The professor said that my information is not complete, and I need your help to list it in Excel and expand and improve my financial section based on my project. If my data needs to be modified, you can modify it.
Financial Part
?
Decoration cost: A 700-square-foot store is expected to cost approximately $120
per square foot, with a total potential of around $84000.
?
Rent cost: In the Soho area, the rent is approximately $220 per square foot, and
the store rent may reach $154000 per year.
?
Purchase of essential oils and other perfume raw materials: Two suppliers:
Aromaaz International: The prices range from $3.50 to $15.00 per 100 ml.
The Essential Oil Company: The prices range from $4.00 to $100.00 per 15 ml.
Single Material costs: Add up the cost of oils (20 drops of essential oil, $0.40 $6.6), alcohol ($0.50), distilled water ($0.01), and bottle ($0.50), and the total
cost of a 50 ml bottle of DIY perfume can range from $1.31 to $7.61
?
Initial inventory cost: The cost of each bottle of perfume varies from $1.31 to
$7.61. We take the average value: $4.46 per bottle. Assuming the prepared
inventory can support store operation for six months. Considering that 20 bottles
of perfume are sold every day, the initial inventory cost is 20 * 4.46 * 30 * 6 =
$ 16056.
?
Other costs, including opening costs, marketing costs, insurance expenses,
utilities, etc., are estimated to be approximately $ 10,000.
?
Employee cost: The monthly employee cost is $ 22,000, with two
assistants($4000) and one cashier($4000) plus my salary ($10000), so the annual
employee cost is $22000 * 12=$264000.
?
Monthly sales: Assume that 20 bottles of perfume are sold every day, the price of
each bottle is $65, and the monthly sales are 20 * 65 * 30=$ 39,000 for 30 days
of work every month.
?
Initial total investment: Rent + Decoration expenses + Initial inventory expenses
+ Other expenses = 154000+84000+16056+10000=$264056.
?
Total investment: The total initial investment includes rent, decoration costs,
initial inventory costs, and other costs, estimated to be $528056.
?
Return period: Total investment/monthly income=528056/39000 ? 13.5. The
initial investment in the store will receive a return on sales revenue within 13.5
months.
1
DIY Fragrance Room Business Plan
Qiming Liu
New York University
INTG-GC-4000-1-014
Prof. John O’Malley & Steve Menges
03/04/2024
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DIY Fragrance Room Business Plan
Executive Summary
My business plan is to open an offline DIY perfume retail store where customers can
customize their perfume. The plan is to open in Soho, NYC. About 600-700 square feet. First,
customers can make an appointment on Google or our official website or go into the store and
experience it. The first step is for customers to enter the store to complete a scent preference
survey by scanning a code, and after completing the survey, 3 to 4 scents will be recommended
to the customer to suit their scent. At the same time, we will provide hundreds of essential oils;
customers can also personally smell each scent to choose their own; you can first clarify their
favorite types, such as fruit, tea, and wood. After the selection, the store staff will be responsible
for teaching the perfume blending, and the store staff will give the customer a few cards to try
out the fragrance. By trying out the fragrance, you can decide on the main fragrance, top, middle,
and bottom notes. The store staff will guide the customer in making the ratio of essential oils to
the blend. After blending, you can add your favorite color to the perfume. If you don’t like it or
are afraid of staining your clothes, you can also not add it. Likewise, our labels, bottles, and caps
are all available to choose from.
For funding, we need funds to cover rent, store renovations, initial inventory, employee
costs, marketing costs, utility grid, insurance, and other expenses. Our business model attracts
attention and interest because it combines personalization and hot trends in the perfume industry.
Our stores will be unique destinations that offer consumers a fun and fabulous shopping
experience that will attract more customers and keep them loyal.
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The executive summary is one of the most essential parts of your business plan because it
is the first thing that will be seen by the first person exposed to your business plan. It needs to be
a clear, concise summary of your business idea, market opportunity, competitive advantages, and
funding requirements to give investors a quick overview of your business concept and pique their
interest. Another significant part is business analysis; first, market analysis can help us to gain
insight into market demand and opportunities. By studying market size, growth trends, and
consumer behavior, we can identify potential market opportunities and develop appropriate
positioning and marketing strategies for our products and services. Understanding the market
helps us identify target markets and customer segments. By analyzing market segments and
customer characteristics, we can determine who our target customers are and understand their
needs, preferences, and buying behaviors so that we can better meet their needs Calistus, M.
(2018). This helps us identify our competitors and understand their products, pricing strategies,
and market position. We can locate our differentiation opportunities by comparing our
competitors and developing appropriate strategies to highlight our competitive advantages.
Finally, market analysis also helps us assess market risks and challenges. By analyzing market
trends, the competitive environment, and the impact of external factors, we can identify potential
risks and challenges and develop appropriate risk management strategies to mitigate risks and
protect our business Calistus, M. (2018).
Business Description
Our store offers our customers the highest quality personalized perfume-making services;
likewise, our services include customized consultation and advice. Our store staff will work with
customers to understand their preferences and needs and provide customized guidance based on
their preferences. Whether it is about the choice of perfume formulas or how to preserve and use
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the perfume, we will provide professional advice and guidance to ensure that our customers are
satisfied and enjoy the best possible shopping experience and that we create scented products
unique to them. In addition, we will also sell a wide range of original essential oils, perfume
accessories, and peripheral products such as bottles, labels, sprays, and other products to satisfy
our customers’ needs.
In addition to providing personalized consultation, we are committed to providing
ongoing after-sales support to our customers. If a customer encounters any problems or has any
questions, and if they are not satisfied with their perfumed product purchase, we are always here
to help and support them, whether it be by phone, email, or in-store consultation, we will ensure
that we respond and resolve the customer’s issue promptly to increase their satisfaction and trust.
This may include adjusting formulations and changing bottles or labels to ensure customer
satisfaction and loyalty. Our mission is to provide our customers with a pleasurable, innovative,
and personalized shopping experience that satisfies and delights them by helping them create
unique perfumed products. We strive to be a well-known perfume store in Soho, bringing our
customers great experiences and memories.
The store’s business model: we are an offline DIY perfume retailer that is a business-toconsumer niche. Our pricing is $65 per experience, which is more competitive than our
competitors. This price includes all the steps of the customer choosing the essential oils, mixing
the perfume, selecting the bottle, and labeling. Our business model has diversified revenue
streams. The primary source of revenue is the fee per customer experience. In addition to
providing perfume-making services, there is additional revenue through accessories such as
essential oils, bottles, labels, etc., in addition to sales, as well as providing other services such as
customized gift packaging and special events. In this way, we will maximize revenue and ensure
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the long-term profitability of our stores. The cost structure of the store: the main costs include
essential oils, rent, employee wages, store renovation and maintenance, marketing expenses, and
other operating costs. In terms of cost management, this involves ensuring that costs are
controlled while maintaining quality and service to ensure profitability. Critical partners for
stores include essential oil suppliers, store rental companies, marketing partners, etc. The store’s
business model also relies on social marketing. We will promote our brand and products through
social media platforms such as Instagram, Facebook, Xiaohongshu, and offline events to build
customer rapport and promote word-of-mouth. In this way, we will expand our brand reach and
customer base and achieve long-term business success.
We aim to become a well-known and unique perfume store in Soho, attract more
consumers, and build a solid customer base. We plan to be profitable within the second year and
gradually expand the business over the next few years by opening more branch stores and
entering more markets. Our long-term goal is to become the leader in the DIY perfume industry
in New York City and even across the country and to provide our customers with high-quality
products and an unparalleled shopping experience.
Industry Analysis
The perfume industry is a massive market, with global sales growing yearly. According
to industry reports, the global sales of the perfume market are expected to grow at a compound
annual growth rate (CAGR) of 5.9% from 2023 to 2030. In the U.S., the perfume market is also
large and diversified and is estimated to total approximately $10 billion in 2022, with a trend of
steady growth (Grand View Research).
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Consumers increasingly focus on personalization and uniqueness, with a higher demand for
customized and personalized products. This trend has impacted the fragrance industry, driving
the rise of DIY perfume stores and customized fragrances. Similarly, a growing consumer
preference for natural, organic, and eco-friendly products has created skepticism toward
traditional perfumes containing chemical ingredients. As a result, the use of natural fragrances
and organic ingredients is emerging as a critical trend in the industry. With the popularity of ecommerce and the growth of online retail, more and more perfume brands are turning to online
sales. Meanwhile, several online customized perfume platforms are also rising, providing
consumers a more convenient shopping experience(Grand View Research).
The DIY perfume industry is still immature, and the market still needs to be fully
saturated. We have the opportunity to innovate and develop in the DIY perfume industry. We
can gain a competitive advantage by exploring new products and services that meet consumers’
changing needs and preferences. This can also be done through educational and promotional
activities that introduce consumers to the concept and benefits of DIY perfumery. By providing
personalized advice and guidance, we can help consumers understand how to make their
perfumes and stimulate their interest and engagement.
Market Analysis
The market size of the DIY perfume industry is growing rapidly, especially among the
young and personalized consumer segments. According to industry research reports, the global
perfume market size is expected to maintain steady growth in the coming years and show
increasing demand for personalization and customization Kacey, C. (2019). Due to the strong
growth of the DIY perfume industry, we expect potential sales to expand accordingly. By
attracting and satisfying diverse consumer needs and providing personalized products and
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services, we can achieve continued sales growth and gain additional market share. Our key
differentiator and competitive advantage is the provision of personalized perfume-making
services. Unlike traditional perfume stores, we will involve our customers in the process of
creating perfumes and provide customized perfume formulations and unique perfume
experiences, which will win consumers’ favor and spread word-of-mouth.
The store’s target market is categorized into four main groups. The first is young
urbanites, primarily Millennials and Generation Z, who live in urban areas such as New York
City. They value experiences over material possessions, seek authenticity and self-expression,
and are willing to spend money on products that reflect their style. They are active on social
media, are attracted to advertising, actively engage with brands, prioritize personal experiences,
and enjoy exploring unique shopping destinations in trendy neighborhoods like Soho Kevin, P.
(2023). The second category is traveling shoppers, such as tourists visiting New York City, both
international and domestic. They seek memorable and Instagram-worthy experiences, enjoy
shopping for souvenirs and unique gifts, and are open to purchasing luxury or niche products
while on vacation. And because of the popularity of Soho, they’re likely to explore famous
shopping districts such as SoHo, be drawn to stores offering exclusive or locally made products,
and be influenced by recommendations from travel guides and online reviews. The third category
is Perfume Enthusiasts, which adapts to men and women of all ages passionate about perfumes
and fragrances. They appreciate the artistry and complexity of scent components, enjoy
experimenting with different fragrance notes, and seek out niche or artisanal perfume brands.
They may be active in online perfume communities and forums, attend perfume-related events
and seminars, and are willing to invest in custom or limited-edition fragrances to express their
individuality. The fourth category is gift shoppers, which are individuals who buy gifts for
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friends, family, or special occasions, value thoughtful and unique gift options, prefer experiences
or personalized items over generic gifts, and are willing to spend more money on something
special. They look for stores that offer a wide range of customizable products and may become
repeat customers if they are satisfied with their buying experience.
We have two competitors in NYC. The first one is Olfactory NYC, which is priced at $85
per experience, which is higher than the other competitors. Offering both online and offline
services offline provides a selection of nine essential oils. Online customers can place an order,
and customers will receive nine 3ml essential oils to mix and match on their own. Personalized
labeling and naming services and online ordering options are available. The store is beautifully
decorated and creates a cozy and stylish customer atmosphere. There are three physical
storefronts in New York City, increasing brand awareness and visibility. The second is Fragrance
Shop New York, which offers a broader range of pricing options between $50-90 per experience.
Offering nearly 100 essential oils for customers to choose from, customers can make their
selections, offering both perfume oils and sprays, with perfume oils being cheaper and sprays
being more expensive. This is a simple, decorated store that provides offline services. There is a
store in Manhattan, New York, with convenient transportation.
Compared to competitors, my store has a price advantage; our price is $65, which is more
attractive than our competitors. Regarding product selection, we offer the widest selection of
essential oils, providing our customers with more personalized possibilities. The store is also
beautifully decorated and provides a pleasant shopping experience for our customers. The store
location was chosen in Soho, a busy shopping and entertainment area that attracts many local and
tourist customers.
SWOT Analysis
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Strengths:
Price advantage: The store offers lower prices compared to competitors, which is more attractive
and can attract price-sensitive customers.
Product selection: The store offers the widest selection of essential oils on the market, providing
customers with more personalized possibilities.
Store décor: The stores are beautifully decorated, allowing customers to experience the pleasure
of perfumery in a pleasant environment.
Weaknesses:
Single location: Compared to our competitors, we have only one physical storefront, which may
limit your market reach.
Staff resource constraints: If the number of store staff is insufficient or the training needs to be
more adequate, this may affect the customer experience and quality of service.
Dependency: If the store relies less on price advantage at the expense of quality and service, the
brand image may be tarnished.
Opportunities:
Online Expansion: Use online channels to expand your business and attract more customers,
especially potential customers who are not nearby.
Events and Partnerships: Stores can host special events or partner with local beauty brands,
lifestyle bloggers, etc. to increase brand awareness and attract new customers.
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Differentiation: Further differentiate your products and services by offering more customization
options and adding peripheral products or services to meet the needs of different customer
segments.
Threats:
Increased Competition: Competition in the marketplace may increase, with competitors offering
price wars or more favorable deals to compete for customers and new stores opening.
Economic volatility: Economic instability may cause consumers to reduce purchases, affecting
store sales and profitability.
Regulatory changes: Changes in industry regulatory policies or new legislation may have an
impact on the business, such as restrictions or requirements on flavor ingredients.
Financial Part
Decoration cost: A 700-square-foot store is expected to cost approximately $120 per square foot,
with a total potential of around $84000.
Rent cost: In the Soho area, the rent is approximately $220 per square foot, and the store rent
may reach $154000 per year.
Initial inventory cost: The cost of each bottle of perfume varies from $1.31 to $7.61. We take the
average value: $4.46 per bottle. Assuming the prepared inventory can support store operation for
six months. Considering that 20 bottles of perfume are sold every day, the initial inventory cost
is 20 * 4.46 * 30 * 6 = $ 16056.
Other costs, including opening costs, marketing costs, insurance expenses, utilities, etc., are
estimated to be approximately $ 10,000.
11
Employee cost: The monthly employee cost is $ 22,000, with two assistants and one cashier plus
my salary ($10000), so the annual employee cost is $26000 * 12=$264000.
Monthly sales: Assume that 20 bottles of perfume are sold every day, the price of each bottle is
$65, and the monthly sales are 20 * 65 * 30=$ 39,000 for 30 days of work every month.
Initial total investment: Rent + Decoration expenses + Initial inventory expenses + Other
expenses = 154000+84000+16056+10000=$264056.
Total investment: The total initial investment includes rent, decoration costs, initial inventory
costs, and other costs, estimated to be $528056.
Return period: Total investment/monthly income=528056/39000 ? 13.5. The initial investment
in the store will receive a return on sales revenue within 13.5 months.
12
References
Calistus, M. (2018, Nov 20). The Importance of Conducting Marketing Analysis. Medium.
https://callygood.medium.com/the-importance-of-conducting-a-marketing-analysis44140a9a4619
Grand View Research. Perfume Market Size, Share & Trends Analysis Report By Product.
https://www.grandviewresearch.com/industry-analysis/perfume-market
Kacey, C. (2019, Nov 06). That’ signature scent’: Fragrances perfect to explore personalization.
Cosmetics. https://www.cosmeticsdesign-europe.com/Article/2019/11/06/Personalisedperfume-holds-significant-opportunity-says-Mintel
Kevin, P. (2023, Oct 03). Exploring the Fragrance and Perfume Market: Trends, Growth, and
Consumer Insights. https://www.linkedin.com/pulse/exploring-fragrance-perfumemarket-trends-growth-consumer-kevin-pat