Business Plan
Contacts: [Toronto, Canada]
Business Description
Foodies Company is a for profit company that is going to offer dairy products, free of artificial flavors and chemicals. The fresh products will be offered to the consumers. The purpose of the business is to increase the health awareness among the people, offering them healthy, quality and free of the artificial flavored products that directly impacts on their health. Initially, the company will offer milk, butter, yogurt, cream and cheese. No artificial sugar, carbohydrates and sodium and any other flavors as well as chemicals for its preservation and sanitizing will be used in the products.
Introduction
This is a business plan report for the new launching company of dairy products named as “Foodies Company”. The owners of the company are needed to start a dairy products’ business that must be free of artificial flavors and chemicals. The purpose of the plan is to outline the basic strategies to conduct the business including what products the company will offer, what will be the features of the products, who will be the targeted customers, what will be the value proposition of the company, what risks will be faced by the company and how these risks will be dealt.
The business plan is also intended to forecast the sales, revenue, and profit and loss of the company for the four years as well as for months. For this purpose, the prices for the products will be decided as well as the number of customer of the company will be assumed based on the market information to get year on year sales. Based on the estimated cost, demand and sales, it will also explain the plan for investment and needs of the funds. As the company is going to develop to generate profit, therefore, it is important to plan proper cost and return to ensure the investors that they will get enough and fair return on their investment.
Developing the business plan, the vision and mission of the new company is as follows:
Vision of the Company
The vision of the company is to become the leader of the dairy industry of the world, offering the most quality and healthy products.
Mission of the Company
The mission of “Foodies” is to expand in the international market offering high quality dairy products and increasing the sense of healthy diet among the consumers. The company is projected to produce enough profit to run the business operations and to fairly return on the equity of the investors as well as the liability of the financial institutions, maintaining the friendly, innovative and cooperative workplace environment.
Plan
Product and Service
As the company is going to offer the dairy products, the major products of the company will be as follows:
Milk
Butter
Cheese
Yogurt
cream
The dairy products are included in the basic daily needs of the consumers. The milk is used for different purposes and also from the medical point of view; the dairy products are quite healthy and important in daily consumption and diet (The dairy Council, 2016). Although, milk and other dairy products are important, however, most of the dairy product companies are producing these products using artificial flavors to enhance taste and preservation chemicals to increase the time of consumption that causes harmful effects on human health. Therefore, rather than fixed packing, the company will offer on time order pack of the milk, yogurt, butter, cheese and cream.
Milk will be the major product of the company, however, the demand of cheese, cream and yogurt is also increasing in the market. Especially, the demand of yogurt is clearly observed over the period of last few years (Davis et al., 2010).
Rather than chemically preserving the products, the company will preserve them in well-designed refrigerated area, isolated of air, bacteria and other organism that can damage the products. Based on these criteria, the company will offer the products as follows:
Milk
Low Fat Milk
Creamy Milk
Cream
Plain Cream
Double Cream
Whipping Cream
Butter
Salted butter
Unsalted butter
Cheese
Cheddar Cheese
Mozzarella Cheese
Cream Cheese
Melted Cheese
Solid Cheese
Yogurt
Plain Yogurt
Honey Yogurt
Sweet yogurt
Sugar free yogurt
Although, the company is going to offer limited products in five categories, however, with the growth, success and development of the business, the company will introduce more products. For now, the original flavors in Yogurt and cream are considered to be launch with the growth in the business in future such as medicated yogurt, blueberry yogurt, pineapple yogurt, strawberry cream, Low fat cream and further flavors as per demand in the market.
Service
The products will be produced at farm and will be stored in refrigerated areas. The distribution service will be based on two channels as follows:
The company will open its own store, initially at one location and latterly on multiple locations as per the business will grow and develop. The distributers and wholesalers will be offered with attractive offers to grab them to sell the products of Foodies, making them aware about the benefits of these products to the consumers.
Rather than simply producing the products to offer the consumers, the company will also arrange the educational programs and campaigns to make the people learn about in-taking healthy diet, side effects of the dairy products containing artificial flavors and chemicals for preservation and cleaning the milk. The medical guidance and consultancy will be offered in those events to increase the health awareness in the region.
Potential Customers
The company is aimed to offer quality and healthy dairy products; therefore, the major aim of the company is to target those consumers who are health conscious and prefer healthy and quality products over tasty products.
Although, it is difficult for the new business companies to attract the target customers, however, the company offering a range of products and maintaining the taste by adding original flavors will gain the customer attention. The company being a dairy product company has potential to target the customers in different market segments such as age, life style, education, psychographic characters, demographic characters etc.
The company will target the consumers live in urban areas as the consumers in rural areas are less aware of health and healthy diet and they will not understand the need of fresh, healthy and toxic free dairy products.
Whilst, within the urban areas, the company will target the consumers having a significant education and qualification as the education impacts the knowledge and knowledge influence the awareness of the consumers. The well-educated consumers are more informed about the use of chemicals in the milk preservation and packing and they are also aware of the side effects of artificial flavors and preservers used in the dairy products, therefore, they will more quickly get attracted towards the products of Foodies.
Based on the life style, the company will target those consumers who are in-taking healthy food and always focus on their fitness. The artificial flavors and sweeteners are medically found as one of the major causes of cardiovascular diseases and health attacks. Therefore, once the health conscious consumers will get aware of these facts, they will prefer to buy flavors free products for their daily diet. In line with this demand, the sales of the products of Foodies will increase.
The youth will be targeted as they study and learn about the healthy diet and side effects of unhealthy diet. Though, targeting the young consumers will potentially result in targeting each member of all age groups of their families. The choices of the food among the family members directly impact on food purchasing in the grocery shopping (Pettersson, Olsson & Fjellstrom, 2004). It means that once the Foodies products will become the choice of the young consumers, it will influence the whole family.
Value Proposition
Value proposition is the plan and statements of the companies and businesses that means thinking of the offerings of the company that must be beneficial and different in the market place to attract the consumers to become the customers. The value proposition of Foodies Company will be as follows while it will be launched in the market:
Although, the dairy products are already considered as healthy products, however, the demands of the consumers are changing with the increase in the education and awareness. Either its milk or any other health benefit product, the consumers demand for something far better and really healthy (Ramirez, 2007). Foodies Company is going to offer the value to the consumers facilitating with the free of chemical and artificial flavored milk and other dairy products.
Rather, the company will offer pure milk to the consumers that will be healthy for their fitness and nutritious. The consumers today are not getting enough healthy diet and thus, facing various problems of health such as obesity, difficulties in sleeping, blood pressure, unfitness and many other health problems that sometimes result in the serious diseases and illnesses. Therefore, offering healthy and pure dairy products is the major value proposition of the Foodies Company.
Further, the company has a range of products from simple dairy products to more categorized products. Though, the company is going to offer healthy milk, it will further offer low fat milk for those consumers who are already facing health issues. Original and pure milk with low fats will make the company to provide value to the consumers. Further, the company will not use sanitizations and chemicals to clean, but it will use the technology to clean the milk that will further refrigerated in the room rather than adding chemicals to prevent the products from bacteria. The use of sanitizes and chemicals are very harmful for the consumers, they must be aware about them.
The further value is added to the customers by offering original flavors in the products rather than adding artificial flavors such as honey yogurt, sweet yogurt etc. The flavors will make the customers enjoy the pure and healthy diet rather than boring diet for healthy nutritious.
Health and healthy dairy products awareness is another value proposition of Foodies Company. The company, rather than simply offering the products, will also serve the nation making them aware about the health benefits of pure dairy products and the health side effects of flavored and sanitized products. Additionally, they will also be provided with the awareness of the reasons for their health problems and issues. The learning and awareness is one of the major values, the company will deliver across the nation as the regulatory companies will also support the company in increasing the knowledge among the people.
Reasonable prices for the health products will be another value proposition of the Foodies Company that will pursue the consumers to become the customers of the company. The pure, fresh and healthy products with reasonable prices will automatically attract the consumers to purchase the products of Foodies.
Facilities required with justification
For the dairy products business, there are various facilities are required to start the business and run properly. The requirements are as follows:
Dairy Farm
The first and the major requirements will be the farm; the owners are required to get a farm with the enough space for the cows and hauling. The owners are going to buy the farm of 40 acres for $ 465,000.00 that will have the space for 70 cows. The farm, the owners are going to buy can be seen in the picture below (Dairy Realty, 2016):
(Dairy Realty, 2016)
The farm is the major requirements for the dairy product business as without farm, the business even cannot be supposed to initiate. Therefore, the major facility required is the dairy farm.
Equipment and Machines
Other than the farm, the next facility required is the equipment and machines. Various machines and equipment will be needed to haul the milk from the cow as well as to convert the milk into other dairy product such as yogurt, cream, butter and cheese. The equipment and machines will include the following:
Cheese cutter
Knives, folks and cutters
Compressors
Pumps and pipes
Tanks
Separators
Holders
Other equipment
Computers
Phones
Many other equipment will also be purchase as per needed at the time of initiating the business and even during the business in different years as per the growth in the company.
Vehicles
Other than the machines and equipment, the business will also require the vehicles. The vehicles will be needed for different purposes such as few vehicles for the farm operations, few vehicles for supplies and distribution in the market. The owners will purchase farm vehicles as well as the distributing vehicles to distribute the products from farm to the shop and the distributors and wholesalers. These vehicles are very important for the business.
Refrigerators
As the company is not going to use sanitizes, therefore, the refrigerators are required to store the products.
Cows
Cows are also included in the major and important needs of the Foodies Company. Around 50 cows will be purchased initially; however, the farm has space of 70 cows. With the growth in the business and the production, more cows will be purchased.
Labor
Labor is another facility requirement that must be available to the company to run the daily operations and productivity efficiently, keeping the major focus of the company in mind. The company is required the labor for both farm and the shop.
Investment
For all these facilities and requirements, the major and the actual requirement is the investment. If the owners will not have enough funds, they are not able to start the business. The investment plan and funds required will be discussed in detail in the financial projection below.
Workplace Skills and Gap
The owners of the company will be the key personnel of the company “Foodies”. The owners are belonged to the similar family therefore; the earnings will be distributed with mutual understanding and requirements. The owners will manage the daily operations at farm, mainly the production and distribution operations. The owners will perform the job of human resource management to hire the initial required staff.
Initially, they will hire the finance manager at first that is very important to run the balance and maintain the cash flows. Where the money is invested and from where the money is put into the account, all will be managed by the financial manager.
Other than the financial manager, the owners will hire the marketing manager. Marketing manager is very important for the newly launched company, mainly the consumers’ product company. The marketing manager will be provided with the proposed marketing budget every month. The marketing manager will contact to the distributers and wholesalers as well as promote the products among the consumers directly.
Dairy workers from five to six will be hired to perform different work at farm such as hauling, caretaking of cows and running equipment and machines to generate the products. Shop workers around two to three will also be hired for the shop operations. For the technical work, two technical employees will also be needed to run the computer systems as well the machines and equipment. Three additional labors will be hired for different roles such as maintenance, transportation and so on. The monthly salaries for the staff will be as follows:
The above staff and personnel are planned based on the initial business requirement. However, the initial plan lacks many workers and employees required for the company’s operations. With the growth in the business, it might become difficult for the owners to oversee the daily operations and therefore, they will need to hire the operational manager. Further, for the proper staff management, the HR manager will also be required that can arrange the training sessions and performance measurements for the staff. With the increasing business activities, the staff might lack the efficient skills. Further, the proper logistics manager might also be required in future that can manage the distribution and the supplies across the country with the growth in the demand of the products of the company.
Risks
The new business can face various risks and uncertainties that might impact the expected performance and sales of the company. It is very important to identify the risks so that the alternatives can be planned. The Foodies Company can face the following risks mainly:
The risks at production are the major risks that impact the business operations and its efficiency. The production can be influenced by the climate threats, responses of the cows, the diseases and problems to animals as well as labors and the problems in the machines.
The market conditions and prices might also influence the business such as the cost can be influenced by the prices of the suppliers as well as the cost of the labor. The competitors might also impact on the prices and the company can face decline in the revenue because of the high cost and low prices.
Legal risks can also be faced by the company as the business is biological in nature involved animals as well as the food product offering company that can face various legal challenges from the authorities such as food regulations and regulations to deal with living organisms.
Health and safety issues are common to every business, where sometimes low and sometimes high based on the nature of the business. The damage to the health of the labor and management can cause the higher issues as well as the compensation to the company and the company can face the huge losses.
The lack of interest and attraction among the customers for the un-sanitized dairy products is another risk to the Foodies Company. The customer might be bound to their traditional dairy products and the company can be failed to generate the expected sales.
Contingency Plan
As the number of emergencies is found in the risks that can cause the issues to the business and its operations, therefore, the emergency plans are very important to reduce these impacts and influences. The few strategies for the risks are as follows:
The company will buy two or three additional machines and equipment to reduce the impacts of technical and production risks. The equipment will place in order so that they can immediately use in place of faulted machines and equipment. The other staff will be hired with additional skills so that they can perform the tasks and role of the employee or labor that might be unfit or unhealthy to perform the role.
The plan and strategies will be reviewed annually, so that the market conditions can be easily understood and the strategies can be modified if required. The suppliers will be contracted so that they cannot impact on the cost and will provide the products for the fixed prices as mentioned in the contract. A good communication and negotiation strategies will be used to reduce the impacts of the suppliers.
Before initiating the business, the company will review all the legal requirements and regulations so that no activity will be done that can make the company to face legal challenges. The continuous communication will be organized with the authorities and regulatory bodies to know the changes in the regulations and the laws either for humanity, for food business, for biological business and to deal with animals. Based on these rules and regulations, the code of conduct of the company will also be modified.
The marketing and promotional techniques will be changed, if the customers will not be influenced with the planned strategy. The customers will be facilitated with the discounts, offers and benefits.
Financials
Pricing Strategy
The company is going to offer reasonable competitive prices for the differentiated products from the market. The prices for all the products will be competitive, however, for few of the products, the prices will be high such as flavored cream and yogurts because the company is going to add original flavors rather than artificial flavors and thus the cost will be higher than the competitors. The prices of the products for the first year will be as follows:
Low Fat Milk/liter 1.80
Creamy Milk 1.50
Plain Cream/kg. 7.00
Double Cream/kg 11.00
Whipping Cream/kg 14.00
Salted butter 1.50
Unsalted butter 2.90
Cheddar Cheese 6.00
Mozzarella Cheese.. .5.00
Cream Cheese0.07
Melted Cheese.. 9.00
Solid Cheese 5.50
Plain Yogurt 8.00
Honey Yogurt.. 9.00
Sweet yogurt 11.00
Sugar free yogurt 14.00
Once the company will grow and develop, the company will launch new products from second and third year with the prices as follows:
Medicated yogurt 16.00
Pineapple yogurt.. 14.00
Blueberry yogurt.. 14.00
Strawberry cream. 15.00
Low fat cream.. 16.00
Assumptions
The incomes, sales and revenue of the company are going to be processed and forecast based on the few assumptions. These assumptions are made based on the market data available such as market sales, contribution, market growth and demand of the dairy products among the consumers.
Before making assumptions, it is important to discuss these trends in the market. The dairy and milk industry of United States is growing with the fast pace. At the end of the year 2014, the industry made sales of 93.4 million ton milk, produced from 9.3million cows. The number of farms has also increased to 50,000 across the country. The production is forecasted to be grown by 2 to 3% that shows the demand is increasing in the industry (USA Dairy Export Council, 2014). Based on the industry sales and growth, few assumptions are made as follows:
Net Sales of milk per month 16,600 units in combination of all the products
The net sales of the Company per year will be 200000 Units in combination.
The annual sales will be increased by 10% from the last year.
All revenue of the first year, other than the expenses for the second year, will be reinvested in the company.
The cost of the products includes packaging, labor, inventories and ingredients.
The prices will grow every year as per the cost will increase and the prices of the competitors will also increase.
The prices will grow as follows:
3% at the end of first year
3% at the end of second year
3% at the end of third year
2% at the end of fourth year
Income Statement
The income of the company is projected for the four years as follows:
The income and profit is projected based on the revenue of the five years (Appendix B).
Monthly Revenue
Based on the assumptions for the sales per month, the monthly revenue is projected as follows:
Balance Sheet
Cost of the products
The cost of the products will include the ingredients, labor, energy and additional materials and therefore the cost of each product is measured in percentage of the price of that product. The cost of the product will be as follows:
Initial Startup Cost
The table below shows the startup cost that include all the facilities and requirements mentioned in the facilities required above:
Expenses
The table below shows the monthly and yearly expenses of the business and its operations and production:
Funds Planning
As Foodies Company is going to start as a private company, therefore, the initial investment will be made by the owners of the company. The owners will receive half of the total initial investment from the banks i.e. $ 292,374.38 and half will invest from their own pockets.
The property for farm have already purchased by the owner that is the worth for $465,000.00 and thus included in the long term assets of the company. The owners will use the defensive strategy for the investment of the funds and to invest the funds in phases. The other required cash in the assets will be used in the future years and months as the company will introduce the new flavors in the market with that cash.
The total funds required for starting the dairy farm Foodies Company is $584,748.75. The initial investment will be used to purchase the equipment, farms, machines, cows, vehicles, products for farm, office furniture and computer and phone and cameras. These investments are included in the assets of the company that have different depreciation period (Appendix A).
Conclusion
The business plan of Foodies Company of dairy farm products was aimed to plan the strategies and to project the financial statement of the company including income, balance sheet and cost of the business and products. It is concluded from the plan that to start any new business, it is very important to add value in the products and services of the company to attract the customers and to make them the customers of one’s own business.
References
Dairy Realty. (2016). Southeastern Wis. Dairy Show Off Your Registered Cattle, #74436. Retrieved March 21, 2016, from; http://www.dairyrealty.com/74436/Southeastern-Wis-Dairy-Show-Off-Your-Registered-Cattle
Davis, C., Blayney, D., Muhammad, A., Yen, S. T., & Cooper, J. (2010). A cross-sectional analysis of US yogurt demand. Journal of Food Distribution Research, 41(2), 36-45.
Pettersson, A., Olsson, U., & Fjellström, C. (2004). Family life in grocery stores–a study of interaction between adults and children. International Journal of Consumer Studies, 28(4), 317-328.
Ramirez, J. C. (2007). Value Proposition. Retrieved March 21, 2016, from; http://www.dairyfoods.com/articles/87374-value-proposition
The Dairy Council. (2016). The importance of milk and dairy products as part of a healthy balanced diet. Retrieved March 21, 2016, from; http://www.milk.co.uk/page.aspx?intPageID=131
USA Dairy Export Council. (2014). U.S. Dairy Industry.
Appendix
Appendix A: Depreciation Schedule
Appendix B: Five Year Revenue
