t homson g reenhouse b usiness p lan p resentation prepared for: thomson family & marv painter /...
TRANSCRIPT
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
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