Jimmy's Just Kicks

Buisness plan for an online shoe retail business
James Bednar October 4th, 2013

Buisness Plan

My business, Jimmy's Just Kicks, will be a shoe retail business that I will run online in my spare time. I want my favorite hobbies to reflect the products I sell, so my two products will be running shoes and basketball shoes. I enjoy running and playing basketball, so I want my company and products to reflect my passions and help spread them to other people.

Monthly costs

Running shoes cost $40 a pair from the manufacturer and will be sold for $85 a pair. Basketball shoes cost $60 a pair from the manufacturer and will be sold for $100 a pair. The manufacturer requires that I must sell at least 10 pairs of running shoes a month and at least 5 pairs of basketball shoes a month.

I would like to have 11 months initial start-up time from the $10,000. To make sure this is possible, my business will spend no more than $900/month on running and basketball shoes.

cost=$40x+$60y

sell=$85x+$100y

Overall Restrictions

I am only able to sell 25 pairs of shoes a month due to time constraints. I will only spend $900 a month on product (running and basketball shoes) to insure my company has 11 months of start-up time. Because of the manufacters requirments, I must buy and sell at least 10 running shoes a month and at least 5 basketball shoes a month.

Restrictions: Inequalites

x= number of pairs of running shoes y= number of pairs of basketball shoes

Number of shoes sold a month: x+y≤25

Monthly cost: 40x+60y≤900

Must sell at least 10 pairs of running shoes a month: x≥0, x≥10

Must sell at least 5 pairs of basketball shoes a month: y≥0, y≥5

Profits: Equations

x= number of pairs of running shoes y= number of pairs of basketball shoes

Profits will be made by subtracting the costs from the selling price

*All figures are per month, not per year

Sell= $85x+$100y

Cost=$40+$60y

Profits= sell-cost

Profit= (85x-40x) + (100y-60y)

Or

P= $45x+$40y

So, profits would equal $45 times the number of running shoes, plus $40 times the number of basketball shoes sold a month.

Graph

Maximizing Profits

(x,y) P=$45x+$40y

x= pairs of running shoes y= pairs of basketball shoes

*Original point was (10,8.33). 8.33 must be rounded to 8 because you can't sell .33 of a pair of shoes.

*(10,8) P=$45(10)+$40(8)

P=$450+$320

P=$770

(10,5) P=$45(10)+$40(5)

P=$450+$200

P=$650

(15,5) P=$45(15)+$40(5)

P=$675+$200

P=$875

According to the figures, monthly profits will be maximized if I sell 15 pairs of running shoes and 5 pairs of basketball shoes a month. This would give me $875 of profit a month, opposed to $770 from (10,8) or $650 from (10,5). Seeing this model for profit tells me that this could be a profitable buisness model to use in real life.

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