Through the Small Business Seminar offered at Hillsdale College during the winter term '15, I was able to gain experience developing a full entire business plan, which includes marketing, finance, strategy, human resource, and legal portions.

1. My Chai Supply LLC
Business Plan
David Peters
01/23/15
Prepared By:
David Peters
86 E. College St.
Hillsdale, MI 49242
(513)-482-1325
mychaisupply@gmail.com

2. Peters 2
TABLE OF CONTENTS
Executive Summary______________________________________________________ 3
Statement of Purpose ____________________________________________________ 4
Legal Structure _________________________________________________________ 4
Description of the Business_______________________________________________4-5
Marketing ___________________________________________________________5-12
Mareting Area/Target Market _____________________________________________ 5-6
Service(s)/Products Offered ________________________________________________6
Environmental Analysis ___________________________________________________7
Market Opportunity & Industry Overview ___________________________________________ 7-8
Competitive Analysis ____________________________________________________________8
Market Potential _____________________________________________________________ 8-10
SWOT Analysis _____________________________________________________ 10-11
Marketing Objective _____________________________________________________11
Marketing Strategy___________________________________________________ 11-12
Competitive Environment & Management _________________________________12-15
Competitive Environment _________________________________________________12
Product Differentation ________________________________________________ 13-14
Distribution ________________________________________________________ 14-15
Financial Section ____________________________________________________15-27
Fixed Cost Forecast _____________________________________________________18
Sales Revenue Forecast___________________________________________________19
Breakeven Sales Forecast _________________________________________________20
Gross Profit Forecast ____________________________________________________21
Capital Spending Plan____________________________________________________22
Payment of Long-Term Debt____________________________________________ 23-24
Profit & Loss Forecast ___________________________________________________25
Cash Flow Forecast __________________________________________________ 26-27
Human Resources _____________________________________________________ 28
Corporate Culture____________________________________________________ 28-29
Organizational Charts ____________________________________________________29
Supply Chain Manager Description __________________________________________30
Advertisement for Supply Chain Manager Position ___________________________ 30-31
Selection System for Human Resources_______________________________________32
Compensation & Benefits _________________________________________________32
Appendix A. FDA Regulations __________________________________________33-34
Packaging Requirements__________________________________________________33
Health Concerns_____________________________________________________ 33-34
FDA Inspection ________________________________________________________34
Appendix B. Michigan Cottage Laws _______________________________________ 35
Appendix C. Michigan Cottage Food Law Food Safety Certificate________________ 36

3. Peters 3
Executive Summary:
As your alarm on your phone rings, you realize it’s 7:40 a.m. You have slept past your alarm and
seconds tick by as your eight o’clock biology exam awaits you. You jump out of bed looking for
a source of energy and caffeine. You would not consider yourself a coffee drinker but rather a tea
drinker. You do not have time to brew yourself a cup of chai or stand in line at AJ’s Café.
Forlorn, you skip your morning chai tea. My solution to this problem came one day as I
remembered my High School Calculus teacher’s chai, which he gave to us as we studied for
finals. It was an experience of tea that left me feeling warm inside and was able somehow to
slow time down. I modified the recipe to include less sugar, more spices, and black tea. Since I
want to share the joy of instant chai with others, I will initially target Hillsdale College students,
operating under Michigan Cottage Laws (see Appendix B). Research shows that millennials are
willing to pay a premium for healthy functional drinks. Additionally, recent studies show how
42% millennials preferred tea and 42% of millennials voted for coffee. Since chai preparation
business has relatively low barriers to entry, I will focus instead on three competitors for
consumer’s spending money on chai elsewhere: local coffee shops, preexisting instant chai
powders found at grocery stores, and homemade instant chai recipes found online. I have found
that my ideal user is a college student who is relatively studious, active, and usually always
seeking adventure by trying new things. I predict that my market potential will reach 20% of
Hillsdale’s student body. My marketing objective is to launch my business to generate $2,819 in
revenue in its first year. In this year I will start a Kickstarter campaign to raise $15,000 to begin
working with dry ingredient blending manufacturers and distributers so I can move beyond direct
sales and into e-commerce. I will be able to use my results from selling chai at Hillsdale College
to market to College students around the nation.

4. Peters 4
Statement of Purpose
“Delivering chai lattes that are affordable, convenient, and delicious.”
MY CHAI SUPPLY LLC, a limited liability company established in 2015, is a tea company that
manufacturers personal servings of instant chai latte for college students and is located at 86 E.
College St., Hillsdale, MI, 49242. The company is seeking growth capital in the amount of
$15,000 for the purpose of purchasing bulk ingredients, developing dry ingredient manufacturing
and for packaging and distributing the product. My Chai Supply’s mission is to provide our
customers with chai lattes that are affordable, convenient, and delicious.
Legal Structure
I chose forming a Limited Liability Company because it protects my personal assets in case of a
lawsuit against the company. With My Chai Supply LLC selling a consumable item, there is a
possibility for a potential lawsuit from food poisoning, mislabeled products, or allergy
complications. Yet legal action can only extend into the business’s assets. Buying general
liability insurance coverage and product liability coverage protects My Chai Supply LLC against
financial losses as a result of a defective product and legal hassles that may ensue. I will operate
My Chai Supply LLC as a single-member LLC owning 100% of the equity. The tax implications
of a single-member LLC can be treated as a disregarded entity, and the LLC's activities will be
reflected on my personal federal tax return.
Description of the Business
As I was sitting on the back-porch drinking a cup of tea with my mom, I wondered, “what are the
profit margins on tea retailing?” Knowing little to nothing about the industry, I consulted my
high school Mathematics teacher who, as previously noted, introduced me to instant chai
powder. He gave me his recipe and, after making a few modifications to it, I knew that I could

5. Peters 5
start my own business in college. Operating under Michigan Cottage Law, My Chai Supply LLC
will grow its student customer base operating out of my dorm room kitchen with direct sales.
Market Area/Target Market:
In the wake of the chai tea craze, Huffington Post notes that, “The drink appears popular among
a health-conscious, gym class attending demographic.”1 A study done by FONA International, a
leader in the flavor industry focused on growing consumer acceptance shows how functional
beverages/non-alcoholic drinks play a large role in Millennial’s lives. Millennials are concerned
with overall health and weight management and 33% of this demographic feel that products with
healthy attributes are important, with 29% of this group willing to pay a premium.2 This study
and studies like it seem to show how Millennials are looking for a healthy, energizing, and
convenient functional drink. In my opinion, the best representation of Millennials is on a college
campus. College students are studious, active, and usually almost always seeking adventure by
trying new things. Initially, my target audience is to Hillsdale College students (approximately
1,500) as I work within the framework of Michigan Cottage Laws. Next, I plan to expand to
colleges around the nation and finally to metropolitan cities with a large millennial population.
There are a variety of behavioristic reasons why people drink Chai tea. I have placed
them into three categories: Healthy, Energizing, and Convenient.
1. Healthy: Part of the target audience drinks chai for the benefits of the spices, the protein
from the milk, and/or knowing that it is gluten-free, GMO-free, and MSG-free.
2. Energizing: Part of the target audience drinks chai for the sugar and small amount of
caffeine to give them a boost during rough mornings and when they are burning the
midnight oil.
1 http://www.huffingtonpost.com/2014/10/21/chai-latte_n_6006012.html
2 http://www.fona.com/resource-center/blog/millennials-functional-beverages

6. Peters 6
3. Convenient: Part of the target audience drinks chai for the convenience of individual pre-
packaged mixes that are easy to store and which bypass all the hassle of coffee shops and
require nothing more than a cup of hot water.
The size of tea market in the United States is $1.5 billion. Chai Tea (bags & loose)
currently accounts for 4% of the total tea market. Major tea companies such as Unilever (52.2%),
R.C. Bigelow Inc. (10.3%), and Hain Celestial Group Inc. (6.0%) control almost two thirds of
the entire tea market.3 Each 1% of the tea market share equates roughly $15.5 million. With
regards to My Chai Supply, forecasted revenues of $2,819 project control of 0.00018% of the tea
market share and 0.0043% of the chai tea market share nationally. Even though a ten thousandth
of a percent nationally is basically zero, controlling 20% of Hillsdale College’s chai market is
very significant for a starting point.
Service(s)/Products Offered:
My initial product offering is a box with twelve individual packets of chai mix for $9.99. Each
packet is made of a 2oz. natural kraft stand-up pouch, which provides excellent protection from
oxygen, moisture, UV light, and causing an overpowering aroma. A key difference between My
Chai Supply and the preexisting instant powders is the already pre-packaged servings. Each
pouch is already pre-measured, easy-to-open, and easy-to-store.
3http://cms.herbalgram.org/heg/volume11/11November/TeaMarketReport.html?ts=1450569195&signature=b5100d
62c9bf68d5178292ba36e861ea&ts=1450569358&signature=29db1be2b3341082f839e3cd542c00d2

7. Peters 7
Environmental Analysis
 Market Opportunity & Industry Overview
Tea is the second most consumed beverage in the world (behind water) and is now consumed in
almost 80% of all American homes.4 Per an American Botanical Council quote in 2013:
The onslaught of hundredsof new retail outlets – and thousands more projected to open in the next few
years… point to a robust and thriving marketplace for tea and herbal tea for many years to come.
Consumers seeking to enhance individual self-care programs coupled with the overwhelming positive
media coverage of the health benefits of tea are further catalyzing the marketplace.5
The time is right to enter into the chai tea market. What makes My Chai Supply different than its
competitors is serving instant chai tea in individual packet form, which is affordable, convenient,
and delicious. Nationally, the consumption of chai tea is growing as influential individuals
endorse the rich experience. Oprah Winfrey announced her partnership on March 19, 2014 to
create Teavana Oprah Chai Tea.6 The chai tea market saw steady growth in 2013 by 20.2%, and
with Oprah’s endorsement of the drink, the awareness among consumers greatly increased.
Oprah, who has 30.2 million Twitter followers, created a large awareness for this drink with her
support. Yet, what effect has this national trend had in the Collegiate landscape? YouGov
(YOU:GBX), an international internet-based market research firm, did a recent study where they
found that coffee no longer is the dominate drink among younger Americans. Coffee, which once
dominated the functional beverage market, is starting to lose its foothold as younger Americans
are turning to tea. The key finding in the study was, “Amongst older Americans coffee is the
clear favorite. 70% of over-65s say that they prefer coffee to tea, while only 21% prefer tea.
4 http://0-clients1.ibisworld.com.library.hillsdale.edu/reports/us/industry/currentperformance.aspx?entid=273#KED
5
http://cms.herbalgram.org/heg/volume11/11November/TeaMarketReport.html?ts=1450569195&signature=b5100d6
2c9bf68d5178292ba36e861ea&ts=1450569358&signature=29db1be2b3341082f839e3cd542c00d2
6 http://worldteanews.com/news/making-teavana-oprah-chai

8. Peters 8
Among under-30s, however, coffee and tea are equally popular, with 42% of millennials
preferring coffee and 42% opting for tea.” 7
 Competitive Analysis
There are three main competitors to My Chai Supply in regards to actually making chai: local
coffee shops, preexisting instant powders, and homemade powders.
- Local Coffee Shops: No physical preparation required. However an individual could
spend close to half an hour to an hour driving, parking, waiting in line, not to mention
paying a premium price to the coffee shop. Yelp® lists three different coffee shops in
Hillsdale, MI who make chai lattes: Jilly Beans, Checker Records, and Jitters Café. (All
of whom charge almost $4.00)
- Preexisting instant powders: Small physical preparation required. However, the large
canisters of chai are not user-friendly as they hard to store and hard to measure. Some of
the large instant powder providers already dominating the market nationally are Big Train
Chai, Oregon Chai, Serious Chai, David Rio Chai, Blue Lotus Chai, Pacific Chai, etc.
- Homemade Powders: Large physical preparation required. The individual would need to
find a recipe from online, buy all of the various ingredients, and spend time mixing the
blend.
 Market Potential
Based on demographics reported from Hillsdale College’s website:
Segment Willing To Spend % / Student Body SOM (Share of Market)
Women Most Willing 52% 30%
Males Least Willing 48% 9.17%
7 https://today.yougov.com/news/2015/02/25/coffees-millennial-problem/

9. Peters 9
52%
48%
% Demographic of Student Body
Women Men
77%
23%
% Demographic of Purchasers
Women Men
I forecast that 280 students will buy one box of My Chai Supply, which equates to 20% of the
student body. Matadornetwork, a travel and lifestyle website with a large social community,
wrote an article labeled, “What baristas actually think of your drink order8,” chai latte’s was,
“You are on your way to yoga. At 6:30 in the morning.” Because chai in western culture
connotes an image of a yoga-class, Starbucks’s going, health-conscious female, men will feel
less inclined at first to order a box or two. My prediction for reordering is as follows:
8 http://matadornetwork.com/life/baristas-actually-think-drink-order/
33%
27%
20%
13%
7%
1 Box 2 Boxes 3 Boxes 4 Boxes 5+ Boxes
% of Repeat Purchasers

10. Peters 10
This will be hashed out in more detail in the financial section, if 33% of 280 students buy one
box, and 27% buy two boxes, and so forth, that would yield an annual revenue of $2,818.67. The
lead user (5+ boxes) is a female who attends Zumba/Yoga classes and who has more
discretionary income. Yet, the market potential at Hillsdale and all other college campuses mean
that, with the advent of social media, word spreads quickly to allow 20% can easily grow to
30%, 40%, and even 50%.
SWOT Analysis
Strengths: My chai is tasty, convenient, and price-conscious. Apart from selling to friends, most
of my sales will be derived from the price of $0.83 per packet and the easy of pouring and
storing the chai. One of the strengths of being a student selling to other students at the same
college is there is a greater willingness to try something new. In the same way, students also are
more apt to help out the business in many areas (i.e graphic design, modeling, web design) for
free.
Weakness: Without hot water, the chai mix is rendered useless. Consumers are only limited in
enjoying a cup of chai by whether not they have access to hot water. I have no experience with
start-ups and very little business experience. Additionally, the scaling process is much harder
than a technology or a product based start-up due to the fact that there are more food regulations
for consumables.
Strengths:
Tasty, convenient, and price-conscious chai
Weakness:
Scalability and regulations
Opportunities:
Growing demand for chai
Threats:
Multiple alternatives for consumers

11. Peters 11
Opportunities: As I am selling a warm beverage in the cold state of Michigan, immediately
anyone who walks inside from sub-below temperatures wanting to warm up is interested. Aside
from Michigan, there is an ever-growing demand for tea nationally, especially among affluent
millennials with a higher amount of discretionary income. Chai lattes, in particular are growing
in popularity across the nation.
Threats: Low barriers to entry, multiple alternatives, and the cost raising market awareness, are
just a few of the threats to My Chai Supply. I am not concerned about starting another chai tea
company at Hillsdale College, but I am concerned that people will not be aware that I exist in the
presence of Chai Keurig®, coffeeshops, and instant powders. Because of the high level of
substitutes for My Chai Supply, student consumers have many options to choose from in a
heavily saturated market. What is stopping a student from popping in a Chai Keurig or ordering a
coffee instead of making a packet of My Chai Supply? With little to no brand loyalty, many
student consumers will view my chai as just another functional drink to choose from when they
are tired or thirsty.
Marketing Objective
My marketing objective is to launch my business generating $2,818.67 in revenue in the first
season, which starts in January and ends in December, and to start a Kickstarter campaign to
raise enough capital to begin working with dry ingredient blending manufacturers and
distributers so I can move beyond direct sales and into e-commerce.
Marketing Strategy (Product, Price, Place, Promotion)
Product: My product is personal servings of instant chai tea, very similar to Starbucks Via® for
instant coffee and Swiss Miss® packets for hot chocolate. Even though there is not a large width
of products, the depth of my product is that there will eventually be many specialized selections

12. Peters 12
such as: Original Chai, Spicy Chai, Sweet Tooth, Peppermint Chai, Mocha Chai, Chocolate
Chai, Hazelnut Chai, Vanilla Chai, and Breakfast Blend Chai.
Price: My Price is currently set at $9.99/12 pack, which means that each packet of chai costs the
consumer $0.83.
Place: My place of business is currently through direct sales to act in accordance with Michigan
Cottage Law. However, I am able to promote my product online through my website and social
media, and I plan on using an Etsy shop to handle payment. It is my ultimate goal to expand into
e-commerce storefronts and to sell in coffee shops and grocery stores nationwide.
Promotion: My target market is to reach 20% of the student body. My promotion is through
word-of-mouth on campus. Additionally, I plan on utilizing various social media platforms
(Instagram, Facebook, and Twitter) to gain support from student consumers. I already own the
rights to @mychaisupply for Instagram and Twitter and /mychaisupply.com for Facebook.
The Competitive Environment & Management
Competitive Environment
I am aware that in order to keep costs low, I ultimately need to find FDA approved suppliers (see
Appendix A). However, with such small-scale production and distribution from the beginning, I
will be able to ride the experience curve, learning what works well and what does not without
machinery to drive costs down. With very little bargaining power, I will be subject to suppliers’
and distributors’ demands and prices. With wide spread chai recipes on Etsy, Pinterest, and Chai
Tea Blogs, students could easily mimic those recipes in their kitchen and sell chai powders to
their friends. Therefore, the barriers to entry are extremely low. Even though these people
possess the ability to create their own Chai Tea powder company, they are not poised for
economies of scale and for large scale production. The largest cost will not be the actual product

13. Peters 13
itself or the packaging, but rather the cost to differentiate My Chai Supply in a very saturated
market. One of the downsides of a start-up with low barriers to entry is that there is immediately
large competition for a multitude of reasons. First, there are pre-existing businesses that are
already well established in the chai tea market. Second, there are already widespread recipes to
make your own chai tea powder on Pinterest and the Internet. Third, there are already consumers
who enjoy strictly buying their Chai Tea usually in the form of a Latte from a Starbucks or a
Coffeehouse. On the flip side, many individuals from my target market have never heard of Chai
Tea or maybe they have heard of it yet have never tasted it. For example, this summer when I
made a sample batch of Chai Tea for a fellow co-worker at the investment bank I interned at, he
had heard of chai tea before but had never tasted it. As I mention My Chai Supply to my friends
and family, they always give me a confused look as if they never knew that Chai Tea came in
powdered form. Therefore, there is a learning curve that I have to overcome as I have to educate
a large portion of my target audience about what Chai tea is and also that it comes in an instant
powered form. One thing I have to stress is that I do not price my chai at too high a price in
comparison, which will be discussed more fully in the financial portion of “My Business
Model.” Additionally, many other companies already have a Chai-Of-The-Month set in place
that could dissuade individuals from subscribing. Companies like Teavana already have a Chai-
Of-The-Month set in place.
Product Differentiation
With a small tweak to the recipe, I can create many different variations of My Chai Supply at a
very minimal cost. As it is cheap and easy to produce proliferation, I want to create a large line
of Chai teas in the future. Ultimately it is my goal to create a Chai-Of-The-Month Club, where
consumers pay yearly for a years worth of teas, in which every month, the consumer receives a

14. Peters 14
sample-full of teas. Additionally, when My Chai Supply reaches grocery stores, I will be able to
broaden the consumer selection and take up more space on the shelf. Some of these additional
Flavors are: Original Chai, Spicy Chai, Sweet Tooth, Peppermint Chai, Mocha Chai, Chocolate
Chai, Hazelnut Chai, Vanilla Chai, Breakfast Blend Chai. The Chai Of The Month Club will not
only secure revenue but will also work as an effective tool to maintain consumers.
Distribution
According to Michigan Cottage Laws, all
sales must be direct sales, in which each box
of chai is physically delivered to each
consumer. For the first year of this company, personal delivery of each box is feasible. During
my first year, I plan to contact the MSU Product Center. From their website, the MSU Product
Center has the mission statement, “The Product Center stimulates and develops business
innovation and economic growth through business counseling, in-depth market analysis and
technical assistance for new entrepreneurs and existing businesses. The use of best practices,
knowledge and experience along with collaboration from internal MSU and external partners
supports clients in the creation of successful ventures.”9 Last year, the product center held nearly
6,000 one-on-one counseling seasons, assisted 687 clients with business concept development,
and helped 300 clients with venture start-ups. With introductory services being minimal, the
Product Center offers opportunities for start-ups, “The Product Center’s Innovation Counselor
Network includes professionals from Michigan State University who are certified to assess the
developmental phase of your project, identify markets, innovate new products, help you make
critical go/no-go decisions, and guide you from concept to launch.” Once I have established sales
with various clients, I aim at reaching out to the Product Center to assist me in moving beyond
9 http://productcenter.msu.edu/uploads/files/Product_Center_Fact_Sheet_2015_revised_10-5-2015.pdf

15. Peters 15
Cottage Laws and to help with FDA regulations. The Product Center has close connections to
Kitchen-Incubators such as “The Starting Block,” which is a source for individuals who want to
take their special recipe to market and create a successful business. As their website claims, “We
provide entrepreneurs, producers, and processors properly equipped, licensed, and inspected food
processing kitchens at reasonable rentals without the initial investment in costly facilities and
equipment.”10 With a fee of general kitchen use of $15/hour and dry pallet storage of $10/month,
the Starting Block aims at assisting entrepreneurs succeed.
Financial Section
To act in accordance to Michigan Cottage Laws the maximum sales allowed is $20,000, which
requires direct sales (no internet delivery). If My Chai Supply LLC was able to handle $20,000
in revenue, that would require selling exactly 5.65 boxes every day for an entire year, which
would yield a profit of $14,501. However, since my target audience is Hillsdale College students,
every student, faculty, and staff member would need to buy a box of chai to reach that number,
and even though I wish that scenario was realistic, it is not. With fixed costs of $2,398.69, the
break-even sales are $2,819. With regards to fixed costs, 42% of the monthly fixed costs
10 http://startingblock.biz/index.html
Wages/Salaries (incl.
Payroll tax 14%)
42%
Marketing &
Advertising
12%
Insurance
21%
Accounting/Books
8%
Supplies
4%
Miscellaneous
13%
Fixed Cost Breakdown

16. Peters 16
coincides with wages and salaries, and that is me paying myself $1.83/hour, and the other 58%
for insurance, supplies, marketing & advertising and miscellaneous expenses. The annual
revenue figure is $17,181 below the Michigan Cottage Laws maximum figure allowed, meaning
that I have room for growth in the coming years. I predict that December sales will triple sales in
July going from $119.44 in July to $382.19 in December, as December marks the beginning of
winter and the Holiday gift-giving season.
The break-even figure of $2,819 is the fixed cost figure divided by the gross profit margin of
85.1%. I predict that the average total cost per item will be $1.56 and the average selling price
will be $10.00, yielding a cost of sales of 14.9%. With regards to my capital spending plan, I
predict that I will need an professional mixer costing around $150, and I predict that I will need
$100 worth of inventory to start and cash contingency of $1,000 to solve any alternative solution
to a problem that could arise. Financing the $1,250 would involve issuing 16% of the $1,250 in
long-term debt and 84% in equity. The payment of the long-term debt is a monthly payment of
$2.53 and a deprectiation expense of $1.67. The cash flow forecast is $1,784 with the cash at
start of the period at $1,050 and the ending period at $2,834. Another key finanical ratio besides
the gross profit margin is the return on equity (ROE). It is the measure of the net income divided
by the net worth or the amount of equity. My Chai Supply’s ROE projection is -3%. While
$-
$100.00
$200.00
$300.00
$400.00
$500.00
Annual Revenue Forecast

17. Peters 17
operating under Michigan Cottage Laws, direct sales are required yet not sustainable with
growth. Dealing with the MSU Product Center and The Starting Block will not only require a
serious time investment but a serious finanical investment as well. Ingredients will have to be
purchased in larger bulk and have to be mixed with larger equipment. In my opinion, I believe I
will need $15,000 to begin to scale my product large enough to make efficent use of the Product
Center and The Starting Block. I plan to obtain initial funding for the first year through my own
equity and capital investments. After the first year, I have many viable options but I think the
two options that I could choose to obtain funding would be crowdsourcing or using an angel
investor. Through crowdsourcing, I would run a campaign on Kickstarter or Indiegogo and
would promise various amounts of chai to differing levels of supporters. Through raising capital
with an angel investor, I would offer the investor 15% of My Chai Supply for $15,000, therefore
valuing My Chai Supply around $100,000. The reason being for that valuation is that I believe
My Chai Supply could sell 100 boxes a day, yielding annual sales of $353,646. I would need to
adjust the fixed costs of paying two employees ($15/hr for a 40 hr. work week with benefits) and
muliplying all fixed expenses by 25x, yielding annual fixes costs of $167,040. As the ingredients
are bought in much larger quantites and the facilites are used for such a low price, the price per
box of chai would be $1.00 per box of chai. Spending $20,000 in capital expenses, $500 for
office space, and $3,000 for opening inventory paid out in $15,000 in equity and $8,500 in long-
term debt, the net income figure is $119,760.

18. Fixed Cost Forecast
Item Cost 12 Months
1 Wages/Salaries (incl. Payroll tax 14%) $83.22 998.69 $73.00 Working 10 hrs. a week
2 Rent/Lease $-
As a side occupation, I
will operate out of my
dorm/spare room
3 Marketing & Advertising $25.00 300.00
4 Insurance $41.67 500.00 $1.83 dollars an hour
5 Accounting/Books $16.67 200.00 10 hours a week
6 Utilities - 4 weeks in a month
7 Telephone -
8 Supplies $8.33 100.00
9 Bad Debts $- -
10 Freight $- -
11 Miscellaneous $25.00 300.00
Monthly total $199.89
Annual total $2,398.69
Notes
1 Item descriptions and amounts appear in the Profit & Loss statement for year 1
2 The total appears in the Breakeven Sales Forecast

19. Peters 19
Sales Revenue Forecast
Month Justification % Revenue
1 January People are cold but not gifting 1.20 $286.64
2 February Valentine's Day and Still Cold 1.10 $262.76
3 March Getting Warmer but still cold days 0.95 $226.93
4 April Beginning of Spring not much demand 0.80 $191.10
5 May May Day and Low Demand 0.70 $167.21
6 June Summer Slowdown Due To Heat 0.60 $143.32
7 July Continue Slowdown 0.50 $119.44
8 August Beginning to Cool-down 0.60 $143.32
9 September Carry-over with the start of Football 1.10 $262.76
10 October Beginning of Fall 1.25 $298.59
11 November Getting colder and Thanksgiving (Holiday Spirit) 1.40 $334.42
12 December Christmas Gifts as well as cold (Large Sale) 1.60 $382.19
Year 1 Total $2,819
Notes
1 Estimate for Average $238.87
2 The total appears in the Breakeven Sales Forecast

20. Peters 20
BreakevenSales Forecast
Final Forecast
1 Annual sales 2,819
2 Fixed costs per year 2,399
3 Gross profit % 85.1%
4 Break-even sales revenue 2,819 (= 2 / 3)
5 Sales over break-even - (= 1 - 4)
6 Profit / (Loss) - (= 3 * 5)
Notes
1 The annual sales figure comes from the Sales Revenue Forecast
2
The fixed costs per year come from the Fixed Costs
Forecast
3 The gross profit % comes from the Gross Profit Forecast

21. Peters 21
Gross Profit Forecast
Item
Chai Tea
Original Total
1 Average total cost per item 1.56
2 Average selling price 10.00
3 Gross profit 8.44
4 Gross profit % 84.4%
5 Total annual sales 2,819 2,819
6 Total annual gross profit 2,400 2,400
7 Average gross profit % 85.1%
8 Average cost of sales% 14.9%
Notes
1 The total average cost of sales is used in the Profit and Loss Forecast
2 The average gross profit is used in the Breakeven Sales Forecast
Average Total Cost Per Item Breakdown
Item Price
Milk Powder $0.01
Creamer $0.02
French Vanilla Creamer $0.01
Sugar $0.05
Unsweetened Ice Tea $0.33
Spices $0.31
Black Tea $0.07
Estimated Outer Packaging Costs $0.50
Estimated Inner Packaging Costs $0.25
Total $1.56

22. Peters 22
Capital Spending Plan
Item Amount
1 Equipment 150
Industrial Mixer
2 Office Space
Computer, Desk, Internet
3 Rent deposit - xxx months rent
4 Opening inventory 100
5 Contingency (cash) 1,000
Total $1,250
Long-term debt 200
Equity 1,050
Notes
1 Updated to reflect more realistic value for inventory

23. Peters 23
Payment of Long-Term Debt
Parameters Amortized Loan
Amount 200 Opening Monthly Interest Principal Closing
No of months 120 Month Balance Repayment Payment Repayment Balance
Interest rate (annual) 9% 1 200.00 2.53 1.50 1.03 198.97
Interest rate (monthly) 0.75% 2 198.97 2.53 1.49 1.04 197.93
Monthly payment 2.53 3 197.93 2.53 1.48 1.05 196.88
Depreciation 1.67 4 196.88 2.53 1.48 1.06 195.82
5 195.82 2.53 1.47 1.06 194.75
Only the first few years shown 6 194.75 2.53 1.46 1.07 193.68
7 193.68 2.53 1.45 1.08 192.60
8 192.60 2.53 1.44 1.09 191.51
9 191.51 2.53 1.44 1.10 190.41
10 190.41 2.53 1.43 1.11 189.31
11 189.31 2.53 1.42 1.11 188.20
12 188.20 2.53 1.41 1.12 187.07
13 187.07 2.53 1.40 1.13 185.94
14 185.94 2.53 1.39 1.14 184.80
15 184.80 2.53 1.39 1.15 183.66
16 183.66 2.53 1.38 1.16 182.50
17 182.50 2.53 1.37 1.16 181.34
18 181.34 2.53 1.36 1.17 180.16
19 180.16 2.53 1.35 1.18 178.98
20 178.98 2.53 1.34 1.19 177.79
21 177.79 2.53 1.33 1.20 176.59
22 176.59 2.53 1.32 1.21 175.38
23 175.38 2.53 1.32 1.22 174.16
24 174.16 2.53 1.31 1.23 172.93
25 172.93 2.53 1.30 1.24 171.70
26 171.70 2.53 1.29 1.25 170.45
27 170.45 2.53 1.28 1.26 169.20
28 169.20 2.53 1.27 1.26 167.93
29 167.93 2.53 1.26 1.27 166.66
30 166.66 2.53 1.25 1.28 165.37

24. Peters 24
31 165.37 2.53 1.24 1.29 164.08
32 164.08 2.53 1.23 1.30 162.78
33 162.78 2.53 1.22 1.31 161.47
34 161.47 2.53 1.21 1.32 160.14
35 160.14 2.53 1.20 1.33 158.81
36 158.81 2.53 1.19 1.34 157.47
37 157.47 2.53 1.18 1.35 156.12
38 156.12 2.53 1.17 1.36 154.75
39 154.75 2.53 1.16 1.37 153.38
40 153.38 2.53 1.15 1.38 152.00
41 152.00 2.53 1.14 1.39 150.60
42 150.60 2.53 1.13 1.40 149.20
43 149.20 2.53 1.12 1.41 147.78
44 147.78 2.53 1.11 1.43 146.36
45 146.36 2.53 1.10 1.44 144.92
46 144.92 2.53 1.09 1.45 143.48
47 143.48 2.53 1.08 1.46 142.02
48 142.02 2.53 1.07 1.47 140.55
49 140.55 2.53 1.05 1.48 139.07
50 139.07 2.53 1.04 1.49 137.58
51 137.58 2.53 1.03 1.50 136.08
52 136.08 2.53 1.02 1.51 134.57
53 134.57 2.53 1.01 1.52 133.04
54 133.04 2.53 1.00 1.54 131.51
55 131.51 2.53 0.99 1.55 129.96
56 129.96 2.53 0.97 1.56 128.40
57 128.40 2.53 0.96 1.57 126.83
58 126.83 2.53 0.95 1.58 125.25
59 125.25 2.53 0.94 1.59 123.65
60 123.65 2.53 0.93 1.61 122.05

25. Peters 25
Profit & Loss Forecast
1 2 3 4 5 6 7 8 9 10 11 12 Year 1 Factor Year 2
Sales 143 119 143 263 299 334 382 287 263 227 191 167 2,819 1.000 2,819
Less: cost of sales 21 18 21 39 44 50 57 43 39 34 28 25 419 1.000 419
Operating profit 122 101 122 224 255 284 325 244 224 193 163 142 2,400 2,400
Fixed Expenses
Wages/Salaries
(incl. Payroll tax 14%) 83 83 83 83 83 83 83 83 83 83 83 83 999 1.000 999
Rent/Lease - - - - - - - - - - - - - 1.000 -
Marketing &
Advertising 25 25 25 25 25 25 25 25 25 25 25 25 300 1.000 300
Insurance 42 42 42 42 42 42 42 42 42 42 42 42 500 1.000 500
Accounting/Books 17 17 17 17 17 17 17 17 17 17 17 17 200 1.000 200
Utilities - - - - - - - - - - - - - 1.000 -
Telephone - - - - - - - - - - - - - 1.000 -
Supplies 8 8 8 8 8 8 8 8 8 8 8 8 100 1.000 100
Bad Debts - - - - - - - - - - - - - 1.000 -
Freight - - - - - - - - - - - - - 1.000 -
Miscellaneous 25 25 25 25 25 25 25 25 25 25 25 25 300 1.000 300
Depreciation 2 2 2 2 2 2 2 2 2 2 2 2 20 20
Less: total fixed
expenses 202 202 202 202 202 202 202 202 202 202 202 202 2,419 2,419
Earnings before
interest & taxes (79) (100) (79) 22 53 83 124 42 22 (9) (38) (59) (19) (19)
Interest on long-
term debt 2 1 1 1 1 1 1 1 1 1 1 1 17 16
Interest on short-
term debt - - - - - - - - - - - - - -
Earnings before taxes (81) (102) (81) 21 52 81 122 41 21 (10) (40) (61) (36) (35)
Taxes (16) (20) (16) 4 10 16 24 8 4 (2) (8) (12) (8) (7)
Net Income (65) (82) (65) 17 42 65 98 33 17 (8) (32) (49) (28) (28)

26. Peters 26
Cash Flow Forecast
Cash in / (out) 1 2 3 4 5 6 7 8 9 10 11 12
Year
1
Year
2
Net income (65) (82) (65) 17 42 65 98 33 17 (8) (32) (49) (28) (28)
Add back
depreciation, a non-
cash expense 2 2 2 2 2 2 2 2 2 2 2 2 20 20
Accounts payable:
Plus purchases on
credit 50% 11 9 11 20 22 25 29 22 20 17 14 13 210 210
Less credit
payments made 2 - - (11) (9) (11) (20) (22) (25) (29) (22) (20) (17) (183) (183)
Accounts receivable
Less credit sales 25% (36) (30) (36) (66) (75) (84) (96) (72) (66) (57) (48) (42) (705) (705)
Plus credit
payments received 2 - - 36 30 36 66 75 84 96 72 66 57 615 615
Investments in fixed
assets
Purchase of
inventory (100) - - - - - - - - - - - (100) -
Fixtures in selling
area (150) - - - - - - - - - - - (150) -
Leasehold
improvements - - - - - - - - - - - - - -
Rent deposit - - - - - - - - - - - - - -
Financing activities
Increase / (decrease)
in short-term loan - - - - - - - - - - - - - -
Long-term loan 200 - - - - - - - - - - 200 -
Repayment of long- (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (13) (14)

27. Peters 27
term debt principal
Net change in cash (139) (102) (64) (8) 15 54 84 42 38 3 (19) (38) (134) (85)
Cash at start of period 1,050 911 809 745 737 751 805 889 931 969 972 953 1,050 916
Cash at end of period 911 809 745 737 751 805 889 931 969 972 953 916 916 830
Short-term loan at
start of month - - - - - - - - - - - - - -
Short-term loan at end
of month - - - - - - - - - - - - - -
Notes
1) We assume that wages and taxes are paid each
month, so there are no accruals
2) Monthly interest on short-term loans is based on the short-term loan at the start of the
month, and this is shown on the Profit & Loss Statement
3) The cash flow forecast for year 2 is based on working capital
being a constant percentage of sales

28. Human Resources
In the beginning of My Chai Supply, I will be the only member of the LLC wearing many
different hats to ensure efficient production, marketing, accounting, delivery, and every aspect of
the business. Yet, I believe I can maintain work as a “one-man-shop” only selling five and a half
boxes of chai tea a week. If that number grows to 7, 10, or 15 boxes a week I will not be able to
handle the growth alone. My human resource management concerns to handle growth are: Who
do I hire? And how much do I pay them? My staffing selection solution would be to hire a
supply chain manager who would handle the production and distribution of the chai. The person
would likely be a student at Hillsdale College and my main requirement for the position would
be that he or she would be a hard worker, honest, and a flexible individual. I would compensate
them with an equity share of 20% ensuring that they understand that until the company is scaled
up they will earn little to nothing from the start. One of the key questions faced with start-ups is
how I am going to handle a survival crisis? A strategy once the company begins to grow is that I
need to start focusing on finding new revenue opportunities not just necessarily new
customers/users. My greatest human resource development concern is training and developing
that individual to understand the exact recipe requirements, food safety preparation, and
courteous delivery of each box.
Corporate Culture
The culture of My Chai Supply is to, “Listen. Listen. Listen!” Creating a culture of listening, I
will be able to first and foremost find what students like about chai and what they do not like. Do
they find the box design eye-catching and is the whole chai experience convenient to them?
Additionally, as the company begins to scale up I will listen to suppliers, manufacturers,
distributers, mentors, investors, and even retailers. By listening, I can understand what needs

29. Peters 29
work and what is working well. As My Chai Supply begins to expand, I want the culture to be
very similar to the western cultural ideal of chai, which is geared towards a health conscious
audience. The culture would be, “our work is play” where the dress is professional but business
casual. I want to maintain a fun, exciting, and adventurous office environment, where a creative
and innovate mindset is rewarded. Below, I outline the general business structures at three
various points: its inception, after 2 years, and after 5 years of operation.
Organizational Charts
Inception (2016)
After 2 Years (2018)
After 5 Years (2021)

30. Peters 30
Supply Chain Manager Description
A supply chain manager would coordinate purchasing bulk ingredients, production, and
distribution with the end goal of improving customer service, accuracy of orders, and decreasing
costs. The Supply Chain Manager would understand each ingredient in the My Chai Supply
recipe and maintain good relationships with each supplier. He would need to be able to think
and reason persuasively during negotiations with suppliers and distributors. In addition to
possessing complex problem solving ability and strong listening skills, the supply chain manager
needs to evaluate product quality and monitor the performance of employees. He needs to be
dependable, an analytical thinker, and attentive to detail. This position also requires expertise in
supply chain software and equipment such as RFID scanners, computers, and inventory
management software.
Advertisement for Supply Chain Manager Position
According to theundercoverrecruiter.com, who describes itself on LinkedIn as the “best
recruitment blog in the world,” “Twitter is an ideal platform for job search and professional
networking, and results from the survey found that 58% of respondents have used Twitter for
job-seeking purposes in the last six months.”11 TheUnderCoverRecuiter, which boasts over
19,000 followers on LinkedIn, writes how using Twitter allows individuals who are already
interested in that organization to apply for that position. In my opinion, people who are
checking their twitter are also people who are drinking chai. Using a Twitter ad, I will only
have to pay when an audience member engages (replied to, retweeted, favorited, or if the link
inside the Tweet is accessed). I pay for the bid, which will determine where in the individual’s
news feed the tweet will be located. The bid price ranges from $0.20 to $4.00. I will use a $2.00
bid. I would utilize a $2,000 campaign budget and a daily budget of $200, and I will run the
11 http://theundercoverrecruiter.com/fortune-500-companies-twitter-recuitment-study/

31. Peters 31
campaign for the entire months of May, June, and July (because those are My Chai Supply’s
slowest months) Hypothetically, the tweet reaches 20,000 individuals, and the average
engagement percentage of promoted tweets is between 1% to 3%12. I would spend anywhere
between $400 to $1,200 depending on engagement level, which is at minimum $800 under
budget. Therefore, I have reached out to 20,000 people who are interested in topics such as chai,
tea, supply chain management, logistics, and more. Also, the promoted tweet is an effective
means of advertising for promoting My Chai Supply. A mock web version is listed below:
And below is a mock mobile version of the Twitter ad:
12 https://www.clickz.com/clickz/news/2193626/promoted-tweets-see-1-to-3-engagement-on-average

32. Peters 32
Selection System for Human Resources
In order to find the best fit for different employees, there is a list of relevant criteria, which
composes skills, behaviors, and various attitudes for each position. It is important that I select
candidates on mainly how they fit in within the culture of the organization. The outline I will
follow is:
1. Online application submission through links from Twitter, LinkedIn
2. Phone interview with work sample emailed
a. Length: 30 minutes.
b. Relevant job related questions determining if this individual is correct for the
position.
c. Understanding their technical abilities and determining whether they have a listening
mindset.
d. After interview, work sample must be submitted within 24 hours.
3. In-person interview with ability test.
a. Length: 1 hour.
b. Additional relevant job related questions determining if this individual is correct for
the position.
c. More questions about integrity, listening ability, and so forth to determine if this
individual is a good cultural fit.
4. Hiring Process
a. Individual is brought in to talk about wages, benefits, and daily employment
expectations.
b. Shake hands and welcome them to the team.
Compensation & Benefits
With regards to compensation at My Chai Supply, I will only pay myself $1.83/hr. in order to
breakeven. It is my plan that I will pay myself in equity shares and therefore will continue my
personal wage expense of $1.83/hr. When hiring members (supply chain manager, marketing and
sales head, and control), I will pay them a salary of $30,000 a year in addition to 15% equity.
Additionally, with regard to regular employees I will pay them a competitive wage of $15/hr,
with a HSA account to include vision and dental and 401(k) plan option, which yields a wage
expense of $25/hr. Fringe benefits for all employees and members will be unlimited free chai.

33. Peters 33
Appendix A. FDA Regulations
Packaging Requirements
Every package is required to have a “principal display panel” which 21 CFR §101.1 defines as
“The part of the label that is most likely to be displayed, shown, or examined under customary
conditions of display for retail sale.”13 Additionally, every package must include an information
panel, which includes “ingredient list, a statement of the name and address of the manufacturer,
packer, or distributor and country of origin markings.” The principal display panel requires a
statement of identity, which for My Chai Supply’s purpose is “CHAI TEA.” The identity
statement must be made with bold type of a size, “Reasonably related to the most prominent
type.” Each package also is required by the FDA from 21 CFR §101.105 the principal display
panel display the declaration of the net quantity of contents expressed in numerical weight,
measure or a combination of numerical count and weight or measure. Additionally, §101.105(3)
requires that the term “net weight” shall be used in stating the net quantity of contents in terms of
weight.
Health Concerns
Tea has been drunk for centuries for its health benefits. In My Chai Supply, the instant powder
contains black tea, cardamom, and cinnamon. Consider the Assam CTC black tea within the
instant powder. According to Livestrong.com, black tea has the health benefit of “phenolic
compounds in Assam tea that have antioxidant properties and function is to reduce the damage of
reactive oxygen and nitrogen species on your cells.” 14 Labeling My Chai Supply as a dietary
supplement, I claim health benefits of various aspects of the tea and have different labeling
13 http://www.tearetailer.com/article_39.html
14 http://www.livestrong.com/article/547874-the-benefits-of-assam-tea/

34. Peters 34
requirements, yet the company is more liable to these claims as the science to these claims
should also be stated as well.
FDA Inspection
According to fda.gov, the “FDA may conduct a facility inspection for a variety of reasons,
including a routinely scheduled investigation, a survey, or a response to a reported problem with
a regulated product. The investigator will examine the production process, check certain records
and collect samples and produce a written report. The list of “Inspectional Observations” also
called an FDA Form 483, usually does not recommend specific corrective measures, but can be
used by the firm as a guide for the necessary improvements.”15
15
http://www.fda.gov/downloads/ForIndustry/SmallBusinessAssistance/SmallBusinessGuidetoFDA/UCM081030.pdf

35. Peters 35
Appendix B. Michigan Cottage Laws
“Under the Cottage Food Law, non-potentially hazardous foods that do not require time and/or
temperature control for safety can be produced in a home kitchen (the kitchen of the person's
primary domestic residence) for direct sale to customers at farmers markets, farm markets,
roadside stands or other direct markets. The products can't be sold to retail stores; restaurants;
over the Internet; by mail order; or to wholesalers, brokers or other food distributors who resell
foods. Operating a business under the Cottage Food Law is not for everyone; some food products
do not fit under the exemptions and some businesses aim to make more each year than the
$20,000 cap outlined in the Cottage Food Law. However, the Cottage Food Law is a great
opportunity for many who have been thinking about starting a food business, but have been
reluctant to spend the money needed to establish or rent commercial kitchen space.
Selling directly to consumers under the Cottage Food Law provides an opportunity for new,
small-scale food processors to "test the waters" and see if operating a food business is the right
fit for them. The law also enables farmers who sell produce at farmers' markets and farm
markets to expand their product lines to include things like baked goods and jams. Hopefully,
this will be a stepping-stone into a full-scale, licensed food processing business for many cottage
food businesses in the future.”16
16 http://www.michigan.gov/mdard/0,4610,7-125-50772_45851-240577--,00.html

36. Peters 36
Appendix C. Michigan Cottage Food Law Food Safety Certificate
CERTIFICATE of ACHIEVEMENT
This is to certify that
David Peters
has completed the course
Michigan Cottage Food Law - Food Safety Training
December 26, 2015