Coffee Distribution Business Plan

The Coffee Warehouse, Inc.

Executive Summary
1.0 Executive Summary The Coffee Warehouse is a new business providing high-quality, full service distribution of coffee, specialty beverages and beverage-related supplies to coffee houses and espresso stands throughout the Spokane and Northern Idaho market. The principal owners are Steve and Jennifer Smith, whose combined experience brings office management, high levels of customer service, and over 20 years in distribution and sales management. At this time we are seeking additional equity capital to compliment our own investment and are seeking to arrange a bank line for inventory and receivables financing. We have firm commitments to distribute several high-quality new age beverage products, and have verbal commitments from independent retailers throughout the Spokane and Northern Idaho market to carry our product. We plan to distribute our first products within 30-60 days of finalizing financial arrangements. Sales projections for The Coffee Warehouse are estimated to begin at approximately $2,229,000 the first year, increasing to approximately $2,558,000 in FY2005 and approximately $2,936,000 in FY2006. Our net profit is projected at approximately $283,000 the first year, increasing to $406,000 by the end of the third year of operation. Distinguishing characteristics of our business will be the combination of management experience, sales and distribution experience, high-quality, innovative products and exceptional customer service. In particular, what really sets up apart is that we are the ONLY full service distribution company servicing the coffee and specialty beverage industry in the Spokane/Northern Idaho market. In addition, The Coffee Warehouse has an exclusive contract to distribute a new, groundbreaking product that would enable us to gain immediate access to a majority of the potential customer base.

Highlights

1.1 Objectives • To open and operate a successful coffee and new age beverage distributorship in the Spokane/Northern Idaho market, employing three to five employees the first year. • To obtain a minimum of 100 regular customers in the Spokane/North Idaho market the first year of operation. • Achieve first year sales of $2,000,000. • Maintain an average gross margin of 25 percent. • To produce a net profit of at least $400,000 by the end of the third year of operation. 1.2 Mission The Coffee Warehouse intends to become a recognized distributor of specialty beverages and beverage-related supplies and services to coffee houses and espresso stands throughout Spokane and Northern Idaho. The Coffee Warehouse plans to develop strong relationships with key customers so we will be viewed as indispensable partners, rather than just another supplier. We will work closely with each customer to recommend product assortment unique for their retail base, appropriate stocking levels, pricing and display assortments, as well as promotional ideas and material to increase sales. The Coffee Warehouse will seek out and work with the manufacturers we represent to deliver the most innovative and exciting products possible to the customers we serve. We are not only selling product, we are selling service.

1.3 Keys to Success
• Innovative quality products. • Individualized customer service - providing our customers with what they want, when and how they want it. • Only full service distribution company in the Spokane/Northern Idaho market. • Fully integrated programs to help customers increase sales through menu development, creative promotions, advertising, and custom marketing material. • Exclusive distribution rights to ground-breaking products not currently available in our market. • The combined experience of the principal owners bring upper office management skills, high levels of customer service, and over 20 years in distribution and sales management.

Company Summary
2.0 Company Summary
The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane, Washington, and will be established based on the details of the following plan.

2.1 Company Ownership
The Coffee Warehouse is a privately held S-Corporation owned in total by its co-founders, Steve and Jennifer Smith. UBI Number: XXX-XXX-XXX (removed to protect confidentiality)

2.2 Company Location & Facilities
The Coffee Warehouse will be located in the Spokane Valley within the Spokane Industrial Business Park. This is a prime location to service both the Spokane and Northern Idaho market. The facilities will include approximately 5,000 square feet of warehouse space, with an additional 1,400 square feet built out for office/retail space. We are currently negotiating lease terms on the several available properties, and plan to have a lease signed by July 31, 2003.

2.3 Start-up Summary
Start-up expenses for the Coffee Warehouse total $16,450, and include expenses such as legal, marketing, lease deposit, computer systems, etc. Start-up assets include $9,800 in initial cash requirements, $18,750 in short term assets (office furniture, refrigeration equipment), and $75,000 in starting inventory. These start-up costs will be financed through investments and small-business loans. The details of the start-up summary are included in the following table.

450 $9.550 .550 $3.800 $500 $350 $1.550 $120.550 $120.200 $16.000 $16.080 $650 $300 $2.750 $0 $103.450 $103.000 $18.800 $0 $9.200 $250 $2.060 $1.750 $9.800 $103.800 $75.Start-up Start-up Requirements Start-up Expenses Legal Business Formation Business Plan Warehouse Lease Deposit Insurance (first month) Utilities (first month) Research & Development Marketing Advertising Personnel Business/Office Supplies Computer Systems Phone System Communication Lines Trade Show/Grand Opening Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $220 $90 $2.000 $93.200 $1.

000 $0 $0 $0 $95.550 $120.450) $8.Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Investor 1 Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding Start-up $25.000 $95.550 $103.000 ($16.000 $0 $0 $25.000 Products .

as well as an assortment of other paper supplies At this time. competitive prices. informative monthly newsletters. training and product demonstrations. Our underlying philosophy in selecting products is to choose lines that will bring consistent quality. White Chocolate and Caramel Syrups/Sauces • Oregon Chai Concentrate • Jet Cafe and Jet Tea Fruit n' Tea Freeze • Cappuccina line of product • Big Train line of product • Red Bull Energy Drinks • Good Cow Concentrated Milk with Custom Dispensing Equipment • Fresh Baked Goods • Assortment of White. Our services will include invaluable trade resources. jet teas.therefore it is the customer's responsibility to acquire these products by their own means.3. and product satisfaction to our customers. The Coffee Warehouse will make these same products available through our high quality. the majority of these products are only available to customers through wholesale vendors such as Cash and Carry retail outlets . Pre-printed Paper. 3. concentrated milk. . and Clear Beverage Cups Systems . fresh baked goods and assorted paper supplies. • Lowery's Gourmet Whole Bean and Wired Willey's White Coffee • Assorted Gourmet Syrups & Coffee Toppings • Chocolate. full service delivery . effective promotional programs.bringing these products directly to their doorstep at a competitive price. custom-designed marketing material.1 Product & Service Description PRODUCT DESCRIPTION The Coffee Warehouse will carry a variety of quality products that will enable us to provide full service delivery to espresso stands and coffee houses. including whole bean or ground coffee. We have personally researched and sampled each of the following products that we offer to ensure the quality we guarantee. flavor syrups. fruit smoothies.0 Products The Coffee Warehouse will provide a first-class delivery service of quality hot and cold beverage related supplies. bubble teas. as well as information on the latest market trends in the coffee/specialty beverage industry.

but our service. and upcoming events. We are better positioned than our main competitors to take advantage of the increasing demands of coffee and specialty beverage supplies because we focus exclusively on high-quality distribution and customer service.3 Sales Literature Sales literature to be distributed to both current and potential customers will include brochures. reader boards. • Samples of the latest product releases . • Custom designed marketing material such as printed banners. and much more. 3. In addition to our full service delivery. However by offering a superior selection of supplies. The Coffee Warehouse has exclusive distribution rights to Good Cow's concentrated milk/dispensing system. as well as other print media such as print advertisements. pre-purchased beverage cards. co-op advertising. creative promotions. the following are other important service elements that we will offer to our customers: • Ideas to help our customers increase sales through menu development. and focusing on high-quality service and full service delivery. new groundbreaking products to the market. 3. Co-founder Jennifer Smith has had many discussions with owners of coffee and espresso businesses that confirm this opinion. new industry equipment.2 Competitive Edge KEY COMPETITIVE STRENGTHS No other wholesaler in the market offers full service delivery with the variety of product we feature. KEY COMPETITIVE WEAKNESSES Our primary weakness is that we are a new business competing largely against established suppliers. • Distribute a monthly newsletter featuring the latest coffee trends. promotional posters. • Routine equipment maintenance and training. punch cards. This product is not currently available in our market by any other suppliers. To significantly build sales. breaking trade news. In addition to the variety of products we feature. we must not just find new customers . we feel will can quickly establish accounts and build strong relationships. newsletters.with eye-catching point-of-sale to advertise new items to the end consumer. promotional ideas. etc. new creative recipes. Jennifer Smith is .we must take customers away from existing suppliers.SERVICE DESCRIPTION An important component of our business is not just our products. fliers.

and providing sales history reports. and increase worker efficiency. Products will be available for purchase by both our wholesale customers who may need product between delivery days. All information recorded in the handheld is available in real time to be viewed by management in the office. as well as master distributors.5 Technology To streamline the efficiency of our distribution methods." this allows us to operate on a 25-30% profit margin. Because this eliminates the broker or "middle man. profit or margin. Other product not being shipped directly to Spokane will be purchased and picked up in Seattle. 3. and has quality design and printing equipment to publish professional pieces at a low cost. Washington. We will also offer a showroom that will feature equipment. Thinque MSP applications will reduce field expenses. Washington. streamlining orders. Oregon and Tri-Cities. thus cutting costs by an average of 5%. 3. decrease day's sales outstanding. Features can be used in or out of the warehouse and include managing returns and collections. while providing our customers with competitive prices. adjusting item price. The Coffee Warehouse plans to share product shipments out of California with distributors operating in Portland. The Coffee Warehouse also plans to hold semi-annual trade shows for current or potential customers. With the addition of the product showroom.4 Sourcing The Coffee Warehouse will purchase product directly from manufacturers. The Coffee Warehouse will offer customers quarterly product and training demonstrations that will be presented by trained beverage experts from the industry. and information on marketing services with examples of marketing and promotional material available to customers.highly skilled in graphic design and desktop publishing. tracking inventory.but also in the trade. All of our drivers/sales representatives will be equiped with Thinque MSP handhelds and software.not only in the warehouse . reducing out-of-stocks. The Coffee Warehouse plans to use the latest in cutting edge technology . supplies. To further reduce costs.6 Future Products and Services Within the first year of business. applying promotional items to an account. as well as retail consumers interested in purchasing product for their home use. The Coffee Warehouse plans to send a truck to Seattle on a bi-weekly basis to pick up product. trade resources. The Coffee Warehouse intends to open a retail/wholesale store and high-quality showroom. 3. These trade shows will allow customers the opportunity to .

talk to manufacturers. university campuses. bars and cafes that also feature these beverages. coffee houses. sports venues. drivethru espresso stands. and even inside other retail establishments that might feature an independent beverage stand. and growth is expected to continue at a strong pace for the foreseeable future. Growth 4% 4% 5% 5% 250 52 18 10 259 54 19 11 268 56 20 12 277 58 21 13 287 60 22 14 2004 2005 2006 2007 CAGR 3. review marketing material.51% 3. and etc. These figures are not including the number of restaurants. As illustrated in the chart below. Market Analysis Summary 4. within the market surrounding Spokane. Market Analysis Market Analysis 2003 Potential Customers Drive-thru Espresso Inner-Retail Espresso Coffee/Tea Houses Other (sports venues. Consumers who enjoy these products purchase drinks at restaurants. This growth offers excellent opportunities for new companies to enter this market. and we are excited about the possibilities of what The Coffee Warehouse can accomplish in the Spokane and Northern Idaho market.14% 8.78% .64% 5. and network with other business owners in their market.sample products. there are currently 250 drive-thru espresso stands. 18 coffee/tea houses. and approximately 10 stands in locations such as sports venues. 4. 52 independent inner-retail espresso stands.1 Market Segmentation The gourmet coffee and specialty beverage industry is divided into several segments. Rathdrum. Post Falls and Coeur d'Alene. with sales growth in some categories projected to grow at rates of 40% per year.0 Market Analysis Summary Coffee is the second largest commodity market next to oil. The specialty beverage industry is growing at an equally strong pace. learn about new industry trends.

as well as all inner-retail espresso stands within our designated market. The Coffee Warehouse initially plans to target these drive-thru espresso stands. Essential needs include: quality products at competitive prices. within the first six months of operation. this industry continues to grow. sales support. first class service. etc) Total 3. published by a national coffee retail magazine. and as business grows and stabilizes.79% 330 343 356 369 383 3. and full service product delivery. eventually evaluate the needs of potential customers in the restaurants and bar industry.2 Target Market Segment Strategy While the market is already sizeable. It is most often these small owner-operated businesses that are neglected by larger suppliers and are forced to service themselves. The sales potential in this market is unlimited. and strong sales support. The article below. It is also these smaller businesses who could most greatly benefit from marketing services. discusses our market's unique drive-thru espresso industry. and it isn't uncommon to see numerous espresso stands within a one or two mile radius. . Providing the same high-quality service. It is this segment that is most in need of the services we are planning to offer. New espresso stands open their doors to the public on a monthly basis in our market.79% Market Analysis (Pie) 4. The Coffee Warehouse plans to expand our target into formal coffee houses and cafes.universities.

Sales growth in the chai tea category alone is estimated to be 50% historically. The new age beverage industry is growing at an equally strong pace.4. . Energy drinks. and have increased 50-fold in the past three years. with projected growth rates of 40% per year. including brands such as Red Bull . In the gourmet/specialty coffee industry alone.are driving the new age beverage growth.and trends such as Jet Tea .3 Market Growth Coffee has been a growing industry for the past several years. the figures show an impressive rate of growth in the United States.

Bubble Tea has been a rapidly growing market in Asia. though it is relatively new to the United States. sales have been exploding . brokers. in addition to the recent trends in Jet Teas and other specialty beverages. with large companies such as Anheuser Busch. exceptional service. we expect the industry to consolidate with larger distributors representing more of a vast selection of products in each market. with hundreds of manufacturers. the coffee and specialty beverage industry does not have large national chains with market control. the industry is comprised of many small participants. Unlike the beer/soda industry. . suppliers and retailers. 4.5 Industry Participants With the rate of growth in the gourmet coffee market. As the markets evolve. Pepsi and Coca Cola controlling most of the market. The Coffee Warehouse is in position to capitalize on the customer's need for quality product. Introduced to trend setting marketings such as San Francisco and Seattle. each focusing on only a few specific items or brands at a time. In an open industry growing at such a strong rate. 4.4 Industry Analysis The coffee and specialty beverage industry is pulverized.and the craze of the "Tapioca Pearl" is expected to spread throughout America. and an effective partner to success.

While one supplier may offer the product at the right price. and service though most often.Currently in our segment of the industry.6 Distribution Patterns The following flow chart illustrates the overall industry surrounding the distribution patterns of coffee and specialty beverages. though their prices are too high. there are no large national chains with market control. This results with the . Other manufacturers allow distributors and suppliers to purchase product direct . (The Coffee Warehouse falls into the level highlighted in yellow).depending on the quantity of product being purchased. there is room for new business that understands the need for high-quality service and sales support . Several manufacturers are represented by master distributors and/or brokers who in turn provide the product to direct distributors and other wholesale suppliers. Most importantly. there is still a great deal of room for new business. customers choose their suppliers based on available product. Product is then distributed or sold through cash and carry wholesale stores to retail businesses as illustrated below. The Coffee Warehouse is working with manufacturers to change that practice. In this industry. The next supplier may offer the right level of service. but also acquire exclusive rights to many of the products in our portfolio. price. 4. 4. they do not provide the level of service that the customer demands. it is the service that suffers most. There are also few products that are offered with exclusive rights to one market. While this is the case with many products.7 Competition & Buying Patterns While there are a handful of coffee and specialty beverage suppliers providing product in our market. and not only represent a larger variety of product than others in our industry.in addition to product at competitive prices.

owner-operated company. we want to establish accounts in as personable a way as possible. quality product at competitive prices. To support our marketing initiatives and product knowledge. most highly personalized service in the marketplace.we are confident that we will see customers and their business continue to increase. By positioning ourselves in the market with in-demand.0 Sales and Marketing The unique aspects of our business include individual product selection. The Coffee Warehouse will offer the best. We will go out of our way to make sure that our customers know that they truly matter to us. Because we want to develop close working relationships with our customers. and high-quality full service distribution. We intend to prioritize customer service and make it a key component of our marketing programs. Sales reps and in-house personnel who deal with customers will be carefully trained and given wide latitude for insuring that customers are always satisfied." and emphasize to customers the high-quality service that is behind this name. when and how they want it. we intend to use this to our advantage to be absolutely certain that every one of our customers receive excellent service. with a consistent high level of customer service . . Sales and Marketing 5. 5. We will closely integrate all of our marketing and sales efforts to project a consistent image of our company and a consistent positioning of our products and services. It is for this reason that we will overwhelmingly emphasize in-person sales calls to build accounts. The Coffee Warehouse's key personnel will stay in contact with our customers. Our strategy is to focus 100% of our efforts on the market for espresso supplies in the Spokane and Northern Idaho area. Being a small. quality assurance.customer purchasing most of their supplies through a cash and carry style wholesale store leaving the customer with no service or support. and will be able to respond to changes in this market much faster than our competitors. Inc. By focusing all of our effort and energy on this particular area. is the key to repeat business and positive word-of-mouth advertising.1 Marketing Strategy Our basic marketing strategy is to work with customers on a one-to-one basis to ensure their supply needs are being met and help develop unique marketing programs for each of them. We believe that providing our customers with what they want. we expect to quickly develop and maintain a leadership position. we will attend as many area conventions and trade shows as possible to ensure we are offering the most up-to-date market trend information. We will build this image around our name "The Coffee Warehouse.

local trade shows. we will service 20-30 accounts per day. frequent ads in the Spokesman Review. As the number of accounts increase. 5. Deliveries will be made Monday through Friday.3 Distribution Strategy To begin. Both Steve and Jennifer Smith will lead this effort . We will also produce a few generic press releases about the products we are distributing for our customers to use toward publicity coverage for their businesses in local publications such as the Spokesman. routes will be restructured to maintain maximum efficiency. the need for additional delivery trucks will continue to be evaluated. 5. as well as provide new recipes. The Coffee Warehouse will feature an advertisement in the Yellow Pages. offer promotions and special deals.4 Sales Strategy Distribution sales are dependent on repeat business. Third.as well as the end consumer. upcoming conventions and trade shows. We will also highlight not just our products.Steve. In addition to personal selling.while maximizing production.2 Promotion Strategy Relationships are the key to success in the distribution business. with a . therefore the sales strategy for The Coffee Warehouse is based on personal. and personal word-of-mouth advertising. and Jennifer in customer service and relations. The Coffee Warehouse will send news releases to local media and press. With each additional delivery truck. with deliveries to each account twice a week. fun tips and other information that can be used in their business. On average. The Inlander and Local Planet. as well as trade magazines to try to get product and company feature coverage in front of the eyes of our customers . Personal selling will remain our most important means of promotion. consistent sales contact.5. as well as participation in networking. the Inlander. The Coffee Warehouse will operate two delivery trucks with a third vehicle for special deliveries between scheduled delivery days. The Coffee Warehouse has identified several other means of advertising and publicity. This newsletter will highlight new and current trends in the industry. and the Local Planet. As a more straight forward advertising effort. with his skill and experience in sales and distribution. we shall have a monthly newsletter for current of potential customers. and will be strategically routed to minimize travel time and fuel costs . but also display ideas and success stories of other business in the industry.

up until 2:30 p.m. This delivery/sales representatives will receive a base salary. who will be responsible for providing full service and delivery to current customers.5 Sales Forecast As indicated in the table.235 $233. depending on the quantity and timeline of product needed.852 $176.158 FY 2006 $549. Because we are a new distributor. with an annual growth rate of approximately 30%. our sales are forecasted to increase rapidly. but also make sales calls for potential new business. with the same deadline as phoned orders. give general information on our company. We understand the hectic schedule of a small business. Product orders can be placed in a number of ways to help facilitate the process: • Phoned Orders: Customers can easily phone orders into our office. we understand that we will have to prove our worth to our customers in order to earn their respect and business. Both of the owners.713 $203. Sales Forecast Sales Forecast FY 2004 Sales Espresso Syrups Chocolate & Caramel Sauces Specialty Beverage $415. and discuss how we feel we can help them succeed in their business.high emphasis on customer service and relations. • Faxed Orders: Customers can fax in a completed product order sheet.660 FY 2005 $477.666 $311. The Coffee Warehouse will begin operations with two full-time delivery/sales representatives. they will receive a courtesy call from our office to verify that an order is not needed.362 $275. • Tel-Sell: Customers may choose to have a representative from the office call them the day prior to their scheduled delivery to check product quantities and assist them in placing their order. with commission on qualified sales. Steve and Jennifer. Customers will be scheduled for a pre-arranged delivery day once or twice a week. will make personal calls on potential customers to review our product line and services.632 . so if a customer fails to call or fax their weekly order. as well as bonuses for new acquired business.316 $352. of the afternoon prior to their scheduled delivery day. 5.

175.606 $42.028 $130.816 $1.022.540 $24.149 $276.837 $58.540 $1.305 $2.208 $2.936.347 $244.Mixes Energy Drinks Concentrated Milk Paper Supplies Marketing Total Sales Direct Cost of Sales Espresso Syrups Chocolate & Caramel Sauces Specialty Beverage Mixes Energy Drinks Concentrated Milk Paper Supplies Marketing Subtotal Direct Cost of Sales Sales Monthly $44.229.655 $8.607 $1.440 $36.521 $2.550 $51.652 FY 2004 $345.964 $6.523 $1.051 $2.285 $18.012.327 $129.797 $48.584 FY 2005 $397.567.309.023 $112.308 $7.185.683 $150.078 $21.558.137 FY 2006 $456.230 Sales by Year .498 $1.542 $97.798 $134.583 $177.754.363.889 $1.722 $312.622 $154.372 $113.919 $888.649 $2.

000 $35.300 $90 $150 $0 $200 $0 $0 $0 $5.000 SDS / JLSDepartment $250 JLSDepartment $3.6 Milestones The following table and chart are the important milestones for The Coffee Warehouse.5.340 JLSDepartment .000 ManagerDepartment SDS / JLS Marketing JLS Marketing JLS Marketing SDS / JLS Marketing JLS Marketing JLS Marketing JLS Marketing SDS / JLS Marketing SDS / JLS Marketing SDS / JLS Web SDS Web SDSDepartment SDSDepartment JLSDepartment 7/10/2003 7/20/2003 7/1/2003 8/1/2003 8/1/2003 8/10/2003 $20. Milestones Milestones Milestone Market/Trade Research Logo Design/Marketing Complete Business Plan Product/Pricing Comparison Finalize Potential Client List Licensing/Incorporation Secure Product Line Research/Secure Financing Warehouse Selection/Buildout Leasehold Improvements Delivery Vehicle Selection Develop Routing Hire Delivery/Sales Personnel Office Equipment/Computer/Supplies Order Beginning Inventory Press Releases/Advertising Organize Grand Opening Trade Show Totals Milestones Start Date 3/15/2003 4/15/2003 4/15/2003 4/15/2003 5/1/2003 5/15/2003 5/15/2003 5/15/2003 5/15/2003 7/1/2003 6/1/2003 6/15/2003 7/1/2003 7/1/2003 End Date 5/15/2003 5/15/2003 5/30/2003 5/15/2003 5/15/2003 6/15/2003 6/15/2003 7/15/2003 6/15/2003 8/1/2003 6/15/2003 7/15/2003 7/15/2003 8/1/2003 Budget $150 $1.000 $0 $100 $100 $5.

6. accounting. Jennifer Smith will be responsible for customer service. shipping and the general administration of the business. Because Steve will be spending a majority of his time in . Steve Smith will be responsible for the routing. The organizational structure is very simple. whose individual areas of expertise cover many of the functional aspects of the business.Management Summary 6. initially working with a small employee base that will cover sales and delivery. Management and personnel plans are covered in more detail in the topics to follow. Together they will be responsible for product selection and sales and marketing. as well as the delivery personnel will report to Jennifer. The support staff at the office and warehouse. distribution management and delivery systems.0 Management Summary The Coffee Warehouse will be owned and operated by its founders.1 Organizational Structure The Coffee Warehouse will be managed by the two founding partners.

Jennifer has held a variety of other inside business management and operations positions. he currently manages ten sales representatives and twenty four merchandisers. Jennifer's strengths and skills include strong management. 6. Prior to this position. Jennifer will be able to support any day-to-day needs that the personnel may have. It is our long-term goal to be the preferred employer within our niche of the beverage distribution industry. Steve has many industry contacts and an in-depth knowledge of the market. Our goal is to offer career opportunities. overseeing the accounting practices. and has strategically routed sales. The goal of The Coffee Warehouse is to have a team of committed associates who empower each other so that the customer's expectations can be exceeded. high levels of organization. he has helped increase market share from 25 to 40%.including desktop publishing and graphic layout . Smith Steve has a long history of experience in sales and distribution management. extensive computer knowledge . he will be in constant contact via computer or phone. merchandising and truck routes throughout the city.GENERAL Initially we expect to be able to handle business needs with Steve and Jennifer. and two product delivery/sales personnel. and day-to-day operations of the company. excellent public relations.the trade. As . Jennifer L. specifically in the beverage industry. As the sales and distribution manager for the largest beverage distributorship in the state. Over the last twenty years. During this time as sales manager. However even when Steve is out of the office.3 Personnel Plan PERSONNEL . one administrative assistant. 6.2 Management Team Steven D.and extensive presentation and reporting skills. advancement opportunities and a level of income and benefits that is competitive within the region and job classification. human resource issues. Smith Jennifer recently operated as general manager for a local business and directed a staff of thirteen. Steve has successfully built and maintained rapport with buyers in the city's largest key accounts.

Personnel Personnel Plan Jennifer Smith Sales/Delivery (Salary) Sales/Delivery (Commission) Delivery/Warehouse Personnel Administration Total People Total Payroll FY 2004 $30.with extra attention given to sales reps and delivery personnel who will deal directly with customers. personalized service we will carefully select all employees .400 $4.000 $20.500 $4.500 4 $102.720 4 $93.500 $19. We will also make sure that each employee understands our way of delivering quality service to each customer.000 $22.500 . over market labor rates to attract and retain quality help.000 4 $110. we will hold a minimum of quarterly meetings with all employees so that results can be reviewed and future plans can be discussed. we intend to hire additional employees one at a time and pay premium.which in this industry usually means granting immediate credit for damaged merchandise. We will have immediate back-up support available by phone from our office for more difficult service issues.500 $22. Not only will we train our employees to deliver excellent service. but also from retailers whom these sales reps have served.757 FY 2005 $35.500 $4.000 $21. we will give them the flexibility to respond creatively to client requests. At least twice a year. In addition. we will continually monitor our clients' level of satisfaction with our service through surveys and other convenient feedback opportunities. and adding additional merchandise to an order.400 $18.business continues to grow. To ensure our personnel are meeting our expectations.237 $20. We will carefully review references not just from past employers or manufacturers.500 $21. SALES AND DELIVERY In order to deliver high quality. a refresher course will be required on product knowledge and how to exceed our customer's expectations.000 FY 2006 $40. We will also give employees enough latitude so that they can respond immediately to almost any customer request or complaint .500 $21.

FY 2004 1 8.652 increasing to $2.993 . balance sheet.055 79% $15. business ratio.584 in FY2005 and $2.00% 8.00% 25. vehicle leases.Financial Plan 7.0 Financial Plan The Coffee Warehouse projects the gross margin to be at approximately 20-25 percent. General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 7.936.00% 8. utilities. operating on average at a 25% profit margin.2 Break-even Analysis The following table and chart illustrate our break-even analysis. Fixed costs include our warehouse lease. break-even analysis. With our fixed costs estimate of approximately $15. and other financial details are shown in the appendix.229. and an estimation of other running costs.137 in FY2006. payroll.00% 8. insurance.558.42% 0 Break-even Analysis Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost Break-even Analysis $75.000 per month. Cash-flow analysis.00% 25. we will need to sell 67.42% 0 FY 2005 2 8. Sales projections for FY2004 are at $2.666 units to break-even in a month. 7.1 Important Assumptions General assumptions for this plan are on the following table.00% 25.00% 0 FY 2006 3 8.

907 21.400 $13.460 $7.584 $2.300 $15.230 $626.7.757 $0 $0 $33.600 $3.000 $14.260 $7.600 .300 $12.000 $0 $0 $34.33% FY 2006 $2.3 Projected Profit and Loss The following table and charts show the projected profit and loss.229.500 $6.500 $3.400 $12.102 21. Monthly projections are included in the appendix.747 21.137 $2.200 $3.096 $7.500 $16.600 $110.000 $3.35% $93.400 $12.200 $6.000 $3.000 $2.800 $6.754.652 $1.550 $475.837 $545.000 $3.000 $2.31% FY 2005 $2.600 $102.012.558.500 $0 $0 $35.575 $13.936.064 $12. Profit and Loss Pro Forma Profit and Loss Total Income Cost of Goods Sold Gross Profit Gross Profit % Expenses Payroll Other Depreciation Rent Utilities and Phone Insurance Payroll Burden Leased Equipment (Delivery Vehicles) Leased Equipment (Warehouse) Leased Equipment (Other) Fuel (delivery) Advertising / Promotion FY 2004 $2.309.000 $2.

272 $409.387 $341.186 $283. etc) Total Expense Profit Before Interest and Taxes EBITDA Other Income Interest Income Other Income Account Name Total Other Income Other Expense Account Name Other Expense Account Name Total Other Expense Net Other Income Net Profit Net Profit/Sales Profit Monthly $2.400 $2.200 $2.400 -----------$191.360 $341.186 $0 $0 $0 $0 $0 $0 $0 $283.600 $3.272 $0 $0 $0 $0 $0 $0 $0 $409.917 $283.94% Profit Yearly .387 $0 $0 $0 $0 $0 $0 $0 $341.635 $409.34% $2.700 -----------$204.272 13.Professional Services Miscellaneous (office supplies.186 12.70% $2.387 13.000 -----------$217.

Monthly cash flow projections are included in the appendix.Gross Margin Monthly 7. and the chart illustrates monthly cash flow in the first year. Cash Flow Pro Forma Cash Flow FY 2004 FY 2005 FY 2006 .4 Projected Cash Flow The following table shows cash flow for the three years.

652 $2.861.229.000 $0 $0 $0 $24.936.584 $2.137 FY 2006 $93.000 $2.500 $2.558. HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax.584 $2.757 $1.229.767.759 $2.000 $0 $0 $0 $24.982 $0 $0 $24.647 $102.561.558.000 $0 .584 FY 2005 $0 $0 $0 $0 $0 $0 $0 $0 $2.558.459.652 $2.137 $0 $0 $0 $0 $0 $0 $0 $0 $2.229.936.759 $110.357. VAT. VAT.137 $2.890 $1.Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income Sales Tax.451.936.652 FY 2004 $0 $0 $0 $0 $0 $0 $0 $0 $2. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities $2.482 $2.

759 $74.750 $858.5 Projected Balance Sheet The projected balance sheet is shown in the following table.929 $18.585.Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance Cash $0 $0 $0 $0 $1.750 $1.824 $428.308 $778.785 $471.973 FY 2005 FY 2006 .155 $778.885.005 $353.483.982 $350. Balance Sheet Pro Forma Balance Sheet FY 2004 Assets Current Assets Cash Inventory Other Current Assets Total Current Assets $353.805 $0 $0 $0 $0 $2.630 $0 $0 $0 $0 $2.805 $358.268. with monthly projections in the appendix.750 $730.630 $410.785 7.754 $428.198 $18.438 $18.647 $344.

736 $0 $0 $0 $858.394 $1.186 $25.272 $1.973 FY 2006 $203.308 FY 2005 $178.000 $0 $225.018 $25.00% FY 2005 14.76% 0.754 $291.736 $341.308 $633.48% 100.042.186 $0 $225.122 $858.00% 49.00% 37.268.579 $23.268.042.00% 100. Ratios Ratio Analysis Sales Growth Percent of Total Assets Inventory Other Current Assets Total Current Assets FY 2004 0.57% 100.122 $0 $0 $0 $1.15% 1.6 Business Ratios $0 $0 $0 $730.000 $608.394 The table shows projected business ratios.88% 2.000 $0 $226.018 $71.75% FY 2006 Industry Profile 14.973 $1.018 $0 $439.00% 100.450) $283.00% .00% 0.387 $633.18% 100.736 $730.186 $291.579 $25.186 $47.Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 7.579 $0 $226.754 FY 2004 $368.00% 47.000 ($16.000 $266.122 $409.000 $0 $439.02% 2.

a n.75% FY 2004 12.00% 100.23 12. General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios 0.00% 1.00% 13.00% 21.00% 100.85 60.17% 0.08% 39.07% 38.34% 53.60 3.66 0.92% 5.a .14% 100.a n.00% 17.00% 0.70% 0.76% 100.35% 7.80 27 3.24% 0.23 12.00% 0.08% 97.a n.a 10.07% 3.00% 21.00% 100.00 0.17 46 2.00% 60.00% 26.31 n.00% 100.26% 0.00% 0.94% 39.17 28 2.00% 21.Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling.00% 13.00% 0.00% n.92% 39.86% 82.00 0.08% 0.00% 100.00% 17.86% 0.86% 39.52 17.24% 53.00% 100.00% 12.81 1.94% 0.00% 0.25% FY 2006 13.24% 73.a n.26% 32.31% 8.33% 8.05 5.00% 60.00% 0.00% 0.92% 100.00% 26.61% 0.77% FY 2005 13.70% 97.51% 0.00% 0.91 5.98 5.34% 0.99 26.00% 0.

43 18% 3.00 0.Debt to Net Worth Current Liab.a n.a .a n.34 26% 1.99 4.00 $1.00 $633.50 1.394 0.00 n.82 0.a n.00 0.04 0.64 0.a n.00 n. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 1.33 60% 0.a $291.736 0.36 1.122 0.a n.22 1. to Liab.a n.00 0.52 2.00 0.042.85 7.a n.00 0.

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