Transcript Slide 1
Seeds Ltd.
Business Plan For A New and Improved Seed Cleaning Plant Nav Khinda, Sean McAlpine and Noor Syed April 05, 2007
Contents of the Plan
Introduction Background Current Situation Goals Key Questions Operational Plan Marketing Plan Financial Plan
Introduction
Seeds is an on-farm cleaning and packaging plant in Sask.
• Cereals, pulses and oil seeds are cleaned and quality tested to broker’s specification • Four machines clean and sort the seeds according to color, size, shape and density.
•Six employees
size and color comparison of beans
Color, Weight and Size Variations in Seeds Variety of pulses soya beans green lentils green split peas dried peas wheat germ black mustard oats Golden flax hemp coriander Pinto beans fenugreek wheat grain Assorted beans
Background
began seed cleaning operation in 1985 Authorized for pedigree and certified for organic seed cleaning Seeds Ltd. became incorporated in 1997
Current Situation
Seed variety
Chickpeas, Lentils, Peas and Beans Flax Small Lentils Mustard Coriander
Unmet Requirements Comments
Not able to process fragile crops Unable to meet 99.99% purity Not able to remove cereals Unable to meet 99.9% purity Unable to remove splits and wheat Gluten is allergen, 100% wheat free Wheat is an allergen
Current Situation
Seeds Ltd. Business Plan New equipment will further improve capability to clean seeds to customer specifications Increase the plant capacity
Goals of New Plant
Reach sales of $1 M
Continue superior quality service
ORGANIZATIONAL CHART
President Administrative Asst.
Plant Operator Plant Assistants Warehouse Technologist Warehouse Technologist 3 rd technologist
Shipping
Plan View of Operations
Long Term Storage Warehouse Processing Future Development Area Screenings Raw Material Storage Receiving Screenings Burning Area Bulk Shipping
WORK FLOW PLAN 1.
RECEIVING 2.
CLEANING 3.
PACKAGING
Packaging
HACCP and ISO
•Seeds Ltd. meets HACCP inspection regulations •Currently no certification for seed cleaning plants exists •Voluntary compliance and free inspection is available •New plant is designed with improvements in critical control points •According to customers specifications lab tests are outsourced
Canadian Food Inspection Agency
Marketing Questions
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Organic industry expanding?
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Who are the current competitors?
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Unique services?
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Supply a niche market successfully?
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Buying and selling direct
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Will HACCP be a factor in the future?
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Should a quality control lab be part of the QC system?
In-house?
The Four P’s
1. Products and Services - cleaning, storage and packaging of various seeds - high quality of service 2. Pricing - cost plus; time required for processing - below or in par with others 3. Promotion - develop relations with existing and new brokers
STP
Segmentation Geographical location Broker specifications Targeting Continue to focus on organic market Positioning Consistent high
quality
std.
Approachable, professional and dependable
SWOT Analysis
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Strengths
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knowledge & experience
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solid reputation
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economy of scope
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Weaknesses
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location (rail)
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company size
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Opportunities
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emerging trend of higher quality standards
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growth in organic industry
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Threats
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power of buyers
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environment
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large competitors
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demand
Marketing Strategies
Sales and Profit Objectives $1 million in sales Channels of Distribution Customers arrange for delivery and pickup Pricing Policy Cost plus We recommend a market value approach Select Markets/Products/Service Mix Organic, Export, High purity demands Selling and Advertising Minimal effort $10,000 per year in trade shows
Debt and Equity
Breakdown of funding for BirdSeeds Ltd.
Finance Source Owner Equity Venture Capital Long Term Debt Total Financing Cdn $ $ 598,300 $ 1,015,872 $ 356,928 $ 1,971,100
Financial Analysis and Overall Financial Performance Summary of the Financial Situation (Base case scenario) Year Sales COGS Gross Profit Expenses Net Income Before Taxes Income Tax Net Income Net Cash Flow to Equity Net Present Value (NPV) IRR 2008 $1,030,857 $809,634 $221,223 $72,685 2009 $1,149,312 $913,426 $235,885 $72,554 2013 $1,253,838 $727,290 $526,548 $71,326 $148,538 $14,854 $133,684 $369,912 $287,909 25.11% $163,331 $16,333 $146,998 $455,221 $59,327 $395,894 $483,930 $497,037 2017 $1,367,870 $709,740 $658,131 $68,607 $589,524 $106,333 $483,190 $504,836
Risk Analysis
Variable
Capacity Cleaning Price Grade Changes Number of Employees Wage rates Seed Price Interest rate Inflation rate Tax rate 2 2 2 2 3
Level of Importance (1, 2, 3)
1 1 2 2
Key for the table.
1. Critical for success and feasibility 2. Important for financial performance 3. Minor importance, but has damaging effect on financial performance.
Scenario Analyses
Variable Capacity % Capacity Grade Changes Packaging Price NPV IRR Base Case 100% 27.8
1 $ 38.86
Worst Case 80% 24.2
3 $ 36.91
$ 287,909 $(1,027,617) 25% -6% Best Case 100% 27.8
0 $ 40.80
$ 855,391 35%
Break even Analysis
25000 20000 15000 10000 5000 0
IRR Cash Flow Net Income
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year
Break even Analysis
$25.00
$20.00
$15.00
$10.00
$5.00
$ IRR Cash Flow Net Income 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Summary
Volume is key Marketing will play an important role Viable Business Plan
Interactive Session
Thank You