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About HiBrasil - HiBrasil was a wonderful alternative world of
Eternal Sports, Youth and Plenty in old Irish / Celtic mythology. It is from
this mythical paradise that its European settlers named Brazil - today
very much indeed a land of youth and beauty and plenty. HIBRASIL business plan summary The Business HiBrasil is a retailer of top quality Brazilian
furniture and housewares, starting with two stores located in Sydney and
Melbourne. HiBrasil has been devised to enable Brazilian producers to
penetrate the Australian marketplace, which up to now has had
substantial impediments to new retail entry by producers of quality
furniture and housewares. HiBrasil is made of three parts; HiBrasil (Brasil)
is a holding company registered and located in Porto Alegre, RS, to be
owned 80% by participating
Brazilian manufacturers; HiBrasil (ANZ) is the operating retail
company in Australia, owned by the holding company HiBrasil (Brasil);
and HiBrasil (World), the planned international franchise chain
of stores. Participants in HiBrasil not only gain cost-effective
access to increased export sales, first in Australia and then globally,
they also share in the retail profits of these sales. The Product HiBrasil offers the best of Brazilian furniture and
housewares for retail sale to the Australian marketplace. It provides
manufacturers in Brazil with a means to gain global market access for
their products in the most cost-effective, uncomplicated and profitable
way. Starting with 4000 – 5000 square metre leased
showroom / stores in Sydney and Melbourne, once established and trading
successfully, the HiBrasil concept will develop extensively with two
company owned showroom / stores in Perth and Brisbane, and one in
Aukland, NZ. The next development will be the structuring and marketing
of a chain of franchise / licenced HiBrasil stores in major centers
throughout the EU, NAFTA, Japan and China. After the initial two years of selling exclusively
top-of-range products intensive development will commence in the form of
a separate but linked retail chain through which to retail Brazilian
products other than top-of-line (perhaps named ‘Hibrasil Utility’). The Marketplace Australia has a population of 19 million, it is very
steady economically and politically, with average GDP growth 3.9 per
year since 1998, average earnings by full-time employees are US$33,000
per year. Australia has one of the world’s highest rates of private
home ownership. In Sydney, a new private residence currently costs
in the region US$450,000; purchase price for existing upper-half middle
class houses is in the region of US$600,000 – 800,000 (North Shore)
including land; somewhat less in Melbourne. Housing values in Sydney
have been increasing 30% per year since 1998, driven at least in part by
heavy purchasing from South East Asia, and by executive transfers to
Sydney as the location of choice for US and EU corporate Asia –
Pacific regional offices. Approximately 45% of Australians live in Sydney /
Melbourne, their average net individual worth is estimated to be some 20
– 30% higher than the national average. The furniture market in Australia in 2001 – 2002
was AU$ 5 billion (US$ 3.3 billion). Local production for this period
was AU$ 3.7 billion, imports account for 20% of retail sales, exports
account for 11% of national production. Import duty on furniture and
housewares is 5%. Standard retail markup for furniture is 40 – 60%.
This market is stable, mature and projected to grow in excess of GDP
growth. The main competitive determinants in Australia’s furniture
market are quality and design within price sectors. Competition amongst producers and importers is strong in each price sector; end-user
sales are mainly through retail chains, buyer groups and direct to
public. However, Coles-Myer, the biggest player in Australian
retail, controlling 80% of all of retail, has long term supply
arrangements in place that are very difficult to penetrate; also,
certain ‘exclusive’ arrangements exist, such as with quality
furniture producer Moran, which restricts entry to this retail outlet by
new top-end quality products. Other major furniture retailers also have
long-term supply arrangements in place, are very demanding of suppliers,
and penetration of these channels is also difficult, costly and long
term. All retail chains combined comprise an estimated 75% of total
furniture throughput. Existing long-term supply agreements restrict
retailer access by new furniture suppliers across the board. Market Penetration Strategy To penetrate the Australian marketplace, HiBrasil
will open its own retail stores, to sell exclusively the furniture,
housewares and other products of its shareholder participants. The first
two showroom / stores will each be 4000 – 5000 sq metres, located in
suburban Sydney and Melbourne respectively. These stores will be leased
(total cost of space – AU$ 350 per year per sq metre), liveried with
the HiBrasil brand. Floor / display stock will be provided by the
participants, along with point-of-sale promotional materials. Sales and administration staff will be recruited and
suitably trained and inducted; where possible, sales floor staff will
feature attractive Brazilians in the 30s age group, who speak excellent
English. HiBrasil will project itself as an up-market retailer
of quality household durables from Brazil. It will also ’push’ the
three major themes of Brazil manufactures being of superior quality, the
uniqueness of Brazilian design, and the theme of Brazil being an exotic
place for Australians. HiBrasil will focus exclusively on the top 10% of
the marketplace; product retail pricing will reflect this strategy, and
all aspects of store operation and promotion will reinforce this. Australians base their buying decisions on furniture and housewares on quality and design, within price bands. (See IbisWorld report.) This means that they rely on what they believe about the brand names to establish their assessment of the quality of these products. It follows that any new brand coming on the market has very little identity of quality attached; it must be strongly promoted to gain this quality identification. A key element of our strategy is to promote the HiBrasil name as an 'umbrella' brand guaranteeing quality for all products handled; this group promotion will be far more cost effective than if attempted by individual Brazilian producers. HiBrasil products will be in three classes –
The furniture and housewares producers must be
shareholding participants in HiBrasil; the incidental product producers
could be associate shareholders. While placement of sale stocks in local warehousing
to meet buyer demands more immediately is available to participants,
managed by HiBrasil ANZ, it is accepted Australian practice not to offer
immediate delivery on furniture, especially for items for which the
buyer selects customizing options, based on viewing of the floor stock
item and of the options listed in the supporting POS materials. For such
customized sales, surface delivery from Brazil (taking 6 – 8 weeks)
will in most cases be acceptable. A ‘teaser’ publicity campaign will promote the
HiBrasil identity for 4 weeks before the simultaneous openings, followed
by a full advertising and promotions campaign focused on the top end of
the market, with a majority of impact concentrated in the first 4 – 6
weeks after opening. Promotions will be focused within the Sydney and
Melbourne areas to achieve greatest cost effectiveness. How it works In the most simple expression, the HiBrasil venture
is about Brazilian producers combining forces to open two retail stores
in Australia, through which to sell their products. Initial funding of the start-up is from participant
subscription in equity in the venture in the form of 80% of shares in
HiBrasil (Brazil), to raise AU$200,000, to pay legal and other incorporation
fees, to fund development of a detailed business plan, to recruit the
retail management expertise required, and for incidental travel,
administration, etc. Once the operational project is ready to start,
participants will contribute AU$1.5 million, which is to fund startup of
the HiBrasil ANZ operation. Each participant undertakes to underwrite
any shortfall in cash flow of the ANZ operation on a monthly basis for
the first 12 months of operation. The balance of HiBrasil (Brazil) is
owned by the management team, allowing for equity issue to further
management participants. HiBrasil ANZ is owned 80% by HiBrasil (Brazil) and
the balance by the management team, allowing for equity issue to further
management participants. Store operation follows standard local
practices, and the main participants will provide floor stock free of
charge to both of the stores. To equalise participant costs, floor space
allocation and stock handling will be charged for as rents and services
charges, pro-rata by use, and paid for as an advanced rebate; this
process will occur internal to HiBrasil ANZ and the deductions made will
be advised to HiBrasil (Brasil) and participants. Participants will be indented for purchases
electronically, with local payment for these products FOB in Brazil made
by HiBrasil (Brazil). HiBrasil (Brazil) will also manage all aspects of
dealings with HiBrasil ANZ on behalf of participants – export and
import documentation, compliance, shipping, packing and local transport
at both ends. HiBrasil ANZ will provide participants with ongoing
analyses of trends in the ANZ marketplace, advice on marketing
initiatives, financial and foreign exchange information, and tax advice.
Capital Need The HiBrasil concept needs to raise capital funding
of some AU$ 5 million (US$ 3.3 million) to start. Funds are required
mainly for lease of retail premises (AU$3.5 million over 12 months),
set-up costs (AU$1.5 million) for initial branding and promotion, staff
recruitment and training, and premises set-up;
and working funding for ongoing staffing / wages of AU$150,000
per month (for 30 employees); and an ongoing marketing communications /
advertising / promotions budget of some AU$200,000 per month. Of these funds, participating shareholders will
purchase equity in HiBrasil (Brazil) in equal shareholdings to raise
AU$2 million. Shareholders will commit to underwrite any shortfalls in
cash flow from the operation of HiBrasil ANZ for its first 12 months of
trading, although it is expected to trade profitably from opening day. Intending participants are invited to join a 10-day
guided tour to personally inspect the markets in Australia; the tour
will be appropriately packaged and participant pre-paid costs advised in
due time. The Team Hugh O’Connor
(Australia) – graduate economist (Dublin), post-graduate studies -
Masters of Business Administration (Melbourne University) and Master of
Enterprise Innovation (Swinburn University); experienced market analyst,
capital project analyst, business planner specialized in new venture
start-up; professional business communicator; experienced in project and
general management. Responsibilities – project champion, business
planning, shareholder liaison, capital finance Cleimar Basso
(Brazil), of Basso Esquadrias, Bento Gonzalves, a well-known
manufacturer of timber doors and windows
Gary Dryden (Australia) – professional sales and
general manager, business and marketing consultant, experienced in
housewares and furnishings markets, experienced in retail franchise
operation, development and marketing. Responsibilities – sales and
marketing, sales team development, retail staff recruitment and
training, general management of retail operations, Australian operations
management, franchise development Team members wanted / to be appointed –
Persons wanting to join the management team - please click here. Financial Projections (for HiBrasil ANZ, excluding franchise program)
NOTE – It is not
possible at this time to offer a detailed business plan for the retail
operation in Australia, since the scale and scope this plan will depend
on the number and nature of participants. Capital generated by sale of
equity in the holding company will be used in part to fund development
of the required detailed business plan.
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