crispy bread

Academic Version

crispy bread

Sharareh Jalily

[email protected]

Academic Version

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________.

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________.

Upon request, this document is to be immediately returned to _______________.

___________________ Signature

___________________Name (typed or printed)

___________________Date

This is a business plan. It does not imply an offering of securities.

Academic Version

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.1 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5.1.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.1.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.1.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.1.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5.2 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.3 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.4 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.4.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.5 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.1 Start-up Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.2 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Table of Contents

Academic Version

1.0 Executive Summary

Crispy bread is a newly found bakery located in West Azarbaijan province city of Orumieh . we are planning to launch our business in May introducing new high quality diet breads which will be people with diabitics , high clostrol , over weight and under weight diets and we will try herbs in these breads. Our porpuse is to set the habit of a healthy and nutritive diet among not only those with special diet but also all other peole who care about what they eat.

Our range of products will include rogen , omega3 , barley toast , baguet which we prapare with high quality special flour and other ingredients. our target market will be hospitals , schools , patients , over weights and under weights.

1.1 Objectives

• to increase nutrition value of bread in target market and change nutrition habit of target customers at least by 20 % .

• supply customers with high quality bread and desirable taste .• to reach acceptable production and sales rate by the first year after start

up to aproximatly 1000 kg per month.• increase the number of shops to 2 by the end of the 1st year.

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1.2 Mission

crispy bread ltd seeks to help those with specific diet programs to improve their health and provide everybody with high quality bread . in doing so we try to satisfy our customers with diffrent taste of food and supply them with product which is healthy and desirable and find loyal customers.Our commitment to our customers and the city of orumieh will be reflected through honest and responsible business. we are sensitive to what we offer to our customors and maily those suffering an illness also we will be happy to have a role in their health improvement. The value that crispy bread delivers to this market is the chance of changing bad habits of eating.

1.3 Keys to Success

The keys to success forcrispy bread:

• Establishing and maintaining working relationships and contractual agreements with hospitals and schools

• high level of quality in our products.• A foundamental change in the type of flour already in use in bakeries .• Cooperation with dieticians .• employing bread specialist .• Broad range of producs in different sizes and shapes.

2.0 Company Summary

crispy bread is a privately-owned specialty producer of good quality diet breads . our costomers have specific diets and generally we work with those caring about good eating habits. the start up busoness would take place in W. azerbaijan province orumieh . and we work in a neighbor which is ready to invest on good nutrition and this matter makes us to expext higher sales .

2.1 Company Ownership

Crispy Bread is a privatly owned bakery which is specialised in diet breads with high quality and enriched flour . The company founded in 1389 in Orumieh .

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2.2 Start-up Summary

The following table and chart illustrates projected initial start-up costs for our bakery includingsome design works , place construction , technology and research , dietician consulting costs and alike.

Table: Start-up

Start-up

Requirements

Start-up Expenseslegal $2,000other $2,000pamphlets $500Total Start-up Expenses $4,500

Start-up AssetsCash Required $2,000Start-up Inventory $5,000Other Current Assets $500Long-term Assets $20,000Total Assets $27,500

Total Requirements $32,000

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3.0 Products

To be loyal to our mission and goals we introduce our product as follows. This product list includes some of the healthiest breads which can be categorised as the most nutritive and the countries most consumed food. As mentioned bread is the unseprable part of every iranian 's meal . in other words iranians love bread . So why not eat the high nutritive bread!

bread type Ingridients diet

rogen rye flour + leaven all

omega3flour omega3+ bakery flour + leaven

old + teenage

barley enrichedbarley flour + bakery flour + leaven

heart desease + fat dieat + diabetic

toastbakery flour + leaven

all - thin diet

baguet bakery four + leaven all - thin diet

breakfastbakery flour + nuts + jam + leaven

all - fat diet - diabetic - heart desease

4.0 Market Analysis Summary

According to our research in market and our mission we categorized our market in order to improve our products and better meet our coustemors need.

health problem diabetics heart problems under weight over weight

healthy 10-16 16-25 26-80

people with health problems are among those who must obey certain diets. omong these grops are people with heart problems , diabetics , under and over weight persons. we can also sub categorise healty people to different age groups.

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4.1 Market Segmentation

• In the city which we plan to launch our products there are 10 major hospitals with approximatly 75 patients with diet priscription which we plan to serve to 500 in total.

• 30 schools with 200 students in each and total student of 6000 . there are more schools than mentioned in this section but we predict that this would be the share of our sales.

• 1000 patient not treated in hospitals with specific diets.

• And a number of small cities around wich we hope to reach to about 3000 customers in total.

Table: Market Analysis

Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGRhospitals 5% 300 315 331 348 365 5.03%patients 5% 1,000 1,050 1,103 1,158 1,216 5.01%schools 5% 2,000 2,100 2,205 2,315 2,431 5.00%small cities around 10% 3,000 3,300 3,630 3,993 4,392 10.00%under weight 3% 300 309 318 328 338 3.03%over weight 10% 1,000 1,100 1,210 1,331 1,464 10.00%Total 7.65% 7,600 8,174 8,797 9,473 10,206 7.65%

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4.2 Target Market Segment Strategy

Our segment definition is of itself strategic we are intending to satisfy specific part of market. As we mentioned earlier this kind of bread is good for health improvement and so we deside on the group of patients with a specific diet for their problems and specially those with the diet for the under and over weight problems . besides we intent to satisfy all consumers of bread which care for their health and our wish is to meet their need . In doing so we do not have any choice other than expand our product to a variety of shapes , sizes and tasets.

4.3 Industry Analysis

In the last years our culture of eating undergone a change for better and nowadays we know more about eating. During these years we learnd that the aim of eating is more than survival and filling our bodies. this change had several consequences. people start to think about their bodies and keeping it healthy and in shape. They are ready to invest more to get high quality food.And the issue of trust came by this culture .

putting aside this change, some government decisions about the price of raw matrial - in our case price of the flour- and supporting industrial bakeries equated consumer price for both traditional and industrial bakeries.

Crispy Bread bakery opperates in an enviornment which is newly entroduced to appropriate way of eating and there are only two other bakeries active in much or less same business . So the chance of success is nearly high.

4.3.1 Competition and Buying Patterns

The notion of trust is the most important issue in choosing our product. And we know for sure that we can not reach the higher level of trust unless we keep providing our customers with good quality and introducing new products regularly. beside producing healthy bread we can support our customors with some information about the kind of bread and its nutrition facts and help with their diet programm if needed . Although the process of gainning trust is a time taking job we can anchor in people's minds trough their senses such as taste , visual and so on.

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5.0 Strategy and Implementation Summary

crispy bread strategy is to expand production capabilities in order to fulfill the requests of importers with whom we currently deal for larger orders which we are unable to currently fulfill. hospitals and schools are among them which we plan a high volume sale and use long term contracts. we will succeed by preparing high quality healthy bread along with competetive prices.

5.1 SWOT Analysis

As there are many strenghs such as our specialised staff , range of our products , placement and special recipes of breads we must face our weeknesses too. we have a high goal to achiew . we are going to help eating habits to change more rapidly . we want people to face the fact that eating is not only for filling our bodies with nonnutritive worthless food. we want to teach them eat nutritive bread and keep their bodies healthy. At this point high marketing costs emerges.and the high price of the raw material adds to our problem. But theresome solutions that we rely on in overcoming these problems. first we can increase our unknown market in nearby cities or increase the size of existing market . its important not to forget about inflation and the emergence of othe competitors in market.

5.1.1 Strengths

• knowledgeable and specialized staff - in order to fulfill our mission and pruduce and sell healthy and high quality bread we employed highly qualified staff - baker to sales force- each of the specialised in their brand and also eager to help the family of crispy bread to grow.

• healthy and nutritive recipes - we work on our recipes with dieticians and made them practical .

• placement of our shop - we located our shop in a neighbour with high population with the advantage of parking space . there are at least 5 schools 3 colleges and 20 apartment building 6 organization .

• product variety - the range of products we are going to produce is broad enough to meet everyones expectation , taste , and needs.

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5.1.2 Weaknesses

cultural change : as we said before eating habits in our socity is changing but this change is a gradual and step by step process and we should be patient and meanwhile facilitator of this process. to achiew this goal we must expend much on informing people and marketing devices.

marketing cost : which we should absolutly pay is high . because a change in culture demands more investment in marketing section.

Raw material cost: government decitions about subsidized four goes hand in hand with an increase in prices of raw material .

5.1.3 Opportunities

• Sale in othe cities: In W. azerbaijan there are at least 3 cities which are appropriate for activity beacaue the population living there is high enough and we are the only competitor for our bakery.

• Market groth: there are some opportunities to expand our market . one of them is to sale sandwich beside bread .

5.1.4 Threats

• Inflation rate : which is relativly high in our country and the unequity of incom may cause a reduction in purchase ability of people.

• Emerging local competitors : currently we are enjoying first mover advantagein this area but new competitors are in horizen.

5.2 Competitive Edge

Our competitive edge is our recipes and new tastes which is the result of the hard work on the need of our target customers and their desires. in order to findethe best recipe for diet bread we studied closely the result of recent reserches and applied them in our wor.

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5.3 Marketing Strategy

Crispy bread 's marketing strategy is driving along with target market's needs. We are planning to give information about advantages of consuming diet breads trough pamphlets and brochures. Our marketing strategy is based mainly on making the right information available to the right target customer. the use of testers in hospitals and schools would equally help us reach our porpuse.The key to our marketing strategy is focusing on the diets, health and fitness . we believe that we could cover about 60 % of this market.

5.4 Sales Strategy

Our strategy focuses first on changing the habit and taste of eating and provoke potential buyers to buy our product. having accomplished this task we would expect the amount of sales to increase. our prediction would be as folows:

1. first step: Crispy bread shop . this earns us with full retail price2. second step : contract with hospitals and schools . In this case we bring

about the whole sale issue3. third step : small city near our central position . which would be a great

deal of increas in sales.

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5.4.1 Sales Forecast

The following charts will show our sales and their costs in the first 3 years of activity. There will not be any increase in prices so that stablization of our condition in the market will facilitated and as the consequences we should not not expect much growth in the sales rate .

Table: Sales Forecast

Sales Forecast Year 1 Year 2 Year 3

Salesrogen $25,546 $25,540 $25,550buguet $40,236 $40,240 $40,243omega3 $16,095 $16,100 $16,112breakfast $10,059 $10,060 $10,062toast $80,473 $80,475 $80,476Total Sales $172,408 $172,415 $172,443

Direct Cost of Sales Year 1 Year 2 Year 3raw $93,885 $93,890 $93,830transport $101 $110 $115Subtotal Direct Cost of Sales $93,986 $94,000 $93,945

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5.5 Milestones

The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets.The milestone schedule indicates our emphasis on planning for implementation.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Departmentcorporation identity 1/5/2010 1/6/2010 $500 ABC Departmentbattle of mind 1/6/2010 1/12/2010 $1,000 ABC Departmentfirst shop 1/8/2010 1/12/2010 $2,000 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentName me 6/5/2010 7/5/2010 $0 ABC DepartmentTotals $3,500

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6.0 Management Summary

We are a small company owned and operated by Sharare Jalily wich plan to launch our new product in the city of Orumieh. We profit from good experience of Mrs. ghorbanpoor in food industry as our recipy and management consultant. Our group has very diverse talents that seem to complement each other well .

6.1 Personnel Plan

The following table shows our personel need. As soon as we established our bakery and reached planed increase in our sales we will need more staff in our shops and production departments which this table shows the rate of this increase . Salaries are generally in line with market pay for the province.

Table: Personnel

Personnel Plan Year 1 Year 2 Year 3

baker $7,200 $7,300 $7,400skilled worker $3,600 $3,700 $3,800sale force $9,600 $4,900 $5,000unskilled worker $3,000 $3,100 $3,100Total People 5 5 6

Total Payroll $23,400 $19,000 $19,300

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7.0 Financial Plan

We want to finance growth through a combination of long-term debt and cash flow.Inventory turnover must remain at or above four or we run the risk of backing up orders and jeopardizing our freshness guarantees. The financial picture is quite encouraging altough we have been slow

7.1 Start-up Funding

The following table shows start-up costs in detail an how these start-up costs will be funded by owner .

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Table: Start-up Funding

Start-up FundingStart-up Expenses to Fund $4,500Start-up Assets to Fund $27,500Total Funding Required $32,000

Assets Non-cash Assets from Start-up $25,500Cash Requirements from Start-up $2,000Additional Cash Raised $0Cash Balance on Starting Date $2,000Total Assets $27,500

Liabilities and Capital

LiabilitiesCurrent Borrowing $0Long-term Liabilities $10,000Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $10,000

Capital

Planned InvestmentOwner $22,000Investor $0Additional Investment Requirement $0Total Planned Investment $22,000

Loss at Start-up (Start-up Expenses) ($4,500)Total Capital $17,500

Total Capital and Liabilities $27,500

Total Funding $32,000

7.2 Important Assumptions

The financial plan depends on important assumptions which the most important one is the following concept:

Although the world including our country expriences finantial problems we believe that it will not affect our bussiness so much . It is true that our prices comparing to traditional, non nutritive breads are slightly high but our product do not categorize in luxery section. we are well aware of people's needs and that they will buy our bread just because they will understand its value.

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7.3 Break-even Analysis

The break-even analysis shows that Crispy bread has sufficient sales strength to remain viable. Our break-even point is close to 10 $ per month .

The essential insight here is that our sales level seems to be running comfortably above break-even.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $10,294

Assumptions:Average Percent Variable Cost 55%Estimated Monthly Fixed Cost $4,682

7.4 Projected Profit and Loss

As the profit and loss table shows we expects to continue our steady growth in profitability over the next three years of operations because we have learned how to deal with the increasing sales levels of selling through channels . Despite the lower profitability levels of recent years, we expect to pass 10% in 2001 and remain at that level through 2012.

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Table: Profit and Loss

Pro Forma Profit and Loss Year 1 Year 2 Year 3

Sales $172,408 $172,415 $172,443Direct Costs of Goods $93,986 $94,000 $93,945Other Costs of Goods $0 $0 $0

------------ ------------ ------------Cost of Goods Sold $93,986 $94,000 $93,945

Gross Margin $78,422 $78,415 $78,498Gross Margin % 45.49% 45.48% 45.52%

ExpensesPayroll $23,400 $19,000 $19,300Marketing/Promotion $2,537 $2,540 $2,545Depreciation $1,992 $1,992 $1,992Rent $4,800 $0 $0Utilities $1,268 $0 $0Insurance $100 $0 $0Payroll $3,510 $2,850 $2,895marketing $5,900 $6,000 $6,100Other $12,683 $12,700 $12,730

------------ ------------ ------------Total Operating Expenses $56,189 $45,082 $45,562

Profit Before Interest and Taxes $22,233 $33,333 $32,936EBITDA $24,225 $35,325 $34,928 Interest Expense $916 $764 $605 Taxes Incurred $6,395 $9,771 $9,699

Net Profit $14,921 $22,798 $22,631Net Profit/Sales 8.65% 13.22% 13.12%

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7.5 Projected Cash Flow

The table presents our projected cash flow balances. The critical first year reflects positive cash flow.Monthly cash flow is positive and more important the balances are positive, which indicates adequate financial reserves and correct planning of the required working capital. The cash flow projection shows that provisions for ongoing expenses are adequate to meet Crispy bread's needs as the business generates cash flow sufficient to support operations.

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Table: Cash Flow

Pro Forma Cash Flow Year 1 Year 2 Year 3

Cash Received

Cash from OperationsCash Sales $172,408 $172,415 $172,443Subtotal Cash from Operations $172,408 $172,415 $172,443

Additional Cash ReceivedSales Tax, VAT, HST/GST Received

$0 $0 $0

New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $172,408 $172,415 $172,443

Expenditures Year 1 Year 2 Year 3

Expenditures from OperationsCash Spending $23,400 $19,000 $19,300Bill Payments $123,921 $129,940 $128,524Subtotal Spent on Operations $147,321 $148,940 $147,824

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing

$0 $0 $0

Other Liabilities Principal Repayment

$0 $0 $0

Long-term Liabilities Principal Repayment

$1,573 $1,580 $1,585

Purchase Other Current Assets $127 $130 $135Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $149,021 $150,650 $149,544

Net Cash Flow $23,387 $21,765 $22,899Cash Balance $25,387 $47,153 $70,052

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7.6 Projected Balance Sheet

As shown in the balance sheet in the following table, our net will grow from 22,000$ in 2010 to 2011$. The monthly projections are in the appendix.

Table: Balance Sheet

Pro Forma Balance Sheet Year 1 Year 2 Year 3

Assets

Current AssetsCash $25,387 $47,153 $70,052Inventory $8,713 $8,714 $8,709Other Current Assets $627 $757 $892Total Current Assets $34,727 $56,623 $79,652

Long-term AssetsLong-term Assets $20,000 $20,000 $20,000Accumulated Depreciation $1,992 $3,984 $5,976Total Long-term Assets $18,008 $16,016 $14,024Total Assets $52,735 $72,639 $93,676

Liabilities and Capital Year 1 Year 2 Year 3

Current LiabilitiesAccounts Payable $11,886 $10,572 $10,563Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $11,886 $10,572 $10,563

Long-term Liabilities $8,427 $6,847 $5,262Total Liabilities $20,313 $17,419 $15,825

Paid-in Capital $22,000 $22,000 $22,000Retained Earnings ($4,500) $10,421 $33,220Earnings $14,921 $22,798 $22,631Total Capital $32,421 $55,220 $77,851Total Liabilities and Capital $52,735 $72,639 $93,676

Net Worth $32,421 $55,220 $77,851

7.7 Business Ratios

Standard business ratios are included in the following table. Our ratios look healthy and solid. growth margin is above industry ratios. The ratios show strong, yet safe growth. Industry Profile ratios are based on Standard Industrial Classification (SIC) Index code 3873.

crispy bread

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Academic Version

Table: Ratios

Ratio Analysis Year 1 Year 2 Year 3 Industry Profile

Sales Growth 0.00% 0.00% 0.02% 6.26%

Percent of Total AssetsInventory 16.52% 12.00% 9.30% 5.61%Other Current Assets 1.19% 1.04% 0.95% 21.31%Total Current Assets 65.85% 77.95% 85.03% 40.79%Long-term Assets 34.15% 22.05% 14.97% 59.21%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 22.54% 14.55% 11.28% 24.91%Long-term Liabilities 15.98% 9.43% 5.62% 23.06%Total Liabilities 38.52% 23.98% 16.89% 47.97%Net Worth 61.48% 76.02% 83.11% 52.03%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 45.49% 45.48% 45.52% 18.41%Selling, General & Administrative Expenses

36.83% 32.26% 32.40% 10.62%

Advertising Expenses 1.47% 1.47% 1.48% 0.68%Profit Before Interest and Taxes 12.90% 19.33% 19.10% 1.29%

Main RatiosCurrent 2.92 5.36 7.54 1.14Quick 2.19 4.53 6.72 0.82Total Debt to Total Assets 38.52% 23.98% 16.89% 51.77%Pre-tax Return on Net Worth 65.75% 58.98% 41.53% 2.29%Pre-tax Return on Assets 40.42% 44.84% 34.51% 4.75%

Additional Ratios Year 1 Year 2 Year 3Net Profit Margin 8.65% 13.22% 13.12% n.aReturn on Equity 46.02% 41.29% 29.07% n.a

Activity RatiosInventory Turnover 12.00 10.79 10.78 n.aAccounts Payable Turnover 11.43 12.17 12.17 n.aPayment Days 27 32 30 n.aTotal Asset Turnover 3.27 2.37 1.84 n.a

Debt RatiosDebt to Net Worth 0.63 0.32 0.20 n.aCurrent Liab. to Liab. 0.59 0.61 0.67 n.a

Liquidity RatiosNet Working Capital $22,841 $46,051 $69,090 n.aInterest Coverage 24.26 43.64 54.40 n.a

Additional RatiosAssets to Sales 0.31 0.42 0.54 n.aCurrent Debt/Total Assets 23% 15% 11% n.aAcid Test 2.19 4.53 6.72 n.aSales/Net Worth 5.32 3.12 2.22 n.aDividend Payout 0.00 0.00 0.00 n.a

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Academic Version

Table: Sales Forecast

Sales Forecast Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Salesrogen 0% $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 $2,214 $2,280 $2,349 $2,419 $2,492buguet 0% $3,000 $3,060 $3,121 $3,184 $3,247 $3,312 $3,378 $3,446 $3,515 $3,585 $3,657 $3,730omega3 0% $1,200 $1,224 $1,248 $1,273 $1,299 $1,325 $1,351 $1,378 $1,406 $1,434 $1,463 $1,492breakfast 0% $750 $765 $780 $796 $812 $828 $845 $862 $879 $896 $914 $933toast 0% $6,000 $6,120 $6,242 $6,367 $6,495 $6,624 $6,757 $6,892 $7,030 $7,171 $7,314 $7,460Total Sales $12,750 $13,023 $13,302 $13,587 $13,879 $14,176 $14,481 $14,792 $15,110 $15,435 $15,767 $16,107

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12raw $7,000 $7,140 $7,283 $7,428 $7,577 $7,729 $7,883 $8,041 $8,202 $8,366 $8,533 $8,704transport $8 $8 $8 $8 $8 $8 $8 $9 $9 $9 $9 $9Subtotal Direct Cost of Sales $7,008 $7,148 $7,291 $7,437 $7,585 $7,737 $7,892 $8,049 $8,210 $8,374 $8,542 $8,713

Appendix

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Academic Version

Table: Personnel

Personnel Plan Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

baker 0% $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600skilled worker 0% $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300sale force 0% $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800unskilled worker 0% $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250Total People 5 5 5 5 5 5 5 5 5 5 5 5

Total Payroll $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950

Appendix

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Academic Version

Table: Profit and Loss

Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales $12,750 $13,023 $13,302 $13,587 $13,879 $14,176 $14,481 $14,792 $15,110 $15,435 $15,767 $16,107Direct Costs of Goods $7,008 $7,148 $7,291 $7,437 $7,585 $7,737 $7,892 $8,049 $8,210 $8,374 $8,542 $8,713Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Cost of Goods Sold $7,008 $7,148 $7,291 $7,437 $7,585 $7,737 $7,892 $8,049 $8,210 $8,374 $8,542 $8,713

Gross Margin $5,742 $5,875 $6,011 $6,150 $6,293 $6,439 $6,589 $6,743 $6,900 $7,060 $7,225 $7,394Gross Margin % 45.04% 45.11% 45.19% 45.27% 45.34% 45.42% 45.50% 45.58% 45.66% 45.74% 45.82% 45.91%

ExpensesPayroll $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950Marketing/Promotion $200 $202 $204 $206 $208 $210 $212 $214 $217 $219 $221 $223Depreciation $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166Rent $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400Utilities $100 $101 $102 $103 $104 $105 $106 $107 $108 $109 $110 $112Insurance $100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Payroll 15% $293 $293 $293 $293 $293 $293 $293 $293 $293 $293 $293 $293marketing $1,000 $800 $800 $300 $300 $300 $400 $400 $400 $400 $400 $400Other $1,000 $1,010 $1,020 $1,030 $1,041 $1,051 $1,062 $1,072 $1,083 $1,094 $1,105 $1,116

------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------Total Operating Expenses $5,209 $4,922 $4,935 $4,448 $4,461 $4,475 $4,588 $4,602 $4,616 $4,630 $4,645 $4,659

Profit Before Interest and Taxes $534 $953 $1,076 $1,703 $1,832 $1,965 $2,001 $2,140 $2,283 $2,430 $2,581 $2,735EBITDA $700 $1,119 $1,242 $1,869 $1,998 $2,131 $2,167 $2,306 $2,449 $2,596 $2,747 $2,901 Interest Expense $82 $81 $80 $79 $78 $77 $76 $75 $74 $73 $71 $70 Taxes Incurred $135 $262 $299 $487 $526 $566 $577 $620 $663 $707 $753 $799

Net Profit $316 $611 $697 $1,136 $1,228 $1,321 $1,347 $1,446 $1,547 $1,650 $1,757 $1,865Net Profit/Sales 2.48% 4.69% 5.24% 8.36% 8.85% 9.32% 9.30% 9.77% 10.24% 10.69% 11.14% 11.58%

Appendix

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Academic Version

Table: Cash Flow

Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash Received

Cash from OperationsCash Sales $12,750 $13,023 $13,302 $13,587 $13,879 $14,176 $14,481 $14,792 $15,110 $15,435 $15,767 $16,107Subtotal Cash from Operations $12,750 $13,023 $13,302 $13,587 $13,879 $14,176 $14,481 $14,792 $15,110 $15,435 $15,767 $16,107

Additional Cash ReceivedSales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $12,750 $13,023 $13,302 $13,587 $13,879 $14,176 $14,481 $14,792 $15,110 $15,435 $15,767 $16,107

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from OperationsCash Spending $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950 $1,950Bill Payments $411 $12,263 $10,443 $10,627 $10,487 $10,690 $10,900 $11,179 $11,395 $11,615 $11,840 $12,070Subtotal Spent on Operations $2,361 $14,213 $12,393 $12,577 $12,437 $12,640 $12,850 $13,129 $13,345 $13,565 $13,790 $14,020

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $124 $125 $126 $128 $129 $130 $132 $133 $134 $136 $137 $138Purchase Other Current Assets $10 $10 $10 $10 $10 $11 $11 $11 $11 $11 $11 $11Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $2,495 $14,349 $12,530 $12,715 $12,577 $12,781 $12,992 $13,273 $13,490 $13,712 $13,938 $14,169

Net Cash Flow $10,255 ($1,326) $772 $873 $1,302 $1,395 $1,488 $1,519 $1,620 $1,723 $1,829 $1,937Cash Balance $12,255 $10,930 $11,702 $12,574 $13,876 $15,271 $16,760 $18,279 $19,898 $21,621 $23,450 $25,387

Appendix

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Academic Version

Table: Balance Sheet

Pro Forma Balance Sheet Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Assets Starting Balances

Current AssetsCash $2,000 $12,255 $10,930 $11,702 $12,574 $13,876 $15,271 $16,760 $18,279 $19,898 $21,621 $23,450 $25,387Inventory $5,000 $7,008 $7,148 $7,291 $7,437 $7,585 $7,737 $7,892 $8,049 $8,210 $8,374 $8,542 $8,713Other Current Assets $500 $510 $520 $530 $541 $551 $562 $572 $583 $594 $605 $616 $627Total Current Assets $7,500 $19,773 $18,598 $19,523 $20,552 $22,013 $23,570 $25,224 $26,911 $28,702 $30,600 $32,608 $34,727

Long-term AssetsLong-term Assets $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000Accumulated Depreciation $0 $166 $332 $498 $664 $830 $996 $1,162 $1,328 $1,494 $1,660 $1,826 $1,992Total Long-term Assets $20,000 $19,834 $19,668 $19,502 $19,336 $19,170 $19,004 $18,838 $18,672 $18,506 $18,340 $18,174 $18,008Total Assets $27,500 $39,607 $38,266 $39,025 $39,888 $41,183 $42,574 $44,062 $45,583 $47,208 $48,940 $50,782 $52,735

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current LiabilitiesAccounts Payable $0 $11,915 $10,089 $10,277 $10,131 $10,327 $10,528 $10,800 $11,008 $11,221 $11,438 $11,660 $11,886Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $11,915 $10,089 $10,277 $10,131 $10,327 $10,528 $10,800 $11,008 $11,221 $11,438 $11,660 $11,886

Long-term Liabilities $10,000 $9,876 $9,751 $9,624 $9,497 $9,367 $9,237 $9,106 $8,973 $8,838 $8,703 $8,566 $8,427Total Liabilities $10,000 $21,791 $19,839 $19,901 $19,628 $19,695 $19,765 $19,905 $19,981 $20,059 $20,141 $20,226 $20,313

Paid-in Capital $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000 $22,000Retained Earnings ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500) ($4,500)Earnings $0 $316 $926 $1,624 $2,760 $3,988 $5,309 $6,656 $8,102 $9,649 $11,299 $13,056 $14,921Total Capital $17,500 $17,816 $18,426 $19,124 $20,260 $21,488 $22,809 $24,156 $25,602 $27,149 $28,799 $30,556 $32,421Total Liabilities and Capital $27,500 $39,607 $38,266 $39,025 $39,888 $41,183 $42,574 $44,062 $45,583 $47,208 $48,940 $50,782 $52,735

Net Worth $17,500 $17,816 $18,426 $19,124 $20,260 $21,488 $22,809 $24,156 $25,602 $27,149 $28,799 $30,556 $32,421

Appendix

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