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Golden FlaxProcessing Ltd. Business Plan Prepared by: Oksana Akhova , Éric Lefol and Sarah Schuster April 05, 2007. Site Plan. Product description. Golden Flax : toasted, ready to eat, unique “nutty” flavour, healthy (Omega-3, Fibres).
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Golden FlaxProcessing Ltd. Business Plan Prepared by: OksanaAkhova, ÉricLefol and Sarah Schuster April 05, 2007
Product description Golden Flax: toasted, ready to eat, unique “nutty” flavour, healthy (Omega-3, Fibres) Toasting at “InfraReady” : unique process with high temperature for a short time Packaging: Vacuum packed in aluminized plastic to keep flax air-tight and avoid exposition to light
Operation Plan • Organizational Structure • Average work day, and activities • Cash Conversion Cycle • Capital Budget Projection
Owner/Manager Owner Administrative Assistant Operation Plan: Organizational Structure
Operation Plan: Average Work Day and Yearly Schedule of Activities • Winter vs. Summer commitment • Monthly activities include Trade Shows and Taxes!
Operation Plan: Activities $ 0.20 $ 0.14 $ 0.55 $ 0.04 $ 1.43 $ 0.14 $ 0.01
Operation Plan: Cash Conversion Cycle CCC = 30 + 180 – 30 = 180 days Account Payable Packaged Toasted Seed in Inventory Account Receivable Received 30 180 210 days
Operation Plan: Capital Budget projection
Summary • Look into lowering Packaging Cost • Lower Average Day in Inventory • Keep good ratio between Owners’ Equity and Expenses & Costs
Human Resources • Wages for 2006 • Shareholders’ agreement • 50/50 net profits • Building arrangements
Marketing Plan • The Marketing Mix (Product, Pricing, Promotion, Place) • Segmentation, Targeting, and Positioning • Summary
Marketing Plan: The Marketing Mix: Product • Golden Toasted Flax • Omega-3 Fatty Acids • Fibres • ZPP Image and Service • Sold only in Health Food Stores • Quality control (Colour, Toasting) • Naturally grown
Marketing Plan: The Marketing Mix: Pricing • The Competition in SK • CanMar Products Ltd. • Northern Quinoa Corporation • Pricing Strategy • Parity Pricing • Price Taker
Marketing Plan: The Marketing Mix: Promotion • From our Farm to your Home • Selling & Advertising • Health Benefits • Differentiation • Tools (trade shows, web-site, direct advertising, pamphlets)
Marketing Plan: The Marketing Mix: Place • Health Food Stores in Saskatchewan • Health Food Stores in the Prairies • Network
Marketing Plan: Segmentation, Targeting, and Positioning
Marketing Plan: Summary Based on: • STRENGTHS in reputation, enthusiasm, and healthy product claims, • WEAKNESSES in competitive pressure, risk associated with outsourcing, limited production capabilities, limited advertising of product and health benefits, • OPORTUNITIES in higher margin selling to health food stores, and innovation of diversification, • THREATS in existing and new competition, and other available sources of Omega 3 ZPP should: • Approach the retailer Nutter’s • Seek approval of Golden Flax with a broker • Continue to approach Saskatchewan health food stores • Follow up with the shaker
Financial Plan • Financial results • Critical variables analysis • Break-even analysis • Scenario analysis
Financial Plan: Goals • Sales: • Price per bag (1 Pound): $4.54
Financial Plan: Financial overview Net Present Value (NPV) 53,674 Internal Rate of Return (IRR) on Equity Investment 55.60% External Rate of Return (ERR) on Equity Investment 31.00%
Financial Plan: The Critical Variables Analysis • The most critical variable for ZPP is price per unit. A drop from $4.54 to $3.91 (14%) drives the NPV from $53,674 to zero • The second critical variable is number of packages sold. 34% of decrease of this variable brings NPV to zero • The least critical variable is secretarial salary. It is needed to be changed by 336% to bring NPV to zero.
Financial Plan: Break-even analysis NPV=53,674 NPV=0 Price per unit, $
Financial Plan: Break-even analysis NPV=53,674 NPV=0 Packages sold
Financial Plan: Summary • Price is the most critical variable for the business. If this variable change by -14% brings ZPP business to NPV=0. • Sales level is the second critical variable • ZPP’s business is able to generate positive NPV under projected sales and price at $4.54
Recommendations • Look into lowering Packaging Cost • Lower Average Day in Inventory • Keep good ratio between Owners’ Equity, and Expenses & Costs • Approach the retailer Nutter’s • Seek approval of Golden Flax with a broker • Continue to approach Saskatchewan health food stores • Maintained level of sales as outlined in the break-even analysis • Seek possibilities to increase price per unit if volume of sales drops
Acknowledgments • Bill Brown and classmates