Course’s Name

Professor’s Name

University’s Name

City, State

Date of submission






The Company

Our company, Wrist Fashion, will be a dedicated and a sophisticated timepiece firm offering instruments of time as well as quality to our customers. We will be dedicated to producing state of the art watches to emerge as leaders in the already crowded industry. We believe that our entry will be a game changer to the industry by offering class and glamor that the customers expect. We plan to offer numerous types of timepieces to both genders with wide price selection. Our business although small at the beginning will be full of talent and compassion filled with appropriate skills and knowledge ready to explore innovative ways of satisfying our customers in the best way they expect. Thus, we plan to become a premier watch distributor both nationally and internationally.

The mission will be to bestow to our customers timepieces that complement their upscale lifestyle, offer them an object of value as well as representing their class. We plan to offer our clientele with superior products and competitive customer services. We aspire to add value to our customers’ life. We stand for our clients’ complete happiness and the innovation of our products by helping them Rethink Time.

Marketing strategy

We plan to make our watches affordable, but with high-quality craftsmanship. We will partner with the highest regarded websites and watch retailers through which we will ensure quality and affordability to boost our sales (Cespedes, 1995). Our product life will be categorized into four categories: Modern, classic, glamorous and sporty for both genders. Classic watches will be available with reminiscent of upscale for both men and women without an added cost to attract more sales (Cespedes, p. 71). We will also offer modern watches with a unique and artistic flair to both genders with an affordable price for consumers who would like a stylish look. We aim to make a revolutionary innovation with the modern watches in the industry.

Our sporty watches, on the other hand, will be made available exclusively for men. We plan to offer active men a technologically advanced and durable watches they expect. Sporty watches will suit various active men from indoor to bodybuilders. Glamorous watches will be made available particularly for women who would want an additional flair to their great fashion sense. We intend to be ahead of the pack in the already competitive fashion industry through superior products. We plan to exude serenity and class of our business to all the client purchasing our watches either from the websites or retail shops (Chevalier, 2008, p. 62). We believe that we will become the top players in the industry through our high quality and affordable watches.

We intend to serve a wide array of the customer from disparate personalities and age groups. Such will include:

Teens: Our watches will develop teenager’s individualities. The products will appeal to various teens like multi-coloured watches suiting hipster teens and sports watches for jocks.

Young Adults: We intend to target young adults as well. Our product will suit young adults who have graduated and looking for jobs. Our classic watches will give such group regal timepieces to men and glamorous ones for ladies.

Parents: We also target parents especially those with kids who would want to buy watches for their children.

Senior-Citizens: We intend to offer senior citizen especially the retired and elderly regal status that match their age.

Pricing Strategy

We intend to offer numerous products with a disparate price range to suit different customers.

Regal pricing: Our classic watches will be sold at the highest price due to their craftsmanship and highest quality material (chevalier, 2008). We will sell them at a maximum price of $1,500. The higher priced products will enable our company to earn significant profit margin while ensuring high satisfaction to our customers as noted by Cespedes (85).

Low Pricing: We will offer our glam, modern, and sport watches at a more affordable prices to cover a wide range of customer. The low prices are intended to attract a young market and ensure constant money flow due to their affordability. We will charge a maximum price of $500, but most of them will retail at a range of $150-300.

Placement Strategy

We are looking forward to setting up an online retail through which we will market and sell our products. We also intend to visit trade fairs at the launch of our products to be able to present our products face-to-face to our customers. Our business will require a straightforward and user-friendly website that maintains beauty and fun to appeal to our customers (chevalier, 2008). The website will consist of high-quality photos of our watches. The website content will be updated continuously with the introduction of new products to reflect any changes in our business term as well as services. Incorporated to the website will be a mailing list through which we will provide our customer with promotions, newsletters, and advertisements.

Our sales breakdown will be as in marginal cost statement below follows:

Source of Sales Projected amount of sales Percentage of total
Online sales $217,500 20%
Trade fairs $60,000 5%
Contractual sales $850,000 75%
Total $1,127,500 1000%



Promotion Strategy

Our promotional strategy will include:

E-mail Blasts: Our website will incorporate a directory for customer emails. We intend to use such emails to send promotions and advertisement to customers on a monthly basis (chevalier, 2008, p.112).

Word-of-Mouth: We plan to ask our customers and employees to encourage their colleagues to subscribe for our promotions and advertisements. We expect to achieve such by offering coupons to customers who have already subscribed to attract more into joining our email list.  We also intend to offer appraisals to employees based on the number of customers they bring to the business to encourage them to look for more.

Social Media: We will create a Facebook page that will be linked to our website and company updates. We also intend to use Facebook promotional plan to market our products to a wide array of customers (Berlendi, 2011). Through promotional posts on our Facebook page, we expect to attract sales from the young adults who are mostly active on social media with our sport, modern and glam watches. We also intend to engage our customers through charts or comments on Facebook to acquire first-hand information of how they feel about our products and services. This will help up make appropriate adjustments to our services and products to suit the needs of our clients.

Newsletters: Newsletter has proved to be effective Marketing Avenue especially to the senior citizens and parents and even the youth. Through newsletters that will be sent to customers via email or at trade fairs, we plan to market varieties of our products ranging from classic to sporty watches.

Positioning Strategy

We plan to be different in the watch industry by offering several unique price point and six famous categories of watches to attract numerous groups of people in the target market. Our products will incorporate the specific type of personality type to make customers feel that the watch was specifically designed for them. We expect to uphold a strong brand in the market to offer our customers a classy and wealthy feel even when the products are not costing them much (Chevalier, 20008).

Break-even Analysis

Forecast Break-even table for the year 2016

Units Total cost in dollars Fixed cost Monthly Fixed cost Amounts in dollars Variable cost Monthly variable cost amounts in dollars
0 100 Utilities expenses $585.00 Salaries expenses 94,285.71
50 125 Loan payment 1,782.11 Social security 5,8845.71
100 135 Rent 2,785.71 Medicare tax 1,367.14
150 145 Insurance 150 State unemployment tax 2,268.00
200 160 Workman’s comp 1,885.71 Federal unemployment tax 336.00
250 170 Storage 100.00 State sales tax expenses 725.00
300 180 Depreciation Expenses 347.80    
350 190 Miscellaneous Expense 50.00    


Our company is expecting to attain a break-even point within the first year of operation. We expect a monthly fixed expenses of approximately $105,152. Our estimation indicated that the company will have to sell 415 units to attain a break-even with a total revenue of $207,500. Achieving the break-even point will be significant to the company since it will help determine the volume of sales which is 415 units to cover both our fixed and variable cost. By understanding the relationship between cost and volume sold we will be able to make decisions on how to adjust the prices for our watches to ensure that it covers the cost of production (Chen 1953, p. 47). We might consider encouraging bulk purchasing, partnering with suppliers with favorable sales terms to ensure that our prices are good enough to meet the production cost. We acknowledge that our projected revenues are not desirable. Therefore, we plan to increase value to our customers or even offer them non-price concessions to attract more sales (63). Having a clear view of the margin safety will provide helpful information for assessing the viability of our business and make appropriate adjustments to ensure delivery of quality products to our customers.

We also look forward to trade above our break-even point to maintain the viability of our business. We believe that by offering good quality products to our customers we will be able to keep our sale above 415 units. We intend to make affordable our Sport, and glamorous watches to increase sales to the widest target market of young adults. We also understand that increasing our margins in an attempt to boost our profits is a risky undertaking because it is the consumer who is the ultimate judge of the value, sales, and benefits (Salenger educational media, 1977). Therefore, we intend to make our classic watches more serene to give our customers value for their money.


Income Statement

Since we are beginning a new business, we will not be expecting profits for the first two months. This is because it is the period when the movement or out trade fair and online sales will start picking up (Plewa et al., 1995). We expect to make significant sales from June. Although the sales are going to start at a minimal amount, we expect it to increase progressively to a full productivity by the month of August. The trend will be as a result of increased online sales as well as through trade fairs. Most of our billing expenses are planned to start at the beginning of August. However, we will gradually recover in later to objectively attain the overall profit. We have a figured amount for the cost of goods sold at approximately 50% of the total sales including a 2% shipping tax. We expect to settle all our taxes at the beginning of June. This will be performed on a monthly basis up to the end of our fiscal year.

We expect to obtain a sales contract in the course of our first year of operation giving as $134,925.75 monthly, thus amounting to a sum of $809,554.50 to the company’s total gross profit. In conclusion, we expect a total profit at the period ended December 30, 2016, to be $271,376.36 at the end of the company’s fiscal year.

Balance Sheet

Since the company will be starting a new business, we expect empty stocks with no investments or cash (Tovar, 2006). At the begging we expect our total assets to be $77,544.00 and liabilities at $194,102.57. We believe that our company will continue to grow given the required initiative that we plan to adopt to make it a success. We, therefore, expect our assets to grow to $479,493.42 and our liabilities to be at $206,789.80 as of December 30, 2016. Apparently, the largest assets we have been a loan amounting to $90,000 which the company expects to receive at the beginning of the year on January 14, 2016. By the end of our fiscal year, we expect our company to have $291,367.33 as the total shareholders’ equity and $206,789.80 as our total liabilities. We believe that our company will prosper as we start the following year with accrued income.

A financially successful company can generate the required resources to achieve its mission (Mackenzie, 1908). Economic resources owned by a company are the assets and are presented in its balance sheet. Such resources include supplies, equipment, buildings and other production factors needed to manufacture high quality. As Tovar points out, the range of resources required by a starting company like our watch company relies on the quantity of its products in their mission statement (34). However, in the absence of clearly set standards for resource requirement, then benchmarking against other firms in the industry may be used momentarily to fulfill the issue of resources needs. A comparative benchmarking data is vital for the desirable performance of any dashboard reporting system. A financially stable organization must be able to generate the funds required to finance the level of resources needed (Mackenzie, 1908). Therefore, as new entrants in the market we believe our company will maintain a progressive growth to be able to generate enough funds to finance our production as well as making a profit.

A review of our company’s balance sheet statement shows that our company is promising sizeable balances of both non-operating and operating income in the first years of operation. Also significant to note in the spread sheet statements record on shareholder’s equity of $281,367.00  Although high performance in equity do not affect net income until securities are sold, they result in a significant increase in the level of total equity at the company (Tovar, 2006).

Cash Budget

Towards the start of our fiscal, our company expect to receive a loan of $90,000 on January 14, 2016. As we end the fiscal year 2016, we will expect a projected $271,376.36. A decrease in cash balance is always common among new businesses as we experienced in Julye when we recorded a loss (Metropolitan life insurance company, 1937). We acknowledge that collecting accounts receivables might be challenging. However, we plan to manage it efficiently to avoid any loses in future and make our business prosperous. With a clear understanding of our financial position, we plan to adopt the efficient use of the fund in the next fiscal year to avoid any future decrease in cash balance. We also plan to seek a variety of avenues through which we will raise funds at reasonable cost and terms.

We recognize that cash is the basis of our company’s liquidity. Therefore, we plan to improve on the business cash to ensure that there is adequate cash balance for the expected resource requirements as well providing a fair margin for contingencies. We also plan to maintain our expenses such as miscellaneous ($50), storage ($100), and salaries ($94,285.27) at a constant rate to control our expenditures and ensure that the budget limit is not exceeded. To ensure long-term planning, we plan to coordinate the disparate finance functions like investments, sales, credits, working capital. We will co-ordinate such functions on probable timing, amount, methods of payment and forms of security so as to obtain a comprehensive way of planning for our business operations. The company will also develop a consistent dividend policy through which it will offer cash dividends to its shareholder based on its liquidity position.



Forecast balance sheet as of December 30, 2016.

Assets Projected as December 30, 2016
Current Assets  
cash $425,643.42
Accounts receivable $0.00
Loan Receivable $0.00
Merchandise inventory $50,000.00
Supplies $250.00
Prepaid insurance $ 600.00
Total current assets $476,493.42
Fixed Assets  
Computers $8,680.00
Less: accumulated depreciation $289.33
Furniture and Fixtures $2,776.00
Less: Accumulated depreciation $92.53
Office Equipment $1000.00
Less: Accumulated depreciation $410.43
Total fixed assets $11,663.71
Total Assets $488,157.13
Liabilities and Shareholder’s equity  
Current liabilities  
Utilities payable $2,340.00
Rent payable $11,142.84
Workman’s comp payable $1,888.57
Salaries payable $94,285.72
Social security tax payable $5,845.71
Medicare tax payable $1367.14
State unemployment tax. $2,286.00
Federal unemployment tax $336.00
Total current liabilities $119,473.98
Long term liabilities  
Loan payable $87315.82
Total liabilities $206,789.80
Shareholder’s equity  
Common stock $10,000.00
Additional paid-in capital $0.00
Retained earnings $271,367.33
Total shareholder’s equity $281,367.33
Total liabilities and shareholder’s equity 488,157.13




Forecast Income Statement for the year ended December 30, 2016

Income Yearly statement
Online sales $ 217,500.00
Trade show sales $60,000.00
Start-Up Loan $90,000.00
Sales contract $809,554.50
Stock investment $10,000.00
Total income $1,187,054.50
Cost of goods sold  
purchases $138,750.00
Shopping expenses $5,437.50
Total cost of goods sold $144,187.50
Gross profit $1,042,867.00
Fixed expense  
Utilities expenses $2,925.00
Loan payment $8.910.55
Rent expense $13,928.55
Insurance expense $750.00
Workman’s comp $9,429.57
Storage expense $500.00
Depreciation expense $1,739.00
Miscellaneous expense $250.00
Total fixed expenses $38,431.67
Variable expenses  
Salaries expense $660,000.00
Social security expense $40,290.00
Medicare tax expense $9,570.00
State unemployment. tax $15,876.00
Federal unemployment tax $2,352.00
State sale tax expense $4,350.00
Total variable expense $733,068.00
Total fixed and variable expense $771,499.67
Net income/loss $271,367.67


Monthly cash budget for the year 2016 amount in dollars

Description January February March April may June July August September October November December
Cash balance at beginning of period $0.00 -5,520.00 -5293 21,685.00 0.00 2150 -$104,102.57 $61,270.61 $93,505.31 $130,294.31 $177,318.66 $224,343.01
Receipts of cash                        
Online sales $4,500.00 0.00 $4800.00 $6,000.00 70,000.00   10,000.00 20,000.00 30,000.00 52,500.00 52,500.00  
Trade show sales $6,400.00 6,500.00 $6700.00   477.65   $60,000.00          
Sales contract 0.00 $15,200.00 40,000,00 $80,000.00     134,925.75 134,925.75 134,925.75 134,925.75 134,925.75 134,925.75
Stock proceeds 0.00 0.00         $10,000.00          
Loan proceeds 0.00 0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Total receipts 10,900.00 21700.00 51500.00 51,125.00 7477.65 0.00 $304,925.75 $154,925.75 164,925.75 187,425.75 187,425.75 187,425.75
Beginning balance + cash receipts 10,900.00 16,180.00 46207.00 78850.00 7477.65 2,150 $200,823.18 $216,196.36 $258,433.21 317,720.06 $364,744.41 $411,768.76
Cost of merchandise 0.00 0.00 $0.00 9,000.00 $10,000.00 0.00 $35,250.00 10,500.00 15,750.00 $27,562.50 $27,562.50 $27,562.50
Salaries $10,000.00 $14000.00 $20,000.00 $60,000.00 85,000.00 $94,285.72 $94,285.72 $94,285.72 $94,285.72 $94,285.72 $94,285.72 $94,285.72
Loan principal 0.00 0.00 $0.00 $120.00 $200.00 $0.00 $0.00 $522.11 $529.42 $536.83 $544.35 $551.97
Storage $50.00 $56.00 $70.00 $90.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
Depreciation $70.00 $75.00 $80.00 $170.00 $347.00 $347.00 $347.00 $347.00 $347.00 $347.00 $347.00 $347.00
Rent $1,200.000 $1,200.00 $1200.00 $1,800.00 $2,785.71 $2,785.71 $2,785.71 $2,785.71 $2,785.71 $2,785.71 $2,785.71 $2,785.71
Payroll tax $2,500.00 $2,500.00 $2,500.00 $6,200.00 $7,212.85 $7,212.85 $7,212.85 $7,212.85 $7,212.85 $7,212.85 $7,212.85 $7,212.85
Miscellaneous $10.00 $12.00 $12.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00
Insurance 150.00 $140.00 $100.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00 $150.00
Utilities $100.00 $120.00 $140.00 $350.00 $585.00 $585.00 $585.00 $585.00 $585.00 $585.00 $585.00 $585.00
Workman’s comp $1000.00 $1,200.00 $1400.00 $1700.00 $1,885.71 $1,885.71 $1,885.71 $1,885.71 $1,885.71 $1,885.71 $1,885.71 $1,885.71
Interest 0.00 0.00 0.00 $0.00 $12,000.00 $0.00 $0.00 1,260.0$0 $1252.69 $1245.28 $1237.76 $1230.14
State unemployment 1200.00 1200.00 $1200.00 $2100.00 $2,268.00 $2,268.00 $2,268.00 $2,268.00 $2,268.00 $2,268.00 $2,268.00 $2,268.00
Federal unemployment 120.00 $120.00 $120.00 $250.00 $336.00 $336.00 $336.00 $336.00 $336.00 $336.00 $336.00 $336.00
Sales tax payable 20.00 $30.00 $50.00 $400.00 $600.00 $0.00 $200.00 400.00 $600.00 $1,050.00 $1,050.00 $1,050.00
Total payment $16420.00 21,473 24,522.00 78,850 111580.22 104,102.57 139,552.57 122,688.90 128,138.90 140,401.40 140,401.40 140,401.40
Cash balance end of period           -$104,102.57 $61,270.61 $93,507.46 130,294.31 177,318.66 224,343.01 271,367.36
Net increase or decrease in cash -5,520.00 -5,293.00 21,685.00 0.00   -$104,102.57 165,373.18 32,236.85 36,786.85 47,024.35 47,024.35 47,024.35















References List

CESPEDES, F. V. (1995). Concurrent marketing: integrating product, sales, and service.                      Boston, Mass, Harvard Business School Press.

SALENGER EDUCATIONAL MEDIA (FIRM). (1977). Break-even point analysis. Santa       Monica, Calif, Salenger Educational Media.

CHEN, C.-S. (1953). The impact of break-even point analysis upon industrial management.

PLEWA, F. J., & FRIEDLOB, G. T. (1995). Understanding income statements. New York,      Wiley.


MACKENZIE, V. S. C., & PULBROOK, A. (1908). The modern balance sheet; an analysis of            company finance. London, E. Wilson.

TOVAR MORA, C. E. (2006). Devaluations, output and the balance sheet effect: a structural    econometric analysis. Basel, Switzerland, Bank for International Settlements.

LAWRENCE, F. C., & HUMPHREYS, E. N. (1947). Marginal costing. London, MacDonald &          Evans.

CRAWFORD, J. V. A., & GOUGH, G. R. (1970). Marginal costing. Hove (169 Dyke Rd, Hove,        Sussex BN3 1TX), Editype Ltd.

BERLENDI, C. (2011). The role of social media within the fashion and luxury industries:          depicting social media’s possible role within the perculiar communication strategy carried by a Fashion or Luxury company. [Berlin], Lap Lambert Academic Publ.

CHEVALIER, M., & MAZZALOVO, G. (2008). Luxury brand management: a world of          privilege. Singapore, John Wiley & Sons (Asia).











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