Still Glamorous or an Acceptable Gown

"In good times and in bad, in sickness and in health, I will love and honor you all the days of my life." Every single woman wants to look perfect on this special day of her life while hearing this touching vow form the love one. Which woman does not want to be a unique bride in life? This business case aims to perfect the wedding day for to all women based out of Boston by reselling pre-owned wedding dresses with lower price. Personally I do not think this business is feasible base on the business plan provided. For the following analysis, I would like make recommendations to improve their business model/practices base on some of the assumption that they have made in the business plan.

Business Model

Still Glamorous targets to women who would buy pre-owned elegant dresses their weddings with at cheaper prices. Their perspective is that new bride might want to save money while economy was recessing few years ago. Their customers are willing to wear pre-owned wedding dresses, and willing to sell their used dresses which were worn only for few hours in their wedding ceremonies. Based on the case, they will keep 60% of the sale, while the consignor will keep 40%, once a dress is sold. They also have partnered with a flower shop and photography studio that will offer a discount to our customers, and also give us an incentive of $100 for each customer that they refer, where they could get profit from these ideas.

Assumptions

Base on the Still Glamorous business plan, here are few assumptions that require further examination with my recommendations.

Revenue Assumption: They assume every dress is sold at the same price $1300. Base on the Internet research conducted, the price range for wedding gowns can vary from $200 to $300,000. On top of the minimum $500 worth wedding dresses, I would suggest Still Glamorous to set a maximum wedding dresses limit so that they can perform a more accurate sales forecast. At the end of Year 1, a 40% sales growth will be incurred (calculated with monthly total sales) and for Year 2, they forecast a 16.34% sales growth (Total revenue of $142,290 in Year 2 verse $122,310 in Year 1), and 15.05% sales growth for Year 3 (Total revenue of $163,710 in Year 3verse $142,290 in Year 2). Continuous high growth seems to be too optimistic for this part-time business for these owners. If this part-time business can be so profitable, in reality there might already be lots of pioneers have started this business and making money out of it.

Cost of good sold assumption: Still Glamorous thought they do not carry a cost in their business. In a normal business practice, businesses do carry cost for the good that they sell. Still Glamorous consider cosigner payment as expense, but at the same time they mention cosigners share their revenue. I would classify the cosigner payment as cost of good sold because wedding dresses source is from cosigners, who are also suppliers of their product. Every dress they sell, 40% is paid to the cosigner.

Start-up cost assumption: Cash flow does not contain a start up cost for Year 1. Still Glamorous is planning to start their business without contributing any capital. They exclude the advertising, gas and oil, storage expense they have to pay before they can actually make the first deal with customers. It just do not make sense that a business can generate profit without shareholders paying/investing any capital in it. They should reexamine their cost structure and consider contributing at least $25,000 to meet their cost forecast for the Year 1 (after cosigner expense item is reclassed to cost of good sold).

Taxation assumption: All businesses conducted in the United States are entitled with tax responsibilities. According to the income statement, Still Glamorous do not take tax into account. That being said, the net income will decrease after tax deduction and the business will not as profitable as it seems to be. Also, Still Glamorous pays owners salaries as an expense in the income statement and owners receive this expense as their personal income, which is before tax. This income received before-tax. This may complicates the entire tax filing process in both personal