sme business plan for leather bag

8/13/2019 Sme Business Plan for Leather Bag

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IntroductionThe entrepreneurial venture I am going to practice is to step in, in the leather business. This

venture will help to stand up on our own feet. World leather industry is huge and never

ever going to be closed down although could face ups and downs as the history of leather

products is as old as human beings are, and leather products are need more than a want of us, so

the scope of leather products could never die although it might face difficulties, which is the part

of business Pakistan is always considered as important player of this ground since after its

independence, Leather industries contribution towards exports is always essential part of the

exports share, but importantly for last 9 years there is marginal contribution in exports. This may

have some certain reasons important are the intense competition, new players like Bangladesh,

China, Turkeys strong position gained in last decay. Importantly electricity shortfall, raw

materials prices and very importantly War against Terrorism put negative effects on leather

industry. The negative perception of the country in the world community has adversely affected

business and we are getting 20 per cent less price for the same product manufactured in other

countries. Price is the only attraction to the buyers who have created fences against Pakistani

goods. So it shows that there are lots of problems in the industry but still is attractive one as

history could repeat itself, and I believe that I can get something positive out of it. Competition

with in the market of Pakistan is not intense so many Companies like Bata shifted their

manufacturing operations in country like China and Bangladesh where advantage of cheap labor

is attractive and we believe my business strategy of dealing customer according to his demand

could give us an edge, as we can say, We are the Leather Tailor.. We divided the market into two

segments one is local, our national market where we will focus on change of trends and needs

and wants and will supply according to that and the other is International, our International


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market is attractive ones earnings in dollar contribute a lot in ones pocket. I will contact

international clients through websites and also planned to participate in exhibitions around the

globe, although it is difficult one and our limited resources may create hurdle but it is essential

for business development to have direct access to your clients, so Future plans are

there for expansion with increasing our products demand in market. Future Trend shows that

there will be no shortage of raw materials as demand and supply of our live stock will increase,

and at the same time lather industry could get the advantage by utilize this opportunity, at the

same time market demand is gradually increasing in international market specially and a bit in

national market, Demand is there and I am ready to supply, ready to run in the field of

entrepreneur, ready to take the risk, not ready to freeze our feet in the slavery of job

A. Name And Address of the businessName: Awesome Leather Bags

Address: 96-A Guldashat Town, Lahore Cantt

Email:[email protected]

B. Name And Address of the principalsName: Muhammad Ali Asim

Address: 96-A Guldashat Town, Lahore Cantt
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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C. Nature of the businessIt is the Sole proprietorship business which deals in leather sleek bags. I shall purchase finished

leather from different suppliers then make customized leather sleek bags according to the

customers demand. At early stage of business I will focus on bags only, with the passage of time

we will expand product line into leather wallets, belts and shoes etc.

D.Statement of Financing NeededFirst of all I have decided my capacity of units per month that is 300 pieces

Initial/fixed cost Rs. 0.2 million

Operating cost/expense Rs. 0.4 million

Reserves Rs. 0.4 million

Total Investment Rs. 1 million

E.Statement of confidentiality of reportEvery person has his own perception about any business same case with me. According to the

industry analysis and future trend in leather products I recommend that leather goods are the

main source of Pakistan exports to boost up the economy. There is 4 to 5% of total export from

leather. There was $1,088 million in 2004-05 from leather export so it is clear that it has great

demand and also a gap between demand and supply. It has more chances to grow as large scale

as compare to other traditional business. Online shopping is increasing day by day so it is

necessary to sell our products online, selling online company can get potential buyers at lower

cost. Pay Pal has over 184 million accounts, so it is clear that online shopping preferences is

increasing day by day.


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Executive SummaryThe purpose of starting the business is to facilitate all class of people with slandered quality of

product at most affordable process. My company is providing innovative, stylish and light

weighted product The Sleek Bag. People are tired of dragging the old heavy bag and still miss

out the most important things. Itsa bag that carries your ID cards, Notepad, Cellphone, Keys,

pen and important documents. There are separate compartments for every mentioned above

things to place on. Our tag line is just grab the bag and go. The most attractive thing that my

company is providing to our customer is customized leather bags. In Pakistan you will hardly

find any shop that provides customized leather bags. Although there is one international brand

with several outlets all over Pakistan by the name of HUB LEATHER which is a French

brand that give a little customization in their bags which is only the inscription of name on the

bag. I have come up with an idea of providing full customized bags as well as sleek in nature. I

have different catalogs through which customers can select leather of their choice. Each and

every part of the bag can be customized i,e inside compartments and you can in script any

name, quote etc of your choice as per mentioned design and font style. I will be providing some

readymade bags of standard design which can be purchased instantly. I will use both synthetic

as well as pure leather. The pure leather which will be used is Buffalo, cowhide, most well

known and most versatile sheep and lamb leather. I will be opening retail outlets at major

shopping malls in Lahore which will be Xinhua Mall, Mall of Lahore, Defence H block and

Defence Y block. I will not be having my own production facility. Rather I will have it

outsourced and get the bags manufactured by the local manufacturers of leather. Supplier will

be determined on who accepts the lowest possible rate compared to others.


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Industry Analysis

Future Outlook and Trends

Leather product is a fashion symbol for teenager and youth generation in the western world like

USA, Canada, Germany, France and Italy. Now in these days every business is facing decline

due to the global crisis but Future Trend shows that there will be no shortage of raw materials as

demand and supply of our live stock will increase, and at the same time lather industry could get

the advantage by utilize this opportunity, at the same time market demand is gradually increasing

in international market specially and a bit in national market, Demand is ther and I am ready to

supply, ready to run in the field of entrepreneur, ready to take the risk, not ready to freeze

my feet in the slavery of job

Analysis of competitors

It is very important to analyze the competition environment of the industry in order to compete

successfully. It is good for strategy making to identify the strengths and weakness of competitors

and try to differentiate itself from them. We have many local as well as international competitors

who produce leather bags and HUB Leather in the top of the list of competitors. But because

of the best feature of customization which adds value to business I dont have much risk from

my competitors.

Market Segmentation

The retail shops will only be located in Lahore and will comprise of four branches I will be

opening retail outlets at major shopping malls in Lahore which will be Xinhua Mall, Mall of

Lahore and Defence H block and Defence Y block as I will be targeting all class of people with

slandered quality of product at most affordable process.


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Industry Forecasts

World leather industry is huge and never ever going to be closed down although could face ups

and downs as the history of leather products is as old as human beings are, and leather products

are need more than a want of us, so the scope of leather products could never die although it

might face difficulties, which is the part of business Pakistan is always considered as important

player of this ground since after its independence, Leather industries contribution towards

exports is always essential part of the exports share, but importantly for last 9 years there is

marginal contribution in exports. This may have some certain reasons important are the intense

competition, new players like Bangladesh, China, Turkeys strong position gained in last decay.

Importantly electricity shortfall, raw materials prices and very importantly War against

Terrorism put negative effects on leather industry, so government of Pakistan is also thinking

about rebates and tax relaxation to the exporters. So it can boost our economy as well as leather

industry particularly exporters

Description of venture

Product

I will be dealing in the sale of Leather Bags only. As far as production of the Bags is concerned I

will be outsourcing it. I will provide leather to the factory charging me comparatively the least

price to process the leather and then I will have it developed into a Bag by a manufacturer again

from whoever will charge me the least price.


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Service

Company will give online sale services for its customers. Customers can order through company

website for customize their products. They will get service for the delivery of goods. Moreover

they will also have the facility to email me the name or quote they would like to have in scripted

on their Bags.

Size of business

The size of the business will be small at the beginning due to limited funds but I may plan to

extent if the business earns a healthy profit so that I can have enough capital to extend and be

able to open up retail outlets in cities apart from Lahore such as Islamabad, Karachi, Faisalabad

and Gujranwala which may increase my customer base.

Office Equipment and Personnel

The office equipments will be computer, printer and internet etc. I will employ 2 sales

representatives, 1 cashier, 1 sweeper and 1 supervisor at each shop to attend the customers which

may increase by employing a supervisor if the business extends. The business will have enough

furniture such as racks, shelves and other necessary material such as statues to put the Bags on

and make to outlet look attractive

Equipments

Equipments Amount/N0

Office Tables 1

Computer 1

Printer 1


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Internet connection 1

Landline 1

Office chair 1

Personnel

Job/Position No of Employees

Sales representative 2

Supervisor 1

Cashier 1

Sweeper 1

Total 5

Background of Entrepreneur

I Muhammad Ali Asim belong to a business family. I am an undergrad student currently enrolled

at Lahore School of Economics (LSE) pursuing my BBA (Hons) Majors in Finance and Minors

in Mathematics and Statistics. I have done FSC from Govt Collage of university, and I have

completed my matriculation from Cathedral School. I live in Lahore Cantt, Pakistan. My family

also originates from Lahore. I have done internship in Diamond Foam as an accountant and I am

also an Assistant Teacher of LSE.


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Production Plan

Manufacturing process

1. Receiving of Raw material:First step is in the manufacturing process is to get the leatherselected by customer from the supplier and deliver it to the manufacturer of Bag.

2. Cutting: In the second step of manufacturing the leather is cut as per the design of theBag with the help of cutting machine.

3. Sewing: In the next of manufacturing the leather is sewed as per design with the machine.4. Sticking: In this step product is going to be stitched with the help of solution.5. Packing: The last step of processing is packing of each item in different boxes. These

products are send to different places as per the order.

Physical Plant and Machinery

My company get the product manufactured i.e Leather Sleek Bag from the manufacturer so I

dont need any sort of machinery or plant although I will have retail outlet to display the product

and it will have enough furniture such as racks, shelves and other necessary material such as

statues to put the Bags on and make to outlet look attractive.

Assessment Of Risk

Evaluate weakness of business

Shortage created in local market due to exports of raw and finished leather Requirement of high working capital High cost of electricity


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Economies of scale is a important factor, as most of units in Pakistan have small capacity,which means higher cost, and this results in decreasing competitiveness in the

international markets.

Wastage due to unskilled labor

New Technologies

New technology has great impact on every business same case with leather in

which tanning process might be more affected by any new innovation. Our operation might be

influenced (cutting, stitching and finishing) by new technology. Innovation in internet or online

shopping can also change in website transaction process so it is necessary for our IT department

to make a plan for future how should adopt these changes when it happens


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sme business plan for leather bag

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