Sample Business Plan

This sample business plan is intended to provide you with a template that can be used
as a reference for when youre hard at work on your plan. The company is a completely
fictional organic denim and apparel company, however, we made sure the industry
research was grounded in real world numbers as much as possible. Lets get started:
Executive Summary
I'll Be Denim is an organic denim clothing line headquartered in Los Angeles that
currently focuses exclusively on locally producing a slim fit, straight fit, and regular fit line
of jeans for men and women. Founded by Elena Horowitz, a retail industry veteran with
experiences at JCrew, the Gap, and Levis, and James Foster, a serial entrepreneur, the
duo is out to bring socially conscious fashion to the masses.
Currently selling online and through partnerships with a handful of local boutiques in LA,
the company is projecting to sell upwards of $400,000 in year 1 and reaching $750,000
in 3 years. Plans for expansion include setting up distribution and manufacturing
relationships in New York, another fashion centric goldmine where the company aims to
gain greater market penetration.

With an emphasis on environmentally responsible fashion, Ill Be Denim will also be

starting a jeans recycling program where consumers will be able to ship or drop off old
pairs of jeans and have them used in the manufacturing process for new ones.
Industry research has found that US consumers own on average 7 pairs of jeans and
stick to one brand based one one important variable, fit. Given that statistic the
companys designs center around providing the best fit, with a tagline of denim so
good, youll never take your clothes off. To further take advantage of this insight, Ill Be
Denim will be launching a custom tailor option where users will be able to request
custom fit jeans through an online portal.
The primary competition comes from three foreign brands namely Kuyichi, Hiut Denim,
and Nudie Jeans, all which have been committed to sustainable fashion since the onset
and are huge advocates for the organic cotton movement. The brand value proposition
and differentiation will come from being an American brand with images of patriotism
and ruggedness that shows both fashion forward thinking and a concern for the
environment.
Primary means of marketing will be online through analytic-driven approaches like SEO
and paid search, in addition to capitalizing on social channels like Instagram, Facebook,
Twitter, and Pinterest. User generated content and engagement will be key as product
pages will include Instagram photos and promote consumer pride in our products.
The organic cotton will be sourced from two mills, one based in Turkey and the other in
Japan where it will be transformed to denim and dyed in natural indigo colors and
shipped to our manufacturing and shipping partner DenimsRUs in LA. Day to day
operations are handled through an office in LA with a second office in New York to be
opened in a years time.
The company has been funded through the two founders, their family and friends,
alongside some private investment.
Our Story
Ill Be Denim is a denim clothing line based out of Los Angeles focused on bringing the
highest quality organic denim wear to North America. Founded by reputable designer
Elena Horowitz and business partner James Foster in October, 2012 with the duo

having gone from a small basement operation in Elenas home to successfully launching
their online store and scaling their operations.
After both founders worked for several years in the retail and fashion industries
respectively, one thing became increasingly clear to both of them, the industry is in the
midst of a deep moral and ethical crisis. With cheap labour being continuously exploited
with abysmal working condition overseas and traditionally manufactured cotton using
upwards of 25 percent of the worlds entire agrochemicals consisting of unimaginable
amounts of insecticides and pesticides, Elena and James decided enough is enough.
The duos vision for Ill Be Denim is simple, fashionable denim wear made with organic
materials thats manufactured locally and created with the intent to make the fit so
comfortable that youll never want to take their clothes off. To achieve such a grand
vision, the company is committed to providing the best in class customer service in
addition to working with only the most detail oriented local manufacturers and promoting
eco-friendly fashion to the mainstream.
The guiding values and principles for the company are guilt-free fashion (letting
customers purchase high-quality apparel without shutting out their conscious), the
denim is in the details (working with only the best local production factories), and eco
is not a fad, but our last chance (sourcing organic denim from certified suppliers).
Current Company Status
Ill Be Denim was incorporated in October, 2012 and operates as a partnership between
Elena Horowitz and James Foster. All company shares are held by the founding duo.
Since sourcing, manufacturing, and selling out of Elenas basement to friends, family,
and through local boutiques, the company has grown to have its own online store,
relationships with suppliers of premium organic denim in Turkey, and local
manufacturers in LA. The company has had its revenues double every two months.
Ill Be Denim Objectives
Ill Be Denim is currently selling denim jeans online through its Shopify ecommerce store
shipping primarily within Southern California with market penetration in New York,
another in addition to sporadic orders north of the border to Canada in Toronto and
Montreal. It also currently partners with two local fashion boutique stores focused on

selling eco-friendly apparel that looks and feels good. The company is laser-focused on
growing its sales and operations as broken down in the two phases listed below:
Phase I (Next 6 Months)

Increase online sales by 20 percent by end of year through influencer and social
media marketing tactics

Partner with 3 additional local high-end fashion boutiques with shared values as
distribution channels

Increase online social presence on Facebook, Twitter, Instagram, and Pinterest

by 30 percent

Build out a custom apparel line of the business giving online consumers the
ability to create their own denim jeans and jackets
Phase II (Next 12 Months)

Explore possibility of brick-and-mortar operations through testing pop-up stores in

LA region

Create strategic partnerships with local fashion boutiques in New York for
distribution in the area

Scope out local manufacturers in New York area for quality production with aim of
opening operations for denim jackets as the next product line and increased delivery
within region

Initiate a jean recycling program whereby consumers will be able to deposit their
denim and have them be reused in the creation of new jeans
The Team
Elena Horowitz is an award-winning fashion designer who graduated from the Rhode
Island School of Design and worked at top retail brands like J Crew, the GAP, and Levis
for the past 15 years. Fed up with the lack of speed with which most retail brands were
moving towards embracing eco-friendly means of production, she decided to quit her job

and start Ill Be Denim. She serves as Chief Design Officer (CDO) and works with
partner manufacturers to ensure quality of product.
James Foster dropped out of the University of Berkeley after finding success with his
first online store selling fertilizer and garden equipment with his college roommate. After
successfully exiting the company, he went on to hold operational positions in
management for a slew of ecommerce companies before meeting Elena at a party and
hitting it off. The two discussed their guilt over buying from traditional fashion brands
and decided to combine forces to launch their own label. He serves as the Chief
Executive Officer (CEO) and oversees all supplier relationships, business logistics and
strategic partnerships.
Market Size and Development
A recent report looking at the Global Denim Consumption and Production through the
years 2011 to 2021 by Denimandjeans.com found that in 2007 the world jeans market
was worth an estimated $51.6 billion and is at pace to grow to $56.2 billion by the year
2014. The report also revealed that North America consumes an estimated 39 percent
of denim purchased worldwide while more than 50 percent of production is still based in
Asia, specifically in countries like China, India, Turkey, Pakistan and Bangladesh.
Another report that focused exclusively on the denim consumption habits in the US
found that an average US consumer owns 15 denim garments on average, 7 of which
are pairs of jeans. Out of all apparel purchased denim makes up 17 percent which
explains why it continues to be the highest selling clothing item in the world.
However, when it comes to consumer behaviour and trends most US denim purchasers
buy jeans for fit at 66 percent citing the reason over its brand name. Interestingly
enough though, 73 percent prefer to purchase the same brand as the one they own with
men showing more loyalty at 64 percent than women at 45 percent.
Going deeper into the growing level of awareness around environmental sustainability
and climate change, the Cotton Incorporated 2013 Environment Survey found that 51
percent of consumers say that environmentally friendliness is important to their apparel
purchase decisions. Digging a little further, about 33 percent are actually more likely to
seek out environmentally clothes for themselves.

When it comes to the material of their clothes though, nearly 72 percent of survey
respondents say that natural fibres are better for the environment than synthetics, with
51 percent of consumers willing to pay more for them. Such trends are driving global
brands like Gucci, Timberland, and others to focus on making their products and supply
chain more environmentally friendly.
Pair all those facts together and you get a winning combination championed by Ill Be
Denim, provide consumers with organic denim manufactured locally with an emphasis
on designing for fit while also offering custom fit solutions.
Competition

Kuyichi - Based in the Netherlands, the company has been in the market since
2001 selling organic denim wear while simultaneously using natural indigo dyeing
techniques and running a robust jeans recycling program

Hiut Denim - Based in the UK, the company operates out of a small town known
for manufacturing jeans. It currently offers a selection of organic denim jeans targeted at
both men and women, making only 100 pairs a week and resolving to only make jeans

Nudie Jeans - Headquartered in Sweden, the company achieved its goal of

launching an organic denim jeans collection in 2012 and has both online and brick-andmortar locations. They also have a wide assortment of sustainable efforts ranging from
providing a fair living wage to everyone involved in the manufacturing process and
recycling jeans.
Brand Differentiation and Value Proposition
Though there are more than a handful of organic denim startups, at Ill Be Denim, we
firmly believe that with the founders combined experience, industry partnerships, and
focus on providing the quality denim jeans produced with sustainability in mind from
cradle to grave, the brand can stand out. Our plan is to leverage our American heritage
and love for the fabric and use a marketing strategy that is closely aligned with building
personal relationships with our target market. In addition, with fit being the biggest
variable in jean purchase decisions, our custom fit program in addition to our slim,
straight, and regular fit jeans will help us delight our customers who in turn will spread
the word.

Target Market
With our initial line of slim fit, straight fit, and regular fit denim jeans, were looking to
target the following consumer segment:

Age: 17-35

Social Media Savvy: Voraciously active on popular social networks like

Facebook, Twitter, Instagram, Pinterest, and Tumblr

Fashion Forward: With a keen eye on their day to day wear, these male and
female fashionistas dress to impress

Addicted to Mobile: They Instagram their food, check their Facebook status
while waiting in line, and tweet every traffic disruption they experience.

Eco-Friendly: They feel a pinch everything they know their clothes were
manufactured unethically or are aware of the eco-footprint they have by consuming
clothes made with regular cotton

Location: The beachheads for the company will be LA and New York, however,
with the ability to shop online, well heavily promote ourselves throughout southern
California
Marketing Plan

SEO: Our content and blogging efforts will be targeted at having us rank
competitively for keywords like organic denim, organic jeans, and eco-friendly
garments

Paid Search: We will invest in both Google Adwords and Facebook Ads to take
advantage of their PPC services with optimized landing pages for conversion

Instagram: We will launch campaigns and contest to encourage user-generated

images which we will then upload to our product pages to build a community around our
brand and the values we stand for

Other Social Media: We will subcontract a community manager to regularly

engage our Facebook, Twitter, and Pinterest communities

PR: We will promote our story, values, and fashion to leading fashion blogs and
print magazines emphasizing our earth-friendly and ethically manufactured clothing

Business Development: We will actively look for the most popular local fashion
boutiques frequented by our target market that shares in our values and beliefs
Another point to highlight is our focus on customer service with a 100 percent fit
satisfaction guarantee or reimbursement for any alternations, in addition to a complete
refund policy effectively in place.
Daily Operations
For our day to day operations, Ill Be Denim has established several key partnerships
that ensure long-term durability and the ability to scale alongside demand for our goods.
We will source the best organic cotton from two suppliers, one located in Turkey and the
other in Japan which means that their supplies were produced without the use of any
pesticides and was dyed in indigo using a natural means. Once the shipment arrives in
the US, itll be routed to our production and shipping partner, DenimsRUs located in the
outskirts of LA who the company will work closely with to ensure quality through regular
checks and audits. It is also where the products will ship out of through an integrated
backend system and order processing mechanism.
The Ill Be Denim office is located on 2029 Century Park East where the two cofounders in addition to two admin and one sales and marketing support staff will work
out of handling all online order processing and ensuring the purchase to delivery of their
denim products runs smoothly. Its also where all requests for refunds will be handled in
addition to the future launch of the jean recycling program.
Financial Plan
Pro Forma Income Statement
Year 1

Year 2

Year 3

Sales

$395650

$610000

$750000

Direct Cost of Sales

$50370

$82000

$105000

Other Production Expenses

$50370

$82000

$105000

Total Cost of Sales

$100740

$164000

$210000

Gross Margin

$294910

$446000

$540000

Gross Margin %

74.54%

73.11%

72%

Payroll

$177600

$192600

$212000

Sales and Marketing and Other Expenses

$0

$130000

$150000

Depreciation

$7140

$7140

$7140

Leased Equipment

$0

$0

$0

Utilities

$6000

$6000

$6000

Insurance

$6000

$6000

$6000

Rent

$24000

$24000

$24000

Payroll Taxes

$26640

$28890

$31800

Other

$0

$0

$0

Total Operating Expenses

$247380

$394630

$436940

Profit Before Interest and Taxes

$47530

$51370

$103060

EBITDA

$54670

$58510

$110200

Interest Expense

$13830

$12750

$12570

Taxes Incurred

$10110

$11586

$27147

Net Profit

$23590

$27034

$63343

Net Profit/Sales

5.96%

4.43%

8.45%

Year 1

Year 2

Year 3

Cash Sales

$395650

$610000

$750000

Subtotal Cash from Operations

$395650

$610000

$750000

Expenses

Pro Forma Cash Flow

Cash Received
Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

New Investment Received

$0

$0

$0

Subtotal Cash Received

$395650

$610000

$750000

Expenditures

Year 1

Year 2

Year 3

Cash Spending

$177600

$192600

$212000

Bill Payments

$103957

$364975

$463540

Subtotal Spent on Operations

$281557

$557575

$675540

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

Long-term Liabilities Principal Repayment

$21600

$1800

$1800

Purchase Other Current Assets

$19800

$19800

$19800

Purchase Long-term Assets

$0

$0

$0

Dividends

$0

$0

$0

Subtotal Cash Spent

$322957

$579175

$697140

Net Cash Flow

$72693

$30825

$52860

Cash Balance

$137293

$168118

$220978

Expenditures from Operations

Additional Cash Spent

Projected Balance Sheet

Year 1
Assets
Current Assets

Year 2

Year 3

Cash

$137293

$168118

$220978

Inventory

$6270

$10207

$13070

Other Current Assets

$19800

$39600

$59400

Total Current Assets

$163363

$217926

$293448

Long-term Assets

$50000

$50000

$50000

Accumulated Depreciation

$7140

$14280

$21420

Total Long-term Assets

$42860

$35720

$28580

Total Assets

$206223

$253646

$322028

Liabilities and Capital

Year 1

Year 2

Year 3

Accounts Payable

$9633

$31822

$38661

Current Borrowing

$0

$0

$0

Other Current Liabilities

$0

$0

$0

Subtotal Current Liabilities

$9633

$31822

$38661

Long-term Liabilities

$128400

$126600

$124800

Total Liabilities

$138033

$158422

$163461

Paid-in Capital

$200000

$200000

$200000

Retained Earnings

-$155400

-$131810

-$104776

Earnings

$23590

$27034

$63343

Total Capital

$68190

$95224

$158567

Total Liabilities and Capital

$206223

$253646

$322028

Net Worth

$68190

$95224

$15856

Long-term Assets

Current Liabilities