Executive Summary
Search for beauty is a current social trend, and ladies are determined to become more attractive by improving the appearance of their skin. Vera Skincare Enterprise (VSE) will provide different cosmetic products, such as body lotions and hair relaxers made using fruits as the main ingredients. The products will help improve the skiing appearance, making it smooth and more beautiful. Lemon, avocado, oranges, and palm fruits are among the target fruits that the enterprise will use as raw materials for producing oil and body lotion that will make skin smooth and soften the hair making the ladies more attractive. The enterprise will offer products to young and older people interested in improving their skin health and texture. The lotions will help enhance skin health for ladies aged between 15 and 45, the main target customers. Body lotions, moisturizing creams, and hair relaxers will be the main products of the enterprise.
Business Need
Product
Vera Skincare Enterprise (VSE) will provide different cosmetic products. The cosmetic business is one of the fastest-growing industries in the UK. In the last five years, many customers have been showing interest in using organic and sustainable products, and most of them have refrained from purchasing beauty products that are not organic. In the UK, over 40% of the clients would prefer purchasing organic products making the organic beauty market grow (Goulde 2022). The future of the cosmetic market in the UK will be monopolized by skincare products that are organic, simple, and eco-conscious. However, there are few inquiries that are producing organic beauty products, hence, creating a business gap. Therefore, Vera Skincare Enterprise will locally manufacture cosmetic products to treat skin diseases using vegetables and fruits, as shown in the product plan form below.
Table 1
Summary of the Product Plan Form
Place
The business will be based in England. Although there has been an increase in consumer demand for cosmetic products, limited delivery channels are making the large population using cosmetic products need more suppliers. Moreover, as ladies look for beauty, there is an increasing demand for body lotions from natural raw materials. According to Goulde 2022, the lockdown during COVID-19 facilitated growth in the beauty industry within the UK. While people were at home, they focused more on self-care, making the skincare market grow to over €3 billion (Goulde 2022). Goulde 2022 notes that moisturizers and creams that can help relax the body after a long day of work have increased in demand resulting in a growth of the industry by 38%. After the restrictions, people returned to their saloons for skin care products, increasing the demand for UK skincare products.
Promotion
The enterprise will need direct marketing and online advertisement to help in promoting the brand. Jodie 2022 notes that social media influencers are leading in popularizing the makeup industry in the UK. Beauty and wellness have been trending through social media channels, such as Instagram, making more people interested in the cosmetic industry. Consequently, there has been a rise in the number of companies registered using the word “beauty “as part of their name.
Price
The increase in inflation is a severe factor to consider when setting the prices of products. However, the cost-plus pricing strategy will be the best approach at the start of the business. Through cost-plus pricing, it will be possible for the enterprise to break even within a short period. Therefore, different sizes of products will be changed based on their cost of production and the prices set by competitors.
People
The enterprise will engage employees who are excellent at providing customer service to serve as salespersons. A positive customer experience will give the business a competitive advantage within the UK. The customer care team will be accessible, efficient, and practical and provide free consultancy services. The staff will include a senior manager, operation and production staff, sales and marketing persons, skin therapy and hairdressing staff, records keeping and accounting, inventory control staff, retailers, and distributors.
Process
The enterprise will reach the market through online advertisements and online shopping. Since the products will be extracted from natural products, environmental sustainability will be at the center of the enterprise. The distribution will be made through retailers, wholesalers, and individual distribution.
Physical Evidence
The enterprises understand the need for physical evidence of products and sales. It will establish a physical store where clients can visit and have an experience with the brand and ask questions for further clarification.
Ancillary Revenue Streams
The business will generate ancillary revenue through perfumes, eyeliner, mascara, and lipstick sales.
Financial Analysis
Direct Product Costing
The raw materials used in the production process will be part of the final product. Table 2 shows the specific cost for raw materials the enterprise will need to start production. The table has four columns: the column for the raw materials, the cost of the raw material per kg, the number of Kg needed, and the total cost.
Table2
The Direct Product Costing Form for Vera Skincare Enterprise for the First Month of Operation
| Raw materials | Cost per Kg(€) | Number of Kgs needed | Total cost (€) |
| Oranges | 2 | 50 | 100 |
| Palm fruits | 1 | 40 | 40 |
| grapes | 2.5 | 30 | 75 |
| lemon | 2 | 30 | 60 |
| Chew cumber | 1.5 | 50 | 75 |
| Avocados | 3 | 50 | 150 |
| Total | 12 | 250 | 500 |
Direct and Indirect Labour Cost
The enterprise will need fifteen staff members responsible for different departments and production stages during start-up, as summarised in Table 3 below.
Table 3
A Summary of Direct and Indirect Labour Costs
| Staff Members | No. Of Staff | Total Monthly Working Hours | Total Monthly Compensation (€) | Direct Cost Of Labour | Indirect Cost Of Labour | ||
| Total Monthly Production Hours | Compensation For Time Free From Production(€) | Total Hours Free From Production Activities | Payment For Time Free From Production Activities(€) | ||||
| The Enterprise General Manager | 1 | 210 | 600 | ……………… | ………………… | 210 | 600 |
| Operation staff | 3 | 630 | 1200 | 630 | 1200 | ……………… | ………….. |
| Inventory managers | 3 | 630 | 1200 | …………….. | ……………. | 630 | 1200 |
| Records and financial managers | 2 | 420 | 600 | ……………….. | ……………… | 420 | 600 |
| Sales and marketing | 3 | 630 | 600 | ……………. | ……………….. | 630 | 600 |
| Skin therapists and hairdressers | 3 | 630 | 1200 | 630 | 1200 | ……….. | ………… |
| Total | 15 | 3150 | 5400 | 1260 | 2400 | 1890 | 3000 |
The direct cost of labor per hour (DCL/h) is given by;
DCL/h = (Total compensation for the time in production) / (Total time in production)
DLC/h = 2400/1260
DLC/h = €1.905
Direct Labour Cost per Product
Consider a hair relaxer or avocado cream produced within 10 minutes (1/6 hrs.) by the operation team. The direct labor cost per item will be given by multiplication the direct cost of labor per hour by the time taken to produce a product, as illustrated in Table 4 below.
Table 4
Calculation of Direct Labour Cost per Item
| Production Activities | Time For Every Activity |
| Mixing raw materials | 2 minutes |
| Loading raw material into the machine | 2 minutes |
| Making final product | 2 minutes |
| Total | 6min = 0.1hrs * 1.905 = €0.1905 (direct cost per item) |
Indirect Cost
The indirect costs the investors will incur when starting and running the business are illustrated in Table 5 below.
Table 5
Form for Indirect Cost for Vera Skincare Enterprise
| Items | Indirect costs per month (€) |
| Water and electricity bills | 100 |
| Rent | 150 |
| Indirect labor | 3000 |
| Insurance and legal documents | 30 |
| Depreciation | 20 |
| Sales promotion | 150 |
| Distribution | 200 |
| miscellaneous | 100 |
| Total indirect cost | 3750 |
The Total Cost per Item
The total cost per item is indirect, direct labor, and direct materials.
Table 6
Calculation of Total Cost per Item
| Related posts | Related amounts (€) |
| Direct labor | 2400 |
| Direct material | 500 |
| Indirect cost | 3750 |
| Total | 6650 |
Cost Benefit Analysis
The projection for sales and revenue for the first year of operation of the enterprise is summarised in Table 7 below.
Table 7
Sales and Cost for the First Year of Operation
| Months of the year | Details | |||||
| Sales(€) | Direct cost of materials(€) | Direct labor cost (€) | Gross profit (€) | Indirect cost (€) | Net profit (€) | |
| Jan. | 2000 | 500 | 2400 | (900) | 3750 | (4650) |
| Feb. | 3000 | 700 | 2400 | (100) | 3750 | (3850) |
| Mar. | 3400 | 1000 | 2400 | 0 | 3750 | (3750) |
| Apr. | 4000 | 1000 | 2400 | 600 | 3750 | (3150) |
| May | 6000 | 1600 | 2400 | 2000 | 3750 | (1750) |
| Jun. | 8000 | 2000 | 2400 | 3600 | 3750 | (150) |
| Jul. | 8000 | 2500 | 2400 | 3750 | 3750 | 0 |
| Agst. | 9000 | 2500 | 2400 | 4100 | 3750 | 350 |
| Sep. | 12000 | 3000 | 2400 | 6600 | 3750 | 2850 |
| Oct. | 14400 | 3000 | 2400 | 9000 | 3750 | 5250 |
| Nov. | 19000 | 4500 | 2400 | 11800 | 3750 | 8050 |
| Dec. | 20000 | 4000 | 2400 | 13800 | 3750 | 10050 |
| Total | 61400 | 26300 | 28800 | 50250 | 45000 | 7250 |
Table 7 shows that the business will give a return on investment, and July will be the break-even month. After July, the company will generate net income, increasing over time. For the first year of operation, the business will cause a net gain of €7250. the analysis indicates that the company is viable, and the investors can start with information that they will start earning profit from the 8th month of the year.
Cost of Equipment’s Needed
For the first year of the business operation, the investors must invest in operation equipment, illustrated in Table 8 below.
Table 8
List of Equipment
| Equipment | Reason for need | How to obtain | Cost (€) |
| Machine | Production | Purchase | 4000 |
| Van | Transportation | Lease | 800 |
| Office furniture | Office operation | Purchase | 500 |
| Office fitting | Office set up | Purchase | 500 |
| Messaging equipment | Communication | Purchase | 200 |
| Total | 6000 | ||
Total Start-Up Cost
Table 9
An Illustration of the Total Start-Up Cost for Management of the Business for the First Year of Operation
| Item | Cost (€) |
| Equipment | 6000 |
| The direct cost of material | 26300 |
| Direct labor cost | 28800 |
| Indirect cost | 45000 |
| Total cost | 106,100 |
Implementation and Execution
Source of Funds
From the financial analysis section, the investors will need 106,100 to start the enterprise and run it effectively for the first financial year. The investors can source the funds from the owner’s equity. If the investors opt for taking a lone, they must include the interest on the loan under the indirect cost to find the total cost.
The Launch Plan
The product launch will involve several activities scheduled at different times during the first two months of operation. The enterprise will borrow the product launch schedule known as the RACE framework (RACE- Research, Act, Convert, and Engage). According to Chaffey 2022, we are in an entrepreneurial era where digital information has the highest audience. Therefore, marketers should avoid minor launch mistakes that may cast the business promotion. Chaffey 2022 suggests that the RACE framework is a better structure that can help organizations trace their journey with the customers. Figure 1 is a summary RACE framework.
Figure 1
The RACE framework (Chaffey 2022)
The Gantt Chart
The chart is based on the RACE framework, and the event distribution will be illustrated in Figure 2.
Figure 2
Gantt Chart for the Launch Plan
Success Factors
The cosmetics industry is one of the fastest-growing business areas in the UK. Malone 2022 shows that many ladies do several homework tests before settling on the skincare oil they use. She notes that there is an opportunity to help the ladies get their skin attractive and healthy by providing them with products made from natural resources. However, due to the increasing population in the country, the current providers need to adequately meet the customers’ demands. Vera skincare enterprise aims to fill the business gap by producing cosmetic products made from organic ingredients. The company’s success is pegged on addressing different cosmetic needs ranging from hairstyle to skin color. The success factors of the business can be assessed through SWOT analysis, as shown in Table 10.
Table 10
SWOT Analysis of Vera Skincare Enterprise
| SWOT Analysis | |
| Strengths | Weaknesses |
| · Availability of raw materials.
· Availability of capital. · High market demand for cosmetic products. · Friendly business environment. · Quality products and packaging. · Skin therapy will gain fame among women. · Free consultancy service. |
· Limited natural resources such as fruits and vegetables.
· Limited skilled labor experienced in the production area. · Inadequate market experience as compared to other competitors. · Few workers would delay production. |
| Opportunity | Threats |
| · New products with organic ingredients.
· Only some competitors produce the products. · Competitors need to meet the high demand for cosmetic products. · Banks within the UK are willing to support business ideas. |
· Customers may be loyal to the existing companies and may take time to adapt to us.
· Dynamics in customers’ needs may affect their satisfaction. |
Contingency Plan
The investors will place a contingency plan to help address the weaknesses and threats of the business. Table 11 summarizes the contingency plan the investors will apply to address the weaknesses and threats.
Table 11
Contingency Plan
| Weaknesses | Contingency plan |
| a) Limited natural resources such as fruits and vegetables.
b) Limited skilled labor experienced in the production area. c) Inadequate market experience as compared to other competitors. d) Few workers would delay production. |
a) Import fruits and vegetables to supplement the available resources.
b) Offer in-service training of the available labor force. c) Do comprehensive market research. d) Employ more workers as the business expands. |
| Threats | Contingency plan |
| a) Customers may be loyal to the existing companies and may take time to adapt to us.
b) Dynamics in customers’ needs may affect their satisfaction. |
c) Invest in marketing to reach a wide area and inform about the new product.
d) Invest in systematic market research to identify the changes in customers’ tastes. |
Marketing Budget Distribution
The enterprise intends to invest in an advertisement by using different media platforms such as Twitter, Facebook, radio, and shows. Highly skilled marketing managers will help plan product advertisements in other regions within the UK. Marketing will enable the firm to create awareness of the products and persuade customers to have experience with the new products. Moreover, the promotion will assist in informing potential customers of the location where they can get the products and sell the brand image.
Table 12
A Summary of Product Promotion Budget Distribution
| Advertisement | Details | Cost (€) |
| Banner on the building | Showing the name of the enterprise and the list of products | 30 |
| Radio | Tell clients information on where to find our products | 50 |
| Public shows | Using music within an area with target customers | 50 |
| Stickers | Sent to vendors and retailers, and daily customers | 20 |
| Free delivery | Delivery to customers and retailers | 0 |
| Direct selling | 0 | |
| Total | 150 | |
Recommendations and Future Plans
The longevity of the business depends on entrepreneurial sustainability. According to Tur, Roig, and Llorca 2018, sustainability involves addressing business environmental factors and human behavior-related factors. Comprehensive sustainability covers “economic prosperity, environmental integrity, and social sustainability” (Tur, Roig, and Llorca 2018, p.2). The investors in Vera skincare enterprise must consider environmental integrity by producing environmentally friendly helps to safeguard future generations. Exceptional well-being is a critical factor for organizational progress; thus, the investors must value the social capital through a pleasant working environment for all organization members.
Moreover, economic prosperity depends on the nature of products and quality of services. High-quality products are one of the strengths of the Vera skin care enterprise. The investors must invest in quality control on all products to ensure that they keep the standards that meet the expectation of prospective customers (Almohaimmeed 2019). In addition, high-quality customer service will help the enterprise to retain its customers.
Additionally, the future of the business will depend on the quality and frequency of research during the operation. In every industry, the customer is the most precious component. The taste and preferences of customers depend on the quality of products, value, ethics, and emotional factors. Hanaysha, Al-Shaikh, and Alzoubi 2021 note that market researches are the most effective approach that enterprise investors can use to understand the dynamics of customers’ needs (Hanaysha, Al-Shaikh, and Alzoubi 2021). Understanding customer preference will help improve the quality of the products and the nature of the promotion. Consequently, they will increase their customer base and create an opportunity for business expansion.
Finally, the investors should consider the opportunities and use them to expand their business operations. Noting the high demand for cosmetic products within the UK and the new products that the enterprise will offer, there is an opportunity for business expansion. The investors can reinvest the profit to open more stores in different locations to reach more customers and improve the business’s competitive advantage. Moreover, there is an opportunity to invest in the farming of fruits and vegetables to reduce the cost of raw materials and increase the profit. Considering these recommendations will place the enterprise in an excellent financial position such that the investors will have adequate funds to improve the business within the next five years.
Reference List
Almohaimmeed B 2019. Pillars of customer retention: An empirical study on the influence of customer satisfaction, loyalty, and profitability on customer retention. Serbian Journal of Management, 14(2), p.421-435. Available from: https://www.aseestant.ceon.rs/index.php/sjm/article/view/15517 [6 April 2023]
Chaffey D 2022. ‘Product launch marketing plan example.’ Smart Insight. Available from: https://www.smartinsights.com/traffic-building-strategy/campaign-planning/structure-product-launch-campaign/ [6 April 2023]
Goulde T 2022. ‘The growth of the UK beauty industry.’ TechRound. Available from: https://techround.co.uk/news/growth-uk-beauty-industry/ [6 April 2023]
Hanaysha JR, Al-Shaikh ME and Alzoubi HM 2021. Importance of marketing mix elements in determining consumer purchase decision in the retail market. International Journal of Service Science, Management, Engineering, and Technology (IJSSMET), 12(6), pp.56-72. Available from: http://research.skylineuniversity.ac.ae/id/eprint/128/1/68.pdf [6 April 2023]
Jodie J 2022. ‘The expansion of the beauty industry in the UK.’ Companies House. Available from: https://companieshouse.blog.gov.uk/2022/01/31/the-expansion-of-the-beauty-industry-in-the-uk/ [6 April 2023]
Malone M 2022. ‘UK women’s facial skincare market report 2022.’Mintel. Available from: https://store.mintel.com/report/uk-womens-skincare-market-report [6 April 2023]
Tur PA, Roig TN and Llorca MA 2018. ‘Factors affecting entrepreneurship and business sustainability.’ Sustainability, 10(2), p. 1-12. Available from: https://www.mdpi.com/2071-1050/10/2/452 [6 April 2023]
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