Business Plan for: Vitality DrinksLimitedPleaseName:Business
Plan for:Vitality Drinks Limited(Please use this template in
conjunction with the guidePrepare a business plan, where you will
find information about how to use your business plan as well
asinstructions on how to use this template)Document Version:
Date:
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Business plan contentsExecutive summary. 41 Executive summary.
42 Business details. 53 Key personnel 6Vision. 84 The business
idea. 85 Business goals. 96 What the business does. 107 What makes
the business different 118 Legal requirements. 12Sales and
marketing. 139 Market research. 1310 Profiling customers. 1411
Profiling competitors. 1512 Managing market risks. 1613 Pricing.
1714 Promotion and advertising. 18Running the business. 1915 Staff
1916 Premises. 2017 Suppliers. 2118 Equipment 2219 Managing
operational risks. 23Finance. 2420 Start-up costs. 2421 Profit and
loss forecast 2522 Sourcing finance. 2623 Managing financial risks.
2724 Cashflow forecast 28Executive summary
1 Executive summaryThis business plan is for vitality drinks
company Limited, a proposed energy drinks company. The company will
venture into the drinks market and specialize on the production of
soft drinks, energy drinks and packaged water.The business will be
a limited liability company with perpetual succession. This
structure was chosen because the owner of the business does not
want to bear any more liability than the capital which was
contributed to the company as share capital. However, it is
appreciated that operating a limited liability company has more
legal requirements to be followed, than operating other forms of
businesses. This is because a limited liability company is regarded
as a legal person.The owner will first employ a limited number of
employees, so as to cut on costs. However, these will be increased
as the business grows. The owner will be the manager of the entity,
and will also oversee some extra functions such as human
resources.The finance to start and operate the company will be
sourced from the owners personal savings. However, this is not
enough and the company will have to seek external financing from
banks and other financial institutions. This will, however, have an
interest which acts as the cost of the finance.From the forecasts
which were undertaken, the company is viable. The company will make
minimal profits in the first year of operations, and this is
expected to increase as the brand name of the business continues to
grow.
2 Business detailsCompany name:Vitality Soft Drink Company
LimitedAddress:New South WalesTelephone number:The company is yet
to be set up.Legal status:The business is a limited liability
company, with the ability to own property, sue and be sued in its
own name. It also has a perpetual succession. This business
structure was chosen because the liability of the owner to the
creditors and other third parties who are owed by the company is
limited to the amount of capital which has been injected by the
owner to the company. It is good for businesses which are starting
up because it is not clear how the same will be.The business
will:The business will be in the manufacture of soft drinks. The
soft drinks will be manufactured in New South Wales, and then
transported to various consumers. As the business grows, other
manufacturing and bottling plants will be opened. The company will
also start with less than 10 employees, but the same will be
increased as the time goes by. This is in a bid to save on costs.
The costs of starting up the business will be sourced from the
owners savings, and the deficit will be filled by a bank loan to be
obtained. However, it is appreciated that the financing to be
sought has a cost which has to be footed by the company in the form
of interests. This is very delicate for businesses which are
staring up because the interest has to be paid regardless of
whether the company makes profits or losses. This puts the company
at risk.
3 Key personnelDetails of owner(s):Name: ArthurPosition/main
responsibilities: As the owner of the business, the same will be in
charge of general operations of the company. He will also be in
charge of human resources and production management.Experience and
knowledge of our industry: The owner has had a wide experience in
the soft drink industry, after working with the coca cola company
first as a promoter, and later as a supervisor in one of the
bottling plants. The owner also has interests in the manufacture
and bottling of soft drinks, and he is optimistic that the
introduction of another soft drink in the market will be met with
enthusiasm by the consumers. Apart from the above knowledge and
experience on soft drink, the owner is also a management student,
and he is eager to apply what he has learnt in school to his
business.Previous employment: He has worked with Coca Cola company
on previous occasions, as a supervisor and as a promoter. He also
has managerial experience from a company he has previously worked
with.Key skills brought to the business: Managerial skills.Business
experience and any training undertaken: The owner has a managerial
as well as marketing experience.Academic/professional
qualifications: The owner has various managerial as well as
marketing experiences.Most recent salary : 6,000 p.a
Other key personnel (including shareholders):Name(s):
MargaretPosition/main responsibilities: Margaret will be in charge
of accounting and Finance in the company.Experience and knowledge
of our industry: Margaret does not have much experience in the
production sector, and in particular the beverage industry.
However, she has a wide experience in the management of companies
which are starting up. She has taken a number of decisions on
whether to borrow loans or raise share capital, or employ any other
capital available.Previous employment: She has worked in the
accounting department of many companies, especially companies which
are being started. She has also worked as a consultant as a part
time activity, something she still does to date.Key skills brought
to the business: Financial planning and management. Auditing will
also fall under her docket.Business experience and any training
undertaken: She has not done any business on her own, but she has
been the head of various accounts departments of companies. She has
done small courses on business financing, and she has also been
able to attend many business conferences dealing with business
financing and management. She is very crucial on the success of the
business, noting that many businesses which are started do not
finish the first two years of their operations. Finances also play
a critical role as well as the survival of any business entity, and
it is paramount that we get a person we can be able to
trust.Academic/professional qualifications: She has a degree in
accounting, as well a masters degree in business administration. In
her studies, she has had a bias in accounting and finance.Most
recent salary/salaries : 9,000 p.a
Vision
4 The business ideaThe idea is to bring into the market a drink
which has the combinations of a soft drink and an energy drink. The
nutritional value of the drink will also be considered. This is
because there is no particular drink in the market which serves the
two purposes in the market. The drinks available are either purely
soft drinks or purely energetic.Another reasoning is that there is
an increasing number of persons who are continuously getting
concerned about their weights. These persons prefer low calorie
drinks which are limited in the market. It is also appreciated that
the drink should be able to provide the needed energy despite the
fact that it has low calorie content.The company will be started
small, and left to grow gradually until it is able to compete on a
level footing with the majority of the competitors who are present
in the market today. The company should also be able to curve its
own niche by manufacturing specialised products.Company mission: To
incorporate hard work and integrity into becoming the leading
manufacturer of energetic soft drink.Company Vision: The mission of
the company is to be the world manufacturer of the soft drink of
choice.
5 Business goalsWhat do you want to achieve in your first year
of business?For example business goals could include turnover of
100,000 or trading at breakeven. To achieve profit and increase the
stakeholders wealth To achieve competitive edge over its
competitors To achieve a very low staff turnover To open an
additional bottling plant within two years of operations. To
increase employees by 50% within the first year of operations To
repay any additional financing the company may seek To achieve
considerable goodwill and brand image To achieve break-even point
and at least 20,000 profit To have no accruements in terms of
salaries and wagesWhere do you see your business in 3-5 years
time?In 3-5 years the owner of the company hopes that the business
will have stabilised. It is hoped that all the finances which will
have taken from banks and financial institutions will have been
paid in completion, and the company will not owe any money. Another
issue which should have occurred in the next five years is that the
company should have gone outside its jurisdiction to have branches
and distributors in other districts outside New South Wales. In
fact in five years time the company should have branches all over
Europe, and there should be strategic plans to globalise the
operations of the company. The company should be considering offers
from overseas bottlers on the bottling and packaging of the soft
drink.The company should also have considerable number of qualified
employees, and the management staff should have also increased.
6 What the business doesProduct/serviceFeaturesBenefits
Soft drinks Energy drinks Combined benefits Water Mineral water
Highly purified and packaged. Soft drinks Diet drinks No calorie
drinks for those watching their calorie intake
7 What makes the business differentYour product/service is
unique or different compared with the competition because: (Use as
many fields as is applicable and add more if you need to.) It
combines the properties of soft drinks with energy drinks It is
suitable for consumption for all categories of persons, and it is
clinically tested. This is because some categories of persons such
as diabetics have very restricted diets, and no company has looked
into their interests. The drink will also be cost effective. The
company will undertake a cost leadership strategy in the first
years of operations before it develops a strong goodwill. It will
be packaged in environmentally friendly packages It will take into
consideration corporate social responsibility Corporate governance
best practices will be observed diligently by the management for
the company The company will also maintain an open door policy to
its employees for greater efficiency
8 Legal requirements (including regulations and licences
particular to your business)The legal and insurance requirements
that apply in your business are: (Use as many fields as is
applicable and add more if you need to.)1. Name search2. Business
registration/ Incorporations of the company3. Employee insurance4.
Safety and quality certification5. Tax registrationYou will meet
your legal and insurance requirements by: (Use as many fields as is
applicable and add more if you need to.)1. Applying for a name
search and preparation of articles necessary for the registration
of the company2. Taking out insurance policies for the benefit of
the workers3. Filling out tax registration forms and obtaining
ABNS4. Seeking quality standard certification
Sales and marketing
9 Market researchTrends in your chosen market are:1. Most soft
drinks companies are going global2. Most of them are also adopting
digital technology and e- selling3. There is rising competition in
the soft drunks market.How you know this: (Use as many fields as is
applicable and add more if you need to.)1. Market research2. From
business news3. Information from the competitors websites4.
Horizontal analysis of competitors5. Stock exchange news
10 Profiling customersThe customer groups you will be selling to
are:1. Students2. People involved in manual work3. Travellers and
those who are in outings and hikesYour customer research has shown
what your customers want is: (Use as many fields as is applicable
and add more if you need to.)1. Cost effective drink- They want
drinks which will give them value for their money.2. Quality
assurance The drink should also be of high quality.3. Healthy
drinksHow you know this: (Use as many fields as is applicable and
add more if you need to.)1. Through customer survey- A survey was
conducted on the prospective customers of the company.2. Through
experience from existing energy drinks3. Through a pilot
studyNumber of customers you expect to win in each group and what
they might pay: (Use as many fields as is applicable and add more
rows if you need to.)GroupNumber of customersPrice they might pay
per unit
Students100001.5
Sick and those who are recovering8700 2.0
Long distance drivers20001.5
Other consumers80001.5
11 Profiling competitorsUse as many fields as is applicable in
the table below and add more rows if you need to.Competitor
nameStrengthsWeaknesses
Coca-cola Established brand name No reliable bottlers around the
world Pepsi-Co Cost leadership strategies High employee turnover
BertShell Pty Co. Local acceptance No publicity in other places
other than Sydney Yuvenay Pty Co. The company is gaining
considerable goodwill Limited number of employees Redbull Australia
This company has international acceptance Products sold at high
prices
How you can improve on their offer and/or price(s): (Use as many
fields as is applicable and add more if you need to.)1. Manufacture
of high quality drinks2. Maintain high customer satisfaction and
follow up3. Establish employee appraisals and motivation to prevent
employee turnovers4. Implement cost cutting strategies to enable
the company to reduce on the prices of the soft drinks5. Employ
aggressive advertising strategies.6. Seek for low profit margins to
enable the company to sell the drinks at lower prices7. Employ
members from the New South Wales community, so as to achieve
community acceptance of the soft drink.
12 Managing market risksWrite down the risks you have
identified: (Use as many fields as is applicable and add more if
you need to.)1. Market risks2. Financial risks3. Management risks4.
Operations risks5. Competition risksHow will you manage these risks
so that they become less of a threat: (Use as many fields as is
applicable and add more if you need to.)1. Doing a proper market
survey before the launch of the soft drink. The market survey will
enable the company to come up with strategies which will aid it in
cost reduction.2. Employment of competent employees who can make
rational decisions. This is important because a limited liability
company is just but a legal person. All the decisions of the
company are to be made by employees who are physical persons
working for the company.3. Proper monitoring of the operational
activities of the firm4. Implementing proper competitive strategies
such as differentiation strategy. However, a SWOT analysis will
have to be conducted before the correct strategy can be arrived
at.5. Training the management on corporate governance and on
contemporary issues in management so as to be able to face
contemporary challenges.
13 PricingHow you can calculate your prices: (Use as many fields
as is applicable and add more if you need to.) Adding a small mark
up on the overall cost of manufacturing the drink including the
overheads Considering comparable products in the market Determining
the overall profit anticipated dividing this among all the products
which will be produced by the company. This is very complicated,
and may not be practicable in this case.How your prices compare
with the competition: (Use as many fields as is applicable in the
table below and add more rows if you need to.)Product/serviceYour
price(s)Range of competitor prices (per unit)
Soft Drink1.51.5- 2.0
Energy Drinks 2.02.5- 3.0
Water1.01.2-1.5
Reasons for the difference between your price(s) and your
competitors price(s): Our company is starting up, while the
competing companies have been in the market for a considerable
period of time, and have goodwill to sell. My company is still
building up a goodwill My company is also seeking low contribution
margins in a bid to attract more customers The competitors use
different production techniques, which may lead to different cost
of production in the end.
14 Promotion and advertisingHow and where will you promote your
product/service? (Use as many fields as is applicable and add more
if you need to.) With the advent of technological advancement,
internet tools such as the social media are gradually becoming a
very important advertising tool, especially for upcoming companies,
due to the cost saving involved. The company will, therefore, use
the social media by opening up facebook pages and twitter trends
for the purpose of the company. The company will also have a well
structured website where consumers and suppliers can get in touch
with it to negotiate on business tools. This will also save the
company of employee costs because a person will also only come to
the company premises when they have sufficient knowledge of the
products, and the visit will be to conclude businesses. Print and
media broadcasts will also be undertaken. The broadcast which will
be employed will be on the local media, because that will be the
focus of the company upon the inception of operations. This will
however, be evaluated with time to ensure that the company is
benefiting from it because it is known to be very expensive
compared to other advertising methods. The employees of the company
will also act as goodwill ambassadors of the company. What this
means, is that they will wear the company t-shirts and have their
cars branded at their requests. This will enable a wider knowledge
of the company to third parties. Another way in which the company
can advertise its services is through the use of billboards. These
expire after a certain period of time, and their cost effectiveness
should be considered before the company resorts to the same. These
billboards will be placed at strategic locations where the companys
potential customers can be found. This requires a prior market
analysis.
Running the business
15 StaffUse as many fields as is applicable in the table below
and add more rows if you need to.RoleTotal costNecessary
experienceSpecialist skills and/or qualifications
General Manager12000pa Wide experience in managerial and
supervisory work Degree in business Finance manager
12000pa Extensive financial work. Master of Business
administration Production Manager
8000pa Wide experience in beverage production. Master of
Business Administration Supervisor
2000pa Wide experience in supervisory work Degree in Human
resources management
16 PremisesCost
Premises required at start-up: Production Plant50,000
Premises required in the future (if different): Sales outlets,
and SQs20,000
17 SuppliersYour key suppliers and their credit terms: (Use as
many fields as is applicable and add more rows if you need
to.)SupplierWhat youll buy from themNumber of days credit
Chemical Suppliers The chemicals needed to manufacture the
drinks 30 Water suppliers They will be responsible for the supply
of the water to be used in the manufacturing plant 30 Bottle
manufacturer It will manufacture the bottles which are required to
package the drinks. 30 Designers These will design the bottles and
the outward appearance on the same. 30
18 EquipmentUse as many fields as is applicable and add more
rows if you need to.ResourceWhenHow fundedCost per unit
Manufacturing equipmentAt the inception of businessDebt finance
10,000
Bottling equipmentAt the inception of businessDebt
finance5,000
Computers and other office accessoriesAt the inception of
businessPersonal savings1,000
Packaging equipment/ machineAt the inception of businessPersonal
savings2000
Bottles and other packaging equipmentAt the inception of
businessDebt finance2000
19 Managing operational risksRiskSolution
Staff Turnover Breach of confidentiality and divulging the
company secrets De-motivation Ghost workers Fraud Enter into
confidentiality agreements at the inception of employment
contracts. There should be restriction of trade clauses in the
contacts of employment. perform a constant employee appraisal
Investigate into the possible causes of turnover and rectify the
same. Undertake employee fidelity insurance covers Perform audit
procedures on the payroll frequently to ensure that ghost workers
are not paid by the company.
Suppliers Poor quality supplies Late supplies Market risks
Contracts should be enforced strictly to protect the company. The
company should implement supply techniques which save the company
from detrimental effects of late suppliers. JIT techniques may not
work for new suppliers
FinanceThe finance section of this template is intended for
business planning purposes only. If financial tables are to be used
for any purpose other than internal financial management, we
strongly recommend you consult an accountant or tax advisor.Click
on the links below to access a range of Microsoft Excel work sheets
to input your figures, Microsoft Excel will automatically update
the totals for you.(If you do not have access to Microsoft Excel
you can save the files on to your PC. You can then use Open Source
Software such asGoogle DocsorOpenOfficeto access the information by
uploading the files into this software. We have provided Open
Document Format versions of the tables in this section as
well.)Please notethat all tables can be customised and additional
rows and categories can be added.If you need to print out this
business plan and the associated tables (once you have completed
them) eg to show your accountant or your bank, place the tables
behind the next pages in this template.You can findinformation
about Microsoft Excel and accessibility on the Microsoft
website.
20 Start-up costsCalculate how much money you need before you
start trading (This helps you to calculate the costs of starting
your new business.)equipment requiredEstimated cost
Manufacturing equipmentBottling equipmentMotor
vehicleBottlesComputers and other accessoriesChemicals
neededRentDistribution costsSalaries and
wagesTotal10,0005,00010,0001,0002,0005,00010,0002,00030,00078,000
Personal survival budget:Estimated annual personal expenditure
(This helps you work out the minimum amount you need to earn from
your business in the first year and how much money you might need
to borrow to start the business.)Personal survival itemsCost
RentTransportFoodEntertainmentClothingMiscellaneousTotal2,4002,0003,0001,5002,0003,00011,900
21 Profit and loss forecast (Use the tabs within the Microsoft
Excel work sheet to view the second year and third year forecast
templates. The profit and loss forecast is more detailed at the
start because you should have a clearer idea of your profit and
loss expectations.)Please note: Where the business holds and sells
stock this cost should be included in direct costs. It is
calculated as: opening stock + purchases closing stock. If you are
VAT registered all sales and costs records should be entered
excluding VAT. If you arenotVAT registered then you will need to
include VAT in your costs where it is charged. For information
about VAT, VAT threshold, VAT schemes and turnover threshold,
please visit the HMRC website:VAT rates, thresholds, fuel scale
charges, exchange rates.
22 Sourcing financeTotal borrowing requirement for the business
(This helps you to understand how much money you will need to find
in order to close the gap between your start-up costs as well as
the costs of operating before your business will make a profit, and
the money that you have available to put into the business
yourself.)This is in a separate excel worksheet which has been
provided.
23 Managing financial risksThe risks that you have identified
for your financial forecast are:1. Interest rates risks2. Inflation
which will lead to changes in the cost of sales3. Inability to
achieve the intended sales4. Poor estimation of the costs of
goods5. Poor repayment by the creditors, compromising the liquidity
of the company6. Happening of events which will make the company
unable to repay the bank loan it borrowed, and thereby threatening
foreclosure.How you will minimise their impact:1. The risk of the
loan which was taken by the company can be reduced through the use
of hedging financial instruments such as derivatives.2. The finance
department to do an evaluation of the market from time to time so
as to know whether there is any change which is expected in the
market. It is only then that the company can take corrective
action.3. The company should restrict the credits it offers, at
least during the first year of operations, or until it can
determine the creditworthiness of the person who is seeking the
credits.4. When estimating the costs of goods and other capital
equipment, regard should be had on the upper margin. It is better
to be overstated that being understated because this is a new
business.5. However, it is unfortunate that most of the factors
which give rise to financial risks are external to the firm, and
the firm has no control over them. Factors such as inflation and
the fluctuation of money markets cannot be controlled by the
company.
24 Cashflow forecast (Use the tabs within the Microsoft Excel
work sheet to view the second 6 months and summary)You only need to
complete the VAT line in the cashflow forecast if you are VAT
registered. For information about VAT, VAT threshold, VAT schemes
and turnover threshold, please visit the HMRC website:VAT rates,
thresholds, fuel scale charges, exchange ratesPlease notethat if
you are VAT registered all sales and costs records should be
entered excluding VAT. If you arenotVAT registered then you will
need to include VAT in your costs where it is charged.This has been
done on the Microsoft Excel worksheet which has been uploaded
differently.