braden michnik. product certified organic birdseed blended for canaries, budgies, and finches ...
TRANSCRIPT
PRODUCT
Certified organic birdseed
Blended for canaries, budgies, and finches
Ingredients: mixture of organic canary seed, millet, sunflower seeds and canola seed
MISSION STATEMENT
For the bird owner who wants their feathered companion to enjoy a healthy and balanced diet, Living Skies Organic Birdseed provides essential nutrients that contribute to a long-lasting life.
TARGET MARKETS
Market Segments Bird Owners Bird Watchers Bird Breeders
Sell to people who want the best for their pet bird
PRICING
Will charge a premium price Direct to customer
$7.00 + 30% = $9.10 To Retailers
$7.00 – 25% = $5.25 To Wholesale Distribution
$5.25– 25% = $3.94
BUYING LOCAL
Eating local has many benefits beyond the environment
Recognize and reward Saskatchewan farmers
COST BREAKDOWN FOR 2KG BAG
Unit Cost Analysis
2011 2012 2013
Canary Seed .27 .28 .31
Millet .26 .27 .29
Canola Seed .28 .29 .32
Packaging 1.06 1.04 1.02
Direct Materials 1.87 1.88 1.94
Direct Labor 1.27 1.15 .98
Overhead 0.43 0.35 0.28
Total Unit Cost 3.57 3.41 3.23
FINANCIAL ANALYSIS
Year 2011 2012 2013 2014 2015
Sales 107,358
115,076
124,779
139,468
135,192
COGS 59,600 65,052 68,513 71,983 79,462
Gross Margin
48,758 50,024 66,266 68,485 85,730
Total Expenses
45,077 49,332 58,365 59,132 64,935
Income Taxes
3,319 4,588 8,865 11,745 21,524
Net Income 42,778 45,045 50,314 48,633 57,952
Dividends 0 0 0 0 0
Net Cash Flow
20,708 27,013 33,545 47,862 58,794NPV $14,990
IRR 20.1%
ERR 14.2%
CRITICAL RISK FACTORS There are three main critical variables:
raw material expense selling price (to stores = most critical) quantity of sales
Critical Variables Base Case
IRR=0 % Change
Packaging 1.06 1.45 0.27
Wages 10 31.68 0.72
Inflation 0.02 4.1 1.00
Internet Selling Price
7 5.04 -0.39
Retail Selling Price 5.25 2.76 -0.18
Sales Quantity in Retail
6884 9600 0.28
Sales Quantity Online
1543 2400 0.36
CONCLUSION
Business plan shows that the business is a feasible enterprise
The required rate of the return (20%) is achieved
Future challenges for bird seed manufacturers is food pellets.