Assignment 4 - Business Plan - Final
AT2000
SweetBlendBusinessPlan.docxRunning Head: SWEET BLEND BUSINESS PLAN
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SWEET BLEND BUSINESS PLAN
Alita Heckstall
Assignment 4 Bus 599 Strategic Management
Dr. Andrea Banto
Strayer University
September, 2019
EXECUTIVE SUMMARY
The Sweet Blend Company is a nonalcoholic beverage company that will be located at San Francisco, California. It was first started as a small scale business with the main clients being the local community. The location was chosen due to the vast market potential from the large population, which also reduces the cost of operation incurred in transport and labor outsourcing. The Company aims at creating a significant impact on the market by creating healthier products than the competitors. The healthy products choice is because of the observation that more people are turning to healthy products and doing away with products that are not beneficial to their health.
The nonalcoholic beverage industry has seen an influx of competitors in the recent past with more companies switching towards the production of these products. Giant companies like Cola and Red bull have been diversifying their products to include more health beneficial products which have enabled them to maintain the market niche that they had. However, Sweet Blend will focus on the production of top-notch, quality juice products, which will be a distinguishing factor of our products.
The leading target group for our products has been identified as the working class in the entire population, which falls between the ages of 24 to 54. This choice was mainly facilitated by the fact that this group contains the most significant number among the total population of the county. Apart from providing a substantial amount of consumer market, it is also worth noting that this number contains a high number of the working class in the population, thus influencing their consumer behavior positively.
The main competition in the area will be Red Bull and Monster Energy. Monster Energy, having been established in San Francisco coupled with the low prices for their products, has managed to create high-level customer loyalty which it has been able to maintain through a dynamic online presence thus creating an online community of consumers. Red Bull, on the other hand, has increased its portfolio to include a series of other nonalcoholic drinks that are more favorable to consumers' health, for example, the Red Bull apple drink. However, due to the history of the competitors on the use caffeine and lack of product diversification, the Company will be keen to specialize in the production pure juices with the only necessary additives like preservatives and water. The Company is going to manifest on the reliable name and roots it had from the community where they first started selling to create a strong brand name.
Sweet Blend, as a company formed during the digital error, will be keen to utilize the various social media platforms like Facebook, twitter, and Instagram to promote the product and the Company's culture. Apart from the platforms, the Company will also provide a website where people will have an opportunity to engage in business with the Company on different capacities, for example, wholesaler and distributors.
The production will be done in the facility that was left to Melinda by her deceased uncle, which will house the various owned as well as leased equipment. All the products will be done in-house, including the packaging, meaning that the products will be expected to be finished with by the time they are leaving the facility. The Company utilizes the facilities at hand to reduce the overall cost of production of the products. This use is mainly because only a few pieces of equipment are leased. However, the Company will outsource for more significant facilities and equipment in the future if the scale of operations increases.
Sweet blend emphasizes on the full-scale use of technology in its operations. The emphasis is mainly due to the small amount of labor with a large scale production. Apart from the use of technology as a management tool, the Company will be keen to utilize the medial social platforms to receive and respond to customer feedback to continue perfecting the product. The IT expert will manage this interaction.
Due to the labor constraints in the Company on start-up due to lack of enough capital to hire more personnel, the Company found it necessary to assign one person more than one role including among the management and the staff. An example of this is where the CEO will have to share tasks with the production line manager who has vast knowledge when it comes to operation within fortune 500 companies. Mary Cate will be handling all the legal issues about the Company, including the Human resource, which contains some legal aspects, for example, contracts, among others.
Having its roots in the community as an appreciated product, the Company will be keen to give back to society through several programs. These programs will include community health, education, and environmental programs. These responsibilities will be achieved through the creation of policies to regulate certain areas touching on this for example production of non-caffeinated products, employed training and development programs and finally policies on recycling of used plastics within the premises. Sweet Blends primary financial strategy will involve the emphasis on the reduction of loan burden by repaying all of the start-up debts. The debt clearance should be done within the first 1-2 years while at the same time using the profits generated to reinvest in the diversification of various areas of operation. The first year is expected to have a profit of $533,690, whereas the next financial year is projected to have $1,089,392 as the profit.
The Nonalcoholic Beverage (NAB) Company's name is Sweet Blend. The name was chosen because the mission of our Company is to produce the most nutritious and fresh fruit juices which meet the current market standards and the needs of our target customers, taste and preference. The Company aims to bridge the gap in the market by producing the most nutritious and the healthiest juice around. The nonalcoholic beverage company name that best fits our description here is the Sweet Blend as we seek to provide the sweetest and most nutritious fresh drink in the state and across the borders.
The mission of the Company is to produce a juice that meets the health needs of the population. The Company seeks to improve the health of the people by providing them with a juice that will fulfill their nutritional needs. There are two primary components of this mission statement. The first component of the mission statement is the nourishment needs of the people. The mission statement captures the nourishment needs of the people and seeks to address them through the fruit juice. The second component of this mission statement is the fact that the fruit juice is being customized to meet the specific nutrition requirements of the population.
There exist several trends in the Nonalcoholic Beverage (NAB) industry, and this includes the choice and preference of the people to get healthy and nutritious drinks. This trend generally means most of the population is looking forward to having naturally produced fresh and nutritious fruit juices. People nowadays are trying to shift away from carbonated drinks and live a healthier lifestyle, and this is an opportunity where we come in now to meet the needs of the people (Rayner, Wood, Lawrence, Mhurchu, Albert, Barquera & L'abbé, 2013).
Reasons for choosing the soft drink is among them that wish to produce healthier drink and to fulfill the health needs and goals of the people. The Company also aims to provide the most affordable and the sweetest juice in the state.
Sweet Blend’s Strategic Position
The strategic positioning is very crucial for determining how any business is competing fairly against its competitors in the industry and the extent to which it is serving the needs of its customers. The positioning strategy that our Company is developing is very important in the attaining prosperity of our product in the market. For our nutritious fresh fruit juice to succeed in this dynamic market, the Company finds it crucial to choose the most strategic position which will, in the short run, deliver the best results as desired. The Company will capitalize on product differentiation by producing unique brands
The fundamental reason for this approach is that it uses already available distribution channels such as the wholesalers which make it cheap for the Company to spend small amounts of resources in the establishment of the distribution channel for its products.
Potential risks the Company may face several potential risks do exist that the business is facing and they may possibly affect the market performance of our Company. Therefore, this makes it very necessary for our Sweet Blend company to ensure that it does a research on the desired quality standards as required and perform the most appropriate adjustments according to the demand of the market. Another threat for Sweet Blend is high-cost operations. A quick check at the costs of production shows an upward increase, which will affect the profitability of our Company. It is emerging that the costs of fruits and labor are skyrocketing at a shocking pace (Mhurchu, Vandevijvere, Waterlander, Thornton, Kelly, Cameron & INFORMAS, 2013).
· High-quality products. So as to meet the demand, many companies have eroded the original taste of the juice extracts by increasing the use of additives like sugar and others so as to increase the quantity produced. Sweet Blend’s pure juices will bring back the original taste by applying very little use of additives.
· Adequate Resources. Sweet Blend Company has accumulated sufficient resources to invest in the production of the fresh fruit drink. These investments include the already owned and leased equipment and also the inventory.
· The employees will be given the opportunity of coming up with creative ways of improving the Company's products and services in order to obtain more and loyal customers.
· Client-focused production. The Company's services and products are always meant to attain customer satisfaction for the Company's success.
· Employee motivation. There are also motivations like incentives that encourage the staff members to do best at work.
Weaknesses
· The Company is limited to invest and focus on the products as well as services that significantly attract clients and keeps them to come back.
· Lack of diversified of products. The customers are very specific on the type and quality services and products that they always crave for, and in case of its absence, it would lead to the Company losing a significant number of loyal customers, Storey (2010).
· Lack of enough skilled and unskilled labor. This weakness might paralyze operations when the demand becomes higher than expected within a short period.
· Lack of proper marketing knowledge. Since the Company will mainly use the social tools to market its products, full-time digital marketing experts who the Company has not yet acquired, will be required/ this will be for the effective delivery of the marketing techniques.
Opportunities
· Partnership opportunities. The Company is welcoming partnership requests from interested investors who have seen the potential of the Company that reflects outstanding performance if it is financially stable and the management comes up with a well-written marketing plan that can be easily implemented and blends well with the Company's goals and objectives.
· Unique products in the market. The Company's products are unique, and the value will increase due to the excellent branding to be implemented.
· Newmarket opening. A new market is also much considered whereby the Company's products are yet to be tested in a new environment by opening new stores to obtain more clients and expand its market, Storey (2010).
· Production of healthier products than the competitors. The production of fruit juices with little additives will provide the original taste and health benefits greatly desired by customers.
· They have already laid down distribution channels. The existing distributors will reduce the cost of promoting and selling their products to all potential clients.
Threats
· Stiff competition. The Company will be faced with intense competition from other companies that offer some of the same products.
· The numerous successful marketing companies make it difficult for the Company to pursue a complete and successful marketing strategy for the business
· Inadequate marketing strategy as compared to competitors. Other companies in the similar field may apply better and advanced marketing strategies than that of the Company to sell their products, improve their services, and increase their client base, Dana (2012).
· Government regulations. The Company might face legal issues due to the waste disposal measures and other legal requirements of conducting business within the county.
Target Market
The primary target market for the products will be people falling between ages 25 to 54 years. This is mainly because according to the American fact finder statistics of San Francisco, California, the largest population falls between age groups 25 to 34, 35 to 44 and 45 to 54 years with the populations estimated to be 198,732, 137,258 and 116,387 respectively (Factfinder, 2017). One of the major characteristics that the target market has is that the working class in the entire population normally falls between this age group. It is also noticeable that it is at this age that people start being more aware of what they eat and drink. The fact that they earn may provide them with an opportunity to practice healthier behaviors; hence, they usually start to look for beneficial products. Sweet Blend Company is looking to exploit this gap by vigorously marketing its products among this group. This exploitation will be achieved through the use of online and offline advertisements like, for example, social media and billboards respectively. This notion means that the income disparities are likely to influence consumer behavior within this target market positively.
There have also been higher education levels within these age groups; hence, they are more concerned about the health benefits of the beverages they consume. According to the population survey of California, the largest consumers of the nonalcoholic beverage drinks are aged between 35-55 years from all ethnic groups found in there (Statisticalatlas, 2019). This observation can mainly be associated with the increased income levels in the age group and also changes in lifestyle to healthier practices.
Competition Assessment
Red Bull
Strengths
Strong financial position: Due to the strong financial position, the Company has been able to adapt effectively to the changing consumer behavior by, for example, diversifying its products. Strong Leadership: This has been facilitated by its Owner, Dietrich Mateschitz, who is full of innovative ideas and experience in dealing with multiple obstacles (Dudovskiy, 2016).
Customer Loyalty: This has mainly been supported by their advertising campaign, which has positioned the product as the ultimate energy drinks for sporting activities.
Strong Brand name: The Company has established a strong brand name in California, which over time through a vigorous advertising campaign with an emphasis on sporting events.
Weaknesses
High prices of products: Most red bull products are priced above the $2.1, which makes its affordability hard for the locals as compared to other drinks.
Limited Range of Products: Changing consumer behavior towards healthier products low in sugar and caffeine and has affected the Company since most of its products fall into this category.
Negative Customer perception: Most of its products have been rated as being unhealthy due to the high concentration of caffeine and sugar, thus changing consumer towards the products.
Opportunities
Enhancing the nutritional balance of the products: The Company has been producing sugar-free products, for example, the Purple Edition Sugar-Free Acai Berry Energy Drink among others.
Engaging in product diversification: The Company has been diversifying its products portfolio to include fruitier products such as the coconut edition and tropical punch energy drinks.
Increasing presence in media: Through gaming, the Company has been able to get to the target niche of the young and vibrous gamers (Digital Surgeons, 2018)
Threats
Further intensifying competition: There has been an influx in the number of players in the nonalcoholic beverage industry, for example, the cola company which is a giant with huge financial potential thus providing a challenge in all areas from marketing to reduction in the customer loyalty.
Negative health effects of products: The high sugar and caffeine in the products have made health experts regard the products as unhealthy, thus changing consumer behavior.
Lawsuits: In 2014 the Company was forced to pay $13 to the customers that had purchased the product within the last 12 years because of the fake marketing strategy, "it will give you wings" (Hamblin, 2014).
Monster Energy
Strengths
Strong Brand name: Since its establishment, the California based energy drink has gained a huge brand identity among new and existing customers.
Huge online audience: As one of its advertising strategies, the Company has been able to attain a strong online presence through the formation of the Monster Army.
Strong customer loyalty. The loyalty has been facilitated through the high customer value and presence it has struggled to build since its establishment through distributors.
Reasonable Pricing: The Company's products have been twice as cheap as Red bull's price, which has increased the number of customers purchasing the product over Red bull.
Weaknesses
Customer perception: Due to its low prices, the product has mostly been associated with low-income users hence affecting the performance of the products in the high-end market.
Marketing Limitations: Its marketing is limited to extreme sports; hence, most users are likely to be extreme sports performers than common users.
High Sugar contents in products: The Company's products have been associated with higher sugar levels than most Coca-Cola products.
Limited products range: There have been limited options provided by the Company for the customer in regards to their products. An example of this would be fruit juice products.
Opportunities
Online channels: The Company can leverage the large online presence it has built to conduct data analytics from customers so as to be able to improve on its products.
Provision of a variety of products for clients: The products can range from vegetable to fruit juices that are healthier and readily acceptable by the new target market needs.
Threats
Change in consumer behavior: More people have reduced their consumption of the Company's products due to the high caffeine and sugar contents of the products.
High Competition: The heightened competition from already established beverage companies has reduced the revenue generated from the Company's customers.
Counterfeit products: This has been a threat to the Company's brand because some products are cheap and of low quality thus losing originality.
Marketing Strategy
The Company is going to mainly concentrate on pure fruit juices hence the slogan of the Company will be "Your health, Our priority". This will position the Company as healthy juices manufacturer where it will concentrate on the production of pure juices with natural sugars and no caffeine. This will differentiate the Company's products from the competition. The slogan will also manifest in the customers need for healthier products; hence, this will possibly shift their mindset towards the product in search of better, healthier products.
The marketing will also be facilitated by a vigorous online marketing campaign through the retailers and our own websites. The Company will be keen to employ the services of medial social specialists, Marketing consultants and the Advertising Agencies to effectively reach the target market. These services are expected to cost the Company $500, $200 and $300 every month respectively. The website on the other hand, as one of the marketing tools, is expected to cost the Company a onetime fee of $400 for its design and development and a maintenance fee of $20 every month. The Company will also employ the services of broadcasting companies like television companies at an approximated fee of $200 to air their advertisements. This has a great potential of reaching out to a wide variety of people since everybody watches television; hence it's not limited to a certain audience. It is worth noting that there has been a steady increase in the use of the internet and especially social media, which stands at 223 million in 2019 (Baer, 2019). This provides the Company with an opportunity to reach out to more people through the use of Google ad sense and social media platforms like Facebook. This is expected to drive a number of potential customers from the vast pool of users into trying out the juices.
Marketing Vehicles
This, however, has to be approached carefully since the presentation can work against or in support of the Company's objectives. Another channel of marketing its products is use of celebrities for marketing itself on the internet. Additionally, this business uses high-quality services to lure their clients to them. For instance, they offer free delivery services to their clients near our stores, which helps them have many loyal customers.
The Company will also offer the service of Sweet Blend experience which comes in splendid treatments of service and the cool places in towns to enjoy the drink. Additionally, Sweet Blend offers a cool place for relaxing after a tiring journey with cool music and limited noise.
Sweet Blend plans to use a variety of means to inform the target community about their products as well as persuade them to choose the Sweet Blend experience. The promotion strategy would be necessary for making our customers see the uniqueness in our products. Sweet Blend plans to use an advertisement to promote their brand of products.
The Company shall mount billboards in strategic places with pictures of some products offered by the Company and text about the location of the restaurant. The Company will also make advertisements on most visited websites in California informing the public about the Sweet Blend experience.
Distribution
The main distribution will be done through wholesalers who have been in the industry for long and have excellent customer relations and image. An example of this is the California Beverage Systems Company, which has been distributing beverages and other food-related products for large companies like Coca Cola (Calbev, 2019). This move will make sure that the Company reaches the customers in time. Such distributors will be attracted through the official launching of the product which will create brand awareness among the target market. This will be in an effort to reduce the cost of distribution like fuel and labor costs by the use of already existing distribution channels.
The distribution is also expected to be facilitated by the availability of huge and renowned retail chains in the market. An example of this is the Rainbow Grocery and Amazon Go grocery store, which already has a huge customer base. This will mainly be done through the physical sampling of the Company's products, which will be done either for free or at the cost price of the products. The quality of the products offered as perceived by the customers will predetermine the feedback from clients through social media platforms.
Operation Plan
Before taking on the decision to produce products on a broader scale, Sweet Blend had previously been introduced in county Fairs which were sold at $2 a bottle. However, she intends to start the business as a start-up since they are not yet in operation as a large scale producer. So far, the Company only has the recipe and the facilities and equipment that were left to her with her uncle after he died. However, there is the need to have a more extensive inventory of equipment based on the production projections of the Company.
Melinda cate's recipe will be the main one used in the production of the Sweet Blend beverages. Apart from this, there will be the use of other tools and equipment to be used in production. However, since the Company does not already own all the machines required, the Company is willing to lease some of them. An example of these includes the labeling machinery and the printers. This machinery will be bought with time using the profit realized within the course of the business. The main challenge will be funded to acquire the lease the machinery which is expected to be covered by the $20000 that was raised from friends and family.
Materials
The procurement of raw materials will be done through the procurement department, which will publicly outsource for suppliers. They will be tasked with making sure that they acquire only the best products because this will determine the overall quality of the products produced. In supply, there is always the problem with the suppliers failing to do deliveries on time. This delay affects the production process negatively, something that will be captured when processing bids by introducing some penalties.
The Company will use the Total Quality Management (TQM) system to improve on the quality of its production process, which automatically impacts on the quality of products. This system will involve the follow up on the ISO 9001 certification, which describes a set of procedure that will be implemented to make sure that the production process is as efficient as it can be. However, the whole Company will be involved, including the employees through training and development and also constant audits on the production process. These measures will make sure that the products are produced according to the proper standards.
Equipment:
Production will be done under the facility that was left to Melinda by her uncle, which will host the production plant for the time being before a bigger one is required in the future. This facility will host the production equipment described below: Two SWEET BLEND mixers which will cost $28500 each, two Accutek Accusnap Capper Bottling Machines at $9600 each, Four-panel vans at $10000 each, three Apple Macintosh computers at $1200 each and a graphic software at $750. Other leased equipment that will be used in the production includes the labeling machinery at $450/month and Printers at $550/month.
As a market penetration strategy, the Company will reduce the prices of one unit from $2 to $1.3, which will provide the main competitive advantage for the Company. These will be provided by the ready availability of equipment and labor that will be used in the production process. The supply of the products will be done by the use of the distributors' channels that has seen many companies do a merger. This observation explains the importance of sharing the work, thus delegating the distribution process to those who know better. This notion is supported by the fact that they do the majority of the work in advertising, for example, the major distributors.
Research and Development
One of the main tools that the Company will use for the research and development will include the social tools and also constant surveys. The research and development is among the main purposes of the use of social media by the Company. These notion is supported by the fact that they provide a huge variety of feedbacks from clients which enables the Company to modify and develop its products. Real time customer engagement will be a key priority to showcase the customer commitment of the Company to its clients. The Company will also use the data collected to edge out on the competitors’ products by developing the products to meet the suggested customer requirements.
Technology Plan
It is worth noting that at the moment, the Company has not yet made a considerable input into the use of technology in its operations. This might be attributed to a number of factors, for example, the number of employees in the organization and the scale of operation of the Company. However, the use of technology has always been known to be advantageous to companies with growth objectives.
Since the Company will exhibit a minimal number of employees during start-up with a considerable range of operations, it will need to employ the extensive use of technology in its operations. An example of this is an Enterprise Management Planning System (ERP). The ERP software is used in large and small organizations to account, procure, manage projects, and supply chain operations. This software will facilitate the visualization of the Company's operations, thus coming up with easy to interpret data.
In production, the Company needs to invest in the application of business automation services. An example of these is the Fishbowl which automatically records the inventory flow and by referencing the automated production line. This software will ease the production process while at the same time, reducing the cost of production because less labor will be required.
The Company will soon launch a website which will serve as a meeting point for everybody and the business. The provision of the site will go a long way into making the communication of the customers more accessible through the online presence. The integrated SAP management provides a perfect tool for the fulfillment and tracking of orders. This observation is mainly because they handle information regarding daily operations and reporting more efficiently and in a safe way.
Management and Organization
Any successful organization usually attributes the success to the strong management it has had. This observation is mainly supported by the fact that management usually integrates the organizational goals with the individual objectives (Chand, 2019). The management plan will also help improve the efficiency of operations as well as avoid conflicts in the place of work. Since the Company is a start-up without a vast number of employees, a collaborative organizational structure will be used to run the organization. This means that all decisions will be made collectively since duties will be shared before the proper allocation of tasks is done. The Main key personnel in the Company will be three employees and one volunteer. They will have divided roles among them to cater for different sectors in the organization. However, there will be other supervised personnel who will be working under the key personnel so as to provide support in the production and distribution processes. The final decision in the Company will be approved by the CEO in consultation with the Owner of the Company.
The consultant will be in charge of Human resource management and all legal issues about the Company. The allocation is because of her vast knowledge in the unlawful business practices that might threaten the future of the Company. It is worth noting that the legal issues typically include the Employees Act, which requires staffing under specific rules. The computer Expert will be in charge of the maintenance and repair of the production system by tracing the defects and applying the necessary corrective measures. The production line manager, on the other end, will be sharing the marketing role with the CEO having worked with big beverage companies previously. The CEO, on the other hand, will be responsible for making sure that everything involving the operation of the Company is followed accordingly and directly reports to the Owner of the Company.
Upon growth, the management structure will be expanded to accommodate the new staff but will be keen to add only the qualified personnel to top management. An example of this is the sales and marketing representatives and human resource manager. However, there will also be the need to create additional production line foreman, the projection line workforce, and the Maintenance workforce. The growth might necessitate the change of the structure from a collaborative one to a more democratic structure.
Melinda Cates
(Owner)
Ian Glass
(Production Line Foreman)
Fore==
Stephen Job
(Computer Expert)
(Alita Heckstall)
(CEO)
Mary Cates
(Consultant)
Ethics and social responsibility plan
1. The recruitment process will strictly be done under the HRM department to make sure that the right personnel for the job is chosen. The jobs will be created and advertised publicly before the candidates are shortlisted for the interviews.
2. The Sweet Blend Company will be keen to properly remunerate employees for equal work done according to the Equal pay Act (Cho & Kramer, n.d). As much as the Human Resource Management section will conduct the staffing docket, the management will be keen to make sure that there is gender equality in the workforce. This move will aim at promoting workplace diversity, which leads to more productivity (Seidel, 2013).
3. There will be a recycling policy in the Company which will start from the production plan itself. The Company is targeting a 97% waste recycling from the products used by its employees, including plastic bottles that can be reused in the packaging after treatment. By the end of the first year in operation, the Company is going to increase the number of public bins in the county and eventually to other areas. These will improve the efficiency of the waste collection process.
Water Management will also be a priority. Apart from reducing the costs of production, the Company is going to recycle the water for reuse that reducing the number of wastes released into the environment.
4. The use of Cognizing will provide a replacement for the harmful caffeine that has previously been used by energy drink companies. This ingredient will be used as an additive to the energy drinks that will be part of our portfolio.
Our non-beverage products portfolio will also include Omega-3s in the list of ingredients to match the brain advantages of the products that will be produced on young consumers. However, their solubility might prove to be a big challenge to the taste of the products since they provide fresh marine aftertaste.
The Financials
Sources and Use of Funds
The Company is lucky to already have some of the owned equipment as well as donated equipment from the Owner's family. This provision reduces the cost of start-up investment, which will reduce the overall cost of start-up significantly. However, some money will be required to facilitate the various operations the Company will be undertaking, so outsourcing will be very much necessary.
1. The primary source of funds for a start-up capital will be friends and family members. We have already managed to gather $20,000 from friends and relatives with an agreement to have their money back before the end of their first year. The other option was to refund their money after two years in business with a 5% interest. We preferred the first choice because it reduced the burden of loan.
2. However, due to the financial difficulties that may arise in the course of business, the Company will be reserving the bank financing options for such emergencies to avoid unnecessary financial liabilities. This liquidity rate of this source of capital is also another reason for its consideration. The Kickstarter part of the business also comes with its share of challenges and as such.
3. Shareholder equity will also be a key area regarding outsourcing for funds. It's also referred to as angel equity. It mainly refers to selling an ownership part of the Company in the form of stakes to kickstart the Company. The Company will be keen to reinvest a significant share of their retained earnings and profits back into the business to facilitate faster growth.
These funds will be used to facilitate the various capital expenditures and also operational costs that will be used in the organization.
Assumptions
Future Personnel:
The constant number of personnel in the Company to be maintained throughout the first year will be one administrative personnel, three professionals, and one supervisor. However, the Company anticipates the number to grow after the first year due to the complexity of the operations after expansion. The projected number will be two administrative personnel, six professionals and two supervisors. There will also be the addition of the manual hourly-paid labors. This increase will mainly facilitate the increase in work shifts and even the increase in the workload in the production line.
Financing:
The Company is going to be financed by a $20,000 non-interest loans from the friends and relatives who according to the agreements, needed their money back before December 1st, 2020. The alternative to this was an addition of 5 % interest within the second year of the Company's operations. The projected profits which will stand at $ $1,535,010 are expected to avail cash to reinvest back in the Company thus no need for external sources of funding.
Break-even analysis
The project break-even for year one will be $1,545,888, which means that by the end of year one, the Company will have returned the capital investments in the business. This figure is attained after canceling out all the liabilities from the total assets at the end of the year. The monthly mean of the accumulation of the overall individual monthly break-even analysis was multiplied to acquire the annual mean for the first year.
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