1. SUMMARY OF THE PROJECT
The goal of the project is the organization of a vape shop in Novosibirsk. Vape shop (vape-shop) - a place that combines the functions of a store and a club for lovers of the so-called electronic vaporizers (electronic cigarettes). Customers can purchase electronic devices themselves, supplies for them, related accessories, as well as spend time smoking ("hovering") and chatting with other visitors to the vape shop. Vaping today is a fairly powerful subculture, so well-organized vape shop is able to attract a large number of customers.
The level of competition in Novosibirsk today is quite low - there are no more than 3 vape shops in the whole city. This is one of the main factors for the success of the project. Key performance indicators of the project are given in Table. one.
Table 1. Project performance indicators
Discount rate (r), % | 7% |
Discount rate (r-month), % | 0.565% |
Payback period (PP), months | 9 |
Discount payback period (DPP), months | 9 |
Net present value (NPV), rub. | 532 473 |
Return on Investment (ARR), % | 20.74% |
Internal rate of return (IRR), % | 13.21% |
Profitability Index (PI) | 1.30 |
2. COMPANY DESCRIPTION AND INDUSTRY
Vaping (from the English. Vape - steam) is a new subculture that is actively gaining popularity all over the world and in Russia in particular. Vapers contrast themselves with regular cigarette smokers; It is believed that smoking electronic cigarettes is not harmful to health. To date, there are no official statistics on the number of vapers, the volume of sales of devices and supplies. However, if we assume that one in twenty smokers in the country uses electronic cigarettes, then the market volume can be estimated at 2.5 million people (according to statistics, in 2015 smokers made up 35% of the country's population). This number will constantly grow - both due to the transition of smokers of regular cigarettes to electronic cigarettes, and due to non-smokers who are part of the new subculture. The average cost of a smoking device is 3, 000 rubles; the term of use is 1-2 years. Consumables - basics, flavorings, batteries, etc. - are purchased at different intervals depending on the activity of using the device, but, as a rule, at least once a week. The average bill is about 300 rubles. Thus, in monetary terms, the market can be estimated at 40 billion rubles a year.
Like any subculture, vaping is characterized by a high level of involvement of its participants, commitment to brands and trends, active tracking of new products and fashion trends.
Today, vape culture is also actively developing in Novosibirsk, but the level of competition is still low - 12 stores specializing in the sale of electronic cigarettes, and 3 vape shops.
The main difference between a vape shop and a store is the ability to visit the first one not only for the purpose of acquiring devices or supplies, but also for the purpose of communicating according to interests in the smoking process, as in a social club. To do this, the facility has a bar-like counter and several chairs. Since the institution does not belong to the field of catering, there is no need for a bathroom for customers, other requirements, usually imposed on bars and clubs, are also not applicable.
The location of the vape shop is the territory of the Creative World cultural and leisure center, which houses shops for young people, art workshops, bicycle rental and repair, etc. Since the most important target audience of the project are young men and girls aged 18 to 35 years, the location in this place is the most appropriate and justified.
Assortment - vaping devices, consumables and accessories. Price category - medium. The product line includes devices for both beginners and professional. The former are represented in a smaller volume than the latter.
Investment costs for opening a vape shop involve repair and decoration of the premises, expenses for the launch advertising campaign, the purchase of the first batch of goods at the warehouse, as well as the formation of a working capital fund before the project returns to payback. The project initiator performs, among other things, the function of a seller. Investment costs are given in Table. 2.
Table 2. Investment costs
NAME | AMOUNT, rub. | |
The property | ||
one | Room repair | 55, 000 |
Equipment | ||
2 | Cash registers and software | 30, 000 |
3 | Furniture | 45, 000 |
Intangible assets | ||
four | Web site | 70, 000 |
five | Starting advertising campaign | 120, 000 |
Current assets | ||
6 | Current assets | 91, 000 |
Total: | 411 000 ₽ | |
Own funds: | 200 000, 00 ₽ | |
Required borrowed funds: | 211 000 ₽ | |
Rate: | 18.00% | |
Duration, months: | 24 |
3. DESCRIPTION OF GOODS AND SERVICES
The range of the project is vaping devices, consumables, accessories. The product line consists of 78 positions; therefore, for the convenience of description and financial calculations, they are combined into product groups, for each of which the average check amount is determined. Product groups and their characteristics are given in Table. 3.
Table 3. Product groups and their characteristics
No. | Commodity group | Characteristic |
one | Starter Kits | Starter kit consisting of a low-maintenance maintenance-free electronic cigarette (clearomizer + battery pack) and a battery (China) |
2 | Professional sets | High Power Kits and Mods Serviced (China) |
3 | Premium Professional Kits | The line of professional sets from the USA, released in a limited edition. Distinctive features: high autonomy and power, stylish design. |
four | Liquids | Liquids and flavors for steam (China, Russia) |
five | Accessories | Electronic Cigarette Covers, Service Tools, and Other Accessories (China) |
Table 4. Purchase value and selling price
GOODS / SERVICES | COSTS UNITS, rub. | TRADING VALUE, % | UNIT COST, rub. | |
one | Starter Kits | 1, 700 | 80% | 3, 060 |
2 | Professional sets | 3, 600 | 90% | 6 840 |
3 | Premium Professional Kits | 5 100 | 100% | 10, 200 |
four | Liquids | 70 | 100% | 140 |
five | Accessories | 1, 500 | 100% | 3, 000 |
Total: | 23 240 ₽ |
As an additional service, customers are offered to test individual models of devices or types of liquids in a vape shop, on the basis of which they can make a purchase decision. Visitors to the vape shop can also soar in the storeroom behind the bar. Five seats are provided, however, if desired, visitors can sit and stand.
Sellers provide consulting services for the selection of devices and liquids, conduct training on their maintenance; if necessary, they can conduct a maintenance master class.
4. SALES AND MARKETING
Sales are made directly at the vape shop premises. Behind the bar is a showcase on which devices and consumables are placed. The client can comfortably sit behind the bar, while the seller talks about the features of a particular device, and can also test the device on the spot.
At the initial stage, promotion is carried out through contextual advertising on the Internet, as well as through the distribution of advertising materials among visitors to the Creative World CDC, which is, in fact, a youth community with close relationships. Community members support each other and help in development. Thus, the first customers of the vape shop will be tenants and visitors to the CDC. In the future, viral dissemination of information through people who have already visited the vape shop is expected.
Of the traditional methods of promotion, promotion is provided on social networks (vk.com, fb.com, Instagram, Twitter). In addition, it is planned to use innovative methods of brand promotion: shooting viral videos, holding cloud-chasing competitions (vaping at the maximum capacity of electronic cigarettes in order to obtain a large vapor cloud).
Groups in social networks are filled with the following content:
Reviews of new devices and liquids
Instructions for selecting and maintaining devices
Lifehacks on using vape devices
Cloudchasing Competition Video
company's news
There is a loyalty program to stimulate the purchase of devices and supplies: each buyer receives a card on which the seller puts a mark on each new purchase. After every tenth purchase, depending on the total amount, the customer receives a gift from the store.
5. PRODUCTION PLAN
The vape shop is located on the first floor of the Creative World CDC in a room of 25 m2. The room requires cosmetic repairs and design. All communications failed. Estimated period of repair work is 10 working days. It is possible for the lessor to provide rental vacations for two months.
In parallel with the repair of the premises, a bar counter is made according to individual sizes. The manufacturer is a furniture factory in the city of Novosibirsk.
The goods are purchased in small batches from two wholesale suppliers located in China and Moscow, delivery is carried out by a transport company. For storage, the back room of the vape shop is used. The volume of the purchased lot is defined as the planned monthly sales plus ten percent.
6. ORGANIZATIONAL PLAN
The project implementation process can be divided into two main stages: preparatory and working. During the preparatory phase, repairs and decoration of the premises are carried out, the first batch of goods is purchased. Duration - 3 weeks. At the second stage, operational activities are directly carried out. The project implementation period is supposedly limited to five years, after which, depending on the development of the vape device market, a decision can be made to close it and withdraw funds.
The legal form of the project is IP. All the main management functions are performed by the entrepreneur, combining them also with the duties of the seller. The organizational structure of the vape shop is very simple: two shift sellers (one of them is the initiator of the project), an accountant is outsourced. Schedule - 10.00 - 20.00, 2/2.
There are no special requirements for project personnel. For the hired seller, knowledge of the topic of vaping is welcome; in the absence of such knowledge, training is provided. Salary of the seller - 25 000 rubles. The total salary fund (including payment of accounting services) is 37, 700 rubles per month (with contributions to extra-budgetary funds).
7. FINANCIAL PLAN
The financial plan is drawn up for a period of five years and takes into account all the income and expenses of the enterprise.
Investment costs include the costs of repairs and premises. Acquisition of cash equipment and software for trade, website development and launching an advertising campaign. This also includes funds for the purchase of the first batch of goods, as well as for the formation of a working capital fund, with which the losses of the first periods of the project will be covered (Table 2).
Own funds of the project initiator - 200 000 rubles. The missing amount of money is planned to be raised with a bank loan for a period of 24 months at a rate of 18% per annum. Credit holidays - three months. Redemption is carried out by annuity payments.
Variable costs include expenses for the purchase of goods and their transportation (Table 4). Fixed costs include rent, utilities, advertising costs, etc. Also included is the depreciation of fixed assets and intangible assets. The amount of depreciation is calculated using the linear method, and the useful life is five years.
A detailed financial plan is provided in App. one.
Table 5. Fixed costs
NAME | AMOUNT PER MONTH., Rub. | |
one | Rent | 12, 000 |
2 | Advertising | 15, 000 |
3 | Communal payments | 3, 000 |
four | Telephony and Internet | 1, 200 |
five | Depreciation | 4 416 |
Total: | 35 616 ₽ |
8. EVALUATION OF EFFICIENCY
Performance evaluation is carried out on the basis of the analysis of the financial plan, as well as using simple and integrated performance indicators (Table 1).
Revenues of the first year of the project - 3.7 million rubles; net profit (after tax) - 617 147 rubles. Revenues for subsequent years - 4.6 million rubles, net profit - 994 524 rubles.
Simple and discounted payback period - 9 months. To account for changes in the value of money over time, the cash flow discount method is used, the discount rate is 7%.
The net present value of the project (NPV) is 532, 473 rubles. Return on Investment (ARR) is 20.7%. The internal rate of return (IRR) is 13.21%. Profitability Index (PI) - 1.3. All these indicators testify to the profitability of the project and its investment attractiveness.
9. WARRANTIES AND RISKS
To achieve maximum efficiency and financial stability of the project, all possible risks associated with its implementation are analyzed. Both internal and external factors are evaluated.
The main internal factor can be attributed to an incorrectly selected assortment line. To prevent profit shortages for this reason, constant monitoring of the market and competitors is necessary in order to identify the latest market trends and assess demand.
The main external factor of influence is state regulation of the industry. In particular, the ban on the use of vape devices in public places, on the one hand, can adversely affect the level of consumer demand, and on the other, attract more visitors to the vape shop as a place where the devices can be used.
10. APPLICATIONS
Annex 1.
Financial plan
Denis Miroshnichenko
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