Business Plan: Agri-Business - Essay Example

Business Plan: Agri Business Table of Contents Business Plan: Agri Business Table of Contents 2 Executive Summary 4 Keys to Success 4 Company Summary 5 Objectives 7 Mission 7 Company Locations and Facilities 8 Products 8 Industry Analysis 9 Market Analysis Summary 9 Target Market 10 Competitor Analysis 11 Development and Production 13 Competitive Edge 13 Sales and Marketing 13 Marketing Strategy 13 Pricing Strategy 14 Sales Strategy 14 Strategic Alliances 15 Management Summary 15 Financial Plan 16 Assumptions 18 Reference List 19 Appendices 20 Appendix 1: Financial Plan 20 Appendix 2: Utilisation of Funds 20 Appendix 3: Pro forma Profit and Loss Statement 21 Appendix 4: Pro forma Balance Sheet 21 Executive Summary Farmers Haven is an upcoming agriculture based company that plans to engage into farming of organic fruits and vegetable and high grade cattle in approximately a 3 acre plot. The company plans to own the plot by raising finance from personal and institutional sources and also by seeking government support. The key objective of Farmers Haven is to provide high quality organic produce to the people of Scotland residing in the Stranraer region. The company has also aimed to provide farm fresh produce that is free from any preservatives and cater it to the local people of the region. The key success factor of Farmers Haven shall be its freshness and its purity in terms of organic nature of farming. The company shall brand itself as a high quality food supplier using best quality genomes for its produce. The paper is a detailed business plan that begins with a discussion of company’s objectives and mission. The paper identifies the key success factors of the business and goes forth to discuss the company’s key operations and products, its location geographies and facilities. The paper also discusses a detailed marketing strategy for the company highlighting its target market and key competitors. Under strategy implementation, the paper brings in the competitive edge for farmers Haven, its marketing strategy, pricing strategy, sales strategy and strategic alliances. The financial plan is the key to a comprehensive idea about the sources of funds and how they shall be utilised in the business processes. The financial summary also presents a pro-forma balance sheet and income statement presenting forecasts based on estimated figures based on ascertainable assumptions. Through the detailed discussion, the paper aims to provide a complete outlook on the proposed business plan and its viability in the future. Keys to Success The prime keys to success for Farmers Haven shall be 1. Organic Farm produce 2. High quality genomes for fruits and vegetables 3. Organic breeding for poultry 4. Fresh availability of farm produce 5. Lack of pesticides, preservatives, chemicals and pesticides within the products sold. Company Summary Farmers Haven shall be formed with the acquisition of the Knocktim Dairy Cottage and shall be working towards developing the fertile land into a full-fledged farming area producing high quality farm produce including fruits, vegetables, poultry produce and horticulture products. The 3 acre land shall be put to use in its fullest potential by farm managers and the owner who have the most extensive knowledge and experience in the farming business. The company shall be engaged in the production; marketing and distribution of organic farm produce to local retailers, grocers and restaurants and shall not have any store of its own for making sales. The region of operations is located within an area of Scotland that is highly fertile and also attracts a lot of tourists for its natural beauty. The land is to be acquired for farming was primarily engaged in the dairy activities and it shall be strategically divided for producing, flowers, orchards, garden vegetables, and also breeding and feeding poultry. An additional region shall also be devoted to the processing and production of ancillary farm produce like cheese, butter, yogurt, wax and oils that can be sold in packaged containers. Marketing for the product shall be undertaken by the company in the form of distributing pamphlets, and advertising with local hotels, restaurants, departmental stores and retail grocery chains. There shall be newspaper advertisements in the local dailies for generating awareness among the people. However, not major expenses shall be involved for marketing within a small region. The projected revenues for the three year business plan are as follows Figure 1: Estimated Sales Figures between 2014-2017 It is expected that the company shall be estimated investmens shall generate sufficient revenue floe to pay interests at the rate of 7% to the investors. The profits are estimated to yield positive results only in the second year of operation. The projected profit figures can be estimated as below. Figure 2: Estimated Profit margin between 2014-2017 The highest amount of investment shall be sourced in the first year through a mix of owner’s capital and borrowings from personal, governmental and institutional sources. The company plans to borrow close to 50% of the amount of 1,169,400 in the first year and the rest shall be spread over a period of two following years. The initial requirement comes from purchase of land for farming and purchase of major plat and equipments necessary to begin the land development and farming activities. Objectives The Scotland based company Farmers Haven plans to develop a farming plot in Knocktim Dairy Cottage of Kirkcolm town of Stranraer region located in Central Scotland (UK Land & Farms, 2014). The objective of Farmers Haven is to put to use an old land dedicated to the dairy activity and engage it into cultivation of high quality and organic fruits and vegetables that shall be sold fresh in the local markets and shall provide the consumers with the benefit of having access to high quality and farm fresh products. The company shall also breed high quality of poultry and sell dairy products to serve the local needs. The company aims to provide high quality organic vegetables and fruits to its customers. It shall primarily target the local residents of the Stranraer region and the local restaurants who cater to the health conscious and the elite consumer groups with their high quality produce. The company also aims to serve freshness in dairy products that will be sold directly to the consumer without any added preservatives. The butter, cheese and honey produced fresh in the farm will also be packaged as organic and farm fresh with no preservatives added. The company wants to benefit from the scale economies and the savings in cost for joint production of fruits, vegetables and dairy products and also their by-products in the same area (Hansen, 2010). Mission The aim of the business is to produce highest quality agricultural produce utilising the small land to the fullest potential by making good use of cutting edge technology, high quality of genomes, exceptional food technology and highest quality of production techniques. The company will be committed towards the improvement of farm produce quality and cater fresh farm produce directly to the consumers in the surrounding regions. The company will be founded on a very strong horticulture and biological education an industry rich experience in the farming activity. It will also benefit from the research and experience of its founder. Company Locations and Facilities Farmers Haven will be located in Central Scotland in the Stranraer region within the town of Kirkcolm spreading over a 3 acre area approximately. The farm will be strategically divided into 5 major units: 1. Fruit orchards for about a quarter of the farm area 2. Vegetable Gardens for another quarter of the available area 3. A quarter for cattle and homestead with small piece dedicated towards cereal production 4. 1/8th of the remaining quarter is to be dedicated for cattle grazing and breeding of poultry 5. 7/8th of the remaining quarter area will be developed for established and processing and packaging unit for by-products of farm produce. Products The company will focus primarily on vegetables and fruits that are produced on the majority area of the farm. The 1.5 acre of grazing area will be equitably distributed to produce vegetables like carrots, lettuce, spinach, red onions, globe beets, leeks, winter greens and winter squash. The orchards will produce a mix of strawberries, green apples, oranges and tomatoes. The remaining 1.5 acres will be distributed into poultry farming, dairy produce, cereal and homestead. The poultry will include cows, hens, ducks, swans, pigs, fish and bees for the production of milk, honey, wax, eggs, meat and ancillary products. The vegetables and fruits will be grown out of genomes that are organically developed. The farming techniques will be highly organic so as to cater to the increasing preference of the Scots to consume organic farm produce. The milk will also be used to process butter, cheese and yogurt. The company plans to package and sell such dairy products as fresh organic farm produce. With business progress, the company plans to bring in the emerging livestock varieties as well that will include rabbits, goose, and guinea fowl. When the business picks up some activity, Farmers Haves also plans to develop some part of the land for horticultural activities. The region of Scotland is famous for its blooms and flowers are a popular gesture for greetings within the country. Floriculture will be a small business that will be sold through street shops located in popular city locations and different tourist spots within the region of Stranraer region. Industry Analysis The market for organic produce has been growing at the rate of 15-20% every year (Herald Scotland, 2013). The consumers are increasingly reaching out for anything that is edible and labelled organic. The Scots are looking for organic produce more than anybody in the rest of UK. The growth rate of organic produce is also at the rate of 8.2% as recorded in January 2014 (Herald Scotland, 2013). For the purpose of promoting organic farming, several certified Soil Associations are providing means and ways of investing in farming to many new farmers. The business plans to take advantage of such promotional activities in developing its farming business. The surrounding area is a rural locality inhabited by local population. The region also invites a lot of tourist population who come and stay within the hotels that have been mushrooming within the vicinity. The area proves to be promising in terms of population. Also, studies have shown an increasing inclination of Scottish people towards organic food for growing health concerns. The place also has a lot of upscale restaurants and hotels who serve to the tourists as well as the local people. These hotels can be targeted for strategic partnerships for making sales of organically prepared food and beverages. Organic fruits and vegetables attract premium prices and people are increasingly ready to pay for it. Market Analysis Summary The Stranraer region has an average population of about 10,851 people. The general age of the people is about 39 years with a higher female population (SCROL, 2014). The region has an average tourist footfall of about 21000 people in a year visiting the area for different purposes (EGENDA, 2014). The 3 acre area was devoted to equestrian activities and is strategically located within a beautiful rural surrounding highlighted by the distant view of the seas. The land area included a small kitchen garden located adjacent to the farm cottage and a 1.5 acre grazing farmland. The Stranraer region is also a very popular tourist destination in Scotland and the company plans to take advantage of its strategic business location. Target Market The target market will include 1. Local residents of Stranraer region 2. Hotels within the region who cater to elite and health conscious customer group 3. Local restaurants that will agree to the contract buying of organic raw materials for organic food preparations 4. Vegetable processors who want to source organic produce to prepare jams, jellies, different types of herbs and oils. 5. Tourists who want to consume raw fruits and vegetables that have been grown organically Figure 3: Target Market Segmentation for Farmers Haven Among the above, Farmers Haven believes that the local inhabitants and the restaurants will be their major buyers. This is because the population does not have enough options around the vicinity when it comes to organic food in the Stranraer region. The vegetable processors are also expected to be among the major buyers because the demand for organically prepared jams, jellies, toiletries and oils is also gaining high momentum. Competitor Analysis Scotland is among the premium farming regions of the United Kingdom. The weather conditions are extremely favourable due to the adjacent sea and hilly terrain. The region has plenty of water and bears impeccable variety of fruits and flowers. The region also has a huge variety of plantations but there is a major lack of vegetable growth. The company plans to fill this gap by dedicating a fourth of its region to vegetable farming and thereby reduce the regions dependency on imports of vegetables form the adjacent European nations. Farming has also not been a very popular occupation among the people of Scotland for which they have to rely extensively on external exports for fulfilling their daily food needs. Through cereal production also, Farmers Haven wants to reduce the region’s dependency on imported wheat, maize and rice (Stranraer, n.d.). The region of the Kirkcolm town is highly fertile and is located at the valleys of the mountains which assure regular flow of fresh water from the snow capped mountains. The region has an abundance of lakes and the weather is not as cold as it is on the mountains. The region has adequate amount of rainfall that assures of a highly productive land. The region also has a few other farming plots in and around the Kirkcolm town within the Stranraer region. The first competitor for Farmers Haven is a mid-sized farm, Fruit Berries that grows high quality of fruits and has huge orchards dedicated to serve the exports from the country. The orchards are spread over a 5 acre region and are located near the Knockquhassen Reservoir. Fruit Berries sells through dedicated company owned stored located sparingly in the populous places of the region. Farmers Haven will have a wider presence because it sells its products through departmental chains and retails stores that are widely located and are highly accessible to almost all. Additionally, the company will be the only organic farming company in the region which brings in an added niche consumer set for its produce (Fossel, 2007). The second competitor for Farmers Haven happens to be the imported fruits that are sold within the retail chains and supermarkets of the region. These imported fruits and vegetables are of highest quality and are a very poplar pick among the local people. The fruits and vegetables come from the Western European countries that are renowned for their high quality produce. The price of these imported fruits and vegetable are much higher than the local produce because of the import tariffs and taxes. The high priced produce of Farmers Haven will compete imported farm produce on the ground of quality where the company plans to sell its organic brand. The imported products are of high quality but are not organically produced. The third competitor for the company is the adjacent dairy in Kirkcolm town called Dairy Farm that specialises in the production and sales of milk, eggs and meat from animals that are of highest breed. The Dairy Farm is immensely popular for their produce but they do not process the by-products. They sell their products to local marketers for processing and packaging and not to the end consumer directly. The huge scale of operations also makes their product cost effective. Farmers Haven plans to manage competition posed by Dairy Farm by breeding only those poultry that are fed on organic produce and also operating through channelled partners that are popular for their cattle and bird supplies. They plan to reach out to the ultimate consumer providing fresh supplies that are free from any preservatives added during packaging (Wiswall, 2009). Development and Production The idea behind the farming business is to provide high quality fresh farm produce to the people of Scotland who are increasingly moving from packaged food to fresh farm produce for health reasons. It is a well known fact that packed and canned food contains a whole lot of preservatives that are not considered healthy. They also give rise to numerous diseases that can even take the form of cancer. With the rise in awareness of the benefits associated with farm fresh fruits vegetable and poultry products, the demand for same items has also increased. The company plans to use high quality genomes of seeds for vegetables as well as fruit orchards and grow them within the land that has been made fertile using the organic means. The manure and insecticides used during the productions activity will be organic and the entire production system will be kept organic to the highest extent possible. Competitive Edge The main competitive advantages of Farmers Haven are: 1. Organic Farm Produce 2. Highest technology of Production 3. Reduced costs of overheads by combining the crop output with processing activities and reaping on the scale economies through such joint production activities. 4. Highly skilled and knowledgeable management and workforce Sales and Marketing Marketing Strategy The farmers will engage in an aggressive marketing strategy to make sure that their products are made visible. By visibility it is meant that the consumer and the local inhabitants of the Stranraer region and particularly the town of Kirkcolm are aware that Farmers Haven is engaged in the production and supply of organic and high quality fruits and vegetables and also fresh poultry products. In order to achieve the same, the company will engage in pamphlet marketing and advertising within the restaurants and hotels (Flamholtz and Randle, 2012). It will also put up banners within the retail stores where the company plans to sell its produce. There is not much cost involved within the marketing activities because the target market is small and the area of service is limited. The farm produce will be able to cater only to the town limts because of the restricted ability to produce in the initial stages of the farming business. Also, since the farm will be engaged in the production of a variety of goods the produce for each fruit, vegetable and dairy product becomes all the more limited. Also, sample tasting of farm produce within the retail grocery outlets will also allow people to appreciate the taste and healthiness of the products. Pricing Strategy The price of poultry products will be kept in line with the market prices. This is because the eggs, meat and honey are freshly available in the rural regions of Scotland. The company will not compete in prices with the canned meat because they are already priced high for the additional costs of preserving and packaging the meat products. The fresh meat saves in terms of preservation and packaging and therefore the prices will be kept at par with canned produce. The products of Farmers Haven will be competing with the preserved foods in terms of freshness and portability (Ferrell and Hartline, 2010). In terms of pricing of the fruits and vegetables, they will exceed the average market price for high degree of quality and freshness (Hutt and Speh, 2009). Farmers Haven will also allow for test sampling of fruits at the retail outlets where they will be sold. The hotels will be asked to pay high prices for organic foods which can again be passed on to the consumers of their preparations for using high quality ingredients in their menu. The use of pesticides within the production of such organic farm produce are also ozone friendly and naturally prepared, this brings in additional costs in breeding of the fruits and vegetables which need to be passed on to the ultimate consumer. Sales Strategy The company plans to grow seasonal fruits and vegetables and sell the surplus after personal consumption to the rural surroundings. It is known that the Stranraer region has high levels of tourist activity which has led to thriving of a huge number of eateries and hotels within the region. Farmers Haven plans to tie up with thee restaurateurs and hoteliers for supplying farm fresh fruits and vegetables to them so that they can sell organically prepared meals to their customer (Rao, 2006). In addition to that, ancillary farm products like bees wax, honey, yogurt, butter and cheese will be packaged and sold under the company’s name and marketed as organic and farm fresh products that are free from any chemicals. These packages will be made available with the local retailers so that minimum wastes happen in transit and the products also get sold through easy availability to all potential customers. Strategic Alliances Farmer’s Haven will get strategically linked up with 1. Local departmental stores for the sales of its farm produce 2. Local restaurants for using their produce in making menu preparations for their health conscious and high profile clientele 3. Soil Association for funding requirements and technological knowhow on organic farming techniques. 4. Ministry of Health for permissions and support in terms of licences and agreements for farming activities. 5. Alabama Wildlife for knowhow of poultry animals care and breeding. Management Summary The company will be a sole trader firm wherein the owner will be the sole decision making body for the company (R. Kinney, D. Kinney and M. Kinney, 2013). Apart from the owner, the company will seek business expertise from different levels of managers who specialise in different types of farming activities. The company will also seek help of skilled staff for carrying out the farming activities. Some help will also be needed in processing of dairy by-products like cheese, butter, oils, bees wax and yogurt. Farmers Haven will be headed by Mr. L. Jones who has extensive expertise in the farming activity for about 20 years now. He gained extensive farming knowledge owing to the childhood association with the farming activity and also during the internship with a farming company during the courses of education. The company plans to employ about 12 people of which 5 will be hired as temporary workers for the first year only for providing their technical expertise in the development of the grazing land. 3 Manager will be working full time towards company operations. The company also plans to recruit 4 part time workers who will provide help in processing activities for by-products of farming. The managers of the company will be responsible for supervisory role and will be participating in carrying out the daily business activities smoothly and efficiently. The company will be hiring 3 managers for fruit farming, vegetable farming and dairy management. Financial Plan The company plans to borrow about £2,036,800 from various sources for the entire project in a span of three years (Appendix 1). For the purpose of raising such high amount for acquisition of land and carrying out the business activities, the company plans to seek help from the Ministry of Health of Scotland to source support for organic farming initiatives. Also, it is known that the Soil Association of Scotland has been helping people to find ways of investing in organic farming and food budget plans in order to promote the growth of organic produce within the country (Herald Scotland, 2013). The association also provides technological knowhow and expertise to farmers on green and clean ways of farming and doing local business. The funds will also be sourced from personal sources like friends and family who will be entitled to have 7% interest payments over the borrowed amount (Leach and Melicher, 2008). Out of a total of £2,036,800 sourced from personal and institutional sources, about £1,350,000 will be used up in the acquisition of the land. Out of the remaining funds, about £70,000 will go into developing the land for different fruits vegetables and their organic farming. The grazing land needs to be developed for the purpose of vegetation. About £402,000 will be spent in buying the necessary farming equipments that will allow for high levels of technology in environment friendly farming and supporting organic infrastructure for farming activities (Appendix 2). The company plans to spend about £105,000 into salaries of managers that will be hired for their expertise in different areas of farming like horticulture farming, organic farming for fruit orchards and vegetable gardens. In addition to this, the company will also hire a few workers who are to help in maintenance of land and working on the farming activities. Few people will also be engaged in honey extraction and processing of cheese, butter, yogurt and wax as byproducts of farming activities. The company plans to spend about £40,000 into marketing activities. Such low marketing requirement comes from the need for only printing of pamphlets and small boards that are to be set up in departmental stores and retail chains for advertising. Some money will also be spent for printing of newspaper advertisements for making the local people aware of their products (Stevenson and Skillern, 2006). The remaining amount of about £69,000 will be majorly utilized in packaging of byproducts of farming produce and selling them on the racks of the departmental stores. Other miscellaneous operational expenses like electricity, water and fuel will also be accounted for within such other operating expenses. The company estimates the sales figures to remain conservative during the first year of its activity. This is because it is expected that there is a general lack of awareness in the region about the company and its produce. It is expected that with the rise in the acceptability of the products and increase in public awareness about the company and its offerings, the sales will pick up and the company will start earning positive profits from the second year onwards. The profits in the second year of operations are expected to be around 3.37%. The company expects to grow by over 100% in terms of net profits in the third year expecting profits of about 7.51% of total sales. The temporary employees will be used up only in the first year when the land is to be made fit for farming. The payroll expenses fall from the second year and only permanent employees remain. The business does not have any debtors. This might be striking but it is assumed that since the business is based on an FMCG agricultural produce that is sold directly to the consumers fresh hence there will not be any long time gap in receiving payment for goods sold from the debtors. Far fresh produce remain good only for about a week and hence most transactions are expected to be in cash rather than credit. This implies the accounts receivable factor will remain 0.The pro forma profit and loss (Appendix 3) account and the pro forma balance (Appendix 4) sheet give estimated account of the different aspects of finance for Farmers Haven. Assumptions The financial projections presented within this paper are mere estimations based on ascertainable facts of the industry. The projections made are based on the expected investments required for the planned farming business. The investment sourcing is desired from four major sources for which the investors have been broken up into investor one, investor two, investor three and investor four with approximate figures. The number of investors might go up or down as the case may be for the fulfilment of the desired amount of money required for starting up the business activity. These projections are a reflection of the management’s judgements of the anticipated conditions of the market, business, economy and industry in general and their expected courses of action based on hypothetical assumptions. Reference List EGENDA, 2014. Visit Scotland SLA monitoring report. [pdf] EGENDA. Available at: [Accessed 8 April 2014]. Ferrell, O. C. and Hartline, M. D., 2010. Marketing strategy. 5th ed. Connecticut: Cengage Learning. Flamholtz, E. G. and Randle, Y., 2012. Growing pains: Transitioning from an entrepreneurship to a professionally managed firm. 4th ed. New Jersey: John Wiley & Sons. Fossel, P. V., 2007. Organic farming: Everything you need to know. London: Voyageur Press. Hansen, A. L., 2010. The Organic Farming Manual. Massachusetts: Storey Publishing. HeraldScotland, 2013. Agenda: How to feed the growing appetite among Scots for organic products. [online] Available at: [Accessed 8 April 2014]. Hutt, M. and Speh, T., 2009. Business marketing management. New Jersey: Pearson Education. Kinney, R., Kinney, D. and Kinney, M., 2013. Trends 2: Business and culture reports: Global edition. Arizona: Kinney Brothers Publishing. Leach, J. and Melicher, R., 2008. Entrepreneurial finance. Connecticut: Cengage Learning. Rao, V.R., 2006. Analysis for strategic marketing. New Delhi: Pearson Education India. SCROL, 2014. Comparative Population Profile: Stranraer Locality Scotland. [online] Available at: [Accessed 8 April 2014]. Stevenson, A. and Skillern, J., 2006. Social and Commercial Entrepreneurship: Same, different or both? Entrepreneurship: Theory & Practice, 30(1). Stranraer, n.d. Stranraer: Facinating Facts. [online] Available at: [Accessed 8 April 2014]. UKLand&Farms, 2014. Knocktim Dairy Cottage, Kirkcolm, Stranraer. [online] Available at: [Accessed 8 April 2014]. Wiswall, R., 2009. The Organic Farmers Business Handbook: A Complete Guide to Managing Finances, Crops and Staff – and Making a Profit. Vermont: Chelsea Green Publishing Company. Appendices Appendix 1: Financial Plan Start-up Funding 3 Year Plan Year 1 Year 2 Year 3 Start-up Expenses to Fund 685,600 304,711 228,533 152,356 Start-up Assets to Fund 1,145,400 509,067 381,800 254,533 Total Funding Required 1,831,000 813,778 610,333 406,889 Assets Non-cash Assets from Start-up 900,800 400,356 300,267 200,178 Cash Requirements from Start-up 245,500 109,111 81,833 54,556 Additional Cash Raised 0 0 0 0 Cash Balance on Starting Date 245,500 109,111 81,833 54,556 Total Assets 1,391,800 618,578 463,933 309,289 Liabilities and Capital Liabilities Current Borrowing 405,000 180,000 135,000 90,000 Long-term Liabilities 430,400 191,289 143,467 95,644 Accounts Payable (Outstanding Bills) 32,000 14,222 10,667 7,111 Other Current Liabilities (interest-free) 0 0 0 0 Total Liabilities 867,400 385,511 289,133 192,756 Capital Planned Investment Investor One 267,900 119,067 89,300 59,533 Investor Two 300,500 133,556 100,167 66,778 Investor Three 300,500 133,556 100,167 66,778 Investor Four 300,500 133,556 100,167 66,778 Other 0 0 0 0 Total Investment Sourced 1,169,400 519,733 389,800 259,867 Loss for Start-up as Expenses -645,000 -286,667 -215,000 -143,333 Total Capital 524,400 233,067 174,800 116,533 Total Capital and Liabilities 1,391,800 618,578 463,933 309,289 Total Funding 2,036,800 905,244 678,933 452,622 Appendix 2: Utilisation of Funds Breakdown of Use of Funds Acquisition:   Property £1,350,000 Land Development £70,000 Equipment System £402,000 Sub-total £1,822,000 Operating Expenses:   Salaries £105,000 Marketing and promotion £40,000 Other operating expenses £69,000 Sub-total £214,000 Total £2,036,800 Appendix 3: Pro forma Profit and Loss Statement Pro Forma Profit and Loss   Year 1 Year 2 Year 3 Sales £575,400 £703,000 £852,000 Direct Cost of Sales £398,000 £498,100 £579,850 Other £12,000 £12,000 £12,000 Total Cost of Sales £401,000 £488,100 £588,850 Gross Margin £174,400 £214,900 £263,150 Gross Margin % 30.31% 30.57% 30.89% Expenses Payroll £117,800 £112,000 £112,000 Sales, Marketing & Other Expenses £11,200 £11,000 £16,500 Depreciation £0 £0 £0 Gas and Oil £2,140 £3,080 £3,080 Utilities £6,500 £6,500 £6,500 Insurance £5,060 £5,540 £5,540 Other £0 £0 £0 Total Operating Expenses £142,700 £138,120 £143,620 Profit Before Interest and Taxes £31,700 £76,780 £119,530 EBITDA £31,700 £76,780 £119,530 Interest Expense £54,864 £47,850 £39,100 Taxes Incurred £0 £5,211 £16,428 Net Profit -£23,164 £23,719 £64,002 Net Profit/Sales -4.03% 3.37% 7.51% Appendix 4: Pro forma Balance Sheet Pro Forma Balance Sheet   Year 1 Year 2 Year 3 Assets Current Assets       Cash £234,980 £183,077 £204,250 Accounts Receivable £0 £0 £0 Inventory £55,660 £24,566 £29,787 Other Current Assets £251,000 £251,000 £251,000 Total Current Assets £541,640 £458,643 £485,037 Long-term Assets       Long-term Assets £200,000 £200,000 £200,000 Accumulated Depreciation £0 £0 £0 Total Long-term Assets £200,000 £200,000 £200,000 Total Assets £741,640 £658,643 £685,037 Liabilities and Capital Current Liabilities       Accounts Payable £6,974 £45,043 £55,860 Current Borrowing £146,000 £146,000 £46,000 Other Current Liabilities £0 £0 £0 Subtotal Current Liabilities £152,974 £191,043 £101,860 Long-term Liabilities £200,000 £175,000 £150,000 Total Liabilities £352,974 £366,043 £251,860 Paid-in Capital £1,040,102 £1,050,563 £1,237,459 Retained Earnings -£674,600 -£734,244 -£740,280 Earnings -£23,164 £23,719 £64,002 Total Capital £388,666 £292,600 £433,177 Total Liabilities and Capital £741,640 £658,643 £685,037 Net Worth £388,666 £292,600 £433,177 Read More

 

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