Home Garden Gifts Online Business Plan
G-T Enterprises is owned by E. Gwen Hultquist and her husband, Timothy A. Hultquist. While primarily operating the Web store, Grapevine Country Gifts at www.grapetime.com, the owners are also vendors at consumer gift shows, home and garden expositions, summer fairs and festivals; these events help us to promote the Web store. By the end of the third season, both online visitors and purchases have increased significantly over the previous year, despite the difficulties of a slow recovery of the national economy.
The owners of G-T Enterprises believe that continued growth of the business can be accomplished with:
- Serious revamping of the Web store (already in progress) and increased promotions;
- Sponsoring special community events and fund raisers for local organizations;
- Renovation of an existing building to safely store inventory and set up a more efficient packing and shipping area;
- Increasing the number of shows/events aimed at upscale consumers;
- Purchasing seasonal and regular inventory in larger quantities for better price breaks.
While the sales growth has been anticipated and welcomed, it has come a little late for financial recovery of debts incurred to reach this point. We need financing to renovate the existing storage space (our barn), alleviate the outstanding debts and release credit lines for product purchases and advance payments that are required for space rental at shows, festivals and other market events. In addition, financing will prevent us from missing opportunities for obtaining and selling “ground floor” products before they become available by other merchants on the travel show circuit.
In the local community, there are limited opportunities for unskilled employment for young people. We expect to hire high school students for stocking, packing, shipping, and training on other business activities. These students can benefit from our experience and education, and we hope to be role models for them, encouraging them to further their education or pursue their ambitions of entrepreneurship. In addition, we will be sponsoring special events (i.e., “SummerFest,” 4th of July activities) and fund raisers for local organizations (schools, churches, other groups).
Our two main suppliers manufacture in the United States, so our sales are contributing to keeping jobs in America. We continue to seek out and direct-buy American-made products that we can offer at reasonable prices and receive a fair profit. We also have potential resources, with adequate funding, to obtain quality and highly saleable merchandise appropriate for fundraisers.
We are seeking $40,000 in long-term loans to finance renovation and restoration of the existing barn for use as a warehouse, and to maintain positive cash balances throughout the months we are occupied with the renovation.
Grapevine Country Gifts is a celebration of the home. Our mission is to provide unique and affordable home accents and gifts for the quality- and style-conscious consumer. We will make our products easily accessible with a presence online and at various shows and festivals.
Grapevine Country Gifts takes pride in its customer service, good communication, and guaranteed satisfaction of consumers’ purchases.
Our employees will enjoy a friendly and fair work environment, which rewards hard work and offers opportunities for training in a variety of business activities.
- Continue to provide unique quality home and gift products at reasonable prices on the Internet and at consumer home/gift shows;
- Generate minimum total revenues of $125,000 by the end of year one;
- Expand and maintain Web store to increase revenues to create attractive purchase by year five;
- Realize an annual growth of approximately 45% in year two;
- Realize an annual growth of approximately 20% in year three and each year thereafter; <=”” li=””>
- Establish a following of customers in a specific road show circuit of 24-36 shows per year: Home & Garden Shows, Shipshewana On The Road, Summer Festivals/Arts & Crafts Shows;
- Seek out additional quality products to include in our product mix.
1.3 Keys to Success
The primary keys to success for the company will be based on the following factors:
- Home based facilities that reduce overhead expenses and maximize profit margins.
- Products that provide quality and value to the consumer while meeting needs for an expression of personal style.
- Customer services, such as obtaining obscure and discontinued products (specifically Spoontiques Pin Art and Ear Art), and personalized promotions, so that customers are encouraged for repeat purchases and make referrals.
- Communication with our customer base through email and postcard mailings.
- A visible, accessible and welcoming Web store to position us as the preferred choice for our products and services within the marketplace on the Internet and local communities in our 4-state region.
- Practice of daily management tactics, so that a successful and growth-oriented business is developed and maintained.
Grapevine Country Gifts is an Internet-based Web store spun off by G-T Enterprises. It began as an experiment for the design of an e-commerce site after a G-T customer refused to pay for development of a similar site because, “it wasn’t making any money,” within the first four days of implementation. Launched in January of 2000, the site was submitted to search engines about four months before search engines began charging for submission. Even though the site began attracting visitors, sales were slow at first, due in part to an inadequate (but costly) payment processing system which has since been replaced. With this early system we often had to meet suppliers’ minimum order requirements in order to fill a single customer’s order, as inventory levels were being built.
Our new system is much more efficient, and the higher sales volume we are now processing has streamlined our inventory management. Last year’s sales revenues were more than 6 times higher than sales the year before that. We expect continued growth, at a much slower pace, in the foreseeable future.
2.1 Company Ownership
G-T Enterprises is currently a partnership owned by the married couple E. Gwen Hultquist and Timothy A. Hultquist. Gwen Hultquist is the majority owner and manager for both G-T Enterprises and Grapevine Country Gifts. Tim Hultquist is sole owner and manager of Technical Computer Support (TCS), a small-business computer consulting company for sales, installation, integration, networking, maintenance, and support, which is not part of this business plan. The owners both hold Bachelor of Business Degrees from Western Michigan University, Kalamazoo, Michigan and have had several years’ of management experience prior to self-employment.
This business plan is based upon the consolidation of Grapevine Country Gifts (the Web store) into the pre-existing G-T Enterprises, which has so far focused on selling similar products through road shows. These endeavors are very similar, and combining them under the same company will greatly simplify our financial and marketing strategies, by treating them as different revenue streams in a unified plan. The larger G-T Enterprises will remain a partnership between the Hultquists, with Gwen as the majority owner.
2.2 Company History
G-T Enterprises began in 1999 as a website consultation, design and development firm for small- to medium-sized businesses. Various events led to the addition of the Web store, “Grapevine Country Gifts and Collectibles” (now simply, “Grapevine Country Gifts”), selling primarily Pin Art, Ear Art and miniature lighthouse replicas by Spoontiques©. We added hand painted Artistic Glass by Artistic Gifts© and other miscellaneous products from various vendors. In the spring of 2002, as a means of promoting the Web store, we began exhibiting and selling our products at consumer gift shows and home shows in a four-state area. “Newbies” in this area of commerce, the first show was a complete bust with the exception of gaining valuable experience in evaluating shows and developing organizational skills for setup and booth layout.
Operations of the business are conducted on our 100-year-old family farmstead, now reduced to approximately five acres. A 16′ x 24′ barn and a smaller antique outbuilding were converted and renovated for office/work shops. The three-story barn was re-roofed in 1995, along with the house. It is structurally sound, but requires extensive restoration and renovation for use as storage for product warehousing, packing and shipping. The home-based operations greatly reduce our overhead expenses and a fair portion of utilities and other related household expenses can be charged as business expense.
G-T Enterprises’ start-up capital of $1,000 was originally provided by E. Gwen Hultquist. Her husband, Timothy A. Hultquist, has, among other things, supported the company financially, mostly by providing ‘no-interest’ short-term loans to cover working capital requirements. At the starting year of the current business plan (FY2004), Mr. Hultquist has provided a total of $20,000 of no-interest loans that need to be repaid within three years.
Grapevine Country Gift’s product line is extensive. We offer basically the entire Spoontiques vendor catalog of several thousand items, although we concentrate on several popular designs of Pin Art, Ear Art, step stones, and other unique items. Artistic Gifts has many designs of art glass in seven sizes, most of which are featured on the Web store. Because of the large quantity of items and styles, it is not feasible to inventory all products; our website features those products we know to be bestsellers. However, any of these items can be purchased from Grapevine Country by special order, either at shows, by phone, or online. Artistic Gifts will drop-ship for a nominal fee.
Because of the relatively long lead time between a customer’s order, arrival of the goods and subsequent shipment to the customer, Grapevine Country has found that certain items maintain a marked popularity and we stock these items ready for immediate shipment. Wholesale value of inventory is approximately $6,000 at any given time. G-T Enterprises constantly searches for unique products that will offer value, fun, and appeal based on interests shown at shows and search strings in the Web store statistics.
Our products focus on personal style and interests. Spoontiques Pin Art and Ear Art are novel theme-based designs that excite buyers to purchase either for themselves or as gifts for someone else. The monkey and moose earrings are bestsellers, with anything in frogs or cats following closely. Our secondary product lines change as we find exceptional values. Summer show products are concentrated on products for the entire family and children as well as the home and garden décor and personal gifts.
Market Analysis Summary
Our target market is women over age 40, with household income over $60,000. With high disposable income, mature adults (empty nesters) redecorate their homes to reflect their tastes more than was possible when there were young children in the home.
Last year in the U.S., female consumers produced the highest growth rate in online sales, accounting for 52% of online purchases, an increase of 5% over 2002. Nearly 54% of those purchasers are in our target age group. Gifts and flower sales online were up 56% this holiday over last. Home and garden purchases were the top category in the 2003 holiday buying season, experiencing a 27.9% increase over 2002. This female target market is the primary purchaser of household gifts and home décor. The mature audience shopping online is expected to increase by 16%, compounded, per year through 2008. (Network World Fusion, Jan, ’04, U.S. 2000 Census; Jupiter Research, Feb,’04)
4.1 Market Segmentation
As stated above, the company’s target audience is women over 40 with a household income over $60,000. In terms of sales channels, we believe that about half of our target clientele will be reached through our website, with the other half split between the ones we reach via our participation in road shows and special events. We also forecast that the pool of potential web clients will grow at the fastest rate (at 20% annually), while the client base for road shows and special events will be growing at 15% and 10%, respectively, as summarized in the table below.
4.2 Target Market Segment Strategy
We know that the target market segment we have selected is already predisposed to seek out our products. Comfortably well-off women over 40 make up most of those attending home and garden and other shows at which we exhibit our products. Our presence at these shows has increased monthly visits to our website by 413% in the past year.
While online purchases by women over 40 continue to rise, publications by Jupiter Research in February, 2004, project that similar women over 60 will be expanding their Internet experience and expenditures at even higher rates in the near future. By expanding our presence on other shopping sites, we will continue to increase our access to this group. Linking with other popular sites through a LinkShare program will not only provide additional revenues with “click-through” purchases, but associate Grapevine Country Gifts with other quality merchants on the Internet frequented by our target market.
Home redecoration allows women to reflect their tastes and use their creativity to make their homes truly special to them. Quite often this means that a woman looks for some rare, limited-edition item that will bring comfort to her home and peace in her mind. Although home decor products are carried by many retailers, out-of-stock items are hard to find, since few stores special-order items. While a few hard core collectors find the thrill of searching for rare items appealing, most of our customers who would like to decorate their homes favor convenient ordering and reasonable prices.
4.3 Industry Analysis
Post-2003 retail sales reports indicate that economic concerns and comfort levels for buying on the Internet are improved. Holiday sales, exceeding projections, were up 29.5% over 2002 – reaching $12.5 billion (excluding travel and auctions). (Network World Fusion, Jan. ’04) Although predictions for retail sales growth in 2004 are a little slow in coming, the recovery can be seen in sales bursts on the web and increased sales at Spring shows.
4.3.1 Competition and Buying Patterns
Competition for jewelry and home décor is stringent on the Internet and at consumer shows. Many online and traveling merchants have been in existence for a longer period and have established recognition. Our products are also carried in fine gift shops, such as Hallmark stores, and in major department stores. Many of our competitors have additional advantages because of their greater size, which allows them to more easily absorb losses on unpopular products.
Our targeted consumers are seeking convenience and value in their purchases. They want a wide selection to reflect their own individual styles, and easy purchase processes at good prices. Our switch to an easier payment process has shown how important it is to our customers to have a secure, transparent, and reliable purchase process with good customer service. This one change is responsible for at least half the strong sales growth we have seen in the last year.
Customers who come to shows and festivals where we exhibit are also seeking convenience and value, but our competition at these shows is largely the other vendors. A potential customer arrives with at least a subconscious notion of how much she is willing to spend, and on what, while at the event. Sales made by other vendors are money taken out of our pockets. Competition here is about value, attractiveness of displays, good selection, and friendly, in-person interactions.