Table of Content

    Subscription Box Business Plan for starting your own business

    Do you plan to start a subscription box business? Subscription box business has been growing steadily over the last couple of years which has seen a drastic increases in the number of subscribers gaining interest in subscription boxes. The best part about this business is you can exercise as much creativity as you want since there are so many creative ideas you can implement to stand out from your competitors. Everyone gets excited at the thought of receiving a subscription box every month not knowing what the box contains. Statistics have shown that traffic to subscription box sites has grown by over 3,000% in a span of three years. There are so many niche categories to choose from and with a well-laid out subscription box business plan, you’re guaranteed to make good profits.

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    Executive Summary

    2.1 The Business

    The subscription box business will be registered as Brandchoice and will be situated in Los Angeles, California. The business will be owned and managed by Raul Davis who’s an experienced Accountant by profession.

    2.2 Management Team

    Raul Davis who’s the owner and manager of Brandchoice is an experienced accountant with vast experience in the subscription box industry that spans over 10 years. During his career, Raul has worked for top subscription box companies such as Ipsy and Blue Apron gathering crucial experience associated with the subscription box industry.

    2.3 Customer Focus

    In this subscription box business model, focus will be on targeting customers who love subscription boxes and are excited by the curiosity that comes with not knowing what they will find in a box each month.

    Subscription Box Business Plan - 3 Years Profit Forecast

    2.4 Business Target

    Brandchoice plans to offer high quality, niche specific, durable and exciting products to a wide range of customers. After carefully considering local trends, Brandchoice is looking to target both local, regional and international customers with an aim of targeting customers.

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    Company Summary

    3.1 Company Owner

    Raul Davis is an experienced accountant who has had the opportunity to work in reputable and well known subscription box companies across the United States. Given his past experience, he knows how to start a subscription box business. Raul clearly understands the various aspects involved in niche selection, business strategy and business marketing.

    3.2 Aim of Starting the Business

    Subscription boxes have become so popular thus necessitating the need to have providers who can creatively cater for customer needs. Customers love subscription boxes because they’re highly convenient and are delivered at your doorstep. With people preferring personalized items, subscription box businesses cater for these needs. The excitement associated with subscription boxes is evidently increasing and for these reasons, Raul found the best approach of how to build a subscription box business that caters for individual customer needs.

    3.3 How the Business will be Started

    With over a decade in subscription box industry, Raul Davis is an expert in subscription box businesses as he has actively helped many businesses to prosper. Given his accounting experience, Davis understands what needs to be done and has come up with a comprehensive financial analysis for Brandchoice.

    Subscription Box Business Plan - Startup cost

    Start-up Expenses  
    Legal $3,000
    Consultants $6,000
    Insurance $18,000
    Rent $14,000
    Research and Development $13,000
    Expensed Equipment $20,000
    Signs $5,000
    Start-up Assets $0
    Cash Required $150,000
    Start-up Inventory $50,000
    Other Current Assets $23,000
    Long-term Assets $10,000
    TOTAL ASSETS $23,000
    Total Requirements $25,000
    START-UP FUNDING $90,000
    Start-up Expenses to Fund $40,000
    Start-up Assets to Fund $30,000
    Assets $20,000
    Non-cash Assets from Start-up $14,000
    Cash Requirements from Start-up $0
    Additional Cash Raised $50,000
    Cash Balance on Starting Date $25,000
    Liabilities and Capital $0
    Liabilities $0
    Current Borrowing $0
    Long-term Liabilities $0
    Accounts Payable (Outstanding Bills) $0
    Other Current Liabilities (interest-free) $0
    Capital $0
    Planned Investment $0
    Investor 1 $30,000
    Investor 2 $25,000
    Other $0
    Additional Investment Requirement $0
    Loss at Start-up (Start-up Expenses) $40,000
    TOTAL CAPITAL $55,000
    Total Funding $280,000
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    Services for Customers

    Brandchoice plans to offer its clients a wide range of exciting products. The best part about subscription box business is it directly caters for the needs of customers. Brandchoice hopes to collect information from each customer in order to better understand their likes and preferences with an aim of making customized products. In order to successfully create a subscription box business, it is important to identify the products you wish to sell and try to diversify where necessary. In this case, Brandchoice is planning how to start a monthly subscription box business that will offer customers the following products:

    • Art and Culture subscription boxes such as jewelry boxes, toys, paintings and kids books.
    • Food and beverage subscription boxes such as chocolate subscription, jams, honey, healthy food bars and baking boxes.
    • Home and Living subscription boxes i.e. cleaning suppliers, flowers and doormats.
    • Fashion, Beauty and Grooming subscription boxes such as luxury bags, t-shirts, soap, underwear and deodorants etc.

    Marketing Analysis of Subscription box business

    Ever since the introduction of subscription boxes, the market has been receptive as the number of people signing up for subscription boxes has increased. The retail market has changed and customers now want to be surprised with pleasant items they didn’t expect. There are numerous reasons that have increased the popularity of subscription box businesses. This subscription box business plan identifies technology as one of the main drivers of the growth of subscription box enterprises. According to Hitwise, there are approximately 5.7 million subscription box shoppers as at 2017.


    Demographics are key and Brandchoice knows too well starting a subscription box business must clearly identify and target specific demographics.

    5.1 Market Segment

    Immigration Business Plan

    For Brandchoice to meet the needs of its customers, the subscription box business plans to offer diverse subscription box products whose demand is high. This way, subscription box can effectively reach out to consumers. Subscriptions don’t last forever as customers eventually end them. Brandchoice has done a comprehensive market analysis to only target the right customers with the right products in order to lengthen subscriptions.

    Subscription Box Business Plan - Market Segmentation

    5.1.1 Households

    Los Angeles has a high population of households that require different types of items for various uses. However, research has shown subscription box purchases are mainly done by households with an income exceeding $100,000. Given the unique nature of subscription boxes, only households with specific interest in unique items will be expected to subscribe for boxes from Brandchoice. This business plan for subscription box intends to specifically offer subscription boxes with products tailored for household use. There’s no doubt, this is a major revenue source for Brandchoice.

    5.1.2 Working Class Population

    Subscription boxes are a favorite for employed individuals and entrepreneurs earning a steady income. Subscription boxes come at different prices and the concept of monthly payments makes them an ideal choice for salaried individuals with a taste for fine and unique items. Los Angeles is a business hub thus providing a high population of working class individuals who’re likely to commit to monthly subscription of products cutting across various niches.

    5.1.3 Women

    Women ordinarily love creative and unique items and will therefore to go any lengths to search for customized products. Subscription boxes offer a perfect solution because these boxes are famously associated with various fashion and beauty items. Brandchoice plans to sell fashion, beauty and grooming subscription boxes which are a favorite for women. To succeed in the business, Brandchoice has incorporated subscription box business ideas that target female shoppers who’re considered a key customer segment for the business.

    5.1.4 Children

    A good number of subscription boxes to be offered by Brandchoice will be geared for children. These boxes contain kids’ items such as toys, children books and clothes that attract parents who want to buy them for their children. The aim of the business is to venture into niches that are appreciated by children in order to capture this lucrative market. Brandchoice is keen to curate products for children to maximize retention and offer a great customer experience.

    Market Analysis
    Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
    Households 30% 25,000 27,000 29,000 31,000 33,000 10.00%
    Working Class 27% 23,000 25,000 27,000 29,000 31,000 12.00%
    Women 23% 20,000 22,000 24,000 26,000 28,000 14.00%
    Children 20% 17,000 19,000 21,000 23,000 25,000 16.00%
    Total 100% 85,000 93,000              101,000 109,000 117,000 20.00%

    5.2 Business Target

    With the demand for subscription boxes increasing, Brandchoice has created a unique subscription box business plan template that will cater for both local and external customers. Los Angeles is a large city and the business expects to make good sales by putting in place systems that allows for the creation of unique and exciting subscription boxes. This box subscription business model hopes to achieve an annual sales growth of between 15-20%.

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    5.3 Product Pricing

    In order for Brandchoice to achieve its targets, a detailed pricing survey was done in order to come up with a competitive pricing structure after taking into account the market average. Brandchoice also hopes to initially sell its subscription boxes at discounted prices for the first two months.


    The subscription box industry has witnessed positive growth and it is expected more people will join this new wave. The appetite for unique and customized products has grown and trends indicate an increase in the uptake of subscription products.

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    When determining how to create a subscription box business, focus should be how to attract long lasting subscriptions to keep a steady flow of income. With good strategies in place, Brandchoice hopes to reach out to a wide market segment.

    6.1 Competitive Analysis

    When you start subscription box business, it is critical to analyze the market and come up with the best strategies to grow the business. Despite the growing number of subscription box companies in Los Angeles, Brandchoice has come up with the best strategies to remain ahead of competitors.

    6.2 Sales Strategy

    For Brandchoice to advertise its subscription boxes, the following sales strategies will be adopted for marketing the business.

    • Understand client preferences and what they want in order to minimize cancellations and find out ways of making subscription boxes more appealing
    • Find a creative and customer-friendly approach of handling cancellations and returns to keep a positive image of the business
    • Provide a good alternative for customers who’re not satisfied with the present subscription plan or model
    • Advertise the subscription box business on local media channels such as television, radio and newspapers
    • Offer new clients a free subscription box in order to entice and allow them to see the quality of products
    • Adopt direct mailing approach for targeted customer segments such as household and corporate organizations
    • Advertise the business using digital marketing strategies such as Social media platforms (Facebook, Twitter and Instagram).

    6.3 Sales Forecast

    To achieve its sales targets, Brandchoice has formulated a detailed sales forecast to show how the subscription box business will perform when it begins operations.

    Subscription Box Business Plan - Unit Sales

    Sales Forecast      
    Unit Sales Year 1 Year 2 Year 3
    Art &Craft Subscription Boxes 500,000 520,000 540,000
    Food &Beverage Subscription Boxes 400,000 420,000 440,000
    Home & Living Subscription Boxes 300,000 320,000 340,000
    Fashion, Beauty & Grooming Subscription Boxes 250,000 270,000 290,000
    TOTAL UNIT SALES 1,450,000 1,530,000 1,610,000
    Unit Prices Year 1 Year 2 Year 3
    Art &Craft Subscription Boxes $400.00 $420.00 $440.00
    Food & Beverage Subscription Boxes $300.00 $320.00 $340.00
    Home & Living Subscription Boxes $200.00 $220.00 $240.00
    Fashion, Beauty & Grooming Subscription Boxes $100.00 $120.00 $140.00
    Art &Craft Subscription Boxes $350,000 $370,000 $390,000
    Food &Beverage Subscription Boxes $300,000 $320,000 $340,000
    Home & Living Subscription Boxes $250,000 $270,000 $290,000
    Fashion, Beauty & Grooming Subscription Boxes $200,000 $220,000 $240,000
    Direct Unit Costs Year 1 Year 2 Year 3
    Art &Craft Subscription Boxes $3.20 $4.20 $5.20
    Food &Beverage Subscription Boxes $2.20 $3.20 $4.20
    Home & Living Subscription Boxes $1.20 $2.20 $3.20
    Fashion, Beauty & Grooming Subscription Boxes $1.00 $2.20 $3.20
    Direct Cost of Sales
    Art &Craft Subscription Boxes $120,000 $140,000 $160,000
    Food &Beverage Subscription Boxes $70,000 $90,000 $110,000
    Home & Living Subscription Boxes $30,000 $35,000 $40,000
    Fashion, Beauty & Grooming Subscription Boxes $50,000 $55,000 $60,000
    Subtotal Direct Cost of Sales $315,000 $350,000 $365,000

    Personnel Plan

    Brandchoice plans to hire an experienced and small team of staff to run the subscription business. How to start your own subscription box business requires you to identify your personnel team as well as each role every member will play. It is also important to come up with a staff budget to help the business know how much it will spend on staff salaries.

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    7.1 Personnel Plan

    Brandchoice is owned by Raul Davis who will also become the manager of the subscription box business. As preparations take shape to open the business, the following staff members will be hired to help on how to run a subscription box business. The team is expected to work closely together to facilitate a smooth flow of business activities.

    1 Marketing Executive
    1 Operations Manager
    1 Accountant
    2 Designers
    1 Admin Assistant
    Those who’re successful will be taken through extensive training in order to familiarize themselves with how subscription box businesses are managed on a day-to-day basis.

    7.2 Average Salaries

    Brandchoice plans to remunerate staff members the following salaries in the first three years of operation.

     Personnel Plan      
    Year 1 Year 2 Year 3
    Manager $40,000 $45,000 $50,000
    Marketing Executive $35,000 $40,000 $45,000
    Operation Manager $25,000 $35,000 $40,000
    Accountant $30,000 $50,000 $70,000
    2 Designers $50,000 $55,000 $60,000
    Admin Assistant $25,000 $30,000 $35,000
    Total Salaries $205,000 $255,000 $300,000

    Financial Plan

    Brandchoice has come up with a comprehensive financial plan that will guide how the business will be run and managed. In this subscription box service business model, key financial parameters have been identified. Raul Davis will raise capital from his personal savings and will be working closely with two investors. Before planning how to start a box subscription business, you need to know about the expenses and costs involved to launch operations. A bank loan for business plan subscription box will be secured to finance any budget deficiencies.

    8.1 Important Assumptions

    The financial forecast for Brandchoice will be based on the assumptions below.

     General Assumptions      
    Year 1 Year 2 Year 3
    Plan Month 1 2 3
    Current Interest Rate 8.00% 11.00% 13.00%
    Long-term Interest Rate 5.00% 5.00% 5.00%
    Tax Rate 12.00% 14.00% 16.00%
    Other 0 0 0

    8.2 Brake-even Analysis

    The Brake-even Analysis for Brandchoice is shown in the graph below.

     Brake-Even Analysis  
    Monthly Units Break-even 12000
    Monthly Revenue Break-even $420,000
    Average Per-Unit Revenue $250.00
    Average Per-Unit Variable Cost $3.00
    Estimated Monthly Fixed Cost $520,000

    Subscription Box Business Plan - Brake-even Analysis

    8.3 Projected Profit and Loss

    Below is the Profit and Loss information for the subscription box business calculated on a monthly and annual basis.

     Pro Forma Profit And Loss      
    Year 1 Year 2 Year 3
    Sales $500,000 $520,000 $540,000
    Direct Cost of Sales $100,000 $130,000 $160,000
    Other $0 $0 $0
    TOTAL COST OF SALES $600,000 $650,000 $700,000
    Gross Margin $400,000 $420,000 $440,000
    Gross Margin % 70.00% 74.00% 80.00%
    Payroll $300,000 $320,000 $340,000
    Sales and Marketing and Other Expenses $6,000 $8,000 $10,000
    Depreciation $3,000 $5,000 $7,000
    Leased Equipment $0 $0 $0
    Utilities $7,000 $9,000 $11,000
    Insurance $3,000 $4,000 $5,000
    Rent $12,000 $14,000 $16,000
    Payroll Taxes $25,000 $28,000 $31,000
    Other $0 $0 $0
    Total Operating Expenses $320,000 $350,000 $380,000
    Profit Before Interest and Taxes $70,000 $80,000 $90,000
    EBITDA $20,000 $25,000 $30,000
    Interest Expense $0 $0 $0
    Taxes Incurred $18,000 $22,000 $26,000
    Net Profit $120,000 $130,000 $140,000
    Net Profit/Sales 25.00% 30.00% 35.00%

    8.3.1 Monthly Profit

    Subscription Box Business Plan - PROFIT MONTHLY

    8.3.2 Yearly Profit

    Subscription Box Business Plan - PROFIT YEARLY

    8.3.3 Monthly Gross Margin

    Subscription Box Business Plan - GROSS MARGIN MONTHLY

    8.3.4 Yearly Gross Margin

    Subscription Box Business Plan - GROSS MARGIN YEARLY

    8.4 Projected Cash Flow

    Below is a summary of pro forma cash flow, subtotal cash received, subtotal cash spent, subtotal cash from operations and subtotal cash spent on operations.

    Subscription Box Business Plan - Projected Cash Flow

     Pro Forma Cash Flow      
    Cash Received Year 1 Year 2 Year 3
    Cash from Operations
    Cash Sales $150,000 $155,000 $160,000
    Cash from Receivables $80,000 $100,000 $120,000
    SUBTOTAL CASH FROM OPERATIONS $230,000 $255,000 $280,000
    Additional Cash Received
    Sales Tax, VAT, HST/GST Received $0 $0 $0
    New Current Borrowing $0 $0 $0
    New Other Liabilities (interest-free) $0 $0 $0
    New Long-term Liabilities $0 $0 $0
    Sales of Other Current Assets $0 $0 $0
    Sales of Long-term Assets $0 $0 $0
    New Investment Received $0 $0 $0
    SUBTOTAL CASH RECEIVED $158,000 $165,000 $172,000
    Expenditures Year 1 Year 2 Year 3
    Expenditures from Operations
    Cash Spending $40,000 $45,000 $50,000
    Bill Payments $25,000 $30,000 $35,000
    SUBTOTAL SPENT ON OPERATIONS $65,000 $75,000 $85,000
    Additional Cash Spent
    Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
    Principal Repayment of Current Borrowing $0 $0 $0
    Other Liabilities Principal Repayment $0 $0 $0
    Long-term Liabilities Principal Repayment $0 $0 $0
    Purchase Other Current Assets $0 $0 $0
    Purchase Long-term Assets $0 $0 $0
    Dividends $0 $0 $0
    SUBTOTAL CASH SPENT $65,000 $75,000 $85,000
    Net Cash Flow $20,000 $23,000 $26,000
    Cash Balance $25,000 $28,000 $31,000

    8.5 Projected Balance Sheet

    Below is a Projected Balance Sheet for Brandchoice that shows assets, capital, liabilities, long term assets and current liabilities.

     Pro Forma Balance Sheet      
    Assets Year 1 Year 2 Year 3
    Current Assets
    Cash $380,000 $400,000 $420,000
    Accounts Receivable $40,000 $50,000 $60,000
    Inventory $5,000 $8,000 $9,000
    Other Current Assets $5,000 $5,000 $5,000
    TOTAL CURRENT ASSETS $430,000 $463,000 $491,000
    Long-term Assets
    Long-term Assets $30,000 $33,000 $36,000
    Accumulated Depreciation $15,000 $18,000 $21,000
    TOTAL LONG-TERM ASSETS $5,000 $3,000 $1,000
    TOTAL ASSETS $480,000 $517,000 $549,000
    Liabilities and Capital Year 1 Year 2 Year 3
    Current Liabilities
    Accounts Payable $20,000 $23,000 $26,000
    Current Borrowing $0 $0 $0
    Other Current Liabilities $0 $0 $0
    SUBTOTAL CURRENT LIABILITIES $20,000 $23,000 $26,000
    Long-term Liabilities $0 $0 $0
    TOTAL LIABILITIES $15,000 $20,000 $25,000
    Paid-in Capital $30,000 $30,000 $30,000
    Retained Earnings $30,000 $60,000 $90,000
    Earnings $130,000 $160,000 $190,000
    TOTAL CAPITAL $310,000 $330,000 $350,000
    TOTAL LIABILITIES AND CAPITAL $340,000 $380,000 $420,000
    Net Worth $420,000 $450,000 $480,000

    8.6 Business Ratios

    The following is the Ratio Analysis, Business Net Worth and Business Ratios for Brandchoice.

     Ratio Analysis        
    Year 1 Year 2 Year 3 INDUSTRY PROFILE
    Sales Growth 10.00% 50.00% 60.00% 6.00%
    Percent of Total Assets
    Accounts Receivable 10.00% 8.00% 6.00% 11.00%
    Inventory 5.00% 4 3.00% 10.00%
    Other Current Assets 3.00% 4.00% 2.00% 35.00%
    Total Current Assets 120.00% 150.00% 150.00% 60.00%
    Long-term Assets -8.00% -14.00% -25.00% 50.00%
    TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
    Current Liabilities 6.00% 4.00% 2.00% 26.00%
    Long-term Liabilities 0.00% 0.00% 0.00% 24.00%
    Total Liabilities 6.00% 2.00% 1.50% 45.00%
    NET WORTH 100.00% 90.00% 110.00% 38.00%
    Percent of Sales
    Sales 100.00% 100.00% 100.00% 100.00%
    Gross Margin 74.00% 80.00% 90.00% 0.00%
    Selling, General & Administrative Expenses 65.00% 75.00% 60.00% 70.00%
    Advertising Expenses 5.00% 3.00% 1.50% 5.00%
    Profit Before Interest and Taxes 25.00% 28.00% 33.00% 3.00%
    Main Ratios
    Current 8 10 14 1.6
    Quick 28 31 34 2.5
    Total Debt to Total Assets 4.00% 3.00% 2.10% 60.00%
    Pre-tax Return on Net Worth 85.00% 95.00% 100.00% 4.00%
    Pre-tax Return on Assets 65.00% 55.00% 68.00% 10.00%
    Additional Ratios Year 1 Year 2 Year 3
    Net Profit Margin 20.00% 23.00% 26.00% N.A.
    Return on Equity 55.00% 60.00% 50.00% N.A.
    Activity Ratios
    Accounts Receivable Turnover 7 9 11 N.A.
    Collection Days 100 110 120 N.A.
    Inventory Turnover 23 27 31 N.A.
    Accounts Payable Turnover 14.2 16.2 18.2 N.A.
    Payment Days 24 24 24 N.A.
    Total Asset Turnover 3.6 2.6 1.6 N.A.
    Debt Ratios
    Debt to Net Worth 0 -0.1 -0.05 N.A.
    Current Liab. to Liab. 0 0 0 N.A.
    Liquidity Ratios
    Net Working Capital $410,000 $430,000 $450,000 N.A.
    Interest Coverage 0 0 0 N.A.
    Additional Ratios
    Assets to Sales 0.75 0.5 0.35 N.A.
    Current Debt/Total Assets 9% 7% 4% N.A.
    Acid Test 32 35 38 N.A.
    Sales/Net Worth 4.2 3.5 2.6 N.A.
    Dividend Payout 0 0 0 N.A.

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