business ideas: Knitwear business plan

* The calculations use the average data for the World

1. SUMMARY OF THE PROJECT

The production area of the enterprise will be 65 square meters. meters. For the arrangement, the necessary knitting, sewing and auxiliary equipment will be purchased in the amount of 798.1 thousand rubles. The total amount of starting investments will amount to 1.4 million rubles. The success factors of the enterprise include:

increased demand for knitted woolen products due to fashion;
originality and modernity of manufactured products;
work for a wide target audience: of different sex and age;
reasonable prices with high quality products.

The planned monthly turnover of the enterprise is 925 thousand rubles. Net profit - 311 thousand rubles. Return on sales - 33.6%. Key performance indicators of the project are given in Table. 1 business plan.

Table 1. Integrated performance indicators

Discount rate (r-year), %	6
Discount rate (r-month), %	0.487
Payback period (PP), months	7
Discount payback period (DPP), months	7
Net present value (NPV), rub.	2 174 179
Return on Investment (ARR), %	16.64
Internal rate of return (IRR), %	14.27
Profitability Index (PI)	1.55

2. DESCRIPTION OF THE COMPANY

For a long time, knitted clothes in the public mind were associated with clothes that were quite simple and unpresentable, suitable for wearing only at home. However, in recent years, the situation has changed radically: knitted clothes have become the highlight of fashion shows and have entered the everyday wardrobe of many people, including those with high incomes. Previously, the practical factor came to the forefront - convenience and comfort, but now consumers are no less interested in the design of knitwear. The brightness and originality of the author’s ideas often become decisive for and against the choice of purchase.

This business plan considers the creation of our own production of full-cycle knitted clothes. Production will be located in a city with a population of more than 1 million people. The company will specialize in the production of original knitwear. These will be original designer sweaters, coats, cardigans, tops, scarves and other knitted products. The basis of the range will be products for women and children (about 70%), the rest will be knitted goods for men.

The legal form of business will be individual entrepreneurship (IP). A business starts from scratch, the initiator of the project is a person who previously had experience in the production and sale of designer knitwear at home. Products will be sold in small wholesale and retail through its own online store.

Production will be located within the city in a rented area of 65 square meters. meters. For the arrangement, the necessary knitting, sewing and auxiliary equipment will be purchased in the amount of 798.1 thousand rubles. The total amount of starting investments will amount to 1.4 million rubles. In Tab. 2 of the business plan presents all the starting costs for the opening of the workshop.

Table 2. Investment costs of the project

No.	NAME	AMOUNT, rub.
Equipment
one	Equipment purchase	798 100
Intangible assets
2	Creating an online store	70, 000
3	Software	25500
Current assets
four	Current assets	200, 000
five	Raw material purchase	308, 000
Total:		1, 401, 600

3. DESCRIPTION OF GOODS AND SERVICES

The clothes that will be produced by the company will not only differ in warmth and convenience, but will also be able to emphasize the individuality of the owner due to the wide selection of design drawings. All products will be created so as not to hamper the movement of a person and at the same time emphasize his style. Raw materials for production (yarn, accessories) will be purchased in bulk from a local supplier working directly with several dozen manufacturers, which will ensure the procurement of various types of products in a “single window” mode. The list of products and variable costs are given in Table. 3 business plans. Note that in the future, with access to a wider production capacity, the range of products will be expanded.

Table 3. Nomenclature and variable costs

No.	PRODUCT GROUP	COSTS UNITS, rub.	UNIT COSTS AVERAGE, rub.	TRADING VALUE IN AVERAGE, %	PRICE RANGE	AVERAGE COST
one	Knitted children's sweater (1-14 years)	181-636	408.5	231	600-1600	1100
2	Men's knitted sweater	545-886	715.5	165	1200-2600	1900
3	The sweater is knitted man's extended	600-1000	800	212	1400-3600	2500
four	Knitted sweater for women	430-727	578.5	177	900-2300	1600
five	Knitted sweater for women, long / cardigan	454-836	645	249	900-3600	2250
6	Women's knitted top	360-460	410	424	1700-2600	2150
7	Women's knitted coat	1500-3500	2500	148	3500-8900	6200
eight	Knitted coat for children	450-2100	1275	135	1500-4500	3000
9	Knitted scarf for children	120-140	130	188	300-450	375
ten	Knitted scarf for women	140-170	155	191	350-550	450
eleven	Men's knitted scarf	140-170	155	191	350-550	450
12	Knitted hat	50-100	75	273	170-390	280

4. SALES AND MARKETING

Our products will be targeted at people of both sexes and all ages. The main emphasis will be placed on a female audience of 18-35 years old and children. A typical representative of our target audience is a solvent person who seeks to conform to fashion, is interested in new and unusual things, and has a good sense of humor. Such a person is ready for good clothes, but at the same time requires from her the highest quality and comfort at a reasonable and affordable price.

Sales will be carried out in small wholesale at retail clothing stores, as well as retail through its own online store. In parallel, it is planned to conduct promotion on social networks: product samples will be presented in the company’s communities on Instagram, Vkontakte and Odnoklassniki. It is also planned to participate in specialized clothing fairs and knitwear fairs.

5. PRODUCTION PLAN

The production will be located in a rented area of 65 square meters. meters. 40 sq. meters will be involved directly under the knitting shop, 10 square meters. meters will take a sewing room, the rest of the area will fall on utility rooms, a warehouse, a bathroom.

For production, the necessary equipment will be purchased in the amount of 798.1 thousand rubles. A detailed list is given in Table. 4 business plans. Preference will be given to universal equipment, namely fifth-class knitting machines, which will make it easy to expand the range of knitted products in the future. Some of the knitting machines will be electronic, which will allow you to build accurate patterns, automatically knit a pattern, create and edit patterns on a computer, etc. For all knitting equipment and accessories, a 1-year seller’s warranty is provided. Installation and training in basic techniques are included.

Table 4. List of equipment

No.	Name	Specifications	price, rub.	Quantity	Cost, rub.
Production equipment
one	Knitting machine Silveer Reed SK840 / SRP60N	Car class: 5 Number of Fonts: 2 Number of needles: 200 Programming Method: computer Programmable pattern report: up to 200 needles Country of development: Japan Country of Origin: China	121, 000	one	121, 000
2	Knitting machine Silveer Reed SK840	Car class: 5 Number of Fonts: 1 Number of needles: 200 Programming Method: computer Programmable pattern report: up to 200 needles Country of development: Japan Country of Origin: China	82200	one	82200
3	Knitting machine SilverReed SK280 / SRP60N	Car class: 5 Number of Fonts: 2 Number of needles: 200 Programming Method: Punch Card Programmable pattern report: 24 needles Country of development: Japan Country of Origin: China	92000	3	276000
four	Kettelnaya machine Hague 280H	Manual cattel machine Hague 280H class 5	54900	one	54900
five	Fishnet LC580 for Silver Reed SK840	Carriage for knitting openwork on computer machines of the 5th class.	35750	one	35750
6	Silver Reed YC-6 color changer	construction for knitting multi-color fang weave, Norwegian and double jacquard. For knitting machines SK280, SK840. 4-thread filament system.	24100	one	24100
7	Silver Reed RJ-1 Jacquard Carriage for Silver Reed SRP60N	Silver RJ-1 Jacquard carriage for an elastic attachment to Silver 60 and Silver reed SRP60N knitting machines of the 5th class.	18600	one	18600
eight	Carriage Silver Reed AG24 (Intarsia) for SK280, SK840	Carriage for knitting large patterns with many colors in one row without broaches on the wrong side of the product.	6000	one	6000
9	Yarn winder	Yarn rewinder	2900	2	5800
ten	Sewing machine Janome JB 1108	Electromechanical sewing machine	8000	2	16000
eleven	Other equipment	Overlocks, irons with steam generators, ironing table and so on.	45000	one	45000
Ancillary equipment
13	Computer	Personal Computer	27800	one	27800
14	Knitting machine table	Knitting machine table	7990	five	39950
15	Sewing machine table	Sewing machine table	6000	2	12000
sixteen	Chairs	Chairs	1500	eight	12000
17	PC table	PC table	6000	one	6000
17	Other	Other auxiliary equipment	10, 000	one	15, 000
Total:					798100

In addition to the list, you will need specialized software necessary to track the process of knitting patterns and work on creating projects with a complex structure. The cost of software will be 25500 rubles.

Knitted clothing is a seasonal product and is in greatest demand from October to April, which will be taken into account in the production plan of the enterprise. During the off-season period, production will be partially reoriented to the spring-summer assortment, with a 30% reduction in planned marks for revenue purposes. Planned production figures are given in Table. 5 business plans.

Table 5. Planned production indicators

Product	Average planned sales	Revenue RUB	Variable costs
Children's knitted sweater	88	118 988	35 948
Men's knitted sweater	38	72051	27189
Men's knitted sweater	28	6988	22, 400
Women's knitted sweater	63	100846	36275
Knitted sweater female extended / cardigan	60	135063	38700
Women's knitted top	88	189 059	36, 080
Women's knitted coat	17	105400	42500
Knitted coat for children	17	50936	21675
Knitted scarf for women	60	27063	9300
Men's knitted scarf	38	17140	5890
Knitted hat for children	60	21840	7800
Knitted hat	60	16, 785	4500

6. ORGANIZATIONAL PLAN

The legal form of doing business will be individual entrepreneurship (IP). The form of taxation is simplified (6% of income). The initiator of the business will be an individual entrepreneur, who previously had experience in the sale of knitted products of own production in small volumes. In addition to the duties of managing the company, his responsibilities will include sales management. The staff of the company will include 8 people, including 5 knitters, 2 seamstresses and a desinator programmer. The payroll and staffing table are given in Table. 6. Accounting will be outsourced. Maintenance tasks for the sewing machines will be carried out by mechanics-adjusters, the payment of which will be carried out under a contract. Production launch is scheduled to begin in August, before the start of the sales season.

Table 6. Staffing and payroll

No.	Position	Salary, RUB	Number of people	PHOT, RUB
one	Knitting machine operator	22000	five	110000
2	Seamstress	22000	2	44000
3	Desinator programmer	30000	one	30000
Total:				184000
	Social Security contributions:			55200
	Total deductions:			239200

7. FINANCIAL PLAN

Investment costs for the opening of the enterprise will amount to 1.4 million rubles. The bulk of the funds will be used to purchase equipment (798.1 thousand rubles), purchase raw materials (308 thousand rubles) and create a working capital fund (200 thousand rubles). The structure of starting costs is shown in Table. 2 business plans.

Variable costs include expenses for the purchase of raw materials and transportation costs. Variable costs are presented in detail in Table. 7 of this business plan. Fixed expenses include rent, bookkeeping, depreciation, website hosting (see Table 8). Depreciation of fixed assets is calculated in a linear manner for a life of 10 years.

A three-year financial plan is presented in Appendix 1.

Table 7. Fixed costs of the enterprise

No.	NAME	Amount in months, rub.
one	Rent	13, 000
2	Bookkeeping	10, 000
3	Depreciation	6, 650
four	Site hosting	350
Total:		30, 000

8. EVALUATION OF EFFICIENCY

The project to open an enterprise for the production of knitted clothes is effective, as evidenced by the financial plan, as well as simple and integrated indicators for a 5-year period. Simple and discounted payback periods for the project will be 7 months. A break-even point is expected for 2 months.

To account for the value of money over time, a discount rate of 8% was used. The planned monthly turnover of the enterprise is 925 thousand rubles. Net profit - 311 thousand rubles. Return on sales (ROS) - 33.6%, return on investment (ARR) - 16.64%. The internal rate of return (IRR) is 14.27%, which exceeds the discount rate. The net present value of the project (NPV) is positive, and the profitability index (PI) in our case is 1.55, which exceeds 1. Thus, the project is attractive for investment.

9. RISKS AND WARRANTIES

The main risks of the project for the production of knitted products include the following factors, presented in Table. 8 business plan.

Table 8. Possible risks and ways to prevent them

Risk factor	Probability of occurrence	Severity of consequences	Risk and mitigation measures
Equipment failure	low	average	Purchase of equipment with a seller’s warranty, compliance with operating rules
Raw materials appreciation	average	low	Laying costs into production costs, buying raw materials in larger volumes to get discounts, finding new suppliers
Failure to achieve planned sales	average	average	Attraction of sales specialists, receiving feedback from the client, marketing promotion
Getting low-quality products	low	high	Hiring qualified personnel, purchasing quality raw materials
Unprofitability of the company in the off-season	low	average	Accounting for product demand volatility in financial planning, transition to seasonal assortment