New Venture Creation Assessment Assignment Sample

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Introduction

In recent years, consumer awareness regarding the harmful effects of chemical-based beauty products has significantly increased. This shift in consumer behavior has led to a growing demand for natural and herbal cosmetic alternatives that are both skin-friendly and environmentally sustainable. Responding to this evolving market trend, an entrepreneur has developed a comprehensive business plan to launch a new venture—Gentle Herbs—a brand specializing in herbal cosmetic products made from organic ingredients. The business aims to cater to customers of all age groups, offering safe and effective beauty solutions that align with modern values of health and sustainability.

The primary mission of Gentle Herbs is to provide high-quality organic beauty products while promoting eco-conscious consumer choices. The company's vision is to become a trusted name in the herbal cosmetics industry, with a key objective of achieving a 20% increase in sales within the first 12 months of operation. To safeguard innovation, the company also plans to obtain patents for its unique formulations.

This business plan outlines the organizational structure, roles and responsibilities of team members, required skills and qualifications, as well as training needs essential for the success of the business. With a clear strategic approach, Gentle Herbs aims to make a meaningful impact in the booming natural cosmetics market.

EXECUTIVE SUMMARY MANAGEMENT TEAM

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Overview of Plan

The present study is based on the business plan of an entrepreneur who will start a business of herbal cosmetic product by open a Gentle Herbs. The entrepreneur will make beauty products using organic ingredients for the customers of every age group (Abbott, 2020). The mission, vision of the company will to provide organic beauty product and objective is to increase sale by 20% in 12 months. The company make patent for the products to provide safeguard to them.

Organizational chart and role of team member

The Gentle Herbs will use organizational structure in the company that give proper details of roles, responsibility and relationship of employees within the organization. The company will have different department for finance, technical, administration and well as for the HR. The top management gives instruction and order for production of product as well as for better services to middle management to general employee. This will aids the company in making right decision and earn profit to attain objectives. Thus, the compliance with the hierarchical structure will be implemented and it will be providing a better base to the company to develop themselves.

The team member of the Gentle Herbs will aid in achieving goals by performing duties and responsibility. The operation and production team role is to produce a herbal product with natural ingredients at a minimal cost. The role of sales and marketing team is to handle the advertising and marketing of products through TV, social media and website (Benková et al, 2020). The accounting and finance team make financial planning , budgeting for producing the product. The research and development team do research and bring innovative ideas for the product to attract the customers.

Skills, Qualification, training needs and interest of team member

For the succession of the Gentle Herbs, it will required skill and qualified employees or team members. The company will require skill team members who have a better understanding of the skin type, well- known about the designing and production of the cosmetic. A good formulator of cosmetic have better knowledge of ingredients to create cosmetic product like balms, gels and effectively differentiate one product type to other. A team member also requires skill of good communication, problem-solving and decision making. The team member of herbal cosmetic company need to have a qualification specially need a degree in chemistry, require skill in organic and biochemistry to develop a suitable cosmetic product. The company require to give training to the employees regarding management of inventory, production, delivery of products and also giving precautions to the feedback of the customer for better performance.

BUSINESS DESCRIPTION

Business Name

In today`s time the consumer are more aware about the harmful effects of chemicals in the beauty products. In current time the consumer taste and preference is changes as the consumer are concerned about the environment and the impact of the product use by them on nature. As a result, many consumers change their preference to green cosmetic that have a less risk to the skin and on the environment. The natural cosmetic market leads to generate the revenue of US $ 266.70 m in the year 2024. It going to makes a growth of 5.54% annually. By referring this and with the increasing demand for herbal product the entrepreneur will make a plan to open store named Gentle Herbs.

Description of the product

In the new business the entrepreneur will include variety of products like skincare product lotion, creams, sunscreen, cleanser, toner, serum, body products like face wash, shampoo, hair oil and so more all this product will build using organic or herbal ingredients and will use environmental friendly packaging (Bowey et al, 2023). The natural ingredients will contain such as aloe-Vera, coconut oil, pats of plants like leaves, flower and seeds. The Gentle Herbs will offer the range of herbal products to the male, female as well as child, young and elderly people.

Company`s vision, mission and objectives

The vision of the Gentle Herbs to enhance the health and wellbeing of customer by providing safe, effective herbal beauty products. Its vision will include be ethical in every aspect of business and providing services that meet the requirement of the customers. The mission of the Gentle Herbs will to do good for the business as well as for the customers by making and catering products that are healthier as well as greener. It mission will to use the organic ingredients in production of beauty products that good for the customer skin as well eliminating the impact of chemical products on the environment. The business mission is to discover sustainable healthy product that make a visible difference in customer skin.

The objectives of Gentle Herbs to increase the sale by 20% in the next 12 month by offering hebal product through expand the activities to the online platform.

Unique Benefits/ Value Proposition

The Gentle Herbs will have the unique benefit/value proposition of the product is that it made of 100% from organic ingredients as well as the company will use organic or green packaging for packing the product (Hussain et al, 2022). It means the product as well as packaging leads to reduce wastage and able to reuse and recycle products that reduce the environmental impact.

Intellectual Property Detail

The Gentle Herbs will invest a huge amount of money and time to do research and development of product. To protect the herbal cosmetic product of the Gentle Herbs from copying by its competitor, it will make a copyright, patent and trademark of its product. The company will do this to provide safeguard to its herbal product or design to copy by other company (Kalogiannidis, 2020). The company will make a patent for its product that gives permission to other company to make use of product and charge a fee for this. This intellectual property right will provide advantage for the company as it will protect the use of product from its competitor as well generate a revenue by giving permission to other to use it. It will also beneficial for the company as by giving permission to other it increase the customer for the herbal cosmetic product and able to achieve its objective.

OPPORTUNITY ANALYSIS, RESEARCH AND TESTING BUSINESS IDEA

Explanation of market chosen and market research conduct

These days, there is increasing awareness of people regarding their health and skin. The people not want to harm the skin as well as put their lives in the risk by using the cosmetics that include chemical ingredients .The chemical- based cosmetic increase the chances of skin related disease like acne, dry skin, itching, swelling and so more. Therefore, there is change in consumer preference and lead to shift the demand of consumer from chemical product to herbal beauty product (Lima, McMahon and Costa, 2021). Therefore, the entrepreneurs choose to do a business of herbal cosmetic product. As there is high chances of business succession because people like to keep their skin good and love to look good. Thus, it increases revenue for the company.

In current time, there is increment in the salon business that is an important factor that increases the demand for cosmetic product especially the herbal one. Due to this, the herbal beauty product market expected to grow approx 5.4% CAGR between the year 2023 and 2033.The projected period increase the demand for herbal cosmetic product at reasonable price with green label. The cutting- edge product going to enhances the market expansion and market share for the herbal products.

Industry Analysis

The entrepreneur will do analysis of the industry before commence a business.

Threat for new entrants- The Gentle Herbs will analyze the industry because there is a threat of new entry in the market. The company will require making a good customer base by offering better product from competitors (Maryami et al, 2023). It will reduce the chance of customer shifting to another company product.

Threat of Substitute Product- There will high risk of the company to the substitute product available in the market like product of Body Shop Company. Thus, it is important for the entrepreneur to give focus on this and make a product with innovation that is different from competitor.

Competitive Power- The entrepreneur will decide a price that is reasonable and affordable for the customer. So, the entrepreneur will able to attack more customers towards the herbal product and able to capture the market share.

Supplier Power- The bargaining power of the supplier is remain low because the entrepreneur will source the raw materials for the herbal product from large number of supplier from all over the world. This leads to decline the reliance of entrepreneur on few suppliers.

Buyer Power- The bargaining power of the buyer is high in the cosmetic company. The customer will make pressure on the entrepreneur to decrease the product price, enhance quality of product and for providing better services. As cosmetic market is highly competitive and entry of new firm gives more option to customer this leads to shift the customer to other product.

Evaluation of competitor

For making entry in the market of herbal cosmetic product, the entrepreneur evaluate the competitor firms in the market like Body Shop, L`Occitane, Yves Rocher. These companies also give emphasis on natural ingredient as well as protection of environment. This company makes a continuous growth in the market as consumer shifts their preference to herbal products (Olusegun and Martincigh, 2021). It increases the profitability of the business.

Primary Research Conduct

The entrepreneur conducts the research to collect the data regarding the demand of herbal cosmetic product in the market. The entrepreneur collected the data with the help of questionnaire. It collect data from 10 people and asking question related to why people demand herbal product as well as their requirements what they want in product type. This give an idea about demand of the herbal product in market, this is an influencing factor for the entrepreneur to do business in this market line.

FINANCIAL PLAN

Source of funding

To commence the business, the entrepreneur first makes a plan for raising fund from the appropriate source. For this, the company first analyzes the different source of fund including bank loan, crowd funding as well as angel investor.

Bank Loan- Bank loan helps the entrepreneur to raise fund. Bank offers loan based on the business need. It charges a interest on the amount of loan taken which is paid by the entrepreneur annually.

Crowd Funding-Crowd funding is one of kind of raising money to commence a new business. In this the entrepreneur pitch the idea of business and raise money through attracting large amount of people and collect amount (Cai, Polzin and Stam, 2021). It is done with the help of social media and website related to crowd funding.

Angel Investor- The angel investor is private investors that provide financial support to start-up business and entrepreneurs in return take equity ownership in the company. raising fund through angel investor the business need not to return the fund.

After identified all source of fund, the entrepreneur will choose the best and appropriate source. It may choose bank loan as there is an advantage that there is no need to surrender equity to the lender. It aids the entrepreneur in keeping their ownership right.

Budgeted profit and loss account

	Year 1
Particulars	Amount ($)	Amount ($)
Sales unit	7800
Selling price	100
Sales Revenue		780000
Less Cost of Sales	687500
Gross Profit		92500
Gross Profit Margin		12%
Expenses:
Payroll	7800
Sales and Marketing	5600
Depreciation	1150
Utilities	1000
Insurance	245
Rent	5455
Payroll tax	100
Less Total operating expenses		21350
Profit before interest and tax		71150
Less Interest		1150
Profit before tax		70000
Less Tax @ 20%		14000
Net Profit		56000
Net profit Margin		7%

Budgeted balance sheet

Particulars	Details	Year 1 ($)
Assets
Long term assets	55000
Less Depreciation	950	54050
Current Assets:
Trade receivables		24650
Inventory		14350
Cash Balance		6550
Total Assets		99600
Liabilities
Current liabilities:
Trade payable	23500
Bank loan	52150	75650
Non-current liabilities
Debts		7350
Equities
Share Capital		16600
Total Equities and liabilities		99600

Budgeted cash flow statement

Particulars	Details	Year 1 ($)
Opening cash balance (A)		5500
Add Cash inflow:
Sales receipt	78500
Purchase of long term assets	45000
Total cash inflow (B)		123500
Less Cash outflow
Expenses excluding depreciation	71500
Bill payments	27000
Total cash outflow (C)		98500
Net Cash flow (D) = (B) - (C)		25000
Closing cash balance (A) + (D)		30500

Breakeven analysis

Particulars	Formula	Amount
selling price per unit		110
less: VC per unit		75
Contribution	Selling price- VC	35
FC		95000
BEP (units)	Fixed cost/ contribution	2714
BEP (rupees)		271429

With the evaluation of the budgeted financial statements it is clear that within the first year of business operations the company will be earning the net profit margin of 7%. However, the gross profit margin was 12% but the indirect expenses of the company are more and as a result of this the company is having less net profit margin. In addition to this, total assets of the companies estimated to be 99600. Furthermore, it was evaluated that the closing cash balance with the company is around 30500. Also for being in a no profit no loss situation it is necessary for the company to produce at least 2714 units of products. After this unit of production the company will start earning profits and it will be helpful for the company to grow and developed (Qi et al, 2020). With regards to the contingency plan it is necessary for the company to have a particular contingency fund which can be utilized in case of some emergency or discrepancy. The total of 2% of the profits will be set aside as the contingency fund and it will be used in case of emergency.

KNOWLEDGE & UNDERSTANDING OF THE BUSINESS MODEL CANVAS

Key Partners	Key Activities	Value Propositions	Customer Relationships	Customer Segments
1. Suppliers of raw material 2. Retailers and Distributors 3. Advertisers	1. Build a herbal cosmetic products 2. Marketing & Advertising 3. Strategy for offering better services 4. Manufacturing product 5. Product Distribution 6. Collaborate with influence to promote product 7. Concern with other departments	1. Herbal product made of natural ingredients 2. Collaboration with celebrities 3. Availability of product easily 4. Reasonable pricing 5. Customisation of product 6. Better services	1. Attention to customers 2. Engagement through social media 3. Offer combo of products 4. Attention to feedback of customer 5. Establishing relation through advertisement	1. Women 2. Adult 3. Child 4. Celebrities 5. Beauty professionals
	Key Resources		Channels
	1. Financial resources 2. Human resource means employees 3. Factory and equipment for production 4. Raw material 5. Technology for production and distribution 6. Platform for marketing and advertising		1. Retail shops 2. Online stores 3. Beauty Salons 4. Home shopping
Cost Structure	Revenue Streams
1. Cost of production 2. Administrative cost 3. Cost of advertising and marketing 4. Product distribution cost 5. Commission of retailer 6. Research and development cost	1. Retail cosmetic price 2. Retailer's commission 3. Sponsorship 4. Advertising revenue

References

Books and Journals

• Abbott, R., 2020. Artificial intelligence, big data and intellectual property: protecting computer generated works in the United Kingdom. In Research handbook on intellectual property and digital technologies (pp. 322-337). Edward Elgar Publishing.
• Benková, E., Gallo, P., Balogová, B. and Nemec, J., 2020. Factors affecting the use of balanced scorecard in measuring company performance. Sustainability, 12(3), p.1178.
• Bowey, P., DeYong, K., McNulty, E. and Roeber, K., 2023. Mission & Vision. PLANT SCIENCE, 25(1).
• Cai, W., Polzin, F. and Stam, E., 2021. Crowdfunding and social capital: A systematic review using a dynamic perspective. Technological Forecasting and Social Change, 162, p.120412.
• Hussain, F., Pathan, S., Sahu, K. and Gupta, B.K., 2022. Herbs as cosmetics for natural care: A review. GSC Biological and Pharmaceutical Sciences, 19(2), pp.316-322.
• Kalogiannidis, S., 2020. Impact of effective business communication on employee performance. European Journal of Business and Management Research, 5(6).
• Lima, E.S., McMahon, P. and Costa, A.P.C.S., 2021. Establishing the relationship between asset management and business performance. International Journal of Production Economics, 232, p.107937.
• Maryami, S., Loi, M., Martinez, M. and Di Guardo, M.C., 2023. On the role of team passion in inventing, founding and developing: what happens in the early stages of entrepreneurship?. Journal of Small Business and Enterprise Development.
• Olusegun, O.A. and Martincigh, B.S., 2021. Allergic contact dermatitis: a significant environmental and occupational skin disease. International Journal of Dermatology, 60(9), pp.1082-1091.
• Qi, X., Chan, J.H., Hu, J. and Li, Y., 2020. Motivations for selecting cross-border e-commerce as a foreign market entry mode. Industrial Marketing Management, 89, pp.50-60.
• Online
• Herbal Beauty Products Market Outlook.2024. Online. Available through:< https://www.futuremarketinsights.com/reports/herbal-beauty-products-market >
• What is Hierarchical Structure (vs Flat Structure). 2023. Online. Available through: < https://chisellabs.com/glossary/what-is-hierarchical-structure/>