Tower Threads 2

Table of Contents
I. Executive Summary 3
II. Industry Analysis 7
Nature of Participants 7
Key Success Factors 8
Industry Trends 8
Long-Term Prospects 9
III. Company Description 10
Company history 10
Mission Statement 11
Products and Services 11
Current Status 11
Legal Status and Ownership 11
Key Partners 11
IV. Market Analysis 13
Market Segmentation and Target Market Selection 13
Buyer Behavior 13
Competitor Analysis 13
Estimates of Annual Sales and Market Share 15
V. The Economics of Business 17
Revenue Drivers and Profit Margins 17
Fixed and Variable Cost 17
Operating Leverage 17
Start-up Cost 17
Break-Even Chart and Calculation 18
VI. Marketing Plan 19
Overall marketing strategy 19
Product, Price, Promotions, and distribution 19
Sales Process 22
Sales Tactics 23
VII. Design and Development Plan 24
Development status and tasks 24
Challenges and risk 24
Projected development cost 25
Proprietary Issues 26
VIII. Operations Plan 27
General approach to Operations 27
Business locations 27
Facilities and Equipment 27
IX. Management Team 29
X. Overall Schedule 35
XI. Financial Projections 38
Sources and Uses of Funds Statement 38
Assumptions Sheet 39
Pro Forma Income Statements 39
Pro Forma Balance Sheet 41
Pro Forma Cash Flows 41
Ratio Analysis 42
 Tower Threads 3

I.Executive Summary

Industry Analysis

The retail industry is growing steadily, with new participants joining the established

participants each year. This creates a fragmented market which Tower Threads will be poised to

disruptive with a business model that brings retail clothing, accessories, and convenience items

directly to the consumer. Industry trends for this market are growing to incorporate technology

and mobile trucks, trends Tower Threads will remain on the forefront of by encouraging mobile

payments by customers and utilizing social media to advertise the location of the truck.

Company Description

Tower Threads was founded by five Sacramento State business students, Curtis

Cantaloube, Marissa Mendez, Ryan Loof, Savannah Foreman, and Timothy Klehn who each

have backgrounds uniquely qualifying them as chief officers of Executive, Co-Marketing, Co-

Marketing, Finances, and Operations, respectively. With vast experience between the five

partners, Tower Threads will grow from one truck and one garage to a mobile empire that brings

capitol corridor fashion to Threadies throughout California. Offering affordable clothing,

accessories, and convenience items to women attending concerts, festivals, farmers markets, and

downtown areas, the company is cornering the mobile clothing market. Currently, the Tower

Threads is a limited liability corporation, with each partner owning 20%. Key partnerships

outside the company will include relationships with apparel wholesalers, convenience-store

wholesalers, and festival organizers for inventory and product placement.

Market Analysis

Currently, Tower Threads has one local fashion truck competitor, with roughly 500 in

competition across the mainland United States. Tower Threads will enter the festival market, and
Tower Threads 4

further segment this market by targeting female, experiential millennials who earn $20,000 to

$40,000 annually, within the Single I lifestyle. Since this segment engages in hedonistic

spending and values relationships, Tower Threads will encourage a social relationship via social

media, and design the truck as a secondary destination experience. This experience and the larger

service area will differentiate the company from other local competitors.

Economics

Total monthly costs include vendor permits, gas, inventory, maintenance, and insurance,

which total $1,667. With a conservative estimate of revenue of $12,750 per month, the Break-

Even Point will occur between the fourth and fifth month of operations.

Marketing Plan

Tower Threads will use barebones marketing tactics such as social media, local

influencers, and variable interval promotions. The product is 70% clothing, 20% accessories, and

10% convenience items, all distributed to festivals, concerts, and events. The pricing will be

affordable, but still include a 50% margin due to strategic partnerships with wholesalers.

Promotion will include recruiting lifestyle influencers and discounts for followers along social

media platforms. Tower Threads will use relationship sales tactics, a comfortable atmosphere,

and closed-ended questions to encourage sales.

Design and Development

Tower Threads will bring fashion to various locations around California, and will have

two partners staffing the truck at all times. Currently underdevelopment, the truck will be

expanding throughout 2027. All paperwork has been completed, however additional licenses will

need to purchased and additional staff will be hired through expansion. Partners Marissa and

Savannah will navigate trends, while Ryan will mitigate any customer dissatisfaction. The total
Tower Threads 5

projected development costs are $64,000, including the truck, inventory, insurance, equipment,

renovations, parking permits, gas, and maintenance. Tower Threads will trademark their logo

and company name.

Operations

The company will operate from 11 hours a day from Monday to Thursday, 12 hours on

Fridays and Saturdays, and 10 hours on Sundays. Initially staffing will be limited to the five

partners, but as the company scales more staff will be recruited. The truck was purchased and

renovated for $20,000, financed by Savannah. Storage fees will be avoided by parking at

Marissas house when not in use.

Management Team and Company Structure

Curtis Cantaloube has many years of project and time management which has shaped him

into the ideal CEO, who is responsible for company oversight, funding, and managing the

remaining four partners: Marissa Mendez and Ryan Loof who are Co-CMOs, Savannah who is

CFO, and Timothy Klehn who is COO. As Co-CMOs Marissa and Ryan split duties for permits,

licensing, scheduling, planning, and general marketing, while Savannah is responsible for

profitability and finances, and Timothy is responsible for inventory, supply chains, property,

equipment and general maintenance.

Overall Schedule

Tower Threads mainly has event-based milestones, including selling $10,000 over a three

day festival, with sequential milestones of obtaining a loan, facilitating a soft open, and breaking

even.

Financial Projections
Tower Threads 6

The partners used 38% personal funds, 38% private loans, and 24% business credit,

which cover the total startup costs of $48,800. These costs are bound by assumptions, such as the

economy is continuing to rebound and will have a general positive outlook over the next five

years. These assumptions additionally guide the pro forma income statement which claims a total

net income of $42,800 in year one, $71,512 in year two, once all debt is repaid, and with modest

growth in year three total net income will be $80,624.

Tower Threads 7

II. Industry Analysis

The domestic market value of fashion in the United States is $385.7 billion

dollars1. In 2017, fashion industry growth is projected to increase 2.5 to 3.5 percent2.

The value and affordable luxury market segments are expected to increase the most.

The fashion industry is fragmented due to constant change in fashion trends. New

companies are able to enter the market because of the lack of large retail fashion stores

dominating the industry. According to the National Retail Association, it is projected that

industry sales will increase 3.7 to 4.2 percent in 20173.

Nature of Participants

There are many participants in the retail fashion industry in the United States.

This contributes to the fragmented market along with the seasonal nature of fashion.

These brick and mortar or online fashion retail stores are not in direct competition with

Tower Threads. Participants such as Forever21, H&M, and Urban Outfitters would be

our lateral competition. This is due to fact the mobile boutiques are a niche within the

retail fashion industry. Tower Threads direct competition is other mobile fashion

boutiques. These participants are innovative by nature due to their unique business

model. Traveling to the consumer allows mobile retail stores to capitalize on a small,

new market.

Key Success Factors

1
http://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion
2
https://fashionunited.com/global-fashion-industry-statistics
3
http://www.cnbc.com/2017/02/08/retail-sales-seen-rising-between-37-percent-and-42-percent-this-year.html
Tower Threads 8

Tower Threads key to success is our disruptive business model that brings retail

clothing, accessories, and convenience items directly to the consumer. Customers

seeking instant gratification will not be forced to travel to a brick and mortar store or wait

for their items to be delivered. Tower Threads will hand select trendy items and bring

those items directly to the consumer. Additionally, Tower Threads will provide dressing

rooms and mirrors inside of the mobile boutique. This is a vital feature in the retail

fashion industry that online retailers lack. Tower Threads will provide an exclusive

shopping experience. The interior of our boutique will be modern and aesthetically

pleasing. Our presence in high demand environments will be essential to our success

as well. Due to our operations management strategy of high inventory turnovers and

perpetually new products, we will take advantage of the treasure chest effect and

provide unique experiences. Tower Threads will operate during late night hours and

take advantage of the lack of retail brick and mortar stores open late. Additionally,

consumers may be more enticed to shop after having a few late-night drinks. Tower

Threads will sell a mix of shopping, specialty, and convenience items to meet

consumers needs. This will allow Tower Threads to capitalize on purchases at festivals

and concerts when convenience items are needed. Lastly, Tower Treads early entry in

the market will create a competitive advantage and allow the company time to establish

a brand before California becomes a flooded fashion truck market.

Industry Trends

In the retail fashion industry, brick and mortar stores are a staple. However, the

market is slowly shifting to favor online and mobile retailers. Online retailers often

provide a larger product selection while carrying lower prices, due to a lack of overhead.
Tower Threads 9

Consumers also get to shop at their convenience and are not forced to travel to a

physical location. The business model for Tower Threads will not directly compete with

online or brick and mortar stores. Its mobile advantage will allow the company to bring

products directly to consumers and avoid expenses of shipping, online payments or

returns, and rent. The retail fashion industry is seasonal and ever changing, therefore it

is vital to stay relevant and on top of trends in the fashion industry. The industry is

currently shifting towards incorporating new technology and unique buyer experiences.

Long-Term Prospects

Long-term the clothing industry will evolve to compete with online retailers prices.

The companys direct-to-customer business model will keep profit margins high while

still providing Threadies with high quality trendy items. The retail fashion industry will

remain a profitable sector due to the increase in consumer spending. Disposable

personal income was up 3.4 percent in the year ending October [2016], and average

hourly earnings are starting to accelerate 4. Tower Threads will need to be aware of

any regulatory changes in relation to import taxes, and be wary of any tariffs on

imported goods from China.

4 https://www2.deloitte.com/us/en/pages/consumer-business/articles/retail-distribution-industry-outlook.html
Tower Threads 10

III. Company Description

Five students founded the company in 2017 while attending Sac State. The

company was created when the five students realized there was no options to buy dry

socks or rain gear while at school during the rainy season. Marissa and Savannah are

the lead fashion consultants who use their knowledge of fashion to locate the best

styles at the best prices for each occasion. Curtis and Ryan use their skills to locate and

find high traffic locations and find the low traffic routes. They use their knowledge of

major events to develop a strategy of high-yield events. Timothy uses his sales

knowledge to develop a business plan and sales strategy. Currently, the company has

one vehicle in service with plans to expand and have multiple mobile boutiques

throughout California by 2027.

Company History

Marissa, Savannah, Ryan, Curtis and Timothy founded the company in 2017

while attending Sac State. Quickly becoming the best of friends, they set out to create a

mobile company that sells high-end, trendy clothing, accessories, and convenience

items throughout California with a target market of women who attend events, hang out

at the beach or at the nightlife scene. The company started off with one garage and one

truck to tackle different locations with a strong social media marketing strategy. A

special focus is on SnapChat and Instagram stories by offering discounts followers. This

strategy has been successful with an increase in customers (Threadheads or

Threadies) and sales with minimal marketing costs. The company will expand to 30

trucks throughout California, setting up trucks in heavily populated area such as San

Francisco, Los Angeles, San Diego and other locations by 2027.

Tower Threads 11

Mission Statement

Tower Threads brings fashion-forward clothes and accessories to all of California

from the capitol, one festival at a time. Our Threadies will always have affordable

clothing at all the avenues and boulevards -- Tower Threads keeps your fashion on

point.

Products and Services

The company selects affordable, trendy womens clothing from wholesalers and

sells them in highly populated areas, such as concerts, farmers markets, beaches, and

the downtown bar/concert scene. It sells fashion goods based on the location and

season, including swimwear and jackets. The company will also sell jewelry,

accessories, and other seasonal convenience items such as sandals, comfortable flats,

and umbrellas.

Current Status

The company currently operates one vehicles, and mainly focuses on special

events and nightlife of heavily populated downtown areas in California.

Legal Status and Ownership

Tower Threads will operate as a limited liability corporation to allow for the

separation of personal assets from business debts. The company ownership is split

between the five founders, each with 20% ownership in the business.

Key Partnerships

The company will partner with several wholesale fashion retailers to bring unique

products to their customers. Wholesale Fashion Square and LA Showroom are two

wholesalers with small batch sizes that will help with the goal of high turnover. Tower
Tower Threads 12

Threads will partner with music festivals and local events to increase brand awareness

and market size.

Tower Threads 13

III. Market Analysis

Clothing Industry-

There are about 500 fashion trucks across the 48 mainland states, with no

Sacramento-based fashion trucks. This industry has several major players, meaning it is

fragmented and highly competitive. To compete, companies must be efficient and

adaptable.

According to Plunklett Research, the global apparel industry saw $5.485 trillion

sales in 2016, a $1.485 trillion increase in sales from 2015. The United States retail

industry is expected to sell over 19 billion dollars in 2017. And per the National Retail

Association, increases in sales can be expected between 3 to 5 percent for 2017 5.

Market Segmentation and Target Market Selection

Tower Threads wants to enter the concert, festival, and rave market. This market

is usually filled by millennials in the Single I life cycle of 18 to 30 years. The company

can capitalize on this segment by being mobile and parking in or near these events to

sell products and accessories.

Demographics and psychographics

Tower Threadies are women living in California between the ages of 18 and 30,

who earn between $20,000 and $40,000 annually. Threadies are experiencers,

according to Business Insights VALs profiles, who want everything, are first adopters

5http://www.valueline.com/Stocks/Industries/Industry_Overview__Apparel.aspx#.WRPWjeUrK00
Tower Threads 14

and first droppers of fashion, are subcultures of mainstream, who place high value of

friendships and experiences, and are sociable and spontaneous.

Buyer Behavior

This segment spends money on hedonistic experiences, including entertainment.

This segment prioritizes money for entertainment and impulse buying, so the company

will cater to this by offering the mobile truck as an experience, not just a single

transaction. By encouraging Threadheads to interact via Snapchat, Instagram,

Facebook, Twitter, Yelp, and the website, the company will create a word-of-mouth

community that generates buzz for the brand. It will also target online social media

influencers to represent the brand and further increase an online presence.

Emphasizing the cyclical qualities of fashion, customers can expect different fashion

items with each visit to the store.

Competitor Analysis

There is only one fashion truck based in Sacramento, Wild Poppy & Co, with the

next closest competitor based in Elk Grove, The Streetware Truck. Another competitor

is La Bella Mobile Boutique, based in Stockton.

Wild Poppy & Co (WPC) is an online retailer with a mobile truck serving the

greater Sacramento area. It caters to young, fashionable women with larger spending

budget. They also provide shopping experiences, mainly to groups who have reserved

the truck for parties and events, such as bridal showers, Sunday brunch, birthdays,

sororities, and girls nights. By providing small appetizers, champagne, wine, and

discounts to groups of fifteen or more, they guarantee purchases and increase value.

WPC prices their clothing with high markups, with single items priced at or above $40,
Tower Threads 15

which increases their perceived quality. The social media strategy for WPC is bare-

bones, in that they have links to Pinterest, Instagram, Facebook, Tumblr, and Twitter on

their webpage, but only have active accounts through Facebook and Instagram. They

have a strong social media connection to local businesses, by posting their daily

location and highlighting the bar or restaurant they are parked outside. Occasionally,

they post promotions for other small businesses, like a $5 entry discount to Sacramento

Beerfest.

The Streetware Truck caters to young males interested in street-fashion t shirts

and sneakers. Their social media strategy includes a presence on Instagram, Twitter,

and YouTube, all of which are well-rounded with consistent, daily posting schedules.

Their instagram is mainly a shout-out to their customers, usually an individual or couple

posed with an article of clothing in front of the truck. TST does not have an ecommerce

store, only a mobile truck, which can increase foot traffic by capitalizing on the treasure

chest effect, where clothing changes rapidly and pricing is unexpected.

La Bella Mobile Boutique (LBMB) is based in the Stockton and Lodi area, and is

a clothing, consignment, and accessories store. With no website, and an inconsistent

presence on Facebook, competition is not high.

None of these trucks serve the same markets, demographics, areas or events

that Tower Threads does.

Estimates of Annual Sales and Market Share

According to the American Mobile Retail Association (MNRA), monthly gross

revenue is about $1,000 to $4,999, meaning one third of all retail trucks breakeven
Tower Threads 16

between 7 months and 2 years. Initial start up costs are about $70,000, and monthly

costs are about $1,000 for gas, maintenance, and parking6.

the monthly gross revenue for 45% of mobile fashion trucks in their survey is

$1,000 to $4,999, with about 35% of trucks reaching their breakeven point within 7

months to 2 years. Annual sales can be projected to be about $12,000 to $60,0007.

While these margins are slim, we expect higher numbers due to our larger service area,

unique shopping experience, and social media interactions.

6
http://www.businessinsider.com/fashion-trucks-across-america-2014-9
7
https://2.bp.blogspot.comqcRWjULSn14/V3wWA22kOLI/AAAAAAAAB2A/cgdck1KZo_sAK6sIR3t2_LkawwSC6GXhwCLcB/s1600/

MOBILE%2BRETAIL%2BSURVEY%2BRESULTS%2B2015%2BINFOGRAPHIC.png
Tower Threads 17

V. The Economics of the Business

Revenue Drivers and Profit Margins

Fixed Costs Per Inventory Cycle (2mo.) Per Inventory Cycle ( 1mo.)

Maintenance 667 333

Insurance 500 250

Total Fixed Costs $1,167 $583

Variable Cost

Vendor Permits 167 83.5

Gas 1,000 500

Inventory 10,000 5,000

Total Variable Costs $11,167 $5,583.5

Operating Leverage and Its Implications

Start-Up Costs: See Financial Section: Sources and Uses of Funds

BreakEven Analysis:

For each inventory purchase of $10,000, the company will generate $25,500 in

revenues, approximately every two months. The break even point was calculated by

dividing this revenue by subtracting the total fixed cost per cycle of $1,167, then dividing

by the total variable cost per cycle of $11,167.

Tower Threads 18

Revenue 25,500 = 1,167+11,167x x = Breakeven Point = 2.18 cycles

After 2.18 purchasing cycles, Tower Threads will break even. The company will break

even after 4.3 months.

1 Revenue = 1 purchasing Cycle =$25,500 profit = ~ 2 Months Time

Tower Threads 19

VI. Marketing Plan

Overall Marketing Strategy

As a small startup, Tower Threads will rely heavily on barebones marketing,

including social media, local influencers, and variable interval promotions.

With a marketing plan resting heavily on social media, Tower Threads can keep

its advertising costs to a minimum and still reach desired consumer segments. Since

the most sought after segment for Tower Threads is young women in the Single I phase

who are about 18 to 30 years, social media will be the optimal channel to engage with

these women.

Our strategy in social media is to gain new customers as well as retain our

current customers by creating a relationship with them by building brand loyalty. We will

create contest online using our hashtag to promote our brand and give free

merchandise/apparel away to winners.

Our marketing strategy also consists of attending large music festivals because

of the large crowds they bring in directly correlate with our target market. We will give

some free products to performing artist at these festivals in hopes they will endorse the

brand. Celebrity endorsements will be huge in promoting our brand at events and via

social media.

Product, Price, Promotions, and Distribution

Product: Affordable festival clothing and accessories plus a healthy mix of

convenience items. Clothing will be retailed from wholesalers sourced in China which

allows for a 50% markup while simultaneously providing an affordable price tag.

Clothing items will include rompers, shorts, pants, tank tops, t-shirts, bralettes,
Tower Threads 20

swimwear, outerwear. Accessories include sunglasses, chokers, statement

necklaces/earrings, rings, belts, gloves, sarongs, sandals, shoes, and socks. Seasonal

convenience items include rain jackets, ponchos, umbrellas, sunhats ,and handheld

fans. While yearlong convenience items include water bottles, lighters, sunscreen,

chapstick, bug spray, aloe vera, aspirin, backpacks, and power bars. Inventory will be

70% clothing, 20% accessories, and 10% convenience items.

Price: All clothing will have an affordable price tag, most clothing priced around

$20 to $30 for a single item, and accessories will range from $10 to $20. Most festival

goers have a fixed budget for attending events with a smaller budget for gear and

souvenirs, so we will fit within their price range and still provide the quality and

convenience they seek. The convenience items will be similar to those items found in

corner stores and convenience stores, with a similar markup. These items are

nonperishable, and bring the convenience of the corner stores to the heart of the

festival, allowing ThreadHeads to purchase the items they need while remaining inside

the festival gates.

Promotions: To encourage the festival lifestyle, we will have discounts for those

who pay with Android Pay, Apple Wallet, or Google Wallet. We will also have Yelp

review discounts, and variable interval promotions to encourage customers to find the

truck. Our Yelp discounts will encourage positive reviews and establish the legitimacy

of the company, with a 10% discount for a positive review. Another 10% discount will be

at the point of sale, for customers paying with a mobile application. Alternatively, we will

have Find the Truck variable interval promotions, which are announced the day of the

promotions and last between 1 to 5 hours. This type of promotion will encourage
Tower Threads 21

customers to solve riddles to find the truck, promote their journey while finding the truck

via social media, and provide third party social media coverage for Tower Threads.

Tower Threads will use a variety of platforms, including the following:

-Instagram: highlight outfits of the day, special ensembles, interior design of

truck

-Facebook: acts as a secondary website with a reviews page; SEO to redirect to

website; hosts discounts for Yelp and variable interval promotions

-Snapchat: teasers of new items, behind-the-scenes, and variable interval

promotions

-Twitter: similar to Snapchat except more permanent; SEO to redirect traffic to

website

-Yelp: reviews reinforce the legitimacy of the website, will be populated with

discounts for return customers

Throughout these platforms, we will seek out lifestyle influencers who have 500 to

1,000 followers and specialize in fashion, festivals, music, and events. These individuals

will be personally invited to our open truck week, a series of events when the truck will

be in each of the 7 major California cities, including: Redding, Sacramento, San

Francisco, Santa Monica, San Jose, Los Angeles, and San Diego. During this unveiling

week, we will encourage influencers in and around these cities to meet us at the truck,

try out our clothing, and post their favorites to their social media channels. To

encourage a broad California community, we will promote the influencers on our

platforms as well.
Tower Threads 22

Distribution:

The Tower Threads truck will be the only channel of distribution, allowing the

truck to be in multiple vending locations in a city throughout the course of a day, and in

multiple regions over the course of a week. We will not distribute over the website, due

to two factors: employee costs required to update and maintain the perpetually

changing inventory; operational differences of online distribution including payment and

timely shipping. Distribution will depend on the major events occurring in California,

including the Hard Music festivals, the three day Outside Lands Festival in San

Francisco, Pride celebrations throughout the major cities, Coachella, and Electronic

Dance Music festivals. Between these events, we will drive to farmers markets, Second

Saturdays, and food festivals including the Strawberry festival in Roseville and Galt, the

Grilled Cheese Festival in Sacramento, Asparagus Festival in Stockton, and the Honey

Festival in Woodland, to name a few. Tower Threads will make college campus

appearances as well has downtown concert/bar scene stops in LA, San Francisco, and

Sacramento.

Sales Process

Tower Threads will have short inventory cycles, allowing for seasonal changes to

clothing and for easy feedback as to which items are popular and fast-selling. The sales

process includes engagement with the customer, informing them of our current location,

and using Square at the point-of-sale. After purchase, we will send a follow up text or

email message, encouraging the buyer to snap a photo of them and their new item for a

discount on their next purchase. Collecting personal information of the buyers will prove

beneficial, as we can further tailor our products and promotions to the demographic.
Tower Threads 23

Ideally, we will have monthly repeat customers, and can encourage habitual purchasing

with buy 10 items and get the next item 50% off promotions.

Sales Tactics

Tower Threads will have a variety of sales tactics, ranging from using closed-

ended question to help the customer figure out what kind of outfit they desire to using

social media to offer discounts to people for following or subscribing to Tower Threads.

Tower Threads will offer great customer service to make the customers feel like they

are in a normal brick and mortar store.

Tower Threads 24

VII. Design and Development Plan -

Tower Threads will be selling clothing, accessories and conveniences items to

women at festivals or different areas like beaches bars . Using a truck to transport and

hold the product, Tower Threads will be able to move to different locations and sell what

is needed for each occasion. Bikinis and swim trunks at the beach, dry socks for the

rainy season. Tower Threads will operate one truck with two people working. One

person will handle the POS and the other person will maintain customer service and

keep an eye on the inventory to lower the chance of theft. At the end of the day the

money will be counted and placed away till it can be deposited.

Development Status and Tasks

Currently Tower Threads had one truck and a medium size inventory. In the

future, Tower Threads is first looking to purchase more trucks and more inventory for a

better price. By doing this Tower Threads will be making more profit and increasing the

areas they can cover throughout California. Tower Threads has submitted the

paperwork for all of the license they need to operate. When the expansion begins Tower

Threads will need to apply for additional licenses for each Truck that is in operation.

Tower Threads will also be hiring more people to operate the trucks and to help out with

festivals.

Challenges and Risks

Same with all business there will be challenges and risk that Tower Threads will

face. A challenge that Tower Threads will face is the unpredictable future. Trends

change and people change, but using the fashion skills of Marissa and Savannah,

Tower Threads will be able to find new trends and adapt to the changing market.
Tower Threads 25

Regulation change could be a big challenge for Tower Threads. If Tower Threads will

be able to adapt and continue to operate even with the regulation changes. Customer

services is the most important and hardest challenge Tower Threads will face. Not all

customers will be satisfied and those that are not will go to the internet to complain.

Using Ryans excellent customer service skill, he will be able to identify the leading

cause of customers being dissatisfied and will be able to act and fix the problem that is

making the customer unhappy. These are all challenges and risk Tower Threads will be

facing while starting up.

Projected Development Costs-

Used Truck cost - $15,000

Inventory - $10,000

Insurance - $3,000

Equipment - $20,000

Wage - Until break-even point is reached, 70% of profits are reinvested into company.

Once BEP is reached, 50% of profits are reinvested into the company, and the

remainder are split evenly between founders.

Parking Permits - ~ $1,000

Renovation - $5,000

Gas - $6,000

Maintenance - $4,000

Total Projected Development Cost - $64,000

Tower Threads 26

Proprietary Issues (Patents, Trademarks, Copyrights, Licenses, Brand Names)

Tower Threads will be getting a trademark on their logo and company name to

ensure they will be the only business with that icon and name. Licenses Tower Threads

will need to get a class A drivers license, business license, employer identification

number, vehicle license also, a seller's permit and a business license for all the cities we

will be selling in and for each location. Tower Threads will be selling Name brand over

the counter drugs like tylenol and name brand lighters like Bic.
Tower Threads 27

VIII. Operations Plans -

General Approach to Operations:

Tower Threads will operate from 10am to 9pm Monday through Thursday, from

10am to 2am Friday and Saturday, and from 10am to 10pm Sundays. The company

staff will comprise of the five founders working in shifts of two to manage the boutique.

Once Tower Threads becomes profitable, the company will hire employees, which will

allow the founders to focus on operations. Tower Treads will have a heavy online

presence focusing on social media to establish the brand and handle customer

relations.

The company will be based out of California to capitalize on the unique festival

and music culture as well as the high level of disposable income in the area. California

weather also allows Tower Threads to provide a variety of fashionable items for each

season. Inventory will be hand selected by our buyers, Marissa and Savannah, who are

informed on the latest fashion trends. The company will finance the purchase of

inventory with Curtiss personal loan of $25,000. The remaining cash needed for

operational costs will come from company credit cards. Tower Threads will account for

the high inventory turnover and time needed to receive shipments of inventory.

Facilities and Equipment:

Tower Threads purchased a used bread truck from Craigslist for a total of

$15,000. Interior and exterior renovation costs for the truck were $5,000. Savannah took

out a personal loan to finance the equipment and will pay annual interest of $400. The

company will store their inventory inside of the truck to avoid the cost of a storage unit.
Tower Threads 28

Tower Threads will operate out of Marissas garage and park the company vehicle in

her backyard when it is not in use.

Tower Threads 29

IX. Management Team & Company Structure

Management Team

Marissa Mendez, Co-Chief Marketing Officer (Co-CMO)

Marissa Mendez has had extensive experience creating success for small

businesses, beginning in middle school when she began babysitting. Promoting her

babysitting skills included handing out refrigerator magnets with her phone number,

posting flyers on community mail boxes, and encouraging word of mouth sales. After a

while, she began shadowing a specialty cake designer, and opened up her own

specialty cake business, Edible Art. Employing her sister for detailed design work, and a

classmate to handle social media, Marissa could focus on designing cakes and growing

the business.

These two experiences laid the foundation for her third entrepreneurial endeavor,

The Dapper Choice, a handmade, affordable, online fashion accessory company for

young women. This company was fully licensed and recognized by the State of

California, which sold bowties to young women across the United States. She created a

website, a storefront through Etsy, and had the occasional pop-up location at craft fairs

or farmers markets. After two years, she decided to focus on finishing her three

associates degrees: Spanish, Business, and Social Sciences.

She transferred to Sacramento State to earn her bachelor's degree in marketing

and international business, where she began her own Marketing Consulting company

and helped launch The Craft Cube. As a marketing consultant, she creates promotional

materials including websites, brochures, and letterheads, while fostering strong

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relationships with industry professionals in entrepreneurship, construction, fine arts, and

videography.

She will be partially responsible for permits, local licensing, scheduling, and

planning, including a calendar events,vendor licenses for each event, and permits.

Ryan Loof, Co-Chief Marketing Officer (Co-CMO)

Ryan has a strong customer service, operations, administrative and marketing

background. After high school Ryan Joined the Air force where her served five years as

an aircraft mechanic. During his time in service he learned firsthand how global logistics

and supply chain functions were performed. After separation from the military Ryan

worked at several retail outlets to include Orchard Supply Hardware, Old Navy and his

schools Bookstore all giving him invaluable customer service and retail experience.

After working retail for several years Ryan began working for Raleys Distribution center

in a warehouse setting, advancing his knowledge of the supply chain and logistics.

Currently, Ryan works as a program assistant with the California Department of

Public Health, Women Infants and Children (WIC) Division where he administers

authorizations for farmers and farmers market managers to participate in the WIC

program. He performs check validations, creates documents and spreadsheets,

maintains a customer database and handles vendor complaints.

Ryan has two associates degrees in Business Administration and will graduate

with his Bachelors in Business Administration with a marketing concentration in the fall

of 2017. He then plans to pursue his MBA at Embry Riddle in 2018.

He will be partially responsible for permits, local licensing, scheduling, and

planning, including a calendar events, vendor licenses for each event, and permits.
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Timothy Klehn, Chief Operations Officer (COO)

Timothy has experience in controlling inventory, managing and maintaining

different equipment. At the age of 17 Timothy was responsible for managing inventory,

fixing machinery and gathering information on new equipment for his parents 4

business. Taking control of the inventory help teach him the importance of ordering the

right number of items. If he ordered too much food would spoil, too little and there was a

lost opportunity to make a sell. He learned all these skills from his mother who received

a bachelor's degree in business administration and accounting from Holy Angel College

in the Philippines. He was also taught about supply chain from his older brother who

learning the skill from Sac state. His father how was in the United Air Force for 23 years

taught him how to maintain and fix different types of machinery. Using all the knowledge

his family has taught him he could make sure the business was always stocked

correctly and the machines were running properly.

When his parents decided to sell the businesses, Timothy made a choice to go

back to school and finish his business degree at Sac State. So far he has been learning

more about operational management, finance and international business. Timothy will

graduate in the year 2019 with his international finance business degree and hope to

get a job in risk management or investment.

Timothy will be responsible for inventory, supply chain, property, equipment, and

vehicle maintenance.

Savannah Foreman, Chief Financial Officer (CFO)

Savannah Foreman has both retail fashion, and administrative experience.

Savannah learned the ins and outs of fashion when she worked at Crossroads Trading
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Company. Here she learned about purchasing and reselling clothing to make a profit.

Savannah gained knowledge of the seasonal, cyclical, and trendy nature of fashion

items. To pursue her interest in business, Savannah left Crossroads Trading Company

to work for the California Department of State Hospitals in the Accounting department.

During this time, Savannah was pursuing her bachelor's degree in Business

Administration with a focus in Accounting.

After attending several classes at Sacramento State and working for the State of

California, Savannah obtained knowledge of accounting principles and administrative

processes. During Savannahs senior year at Sacramento State, she realized that she

didnt enjoy working a monotonous accounting job and decided to change her

concentration to Entrepreneurship to pursue something she is passionate about.

Savannah will graduate fall of 2017 and plans to obtain her MBA in Finance after she

establishes a career.

She is responsible for accounting, profitability, and finance.

Curtis Cantaloube Chief Executive Officer (CEO)

Curtis has experience in time management, customer service, and management.

He learned how to plan accordingly and great time management techniques while being

a student athlete his whole life and including this first four years of college. Managing

time is crucial as a student athlete due to the many different obligations. The duties that

come with being a student athlete consist of having to attend all practices and team

meetings while also working hard in school to maintain a GPA of at least a 2.0 to remain

eligible to play in games. Without making a calendar scheduling times to devote towards

school working around practice and team responsibilities this task can be very difficult.
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Curtis also has great work experience making him an excellent choice for the

CEO of Tower Threads. He worked in the restaurant industry at Chicago Fire for over

three years, in which he acquired great customer service experience. Curtis also has

worked at his family business Roseville Brake & Alignment for three years as a service

advisor and manager. He learned the ins and outs of managing a business and day-to-

day operations. As a manager Curtis also learned how to keep open communication

with employees which allowed for employees to have input and their thoughts on what

could help the business continue to grow. This is essential for all businesses to have

open communication so that nothing goes unnoticed and different views can be brought

to the attention of management.

Curtis has an Associates degree in Social Science from Monterey Peninsula

College. He is also working on his Bachelor's degree from Sacramento State University

in Business Administration with a concentration in Marketing. He will graduate this

December. He has learned very valuable information in his marketing and business

classes that will be applied while being the CEO for Tower Threads.

He is responsible for company oversight, initial funding, and high level operations.
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Company Structure
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X. Overall Schedule

Major events, milestones,

Some major events we want to have our mobile truck outside of include concerts

such as Coachella, Stagecoach, and other local concerts held at the new Golden 1

Arena. Coachella is an annual music and arts festival held at the Empire Polo Club in

Indio, California. This is one of the largest music festivals held in California lasting over

a three-day span which includes a large variety of different musicians and music styles

on multiple stages. This festival draws a huge crowd with a variety of people who have

different clothing styles relating to the music they listen to. Attending this festival with

our mobile truck could be huge for our company because we will come across a wide

variety of females with different styles and taste for clothing. This is the perfect scenario

for our company to be able to have a presence in an area where there are people willing

to spend money on clothing and accessories to complement their music taste while

staying current with what is trending at these events.

Another event that we feel is similar to Coachella and is also vital in sparking

revenue for our company, is Stagecoach. Stagecoach is a three-day festival for country

music fans and those looking to enjoy a fun filled weekend. If we can get our mobile

truck to this event, we feel we can make a good amount of profit selling our unique

clothes and accessories. These events present us with thousands of people in our

direct target market. Also, by just being present at these events we create such a large

audience that is great marketing for our brand.

We also want to attend local concerts and events at the newly built Golden 1

Arena in Sacramento. There are many different types of concerts and events held in the
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arena pulling in large crowds of people. By attending these local events we will be

building our brand, marketing to a large audience, and will make high revenue in a short

period.

Milestones

The first milestone for Tower Threads is to accrue some debt via loans to cover

startup cost and initial inventory. Loans are best option for Tower Threads in the early

stages, instead of compromising equity.

The second milestone is to complete a soft launch during the first three months

by buying minimal inventory to observe product trends sold at festivals only. After three

months Tower Threads will have a concrete overview of festival driven profits for each

inventory category, and eliminate items that do not perform.

The third milestone is to establish staffing by month three. Retaining the most

driven employees who understand the company direction is important.

The fourth milestone is achieving the breakeven point as soon as possible to

generate profits, pay back investors, and pay off loans. After 12 months in operation the

company will generate revenue by attending concerts and events.

The fifth milestone Tower Threads will achieve is to sell $10,000 of inventory

over the span of a large 3 day event. This is a huge opportunity to spike sales and

revenue due to the thousands of people who will be in attendance.

Milestones \ Dates 02/18 03/18 06/18 09/18 04/19 06/19

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Loan: car, inventory

Inventory & licenses

Soft Open

Staffing

Sell 10k over 3 days

Break Even Point

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XI. Financial Projections

Sources and Uses of funds Statement-

Assumptions Sheet
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As the economy continues to rebound and grow, unemployment rates drop and

average household incomes continue to rise, retail in general has a great outlook over

the next three to five years.

The clothing boutique industry is expected to retail over 19 billion dollars in 2017,

a 3.1% decreases per pre-presidential election numbers. With the growth of the

economy projections will likely increase this year rather than decrease. Our business

model will allow us to present our products to our customers where they are, increasing

impulse buys over our top competitors.

Pro forma Income Statements

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Pro forma Balance Sheets

Pro forma Cash flows

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Ratio Analysis

Return on Assets= $80624/$56000= 1.43 in 2017

Return on Sales = $51000/$147000= .347 in 2017

Gross Profit Margins= ($145200-$60000)/$145200= .587 in 2017

Profit Margin=$42800/$147000= .291 in 2017

Asset Turnover= $147000/$51000= 2.88 in 2017

Debt Ratio = $40000/56000 = .71 in 2017