Question

I want to open an online business and sell specially designed athletic wear for larger women. I need to construct a preliminary plan to raise capital to get things going. (Angel investors, partnerships. etc). I need to thoroughly detail my long-term goals, including a one and five-year goal for the business. (In one year, would like to be showing a profit, and within 5, just be a stakeholder, with no active role). (My goals at this time are to find initial investors, so I can produce some of the clothes, to show them that my business model is viable). I also need to a summary of my financial needs, (budget for manufacture of goods, setting up my website, payment system/I have chosen Stripe, do a preliminary cash flow statement (have no actual figures at this time), and decide on long-term plans for the business. I want the company to be self-sufficient in 2-3 years, when I can sell my major interests, but still receive a percentage of the revenue. How should I do this?

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Answer 1

In order to raise capital for this online business, the following options can be considered:

1. Own contribution- If enough savings are there, investing money from the savings is the best option initially. This is because it requires less formalities and no significant cost of raising capital is involved.

2. Bank Loans- If working capital loan is taken from a bank, it will cover the day-to-day expenses of the business but fixed assets and investments can not be funded from it. Further, the business plan can be shared with the bank based on which the bank sanctions the loan. This is called Funding. In this case, Funding seems relevant.

3. Non Banking Financial Company- If one does not qualify for a bank loan, loan can be taken from Non Banking Financial Companies also. They will provide banking services without much legal hassles.

4. Angel Investors- Along with having surplus cash to invest in a startup, they also share their expertise and provide advice for doing business. They can take more risk in investment. In return, they will ask for a certain percentage of equity in the business.

5. Incubators & Accelerators- Incubators are collaborative programs which along with providing funds will help and assist to solve different problems related to the business. Accelerators also help in the similar manner, specially when the business wants to gain a pace and compete with other players in the market. Some examples are: Y Combinator, TechStars, etc.

The one year goal for the business can be to indulge into pre-selling the product before launching it online. Another good option can be to engage into large scale production of athletic wear for larger women. Marketing the products during any particular sporting event can also be considered.

In five years, the goal can be to expand the business in such a way so that it can be listed in the stock exchange. This can be done by continuously advertising and promoting the products, generating more sales and profit. It will help in gathering fresh investors and expand the business even more.

The following points should be kept in mind:

1. There should be variations in the athletic wear like color, length, design, etc.

2. Target customer is to be decided. For example, whether the product should be sold to all income groups of people or any particular income group of people.

3. A good and efficient management team should be there who will help to design product to match the customers' demand.

4. Advertising the products through various mediums to reach out to a large number of customers.

5. A good and efficient web designer should be hired to create a new website in a very professional, attractive and customer-friendly manner so that the business is just a click away from the customers.

6. A proper delivery system should be figured out. If it is cash on delivery system, a tie-up with a courier service is to be made. Other payment options like payments by debit/credit cards, Google Pay, EMI etc. should be made available.

Keeping these points in mind, the goals can be reached.