Business Report

KerryBUS3585

Group member:Linfeng Li Xinkai Ma Zhi Wang

Executive Summary:

The purpose of this business plan is to raise $150,000 for the development of a

jewelry store while showcasing the expected financials and operations over the next

three years. The Crown Jewelry Store, Inc. is a New York based corporation that will

provide a substantial inventory of jewelry products and jewelry related services to

customers in its targeted market. The Company was founded in 2015 by Kevin, Austin

and Jersey, which located in the luxury shopping district.

Products and Services Overview:

The primary source of revenue for the Company will come from the direct retail sale

of silvery, gold, and platinum jewelry which may contain precious stones. I am

currently sourcing a number of inventories from wholesalers so that the business will

have an extensive collection to offer to its customer base. The Crown Jewelry Store,

Inc. will also generate secondary streams of revenue from jewelry repair and

customization services, which will be provided on site. This is an important revenue

center for the business as the income produced from these services carries very high

margins. The third section of the business plan will further describe the services

offered by the Crown Jewelry Store.

The Financing:

We are seeking to raise $150,000 from as a bank loan. The interest rate and loan

agreement are to be further discussed during negotiation. This business plan assumes

that the business will receive a 10 year loan with a 9% fixed interest rate.

Mission Statement:

The Crown Jewelry Store’s mission is to become the recognized leader in its targeted

market for providing outstanding jewelry inventories and jewelry related services.

Management Team:

The Company was founded by Kevin, Austin and Jersey, We has more than 10 years

of experience in the jewelry industry. Through our expertise, we will be able to bring

the operations of the business to profitability within its first year of operations.

Sales Forecasts:

We expect a strong rate of growth at the start of operations. Below are the expected

financials over the next three years.

Expansion Plan:

The Founder expects that the business will aggressively expand during the first three

years of operation. We intend to implement marketing campaigns that will effectively

target individuals within the target market.

COMPANY AND FINANCING SUMMARY

Registered Name and Corporate Structure:

The Crown Jewelry Store, Inc.

The Company is registered as a corporation in the State of New York.

Required Funds:

At this time, the Crown Jewelry Store requires $150,000 of debt funds. Below is a

breakdown of how these funds will be used:

Investor Equity:

We are not seeking an investment from a third party at this time.

Management Equity:

We own 100% of the Jewelry Store, Inc.

Exit Strategy:

If the business is very successful, we may seek to sell the business to a third party for

a significant earnings multiple. Most likely, the Company will hire a qualified

business broker to sell the business on behalf of the Jewelry Store. Based on historical

numbers, the business could fetch a sales premium of up to 4 times earnings.

Products and Services

Below is a description of the jewelry products and related services offered by the

Jewelry Store:

Sales of Jewelry:

As stated in the executive summary, the primary revenue source for the business will

come from the direct sale of jewelry inventories to the general public. We are

currently sourcing a number of wholesalers and brand name jewelry distributors that

will provide the Company with its initial inventories of watches, bracelets, rings,

earrings, and other jewelry products that are in demand. These products will be made

from the highest quality metals including sterling silver, gold, and platinum. The

Company will also carry a number of jewelry products that feature precious stones

such as diamonds, rubies, emeralds, sapphires, and other rare stones. Approximately

80% of the Company’s revenue will come from the sale of jewelry products.

Jewelry Services:

The Company’s secondary source of revenue will come from providing jewelry

related services to its customer base. These services will include jewelry piece

resizing, watch repairs, polishing, and other services commonly associated with

jewelry maintenance. This is a very important source of revenue for the Company as

the income generated forms these services carries very high margins.

Strategic and Market Analysis

Economic Outlook:

This section of the analysis will detail the economic climate, the jewelry industry, the

customer profile, and the competition that the business will face as it progresses

through its business operations.

Currently, the economic market condition in the United States is in recession. This

slowdown in the economy has also greatly impacted real estate sales, which has halted

to historical lows. Many economists expect that this recession will continue until mid-

2016, at which point the economy will begin a prolonged recovery period. The final

concern for the business is the pricing structure and supply chain management that is

common in the diamond industry. It is no secret that the jewelry (especially the

diamond) business has been occasionally riddled with controversy and problems.

The distribution portion of the industry historically has operated on an oligarchy

system, with De Beers controlling a significant portion of the market. In the mid

1980s, De Beers controlled more than 90% of the aggregate known diamond supply.

Today, the company only controls a 45% to 50% market share. This is primarily

attributed to the fact that many diamond mining companies have started operations,

and have begun to release diamond into the open market at prices that are below De

Beers. These miners are focusing on areas of Canada which have been found to have

significant diamond deposits. Many market analysts expect that the market for

diamonds has now been irrevocably changed, and the supply of diamonds to the open

market will act in a free market capacity as more agents enter the market.

Industry Analysis

The jewelry industry is one of the United States’ most exclusive industries with a

relatively small number of supplies providing jewelry to the entire market. As of the

last economic census, there are approximately 9,000 businesses that deal specifically

with the sale of jewelry on both a wholesale and retail level. For each of the last five

years, the industry has generated more than $54 billion dollars a year of revenue, and

provides jobs to more than 70,000 people. Each year, approximately $2 billion dollars

of payrolls are disbursed to these employees. The industry has had strong growth over

the last ten years as the wealth of the average American has increased significantly.

Demand for specialized jewelry products increased due to this increase in American

wealth. However, with the current economic climate, Management anticipates that the

growth of this industry will substantially slow over the next 12 to 18 months.

Marketing Plan

The Crown Jewelry Store intends to maintain an extensive marketing campaign that

will ensure maximum visibility for the business in its targeted market. Below is an

overview of the marketing strategies and objectives of the Company.

Marketing Objectives:

Develop an online presence by developing a website and placing the Company’s name

and contact information with online directories.

Implement a local campaign with the Company’s targeted market via the use of flyers,

local newspaper advertisements, and word of mouth advertising.

Marketing Strategies

We intend on using a number of marketing strategies that will allow the Jewelry Store

to easily target men and women within the target market. These strategies include

traditional print advertisements and ads placed on search engines on the Internet.

Below is a description of how the business intends to market its services to the

general public. The Jewelry Store will also use an internet based strategy. This is very

important as many people seeking local retailers, such as jewelers, now the Internet to

conduct their preliminary searches. I will register the Jewelry Store with online

portals so that potential customers can easily reach the business. The Company will

also develop its own online website, which will feature information regarding the

Company’s inventories, its location, and hours of operation. In the future, e-commerce

functionality may be included in this website so that the Company can generate sales

from outside of its brick and mortar retail location. The Company will maintain a

sizable amount of print and traditional advertising methods within local markets to

promote the jewelry and jewelry services that the Company is selling.

Organizational Plan and Personnel Summary

Corporate Organization:

Financial Plan

Underlying Assumptions:

• Jewelry Store, Inc. will have an annual revenue growth rate of 8% per year.

• The Owner will acquire $150,000 of debt funds to develop the business.

• The loan will have a 10 year term with a 9% interest rate.

Sensitivity Analysis:

In the event of an economic downturn, the business may have a decline in its

revenues. Jewelry is a non-essential and expensive item, and during economic

recessions, I fully expect that the revenues of the business will decline.

However, the high margin income generated from each sale coupled with the

high margin income from the sale of jewelry related services will allow the

business to remain profitable and cash flow positive.