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Sweet Papaya Business Plan

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New business plan with financials and market analysis. Some information has been changed or eliminated because of client privacy.

New business plan with financials and market analysis. Some information has been changed or eliminated because of client privacy.

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  • 1. BUSINESS PLAN PREPARED FOR SWEET PAPAYA BY MELINDA SCHOENFELD
  • 2. 1.0 Executive Summary Sweet Papaya is a premium, gourmet, organic chocolate manufacturer that specializes in creating a fantasy experience through succulent tastes, creative products, romantic packaging, superior quality, and competitive prices. The company projects annual revenues of $1.2 million within five years by aggressively marketing our brand and vision through the Internet and various distribution channels to service the retail market. A global presence will help to achieve stellar growth and brand recognition. The premium chocolate industry is one of the shining areas of the confectionery industry. With increased attention being paid to increasing obesity rates, organic dark chocolate is scientifically proven to have health benefits. Market studies show the more affluent consumer prefers premium, organic chocolate and has a higher tolerance to economic fluctuations. The largest growing segment of the market is Baby Boomers. Even though Baby Boomers tend to eat fewer sweets, they prefer a higher quality, premium chocolate to other confections. The largest consumer of confections is the five – 14 year olds. This group, however, is showing stagnant numbers in their growth projections. This group is also less likely to consume premium chocolate in favor of non-chocolate confections. Many opportunities exist within this growing segment of the confectionery market. These include an expansion of the product line that uses chocolate as an ingredient includes vitamin-enriched energy bars, Twist products, body and bath products, other gourmet food items, cooking sauces, and specialty lines targeted at specific consumers including women, children, and the erotic industry. Sugar free, low carb, organic, and premium chocolates are driving up sales in this $17.8 billion industry. Unlike other industries, the premium chocolate niche market has produced a plethora of small, independent chocolate producers that thrive by creating a high-end product that optimizes an image of quality and superiority for the more discerning consumer. This target market does not like the taste of low-fat or fat-free chocolates allow themselves to enjoy a smaller amount of a premium chocolate instead of a lower quality, lower calorie substitute. This business plan has been prepared to forecast all financial statements for three years, as well as to obtain initial funding of $35,000. This will cover initial start-up costs of $22,000 as well as operating expenses for the first year of $13,000. Sweet Papaya projects revenue of $50,000 by the end of year one, $165,000 by the end of year two, and $332,500 by the end of year three. 2
  • 3. Table 1.0: Highlights $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $2006 2007 Sales 1.1 Gross Profit 2008 Net Income (Loss) Objectives The objectives of Sweet Papaya are as follows:        1.2 To achieve first year sales figures of $50,000. To achieve local and regional sales of $15,000 in the second year, 2007. To achieve national sales of $25,000 in the third year, 2008. To achieve global sales of $45,000 in the fourth year, 2009. To achieve $1.2 million in sales by the fifth year, 2010. To make inroads into the entertainment industry within the first five years. To create an unparalleled brand image of romance and euphoria. Mission Sweet Papaya will use the highest quality premium, organic chocolate to produce a creamy, succulent line of gourmet chocolates using exotic flavors and smooth textures. Our company is dedicated to providing customers a euphoric taste experience that titillates the palette and excites the senses. Sweet Papaya will provide its pampered customers a consistent taste experience in romantic packaging for the ultimate chocolate adventure at a competitive price. 3
  • 4. 1.3 Keys to Success The keys to success for Sweet Papaya are as follow:            Obtain Small Business Loan. Creating the perfect packaging and color scheme. Developing the necessary marketing materials. Creating the fantasy advertising slogans. Creating systems and procedures so successes are repeatable. Any success that cannot be repeated is not really a success, it’s just a coincidence. Developing and perfecting existing and new chocolate recipes and products. Developing a creative web site for Internet marketing. Implementing the business plan and updating the information. Understanding the market and the target consumer. Continually learning. Creating the market instead of reacting to the market. Being a Trend Setter. 4
  • 5. Table of Contents 1.0 Executive Summary 1.1 Objectives 1.2 Mission 1.3 Keys to Success 2 3 3 4 2.0 Company Summary 2.1 Company Ownership 2.2 Start-up Summary 2.3 Company Locations and Facilities 6 6 6 8 3.0 Products 3.1 Competitive Comparison 3.2 Sales Literature 3.3 Future Products 8 9 9 9 4.0 Market Analysis Summary 4.1 Market Segmentation 4.1.1 SWOT Analysis 4.2 Industry Analysis 4.2.1 Industry Participants 4.2.2 Distribution Patterns 4.2.3 Competition and Buying Patterns 10 11 5.0 Strategy and Implementation Summary 5.1 Marketing Strategy 5.1.1 Pricing Strategy 5.2 Sales Strategy 5.2.1 Sales Forecast 15 15 16 17 17 6.0 Management Summary 6.1 Personnel Plan 18 19 7.0 Financial Plan 7.1 Important Assumptions 7.2 Break-even Analysis 7.3 Projected Profit and Loss 7.4 Projected Cash Flow 7.5 Projected Balance Sheet 7.6 Business Ratios 19 19 20 21 23 24 26 5 11 12 14 15
  • 6. 2.0 Company Summary Sweet Papaya will create, develop and market premium, gourmet, organic chocolate through multiple distribution channels both foreign and domestic. The company will start primarily with distribution through the Internet while building a regional presence through retail outlets. Growth strategies will include marketing to large mass retailers and global distribution through increased Internet sales. The company is dedicated to creating a fantasy for its customers through romantic packaging and euphoric-tasting chocolate. 2.1 Company Ownership The company will be organized as an “S” Corporation organized by Taylor Delacourt, President. The company logo will be trademarked through the U.S. Department of Commerce Patent and Trade Mark Office. Taylor’s experience consists of 22 years of business management, two years of property management, three years as Chief Financial Officer, and 40 years as a dedicated chocolate connoisseur. As a business manager, Taylor gained experience in all aspects of running a business including finance and accounting, marketing, sales, office management, new business start-up, and venture capital. 2.2 Start-Up Summary Sweet Papaya will be based upon Taylor working full-time with no other initial employees. Taylor’s primary responsibilities during the beginning phase of the start-up operation are to get the business licenses, begin office operations, purchase necessary equipment, design packaging, get the web site designed and online. The initial costs to get the primary functions of the business operational are $21,150. The beginning inventory necessary to begin is $500. A short-term, non-interest bearing loan has been secured for $2,500 and a long-term investor is secured for $5,000 with no interest accruing. The remaining start-up expenses and operational costs will be secured with a long-term small business loan. 6
  • 7. Table 2.2: Start-Up Expenses Start-Up Expenses Legal Office Supplies Furniture Insurance Rent Software Marketing Materials Web Site Development Search Engine Placement Expensed Equipment Other Total Start-Up Expenses $250 $300 $150 $500 $50 $150 $3,000 $10,000 $1,250 $3,500 $2,000 $21,150 Start-Up Assets Needed Cash Requirements Start-up Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Total Start-up Requirements: Left to Finance: $0 $500 $0 $500 $0 $21,650 $21,150 Start-Up Funding Plan Investment Investor I Other Total Investment $5,000 $2,500 $7,500 Short-term Liabilities Unpaid Expenses Short-term Loans Interest-free Short-term Loans Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities $0 $0 $2,500 $2,500 $5,000 $7,500 Loss at Start-up Total Capital Total Capital and Liabilities Checkline -$7,500 $0 $0 $0 7
  • 8. $25,000 $20,000 $15,000 $10,000 $5,000 $0 Expenses 2.3 Assets 1 Investment Loan Company Locations and Facilities Taylor will be utilizing 300 sq. ft. in the kitchen and 400 square sq. ft. in the designated office of her home. The kitchen will be utilized for design and production, and the office will be utilized for marketing, office functions, sales, and accounting functions. 3.0 Products Changing consumer demographics, healthy eating, and economic issues will all directly impact the future of confections in the United States. Both non-chocolate and chocolate confections will be highly influenced by the American consumer’s changing preferences.         All products are 100% organic and made of premium chocolate. All products are packaged in jewel toned boxes with the primary color being purple. The boxes are trimmed with lace and jewels/pearls for a romantic touch. 1.5 – 3.5 chocolate bars in milk, white, and dark organic chocolate and many exotic flavors. Clam shells made with milk chocolate mousse filling. Truffles made with milk and dark chocolate and many exotic flavors. Chocolate sauces in milk and dark chocolate. Vitamin-enriched chocolate bars. Twist chocolates in milk, white, and dark chocolate. Individually wrapped chocolates. 8
  • 9. 3.1 Competitive Comparison Dagoba Moonstruck Euphoria Endangered Species Founded Location 2001 1993 1985 1995 Ashland, OR Portland, OR Eugene, OR Specialty Organic Truffles Truffles 12 bars for $36 $33 for 10 Crescent Moon Truffles $27.95 for 12 Assorted Truffles Packaging Ecologically friendly Red, midnight blue, silver foil boxes Gold boxes Talent, OR Endangered Species $27 for 12-3.25 oz Belgian chocolate bars Wrappers feature close-ups and information about wild animals Other Offerings Chocolate bars, drinking chocolate, chocolate coffee beans, gifts Chocolate cafes, espresso drinks Chocolate sauces, specialty chocolate made with local wines, chocolate fountains, gifts Trading cards, endangered species named candies Strengths First 100% certified chocolate company, strong brand recognition, developed distribution channels, numerous awards Unique flavors, multiple box sizes, offered in the Academy Awards gift baskets Strong brand recognition, excellent reputation, customer loyalty, developed distribution channels Limited product line Limited distribution Limited distribution dagobachocolate.com moonstruckchocolateco.com Internet, mass retailers Internet, Chocolate Cafes, Wild Oats, other specialty grocers euphoriachocolate.com Internet, companyowned stores, Made in Oregon stores, regional grocers Prices Weaknesses Website Distribution 3.2 Unique product line, environmental and charitable hook Limited distribution, limited product line chocolatebar.com Internet, New Seasons, Wild Oats Sales Literature Sweet Papaya will develop sales brochures listing their product line and prices. Included in the literature will be the history of the company, the dedication to creating the fantasy and producing a quality product, and contact information. These brochures will be used for direct marketing as well as included in orders placed online. 3.3 Future Products Sweet Papaya will be continually creating new products to hold and gain market share. Product lines including:     Bath & Body products Gourmet cooking items Cooking sauces Specialty lines catering to specific market groups such as couples, women, and children. 9
  • 10. 4.0 Market Analysis Summary The NCA estimates chocolate sales reached $15.1 billion in 2004 (up 3.9%) while the sales of non-chocolate confections witnessed only a slight increase of 1.6% to $7.8 billion in 2004. The majority of those sales occurred in supermarkets; they reported sales of $4.2 billion. When holidays occur on Saturdays or when there is a shorter shopping season, chocolate sales will decrease. There will be a longer shopping season of 32 days in 2006. Everyone loves chocolate. But ever-growing concerns among consumers about their health and the increasing incidence of obesity have kept consumption levels flat, even as marketer competition and innovation have been dampened by a sluggish economy, market consolidation, and rising costs. Even Hershey raised wholesale prices on its product line in December 2004. Packaged Facts reports that along with caloric and carb concerns, demographics conspire against any near-future surge in market growth. Chocolate candy product introductions over the studied 2000-2004 period reveal three key market drivers: Upscale/gourmet, no or low carb/sugar, and natural-related/organic claims. Packaged Facts reports other important trends include functional/fortified chocolates and a continued focus on only-for-kids candies. The company further states, “Smaller, bit-size, easy-open/resealable, and portable candies remain the growth area in the market because they provide extra convenience for impulse and grab-and-go eating.” An important aspect for our market aside from niche products, such as sugar free and low carb, is the fact that nearly 10% of the chocolate market is regarded as premium. Packaged Facts estimates U.S. sales of premium chocolates approached $1.5 billion in 2004. U.S. retail sales of gourmet chocolates more strictly defined are estimated at $1.1 billion. Sales growth in organic chocolates, which have emerged as an important niche within the gourmet market, are estimated at 30% annually. According to a Productscan report on package tags (featured products claims) on 200 premium chocolate candy products or product lines introduced in 2004, dark chocolate (with 91 tags) is nipping at the heels of milk chocolate (104 tags), although bittersweet chocolate (13) remains less common than white chocolate (36). Nuts (172 tags overall, including praline), led by almond (42), are even more popular as inclusions than fruit (116), led by raspberry (22). Gourmet chocolate consumers favor products with higher cocoa content percentages and, as is the case with wine and gourmet coffee, varietals and origins. As consumer tastes become more educated, marketers are introducing many dark chocolate products with cocoa contents of 50% or more and, conversely, with less sugar content and minimal if any fillings and inclusions. Packaged Facts notes “a trend extension that similarly has best-seller potential is the trickle down of the cocoa content craze to milk chocolates, represented by creamy but less sweet products.” 10
  • 11. 4.1 Market Segmentation Researchers estimate that about 2/3 of U.S. adults indulge in the consumption of chocolate candy, while ¼ eat non-chocolate candy. Chocolate candy is so popular that no major demographic group stands out for significantly higher-than-average usage rates. In the premium category, however, the attitudes and demographics are distinctive. Packaged Facts reports premium chocolate consumers are only slightly more likely than average to frequently eat sweets at an index of 106, compared with an index of 116 for chocolate candy consumers overall (and of 136 for heavy consumers of chocolate candy). Premium chocolate users are also less likely than average to indulge in unhealthy treats (index of 90) or to often snack between meals (index of 94), and conversely are more likely than average to snack on health foods (index of 128) and to try new health foods (index of 149). In addition, women are much more likely than average (index of 124) to most often use premium chocolate brands (index of 124), though they are only somewhat more likely than average to use chocolate candy overall (index of 106). Moreover, Northeasterners are prime users of premium chocolates (index of 137), though they are slightly below average for chocolate candy overall (index of 95), a pattern that also applies to those with residences valued at over $300,000 (at indexes of 149 and 94, respectively). Hispanics are overall significantly less likely than average (index of 72) to indulge a sweet tooth – only 33% frequently eat sweets, according to Simmons, compared with 41% of Asians, 43% of blacks, and 47% of non-Hispanic whites. Correspondingly, only 45% of Hispanics frequently snack, compared with 63% of non-Hispanic whites and 65% of blacks. At the same time, the population aged five to 24, the prime consumers of chocolate products, will grow by only 10% over the 2005-2010 period, against a 28% share of the total population, with the 10-14 age bracket posting a decline in total numbers. Population growth will center in the Boomer-heavy 50-69 age bracket, which rank slightly below average even among adults in frequent consumption of sweets or snacks. 4.1.1 SWOT Analysis An analysis of Sweet Papaya’s strengths, weaknesses, opportunities and threats concluded the following: Strengths:       Sweet Papaya’s reputation for premium quality products and competitive pricing. Excellent customer service. The ability to customize products to meet the needs of our clients. An online store for easy access to our products and staff. Minimal capital investment because of small start-up costs and the home-based facilities. Management’s knowledge of the product and industry. 11
  • 12.   Dedication to providing an experience when the customer consumers the product rather than just a consumable product. A creative staff and philosophy that will drive a philosophy of trendsetting through market research, customer knowledge, and listening. Weaknesses:         Limited resources in the preliminary growth stages. Limited brand awareness. Steep learning curve as new entrant into the market Lack of relationship with the wholesale market. Lack of automated production equipment until cash flow improves. Poor market penetration. Lack of networking/working relationship with mass retailers and global network. Limited specific expertise/resources in the confectionery industry. Opportunities:      Baby Boomer market is the fastest growing segment of the market. This segment of the market prefers premium, organic chocolate to other confections. Growing belief in the health benefits of organic products and dark chocolate. Asian markets are largely unserved by this product and provide a large market opportunity when the company expands into the global market. A product catering to women through targeted packaging and flavors. Very few organic competitors in a growing segment of the confectionery market. Threats:      4.2 Lack of automated production and packaging equipment. Lack of sales/marketing force. Increased cocoa bean prices. Scientific studies that may sway consumer’s tastes and health concerns. Difficulty is establishing brand awareness and consumer interest. Industry Analysis There were 358 new product lines in 2004, up from 264 in 2000. One year’s crop of new SKUs is several times the assortment typically carried by chain retailers, who can stock only two to three percent of the available products. Prioritizing linear-foot profits over depth of selection, chain retailers – particularly Wal-Mart, which jettisons up to 20% of its products each year, according to BusinessWeek, are pressuring marketers to weed out slower-moving brands and SKUs. 12
  • 13. Confectionary Overview: The overall U.S. candy market is largely mature, and health and diet concerns (including childhood obesity) dampen the prospects or internal growth. Given the maturity of the market, health concerns, and unfavorable demographic factors on the one hand and the continued growth in premium chocolates on the other, Packaged Facts projects that U.S. retail sales of chocolate candy will grow at 4% annually over the upcoming five-year period. At this rate, the market will approach $17.8 billion by 2009. Annual sales growth for organic chocolates is estimated at 3% annually. According to Productscan data on package tags (featured product claims), the number of organic chocolate candy introductions climbed from nine in 2000 to 18 in 2004, while the number of natural chocolate candy introductions rose from 20 to 51. Private label is somewhat weak in chocolate candy compared to other food categories, at 9.3% of dollar sales in chocolates versus 14% for food categories overall. Nonetheless, store brands have weighed in very respectably for gift box (18.7%) and seasonal (13.5%) chocolates. Nutrition-related claims, including low sugar, low card and organic, are among the most important new product appeals. The household group also tends to have more flexibility toward the brand they purchase, which means if a store is out of the brand they intend to buy, they will buy another brand that is on sale and/or looks good to them. The self-purchase group, on the other hand, is willing to go to another store to get the bar they consider their favorite “everyday” chocolate bar. Regarding category trends, the survey respondents say low-fat and fat-free products aren’t as good tasting as regular chocolate. The respondents also mentioned concerns about such products’ ingredients and whether they might be some ingredient in the reformulated chocolate that is equally bad for them. Demand for Cocoa: The demand for cocoa is influenced by several factors:  Price – a rise in cocoa prices leads to a fall in demand.  Income – the income of individuals has a significant effect on their purchase of chocolate and so impacts on demand. Countries with high GDP are also high cocoa consumers.  Population and population structure – the size of a country’s population affects its demand for cocoa. The structure of its population is also important as young people tend to eat more chocolate than older people.  Taste and preferences – Climate and cultural differences can affect demand for cocoa. Those in warmer climates tend to eat less chocolate than those in colder climates. Culture and preferences can sometimes explain low consumption figures. 13
  • 14. Asia offers strong growth potential for the chocolate industry because of the sheer size of the market which includes highly populous China, India and Indonesia. Despite its size, Asia only accounts for around 10% of the world chocolate confectionary consumption. Per capita consumption of chocolate confectionery in Asia is very low so there is plenty of scope to boost it. In the 2001-2002 cocoa year, world consumption was around 0.530 kilograms per head (or 0.967 kilograms per head excluding China, India and Indonesia whose large populations have a disproportionate effect on world per capita consumption). There are, however, wide variations in consumption levels between the regions. Countries in Europe consume on average around 1.868 kilos per head, the America 1.197 kilos, Asia and Oceania 0.106 kilos, and Africa 0.134 kilos. The global confectionery market reached as estimated value of $73.2 billion in 2001, an increase of 21% since 1996. The European market is the world’s largest, accounting for 42% of revenues for confectionery worldwide, followed by the Americas. Though chocolate has reached all regions of the world, 60% of all chocolate is still consumed in the mature chocolate markets of the U.S. and European Union, representing only 20% of the world population. Volume growth is difficult to achieve in the traditional markets of the US and EU, but there are opportunities for value growth with the introduction of premium chocolates, snack products and functional foods. 4.2.1 Industry Participants The table below is lists the top ten global confectionery companies that manufacture some form of chocolate by total confectionery sales value in 2003:           Mars Inc Nestle Sa Cadbury Schweppes PLC Ferreroa SpA Hershey Food Corp Kraft Foods Wm. Wrigley Jr. Co. Barry Callebaut AG Perfetti Van Melle SpA Lindt & Sprungli $ 8,145 millions $ 7,771 millions $ 5,890 millions $ 4,769 millions $ 4,120 millions $ 3,122 millions $ 2,746 millions $ 2,547 millions $ 1,599 millions $ 1,212 millions 4.2.2 Distribution Patterns Distribution patterns in the gourmet chocolate industry as such that small, independent manufacturers can compete in the niche market successfully through the Internet and retailers that specialize in the gourmet and organic market. Developing a loyal customer base is the key element in distribution in this industry. When brand awareness and customer loyalty have started to take hold, distribution through local and regional markets becomes more readily accessible. 14
  • 15. 4.2.3 Competition and Buying Patterns Large, established companies in the industry have economies of scale that will not be possible for a small, start-up company. Large manufacturers, however, traditionally compete at a different price point than smaller, more specialized manufacturers. Research shows the main difference between mass market consumers is that respondents who bought chocolate candy primarily for themselves were driven by personal cravings for chocolate, but respondents who bought mainly for their household were concerned with pleasing the entire family. Household purchase groups make brand decisions based on chocolate candies that will make themselves and their families feel good, indicating chocolate is a comfort food for them and they buy it when they want to do something nice for their families. They base their brand purchase decisions on chocolate candies that they liked as children, but are not as loyal to the type of chocolate they purchase. They are more willing to buy a variety that is on sale or a variety for which they have a coupon. 5.0 Strategy and Implementation Summary Sweet Papaya will pursue local, regional, national and global markets through different distribution channels primary centering on Internet sales. We will use our unique product packaging and corporate dedication to creating a romantic, euphoric product to propel sales and direct marketing into key outlets. Initial revenues will be generated by Internet sales and local distribution. Regional and national sales will follow. Women will be targeted first. 5.1 Marketing Strategy A product launch of chocolate bars, which continue to dominate the candy category despite growing competition and consumer interest in “healthful” alternatives, would combine two popular categories of organic and chocolate bars. 1.5 to 3.5-ounce candy bars are still the 800-pound gorilla of the candy industry. There are four general trends in the candy bar world: increasing variety in product shapes and packaging; research into untapped sales venues; continuing consumer acceptance of reduced-fat items; and more promotional co-branding with partners from other industries. Adding vitamin-enriched bars would also be a good addition to the product line. This would address consumer concerns about chocolate contributing to obesity while also servicing a segment of the market less inclined to eat organic chocolate, the five-14 year olds. 15
  • 16. The growing trend toward low-cal, low-fat products appears to have benefited the premium chocolate market. The increase in awareness about calories and related health concerns has created a backlash effect among some consumers who still want to treat themselves regardless of calorie or fat concerns being expressed by other consumers. Many people who won’t buy health products if they don’t taste great will restrict their frequency of consumption, saying: “If I’m going to eat less chocolate, what I eat is going to be top-quality chocolate.” In addition, fat content is a non-issue in Europe, which means future European imports will not be low-fat. This fact supports our drive towards top-quality, premium chocolate products that strive for euphoric taste without an emphasis on calorie content. Sugar Free and Low Carb bars will be offered, as they are a growing segment of the market. We will introduce a broad assortment of chocolate gift boxes in romantic packaging, as well as Twist products, which are individually wrapped chocolates that can be sold individually. Proprietary product lines of truffles, clam shells, and chocolate sauces will be the base product line. Using a batch process, the company will devote nearly 65% of its output to base product line. By retaining the integrity of the chocolate-making process while simultaneously investing in high-end automation and technology, the company can deliver premium products at affordable price points. It all revolves around the company’s triple bottomline mission, which focuses on delivering creativity, quality and price to an everexpanding circle of chocolate –loving consumers. 5.1.1 Pricing Strategy                  Product will be sold as a premium product while attempting to make the product affordable. 1.5 ounce chocolate bars will be sold at $1.75 a piece 3.5 ounce chocolate bars will be sold at $2.50 a piece Truffles will sell for $2.00 a piece. A 2-truffle box will sell for $3.95. A 4-truffle box will sell for $7.75. A 6-truffle box will sell for $11.50. An 8-truffle box will sell for $15.50. A 12-truffle box will sell for $23.50. Clam shells will sell for $9.50 per pound. Chocolate sauces sell for $7.50 for a 4 ounce jar. The vitamin-enriched chocolate bars sell for $5.00 a piece. Twist chocolate sell for .50 each. Bulk discounts will start at 5% on orders over $500. Credit terms will be extended to retailers. Internet customers will pay shipping costs. Retailers will pay shipping costs. 16
  • 17. 5.2 Sales Strategy Sweet Papaya’s sales strategy is to start with limited capitol on the Internet to keep startup costs low while building a product following. While building the Internet sales, local and regional retailers will be contacted for increased outlets by the first quarter of 2007. The projection is for 20% of sales to be achieved in the local/regional market by the first quarter of 2007. As brand awareness, economies of scale, customer loyalty, and industry knowledge increase during 2007, a move into the national market will be coordinated for 2008 growth projections of 10% of sales in the national market. A global growth projection of 5% will be the forecast for 2009. 5.2.1 Sales Forecast Sweet Papaya projects revenues of $50,000 for the first year. The first quarter of 2007 will see movement into the local and regional markets, projected to be 10% of annual sales. Increased brand awareness and distribution channels should produce stellar growth rates for the first five years as revenues increase steadily in the Internet market. Expanding distribution into the national and global markets will produce revenues of almost $1.2 million by the year 2010. The national market is projected to be 10% of annual sales in the year 2008, and 5% for the international market in the year 2009. The Direct Cost of sales is projected to be 10% of annual sales. The following chart and graph reflect the realistic goals we have set. Table 5.2.1 Sales Forecast Sales Internet Local/Regional Market National Market Global Market Total Sales Direct Cost of Sales Internet Local/Regional Market National Market Global Market Subtotal Cost of Sales 2006 2007 2008 2009 $50,000 $150,000 $262,500 $459,375 2010 $803,906 $0 $15,000 $45,000 $90,000 $0 $0 $25,000 $50,000 $0 $0 $0 $45,000 $50,000 $165,000 $332,500 $644,375 $180,000 $100,000 $90,000 $1,173,906 $5,000 $15,000 $26,250 $45,938 $80,391 $0 $0 $0 $1,500 $0 $0 $4,500 $2,500 $0 $9,000 $5,000 $4,500 $18,000 $10,000 $9,000 $5,000 $16,500 $33,250 $64,438 $117,391 17
  • 18. $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2006 2007 2008 Sales 6.0 2009 2010 Direct Cost of Sales Management Summary As stated earlier in 2.1 Company Ownership, the management of the company will be handled by Taylor Delacourt. As President of Sweet Papaya., Taylor brings 22 years of management experience to the position. Taylor holds a Bachelor of Science degree in finance. Taylor’s education and experience in the candy and confectionary industry comes from years of baking and non-profit catering provided through referral. Taylor began her office management experience in 1982 while working for a start-up general contractor until 1993. This was the first small business start-up company she managed. From 1994 until 1999, Taylor was the President of Jubilee, another start-up small business. As President of Jubilee, Taylor started a manufacturing and distribution company that grew to a $1.3 million company before selling to a larger manufacturer in 1999. In 1999, Taylor finished her undergraduate studies. Taylor will handle all aspects of the start-up and daily operations. 6.1 Personnel Plan The following table illustrates the Personnel Plan for Sweet Papaya Specific needs, compensation, and timing are indicated for each position. 18
  • 19. Table 6.1: Personnel Plan Personnel 2006 2007 2008 2 Production Workers 1 Office Assistant 7.0 $0 $0 $25,000 $0 $25,000 $25,000 Total Payroll F iTotal Headcount n ancial Plan $0 $25,000 $50,000 0 2 3 The financial plan for Sweet Papaya is presented in detail in the following sections. The business will be financed mainly through cash flow. The main investment is for initial equipment, inventory, and operating expenses. 7.1 Important Assumptions The financial plan depends on financial assumptions, most of which are shown in the following table. Current short-term interest rates are calculated at a rate of 0%. If future short-term loans are used, the assumed interest rate will be used. During the first year of business, all sales will be via Internet and paid upon order so no Collection Days estimation or Sales on Credit % has been calculated. There is no payroll until the second year of business so no Personnel Burden % has been calculated during the first year. Table 7.1: General Assumptions 2006 2007 2008 Short-Term Interest Rate 0.00% 10.00% 10.00% Long-Term Interest Rate 10.00% 10.00% 10.00% Payment Days Estimator 35 35 35 0 30 30 Tax Rate % 20.00% 20.00% 20.00% Expenses in Cash % 25.00% 25.00% 25.00% Sales on Credit % 0.00% 10.00% 15.00% Personnel Burden % 0.00% 15.00% 15.00% Collections Days Estimator 19
  • 20. 7.2 Break-even Analysis Proposed Break-even The following table and chart summarize our break-even analysis. With fixed costs of $13,411 per year and variable costs of $0.11 per 3.5 ounce chocolate bar, we need to bill $14,028 to cover our costs at a price point of $2.50 per chocolate bar. Break-even, based upon fixed initial market overheads, will be attained prior to the end of year one. An expanded product line, economies of scale, increased market share, cost control, investments in equipment, and market maturation will accelerate profitability. Break-even should be attained by month five figuring sales of 50 bars per day using a 23day month. 5611 - 3.5 ounce chocolate bars divided by 50 bars per day equals 112 days divided by 23 days per month equals 4.88 months until break-even. Table 7.2: Break-even Analysis NET UNITS NET REVENUE FIXED COST VARIABLE COST TOTAL COST TOTAL PROFIT 0 $15 $938 $1,875 $2,813 $3,750 $4,688 $5,625 $6,563 $7,500 $8,438 $9,375 $10,313 $11,250 $12,188 $13,125 $14,063 $15,000 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $13,411 $0 $42 $83 $125 $167 $209 $250 $292 $334 $376 $417 $459 $501 $543 $584 $626 $668 $13,411 $13,453 $13,494 $13,536 $13,578 $13,620 $13,661 $13,703 $13,745 $13,787 $13,828 $13,870 $13,912 $13,954 $13,995 $14,037 $14,079 ($13,396) ($12,515) ($11,619) ($10,724) ($9,828) ($8,932) ($8,036) ($7,141) ($6,245) ($5,349) ($4,453) ($3,558) ($2,662) ($1,766) ($870) $25 $921 375 750 1,125 1,500 1,875 2,250 2,625 3,000 3,375 3,750 4,125 4,500 4,875 5,250 5,625 6,000 FIXED COST VARIABLE COST $ $ NUMBER OF UNITS UNIT PRICE 20 $ 13,411 0.11 375 2.50
  • 21. Breakeven Analysis $16,000 $15,500 $15,000 COST-SALES-PROFIT $14,500 $14,000 $13,500 $13,000 $12,500 $12,000 $11,500 $11,000 $10,500 6000 5625 5250 4875 4500 4125 3750 3375 3000 2625 2250 1875 1500 1125 750 375 0 $10,000 NET UNITS (000) Per Unit Revenue $ $ $ 2.39 = Total % = $ 13,411 95.60% 0.11 Contribution Margin Volume 2.50 Variable Expenses x x 5,611.3 Fixed Expenses $ 13,411 Operating Income $ 5,611.3 units Volume in units at break even = $14,028.24 Total revenues at break even = 7.3 - Projected Profit and Loss Our projected profit and loss is shown in the following table, with revenue increasing from $50,000 in the first year to $332,500 in the third year. This is attained by expanding marketing efforts from Internet only in the first year to the regional wholesale market in the second year, to national and global sales by year five. It is also attained by investing in commercial production equipment; lower input costs through more efficient, high quantity purchasing; and movement into the wholesale market. 21
  • 22. Table 7.3: Projected Profit and Loss Sales Direct Costs Depreciation Total Cost of Goods Sold Gross Profit $ $ $ $ $ 2006 50,000 5,000 565 5,565 44,435 Expenses: Advertising Charitable Contributions Credit Card Fees Delivery Expenses Dues and Subscriptions Insurance Maintenance Miscellaneous Office Expenses Operating Supplies Payroll Taxes Permits and Licenses Postage Professional Fees Repairs Telephone Travel Wages $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,000 250 50 450 25 525 100 250 2,500 5,000 25 156 250 100 480 2,250 - $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3,300 825 165 1,485 40 550 250 500 8,250 16,500 2,760 100 246 3,000 2,500 504 4,700 25,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 13,411 $ 70,675 $ 136,833 Income (Loss) Before Taxes $ 31,024 $ 75,075 $ 156,767 Taxes $ 6,205 $ 15,015 $ Net Income (Loss) $ 24,819 $ 60,060 $ 125,414 36.40% 37.72% Total Expenses: Net Profit/Sales 49.64% 22 $ $ $ $ $ 2007 165,000 16,500 2,750 19,250 145,750 $ $ $ $ $ 2008 332,500 33,250 5,650 38,900 293,600 6,650 1,663 333 2,994 55 575 400 750 16,625 33,250 5,520 125 516 5,000 4,500 528 7,350 50,000 31,353
  • 23. 7.4 Projected Cash Flow Initially cash flow will be supported by the personal savings accounts of the head officer along with a $2,500 short-term loan and a $5,000 long-term loan. Both loans are interest free. $29,000 $26,500 $24,000 $21,500 $19,000 $16,500 $14,000 $11,500 $9,000 $6,500 $4,000 $1,500 $(1,000) Jan Feb Mar April May June July Aug Sept Oct Nov Dec Cash Flow Cash Balance 23
  • 24. Table 7.4: Projected Cash Flow 2006 2007 2008 Cash Flows From Operating Activities Net Income (Loss) $ 24,819 $ 60,060 $ 125,414 Depreciation $ 565 $ 2,750 $ 5,650 Short Term Investments (Increase) Decrease $ Inventory (Increase) Decrease $ Income Tax Payable Increase (Decrease) Net Cash Provided From Operating Activities Plus: (2,500) $ - $ - 1,750 $ 500 $ - $ 6,205 $ 8,810 $ 16,338 $ 30,839 $ 72,120 $ 147,402 $ (5,650) Cash Flows From Investing Activities Investment in Equipment $ (21,850) $ (29,000) Cash Flows From Financing Activities: Long Term Borrowings $ 5,000 $ - $ - Payment(s) on Long Term Debts $ 1,000 $ 1,000 $ 1,000 Total Financing Activities $ 4,000 $ Increase (Decrease) in Cash $ Cash Balance at the Beginning of the Period 7.5 Projected Balance Sheet Projected Balance Sheets follows: 24 $ (1,000) 29,189 $ 49,270 $ 117,402 $ - $ 29,189 $ 78,459 $ Cash Balance at the End of the Period (1,000) 29,189 $ 78,459 $ 195,861
  • 25. Table 7.5: Projected Balance Sheet Assets Starting Balance $ 5,000 2,500 - 2006 $ 29,189 1,750 2007 $ 78,459 2,250 2008 $ 195,861 2,250 7,500 30,939 80,709 198,111 Plant & Equipment Tools Equipment Office Equipment Total Equipment Accumulated Depreciation - 2,000 3,500 150 5,650 565 4,000 18,500 5,000 27,500 3,315 8,000 33,500 15,000 56,500 8,965 Undepreciated Cost of Equipment - 5,085 24,185 47,535 7,500 $ 36,024 $ 104,894 $ 245,646 Liabilities Current Liabilities Income Tax Payable Notes Payable - Short-Term 2,500 6,205 - 15,015 - 31,353 - Notes Payable - Current Maturities of Long Term Debt Total Current Liabilities 2,500 6,205 1,000 16,015 1,000 32,353 Notes Payable - Long Term Debt 5,000 5,000 4,000 3,000 7,500 11,205 20,015 35,353 Owner's Equity Retained Earnings-Beginning of Year Dividends Paid Current Year Net Income/(Loss) - 24,819 - 84,879 - 210,293 - Total Owner's Equity - 24,819 84,879 210,293 7,500 $ 36,024 $ 104,894 $ 245,646 Current Assets Cash and Cash Equivalents Short Term Investments Inventory Total Current Assets $ Total Assets Total Liabilities Total Liabilities and Owner's Equity 25 $
  • 26. 7.6 Business Ratios The following are generated business ratios. Table 7.6: Projected Business Ratios 2006 88.9% 62.0% 62.0% 49.6% 125.0% 100.0% 620.5% 496.4% 86.1% 68.9% 100.3% Liquidity ratios Current ratio Quick ratio Cash ratio Inventory turnover Cash to total assets Current assets to total assets Quick assets to total assets Inventory to working capital Inventory to current assets Working capital turnover Debt ratios Times interest earned Total debt to total assets Debt to equity Debt to total invested capital Common equity to total invested capital Total equity to total assets Funded debt to working capital 26 2007 88.3% 45.5% 45.5% 36.4% 88.4% 70.8% 1876.9% 1501.5% 71.6% 57.3% 92.8% 2008 88.3% 47.1% 47.1% 37.7% 74.5% 59.6% 5225.6% 4180.5% 63.8% 51.1% 75.7% 5.0 4.7 4.7 3.2 0.8 0.9 0.8 0.1 0.1 2.0 Ratio Gross margin Operating margin Pretax margin After-tax profit margin Pretax ROE After-tax ROE Return on invested capital before tax Return on invested capital after tax ROA before interest and tax ROA after tax Return on working capital 5.0 4.9 4.9 8.6 0.7 0.8 0.7 0.0 0.0 2.6 6.1 6.1 6.1 17.3 0.8 0.8 0.8 0.0 0.0 2.0 13.9% 20.1% 100.0% 0.0% 68.9% 20.2% 3.8% 4.7% 100.0% 0.0% 80.9% 6.2% 1.2% 1.4% 100.0% 0.0% 85.6% 1.8%
  • 27. Other ratios Asset turnover Retained earnings to net income Sales to net worth Fixed asset turnover 1.4 1.0 2.0 9.8 Computed values Operating income Owner's equity / Net worth / Book value Working capital Cash and equivalents Quick assets Total invested capital Net fixed assets Net receivables Average sales per day Average cost of goods sold per day Days' sales in inventory Days' sales in receivables Net sales (sales to use in computations) Other current assets Long-term assets Long-term debt Other long-term liabilities Primary shares Effective tax rate 27 1.6 1.4 1.9 6.8 1.4 1.7 1.6 7.0 31,024 24,819 24,734 29,189 29,189 5,000 5,085 1,666.7 185.5 9.4 50,000 5,000 5,000 75,075 84,879 64,694 78,459 78,459 4,000 24,185 5,500.0 641.7 3.5 165,000 4,000 4,000 156,767 210,293 165,758 195,861 195,861 3,000 47,535 11,083.3 1,296.7 1.7 332,500 3,000 3,000 20% 20% 20%
  • 28. Appendix A Table 7.5: Projected Balance Sheet Assets Current Assets Starting Balances Cash $ 5,000 $ 5,000 $ 7,215 $ 8,297 $ 9,542 Short-Term Investments $ 2,500 $ 2,500 $ - $ - $ Inventory $ - $ 500 $ 675 $ 742 $ Total Current Assets $ 7,500 $ 8,000 $ 7,890 $ 9,040 $ 10,358 $ 11,871 $ 13,607 $ 15,599 $ 17,884 $ 20,507 $ 23,517 $ 26,973 $ 30,939 Plant & Equipment $ - $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 $ 5,650 Accumulated Depreciation $ - $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 $ 565 Total Long-Term Assets $ - $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 $ 6,215 Total Assets $ 7,500 Jan Feb Mar April May June July Aug Sept Oct Nov Dec $ 10,973 $ 12,619 $ 14,512 $ 16,689 $ 19,192 $ 22,071 $ 25,381 $ 29,189 - $ - $ - $ - $ - $ - $ - $ - $ - 817 $ 898 $ 988 $ 1,087 $ 1,196 $ 1,315 $ 1,447 $ 1,591 $ 1,750 Long-Term Assets $ 13,085 $ 12,975 $ 14,125 $ 15,443 $ 16,956 $ 18,692 $ 20,684 $ 22,969 $ 25,592 $ 28,602 $ 32,058 $ 36,024 Jan Feb Mar April May June July Aug Sept Oct Nov Dec Liabilities and Owner's Equity Income Tax Payable $ - $ 1,600 $ 1,578 $ 1,808 $ 2,072 $ 2,374 $ 2,721 $ 3,120 $ 3,577 $ 4,101 $ 4,703 $ 5,395 $ 6,205 Notes Payable – Short-Term $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ - $ - $ - $ - Total Current Liabilities $ 2,500 $ 4,100 $ 4,078 $ 4,308 $ 4,572 $ 4,874 $ 5,221 $ 5,620 $ 6,077 $ 4,101 $ 4,703 $ 5,395 $ 6,205 Notes Payable - Long Term Debt $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 Total Liabilities $ 7,500 $ 9,100 $ 9,078 $ 9,308 $ 9,572 $ 9,874 $ 10,221 $ 10,620 $ 11,077 $ 9,101 $ 9,703 $ 10,395 $ 11,205 Retained Earnings $ - $ 2,068 $ 4,137 $ 6,205 $ 8,273 $ 10,341 $ 12,410 $ 14,478 $ 16,546 $ 18,614 $ 20,683 $ 22,751 $ 24,819 Total Owner's Equity $ - $ 2,068 $ 4,137 $ 6,205 $ 8,273 $ 10,341 $ 12,410 $ 14,478 $ 16,546 $ 18,614 $ 20,683 $ 22,751 $ 24,819 Total Liabilities and Owner's Equity $ 7,500 $ 17,845 $ 20,216 $ 22,631 $ 25,098 $ 27,623 $ 27,716 $ 30,386 $ 33,145 $ 36,024 $ 11,168 $ 13,214 $ 15,513 28
  • 29. Appendix B Table 7.4: Projected Cash Flow Jan Net Income Feb Mar 2,068 $ April 2,068 $ May 2,068 $ June 2,068 $ July 2,068 $ Aug 2,068 $ Sept 2,068 $ Oct 2,068 $ Nov 2,068 $ Dec $ 2,068 $ 2,068 $ 2,068 Depreciation $ 565 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Short-Term Investments (Increase) Decrease $ (2,500) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Inventory (Increase) Decrease $ - $ - $ - $ - $ - $ - $ 290 $ 292 $ 292 $ 292 $ 292 $ 292 Income Tax Payable Increase (Decrease) $ (396) $ 3 $ 39 $ 81 $ 156 $ 240 $ 358 $ 529 $ 747 $ 987 $ 1,453 $ 2,008 Net Cash Provided From Operating Activities $ (263) $ 2,071 $ 2,108 $ 2,149 $ 2,224 $ 2,309 $ 2,716 $ 2,889 $ 3,108 $ 3,348 $ 3,813 $ 4,368 $ (5,650) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Long-Term Borrowings $ $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Payment(s) on Long-Term Debts $ $ 1,000 Total Financing Activities $ 5,000 $ Increase (Decrease) in Cash $ (913) $ 2,071 $ 2,108 $ 2,149 $ 2,224 $ 2,309 $ 2,716 $ Cash Balance at the Beginning of the Period $ - $ (913) $ 1,158 $ 3,265 $ 5,415 $ 7,638 $ 9,947 $ 12,663 $ 15,552 $ 18,660 $ 22,008 $ 25,821 Cash Balance at the End of the Period $ (913) $ 1,158 $ 3,265 $ 5,415 $ 7,638 $ 9,947 $ 12,663 $ 15,552 $ 18,660 $ 22,008 $ 25,821 $ 29,189 Plus: Cash Flows From Investing Activities Investment in Equipment Cash Flows From Financing Activities: 5,000 - $ - $ $ - $ $ - $ $ 29 - $ $ - $ $ - $ $ 2,889 $ $ $ 3,108 $ $ $ 3,348 $ $ $ 3,813 $ (1,000) $ 3,368
  • 30. Appendix C Table 7.3: Projected Profit and Loss Jan Sales $ Direct Costs Depreciation Total Cost of Goods Sold Gross Profit Feb Mar April May June July Aug Sept Oct Nov Dec 500 $ 673 $ 906 $ 1,219 $ 1,641 $ 2,209 $ 2,973 $ 4,002 $ 5,387 $ 7,272 $ 9,854 $ 13,364 $ 50 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ $ 565 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ $ 615 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ $ (115) $ 606 $ 815 $ 1,097 $ 1,477 $ 1,988 $ 2,676 $ 3,602 $ 4,848 $ 6,545 $ 8,868 Advertising $ 500 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ Charitable Contributions $ - $ - $ - $ - $ - $ - $ - $ - $ - Credit Card Fees $ Delivery Expenses $ Dues and Subscriptions $ - Insurance $ 525 Maintenance $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 Miscellaneous $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 $ 21 Office Expenses $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 $ 208 Operating Supplies $ 50 $ 67 $ 91 $ 122 $ 164 $ 221 $ 297 $ 400 $ 539 $ 727 $ 985 $ 1,336 Payroll Taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Permits and Licenses $ 25 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Postage $ 39 $ - $ - $ 39 $ - $ - $ 39 $ - $ - $ 39 $ - $ - Professional Fees $ 250 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Repairs $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 $ 8 Telephone $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 $ 40 Travel $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 $ 188 Wages $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Total Expenses $ 1,867 $ 593 $ 618 $ 692 $ 699 $ 787 $ 885 $ 959 $ 1,111 $ 1,608 $ 1,603 $ Income Before Taxes $ (1,982) $ 13 $ 197 $ 405 $ 778 $ 1,201 $ 1,791 $ 2,643 $ 3,737 $ 4,937 $ 7,266 $ 10,039 Taxes $ (396) $ 3 $ 39 $ 81 $ 156 $ 240 $ 358 $ 529 $ 747 $ 987 $ 1,453 $ Net Income $ (1,586) $ 10 $ 157 $ 324 $ 622 $ 961 $ 1,433 $ 2,114 $ 2,989 $ 3,950 $ 5,813 $ 1,336 1,336 $ 12,027 Expenses: Net Income/Sales 1 $ 5 $ $ -317.17% 1 6 $ $ - 1.53% 250 $ - $ - $ 1 $ 2 $ 2 $ 3 $ 4 $ 5 $ 7 $ 10 $ 13 8 $ $ 1 $ - 45 $ 11 $ 15 $ 20 $ 27 $ 36 $ 48 $ 65 $ 89 $ 120 $ - $ - $ 25 $ - $ - $ - $ - $ - $ - - $ - 17.39% $ - 26.60% $ - $ 37.91% 30 - 43.51% $ - 48.19% $ - 52.83% $ - 55.50% $ - 54.31% $ - 58.99% $ - 1,989 2,008 8,031 60.09%
  • 31. Appendix D Table 7.1: General Assumptions Jan Feb Mar April May June July Aug Sept Oct Nov Dec Short-Term Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Long-Term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Payment Days Estimator 35 35 35 35 35 35 35 35 35 35 35 35 0 0 0 0 0 0 0 0 0 0 0 0 Tax Rate % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% Expenses in Cash % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% Sales on Credit % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Personnel Burden % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Collections Days Estimator 31
  • 32. Appendix E Loan and Reference Information: Key Executives: Business: Sweet Papaya Form of Ownership: S Corporation Loan Purpose: To purchase equipment, inventory, and provide cash flow for first year of operating expenses. Loan Amount: $35,000 Lending Institution: Legal Consultant: Accountant: 32
  • 33. Appendix F PRINCIPAL’S RESUMES 33