Financial plan- Pegasus shoes

The financial projections for a shoe store can actually be determined with more
precision than those that may seem rather arbitrary and based on market adoption
assumptions. Since more shoe stores are able to turn over their merchandise, it will
be a function of your Startup inventory sales and capacity. Other key drivers will be
the amount of marketing spent to acquire each sale and the amount of fixed
expenses that you incur, such as having a premium retail location compared to being
a lower priced rental area with less full-time staff. The best approach is to estimate
the profitability of similar shoe stores that you anticipate being a comparable size to,
which is a good indication of your future financial performance. 

Estimation of startup
cost

Startup materials Amount

Factory building rent 30000

Machinery 100000

Vehicles 60000

Proprietary registration 30000

R&d 20000

Int on loan 20000

Total 260000

Estimation of fixed cost per month :

 Fixed expenses Amount

Factory rent 20000

Depreciation 5000

Salary (core team) 10000

Int on loan 5000

Utilities 4000

Total 44000

Estimation of variable cost per month:

[
Analysis of market demand: Since Pegasus shoes are created by
identifying the current problems in the market. The demand for
these shows are very high.

Selling price per unit: Through the demand projections and

prices per unit we can estimate the sales revenue per month.
Product pricing: we here in Pegasus have
decided that the pricing structure will be
based on the current running in the
industry. We have also conducted a
market survey to make sure that the
pricing is appropriate and the customers
are approving of it. We are currently using
the cost plus pricing method while taking
into consideration the market price and
our pricing are competitive enough.
Pricing is one of the most crucial
determinants that influences the buying
behaviour of customers. If the pricing is
not done in a proper manner it would
result in the failure of the business.

We in Pegasus have sold 130 units of

cricket shoes,150 units of football shoes
and 150 units of running shoes. The total
sales comes up to 630 units.
Break even analysis:
Risk analysis: Improving the supply chain
Globalisation and bulk sourcing of products and materials usually
has a cost advantage, particularly where manufacturing is in low-
labour-cost countries. However, the supply chain can be
cumbersome and slow, leading to long lead times and an inability to
make rapid changes. This is not such a problem where retailers
work on the traditional spring/summer and autumn/winter product
collection model. Accurate forecasting is essential, and the
consequences of getting it wrong could result in either having too
much stock due to insufficient demand, or stock running out with
little prospect of immediate replacement.
Predicting fashions can be notoriously difficult, and for this reason
there is an increasing trend to move towards a more flexible
approach. Instead, a number of large retailers (both with traditional
stores and online) have introduced almost continuous introduction
of new products on a rolling basis throughout the year, in order to
keep pace (or ahead) of fashions and trends. Many of these are
small in quantity, and enable designers to gauge reaction and make
changes as necessary.
The demand for smaller minimum order quantities (MOQs) is seeing
some footwear manufacturing leave its established sources and
move back to more local suppliers. Although this can increase
flexibility, smaller orders often result in a higher price per unit, as a
better price can usually be negotiated for large quantities. This can
be critical to profitability, as some retailers often work on tight
margins.

An upside of local sourcing should be lower freight costs. In

addition, the retailer or his agent may have more opportunities to
visit the production sites to check quality and generally be able to
deal with any issues more rapidly.

Reaching the customer

With the vast majority of products sourced from Asia, sea freight is
still the industry’s preferred method of transporting goods. Once
received, products are often inspected upon arrival at the
warehouse. Stock can remain in a warehouse for some time, and
steps may need to be taken to ensure that the storage environment
does not promote mould growth. Mould growth can occur during
shipping when goods are packaged incorrectly and can be a
significant problem. Leather goods sourced from tropical countries
are particularly vulnerable to mould growth, due to the
environmental moisture and warmth. A number of companies supply
products intended to prevent this.

A more recent initiative is the transcontinental train link from

Chengdu to Poland, which provides a speedier delivery service
between China and Europe. Travelling almost 10,000km, the
journey cuts transit time significantly compared to ocean freight.

Back at the retail stores, merchandisers have the challenge of

planning and controlling the flow of incoming styles and
replenishment of stock. The merchandisers work closely with the
buyers to ensure that sales data is fed back to the buying team, so
that timely and accurate re-orders for popular styles can be placed.