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Smokey Bones Business Plan
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Contents Executive Summary ................................................................................................................................. 3
Mission Statement .................................................................................................................................. 3
Products ................................................................................................................................................... 3
Management plan ................................................................................................................................... 3
Operation Plan......................................................................................................................................... 3
Marketing Plan ........................................................................................................................................ 3
Financial Statement ................................................................................................................................. 3
Operations Plan ....................................................................................................................................... 4
Production ........................................................................................................................................... 4
Sales ..................................................................................................................................................... 4
Company Milestones ............................................................................................................................... 4
Industry Analysis...................................................................................................................................... 4
Competitive analysis................................................................................................................................ 4
Strategy and advantage to competitors .................................................................................................. 5
Customer Analysis ................................................................................................................................... 5
Key Success Factors ................................................................................................................................. 5
Sensitivity Analysis of Future Cash Flows ................................................................................................ 5
Financial calculations of each Scenario: .................................................................................................. 6
Scenario 1 ............................................................................................................................................ 6
Scenario 2 ............................................................................................................................................ 8
Scenario 3 .......................................................................................................................................... 10
Scenario 4 .......................................................................................................................................... 12
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Executive Summary Smokey Bones is a polish limited liability company which produces healthy and tasty bones for dogs.
Company is managed by its founders Simo Tanttu and Tuomas Juhanila. Simo will be responsible for
sales and supply chain operations and Tuomas will be responsible for vendor management and
production activities. Smokey Bones is a fresh start up which has production facilities in Gdansk, but
sales are directed to Finnish dog food and snacks market.
Mission Statement Smokey Bones uses modern smoking technology to produce healthy bones which are easy to access
and purchase by consumers because of internet based shop and home delivery of goods directly to
the customers.
Products Smokey Bones produces two different kind of bones: Beef knuckle bones and smaller miscellaneous
beef bones that are smoked in the companies premises in Poland.
Management plan Smokey Bones will be Limited Liability company which is managed by owners Simo Tanttu and
Tuomas Juhanila by 50% - 50% ownership status
Operation Plan Operations are running 7 days a week in a office/warehouse of Gdansk. Bones are smoked and
stored in the same facility and additionally there will be storage in Helsinki, Finland from where they
will be shipped to customers according to their online orders.
Marketing Plan Products will be marketed in dog shows and other pet related fairs and events. There are two
representatives working for marketing and sales in Finland. We want to be known as high quality,
trustworthy, easy to access and affordable dog bone manufacturer.
Marketing will be done mainly via online portals like facebook and pet related forums. Happy
customers will be placing orders on regular basis since there is constant need for the products for
dog owners.
Financial Statement Smokey Bones requires 100 000 PLN as start up capital from which owners have contributed 50% (50
000 PLN) and rest are financed by 10-year bank loan which annual interest is 3.5%.
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Operations Plan
Production There are two main factors for customers which effects the most in their decision to choose the
place and seller of bones: Price and quality. Smokey Bones is taking advantage of large scale meat
production in Poland to gather good quality and cheap raw materials (bones). With efficient
transportation the bones are kept fresh according to EU standards till the point they will be smoked.
After smoking the bones will be vacuum bagged and transported to storage house in Finland.
Suppliers will be big slaughter houses in Northern Poland. Bones are delivered from slaughter houses
once a week and stored in production facilities in freezers until they are smoked.
Production capacity with one smoking machine is 50kg/5h so in our first scenario it is 1000kg/month.
Production is running on week days from 8:00 to 16:00. Maintaining the online store and sales is
24/7 job.
Sales Sale is done via online store in which customers are placing the orders. Delivery time is within 3
business days and customer pays the delivery cost which is based on the weight of the package.
Customer can place an order any time of the day and they are processed the following business day.
Orders are paid via credit card at the same time of placing the order.
In our future scenarios we are estimating the sales volume to be same each month, but in more
realistic situation of course sale volume is growing especially during the first year of operation.
Company Milestones 6 months before operations: Establish LLC, secure the finances, get all the required licenses and
permissions, find bone suppliers, organize delivery contracts
First operating year: build online store, rent storage and production facilities, build and start
production on low level
Year 2: Hire representative sales person in Finland, start marketing the product, hire employee to the
production facility, start production on full volume
Year 3: Stabilize the production and customer basis
Future: Enlarge marketing and deliveries to other countries like Germany and Sweden
Industry Analysis In Finland there are 600000 dogs and 20% of their owners are buying raw bones to their dogs.
However trend is going upwards as it has been researched that raw bones are really good for the
teeth of the dogs. This means that there's a potential growth of 5% per year in the Finnish market for
these products. Value of the raw bone industry in Finland was around 1.2 million Euro in 2015.
Competitive analysis Main companies providing raw bones in Finland are mainly distributors which means that they are
buying their products from the manufacturing. Their prices are usually higher as they are buying the
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bones from their manufacturing partners in smaller series and then delivering directly to resellers. As
there's more middle hands before product ends up to consumer, price is going up.
Strategy and advantage to competitors Other companies cannot also guarantee the same level quality in the process as they are not 100%
sure that from where the bone is from originally and how it was treated during the manufacturing,
warehousing and transportation process. Our advantage would be that we could monitor the whole
production chain and this way guarantee the quality of the bones and also keep the prices lower as
without middle hands, we would deliver the product directly to consumer.
Customer Analysis Typical customer for the raw bones is a middle or higher class dog owner who lives in the urban area
and who is aware of health benefits of the natural good quality bone to their dogs. On average these
customers are spending 200 Euros per year for bones and 1000 Euros for wellbeing of their dogs.
Key Success Factors Correct marketing to the correct target group is the key in this business. New innovative ways should
be used in this business to reach the correct target group. It also important to highlight the
ownership nationality in the marketing as it is advantage in the Finnish market to sell a product that
is produced by Finnish company, even though main production is in Poland.
Good and stable quality will be guaranteed by agreeing the contract with a reliable vendor for raw
material. Also investment to high quality production machinery is vital. Supply chain should also work
seamlessly and packing should be done in sterile environment
Sensitivity Analysis of Future Cash Flows This analysis includes 3 different simulated scenarios for the first year in the business. Scenario 1 is
using the expected sales figures and current raw material and energy prices. Scenario 2 is more
pessimistic and scenario 3 more optimistic scenario than scenario 1.
Below changing figures for these 3 scenarios. All other figures than below mentioned will remain the
same in these scenarios.
Scenario 1:
Sales of beef knuckles (units sold per year): 8000 units
Sales of misc bones (units sold per year): 4000 units
Bone raw material price (PLN per produced unit): 1.00 PLN/unit
Sales price of beef knuckles 24PLN/unit
Sales price of misc bones 20PLN/unit
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Scenario 2:
Sales of beef knuckles (units sold per year): 5000 units
Sales of misc bones (units sold per year): 2000 units
Bone raw material price (PLN per produced unit): 1,50 PLN/unit
Sales price of beef knuckles 24PLN/unit
Sales price of misc bones 20PLN/unit
Scenario 3:
Sales of beef knuckles (units sold per year): 12000 units
Sales of misc bones (units sold per year): 6000 units
Bone raw material price (PLN per produced unit): 0.7 PLN/unit
Sales price of beef knuckles 24PLN/unit
Sales price of misc bones 20PLN/unit
Scenario 4:
Sales of beef knuckles (units sold per year): 8000 units
Sales of misc bones (units sold per year): 4000 units
Bone raw material price (PLN per produced unit): 1.00 PLN/unit
Sales price of beef knuckles 40 PLN/unit
Sales price of misc bones 26 PLN/unit
Financial calculations of each Scenario:
Scenario 1 raw material cost per kg (PLN)
bones 1
total input energy 1.26
21kwh wood chips 0.4 20PLN a bag
water 0.1
50kg / 5h
laminate plastic 0.1 total: 2.86
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Sales forecast Prod cost Gross price
Profit before tax
Beef knuckle (kg) 2.86 24 21.14 Misc bones (kg) 2.86 20 17.14
Sales volume
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 2000 2000 2000 2000 8000
9000 10000
Misc bones 1000 1000 1000 1000 4000
5000 6000
3000 3000 3000 3000 12000
14000 16000
Sales
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 48000 48000 48000 48000 192000
216000 240000
Misc bones 20000 20000 20000 20000 80000
100000 120000
68000 68000 68000 68000 272000
316000 360000
Production cost
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 5720 5720 5720 5720 22880
25740 28600
Misc bones 2860 2860 2860 2860 11440
14300 17160
8580 8580 8580 8580 34320
40040 45760
Current Assets 2017 2018 2019 Cash 17000 137617.1 260081 Inventory 5000 5000 5000 Total current
assets 22000 142617.1 265081 Fixed assets
Office supplies 3000 2700 2400 Vehicle 30000 27000 24000 Smoker 30000 27000 24000 Lamination
machine 5000 4500 4000 Freezers 10000 9000 8000 total fixed 78000 70200 62400 Total assets 100000 212817.1 327481
Cash Flow Forecast 2017 2018 2019
Beginning cash 17000 137617.1 260081 Net profit after
tax 120617.1 122463.9 124310.7
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End cash 137617.1 260081 384391.7
Income Statement 2017 2018 2019
Sales 272000 316000 360000 Production cost 34320 40040 45760 Gross profit 237680 275960 314240 Gross profit % 87% 87% 87% Expenses:
Insurance 4000 4000 4000 Transportation
cost international 11520 11520 11520 transportation
local 5000 5000 5000 Production facility
rent 18000 18000 18000 Warehouse rent
(FI) 24000 24000 24000 Salary expenses
(inc. Social cost, tax etc) 0 36000 72000
Internet 700 700 700 Website 6000 6000 6000 Marketing 6000 6000 6000 Office supplies 1000 1000 1000 telephone 3000 3000 3000 Depreciation
(10%) 7800 7800 7800 Total expenses 87020 123020 159020 Interest expenses 1750 1750 1750 EBIT 148910 151190 153470 Taxes (19%) 28292.9 28726.1 29159.3 Net income 120617.1 122463.9 124310.7 Net income /Sales 44.34% 38.75% 34.53%
Scenario 2 raw material cost per kg
bones 1.5
total input energy 1.26
21kwh wood chips 0.4 20PLN a bag
water 0.1
50kg / 5h
laminate plastic 0.1 total: 3.36
Sales forecast Prod Gross Profit bef
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cost price tax
Beef knuckle (kg) 3.36 24 20.64 Misc bones (kg) 3.36 20 16.64
Sales volume
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 1250 1250 1250 1250 5000
6000 7000
Misc bones 500 500 500 500 2000
2500 3000
1750 1750 1750 1750 7000
8500 10000
Sales
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 30000 30000 30000 30000 120000
144000 168000
Misc bones 10000 10000 10000 10000 40000
50000 60000
40000 40000 40000 40000 160000
194000 228000
Production cost
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 4200 4200 4200 4200 16800
20160 23520
Misc bones 1680 1680 1680 1680 6720
8400 10080
5880 5880 5880 5880 23520
28560 33600
Current Assets 2017 2018 2019 Cash 17000 55645.1 88587.8 Inventory 5000 5000 5000 Total current
assets 22000 60645.1 93587.8 Fixed assets
Office supplies 3000 2700 2400 Vehicle 30000 27000 24000 Smoker 30000 27000 24000 Lamination
machine 5000 4500 4000 Freezers 10000 9000 8000 total fixed 78000 70200 62400 Total assets 100000 130845.1 155987.8
Cash Flow Forecast 2017 2018 2019
Beginning cash 17000 55645.1 88587.8 Net profit after tax 38645.1 32942.7 27240.3 End cash 55645.1 88587.8 115828.1
Income Statement 2017 2018 2019
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Sales 160000 194000 228000 Production cost 23520 28560 33600 Gross profit 136480 165440 194400 Gross profit % 85% 85% 85% Expenses:
Insurance 4000 4000 4000 Transportation
cost international 11520 11520 11520 transportation
local 5000 5000 5000 Production facility
rent 18000 18000 18000 Warehouse rent
(FI) 24000 24000 24000 Salary expenses
(inc. Social cost, tax etc) 0 36000 72000
Internet 700 700 700 Website 6000 6000 6000 Marketing 6000 6000 6000 Office supplies 1000 1000 1000 telephone 3000 3000 3000 Depreciation
(10%) 7800 7800 7800 Total expenses 87020 123020 159020 Interest expenses 1750 1750 1750 EBIT 47710 40670 33630 Taxes (19%) 9064.9 7727.3 6389.7 Net income 38645.1 32942.7 27240.3 Net income /Sales 24.15% 16.98% 11.95%
Scenario 3 raw material cost per kg
bones 0.8
total input energy 1.26
21kwh wood chips 0.4 20PLN a bag
water 0.1
50kg / 5h
laminate plastic 0.1 total: 2.66
Sales forecast Prod cost Gross price
Profit before tax
Beef knuckle (kg) 2.66 24 21.34 Misc bones (kg) 2.66 20 17.34
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Sales volume
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 3000 3000 3000 3000 12000
15000 20000
Misc bones 1500 1500 1500 1500 6000
9000 12000
4500 4500 4500 4500 18000
24000 32000
Sales
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 72000 72000 72000 72000 288000
360000 480000
Misc bones 30000 30000 30000 30000 120000
180000 240000
102000 102000 102000 102000 408000
540000 720000
Production cost
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 7980 7980 7980 7980 31920
39900 53200
Misc bones 3990 3990 3990 3990 15960
23940 31920
11970 11970 11970 11970 47880
63840 85120
Current Assets 2017 2018 2019 Cash 17000 236793.5 521419.4 Inventory 5000 5000 5000 Total current
assets 22000 241793.5 526419.4 Fixed assets
Office supplies 3000 2700 2400 Vehicle 30000 27000 24000 Smoker 30000 27000 24000 Lamination
machine 5000 4500 4000 Freezers 10000 9000 8000 total fixed 78000 70200 62400 Total assets 100000 311993.5 588819.4
Cash Flow Forecast 2017 2018 2019
Beginning cash 17000 236793.5 521419.4 Net profit after
tax 219793.5 284625.9 384029.1 End cash 236793.5 521419.4 905448.5
Income Statement 2017 2018 2019
Sales 408000 540000 720000 Production cost 47880 63840 85120
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Gross profit 360120 476160 634880 Gross profit % 88% 88% 88% Expenses:
Insurance 4000 4000 4000 Transportation
cost international 11520 11520 11520 transportation
local 5000 5000 5000 Production facility
rent 18000 18000 18000 Warehouse rent
(FI) 24000 24000 24000 Salary expenses
(inc. Social cost, tax etc) 0 36000 72000
Internet 700 700 700 Website 6000 6000 6000 Marketing 6000 6000 6000 Office supplies 1000 1000 1000 telephone 3000 3000 3000 Depreciation
(10%) 7800 7800 7800 Total expenses 87020 123020 159020 Interest expenses 1750 1750 1750 EBIT 271350 351390 474110 Taxes (19%) 51556.5 66764.1 90080.9 Net income 219793.5 284625.9 384029.1 Net income /Sales 53.87% 52.71% 53.34%
Scenario 4 raw material cost per kg (PLN)
bones 1
total input energy 1.26
21kwh wood chips 0.4 20PLN a bag
water 0.1
50kg / 5h
laminate plastic 0.1 total: 2.86
Sales forecast Prod cost Gross price
Profit before tax
Beef knuckle (kg) 2.86 40 37.14 Misc bones (kg) 2.86 32 29.14
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Sales volume
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 2000 2000 2000 2000 8000
9000 10000
Misc bones 1000 1000 1000 1000 4000
5000 6000
3000 3000 3000 3000 12000
14000 16000
Sales
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 80000 80000 80000 80000 320000
360000 400000
Misc bones 32000 32000 32000 32000 128000
160000 192000
112000 112000 112000 112000 448000
520000 592000
Production cost
Product Q1 Q2 Q3 Q4 total
Total 2018
Total 2019
Beef knuckle 5720 5720 5720 5720 22880
25740 28600
Misc bones 2860 2860 2860 2860 11440
14300 17160
8580 8580 8580 8580 34320
40040 45760
Current Assets 2017 2018 2019 Cash 17000 280177.1 567881 Inventory 5000 5000 5000 Total current
assets 22000 285177.1 572881 Fixed assets
Office supplies 3000 2700 2400 Vehicle 30000 27000 24000 Smoker 30000 27000 24000 Lamination
machine 5000 4500 4000 Freezers 10000 9000 8000 total fixed 78000 70200 62400 Total assets 100000 355377.1 635281
Cash Flow Forecast 2017 2018 2019
Beginning cash 17000 280177.1 567881 Net profit after
tax 263177.1 287703.9 312230.7 End cash 280177.1 567881 880111.7
Income Statement 2017 2018 2019
Sales 448000 520000 592000 Production cost 34320 40040 45760 Gross profit 413680 479960 546240
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Gross profit % 92% 92% 92% Expenses:
Insurance 4000 4000 4000 Transportation
cost international 11520 11520 11520 transportation
local 5000 5000 5000 Production facility
rent 18000 18000 18000 Warehouse rent
(FI) 24000 24000 24000 Salary expenses
(inc. Social cost, tax etc) 0 36000 72000
Internet 700 700 700 Website 6000 6000 6000 Marketing 6000 6000 6000 Office supplies 1000 1000 1000 telephone 3000 3000 3000 Depreciation
(10%) 7800 7800 7800 Total expenses 87020 123020 159020 Interest expenses 1750 1750 1750 EBIT 324910 355190 385470 Taxes (19%) 61732.9 67486.1 73239.3 Net income 263177.1 287703.9 312230.7 Net income /Sales 58.74% 55.33% 52.74%