Gift Novelty Souvenir Shop Business Plan

1.1 Mission

Yeti Cards & Gifts’ goal is to provide new and exciting products in an environment that is fun and friendly for customer and staff alike. Customer service is our #1 priority.

“Fun, Functional & Funky, that’s Yeti.”

1.2 Keys to Success

The keys to success are:

1. Offering items of a high quality-value relationship which are not available everywhere. This is essential for maintaining the niche market sectors mentioned in the Executive Summary.
2. Advertising and promoting in areas that our target customer base will learn about our store.
3. Continuously reviewing our inventory and sales and adjusting our inventory levels accordingly.

1.3 Objectives

Yeti has two objectives for the organization. The objectives are lofty, yet achievable. By developing and tracking progress toward the goals, the organization will push everyone to perform their best.

• Open a second store in the University Heights community, increasing visibility and sales potential.
• Open a third store in Year 4.

2.1 Company Ownership

Yeti Cards & Gifts is a single member Ohio registered L.L.C. owned wholly by Dan Gordon.

2.2 Company History

Yeti was originally founded two years ago. The popularity of Yeti was quickly apparent and the business out-grew the location. The business soon moved into the Wigman Hospital/Physicians & Surgeons South Building to take advantage of the 1,144 square foot highly visible retail space. The Wigman location was chosen to leverage its high density of people. Wigman Hospital is Cuyahoga County’s largest employer. On the east side of Yeti is The Case Western Reserve, the state’s largest private university with over 20,933 students, faculty, and employee. The move to the Wigman building was also strategically timed to fill the vacancy of Jabberwocky Cards & Gifts which had just closed their doors.

Yeti is currently in the tenant improvement stage of opening their second store in University Heights. This 800 square foot store is located in the Madison Plaza in-between Starbucks and Noah’s Bagel. This location was chosen because of the high traffic counts (1,800) and the close proximity to two nationally known tenants.

4.1 Market Segmentation

Cleveland Heights Store

Case Western Reserve community
20,044 students total. Largest private university in Ohio.

• This group makes the most “lifestyle” purchases. They are either buying for themselves to give their living space a personal touch, or buying items as a gift for a friend or relative.

• Male students are known for their infrequent shopping habits. They make occasional purchases. These occasional purchasers will need to be converted into impulse buyers. This can be accomplished by offering more items that appeal to their sense of independence.

• This segment makes less frequent purchases than the students

• Female students, 53.6% of student population (10,747)
• Male students, 46.4% of student population (9,297)
• Case Western Reserve Univ. faculty (889) and employees

Wigman Hospital community/Cleveland Heights community
Wigman Hospital is the county’s largest employer. Administrative offices have recently been moved to this location, further consolidating the hospital into a dense employer.

• Higher income levels than students
• Their work site is in very close proximity to Yeti, less than a block.

• 15-19: 11,585 (8.4%)
• 20-24: 17,390 (12.6%)
• 25-34: 20,591 (14.9%)
• 35-44: 18,656 (13.5%)
• 45-54: 20,184 (14.6%)
• 55-59: 5,864 (4.3%)

• Wigman Hospital community. Total population 2,700.
• Cleveland Heights community. Total population 140,550. Ages:

University Heights Store

John Carroll University community18,789 students total

• This group makes the most “lifestyle” purchases. They are either buying for themselves to give their living space a personal touch, or buying items for a friend or relative to give as a gift.

• Male students are known for their infrequent shopping habits. They make occasional purchases. These occasional purchasers will need to be converted into impulse buyers. This can be accomplished by offering more items that appeal to their sense of independence.

• This segment is likely to make fewer purchases than students

• Female students, 47.6% (8,937)
• Males students, 52.4%, (9,852)
• John Carroll Univ. faculty (830) and employees

University Heights community. Total population 51,040. Ages:

• 15-19: 5,662 (11.5%)
• 20-24: 9,896 (20.1%)
• 25-34: 7,317 (14.8%)
• 35-44: 5,991 (12.1%)
• 45-54: 5,570 (11.3%)
• 55-59:1,603 (3.3%)

4.2 Target Market Segment Strategy

The market segments were chosen for two specific reasons, location/proximity and customer demographics, specifically age:

Location/Proximity
In the case of both the Cleveland Heights and University Heights stores, the location is quite convenient to both the students and the surrounding communities. As our days become busier and busier, with less and less free time, we tend to choose stores that are the most convenient. The more convenient the location, the more free time that we have for ourselves.

• Cleveland Heights. The store is within several blocks of a large university campus. Students are continually walking off campus, looking for food, shopping, and diversions from school, all convenient enough so that they can easily get back on campus for the next class. For the Wigman Hospital community, the largest single employer in Cuyahoga County, Yeti is located below their offices. Many people can just walk downstairs to the ground floor, and at most they may have to walk a block to get to Yeti. Customers who need to do a bit of shopping on their break or before they leave for home are able to get to Yeti within five minutes.
• University Heights. Again, location is key in University Heights. The store is also only a few blocks from the large campus making it quite accessible to students, faculty, and campus employees. Yeti was able to secure a desired location within Madison Plaza, one of the premier shopping areas. The fact that Yeti is situated next to Starbucks is significant. Starbucks is nationally known for their real estate prowess, in addition to their marketing. Starbucks is very good at choosing good retail locations for their stores, a prime reason that they have closed so few poor performing stores in their history. On the other side of Yeti is another national retail tenant, Noah’s Bagel. Being surrounded by two national tenants, one of them being the mighty Starbucks is quite material. Additionally, this retail space has customer daily walk-by traffic of 1,800, an impressive number.

Customer Demographics

A second explanation of this phenomenon is that students tend to spend money in a short-sighted manner. The overwhelming majority of students receive financial aid and it is uncommon for all of the money from financial aid to be spent solely on books and tuition. Frequently a good portion becomes their disposable income. Many students take the viewpoint that if they are going to be taking on debt to complete school, then a little more debt, which provides them ample disposable income, is OK, as they will eventually pay it off years down the road when they are making good money. These two explanations offer insight into why students, those with low household incomes have high levels of disposable income. Yeti recognizes this reality and caters to these students with products that appeal to them.

• University communities, both Case and John Carroll. While students do not have the highest household income, since the majority of their time is spent in school instead of working, they have a very high rate of disposable income. This can be explained by two reasons. First, when students enter university, this is often the first time that they are no longer under the watchful eye of their parents, who have controlled or affected the purchasing behavior and lifestyles of their offspring. For many of the students, they suddenly have more freedom in the lives and how they spend their money.A second explanation of this phenomenon is that students tend to spend money in a short-sighted manner. The overwhelming majority of students receive financial aid and it is uncommon for all of the money from financial aid to be spent solely on books and tuition. Frequently a good portion becomes their disposable income. Many students take the viewpoint that if they are going to be taking on debt to complete school, then a little more debt, which provides them ample disposable income, is OK, as they will eventually pay it off years down the road when they are making good money. These two explanations offer insight into why students, those with low household incomes have high levels of disposable income. Yeti recognizes this reality and caters to these students with products that appeal to them.
• Surrounding communities, both Cleveland Heights and University Heights. The members of the community population, older than the university students, want a safe and friendly atmosphere where they can enjoy a sense of nostalgia mixed with youthful excitement. The problem with most card and gift shops is their inability to cater to a wide cross section of the population. They are either too hip or trendy and turn off the more mature crowd, or they are too safe and secure so that only your grandparents would shop there. This “hallmarkification” of gift and card shops is quite common as evidenced by (name omitted), (name omitted), and (name omitted). Yeti has been successful in appealing to both the young and hip crowd (students) as well as the more mature crowd (university faculty, Wigman staff, and the surrounding city communities). Yeti has accomplished this feat in part by offering a wide product selection with the two target segments in mind and offering every customer benchmarked customer service, a way of treating customers so that every customer that enters the store recalls their experience as a pleasant experience that exceeded their expectations.

4.3 Industry Analysis

As mentioned in the previous section, gift and card shops typically fall into two distinct categories, trendy and hip shops that appeal to a younger crowd, and conservative, “hallmarkified” stores that appeal to an older, safety conscious crowd. It is unusual for a store to be able to straddle both categories successfully.

Some stores will try by just carrying merchandise that appeals to the other category, but this approach rarely works. In addition to having the merchandise for the desired market segments, the store must have the look, feel, and customer service to make each market segment feel like they are wanted, that make them feel like they are the typical individual that the store is catering to. Please review section 5.1, the competitive edge for more information on how Yeti is able to accomplish what most in the industry has been unable to.

4.3.1 Competition and Buying Patterns

Competitor #1
Pros: Massive purchasing power (over $30 million in sales last year including a computer and book department); good location; guaranteed customers from the sale of text books.
Cons: Little to no parking; poor customer service; difficulty in selling anything but conservative merchandise for fear of being offensive; youthful customer base keeps adults away.

Competitor #2
Pros: Good location next to Case Univ.; good selection of women’s apparel; established customer base.
Cons: Little to no parking; very poor customer service; lack of diversity in customer base with young women being their primary customer.

Competitor #3
Pros: Chagrin River Center tenant; plenty of parking; a national chain; average customer service.
Cons: Primary customers are 12-19 year olds; too loud background sound system; main focus is on apparel (T-shirts); little to no advertising.

Competitor #4
Pros: Capitol Mall tenant; plenty of parking; national chain; large selection of movie paraphernalia.
Cons: Merchandise selection focused on too small of a customer base; poor customer service; little to no advertising; distance from Case Univ. requires car or bus ride.

Competitor #5
Pros: Eighth St. Market tenant; average amount of parking; established customer base.
Cons: Poor customer service; poor merchandise selection.

Competitor #6
Pros: Two stores within walking distance of John Carroll Univ.; established customer base; large merchandise selection.
Cons: Merchandise selection focused on older customers; too much merchandise clutters aisles and creates claustrophobic conditions.

Competitor #7
Pros: Large national chain with ample parking; large selection of goods; average customer service.
Cons: Cannot respond to customer requests and the latest trends; focused on general merchandise, not cards and gifts; distance from John Carroll Univ. requires a car or bus ride.

5.1 Competitive Edge

Yeti’s competitive edge can be summed up as “Risque, not Raunchy.” This indicates their ability to appeal to a younger hipper crowd such as students, as well as an older, more mature crowd typical of Wigman Hospital employees, university faculty members and employees, and surrounding community members. “Risque, not Raunchy” is achieved to a larger degree through an intelligent product selection that is supported by exemplary customer service.

Yeti sells items that appeal to a wide selection of the population. Some items may indeed seem to push the limits of taste, but in general, none of the items sold are offensive or outrageously obscene. A good litmus test for this feeling of risque not raunchy is that any of the customers, regardless of age feel as if they could bring their parents into the store and not feel embarrassed.

Having a wide product selection is not sufficient, in and of itself, to appeal to a wide demographic group of customers. Part of a customer’s desire to explore stores such as Yeti is the experience that they have while in the store; how they were treated; the help from employees; the feeling that they were welcome in the store. All of the Yeti employees go through training that reinforces the notion that exemplary customer service must be offered to every customer. The customer must feel like they were treated with respect and that the employee truly wanted to help the customer in any way possible. Having this level of customer service helps support the product selection in appealing to a wide range of customers. Just having the right product selection is not enough, you could have the most desired, coolest stuff, but if the experience is not noteworthy, the customer will not come back.

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5.2 Marketing Strategy

Yeti’s marketing strategy will be a strategic effort to develop an awareness of Yeti in the community and the wide range of attractive products that they offer. The strategy will use several formats of media:

• Print advertising: The Cleveland Weekly will be the print medium of choice. Not only is their presence felt throughout the Cleveland metropolitan area (estimated readership is 278,000) but they are the premier alternative media outlet for both Cleveland Heights and University Heights.
• TV advertising: Television commercials are an expensive yet effective media source for a marketing campaign. Production is often one of the large cost drivers for commercials. As a way of significantly decreasing/eliminating production costs as well as developing a catchy, unique, and memorable commercial piece, Dan Gordon will be leveraging his creative mind and the technical assistance of a few university students to develop Flash-based commercials. These commercials create an edgy, distinct message that will be able to communicate the range of products and distinctiveness that Yeti has to offer. By reducing the production costs to almost zero, other than sweat equity by Dan, Yeti will be able to use TV advertisements which they would otherwise not be able to afford. The marketing plan calls for a 50% split between local (WKYC Channel 9) and cable television. Additionally, Yeti will also be using “book end spots” which are 15 second spots that surround a traditional 30 second spot but at a reduced air time fee.

5.3 Sales Strategy

Yeti’s sales strategy is an aggressive training/education regime for all employees. All employees will be trained on the different product categories as well as the specific products within each category. The more information each employee knows and can share with the customer, the increased likelihood a sale will occur. This is especially important since Yeti carries a large product selection and it would be easy for many products to get lost in the mix with no support from the sales associates.

The bottom line is that the more information the employees have regarding the products, how it is used, who the product appeals to, etc., the larger the sales will be with each customer. Additionally, this philosophy of proper training for the employees is aligned with Yeti’s perspective that it is far less expensive to train and maintain extraordinary employees and treat them well, than to invest minimally in the employees but have to deal with high turnover.

5.3.1 Sales Forecast

Yeti has adopted a conservative sales forecasts in order to increase the likelihood of reaching the sales goals and decreasing the possibility that the revenue figures will be incorrect. Yeti believes that the forecasts are accurate since they are based on actual, historical numbers.

5.4 Milestones

Yeti has several milestones that will help guide the organization to success. The following table and chart show these milestones.

6.1 Website Marketing Strategy

Yeti will rely on two sources for the marketing of the website. The first source is the printing of the Web address on all of Yeti’s correspondence and advertising. The second source will be the submission of the site to popular search engines. This will be advantageous for Internet users who may search on “gifts + Cleveland Heights” and Yeti’s website will pop up as a result.

6.2 Development Requirements

Yeti will contract with a computer science student to help develop the website.

7.1 Personnel Plan

Dan will be the manager of both stores. His responsibilities include but are not limited to: sales, purchasing, marketing, advertising, business development, computer technology, and employee training.

Ishada’s responsibilities include but are not limited to: office management, employee training, and human resources.

The Cleveland Heights store will have two part-time employees. Their responsibilities include sales, display organizing, restocking, and light cleaning.

8.1 Important Assumptions

The following table details important financial assumptions.

8.2 Break-even Analysis

The Break-even Analysis indicates that $9,500 will be needed in monthly revenue to reach the break-even point.

8.3 Projected Cash Flow

The following chart and table show projected cash flow.

8.4 Projected Profit and Loss

The following table and charts illustrate the projected profit and loss.

8.5 Projected Balance Sheet

The following table present the projected balance sheet.

8.7 Business Ratios

The following table shows standard business ratios for Yeti Cards and Gifts. Industry Profile ratios are shown for comparison. Our Standard Industrial Classification (SIC) industry class and code are:Gift, novelty, and souvenir shop – 5947.