business financial plan - fbla-pbl · 2018-09-23 · financial plan included in this report is the...

Business Financial Plan

Jaylea Bixenman and Katelyn Cupp Marceline R-V School

2017-2018

Eat Fresh Express Financial Business Plan | P a g e 2

Description of Business

Business Concept Fresh food delivery companies are known for providing families with meals that are nutritional and easily prepared without customers having preparing anything in their homes. Eat Fresh Express is an organic delivery service focused on attracting consumers who want healthy and organic food options. The business will promote a healthy lifestyle and greatly benefit the nutritional health of those who subscribe to our fresh food delivery program. The purpose for their business is to give everyone in our community a chance to excel their health with their diet of fresh and healthy foods. With their delivery plan, people will be able to avoid driving several miles to a grocery store that won’t offer meals with the nutritional values that they obtain and will also allow busy families a nutritional meal without the preparation.

Financial Plan Included in this report is the financial procedure that the two owners plan to conduct in order to operate Eat Fresh Express successfully. With support from local advertisement, Ms. Cupp and Ms. Bixenman hope to establish a repeating customer base within their first fiscal year of business. They plan to do this by ensuring the best meal quality and service. This plan will also be supported by social media with advertising promotions that capture the attentions of today’s most popular cite users. By the end of year two, Ms. Cupp and Ms. Bixenman anticipate a profit of $118,587.79 (Refer to section 5.1)

Underlying Assumptions As they begin their business venture, they have made several underlying assumptions. The first is customer satisfaction. The owners assume that they will be able to keep 95% of all their customers happy and returning. Another underlying assumption they have made is that healthy lifestyle choices will be important and marketable to this community. Price point is always taken into consideration because the owners realize that their prices will be slightly higher than going to the market and purchase the goods to prepare meals individually. The last assumption is the economy. Currently in Scottsdale, Arizona the economy is growing and that looks like a positive for Eat Fresh Express, however the owners understand that may change later on.

Strategies to Obtain Loan Establishing a business is an expensive and risky venture. To help ensure that Eat Fresh Express prospers, a Small Business Administration (SBA) bank loan will be taken out. Ms. Cupp and Ms. Bixenman are going to be receiving a $ 640,000 loan for 72 months from Chase Bank to help finance all of the expenses needed for the initial business operations as well as the inventory needed. In order to receive the loan, both owners will contribute equal monetary amounts from their personal finances in the total amount of $160,000. By the end of the sixth year, the entire loan will have been paid off.


Table of Contents

Description of Business ..................................................................................................... Page 2

1.0 Company Description

1.1 Legal Form of Business ........................................................................... Page 4

1.2 Company Governance .............................................................................. Page 4

1.3 Company Location .................................................................................. Page 5

1.4 Goals ......................................................................................................... Page 6

2.0 Operations and Management

2.1 Business Facilities .................................................................................... Page 7

2.2 Management Personnel ............................................................................ Page 7

2.3 Workforce ................................................................................................. Page 8

3.0 Target Market

3.1 Target Market Defined ............................................................................. Page 9

3.2 Risks and Adverse Results ..................................................................... Page 10

4.0 Financial Institution

4.1 Name and Type of Financial Institution ................................................. Page 11

5.0 Loan Request

5.1 Purpose of Loan and Amount Requested ............................................... Page 12

5.2 Itemized Planned Expenditures .............................................................. Page 12

5.3 Projections for Future Stability .............................................................. Page 14

Work Cited ...................................................................................................................... Page 15


1.0 Company Description

1.1 Legal Form of Business Eat Fresh Express is a limited liability company that will be expanding its location to Scottsdale, Arizona. The business at the Scottsdale, Arizona location will consist of two equal owners, Ms. Jaylea Bixenman and Ms. Katelyn Cupp. The two owners have chosen a limited liability company because of the benefits it will offer. By operating as an LLC, the owners will move the risk that would have otherwise been assumed personally by the partners, to the LLC while also seeking other advantages provided by LLC laws. A significant advantage to having an LLC is that it will avoid the double taxation that often occurs without the LLC status. Also, in the case of any unexpected debt brought onto the company, the two owners will not be held personally responsible for them. Although both owners have accessed all threats thoroughly, they have decided on the LLC status to also protect their personal assets in the event of unforeseen circumstances.

1.2 Company Governance Ownership of Eat Fresh Express will be equally divided under Katelyn Cupp and Jaylea Bixenman as a limited liability company. Fair division of all profit and expenditures will be ensured by contractual agreements. The two owners will obtain specific positions in the business according to their education.

Katelyn Cupp Ms. Cupp will obtain the position of Marketing Manager. As a 32 year-old graduate from the University of California, Los Angeles, she obtained her Master’s degree in Marketing, as well as a minor in Communications.

For the past seven years, Ms. Cupp held the position of Marketing Research Director at Amazon, accumulating a total of 278,000 in savings. Being born and raised in Phoenix, Arizona, Kate is very familiar with the surrounding cultures, customs, and beliefs.


Jaylea Bixenman Ms. Bixenman will hold the Financial Manager position. As a 35 year-old graduate from Cornell University in New York, she obtained her Master’s degree in Macronutrients with a bachelor’s in finance. While attending college, she held an internship with Nutrisystem to get a closer look on the creation of nutrient rich meals as well as helping create new meal selections for their company.

Being raised right outside of Phoenix, Arizona, she is familiar with the demographics of Arizona and knows the best areas for a new business. For the past nine years, Ms. Bixenman held the position of Financial Manager at a large food production company in Phoenix allowing her to have $275,000 in savings.

1.3 Company Location

The new location that we have chosen for Eat Fresh Express is in Scottsdale, Arizona due to its exceptional demographics. It is located in a community of approximately 200,000 patrons. Zocallo Plaza, the location chosen for Eat Fresh Express, is located within the Kierland Master Planned Community, a 730-acre community that includes the Kierland Resort and Golf Club allowing many families to see the business while headed to these popular attractions.

With the traffic counts on Scottsdale Road being over 65,000, our business location will be convenient for those as they are on their commute home. Another demographic that makes this location a great pick for the two owners is that the average household income in the surrounding mile is approximately $94,514. Although they make their meals as affordable as possible, their meals are moderately priced due to the price of using organic and fresh produce. The produce selection is the final reason why they chose the location they did. The warmer climates allow for a longer vegetation season thus allowing them to purchase fresh produce longer.


1.4 Goals

Short Term Year One Goals:

• Building Renovations complete. • Implement a staff that exceeds all expectations and standards. • Obtain 200 customers that have signed up for the automatic weekly delivery. • Increase online sales by 20% or more each quarter during the first year and direct

sales will increase by 5% each quarter for the first year. • End the year with less than $540,000 in debt. • Utilize all local advertising outlets.

Year Two Goals:

• End the year with less than $440,000 of debt paid off. • Expand inventory to include dessert options. • Expand advertising by purchasing another billboard. • Increase customer base to 250 weekly membership customers.

Long Term Year Three and Four Goals:

• End the year with less than $230,000 remaining of debt to be paid off. • Increase customer base to 395 customers. • Expand total number of employees to no more than 30 employees. • Develop matrix to track progress of the business. • Create an incentive program for customers who refer to friends.

Year Five and Six Goals:

• Increase profit continually by 20% by scaling and reducing cost due to increased production and ordering power

• Expand inventory to smoothie, shake, and other drink options. • Increase customer base to 570 customers. • Expand total number of employees. • Begin looking at expanding a franchise in Phoenix, Arizona. • Pay off small business loan used to open business. • Purchase another delivery truck. • Expand business by adding to another new location.


2.0 Operations and Management

2.1 Business Facilities Eat Fresh Express will be located at 15507 North Scottsdale Road Scottsdale, Arizona 85254. Ms. Cupp and Ms. Bixenman chose to operate out of a 5,000 square feet facility. The facility will be open to customers Monday through Friday, from the hours of 8:00 A.M. to 4:00 P.M and on Saturday, from 8:00 A.M. to 12:00 P.M. Eat Fresh Express’s facility will not be open on Sundays. As you can see from the floor plan below, the facility will include a walk-in freezer, storage area, restrooms, computer stations, and much more.

2.2 Management Personnel Eat Fresh Express will have a marketing manager and a financial Manager. Ms. Bixenman will hold the position as financial manager. Ms. Cupp will hold the position as marketing manager. As the marketing manager, she will be responsible for coordinating marketing campaigns with sales activities, creating the publication of all marketing material in line with the marketing plan, and overseeing the company’s marketing budget. Ms. Cupp will have the overall responsibility for brand management and corporate identity. As the financial manager, Ms. Bixenman will be responsible for overseeing the flow of cash and financial instruments, conducting data analysis, and preparing reports as required by law, regulations or company policies. Many typical duties that she will have will be to review financial reports, monitor accounts, and prepare activity reports.


Below you will find the average wages these management position would typically make. As owners, we plan to save this money by running these operations ourselves and will not be added to payroll until our company shows profits.

Position Year 1 Year 2

Marketing Research Director $62,000 $77,500

Financial Manager $62,000 $77,500

Total People 2 2

Total Payroll $124,000 $155,000

2.3 Workforce Since Eat Fresh Express is a meal distribution company, the majority of the employees will need to have experience in the cooking industry as well as a knowledge in nutrition. The kitchen staff will mostly be comprised of culinary arts school graduates. Their jobs would include creating the meals as well as preparing them. All employees that are part of the kitchen staff will work full time. Another employee working part time is an accountant hired by the financial manager, Jaylea Bixenman.

There will also be a few more part time employees. These employees include a receptionist and three drivers. The receptionist’s job includes helping set people up accounts with our online meal subscription plans, sanitary operations, and working at the front desk. The driver’s job includes delivering all of our fresh meals to the customers’ homes. The owners have hired three drivers as they know their prime business hours will be customers wanting delivery in the evening when they are home. The store

hours will be from

JOB (NUMBER OF WORKERS)

WAGES SALARIES ANNUAL TOTALS

ACCOUNTANT ( 1/4 ) $68,150 $17,037.50

HEAD CHEF/ NUTRITIONIST (1)

$44,833 $44,833

COOK ( 1 ) $22850 $22,850

RECEPTIONIST ( 1 ) $12.00 $18,720

DELIVERY PERSONNEL ( 3 )

$13.50 $21,060

TOTAL PEOPLE 8 ¼

TOTAL PAYROLL $124,530.50


• This group of people tends to be busier than others due to their split time between work, home, and their children's activities. Some people falling in this category belong in a single parent household, which adds to the stress due to lack of time, as well as the need for fitting meals for their children. Eat Fresh Express provides these people with the ability to provide nutritious meals for their families.The owners expect the highest growth potential from this category due to their limited amount of free time.

Family households with children under the age of 18 years

old

• This group of people has a need for their services due to many reasons. Professional careers, hectic schedules, and daily demands come up against the need for tasty, nutritional meals. Depending on their work and situations at home, this group could use Eat Fresh Express to enhance their selection of meals while minimizing time spent in the kitchen. People in this group recognize their service and want to enjoy the convenience we provide with their organic meal plans. The owners expect a lower growth of customers from this category due to excess free time that families with children don't have.

Family households without any children living at their home

•This group (65 and older) is the fastest rising portion of the population. There are several reasons that this demographic needs their services including seniors’ lack of time, energy, or means to make it to the grocery store. Also, a large portion of this group is unable to prepare nutritious meals and don’t have the skills to adequately maneuver themselves in the kitchen. The owners expect a large growth of customers from this category due to the ordering services that they have to offer (kiosks with receptionists in their stores for first time orders.)

Senior and Elderly Citizens

3.0 Target Market

3.1 Target Market Defined


3.2 Risks and Adverse Results

TechnologyTheir primary goal is to have all orders taken onlinethus lack of computer knowledge will be detrimental totheir business. They believe their target market group,sneior citizens, will struggle the most in this area. Tocombat this issue, they will be offering training, videoson their website. They will also have computer kioskset up inside their store so when the customer placesthe first order their customer service representives setup an account and automatically enrolls them inweekly services. If the customer is adament about notwanting weekly servces and not wanting to orderonline, they may stop by or call the store.

PriceConsumers pay a high price for convenience. Consumers will also pay ahigh price for organic food but how much is too high for convenientand organic food; that is the question they have to ask ourselves in thisbusiness and one reason why they have included this as a medium risk.Their meals will be higher due to purchasing organic products andfreshly preparing their meals to have the meals delivered to theirhomes. Consumers may see the price and understand they can makethe meals cheaper themselves but how much will they pay forconvenience. The good news is, according to Points 2 Home website inthe chart below, the average consumer in Scottsadale spent aboveaverage spending on food. This is the main reason why price is only amedium risk.

Diet Trends Everyone wants to be healthy, and everyone wants tolive a healthy lifestyle, but no one wants to put in thetime and effort it truly takes. For these reasons thiscauses many consumers to choose a strict diet plan andin return quickly lose interest. Eat Fresh Express'ssolution to the bandwagon dieting issue is to use their onstaff nutritionist to liven up meals, and to keep theircustomers interested. Between their advertising staff,nutritionist, and chef, we will make sure their organicmeals are appealing to the whole family.

CompetitionWith many new fresh food delivery companies fastly growing,this causes a threat to their business. Many times thesebusinesses can offer cheaper meal plans, because they areprepared in owners homes. They are equipt to stand out agaisttheir competition, with their professional staff producinghigher quality meals, as well as their qualified nutritionist tocompile unique and tasteful meal plan options.

Legend

High Risk -

Medium Risk-

Low Risk-


4.0 Financial Institution

4.1 Name and type of Financial Institution Eat Fresh Express will acquire a Small Business Administration (SBA) loan from Chase Bank at the Scottsdale Grayhawk Center. The owners chose Chase Bank due to their status as one of the largest business lenders in the United States, and they are fourth in the overall amount of SBA loans. The owners of Eat Fresh Express have not had any issues with past investments and have very respectable credit histories. The owners have a 20% down payment of personal assets that will be used for the business loans. Also, neither of the owners is in debt from personal loans.

-Offers received when asking for $640,000. -Equity contribution will be split amongst the two owners.


5.0 Loan Request 5.1 Purpose of Loan and Amount Requested The two owners established the requested amount of $800,000. This established amount will cover the start-up costs. The start-up costs include all materials and labor necessary to complete the renovation and installation of commercial kitchen drywall, complete installation of bathroom, construction and installation industrial strength cabinets. The start-up costs also include first years of rent of the facility as well as the purchase of a delivery truck. Eat Fresh Express will receive a loan of $640,000 with a 4.75% interest rate from Chase Bank. With this loan, Eat Fresh Express will break even at the end of year two. By the end of year six, Eat Fresh Express hopes to earn a profit of over $500,000 per year.

5.2 Yearly Itemized

Expense Cost Description

Operating Expenses

Advertising and Marketing

$70,000 Expenses going towards promotion of their company by using billboards, social media campaigns, website, and other promotional products.

Consumer goods $128,689.94 Purchase initial stock and replenish the food stock for delivery orders.

Insurance $5,000 Insurance expenses used for minimizing risks and the protection of their company against liabilities. This will also include insurance on their delivery vehicle.

License Fee and Taxes

$3,800 Licensing fees for obtaining their food delivery license, and general taxes to the city.

Office $2,500 Office supplies including paper, printer ink, computers, desks, etc.

Payroll $172,568.02 Employees’ salaries as well as benefits, insurance, and retirement.

Rent $100,000 Monthly rental payment for the building. This includes the rent for the month of remodel and for yearly rent.


Delivery Fuel and Maintenance

$5,912.66 Budget for regular maintenance including truck repairs. This also includes the regular costs for delivery fuel.

Utilities $16,127.33 Payments for service utilities including: water, plumbing, heat and cooling, telephone, etc.

Non- Operating Expenses

Capital Purchases

Equipment $40,000 Payments of equipment for kitchen and office equipment such as a sink, stove, refrigerator, computers, freezer, cabinets, desk, and office furniture.

Renovation and Installation Costs

$80,000 Costs going toward the installation of kitchen and truck equipment. As well as the office and setting area for guests, bathrooms, and overall renovation of the building.

Delivery Vehicle $36,250 Costs for the official delivery vehicle.

Income/ Sales Tax Payments

$59,120.03 Payment towards the monthly sales tax of 7.95%

Interest Payments $29,135.81 Payment of the Interest rate on the loan of 4.75%

Loan Principal Payment

$89,398.20 Yearly payments to pay off the loan for the borrowed money.


5.3 Projections for Future Stability


Bibliography

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“Https://Www.charterselection.com/.” Charter Selection, Charter Selection, www.charterselection.com.

Kapoor. Glencoe business and personal finance. Glencoe Mcgraw-Hill School, 2011.

Point2 . “Point2 Homes.” Demographics & Statistics - Employment, Education, Income Averages, Crime in Scottsdale - Point2 Homes, www.point2homes.com/US/Neighborhood/AZ/Scottsdale-Demographics.html.

“Small Business Administration.” Small Business Administration, www.sba.gov/.

“Small Business Administration Lending.” SBA Term Loans - Wells Fargo Small Business, www.wellsfargo.com/biz/sba/.

“Small Business Administration (SBA) Loans.” Small Business Administration SBA Loans | Chase Business Banking, www.chase.com/business-banking/small-business-administration-sba-loans.

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http://www.choosescottsdale.com/

http://www.charterselection.com/

http://www.point2homes.com/US/Neighborhood/AZ/Scottsdale-Demographics.html

http://www.chase.com/business-banking/small-business-administration-sba-loans

business financial plan - fbla-pbl · 2018-09-23 · financial plan included in this report is the...

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