Creativity, Innovation, and New Venture: Beauty Prime Cosmetics Report

This report provides a comprehensive analysis of Beauty Prime Cosmetics, a proposed start-up focused on customized organic cosmetics in New Zealand. The report begins with a business introduction, followed by an analysis of market needs, customer preferences, and the competitive landscape, identifying both direct and indirect competitors. Idea generation and evaluation are then presented, with a focus on product and service innovation, ultimately selecting the customized organic cosmetics concept. The report then delves into market feasibility, examining the type of innovation, innovation life cycle, target market attractiveness, and consumer adoption. Organizational and financial feasibility are assessed through SWOT analysis, financial outputs, and sensitivity analysis. Finally, the report explores growth and sustainability potential, including scalability, growth strategies, funding, and sources of competitive advantage. The report concludes with a summary of findings and implications for the venture's success. The report is based on the provided assignment brief and contains information from the provided document.

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CREATIVITY, INNOVATION AND NEW VENTURE CREATION
[Type the document subtitle]
8/13/2019
Student name

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Contents
1.0 Business introduction/background.............................................................................................3
2.0 Market need/opportunity...........................................................................................................4
Customer wants, needs and preferences......................................................................................4
Competition.................................................................................................................................4
Market growth and profitability potential....................................................................................4
3.0 Idea generation...........................................................................................................................5
Idea 1.......................................................................................................................................5
Idea 2.......................................................................................................................................5
4.0 Idea evaluation and selection.....................................................................................................6
Evaluation of creative idea..........................................................................................................6
Idea 1.......................................................................................................................................6
Idea 2.......................................................................................................................................6
Recommended idea......................................................................................................................7
5.0 Market feasibility.......................................................................................................................7
Type of innovation.......................................................................................................................7
Innovation life cycle....................................................................................................................9
Analysis of selected idea.............................................................................................................9
Target market attractiveness and profit potential....................................................................9
Point-of-difference and consumer value addition..................................................................10
Likely consumer adoption.....................................................................................................10
6.0 Organisational feasibility.........................................................................................................11
Swot analysis.............................................................................................................................11
7.0 Financial feasibility.................................................................................................................11

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Financial outputs........................................................................................................................11
Projected financial data for Financial assumptions..............................................................11
Detailed P & L...........................................................................................................................13
Summary of P & L.....................................................................................................................18
Cash flow statement...................................................................................................................19
NPV...........................................................................................................................................22
Financial sensitivity analysis.....................................................................................................24
Three venture scenarios.............................................................................................................24
Most likely scenario...................................................................................................................26
8.0 Growth and sustainability potential.........................................................................................27
Venture’s scalability potential...................................................................................................27
Growth strategies.......................................................................................................................27
Funding strategies......................................................................................................................28
Sources of competitive advantage.............................................................................................28
Product...................................................................................................................................28
Resources...............................................................................................................................29
Customer service...................................................................................................................29
9.0 Conclusions/Implications........................................................................................................30
References......................................................................................................................................31

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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1.0 Business introduction/background
Initiating a business requires large amount of planning and checking for the feasibility before
entering into the market, this will include idea generation, market feasibility analysis, financial
analysis, growth potential for a company and key sources for competitive advantage. Beauty
prime cosmetics is a start-up idea in new Zealand, dealing in customized organic cosmetics
products. The key idea of the business is through one of the major problem identification that is
issue faced by girls regarding the damage to the skin from the makeup products include large
amount of chemicals in it (HPS, 2018). For providing a unique solution to the problem, the
company comes up with products that are natural and created with use of organic ingredients,
and will be made and grouped as per the type of skin of every individual. The cosmetics
industry has identified to have large competition in the market. New Zealand based cosmetics
products are large in number but the major threat in the industry is global brands like Estee
lauder, Mac, and L’Oreal (consultancy.uk, 2018).
The purpose of the report is the assess the market opportunity in new Zealand for the beauty
prime cosmetics brand and create and select the appropriate ideas for the business and look out
for the organizational, market, and financial feasibility for the business idea generated (Bartleet,
2010).

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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2.0 Market need/opportunity
The market identified to be target for the organic cosmetics products would be new Zealand
market, the reason being the follow of western culture that includes use of makeup and skin care
products regularly to the office, or for some special occasions.
Customer wants, needs and preferences
The customers for the product are women of New Zealand. Other than this the identified target
customer would base on customer lifestyle, which include office going or busy lifestyle women
that must be using cosmetic products to look more presentable in office. Other than this the
customers would also include beauty regime parlours or centre in order to include skincare using
these products as part of service by beauty parlours. Considering the income group, high income
group people would be the suitable customer for the brand due to premium pricing range of the
products.
The customer needs identified are need for best quality makeup range, that would provide
nourishment to the skin and do not harm the skin naturally after regular use. The need states the
cosmetic product range, where some people have oily skin, some have dry skin, some are
suffering from acne, and some have normal skin, but the products available in the market are
same for every skin type, despite of different problem areas. Customer prefers to use cosmetics
product which are as per their skin type and will suits their problem areas in skin (HPS, 2018).
Competition
The direct competition of beauty prime cosmetics would be “The natural co.” that is dealing in
natural or organic beauty products. Other than this some of the direct competition companies that
tae the natural skincare companies from New Zealand include Oh natural, natural nation, Tigs &
Boo, Ethique, and Bee Fresh (ecowarriorprincess, 2018). Other than this, other competition for
the brand would be L’Oreal, and Estee Lauder due to global presence and brand recognition, as
the customer trust these brands when it comes to cosmetic products (consultancy.uk, 2018).
Indirect competition for Beauty Prime cosmetics would be the natural products that could be
used by the customers through application of naturopathy as this may decrease the need of the
offered products by the company.

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Market growth and profitability potential
The statistics reflect that the growth in premium beauty market was 1.2% growth in volume, and
as per the statistics the market gained popularity of natural, organic and DIY beauty products,
which reflect growth opportunity of the company (premiumbeautynews, 2018). According to the
statistics, the past trends of cosmetics industry in new Zealand states that in 2015, the exports of
totals lay under ten million dollars. The major exporting nation for New Zealand’s cosmetic
industry is china, Hong Kong, United States and Australia (Kelsey, 2015). This reflect that the
profit potential for the company which could be higher.
3.0 Idea generation
Idea 1
Product innovation idea
One of the ideas after analysing the need of the customer would be the natural products that will
keep their skin originally good, instead of using makeup every day. This would include products
that will take time but will cure the skin in some time. The idea could be effective as the increase
in naturopathy has been identified, which led to such products like using lemon as a source of
vitamin c in the serums. The ingredients would be described along with their benefits in general,
so that in case any customer is allergic to that ingredient they may avoid.
Service innovation idea
The service idea would include providing online services to the customers that is reaching out to
the customer through social media and online stores.
Concept innovation idea
The pricing strategy for this product development idea would be competitive pricing strategy
instead of premium pricing (Choi, 2015).

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Idea 2
Product innovation idea
Another alternative idea would be producing organic makeup products that will not include
chemicals. For instance, using alternative option for herbicides, genetically modified organism
and synthetic fertilizers, in the form of some natural products so that to reduce the harmful effect
of these makeup products. Paraben and sulphates are found most harmful ingredient in cosmetic
product range that will be avoided.
Service innovation idea
Moreover, the service will include customization that is providing a combination of products
according to individual’s traits of skin and hair and suitability. The online service would be
provided to the customers that will include filling up of form by the customers, where they can
answer to the questions like skin type, problem areas, and past skin surgery. After the form will
be filled, the relevant and most suitable products will be suggested to the customer.
Concept/ process innovation
Moreover, the combos like full skin care combo including face wash, face serum, face scrub,
facemask, and face cream will be offered. Other than this personal assistance would be part of
the creative service where the customer can chat to the company representative through chat or
call (as per preferred by the customer) (Finne, 2017).
4.0 Idea evaluation and selection
Evaluation of creative idea
Idea 1
From 1st idea it can be said that it is the integration of product, service, and concept innovation.
This includes the beauty products to cure the damage from chemical cosmetic products. This
product innovation would be integrated with the service offered to the customer. The idea has
some pros and cons, which reflect the value creation of the product and service for the
customers. It can be said that through this idea the key advantages would be solution to the

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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problem identification that is damage to the skin, that can be recover through the natural
products, as it may be an alternative for makeup and permanently reduce the use of makeup
when an individual is going out. The will be helpful for the customers in improving their actual
health and beauty. Other than this the price that would be worth to the customer would also
reflect value creation for the customers. Thus these reflect the pros for this idea.
However, from evaluating this idea, the key cons include the competition in the cosmetics
industry. This included that the customer is habitual of using makeup products in their everyday
schedule, which reflect that inducing customers to use natural products, which could lack the
effectiveness of the makeup products like long lasting and smudge free. Thus, it could act as
competitive disadvantage for the company (consultancy.uk, 2018) (Gabriel, 2016).
Idea 2
The second idea presented in previous section that is of customized organic products in beauty
range. The key factor to evaluate this idea that is value creation for the customer includes various
opportunities and threats for the product and services offered. First key advantage that is
providing solution to the problem identified and another reason over first idea is that the
customer can enjoy makeup product without damaging the skin reflect the opportunity for value
creation.
Considering service innovation idea, the customers because of customisation service will also
feel important and since their skin type and problem area would be identified before offering the
product, the product they receive will provide perfect blend with the skin which will eventually
increase the customer satisfaction. One of the cons that is identified from this idea is the
investment in this idea would be used because of research into products and ingredients that will
not harmful to the skin and providing personalisation and assistance to the customer would
increase the investment in human resource as well (Gong & Yi, 2018).
Other than the pros to the product innovation, service innovation from this idea included adding
value through customer service that is offering personal assistance to the customers, in case of
any complaint or issue, the team would be available which act as the value creation opportunity
for the company. Other than this, the idea reflects the unique product availability based on
unique skin of every individual, which will reflect the competitive advantage for the company.

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Recommended idea
Among the two ideas identified above and evaluated the two on the basis of value creation for
the customer the most appropriate idea found is the second idea that is the customized organic
cosmetic products. The reason being the customers will be able to enjoy the makeup and the
habit of using make up in New Zealand without damaging the skin by just changing the
ingredients of the products and the customisation will help them to permanently cure their
damage that they have already faced by now. Other than this cause the comparison between the
two idea reflect that the second idea represent more satisfying products for the customer which
can serve as an alternative for the skincare and makeup range with the benefit of customisation.
Moreover, service in today’s digital world also impact major impact on customers perception.
Thus, the value added service as per second idea included online services and online assistance
to the customers. This may increase the investment in human resource, but this could act as one
of the key resource that is value adding and act as competitive advantage for the company. Other
than this the trend reflect introduction of organics beauty products to the industry. To justify the
trend it has been identified that there are other companies entering the industry similar to this
idea according to news by Forbes in Nov 2019 (forbes, 2020).
5.0 Market feasibility
Type of innovation
1. Incremental Innovation

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Innovation is the key for a start-up to grow and sustain in the market. Considering the
technology, incremental innovation is the one using existing technology in the existing market,
this type of innovation will not be suitable for the idea selected. The reason being that
technology needs to be changed in order to control the damage as the main purpose is to change
the ingredients and production technology so as to use organic product in instead of chemical
products (Ahlin, 2014).
2. Disruptive Innovation
Disruptive innovation as per the above grid reflects that through this innovation new technology
is used that is offered in existing market. Through this it can be said that this type of innovation,
which with the idea presented in above section, the reason being that technology is the major part
that needs to be changed in order to create value to the customer that is using organic ingredients
instead of chemical products (Aksoy, 2018).
3. Breakthrough Innovation
Breakthrough innovation includes five key elements that is big baggy location, disruptive
innovation, did you can innovation, reverse innovation, and disruptive innovation. It can be said
that this type of innovation would be suitable in case of ideas generated as by now most of the

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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cosmetic companies across the globe have been providing make a product and other cosmetic
products including chemicals like sulphate, which is not safe for the customers. Through this
idea, the scenario of the market and the customer perception regarding the makeup products will
be completely changed that is using the product that will satisfy similar needs but with the
goodness of natural ingredients (Amabile & Rigolizzo, 2015).
4. Sustaining Innovation
Sustaining innovation is not suitable for this idea the reason being such products are not the
existing products, these are the new products created for new value markets however one of the
trait similar to that of sustaining innovation is that this will also target the high-end customers as
it will be providing better performance for the customers (Bruns, 2013).
Innovation life cycle
Life Cycle Stage Description Scope of
Innovation
Startup/ Introduction
Stage
New product High
Growth Technology improvement Medium
Maturity Product innovation, product variety and
design
High
Decline Innovation through marketing Low
Analysis of selected idea
Target market attractiveness and profit potential
The market or the customer segmentation targeted by the new idea generated includes based on
demographic segment. According to this, the basis of income that will be targeted will be high-
income group, the reason being the company will be serving premium products, which will also

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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include additional services for which premium pricing strategy, would be adopted by the
company. Considering the behavioural segmentation the basis of location that will be targeted
will be every day basis and in special locations like wedding season. On the basis of
psychographic segmentation the lifestyle that will be targeted would be office going and college
going girls as people prefer to spend money and time on cosmetic products (Biemans, 2018).
For profit potential, it can be said that that the company is targeting high-income group for which
the profit margin will be higher as the pricing strategy would be premium-pricing strategy
adopted. The potential threats to the company will be threat of rivalry that is from global brands
like L’Oreal. Moreover, the threat of new entrants and buyers bargaining power will be higher as
well the reason being that technology can be immediately and other companies could enter with
better technology and more innovative idea. However, the supplier bargaining power would be
lower (Camison & Fores, 2016).
Point-of-difference and consumer value addition
Considering prices dimension, the pricing strategy as discussed will be premium pricing strategy
due to value added services by the company like customisation, personal time to every Customer
like a specialist and premium product availability. However even after high amount paid by the
customer the value added will be higher due to ingredients used in the product production that is
organic products That will satisfy similar needs like from high and make up range. Therefore, it
can be said that the point of difference from other competition like L’Oreal and Estee lauder will
be the ingredients used to manufacture the products that is organic and natural ingredients
suitable to different skin types.
Likely consumer adoption
The customer adoption could be lower for the first year let’s say 20% of market share due to
introduction stage of the company where the availability and recognition of the brand is the key
object. By the time of fifth year it is expected to have 50% of the market share to do group stage
in this you, where customers perception will have changed and inclined to words more organic
and natural product when it comes to make-up and cosmetic range (Lawrence, 2015).

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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6.0 Organisational feasibility
Swot analysis
A strategic analysis tool that will include strength, weakness, opportunity and threats which will
identify the key internal and external environment feasibility for assisting organisational
feasibility. The keys trends identified from this idea generation is natural products, customer
health and beauty benefit, and customized products. The key weaknesses identified are high
pricing range you do premium products of food, need for increasing brand recognition and
changing customer perception regarding organic products in cosmetic industry (Safari, Safari, &
Montazer, 2016).
The opportunity identified through this idea generation our new product development; this would
include investing in diversified cosmetic range using natural and organic products. The major
threats include threat of new entrants and increased competition in the market like from the
natural company that is New Zealand be used cosmetic brand offering natural products
(Singham, 2008).
7.0 Financial feasibility
Financial outputs
The assumptions discuss through the below statistical analysis include assumption related to the
cost, equity and debt profiles, sales in revenue, cash flow, NPV and IRR.
Projected financial data for financial assumptions
Figures in
'00
Income sources Sell of makeup items
Sell of personal care
Number of employees 50 employees
(Salary of each employee is $
200.)

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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Projected investment in equipment and
material
1500
Projected R&D cost 200
1700
Depreciation allowed for Machinery and equipment @ 10% (SLM)
Expected rent and rates charges $560
Creditor days expected and debtor day
allowed
Creditors turnover days = 60days
Debtors turnover days = 15 days
startup Expenses calculations Rent Deposit $
60.00
Furniture & Fixtures $
100.00
Equipment $
120.00
Build out/ Renovations $
120.00
Installation of Fixtures &
Equipment
$
211.00
Starting Inventory $
700.00
Legal and Other Professional Fees $
100.00
License and Permits $
100.00
Advertising and Promotion $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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90.00
Consulting $
30.00
$
1,631.00
Initial Investment $ 1,700.00
Startup cost $ 1,631.00
Total Investment $ 3,331.00
Shareholders
name
ABC XYZ JKL
Number of share 700 500 700
% shareholding 35% 25% 35%
Cash investment $
5,250
$
3,750
$
5,250
Detailed P & L
Profit and Loss
Statement
pr 21Apr 22
Apr 23
Apr 24
Income
Sales
Sale of goods/services $ $ $ $ $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
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6,500.00 9,750.00 14,625.00 21,937.50 32,906.25
Sundry Income (e.g.
Commission earned,
franchise fees etc.)
$
600.00
$
700.00
$
500.00
$
300.00
$
100.00
Total Sales $
7,100.00
$
10,450.00
$
15,125.00
$
22,237.50
$
33,006.25
Less
Discounts/Commissions
Sales Discounts given $
195.00
$
292.50
$
438.75
$
658.13
$
987.19
Sales Commissions paid $
97.50
$
146.25
$
219.38
$
329.06
$
493.59
Total Discounts/
Commissions
$
292.50
$
438.75
$
658.13
$
987.19
$
1,480.78
Total Net Income $
6,807.50
$
10,011.25
$
14,466.88
$
21,250.31
$
31,525.47
Cost of Sales
Opening Stock $
-
$
600.00
$
125.00
$
100.00
$
75.00
Stock Purchased $
600.00
$
750.00
$
937.50
$
1,171.88
$
1,464.84
$
600.00
$
1,350.00
$
1,062.50
$
1,271.88
$
1,539.84
Less Closing Stock $
600.00
$
125.00
$
100.00
$
75.00
$
50.00
Total Cost of Sales $
-
$
1,225.00
$
962.50
$
1,196.88
$
1,489.84
Gross Profit $
6,807.50
$
8,786.25
$
13,504.38
$
20,053.44
$
30,035.63
Expenses
General & Administrative
Bank charges $ $ $ $ $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
16
40.00 50.00 60.00 50.00 50.00
Consultant fees $
50.00
$
45.00
$
60.00
$
55.00
$
60.00
Office Supplies $
100.00
$
85.00
$
80.00
$
85.00
$
85.00
Business insurance $
90.00
$
150.00
$
120.00
$
150.00
$
150.00
Total General &
Administrative
$
280.00
$
330.00
$
320.00
$
340.00
$
345.00
Marketing & Promotional
Advertising $
80.00
$
88.00
$
96.80
$
106.48
$
117.13
Promotion - General $
50.00
$
55.00
$
60.50
$
66.55
$
73.21
Total Marketing &
Promotional
$
130.00
$
143.00
$
157.30
$
173.03
$
190.33
Operating Expenses
Newspapers & magazines $
20.00
$
25.00
$
30.00
$
25.00
$
25.00
Parking/Taxis/Tolls $
30.00
$
15.00
$
15.00
$
25.00
$
30.00
Cleaning & cleaning
products
$
10.00
$
10.00
$
10.00
$
10.00
$
10.00
Sundry supplies $
100.00
$
415.00
$
400.00
$
415.00
$
415.00
Equipment hire $
240.00
$
240.00
$
240.00
$
240.00
$
240.00
Etc. $
-
$
-
$
-
$
-
$
-
Total Operating Expenses $
400.00
$
705.00
$
695.00
$
715.00
$
720.00
Motor Vehicle Expenses

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
17
Fuel $
60.00
$
51.00
$
53.00
$
52.00
$
51.00
Vehicle service costs $
40.00
$
76.50
$
79.50
$
78.00
$
76.50
Insurance $
90.00
$
90.00
$
90.00
$
90.00
$
90.00
$
-
$
-
$
-
$
-
$
-
Total Motor Vehicle
Expenses
$
190.00
$
217.50
$
222.50
$
220.00
$
217.50
Website Expenses
Domain name registration $
90.00
$
-
$
-
$
-
$
-
Hosting expenses $
20.00
$
35.00
$
47.00
$
45.00
$
50.00
etc $
-
$
-
$
-
$
-
$
-
Total Website Expenses $
110.00
$
35.00
$
47.00
$
45.00
$
50.00
Employment Expenses
Permanent $
-
$
-
$
-
$
-
$
-
Salaries/Wages $
150.00
$
172.50
$
187.13
$
215.20
$
247.48
PAYE $
80.00
$
80.00
$
81.00
$
84.00
$
86.00
Superannuation $
65.00
$
81.25
$
101.56
$
126.95
$
158.69
Other - Employee Benefits $
150.00
$
187.50
$
234.38
$
292.97
$
366.21
Recruitment costs $
100.00
$
200.00
$
240.00
$
300.00
$
350.00
Total Perm. Employment
Expenses
$
545.00
$
721.25
$
844.07
$
1,019.12
$
1,208.38

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
18
Casual
Salaries/Wages $
500.00
$
500.00
$
500.00
$
500.00
$
500.00
Recruitment costs $
300.00
$
300.00
$
300.00
$
300.00
$
300.00
Total Casual Employment
Expenses
$
800.00
$
800.00
$
800.00
$
800.00
$
800.00
Work cover Insurance $
-
$
-
$
-
$
-
$
-
Total Employment
Expenses
$
1,345.00
$
1,521.25
$
1,644.07
$
1,819.12
$
2,008.38
Occupancy Costs
Electricity/Gas $
120.00
$
110.00
$
122.00
$
140.00
$
155.00
Telephones $
60.00
$
50.00
$
60.00
$
50.00
$
50.00
Property Insurance $
40.00
$
40.00
$
40.00
$
40.00
$
40.00
Rates $
20.00
$
20.00
$
20.00
$
20.00
$
20.00
Rent $
140.00
$
175.00
$
198.00
$
247.50
$
309.38
Repair & maintenance $
55.00
$
80.00
$
87.00
$
90.00
$
95.00
Waste removal $
20.00
$
20.00
$
20.00
$
20.00
$
20.00
Water $
40.00
$
55.00
$
65.00
$
95.00
$
115.00
Etc. $
-
$
-
$
-
$
-
$
-
Total Occupancy Costs $
495.00
$
550.00
$
612.00
$
702.50
$
804.38
Other Expenses
Furniture & Fixtures $ $ $ $ $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
19
13.00 13.00 13.00 13.00 13.00
Building $
27.00
$
40.00
$
45.00
$
47.00
$
50.00
Machinery & Equipment $
12.00
$
18.00
$
27.00
$
34.00
$
42.00
Total Other Expenses $
52.00
$
71.00
$
85.00
$
94.00
$
105.00
Total Expenses $
2,650.00
$
3,249.25
$
3,428.37
$
3,749.65
$
4,068.09
Net Profit / (Loss) $
4,157.50
$
5,537.00
$
10,076.01
$
16,303.79
$
25,967.54
Total Year to Date Net
Profit / (Loss)
$
4,157.50
$
9,694.50
$
19,770.51
$
36,074.29
$
62,041.83
Summary of P & L
Profit & Loss
Statement
Month Apr 20 Apr 21 Apr 22 Apr 23 Apr 24
Income
Total Sales 7,100 10,450 15,125 22,238 33,006
Less Total Disc/Comm 293 439 658 987 1,481
Total Net Income 6,808 10,011 14,467 21,250 31,525
Less Total Cost of Gods Sold 0 1,225 963 1,197 1,490
Gross Profit 6,808 8,786 13,504 20,053 30,036
Expenses
General & Administrative 280 330 320 340 345
Marketing & Promotional 130 143 157 173 190
Operating Expenses 400 705 695 715 720
Motor Vehicle Expenses 190 218 223 220 218

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
20
Website Expenses 110 35 47 45 50
Total Employment Expenses 1,345 1,521 1,644 1,819 2,008
Occupancy Costs 495 550 612 703 804
Other Expenses 52 71 85 94 105
Total Expenses 2,650 3,249 3,428 3,750 4,068
Monthly Net Profit / (Loss) 4,158 5,537 10,076 16,304 25,968
Total Year to Date Net Profit / (Loss) 4,158 9,695 19,771 36,074 62,042
Cash flow statement
Cash Flow Statement
Cash flows from Operations
Cash receipts from
customers
(enter positive
amounts)
Cash Sales $
22,000
$
21,500
$
18,900
$
18,700
$
12,000
Cash collected from
customers (debtors)
$
32,000
$
34,000
$
22,000
$
15,000
$
9,000
Funding from Creditors $
-
$
-
$
-
$
-
$
-
Stock purchased, not
yet paid
$
16,000
$
9,000
$
9,500
$
12,000
$
13,000
Cash paid for $
11,000
$
20,000
$
16,000
$
34,000
$
13,000
(enter negative
amounts)
Total Expenses $
-
$
-
$
-
$
-
$
-
Inventory
(stock)purchases
$
-
$
-
$
-
$
-
$
-
Funding to Debtors
Sales made not yet
collected
$
-
$
-
$
-
$
-
$
-
Net Cash Flow from $ $ $ $ $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
21
Operations 8,100,00
0
8,450,00
0
6,640,00
0
7,970,00
0
4,700,00
0
Investing Activities $
-
$
-
$
-
$
-
$
-
Cash receipts from $
-
$
-
$
-
$
-
$
-
(enter positive
amounts)
Sale of property and
equipment
$
-
$
-
$
-
$
-
$
50,000
Matured
Investments
$
6,000
$
6,000
$
6,000
$
6,000
$
6,000
Cash paid for $
-
$
-
$
-
(enter negative
amounts)
Purchase of property
and equipment
$
-
$
-
$
40,000
$
-
$
-
Purchase of
investments
$
9,000
$
24,000
$
25,000
$
14,000
$
7,000
Net Cash Flow from
Investing Activities
-$
300,000
-$
1,800,00
0
-$
5,900,00
0
-$
800,000
$
4,900,00
0
Financing Activities $
-
$
-
$
-
$
-
$
-
Cash receipts from $
-
$
-
$
-
$
-
$
-
(enter positive
amounts)
Increase in short
term debt
$
4,000
$
4,000
$
4,000
$
4,000
$
4,000
Increase in long
term debt
$
-
$
-
$
-
$
-
$
-
Increase in equity
(proceeds from
owners)
$
6,000
$
6,000
$
11,000
$
9,000
$
8,000
Cash paid for $
-
$
-
$
-
(enter negative Repayment of loans $ $ $ $ $

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
22
amounts) 4,000 4,000 4,000 4,000 4,000
Dividends $
14,000
$
14,000
$
14,000
$
14,000
$
14,000
Net Cash Flow from
Financing Activities
-$
800,000
-$
800,000
-$
300,000
-$
500,000
-$
600,000
Net Increase in
Cash
$
700,000,
000
$
585,000,
000
$
44,000,0
00
$
667,000,
000
$
900,000,
000
Cash at End of Year $
700,000,
000
$
585,000,
000
$
44,000,0
00
$
667,000,
000
$
900,000,
000

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
23
NPV
Calculation of net present value
0 1 2 3 4 5
Year
0
Year
1
Year
2
Year
3
Year
4 Year 5
$'000 $'000 $'000 $'000 $'000 $'004
Cash inflows Sales revenue 7.00 7.28 7.57 7.87 8.19
Saving in
Variable Cost 3.30 3.40 3.60 3.71 3.83
Less:
Machinery
cost 12.00
Interest 1.40 1.40 1.40 1.40 1.40
Selling,
Administrativ
e and General
Exp 1.80 1.80 1.80 1.80 1.80
Depreciation 3.00 3.00 3.00 3.00 3.00
NPBT -12.00 4.10 4.48 4.98 5.39 5.81
Less: Tax @ 25% 1.03 1.12 1.24 1.35 1.45
NPAT 3.08 3.36 3.73 4.04 4.36
Add:
Capital
allownces 3.00 3.00 3.00 3.00 3.00
Net cash outflow -12.00 6.08 6.36 6.73 7.04 7.36
8% discount rate 1.00 0.93 0.86 0.79 0.74 0.68
Present value -12.00 5.63 5.45 5.34 5.18 5.01
NPV 14.61

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
24
Calculation of Internal rate of return
Year
0
Year
1
Year
2
Year
3
Year
4 Year 5
$'000 $'000 $'000 $'000 $'000 $'000
Net cash outflow -12.00 6.08 6.36 6.73 7.04 7.36
IRR
45.83
%

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
25
Financial sensitivity analysis
The above presented assumptions in the financial assessment are set of independent variables
whereas the profit and loss and the cash flows are the dependent variables, which may differ
under certain circumstances. For instance, the effect of the cost as the assumed amount for 5
years may affect the cash inflows as in case the cost is increased the cash inflows may decrease
which will eventually decreases the profit margin of the company. Similarly, the assumed start-
up expenses like furniture and fixtures rent deposit and equipment and other calculations done
through the assumption may affect the start-up cost, which will eventually affect the profit and
loss of the company in the form of decrease in profit or increase in laws for the preceding five
years.
Three venture scenarios
Calculation of net present value (Worst Case Scenario)
0 1 2 3 4 5
Year 0 Year 1
Year
2
Year
3
Year
4
Year
5
$'000 $'000 $'000 $'000 $'000 $'004
Cash inflows Sales revenue 4.16 4.33 4.50 4.68 4.77
Saving in
Variable Cost 3.30 3.40 3.60 3.71 3.83
TOTAL
INFLOWS 7.46 7.73 8.10 8.39 8.60
Total Cash
Inflow in
worst case 6.71 6.95 7.29 7.55 7.74
Less:
Machinery
cost 12.00
Interest 1.40 1.40 1.40 1.40 1.40

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
26
Selling,
Administrativ
e and General
Exp 1.80 1.80 1.80 1.80 1.80
Depreciation 3.00 3.00 3.00 3.00 3.00
NPBT -12.00 0.51 0.75 1.09 1.35 1.54
Less: Tax @ 25% 0.13 0.19 0.27 0.34 0.38
NPAT 0.39 0.56 0.82 1.02 1.15
Add:
Capital
allownces 3.00 3.00 3.00 3.00 3.00
Net cash outflow -12.00 3.39 3.56 3.82 4.02 4.15
8% discount rate 1.00 0.93 0.86 0.79 0.74 0.68
Present value -12.00 3.13 3.06 3.03 2.95 2.83
NPV 3.00
Calculation of net present value (Best Case Situation)
0 1 2 3 4 5
Year 0 Year 1
Year
2
Year
3
Year
4
Year
5
$'000 $'000 $'000 $'000 $'000 $'004
Cash inflows Sales revenue 7.00 7.28 7.57 7.87 8.19
Saving in
Variable Cost 3.30 3.40 3.60 3.71 3.83
TOTAL
INFLOWS 10.30 10.68 11.18 11.59 12.01
Total Cash
Inflow in best
case 11.33 11.75 12.29 12.75 13.22

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
27
Less:
Machinery
cost 20.00
Interest 1.40 1.40 1.40 1.40 1.40
Selling,
Administrativ
e and General
Exp 1.80 1.80 1.80 1.80 1.80
Depreciation 4.00 4.00 4.00 4.00 4.00
NPBT -20.00 4.13 4.55 5.09 5.55 6.02
Less: Tax @ 25% 1.03 1.14 1.27 1.39 1.50
NPAT 3.10 3.41 3.82 4.16 4.51
Add:
Capital
allownces 3.00 3.00 3.00 3.00 3.00
Net cash outflow -20.00 6.10 6.41 6.82 7.16 7.51
8% discount rate 1.00 0.93 0.86 0.79 0.74 0.68
Present value -20.00 5.65 5.50 5.41 5.26 5.11
NPV 6.93
Cases NPV
Assumption
s Total
Best Case 6.93 0.2
1.38611
6
Base Case 5.01 0.4
2.00377
5
Worst Case 3.00 0.4
1.20075
3
Final NPV
4.59064
4

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
28
Most likely scenario
The best case scenario identified through the above financial analysis is the increase in total sales
in revenue and increase in net profit by decreasing the total cost of goods sold and other
expenses like general administrative expense and operating expenses. Moreover from the three
venture scenario, the best case situations will be considered where the cash inflows would be
increasing as increase in sales revenue for five year analysis with the selling administrative and
general expenses will be decreased. From the best case scenario considering the net present value
the expected net present value in the best old likely scenario for the company is 6.93 (Kaplan,
2015).
8.0 Growth and sustainability potential
Venture’s scalability potential
For analysing the venture scalability potential of the idea generated in above section, The first
element to be identified is replicability level. Through the idea that can be said that replicability
is difficult for this product invention as this would include innovative product development with
new technology used for which a large amount of research and time will be given to the product
manufacturing range. The second element include customisability, this is one of the strength of
the company as they are providing services to the customers regarding the personalisation by
understanding each customers skin condition, type of skin and problem areas regarding health
and beauty. After analysing, the range of products will be offered to the customer as per their
requirement and suitability. The third element include extend ability, the scope in cosmetic range
is quite high, Due to which the rate of extend ability or the level of extend ability will be large as
well. A new product entering into the market will be researched and through innovation, that
existing product will be produced with organic and natural ingredients, which will act as one of
the opportunity for the company (Huggins & Thompson, 2015).
Growth strategies
Across the venture development stages where is growth strategies have been identified for
instance one of the major strategies include product development. The company is looking
forward into product development in the first stage of the product life cycle which is innovative

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
29
product including organic ingredients instead of chemicals which are existing be used in the
cosmetic brands. Another strategy that will be considered in development stages will be
diversification, as the company initially will invest in makeup ranges and personal care ranges.
As a growth strategy, the company will also invest in other cosmetic range like hygiene related
products for women and men, toiletries. Other than this, the company will also look forward to
words merger and accusation in order to expand their business into other nations. This will
include entering into foreign market, Other than New Zealand, which will be the home market
for the company (Koryak, 2015).
Funding strategies
There are various funding strategies identified like equity, is that financing, debt financing,
motives, venture capital list and various other funding strategies. The funding strategies that are
suggested to be used across the road to development stages will include a combination of equity
and debt funding. This will include marketing the shares of the company in public listing and
considering the loan amount from banks and other financial institutions at the lowest rate
possible. The reason for balancing the funding source is reducing the risk of the investment
through one source as every funding source has their own pros and cons which maybe mitigate
the risk of the investment into the business. For instance, the key advantages of equity financing
include lower risk as with equity financing there is no fixed income that has to be paid like in
case of loan amounts. Credit problems in case of venture are having any sort of credit problems
this may be financed all resolved through equity financing. The key advantages of debt financing
include predictability as the fixed loan amount is to be paid, controlling is another advantage of
debt financing as taking loan will not be in permanent relationship. The benefit from both the
financing method would be considered by selecting the combination of these two financing
sources (Liedtka & Ogilivie, 2011).
Sources of competitive advantage
They could be various sources of competitive advantage like distribution centre of resources for
infrastructure and many others. The key three sources of competitive advantage for beauty prime
cosmetics includes

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
30
Product
Product is one of the major elements that has been developed an innovative through the idea
generation in the previous sections. The unique selling proposition of the company is the product
quality and product traits that are offered to the customers. The premium product is being offered
to the customers that will be of highest quality and will be manufactured in the way in order to
provide maximum value to the customers, which will save for their skin, hair and other beauty
ranges (Betton, 2017).
Resources
The key idea of the business venture is organic products, which includes ingredients all resources
used for the production as major element of innovation. The use of organic products instead of
chemical products is the major point of difference, which the other global brands in cosmetic
industries have not been adopted. The resources used for the product will be natural products like
fruit extracts for which organic farming would be considered as the source of the resource and
supplies (Pansari & Kumar, 2016).
Customer service
As already discussed in previous sections one of the major element or service that will be offered
to the customer will be customisation through online mode, personal calling mode, or off-line
mode. This will include asking customers for the relevant information regarding skin, hair and
other problem areas for which they are looking solution for, and the use of makeup that the
preferred by now. According to the customer requirements, the company that is personalised
service as one of the key competitive advantage source will offer the appropriate set of products
to the customers that make customer service (Tari, 2015).

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
31
9.0 Conclusions/Implications
From the business plan of beauty prime cosmetics, it can be concluded that Beauty prime
cosmetics is a start-up idea in New Zealand, dealing in customized organic cosmetics products.
The market identified to be target for the organic cosmetics products would be New Zealand
market. The needs identified for the customers are best quality makeup range, that would provide
nourishment to the skin and do not harm the skin naturally after regular use. The direct
competition of beauty prime cosmetics would be “The natural co.” the indirect competition for
the brand would be L’Oreal, and Estee Lauder due to global presence. One of the ideas after
analysing the need of the customer would be the natural products that will keep their skin
originally good, instead of using makeup every day. Another alternative idea would be producing
organic makeup products that will not include chemicals.
The online service would be provided to the customers that will include filling up of form by the
customers, where they can answer to the questions like skin type, problem areas, and past skin
surgery. Among the two idea identified above and evaluated the two on the basis of value
creation for the customer the most appropriate idea found is the second idea that is the customise
organic cosmetic products. Customisability, this is one of the strength of the company as they are
providing services to the customers regarding the personalisation by understanding each
customer’s skin condition.

CREATIVITY, INNOVATION AND NEW VENTURE CREATION
32
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