Business Plan for Australian Craft House

This report outlines a business plan for Australian Craft House, a new venture focused on sourcing and promoting handicraft products. It includes market research, operations and technology, human resources, and financial resources.

Business Entrepreneur

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Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Business model canvas....................................................................................................................5
3. Market..........................................................................................................................................8
3.1. Market size............................................................................................................................8
3.2. Growth rate of industry.........................................................................................................8
3.3. Effect of trend.......................................................................................................................8
3.4. Segmentation of market........................................................................................................8
3.5. Target customers...................................................................................................................9
3.6. Distribution channels and competitors..................................................................................9
3.7. Location of the business........................................................................................................9
4. Operations and technology........................................................................................................10
4.1. Available options for the development of the technology..................................................10
4.2. Impact of changing technologies........................................................................................10
4.3. Options for production........................................................................................................10
4.4. Options for sales and distribution.......................................................................................10
4.5. Requirement of resources....................................................................................................11
4.6. Laws and regulations..........................................................................................................11
4.7. Moral or ethical issues........................................................................................................11
5. Human resources.......................................................................................................................12
5.1. Required experience............................................................................................................12
5.2. Owners and their roles........................................................................................................12
5.3. Ownership structure............................................................................................................12
5.4. Manpower requirements.....................................................................................................13
5.5. Company’s growth strategy................................................................................................13
6. Finance.......................................................................................................................................13
6.1. Projected revenues..............................................................................................................13
6.2. Startup costs and equipment costs......................................................................................14
6.3. Projected profit and loss for the first 3 years......................................................................14
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6.4. Possible sources of financing..............................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16
Appendix 1.....................................................................................................................................17
Appendix 2.....................................................................................................................................19
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Executive Summary
The purpose of writing this report is develop a business plan for the new venture. The new
venture is about sourcing of the handicrafts products and building brand value of these products.
The assumed name for this new venture is “Australian Craft house” and main objective of the
new venture would be to check the quality of the products and promote them and building brand
value for increasing the sales in the Australian Markets. The product offerings of the new
business will include all the handmade Jewelry, decorative items and dining items along with
services of the building brand value and sourcing of these products. The report outlines all the
important elements such as the business model canvas that explains the key activities, key
resources, channels, cost structures, key partners and revenues. Also, this report highlights the
business plan by focusing on mainly four elements which are market research, operations and
technology, Human resources and the financial resources. At the end, the conclusion will be
drawn on the basis of the business plan of Australian Craft house.
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Introduction
The report is written with the intent to develop a business plan for the new venture. The business
idea involves the sourcing of the handicrafts products and promoting those products in the
Australian and other international markets. The assumed name for this new venture is
“Australian Craft house”. The main objective of the new venture would be to check the quality
of the products and promote them and building brand value for increasing the sales in the
Australian Markets. The products that mainly offer in the local markets will include all the
handmade Jewelry, decorative items and dining items. This business idea is very beneficial as it
provides an opportunity to all the artists and craft people to show their talent and will get the
recognition in the markets that they actually deserve. This business will be set on a very small
scale. The most important activity in this business idea is to maintain relationships with the
suppliers and distributors. The business idea for starting a new venture needs a huge amount of
investment for sourcing the raw material in a pure form to all the artists or craft people for
making quality products. The high investment is also required to carry out promotional and
branding activities (Grybowski & Jones, 2014).
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Business model canvas
Business model canvas is an effective way to document business ideas or models. This canvas
includes various segments focusing on the key partners, key activities, value proposition,
customer relationships, customer segments, and key resources, channels used for promotion, cost
structures and revenue streams. The main focus of the Australian Craft House will be on the
sourcing of handicrafts products including all decorative items, jewellery and dining products.
The competitive prices will be offered to the customers so that they buy these products again and
again. All the nine segments that included in the business model canvas are explained below in
the context ofa new business idea.
Key partners: The first segment is the key partners and it includes all the people that play
an important role in starting up this new venture. The key partners include Artists,
designers, retailers, suppliers, promoters and distributors.
Key activities: The key activities that involved in this new venture will be the market
research, sourcing of the handicraft products, branding and promotion and quality check.
All these activities need to be managed in an effective way to build strong relationships
with customers and brand image of the products (Myer & Grybowski, 2015).
Value Proposition: The value proposition or Unique selling proposition refers to
something that separates your business from the competitors. Being an entrepreneur, my
motive is to earn the maximum profits by offering the quality handicrafts products to the
public at cheap rates. Also, the products are going to be manufactured in the local
markets as it will contribute towards the welfare of the artists and community.
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Customer relationships and customer segment: The identification of the target customers
is also important and building relationships with the target and potential customers
always result in increasing the sales and profitability of the organization. The target
customers are the tourists and travelers, people working for a social cause, people having
an interest in art and craft and local people buying local products. The relationships with
the customers can be maintained by offering unique handmade products.
Key resources: There are many resources that we require to start a new business. Before
starting up a new business, we have the resources available to us are financial resources,
knowledge resources, human resources and, physical resources (Sullivan, 2005).
Channels: Some of the important channels that going to be used for the promotion of
such handicrafts products are the trade shows, high-end stores, e-commerce sites, airports
and railway stations and craft exhibitions.
Cost structure: The cost involved in the two major activities. Firstly, the initial
investment will be used on the promotion and branding of the products. Secondly, the
company need to invest money on the sourcing of the products, distribution and quality
checks.
Revenue: The revenue from this business will come from the selling of the products in
the local markets.
Key Partners
o Artists
o Designers
o Retailers
o Suppliers,
Key Activities
o Market
research
o Sourcing of
Value
Proposition
Offering the
quality
Customer
Relationships
Offering unique
handmade products
Customer
Segments
o Tourists
and
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Promoters
and
Distributors.
the
handicraft
products
o Branding
o Promotion
o Quality check
handicrafts
products to
the public at
cheap rates.
Quality products travellers
o People
working
for social
causes
o People
having
interest in
art and
craft and
local
o People
buying
local
products
Key Resources
 Financial
resources
 Knowledge
resource
 Management team
Channels
o Trade shows
o High-end stores
o E-commerce
sites
o Airports and
railway stations
o Craft
exhibitions.
Cost Structure
o The initial investment will be used on the promotion and
branding of the products.
o The cost involved on the sourcing of the products,
distribution and quality checks
Revenue Streams
o Selling of the products in the
local markets.
(Heath & Pascoe, 2014)
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3. Market
First of all, it is very essential to carry out the market research to identify the different markets to
offer the products in those markets.
3.1. Market size
The global market for handicraft products reached a value of US $526.5 billion in the year 2017.
The market has a strong growth because of the high demand in the market from hotels, offices
and restaurants and travelers. The market size is highly influenced by the rise in the travel and
tourism industry.
3.2. Growth rate of industry
The industry of handcrafts is expected to reach at $984.8 Billion by the year 2023. The growth
of 11% has been analyzed from the research and it is observed that America is the leading
market for handicrafts in terms of the global share.
3.3. Effect of trend
The increasing trend of the tourism has positive impact on this industry. The trend for the
handcraft industry never goes away because there is always a high demand for the antique and
unique products.
3.4. Segmentation of market
The Australian Craft house will target the economic segments such as the high income people
and middle income people and to cater the needs of these economic segments people, the strong
relationships with the suppliers and distributors a will be created.
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3.5. Target customers
The market that targeted for this business will be the people who are travelling across the world
and appreciate the local art and craft. In addition, the people having a great interest in collecting
the handicrafts also identified and they will also purchase the products offered by our business.
There are many people who love to buy local products from local communities; those people will
also be targeted by our new venture (Department of Labor, 2014).
3.6. Distribution channels and competitors
The biggest rivals or competitors that available in the market for handicraft business are the
Eckersley art and craft and riot art and craft on the basis of their high market share. The
Australian Craft house will adopt different strategies to spread the business in local and
international markets and to promote the handicrafts in Australia and many other places (NIC,
2016). During the startup of this business, products will be offered to the local markets of
Australia and with the help of the internet, the organization will attract customers through
blogging. Another strategy to tap the local and global markets is to collaborate with the famous
E commerce websites such as Amazon. These E-commerce websites will help in selling the
products to the people living in Australia and also track all the local handicraft exhibitions and
trade fair. This will lead to achieve the brand recognition in the market by making people aware
about the presence of the products.
3.7. Location of the business
The location that we decided to start a new business is Australia because of huge demand in
Australia for antique and handmade products (Ganga, 2011).
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4. Operations and technology
4.1. Available options for the development of the technology
The handcraft business is highly dependent on the self-production techniques. The technology
has a great impact on the promotion of the products as technology enables many businesses to
promote their products and services via social media platforms and digital marketing contents
(Khurana, 2011). The company will have the option to make use of the latest social media
platforms for the marketing and supply chain management.
4.2. Impact of changing technologies
In the context of technology, it is found that the threat of change in technology is less on the
business production systems as all the products are created without using any technology
because people preferred handmade customized products. The change in the digital marketing
will have a great impact on the marketing and promotional activities.
4.3. Options for production
There are many options available for the production of the new products such as the in-house,
contract based, license, joint venture and combination of these. The option that we have selected
for the new business is in house production. The most economical way for Australian Craft
House will be the in-house and wholesale supply of the products and this will be the preferred
mode of sales for our new company (Bogiri, 2016).
4.4. Options for sales and distribution
There are many options are available for the new business for the sales and distribution of the
products such as direct sales using organizational websites and other social media platforms. The
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direct selling of the products is also possible through the E-commerce websites by engaging with
retailers and distributors.
4.5. Requirement of resources
The required sources to start a new venture includes the skilled labor, efficient suppliers, quality
raw materials and equipments to manufacture and sourcing the handicraft business.
4.6. Laws and regulations
The policies under which the business of handicrafts falls are industrial policies, tariff polices
and trade policies regulated by the government of Australia. There are many organizations in
Australia who are responsible for the monitoring and working for the welfare of the people that
are producing the arts and crafts products. Some of the famous organizations are NAVA
(National Association for the visual arts), Art centers of Australia and creating Australia. Some
of the other organizations are listed as below that monitors the art and craft products and services
such as Craft Guilds and Associations, Australian Copyright Council and Arts Access Australia
and all of these organizations are held responsible for maintaining the regulatory operations and
they are the one that ensures that all the standards are followed by the craft industries.
4.7. Moral or ethical issues
The most important is to taking care of the ethical issues while starting up a new business.
According to the Virtues ethics, the main emphasis should be given on the virtues of mind and
character as the key elements of ethical thinking rather than rules or the consequences.
Therefore, the new venture will ensure that the artisans and the people involved in the creation of
the handicrafts are not exploited and a fair amount of process is paid for their creative mind and
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hardworking characteristics (Australian Government, 2015).The main motive of our new
business will be to perform ethically and effectively and follows all the regulations and standards
set by the government or legal frameworks so that the true brand image of the company will be
presented to the general public of Australia (Khurana, 2011).
5. Human resources
5.1. Required experience
The first priority is always given to the hardworking, dedicated and the experienced people as
their efforts will help the organization to achieve their long term goals (Council, 2015). The
workforce for this new business must have the technical skills such as the knowledge related to
digital marketing, implementation of new software to manage the sourcing of the raw materials.
Also, managerial skills are also preferred in entrepreneurs.
5.2. Owners and their roles
The entrepreneur is the owner of the organization and their main role is to manage all the
business activities and resources and working with the team all together to achieve the long term
goals of the company. The entrepreneur is the one who is responsible for the management of all
functions.
5.3. Ownership structure
This new business is a single proprietorship company where an entrepreneur will perform all the
managerial tasks and focus towards the achievement of the organizational goals and objectives.
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5.4. Manpower requirements
The Australian Craft House will require manpower including marketing manager, Accountant,
suppliers, production and many in-house handicraft artists. The suppliers and the production
employee will be held responsible for the sourcing of the products to the artists, accountant for
managing cash and financial statements and marketing manager will be accountable for the
promotion of the products and services of the company.
5.5. Company’s growth strategy
The growth strategy for this new business includes the expansion of the business in the global
markets by promoting the products through online platforms. For the implementation of these
growth strategies, it is very important to hire some more people in the organization having great
knowledge about the E-commerce domains and who can attract and retain the customers through
online platforms. The performance evaluation will also be done for better outcomes in the future
(Blue, 2006).
6. Finance
6.1. Projected revenues
The revenue of this business comes from the sales of the products through online platforms or
direct sales. There are many financial statements that need to be prepared such as balance sheet,
income statement, cash flow and profit and loss statements. All these statements will be
maintained and monitored by the entrepreneur and financial accountants to ensure that the cash is
properly managed in the organization (ICAI, 2012). The expected revenue from the business is
around $2, 50,000 from the selling of the products.
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6.2. Startup costs and equipment costs
The cost for the starting up new business and equipment business involved equals to $1,50,000
(refer appendix 1)
6.3. Projected profit and loss for the first 3 years
The projected sales cost and all the expenses related to advertisement, research and production of
new products are estimated and put all the incomes and revenues in the pro forma given in
appendix.
6.4. Possible sources of financing
There are many options available to the entrepreneur for arranging funds such as personal
savings, loans and borrowings from friends and relatives. The entrepreneur will invest their
savings and raise capital for the future long reinvestments. The cost will be incurred on the
sourcing of the handicrafts, development of the organizational websites and promotion of the
products. Some of the other recurring cost involved in this new business will be the
transportation costs, product sourcing and implementation of the quality checks. Also, taking a
loan from a financial institution is the second option that can be utilized to arrange funds for the
new business.
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Conclusion
It is clear from the above business plan that the main focus of the entrepreneur will be on the
sourcing of handicrafts products including all decorative items, jewelry and dining products.
Also, it is very essential to carry out the market research to identify the different markets to offer
the products in those markets. The market that targeted for this business will be the people who
are travelling across the world and appreciate the local art and craft. In addition, the people
having a great interest in collecting the handicrafts also identified and they will also purchase the
products offered by our business. The organization will adopt different strategies to promote the
handicrafts in Australia and many other places. The Australian craft house will fulfill the needs
of the people by providing them quality assured products at affordable prices. The growth
strategy for this new business includes the expansion of the business in the global markets by
promoting the products through online platforms. For the implementation of these growth
strategies, it is very important to hire some more people in the organization.
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References
Australian Government (2015) Importing handicrafts
Blue, B.(2006) Handicraft Sector Design and Business Development Manual.
Bogiri, R. (2016) Fact Sheet: Vanuatu- Handicraft Industry.
Council, C. (2015) Crafts Council Business Plan 2012 – 2015
Department of Labor (2014) Financial Statement: Sole Proprietors and Individuals
Ganga, S. (2011) Exports trends of handicrafts in india: an analytical study
Grybowski, T. & Jones, B. (2014) Arts in Daily Life: Australian Participation in the Arts
Heath, L. & Pascoe, J. (2014) Mapping the Australian craft sector.
ICAI (2012)Preparation of final accounts of sole preprietors.
Khurana, C. (2011) Research plan proposal: a study on consumer perference and satisfaction
towards selected handicraft items
Myer, R. & Grybowski, T. (2015) Arts Nation: An Overview of Australian Arts
NIC (2016) Craft processes and other details of 32 crafts.
Sullivan, F.(2005) Market feasibility study and business development plan for the handicrafts
sector.
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Appendix 1
Start-up Costing for Australian craft house- [2019]
START-UP COSTS Cost ($)
EQUIPMENT/CAPITAL
COSTS
Cost ($)
Registrations 10000 Start-up capital 50,000
Business name 2000 Plant & equipment
Domain names 4000 Vehicles 6000
Trade marks/designs/patents 4000 Computer equipment 3000
Membership fees 1500 Computer software 15000
Accountant fees 500 Phones 5000
Solicitor fees 300 Fax machine 1000
Rental lease cost (Rent
advance/deposit) 2000
Security system
10000
Utility connections & bonds
(Electricity, gas, water) 4000
Office equipment
Phone connection 2000 Furniture 5000
Internet connection 1000 Shop fitout
Computer software 500
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Training 1000
Wages 4000
Stock/raw materials 2000
Marketing & advertising 3000
Total start-up costs
1,50,000
Assumptions:
All figures are GST exclusive.
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Appendix 2
Profit and loss account of Australian craft house for the year 2019-2021
1st year 2nd year 3rd year
Sales
Direct Cost of Sales
Other
TOTAL COST OF SALES
Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Research & Development
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Net Profit/Sales
$0
$0
$0
$0
$0
$200,000
$2,17,000
$69,000
$200,000
$30,000
$0
$2,69,000
($2,69,000)
($2,669,000)
$2, 69,000
$1,00,000
$66,900
1,66,900
$1,50,000
$2,00,000
$2,30,000
$72000
$2,20,000
$40,000
$2,72,000
($2,72,000)
$ 2, 90,000
$3,00,000
$ 1,20,000
$70,000
$1,90,000
$1, 90,000
$2,20,000
$2,50,000
$75000
$2,50,000
$50,000
$2, 90,000
($2, 90,000)
$3,30,000
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