Transcript Operation plan

Golden FlaxProcessing Ltd.
Business Plan
Prepared by:
Oksana Akhova, Éric Lefol and Sarah Schuster
April 05, 2007
Site Plan
Product description
Golden Flax: toasted,
ready to eat, unique
“nutty” flavour, healthy
(Omega-3, Fibres)
Toasting at “InfraReady” :
unique process with high
temperature for a short time
Packaging: Vacuum packed
in aluminized plastic to keep
flax air-tight and avoid
exposition to light
Operation Plan




Organizational Structure
Average work day, and activities
Cash Conversion Cycle
Capital Budget Projection
Operation Plan:
Organizational Structure
Owner/Manager
Owner
Administrative Assistant
Operation Plan:
Average Work Day and
Yearly Schedule of Activities


Winter vs. Summer commitment
Monthly activities include
Trade Shows and Taxes!
Activities
Operation Plan:
$ 0.20
$ 0.04
$ 0.14
$ 0.55
$ 1.43
$ 0.14
$ 0.01
Operation Plan:
Cash Conversion Cycle
Average Days Inventory
180 days
Average Collection Period
30 days
Average Days Payables
30 days
CCC = 30 + 180 – 30 = 180 days
Account
Payable
Packaged Toasted Seed in Inventory
Received
30
Account
Receivable
180
210 days
Capital Budget projection
Operation Plan:
2007
2008
2009
2010
2011
Capital Budget
Cash
$
11,443
$
7,158
$
16,255
$
34,763
$
60,503
Accounts Receivable
$
877
$
3,354
$
6,842
$
10,469
$
14,238
Inventory
$
4,994
$
18,456
$
34,600
$
51,372
$
68,327
Accounts Payable
$
(1,081)
$
(3,030)
$
(4,910)
$
(7,530)
$
(10,465)
Land
$
Equipment
$
Total Owner Equity
Cost of Goods Sold
-
$
-
$
-
$
-
$
-
1,900
$
1,710
$
1,539
$
1,385
$
1,247
$
18,133
$
27,650
$
54,327
$
90,459
$
133,850
$
4,648
$
17,027
$
38,421
$
62,221
$
86,614
Administration salaries
$
6,055
$
10,459
$
9,977
$
17,593
$
28,754
Marketing expenses
$
1,833
$
2,957
$
5,212
$
7,411
$
9,648
Total Adm. & Mark. Exp.
$
7,888
$
13,416
$
15,189
$
25,004
$
38,402
Expenses
Summary

Look into lowering Packaging Cost

Lower Average Day in Inventory

Keep good ratio between Owners’ Equity
and Expenses & Costs
Human Resources

Wages for 2006
Wage
Labour
Total

EI
CPP
Total
823
22
41
42
928
Manager
4,484
87
222
260
5,053
Secretary
1,020
20
50
59
1,150
6,327
129
313
361
$ 7,131
Shareholders’ agreement
50/50 net profits
 Building arrangements

WCC
Marketing Plan

The Marketing Mix
(Product, Pricing, Promotion, Place)

Segmentation, Targeting, and Positioning

Summary
Marketing Plan:
The Marketing Mix: Product

Golden Toasted Flax
•
•

Omega-3 Fatty Acids
Fibres
ZPP Image and Service
•
•
•
Sold only in Health Food Stores
Quality control (Colour, Toasting)
Naturally grown
Marketing Plan:
The Marketing Mix: Pricing

The Competition in SK
•
•

CanMar Products Ltd.
Northern Quinoa Corporation
Pricing Strategy
•
•
Parity Pricing
Price Taker
Marketing Plan:
The Marketing Mix: Promotion

From our Farm to your Home

Selling & Advertising
•
•
•
Health Benefits
Differentiation
Tools (trade shows, web-site, direct
advertising, pamphlets)
Marketing Plan:
The Marketing Mix: Place

Health Food Stores in Saskatchewan

Health Food Stores in the Prairies

Network
Marketing Plan:
Segmentation, Targeting, and Positioning
Marketing Plan:
Summary
Based on:

STRENGTHS in reputation, enthusiasm, and healthy product claims,

WEAKNESSES in competitive pressure, risk associated with outsourcing,
limited production capabilities, limited advertising of product and health
benefits,

OPORTUNITIES in higher margin selling to health food stores, and innovation
of diversification,

THREATS in existing and new competition, and other available sources of
Omega 3
ZPP should:

Approach the retailer Nutter’s

Seek approval of Golden Flax with a broker

Continue to approach Saskatchewan health food stores

Follow up with the shaker
Financial Plan




Financial results
Critical variables analysis
Break-even analysis
Scenario analysis
Financial Plan:

Goals
Sales:
Year
2007
2008
2009
2010
2011
Quantity (tons)
1.00
3.75
7.50
11.25
15.00
#units
2,350
8,813
17,625
26,438
35,250

Price per bag (1 Pound): $4.54
Financial Plan:
Financial overview
Year
2007
2016
Sales
$10,669
$191,257
COGS
4,684
107,867
Gross Profit
6,021
83,390
Expenses
7,888
42,250
(1,867)
41,140
0
4,114
Net Income After Tax
(1,867)
37,026
Ending Retained Earnings
($1,867)
$175,429
Net Income Before Tax
Income Tax
Net Present Value (NPV) 53,674
Internal Rate of Return (IRR) on Equity Investment 55.60%
External Rate of Return (ERR) on Equity Investment 31.00%
Financial Plan:
The Critical Variables Analysis



The most critical variable for ZPP is price per unit. A
drop from $4.54 to $3.91 (14%) drives the NPV from
$53,674 to zero
The second critical variable is number of packages
sold. 34% of decrease of this variable brings NPV to
zero
The least critical variable is secretarial salary. It is
needed to be changed by 336% to bring NPV to
zero.
Financial Plan:
Break-even analysis
6.00
Price per unit, $
5.50
NPV=53,674
5.00
NPV=0
4.50
4.00
3.50
3.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2007 2008
2009
2010
2011 2012
2013 2014
2015
2016
4.54
4.63
4.72
4.82
4.91
5.01
5.11
5.22
5.32
5.43
3.91
3.99
4.07
4.15
4.23
4.32
4.40
4.49
4.58
4.67
Financial Plan:
Break-even analysis
40,000
NPV=53,674
Packages sold
35,000
30,000
NPV=0
25,000
20,000
15,000
10,000
5,000
2007
2007 2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2014
2013
2015
2014
2016
2015
2016
2,350
8,813
17,625
26,438
35,250
35,250
35,250
35,250
35,250
35,250
1,552
5,819
11,637
17,456
23,275
23,275
23,275
23,275
23,275
23,275
Financial Plan:
Summary



Price is the most critical variable for the
business. If this variable change by -14%
brings ZPP business to NPV=0.
Sales level is the second critical variable
ZPP’s business is able to generate positive
NPV under projected sales and price at
$4.54
Recommendations



Look into lowering Packaging Cost
Lower Average Day in Inventory
Keep good ratio between Owners’ Equity, and Expenses
& Costs

Approach the retailer Nutter’s

Seek approval of Golden Flax with a broker

Continue to approach Saskatchewan health food stores


Maintained level of sales as outlined in the
break-even analysis
Seek possibilities to increase price per unit if
volume of sales drops
Acknowledgments

Bill Brown and classmates
Thank You