THOMSON GREENHOUSE

BUSINESS PLAN PRESENTATION

Prepared for:

Thomson Family

&

Marv Painter / Associates

AGENDA Company & Industry Overview

Owners Needs/Key Success Factors

Business Plan

Sensitivity Analysis

Other Options

Contingency Plan

Final Recommendation

COMPANY & INDUSTRY OVERVIEW

Industry $2.2 billion in revenues Canada wide 21,000,000 square meters of greenhouse space 3,475 independent greenhouses 42,000 employees Average growth of 4% to 7% Trends

Company 2nd generation family run side business Average $30,000 in revenues 800 square meters of greenhouse space 7 part-time employees Growth meeting inflation

OWNERS NEEDS & KEY SUCCESS FACTORS

Owner’s Needs: Provide a summer-job for the boys Keep the business within the family

Create a viable business through growth Shift Ryan into Management Role

Key Success Factors: Obtaining financing for growth Securing commercial contracts Charging a premium price Maintaining a consistent climate Ryan’s commitment to the Company

BUSINESS PLAN OVERVIEW

5 Greenhouses over the next 5 years Commercial

3 Greenhouses Retail

2 Greenhouses Increased employee support Succession plan

Ryan

OPERATIONS PLAN

Suppliers U.S. Distributors

Store HoursSummer Months

Sat-Tue – 10am-6pm Wed-Fri – 10am to 9pm

Winter Months Tue-Sun – 10am-6pm Thu – 10am – 9pm

OPERATIONS PLAN Cyclical business

Busy Months = May through August

30 day purchase lead time

Flower growth = 1 month

Vegetable growth = 2 months

FINANCIAL PLAN – OPTION 3

Description Year 1 Year 2 Year 3 Year 4 Year 5

Product Equipment

Truck $0 $0 $0 $30,000

Computer System $5,000 $500 $2,000 $500 $2,000

Garden Tractor $0 $3,000 $0 $3,000 $3,000

Cash Register $0 $4,000 $0 $0 $0

Miscellaneous $10,000

$10,000

$10,000

$20,000

$0

Total Capital Costs

$15,000

$17,500

$12,000

$53,500

$5,000

Capital Costs

ORGANIZATIONAL PLAN - STRUCTURE

ORGANIZATIONAL PLAN - STRUCTURE

ORGANIZATIONAL PLAN

Site Development Plan

Main Greenhouse = 636.47 m2 of Shelf Space

Storage Facility = 41.34 m2 of Shelf Space

ORGANIZATIONAL PLAN

Site Development Plan

Capacity = 873.75 m2 of Shelf Space Total Capacity in 5-years = 3,894.19 m2

HUMAN RESOURCES PLAN

Current Structure = Family run business

Expansion Plans: Additional full-time staff members (Year 2 & 4)

@ $20,000 / year Co-op Students for U of S and U of R (Year 2,3,5)

@ $6,400 / summer Ryan at full-time in Year 5 @ $50,000 / year

HUMAN RESOURCES PLAN

Year 1 Year 2 Year 3 Year 4 Year 5

Owner Manager

2 2 2 2 3

Family help

4 4 4 4 1

Co-op students

0 2 4 4 6

Staff member (full-time)

0 1 1 2 2

Proposed HR Strategy

HUMAN RESOURCES PLAN

Title Year 1 Year 2 Year 3 Year 4 Year 5

Owner Manager - - - - $50,000

Finance/Accounting Personnel

- - - - -

Family help(part-time)

$6,150 $9,344 $9,420 $11,641

$8,623

Co-op Students - $12,800 $26,240 $26,896

$41,353

Staff Members - $20,000 $20,500 $43,076

$44,153

Total $6,150 $42,144 $56,160 $81,613

$144,128

Projected Costs

Note: Wages are adjusted for inflation @ 2.5% per year

MARKETING PLAN

SWOT Analysis Strengths:

17 years of ownership Established a name for premium products and services Diversified products Returning customer base

Weaknesses: Lisa has no experience in running a full-time business Ryan is in Grade 12 – at least 5 years before he can

manage Salaries paid are unrealistic when compared to

industry standards

MARKETING PLAN

SWOT Analysis Opportunities:

Primary target market is growing (55 – 65 year olds) Strength of the Saskatchewan economy Diversify into other revenue streams

Threats: Competition in surrounding area Unfavorable weather patterns Increase in direct costs Disease and pests

MARKETING PLAN

The Marketing Mix Products:

Sold to two different consumers (individual vs. commercial sales)

Increase capacity to two retail greenhouses and three commercial greenhouses

Products = premium quality

Pricing: 25% higher than industry averages

MARKETING PLAN

The Marketing Mix Promotion:

Strategy focused on high quality product and sales services approach

Website Development Re-Branding exercises (logo, brochures, customer

retention) Co-op Programs with University of Saskatchewan

and Regina.

Place: Regina, Saskatchewan High percentage of individuals near retirement

MARKETING PLAN Positioning in the Market

Target Market Identification Primary: individuals aged between 40 - 65 Secondary: mass market chains & wholesales Tertiary: flowers shops and golf courses

Why a focus on Commercial? Guaranteed sales = revenue Decreased spoilage Saturate market on retail sales

How to Capture a growing number of the Primary Market?

Website – designed by RFX brand & communications Brochures – designed by RFX. Flower & Garden Shows Gift Certificates

MARKETING PLAN

Re-Branding: the importance of identifying with your target market and how to present the Company to the public New Logo Website Community Events

Positioning Statement: Individual Consumers – Thomson Greenhouse is a destination

that will provide a beautiful variety of gardening products and supplies, accompanied with the knowledge to help even the “greenest” individual create their ideal Garden!

Commercial Customers - Thomson Greenhouse is a supplier of premium quality gardening products and supplies, whose management has a commitment to service, timely delivery and possess a passion for horticulture.

FINANCIAL PLAN – OPTION 3

Year 1 Year 2 Year 3 Year 4 Year 5

Commercial

Retail

Expansion Project

• Commercial – 874 Sq M• Retail – 636 Sq M

Revenue 37,000$ Expenses

Cost of Goods SoldSeed and materials 3,560$

Containers 3,150 Fertilizer 290

Water 305 Soil 90

Direct Labour 3,000 10,395

Contribution Margin 26,605$ Other Costs

Building Repairs 130$ Truck Costs 2,300

Office expenses 1,015 Property Taxes 1,560

Heat and Power 3,450 Advertising 2,150

Selling Labour 3,150 Depreciation 3,800 17,555

Profit 9,050$

FINANCIAL ANALYSIS   Commercial IndividualCurrent $21 $55 Industry $18 $44

Current AssetsCash 1,000$ Accounts Receivable 1,500 Inventory 3,000

Fixed AssetsLand 26,000 Buildings 58,000 Equipment 21,000

Total Assets 110,500$

Liabilities and Owner's EquityLiabilities

Accounts Payable 1,500$ Owner's Equity 109,000

Total Liabilities and Owner's Equity 110,500$

FINANCIAL PLAN – OPTION 3

Year 1 Year 2 Year 3 Year 4 Year 5

Long – Term Debt $75,000 $130,000

$190,000

$225,000

$325,000

Long-Term Debt

FINANCIAL PLAN – OPTION 3

Description Year 1 Year 2 Year 3 Year 4 Year 5

Product Equipment

Truck $0 $0 $0 $30,000

Computer System $5,000 $500 $2,000 $500 $2,000

Garden Tractor $0 $3,000 $0 $3,000 $3,000

Cash Register $0 $4,000 $0 $0 $0

Miscellaneous $10,000

$10,000

$10,000

$20,000

$0

Total Capital Costs

$15,000

$17,500

$12,000

$53,500

$5,000

Capital Costs

FINANCIAL PLAN

High interest and labour costs

Year 1 Year 2 Year 3 Year 4 Year 5

Net Loss (3,288) (56,428) (61,753) (117,282) (269,657)

Beginning Cash 1,000 (11,428) (71,706) (125,509) (265,292)

Ending Cash (10,428) (71,706) (125,509)

(265,292) (437,849)

Change in Cash (11,428) (61,278) (53,803) (139,782) (172,557)

SENSITIVITY ANALYSISVariable Worst Case Base Case Best Case

Revenues 75% 100% 125%

Cost of Sales 125% 100% 75%

Variable Worst Case Base Case Best Case

Revenues 28.56 38.09 47.61

Cost of Sales 36.53 29.22 21.92

ContributionMargin

(7.96) 8.86 25.69

Fixed Cost = $103,160.81

Worst Case Base Case Best Case

Break Even Sq. Meters

(12,956) 11,637 4,015

Break Even Greenhouses

XX 15 5

FINANCIAL PLAN – OPTION 3

Key Success Factors

YES NO

Net Income X

Cash Flow X

Client Objectives X

Conclusion

FINANCIAL PLAN – OPTION 2

Year 1 Year 2 Year 3 Year 4 Year 5

Commercial

Retail

Option 2 Repair current greenhouse Construct new greenhouse

FINANCIAL PLAN – OPTION 2

Financial Highlights

Long Term Debt = $75,000

Building Repairs & Maintenance Increase to $2,000 / year

Capital Costs = $69,000 One less garden tractor No cash registers Miscellaneous garden tools/devices

Labor Expense = Nominal

OPTION 2

Year 1 Year 2 Year 3 Year 4 Year 5

Net Loss (4,354) (3,571) (6,018) (7,439) (7,833)

Beginning Cash 1,000 (11,554) (16,226) (9,544) (33,483)

Ending Cash (11,554) (16,226) (9,544) (33,483) (25,016)

Change in Cash (12,554) (4,671) 6,682 (23,939) 8,467

Positive Cash flow from Operations+

Negative Cash Flow from Capital Costs

FINANCIAL PLAN – OPTION 2

Key Success Factors

YES NO

Net Income X

Cash Flow X

Client Objectives X

Conclusion

FINANCIAL PLAN – OPTION 1

Year 1 Year 2 Year 3 Year 4 Year 5

Commercial

Retail

Note: Greenhouses still have 25% commercial sales

Option 1 Replace current greenhouse Continue current operations

FINANCIAL PLAN – OPTION 1

Financial Highlights

Long Term Debt = $50,000

Capital Costs = $57,000 One garden tractor Miscellaneous garden tools/devices

Labor Expense = Nominal

OPTION 1

Year 1 Year 2 Year 3 Year 4 Year 5

Net Loss (54,731) (3,269) (2,201) (3,917) (4,618)

Beginning Cash 1,000 (6,431) (2,600) 299 (27,718)

Ending Cash (6,431) (2,600) 299 (27,718) (23,636)

Change in Cash (7,431) 3,831 2,899 (28,017) 4,082

Negative Cash flow from Operations+

Impact of Capital Costs

FINANCIAL PLAN – OPTION 1

Key Success Factors

YES NO

Net Income X

Cash Flow X

Client Objectives X

Conclusion

CONTINGENCY PLANS

Diversification Tree Farming

$100,000 initial capital cost 5 acres will hold 4,000 trees $20 to $30 cost per tree $135 to $145 sales price in 3-5 years Variable cost per tree per year = $2

Discontinue Operations Continue Operations

slowly wind down the over the next few years. Sell unused land

The land holds great value even if the business does not. Neighbor is a viable buyer

Subdivide land Give each son a 5 acre parcel to use as they see fit.

FINAL RECOMMENDATION

Viability/Feasibility Analysis concluded that it is not possible to continue with current production or expand in the current market climate.

We recommend a slow wind-up of the company and eventually either: Selling the land and recognizing the proceeds Continue renting the land to farmer