Business Plan of Artworld.net
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This project describes the business plan for Artworld.net, an online company that we want to set up. This company will be selling art through its website. This is a promising business idea since the market research I conducted revealed that most online art companies in United Kingdom have neglected certain target markets such as schools and students. Our company will be making money by accepting paintings from local suppliers from United Kingdom and sell these paintings to customers all over United Kingdom at a premium using the Internet thus making profits. In order to reduce high competition, our company will offer discounts to repeat customers and thus increasing consumer loyalty. We will employ qualified employees and consultants that will assist us achieve our organizational goals and objectives. After five years of positive returns, we will expand our operations to Italy, France and Spain.
Artworld.net is an online website that aims at selling paintings in the United Kingdom and later expands to international markets. It will accept paintings from local artists in United Kingdom and sell these paintings to consumers across United Kingdom. In addition to this, it will be supporting all crafters, inspire armature painters, educate painters on how to improve their painting skills and sponsor art shows and competitions in an attempt of promoting art in the United Kingdom. There is a good market for paintings in the United Kingdom. This is because there are only a few online retail stores and they do not concentrate on corporate social responsibility towards the citizens in United Kingdom. By offering opportunities for young painters to grow and pursue painting as a career, most customers will prefer our products and this will improve our market share (Farrell and Hartline 2010).
The painting stores of this online art company will be located in major cities in United Kingdom such as London and Manchester. These locations offer strategic advantages to this company since most artists are located in these cities. This will reduce the distribution costs and thus the profit margins of this company will be high (Wright 2000). In addition to this, most customers who love the history of painting are located in these cities and thus they will pay high prices for paintings that this company will offer. The objectives of our company include improving consumer satisfaction by creating an online shopping environment that caters for all the needs for artists and consumers purchasing artwork. We also aim to attain a 40 % profit margin within the first year of business operation and 60% market share in the whole of United Kingdom.
Start Up Cost Summary
This company will start with a 6 months inventory obtained from local artists. In addition to this, it will seek a $250000 loan from financial institutions in London and Manchester. This money will be used to pay for insurance expenses incurred in insuring these paintings against risks due to theft and fire. In addition to this, we will use this money to pay for interior design costs and rent. $27500 of this fund will be used for acquiring current assets, constructing display shelves and creating slot walls. We will contribute $ 39000 from our personal savings that will be used to replenish our inventory during periods when we experience high demand. We will spend about $1200 in setting up security systems in all our stores. In addition to this, $ 4600 will be used to purchase computers that will help in facilitating online transactions. Our company will spend about $ 2800 in financing trade shows and open day promotions that will help in advertising our products.
There are several online art stores in the United Kingdom. These stores include Atlantis Art Materials and Art Supplies, University of Arts Online Store, Hobby Crafts and Pullingers Art Shop. Our target market will be armature artists, paint lovers, business such as graphic designers, professional artists and students. The market researches that we conducted revealed that most online stores in United Kingdom do not view professional artists as target markets to sell paintings (Belew and Elad 2011). In addition to this, we discovered that more than 100 businesses would require paintings. These businesses include advertising companies that will consider buying artwork from our store in order to promote products that they propose to advertise. Moreover, there are many schools in United Kingdom that study art and thus they will be using our paintings as illustrations of the different forms of art. The armature painters will be also paying a subscription fee in order to join online tutorials on how to improve their painting work.
Business Model and Pricing
Our online store will be purchasing painting from local artists. These artists have to sell to us unique paintings and paintings with high consumer demand. These products earn high profit margins (Gangopadhyay 2002). The prices we pay to this local artist for the supply of paintings will depend on factors such as the age of the painting, the history and experience of the artist who painted the artwork and the number of buyers that the painting has been sold to. Our company will make money through several ways. We will charge high premiums to professional artists and paint lovers since they have high amounts of disposable income. Furthermore, we will charge students and schools a low premium on all the supplies that we make to their schools. The amateur painters will also pay low subscription fee for any tutorial lessons that they receive from our online website.
Our online company will adopt several strategies in order to defend itself against high competition from other online art stores in United Kingdom. Improving customer’s satisfaction will be our key objective in all the business transactions that we engage in. We will achieve this by asking the consumers to give us their opinion concerning the level of services that they receive from our online retail store. In addition to this, our company concentrates on offering unique paintings to all our consumers and thus this will improve our brand identity and loyalty (Ferrell and Hartline 2010). The stores and galleries where customers will view the paintings that we offer, will be located in major cities such as London and Manchester. This will enable our company to have a competitive advantage since we will incur less distribution costs when we deliver paintings to our consumers. In addition to this, most online companies do not offer educational artwork to schools and thus will enable us to reduce high competition by targeting a unique market segment. We also aim at increasing our marketing budget in order to increase our product promotion activities in United Kingdom. By conducting extensive marketing campaigns, we will increase consumer awareness throughout United Kingdom and thus we will deal with the treat of high competition from other online stores in the United Kingdom ( Wright 2000). Our company will also offer cash discounts to all repeat customers and this will enable us to increase consumer loyalty.
We will employ six employees, who will be responsible for managing the operations of the online art store. We will employ salespersons who will have the responsibility of explaining the uniqueness of each painting, the history of the painting and the price that the painting will be retailing. In addition to this, we will employ an IT expert, who will be responsible for managing the website that we will use to sell our paintings. This expert will ensure that the website has good web traffic and that it has links to national art resource pages. We will also employ a gallery expert who will have the responsibility of verifying the authenticity of all paintings and determining the stock levels of each painting so that our company avoids stock shortage costs. Our team will also include one accountant and marketing manager. Furthermore, we will divide the employees according to their skills and strengths and this will ensure that they serve consumers more efficiently (Belew and Elad 2011). In addition to this, all the employees will be expected to use creativity and innovation in solving all the problems that this online store may experience. As the store grows, our company will employ permanent clerks who will be responsible for handling the increasing number of consumers. Our company needs advice from financial analysts who will predict to us the risks that we may face due to high competition and the financial options that we have for curbing the high competition.
Our online art company has several opportunities. It has an opportunity of expanding its business activities to other global markets. This is because the cost of conducting online transactions is low and thus this company can expand to international markets with minimal costs (Gangopadhyay 2002). In addition to this, it has an opportunity of adopting a 24/7 operation system since customers can place orders for paintings online regardless of the time. If it adopts this model, it will boost its sales and revenues and thus it will achieve its target of increasing profit margins. It has also an opportunity of engaging in business-to-business networking with other online companies selling artwork. By adopting this model, it will increase its communication with other companies and thus this will create a strong mutual relationship. Furthermore, there is a growth in online art industries in United Kingdom. This is caused mainly by the fact that most people in United Kingdom are accepting e-commerce as an effective medium for conducting transactions. This growth rate is promising since our company will increase its customer’s base.
Our company faces several threats. Since online companies incur low overhead costs, there is a possibility that more people will form online art shops. This will increase the level of competition in the market and thus we may be forced to sell our paintings at lower premiums than the budget (Wright 2000). In addition to this, e-commerce faces the threat of fraud from hackers. These hackers may intercept financial transactions between our company and customers and thus they may use this information to commit frauds in customer’s bank accounts. Some customers do not prefer giving their personal information in the Internet. This is a threat to our company since they will not be willing to conduct online transactions with our company.
Growth of Our Business
Our business will begin operations with two branches in London and Manchester. From the profit projections, we will have enough capital to expand our operations in other countries such as Spain and France. In order to achieve this target, we will need to raise more finance by participating in an IPO or selling bonds to the public (Gangopadhyay 2002). The money raised from these sources of finance will be used to sign more contracts with suppliers of paintings from different countries especially Italy and France. Moreover, we plan to use this money in conducting worldwide consumer campaigns that will increase our product awareness. We are considering franchising options with artwork galleries in Italy that will help us to penetrate the Italian market.
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