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1.0 Executive Summary...1
Chart: Highlights...2
1.1 Mission...2
1.2 Objectives...2
1.3 Keys to Success...2
2.0 Company Summary...3
2.1 Company Ownership...3
2.2 Start-up Summary...3
Table: Start-up...3
...3
Table: Start-up Funding...4
Chart: Start-up...5
3.0 Products...5
4.0 Market Analysis Summary...6
4.1 Market Segmentation...6
Table: Market Analysis...7
Chart: Market Analysis (Pie)...8
4.2 Target Market Segment Strategy...8
4.3 Industry Analysis...9
4.3.1 Competition and Buying Patterns...11
5.0 Strategy and Implementation Summary...11
5.1 Competitive Edge...11
5.2 Marketing Strategy...12
5.3 Sales Strategy...12
5.3.1 Sales Forecast...13
Table: Sales Forecast...13
Chart: Sales Monthly...14
Chart: Sales by Year...14
5.4 Milestones...15
Table: Milestones...15
Chart: Milestones...15
6.0 Web Plan Summary...16
6.1 Website Marketing Strategy...16
6.2 Development Requirements...16
7.0 Management Summary...16
7.1 Personnel Plan...17
Table: Personnel...17
...17
8.0 Financial Plan...18
8.1 Important Assumptions...18
Table: General Assumptions...18
...18
8.2 Break-even Analysis...19
Chart: Break-even Analysis...19
8.3 Projected Profit and Loss...20
Table: Profit and Loss...20
Chart: Profit Monthly...21
Chart: Profit Yearly...21
Chart: Gross Margin Yearly...22
8.4 Projected Cash Flow...23
Table: Cash Flow...23
Chart: Cash...24
8.5 Projected Balance Sheet...25
Table: Balance Sheet...25
8.6 Business Ratios...25
Table: Ratios...26
Table: Sales Forecast...1
...1
Table: Personnel...2
...2
Table: General Assumptions...3
...3
Table: Profit and Loss...4
...4
Table: Cash Flow...5
1.0 Executive Summary
Beanisimo Coffee is a start up Salem, Oregon based coffee roaster that has developed a line of premium coffees and espressos. Beanisimo Coffee has been formed as an Oregon S Corporation by the founder Frank Jones. Frank has brought old world Italian traditions and recipes to meet the market need for premium coffees.
Keys to Success
Beanisimo Coffee has identified three keys that will be instrumental to its success. The first is the need to develop the finest coffee available. The second requirement to develop a top notch customer service organization that exceeds customer expectations. The last element is to employ strict financial controls. The development and implementation of finance and accounting controls will help ensure fiscal success.
Target Market Segments
Beanisimo Coffee has identified three distinct customer segments that it will actively pursue. The first group is made up of coffee houses, drive thru establishments, and espresso carts. This customer segment has 187 potential customers and is growing at a 7% annual rate. The second group is restaurants with 107 possible customers and is growing at an 8% annual rate. The last segment is grocery stores that sell unprepared beans to their customers in either whole bean or ground forms. This segment has 97 potential customers and a 7% growth rate.
Management
Beanisimo Coffee is being lead by Frank Jones. Frank has a strong educational background and a wealth of applicable industry experience. Frank received his Bachelor degree and MBA from Willamette University. Frank has worked at several coffee shops, and has worked in Italy as a coffee roaster under the wing of an Italian master roaster.
Through a combination of a solid business model, strong educational credentials, and
proprietary coffee roasting techniques, Frank will be able to turn Beanisimo Coffee from a start-up business to a significant market player in the high-end coffee market in the Willamette River Valley. Sales for year two are forecasted to be $312,000 rising to $355,000 in year three. Net profit is projected to be 7.58% for year two and will jump to 9.58% in year three.
Chart: Highlights
1.1 Mission
It is Beanisimo Coffee's mission to offer the finest selection of coffees. By using the customs from a 54-year-old Italian master roaster, Beanisimo Coffee's products will surpass all of its competition. A strong customer service ethic will support the fantastic product.
1.2 Objectives
Beanisimo Coffee's objectives are to build brand awareness and customer service excellence, while increasing sales. Beanisimo Coffee intends to utilize the following strategies to achieve these objectives:
• Develop a high-quality menu of different coffee blends.
• Provide an excellent service experience, anticipating the needs of the customers and delivering the best service.
2.0 Company Summary
Beanisimo Coffee is a start up Salem, Oregon based coffee roaster that has developed a line of premium coffees and espressos. Beanisimo Coffee has been formed as an Oregon S Corporation by the founder Frank Jones. Frank has brought old world Italian traditions and recipes to meet the market need for premium coffees.
2.1 Company Ownership
Beanisimo Coffee is an Oregon S Corporation. The primary stockholder and founder is Frank Jones.
2.2 Start-up Summary
The following equipment will be needed for the start up of the company:
• Three workstation computers and one central file server.
• Two laser printers.
• Computer software: Microsoft Office, and Peachtree Accounting.
• Assorted office furniture and equipment.
• Assorted buckets, labels, bags, labels, and hooks.
• Topre Izmir perforated drum roaster.
• Heat based bag sealer.
• Hobart scale. • Van. Table: Start-up Start-up Requirements Start-up Expenses Legal $5,000 Stationery etc. $500 Brochures $1,000 Consultants $1,500
Research and Development $3,000
Total Start-up Expenses $11,000
Start-up Assets
Cash Required $116,000
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $78,000
Total Assets $194,000
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $11,000
Start-up Assets to Fund $194,000
Total Funding Required $205,000
Assets
Non-cash Assets from Start-up $78,000
Cash Requirements from Start-up $116,000
Additional Cash Raised $0
Cash Balance on Starting Date $116,000
Total Assets $194,000
Liabilities and Capital Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0 Capital Planned Investment Investor 1 $80,000 Investor 2 $65,000 Other $60,000
Additional Investment Requirement $0
Total Planned Investment $205,000
Loss at Start-up (Start-up Expenses) ($11,000)
Total Capital $194,000
Total Capital and Liabilities $194,000
Chart: Start-up
3.0 Products
Beanisimo Coffee offers a wide range of specially blended and roasted coffees. Beanisimo Coffee will be using customs passed down from a 54 year old Italian master coffee roaster. Beanisimo Coffee first will select and cup the coffee, then blend different beans before roasting. The key to a wonderful bag of roasted beans is the blending of different coffee beans. Coffee beans are a global commodity. There are many different types of beans, distinctive in the genre of plant that the bean comes from as well as the region that the bean is grown. Beyond these distinctions, beans are still a commodity.
Blending different types of beans makes huge differences. Beanisimo Coffee is privy to decades old blending recipes from old world Italy.The roasting technique also plays a role in the taste of the coffee.
Beanisimo Coffee will offer a wide range of coffees including:
• Italian Roast • French Roast • Columbian Dark • African Roast • Sumatra • Bistro Blend • Kona • Kenya
• Decaf- available in the following blends: Bistro, Sumatra, French and Italian Roasts
Each coffee is available in one pound and five pound packages, in both whole bean and ground versions. Every product that Beanisimo Coffee produces attempts to be the best in its
respective product category based on quality and taste. 4.0 Market Analysis Summary
Beanisimo Coffee has decided to concentrate on three distinct customer segments. The first is coffee houses/drive thru/espresso carts, restaurants, and the last is grocery stores. Each of the customers is distinct. The first segment prepares beverages for their clients, as does the second group along with meals, and the third segment sells the whole bean and ground coffee
unprepared to their customers.
While the coffee industry as a whole has been stagnate for a while, the high-end gourmet coffee market is still growing. This can be attributed to a number of factors including the maturing and increased sophistication of the American palette. Beanisimo Coffee faces
competition from several competitors who focus on convenience or price as opposed to product quality which is the strength of Beanisimo Coffee.
4.1 Market Segmentation
Beanisimo Coffee has segmented their market into three distinct customer segments: 1. Coffee houses/drive thrus/carts: These customers are purchasing coffee beans for the
preparation and sale of coffee and espresso based drinks. Their establishments serve a wide variety of coffee and espresso beverages to customers that visit the coffee houses, drive thrus, or cart based servers.
2. Restaurants: These establishments are purchasing coffee and espresso to serve to their retail food customers.
3. Grocery Stores: These customers are purchasing the beans for either prepackaged, or bulk, resale to their customers. The grocers do not prepare the drinks for the customers like the other customer segments, they only sell the Beanisimo product as is purchased from Beanisimo Coffee.
Below is some demographic information of the end consumers of the above customer segments.
U.S. Demographic Coffee Consumption Patterns
2001- 2002 U.S. Coffee Drinking Trends Survey (according to the National Coffee Association):
2002 2003
U.S. adults who drank coffee every day 107 million 108.7 million U.S. adults who drank coffee occasionally 57 million 52 million
Gender:
• Men and women consume the same number of cups per day.
• Women are more excited about varieties and source of relaxation (social).
• Men like that coffee helps them "get things done."
• Women are more price conscious than men.
Age:
• 18-25: prefer high caffeine, hot or iced drinks, all high octane, richer blends.
• 30-60: prefer premium and espresso with half the caffeine. Lite blends and half-caffeinated grew approximately 7% in 2001.
Other:
• 64% of all coffee is consumed at breakfast; 28% between meals; 8% at all other meals.
• Sweetened or plain: 35% drink coffee black; 65% add sweetener and/or creamer.
• The average daily coffee drinker consumes 3.1 cups per day.
• In 2002, there were 29 million people who drank gourmet coffee every day. Gourmet is defined as specialty coffee (premium), espresso-based beverages (cappuccino, latte, café mocha, espresso), or frozen and iced coffee beverages.
Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Coffee houses, etc. 7% 120 128 137 147 157 6.95%
Restaurants 8% 107 207 224 242 261 24.97%
Grocery stores 7% 97 104 111 119 127 6.97%
Chart: Market Analysis (Pie)
4.2 Target Market Segment Strategy
Beanisimo Coffee will be focusing on the three previously mentioned customer segments because of their desire of having a high-quality product.
The coffee shops/drive thrus/carts segment often appreciates the finest quality coffee/espresso product. Restaurants are another customer segment that is attractive because they have a constant need for coffee and coffee/espresso is a common beverage served with meals, especially when people eat out.
Additionally, restaurants are a year round business that serves coffee at all times during the day. Lastly, Beanisimo Coffee will target grocery stores which sell coffee in unprepared forms to a wide range of customers. Grocery stores are a natural customer since many people buy the bulk of the food they consume during the week from a grocery store, including coffee.
4.3 Industry Analysis
Global Coffee Market: Coffee is the second-largest commodity traded after oil, with the worldwide retail coffee market being a $56 billion industry.
The coffee belt is roughly bounded by the Tropics of Cancer and Capricorn and is mainly comprised of 28 countries. The top-ten coffee-producing countries are, in descending order: Brazil, Vietnam, Columbia, Indonesia, Mexico, Ethiopia, India, Guatemala, Ivory Coast, and Uganda.
During the 1990's, Vietnam moved from fourth largest to second largest producer of coffee in the world, with most of its production in robusta beans. Coffee is available in several forms: bean, ground, liquid, and soluble: powdered, granules, freeze-dried. Worldwide, with the exception of North America, people prefer instant coffee and coffee is mainly prepared at home.
Top coffee-importing countries as a % of world supplies:
USA 55.6% Germany 14.0% Japan 7.7% France 7.5% Italy 6.2% Spain 3.8% Holland 3.4% UK 3.4% Sweden 2.2%
Top coffee-consuming regions (by pounds consumed per capita per year):
Northern Europe* 23 Central Europe 16 South America 7 Southern Europe 10 North America 10 Australia 5 Japan 5
* Does not include the UK, which only consumes 5 pounds per capita per year.
U.S. Coffee Market: The total U.S. coffee market is projected to exceed $25 billion in 2002:
1993 1999 2001
Revenues $13 B $18.5 B $20.7 B
The overall U.S. consumption of coffee has stagnated in recent years. However, consumers' purchase of gourmet coffee (specialty and premium) is increasing, according to the National Coffee Association.
Consumers are choosing to drink higher-grade coffees, moving away from price-based
purchasing to trends that focus on increased quality in a wide variety of products. In the U.S., the coffee market has been segmented into two major categories: mass-market and specialty coffees.
1. Mass-Market: Mainly lower-priced product sold through grocery retail outlets and
convenience stores. Mass-market coffee consumption is declining approximately 5% per year as people of all ages embrace out-of-home specialty coffees. Grocery retail outlets are providing the consumer with more premium coffee choices and are partnering with specialty coffee roasters capturing an increasing share of the mass-market sales channels.
2. Specialty Coffee: Characterized by a quality grade product with branding, historically sold only through coffee shops. Five years ago, there was a clear line between mass-market and specialty coffees in quality, price and distribution channels. Today, there are two
sub-categories that make the positioning more blurred: Premium and Specialty coffees.
Specialty coffee retailers sell higher quality coffee at premium prices. Now, premium coffees have been introduced into other distribution channels to sell below specialty coffee retailer prices, undercutting the exclusive advantage coffee retailers once had. Specialty coffee sales grew 38% from $7.76 billion in 2000 to $10.71 billion in 2001, comprising 30% of the total U.S. coffee market. The specialty coffee market is characterized by being high
fragmented with one large player, several mid-tier companies, and thousands of small regional companies.
Before the success of the specialty coffee retailers in the 90's, coffee was a breakfast drink and choices were caffeinated or decaffeinated. The incredible success of the specialty coffee retailer can be attributed to introducing coffee as a social drink and providing the consumer with new unimagined choices of coffee drinks while introducing and conditioning the consumer to the taste of specialty coffees.
Trends within the Industry:
• In the U.S., Specialty coffee sales grew 38% from $7.76 billion in 2000 to $10.71 billion in 2001, comprising 30% of the market. Thanks in large part to the marketing efforts of Starbucks, specialty coffee has become mainstream. It is the primary growth driver in the otherwise flat or declining coffee industry. Specialty coffee, which was once limited to coffee shops, is now available in a wide variety of mass-market channels.
4.3.1 Competition and Buying Patterns
Beanisimo Coffee several different competitors:
• Allan Brothers: This Oregon based company operates as both a roaster as well as running coffee houses in Salem, Eugene, and Corvalis. The price point for their coffee is midway. The quality is decent, particularly at its price point.
• Caffetto: This company widely distributes their roasted coffee throughout the Willamette River Valley. The quality and price point is pretty low. This company's coffees are attractive if the customer is very price sensitive and need an inexpensive product.
• Assorted varieties distributed by food service vendors (e.g., Food Service of America and Sysco): These varieties are offered at a mid-price point with a low product quality. What you do get with these offerings is individual serving sizes. For a lot of restaurants this is advantageous, but the costs is carried over to the customer for this feature.
The buying patterns for customers is based on convenience, cost, and quality. Some customers are willing to pay more for the convenience of individual sized servings and the benefit of buying coffee from their existing food product vendor. For others coffee is just one more thing on the menu and quality is not that important. Lastly, there are many companies that recognize high quality coffee and espresso and will not settle for anything less.
5.0 Strategy and Implementation Summary
Beanisimo Coffee will leverage its competitive edge of the highest quality product to quickly gain market penetration. This competitive edge is sustainable because it is based on the traditional roasting techniques of an old Italian master roaster. Beanisimo Coffee's marketing effort will be based on the communications that assert that Beanisimo Coffee has by far the best products. Beanisimo Coffee will be vocal in their assertion of the message that while its coffee costs a bit more, the variance is not material and the difference in quality is
immeasurable. The sales strategy will work on converting perspective customers into long-term customers by emphasizing high-quality products and high levels of customer service. This strategy recognizes the fact that even though the company may have the best product, without excellent customer service the organization will not succeed.
5.1 Competitive Edge
Beanisimo Coffee's competitive edge is its market leading product quality. By leveraging
personal relationships, Beanisimo Coffee has gained the recipes and knowledge of an old Italian master roaster. Part of Beanisimo Coffee's secret is the old world roasting techniques, part of the winning formula is the art of blending different green beans to come up with special recipes. Green coffee beans are a commodity, therefore any variations in one company's coffee to
another is based on roasting techniques if they are using the same types of beans. Beanisimo Coffee is able to stand out among its competitors by using time tested blends of different green beans to come up with compelling final products. This competitive edge is sustainable in the sense that this information that Beanisimo Coffee possesses is a trade secret and not available to other roasters. This will ensure Beanisimo Coffee will always have the finest products.
5.2 Marketing Strategy
Beanisimo Coffee's marketing strategy will communicate to the target customer segments that its product clearly exceeds all of the competitors. The strategy will employ several methods to communicate the message. The first will be a print advertising campaign. Several different sources will be used including a local restaurant industry journal as well as a regional coffee shop trade publication. Advertisements in these publications will be effective in reaching the target audience.
A second method that Beanisimo Coffee will use to "get out the word" will be by having several different cuppings. A cupping is analogous to a wine tasting where many different varieties are tasted, compared, and analyzed. The cuppings will be a perfect opportunity for Beanisimo Coffee to have prospective customers taste the difference between its products and the competition. To develop awareness of the superior product offerings, Beanisimo Coffee must offer a superior level of customer service to support the products. Beanisimo Coffee recognizes that you cannot solely compete on product alone, that much of the transaction involves
excellent customer service. 5.3 Sales Strategy
The sales strategy recognizes the need for the company as a whole to back up its superior product offerings with excellent service. This mantra is important because if there was not a service organization to back up the product, there would be no customers after the second or third purchase. Consequently, the sales strategy will focus on customer support and making the customer's experience with Beanisimo Coffee as positive as possible. This strategy will use account managers that look after individual customers, ensuring that their needs are being met. The account managers will be responsible for a certain number of existing accounts as well as will be provided the resources to attract new accounts.
5.3.1 Sales Forecast
The sales forecast, described graphically in the following charts, is conservative in order to prevent unrealistic expectations and to help ensure the achievement of these goals. Sales will grow slowly but incrementally. As a start-up organization, it is realistic to expect that it will take time to grow the customer base so that it is at a sustainable level.
As mentioned in the previous section, account managers will be used to service existing customers as well as generate new accounts. Having account managers with a vested interest in the satisfaction of the customers will help ensure disciplined sales growth. Without account managers, the management believes that it would be too easy for customers to "fall through the cracks."
Table: Sales Forecast
Sales Forecast
Year 1 Year 2 Year 3
Sales
Coffee houses $35,824 $136,004 $154,545
Restaurants $22,211 $84,322 $95,818
Grocery stores $24,360 $92,483 $105,091
Total Sales $82,395 $312,809 $355,454
Direct Cost of Sales Year 1 Year 2 Year 3
Coffee houses $11,822 $44,881 $51,000
Restaurants $7,330 $27,826 $31,620
Grocery stores $8,039 $30,519 $34,680
Chart: Sales Monthly
5.4 Milestones
Beanisimo Coffee has developed several milestones that will serve as a goal to which the entire organization will strive to achieve. All of the milestones are measurable allowing the
responsible department to track progress and assess their ability to reach the milestone.
• Business plan completion.
• First major account: This will be the first large account that provides the company with a material recurring revenue stream.
• Profitability: For the accounting/finance department, this is a significant milestone.
• Revenue exceeding $300,000. Table: Milestones
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2004 2/15/2004 $0 Frank Operations
First major account 1/1/2004 6/15/2004 $0 Sales Manager Sales
Profitability 1/1/2004 10/30/2005 $0 Frank Accounting
Revenue >$500,000 1/1/2004 6/15/2006 $0 Sales Manager Sales
Totals $0
6.0 Web Plan Summary
A website will be used to provide information regarding Beanisimo Coffee and the offered
products to current and prospective customers. The site will be used for informational purposes, it will be not initially used for commerce purposes. Once the organization has been operating for a while they will reconsider the demand for coffee to be sold via the website.
6.1 Website Marketing Strategy
The marketing strategy for the website will attempt to develop awareness for the website thereby directing people to the site for more information regarding the complete line of coffees and espressos that Beanisimo Coffee offers. Beanisimo Coffee will make submissions to search engines such as Google! to ensure that when a perspective customer types in "gourmet coffee" or some other such key word that Beanisimo Coffee's site is high up on the list of hits. In addition to search engine submissions, all of Beanisimo Coffee's promotional material will have the URL for the website, encouraging people to visit the site.
6.2 Development Requirements
As mentioned before, the website will be used as a source of information. Because it will not, at least initially, have an e-commerce component to it, the development requirements will not be that significant. Beanisimo Coffee will leverage the technical expertise of a computer science graduate student (who typically work at below market wages) to develop the informational site. 7.0 Management Summary
Frank Jones, the founder and driving force of Beanisimo Coffee will be the main component of the management team. Frank received his Bachelor of Arts and MBA from Willamette
University. Frank has worked as a barista at several different coffee houses, and with an Italian master roaster who took him under his wing and showed him all aspects of the business. After one year in Italy Frank returned to the states and began to work on a business plan for a coffee roasting company.
7.1 Personnel Plan
Responsibilities within Beanisimo Coffee will be delegated as follows:
• Frank: Business development, some accounting, some sales, and roasting.
• Sales manager: This person is responsible for the sales effort and will be the account manager for all of the accounts initially and will develop new sales accounts as well.
• Sales: As the business grows a sales person will be hired for account management responsibilities as well as some new sales development.
• Shipping: One person will be hired for the position of shipping and delivery. For delivery within the Willamette River Valley, deliveries will be made by the company vehicle. Other shipments that are of greater distance from Beanisimo Coffee will be sent via UPS. This position will coordinate all aspects of order fulfillment.
• Support staff: This position will employ initially one person in a capacity of supporting operations in a multitude of ways based on need. At times they will help support production and shipping.
• Administrative support: This position will help with some of the accounting activities as well as other administrative support functions.
Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3
Frank $24,000 $24,000 $30,000 Sales manager $20,000 $24,000 $30,000 Sales $10,500 $18,000 $18,000 Support $11,520 $15,360 $15,360 Shipping $7,680 $15,360 $15,360 Administration $10,240 $15,360 $15,360 Total People 6 6 6 Total Payroll $83,940 $112,080 $124,080
8.0 Financial Plan
The following sections will outline important financial information. 8.1 Important Assumptions
The following table details important Financial Assumptions. Table: General Assumptions
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
8.2 Break-even Analysis
The Break-even Analysis indicates that approximately $19,000 will be needed in monthly revenue to reach the break-even point.
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even $19,170
Assumptions:
Average Percent Variable Cost 33%
Estimated Monthly Fixed Cost $12,844
8.3 Projected Profit and Loss
The following table will indicate Projected Profit and Loss. Table: Profit and Loss
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $82,395 $312,809 $355,454
Direct Cost of Sales $27,190 $103,227 $117,300
Other Costs of Goods $0 $0 $0
Total Cost of Sales $27,190 $103,227 $117,300
Gross Margin $55,205 $209,582 $238,154
Gross Margin % 67.00% 67.00% 67.00%
Expenses
Payroll $83,940 $112,080 $124,080
Sales and Marketing and Other Expenses $8,394 $11,208 $12,408
Depreciation $15,600 $15,600 $15,600 Rent $14,400 $14,400 $14,400 Utilities $7,800 $7,800 $7,800 Insurance $9,000 $9,000 $9,000 Payroll Taxes $12,591 $16,812 $18,612 Other $2,400 $2,400 $2,400
Total Operating Expenses $154,125 $189,300 $204,300
Profit Before Interest and Taxes ($98,920) $20,282 $33,854
EBITDA ($83,320) $35,882 $49,454
Interest Expense $0 $0 $0
Taxes Incurred $0 $6,085 $10,156
Net Profit ($98,920) $14,198 $23,698
Chart: Profit Monthly
8.4 Projected Cash Flow
The following table and chart will detail information regarding Cash Flow. Table: Cash Flow
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received Cash from Operations
Cash Sales $20,599 $78,202 $88,863
Cash from Receivables $43,327 $182,958 $257,031
Subtotal Cash from Operations $63,926 $261,161 $345,895
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 $20,000 $0
Subtotal Cash Received $63,926 $281,161 $345,895
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $83,940 $112,080 $124,080
Bill Payments $77,036 $178,464 $193,667
Subtotal Spent on Operations $160,976 $290,544 $317,747
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 $160,976 $290,544 $317,747
Net Cash Flow ($97,050) ($9,383) $28,148
8.5 Projected Balance Sheet
The following table displays the Projected Balance Sheet. Table: Balance Sheet
Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets Current Assets
Cash $18,950 $9,567 $37,715
Accounts Receivable $18,469 $70,118 $79,677
Inventory $4,722 $17,927 $20,372
Other Current Assets $0 $0 $0
Total Current Assets $42,141 $97,612 $137,763
Long-term Assets
Long-term Assets $78,000 $78,000 $78,000
Accumulated Depreciation $15,600 $31,200 $46,800
Total Long-term Assets $62,400 $46,800 $31,200
Total Assets $104,541 $144,412 $168,963
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,461 $15,135 $15,988
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $9,461 $15,135 $15,988
Long-term Liabilities $0 $0 $0 Total Liabilities $9,461 $15,135 $15,988 Paid-in Capital $205,000 $225,000 $225,000 Retained Earnings ($11,000) ($109,920) ($95,723) Earnings ($98,920) $14,198 $23,698 Total Capital $95,080 $129,277 $152,975
Total Liabilities and Capital $104,541 $144,412 $168,963
Net Worth $95,080 $129,277 $152,975
8.6 Business Ratios
The following table shows important Business Ratios, specific to Beanisimo as well as the industry as a whole.
Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 279.64% 13.63% -2.25%
Percent of Total Assets
Accounts Receivable 17.67% 48.55% 47.16% 20.65%
Inventory 4.52% 12.41% 12.06% 16.07%
Other Current Assets 0.00% 0.00% 0.00% 21.35%
Total Current Assets 40.31% 67.59% 81.53% 58.07%
Long-term Assets 59.69% 32.41% 18.47% 41.93% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 9.05% 10.48% 9.46% 21.87% Long-term Liabilities 0.00% 0.00% 0.00% 19.28% Total Liabilities 9.05% 10.48% 9.46% 41.15% Net Worth 90.95% 89.52% 90.54% 58.85% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 67.00% 67.00% 67.00% 32.41%
Selling, General & Administrative Expenses 187.06% 62.46% 60.33% 21.65%
Advertising Expenses 0.00% 0.00% 0.00% 1.81%
Profit Before Interest and Taxes -120.06% 6.48% 9.52% 1.84%
Main Ratios
Current 4.45 6.45 8.62 2.24
Quick 3.95 5.27 7.34 1.31
Total Debt to Total Assets 9.05% 10.48% 9.46% 3.37%
Pre-tax Return on Net Worth -104.04% 15.69% 22.13% 45.32%
Pre-tax Return on Assets -94.62% 14.04% 20.04% 6.17%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -120.06% 4.54% 6.67% n.a
Return on Equity -104.04% 10.98% 15.49% n.a
Activity Ratios
Accounts Receivable Turnover 3.35 3.35 3.35 n.a
Collection Days 55 69 103 n.a
Inventory Turnover 10.91 9.12 6.13 n.a
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales
Coffee houses 0% $0 $0 $0 $2,500 $2,656 $2,899 $3,365 $3,989 $4,545 $4,989 $5,225 $5,656 Restaurants 0% $0 $0 $0 $1,550 $1,647 $1,797 $2,086 $2,473 $2,818 $3,093 $3,240 $3,507 Grocery stores 0% $0 $0 $0 $1,700 $1,806 $1,971 $2,288 $2,713 $3,091 $3,393 $3,553 $3,846 Total Sales $0 $0 $0 $5,750 $6,109 $6,668 $7,740 $9,175 $10,454 $11,475 $12,018 $13,009
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Coffee houses $0 $0 $0 $825 $876 $957 $1,110 $1,316 $1,500 $1,646 $1,724 $1,866 Restaurants $0 $0 $0 $512 $543 $593 $688 $816 $930 $1,021 $1,069 $1,157 Grocery stores $0 $0 $0 $561 $596 $651 $755 $895 $1,020 $1,120 $1,172 $1,269
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Frank 0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Sales manager 0% $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Sales 0% $0 $0 $0 $0 $0 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 Support 0% $0 $0 $0 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 Shipping 0% $0 $0 $0 $0 $0 $0 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 Administration 0% $0 $0 $0 $0 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 $1,280 Total People 1 1 2 2 3 5 6 6 6 6 6 6 Total Payroll $2,000 $2,000 $4,000 $5,280 $6,560 $8,060 $9,340 $9,340 $9,340 $9,340 $9,340 $9,340
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Sales $0 $0 $0 $5,750 $6,109 $6,668 $7,740 $9,175 $10,454 $11,475 $12,018 $13,009 Direct Cost of Sales $0 $0 $0 $1,898 $2,016 $2,200 $2,554 $3,028 $3,450 $3,787 $3,966 $4,293
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $1,898 $2,016 $2,200 $2,554 $3,028 $3,450 $3,787 $3,966 $4,293
Gross Margin $0 $0 $0 $3,853 $4,093 $4,467 $5,185 $6,147 $7,004 $7,688 $8,052 $8,716 Gross Margin % 0.00% 0.00% 0.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00% 67.00%
Expenses
Payroll $2,000 $2,000 $4,000 $5,280 $6,560 $8,060 $9,340 $9,340 $9,340 $9,340 $9,340 $9,340 Sales and Marketing and Other
Expenses $200 $200 $400 $528 $656 $806 $934 $934 $934 $934 $934 $934 Depreciation $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 Rent $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Utilities $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 Insurance $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 Payroll Taxes 15% $300 $300 $600 $792 $984 $1,209 $1,401 $1,401 $1,401 $1,401 $1,401 $1,401 Other $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Total Operating Expenses $6,600 $6,600 $9,100 $10,700 $12,300 $14,175 $15,775 $15,775 $15,775 $15,775 $15,775 $15,775
Profit Before Interest and Taxes ($6,600) ($6,600) ($9,100) ($6,848) ($8,207) ($9,708) ($10,590) ($9,628) ($8,771) ($8,087) ($7,723) ($7,059) EBITDA ($5,300) ($5,300) ($7,800) ($5,548) ($6,907) ($8,408) ($9,290) ($8,328) ($7,471) ($6,787) ($6,423) ($5,759)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($6,600) ($6,600) ($9,100) ($6,848) ($8,207) ($9,708) ($10,590) ($9,628) ($8,771) ($8,087) ($7,723) ($7,059)
Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $1,438 $1,527 $1,667 $1,935 $2,294 $2,613 $2,869 $3,004 $3,252 Cash from Receivables $0 $0 $0 $0 $144 $4,321 $4,596 $5,028 $5,841 $6,913 $7,866 $8,620 Subtotal Cash from Operations $0 $0 $0 $1,438 $1,671 $5,988 $6,530 $7,321 $8,454 $9,782 $10,870 $11,872 Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $1,438 $1,671 $5,988 $6,530 $7,321 $8,454 $9,782 $10,870 $11,872 Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Expenditures from Operations
Cash Spending $2,000 $2,000 $4,000 $5,280 $6,560 $8,060 $9,340 $9,340 $9,340 $9,340 $9,340 $9,340 Bill Payments $110 $3,300 $3,317 $3,943 $8,054 $6,607 $7,247 $8,098 $8,696 $9,057 $9,293 $9,314 Subtotal Spent on Operations $2,110 $5,300 $7,317 $9,223 $14,614 $14,667 $16,587 $17,438 $18,036 $18,397 $18,633 $18,654
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Assets Starting Balances
Current Assets
Cash $116,000 $113,890 $108,590 $101,273 $93,487 $80,544 $71,865 $61,809 $51,692 $42,110 $33,495 $25,732 $18,950 Accounts Receivable $0 $0 $0 $0 $4,313 $8,750 $9,430 $10,639 $12,492 $14,492 $16,185 $17,332 $18,469 Inventory $0 $0 $0 $0 $2,087 $2,217 $2,420 $2,809 $3,330 $3,795 $4,165 $4,362 $4,722
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $116,000 $113,890 $108,590 $101,273 $99,887 $91,512 $83,715 $75,257 $67,514 $60,396 $53,845 $47,427 $42,141 Long-term Assets
Long-term Assets $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 $78,000 Accumulated Depreciation $0 $1,300 $2,600 $3,900 $5,200 $6,500 $7,800 $9,100 $10,400 $11,700 $13,000 $14,300 $15,600 Total Long-term Assets $78,000 $76,700 $75,400 $74,100 $72,800 $71,500 $70,200 $68,900 $67,600 $66,300 $65,000 $63,700 $62,400 Total Assets $194,000 $190,590 $183,990 $175,373 $172,687 $163,012 $153,915 $144,157 $135,114 $126,696 $118,845 $111,127 $104,541 Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Current Liabilities
Accounts Payable $0 $3,190 $3,190 $3,673 $7,835 $6,367 $6,978 $7,809 $8,394 $8,747 $8,983 $8,988 $9,461
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $3,190 $3,190 $3,673 $7,835 $6,367 $6,978 $7,809 $8,394 $8,747 $8,983 $8,988 $9,461
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $0 $3,190 $3,190 $3,673 $7,835 $6,367 $6,978 $7,809 $8,394 $8,747 $8,983 $8,988 $9,461 Paid-in Capital $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 $205,000 Retained Earnings ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) ($11,000) Earnings $0 ($6,600) ($13,200) ($22,300) ($29,148) ($37,355) ($47,062) ($57,652) ($67,280) ($76,051) ($84,138) ($91,861) ($98,920) Total Capital $194,000 $187,400 $180,800 $171,700 $164,853 $156,645 $146,938 $136,348 $126,720 $117,949 $109,862 $102,139 $95,080 Total Liabilities and Capital $194,000 $190,590 $183,990 $175,373 $172,687 $163,012 $153,915 $144,157 $135,114 $126,696 $118,845 $111,127 $104,541
