Table of Contents

1.0 Executive Summary 1

Chart: Highlights.................................................................................................................................3
1.1 Objectives..........................................................................................................................................3
1.2 Keys to Success.................................................................................................................................4
1.3 Mission..............................................................................................................................................4
2.0 Company Summary...............................................................................................................................5
2.1 Start-up Summary..............................................................................................................................6
Table: Start-up Funding.......................................................................................................................6
Chart: Start-up.....................................................................................................................................7
Table: Start-up.....................................................................................................................................7
2.2 Company Ownership.........................................................................................................................8
2.3 Company Locations and Facilities.....................................................................................................8
2.4 Company Values................................................................................................................................8
3.0 Products.................................................................................................................................................9
3.1 Product Description...........................................................................................................................9
3.2 Competitive Comparison.................................................................................................................10
3.3 Macro-environment.........................................................................................................................10
3.4 Technology......................................................................................................................................11
3.5 Future Products................................................................................................................................11
3.6 Fulfillment.......................................................................................................................................11
4.0 SWOT Analysis...................................................................................................................................11
4.1 Strengths..........................................................................................................................................11
4.2 Weaknesses......................................................................................................................................12
4.3 Opportunities...................................................................................................................................12
4.4 Threats.............................................................................................................................................12
5.0 Market Analysis Summary..................................................................................................................12
5.1 Market Segmentation.......................................................................................................................13
Chart: Market Analysis (Pie).............................................................................................................14
Table: Market Analysis......................................................................................................................14
5.2 Target Market Segment Strategy.....................................................................................................14
5.2.1 Market Trends...........................................................................................................................14
5.2.2 Market Growth..........................................................................................................................15
5.2.3 Market Needs............................................................................................................................15
5.3 Industry Analysis.............................................................................................................................15
5.3.1 Competition and Buying Patterns.............................................................................................15
5.3.2 Main Competitors.....................................................................................................................15
6.0 Strategy and Implementation Summary..............................................................................................17
6.1 Value Proposition............................................................................................................................17
6.2 Competitive Edge............................................................................................................................17
6.3 Sales Strategy...................................................................................................................................18
6.3.1 Sales Forecast...........................................................................................................................18
Table: Sales Forecast.....................................................................................................................18
Chart: Sales Monthly.....................................................................................................................18
6.4 Marketing Strategy..........................................................................................................................19
6.4.1 Service Provision......................................................................................................................19
6.4.2 Pricing Strategy........................................................................................................................19
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6.4.3 Promotion Strategy...................................................................................................................19

6.4.4 Distribution Strategy.................................................................................................................22
6.4.5 Product Marketing....................................................................................................................23
6.4.6 Product Packaging....................................................................................................................23
6.5 Corporate Social Responsibility......................................................................................................23
7.0 Production Summary...........................................................................................................................24
7.1 Suppliers..........................................................................................................................................24
7.2 Receiving.........................................................................................................................................24
7.3 Storage.............................................................................................................................................24
7.4 By-Products.....................................................................................................................................25
8.0 Management Summary........................................................................................................................25
8.1 Management Team..........................................................................................................................25
8.2 Personnel Plan.................................................................................................................................26
Table: Personnel................................................................................................................................26
8.3 Training............................................................................................................................................26
8.4 Feedback and Control......................................................................................................................27
9.0 Financial Plan......................................................................................................................................27
9.1 Important Assumptions....................................................................................................................28
Table: General Assumptions..............................................................................................................28
9.2 Break-even Analysis........................................................................................................................28
9.2 Break-even Analysis........................................................................................................................28
Table: Break-even Analysis...............................................................................................................28
Chart: Break-even Analysis...............................................................................................................29
9.3 Projected Profit and Loss.................................................................................................................29
Table: Profit and Loss........................................................................................................................30
9.4 Key Financial Indicators..................................................................................................................30
9.4 Key Financial Indicators..................................................................................................................30
Chart: Benchmarks............................................................................................................................31
9.5 Expense Forecast.............................................................................................................................31
9.6 Projected Cash Flow........................................................................................................................32
Chart: Cash........................................................................................................................................33
Table: Cash Flow...............................................................................................................................32
9.7 Projected Balance Sheet..................................................................................................................34
9.7 Projected Balance Sheet..................................................................................................................34
Table: Balance Sheet.........................................................................................................................34
9.8 Business Ratios................................................................................................................................34
9.8 Business Ratios................................................................................................................................34
Table: Ratios......................................................................................................................................35
10.0 Controls..............................................................................................................................................36
10.0 Controls..............................................................................................................................................36
10.1 Contingency Planning....................................................................................................................36
Table: Sales Forecast...................................................................................................................................1
Table: Personnel..........................................................................................................................................2
Table: Personnel..........................................................................................................................................2
Table: General Assumptions........................................................................................................................3
Table: General Assumptions........................................................................................................................3
Table: Profit and Loss..................................................................................................................................4
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Table: Profit and Loss..................................................................................................................................4

Table: Cash Flow.........................................................................................................................................5
Table: Cash Flow.........................................................................................................................................5
Table: Balance Sheet...................................................................................................................................6
Table: Balance Sheet...................................................................................................................................6

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 Sedibeng Breweries

1.0 Executive Summary

BGI Breweries is a medium-scale brewery that is located in the growing industrial centre of
Hawassa, Ethiopia. This is a relatively new business in its start-up phase having been incorporated
recently.

We are on the brink of penetrating a lucrative market in a rapidly-growing economy. The current
trend towards an increase in the number of entrepreneurs and competition amongst existing
companies presents an opportunity for BGI Breweries to penetrate the market. Our products will be
positioned very carefully. They will be of extremely high quality to ensure customer satisfaction,
supported by impeccable service to our customers. Our primary goal will be to establish and
strengthen our license to trade, which will be bestowed by the communities in which we function. As
BGI Breweries prospers and grows, these communities will continue to benefit from both the value
created by BGI Breweries and its behavior as a corporate citizen.

Initial plans are to produce three main lines of products primarily focusing on X, Y, and Z beer
(which comes in different flavors: B, P, C and S). These products will be sold in different sized
containers ranging from the 250 ml ginger beer to the 500 ml traditional beer. These products shall
be extensively distributed to remote, yet extremely viable areas where the market is appreciative of
readily available, good quality brew.

To prosper there is need for BGI to be flexible and responsive, to delight customers by providing
them with what they want, when they want it and before the competition. From product concept to
goods dispatch we intend to ensure that every policy and procedure, system and process must have
the objective of improving the flexibility and response of the whole company. There is a need for
interaction between all functional areas, particularly between marketing and manufacturing, if the
organization is to realize its full potential, with manufacturing being employed as a strategic weapon.

Our marketing strategy will be based mainly on ensuring customers know what need the product(s)
is able to fulfill, and making the right product and information available to the right target customer.
Hence we intend to implement a market penetration strategy that will ensure that we are well known
and respected in our respective industry. We will ensure that our products' prices take into
consideration people's budgets and that these people appreciate the product and know that it exists,
including where to find it. However these prices will also take into consideration the cost of
production and distribution so as to ensure that we remain viable and operational. The marketing
effort will convey the sense of quality and satisfaction in every picture, every promotion, and every
publication. Our promotional strategy will involve integrating advertising, events, personal selling,
public relations and direct marketing. In the long term Internet marketing shall also be undertaken,
details of which are provided in the marketing section of the following plan.

Our target markets will primarily constitute the corporate and working class who appreciate good
quality traditional beer. The working class will range from the miners, who constitute a large portion
of the market, to administrative personnel appreciative of good quality traditional beer. The
corporate or managerial segment will constitute those managers, who though aware of their image
and reputation, want to put aside their ties and jackets after hours and/or on weekends to drink good
traditional beer, easily accessible in the urban areas. The common bond will be the appreciation of a
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good-quality traditional brew able to fulfill their thirst. BGI is primarily targeting a market share of
6% to attain sales of approximately $1.5 million in our initial year. BGI Breweries will pride itself
on its production ability, competitive prices, its high standards of quality and its adaptability to
changes in the market and in the method of its practice.

It is important to recognize that we do not intend that our tangible resources alone will make us
potent competitors but more so our intangibles, such as our ability to relate to consumers,
management style, corporate culture and commitment. These elements will differentiate us from our
competitors and contribute towards the development of a sustainable competitive advantage.

We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure
job satisfaction and enrichment through delegation of authority. Our compensation will include
health care, generous profit sharing, plus a minimum of three weeks’ vacation. As an equal
opportunity employer, we respect the diversity and human rights of our people, and strive to achieve
optimal productivity, while realizing each employee's full potential. Awards will be given out to
outstanding individuals, groups and plants for hard work and production so as to instill a sense of
fun  and promote the maintenance of high standards. By encouraging all employees close to our
customers to think tactically about what BGI Breweries service offerings should be, and by having
enthusiastic, capable and empowered people interacting with our customers, we build the
competitive advantage of being able to meet our customers' needs better than anyone else.

BGI Breweries intends to provide the customer with more than just a traditional brew. We intend to
provide a quality brew that will not only be refreshing and pleasurable, but also encourage
gatherings and sharing of fun. Our customers are assured of products that have been produced using
the highest quality standards.

As we grow we want to grow right. Initially pursuing organic development and expansion we intend
to undertake vertical integration in the future so as to be in total control of our raw materials and
goods dispatch. For example, we realizing that we have to be in constant touch with our stakeholders
to ensure market knowledge at all times. This is the nature of the channels we deal with. Also, we
intend to build our management team correctly. We need the right people, in the right place, at the
right time if we are to ensure optimum growth. We intend to develop our team so that our people can
grow as the company grows-- a mutually beneficial relationship. We shall strive to attain our
primary goal, which is to develop and strengthen our license to trade, bestowed by the communities
in which we function. As BGI Breweries prospers and grows, these communities will continue to
benefit from both the value created by BGI and its behavior as a corporate citizen.

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Chart: Highlights

Highlights

$1,800,000

$1,600,000

$1,400,000

$1,200,000
Sales

$1,000,000 Gross Margin

$800,000 Net Profit

$600,000

$400,000

$200,000

$0
Year 1 Year 2 Year 3

1.1 Objectives

Our business strategy will revolve around the need to provide quality brew to our various target
customers, in the process fully satisfying their needs. This shall be undertaken through the
implementation of high quality control standards and technological innovations, as well as the
recruitment of a professional production and sales team, and the production of good quality
marketing material designed to cater for various kinds of customers. This marketing material shall be
professionally done so as to be reflective of our intended image and reputation. We shall position
ourselves as a quality manufacturer that strives to provide quench fulfillment, enjoyment, reliability
and a good image. We intend to establish a good rapport with all the relevant stakeholders.

With time we intend to establish our presence on the World Wide Web, which will increase the
knowledge of our products to the various market segments we shall be targeting. Web presence is a
natural objective in reaching the appropriate potential customers. Well-done brochures, company
profiles and business cards often has a triggering effect on clients contemplating on ordering our
products. Hence this will undoubtedly generate increased sales of our products.

Our objectives will revolve around the following guiding principles:

 Provision of a great work environment, treating each other with respect and dignity.
 Apply high-quality standards of excellence to all business processes.
 Develop enthusiastically-satisfied customers all of the time.
 Contribute positively to our communities and our environment.
 To continuously formalize and measure cross-functional working communication so as to ensure
that the various departments work harmoniously towards attainment of company objectives.

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 To instill a culture of continuous improvement in beating standards of customer satisfaction and

efficiency.
 Fully commit to supporting growth and development in the economy.

Ultimately we intend to create a stable business platform that will create prosperity for all those
involved in the business venture at all levels, and to uplift unemployed Botswanans who are
prepared to participate in this venture.

1.2 Keys to Success

The keys to BGI Breweries success will undoubtedly be effective market segmentation through
identification of several niche markets and implementation strategies. Along these lines the company
intends to implement advertising, personal selling and direct marketing strategies aimed at the target
markets. Our advertising marketing strategies will rotate around.

Hence our key success factors will include the following:

Excellence in Fulfilling the Promise: We intend to produce and provide products of

uncompromised quality to our customers. This is so as to meet the needs and standards of
our customers.

Effective and Efficient Distribution Network: The importance of such cannot be overemphasized
in our line of business. We intend to establish an excellent distribution network that will enable us to
rapidly respond to customers' orders, and be available in remote areas our competitor has not yet
exploited.

Assembly Technology: To ensure quality brewed beverages it is essential to utilize the latest and
most efficient assembly technology. Keeping abreast with technological developments will ensure
we gain, and maintain, a competitive advantage utilizing the latest production techniques.

Loyalty and Dedication: The loyalty and dedication of our employees shall be essential to the
prosperity of the organization. We recognize that Corporate commitment to success should lead to
the survival and prosperity of the products, and ultimately the organization as a whole.

Marketing Know-how: In an increasingly competitive market there is need to aggressively market

our business so as to be continuously at the top of our prospective and current client's minds.

Adherence to Stringent Values and Principles: BGI needs to acknowledge the fact that the
financial and strategic management of the business will ultimately determine its prosperity and
success. Hence we intend to adhere to stringent values and principles that will enable such to be
achieved.

1.3 Mission

BGI Breweries intends to create a pleasant, enjoyable and sociable environment through the
provision of refreshing high-quality brews. Hence we intend to assist in the creation of a welcoming
and relaxed ambiance reflective of people enjoying themselves. We are sensitive to the taste, look
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and feel of good beer, as well as affordable prices depending on the market. We intend to provide the
best possible value to our customers who care about quality products at affordable prices, and we
want every dollar spent on our products to be well spent. Hence our value proposition is to sell the
benefit of refreshes and enjoyment to our various consumers at reasonable prices.

Internally we intend to create and nurture a healthy, creative, respectful and enjoyable office and
plant environment, in which our employees are fairly compensated and encouraged to respect the
customer and the quality of the product we produce. In addition follow-up will be mandatory so as
to ensure customer satisfaction and make any improvements as recommended by the customers in
future. We seek a fair and responsible profit, enough to keep the company financially healthy for the
short and long term, and to fairly compensate owners and investors for the money and risk.

We also intend to obtain ISO 9000 certification from the South African Bureau of Standards (SABS)
so that our products are internationally recognized and approved. This will assist in our penetrating
the regional and international markets, intentions of which we have in future. However this will
occur after we have established ourselves on the local market. The above is well summarized in our
mission statement which goes as follows:

Our mission is to carefully attend to detail in the hygiene in all our brews, and to uphold superb
quality at all levels of production. To satisfy all our customers and stakeholders.

2.0 Company Summary

BGI Breweries is a relatively new company providing high quality alcoholic and non-alcoholic
beverages in the local market. BGI Breweries intends to focus on the brewing process and the
brewery itself. The brewery will house four stainless steel vessels whose shiny finish will be
highlighted by the flood lights on the ceiling. Interested stakeholders will be able to observe the
brewing process during the day and will be offered guided educational tours of the brewing facility.

It will focus initially on providing and satisfying two kinds of markets:

 Corporate Class: This will constitute all those people in middle and top managerial positions
who appreciate good quality traditional beer.
 Working Class: This will range from the miners who constitute a large portion of the market to
administrative personnel appreciative of good quality traditional beer.

As it grows it will take on people and expand into related markets. It will also look for additional
leverage by establishing relationships and representations with appropriate strategic allies.

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2.1 Start-up Summary

Total start-up capital and expenses (including legal costs, logo design, stationery and related
expenses) came to approximately $41,700. Start-up assets required and utilized included brewing
plant and machinery, pick-ups, office furniture, personal computers and other office equipment. This
figure comes to $840,000.
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $41,700
Start-up Assets to Fund $840,000
Total Funding Required $881,700

Assets
Non-cash Assets from Start-up $760,000
Cash Requirements from Start-up $80,000
Additional Cash Raised $0
Cash Balance on Starting Date $80,000
Total Assets $840,000

Liabilities and Capital

Liabilities
Current Borrowing $20,000
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $20,000

Capital

Planned Investment
Investor 1 $650,000
Investor 2 $76,700
Investor 3 $35,000
Investor 4 $100,000
Additional Investment Requirement $0
Total Planned Investment $861,700

Loss at Start-up (Start-up Expenses) ($41,700)

Total Capital $820,000

Total Capital and Liabilities $840,000

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Total Funding $881,700

Chart: Start-up

Start-up

$900,000

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0
Expenses Assets Investment Loans

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $2,000
Brochures $2,000
Insurance $700
Rent $6,000
Research and Development $20,000
Expensed Equipment $10,000
Total Start-up Expenses $41,700

Start-up Assets
Cash Required $80,000
Start-up Inventory $10,000
Other Current Assets $0
Long-term Assets $750,000
Total Assets $840,000

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Total Requirements $881,700

2 Company Ownership

BGI Breweries is a Private Limited company incorporated at the Registrar of Companies through the
foresight and vision of Mr. X and Mr. Y. Its fiscal year is the calendar year. Though it has only been
in existence for seven months it realizes the potential market and opportunity for growth given
implementation of the appropriate strategies, aided by the necessary finances.

2.3 Company Locations and Facilities

At present the company plants and offices are located in the growing industrial center of Hawassa,
Ethiopia with intentions of establishing an additional plant in other areas, largely depending on the
dictates of the market and the obtaining of a lease. Our current facilities provide offices, plants and
machinery, office equipment and so on.

2.4 Company Values

BGI Breweries is committed towards an open governance system whereby its activities are managed
and undertaken ethically, transparently, and in the interests of all concerned stakeholders.

This shall be undertaken through implementation of the following company values:

 We intend to conduct our business ethically and transparently, respecting all applicable laws.
 We intend to be a responsible corporate citizen fulfilling our obligations as an integral member
of society. Hence our business decisions shall give appropriate weight and consideration to social
and environmental impacts.
 We intend to provide products of uncompromising quality to meet the needs of our customers.
 We intend to seek mutually beneficial and enduring relationships in all the commitments that we
make, ensuring that they are straightforward and honest. Hence our communication shall be open
and accurate, internally and externally.
 We intend to optimize the creation of wealth to provide fair reward and recognition for the
contributions of our stakeholders.
 Ultimately we intend to uphold all the above company values, promoting our employees and
respective third parties engaged by us to do likewise.

Through promotion and implementation of the above stated company values we believe that we will
be able to attain our corporate and stakeholders' goals and objectives for the benefit of all concerned,
in particular the communities in which we will operate.

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3.0 Products

BGI Breweries produces and markets several products. There are three main products currently in its
production line. These are:

1. X Beer
2. Y Beer
3. Z Beer (Note: Z comes in different flavors):

o B
o P
o C
o S

All products are periodically taken for testing to the National Food Laboratory for quality checks so
as to ensure that they conform to required quality standards.

3.1 Product Description

BGI Breweries produces products of high quality and impeccable taste. The company currently
produces three main lines of products, namely X beer, Y beer and Z beer. All three have unique
properties that will enable them to excel on the market. We will also be watching for technological
developments in South Africa and overseas, allowing us to be first on the market and produce high-
quality products through cost effective means. In addition the company will select suitable products
for production under license.

Our current product listing is as follows:

1. X-Beer
Although similar in appearance to the only other product available in the market, our beer has the
superior flavour and texture, smooth, with no rough solids. This stems from (discussion removed
for confidentiality).
2. Y-Beer
This refreshing drink has the unique feature that it can be enjoyed both as an alcoholic or non-
alcoholic drink, depending on the fermentation period after production. If consumed fresh, that
is, within the first week of production, it contains only traces of alcohol, typically even less than
that found in medication (discussion removed for confidentiality).
3. Z-Beer
This traditional food product is widely consumed as a substitute for regular meals and energy
booster, whenever available. Up to now it has only been available in two sources, namely home
prepared or more commonly bought from a shop having a fridge to keep the product refrigerated.

This denies the people in rural area access to these delicious and nutritious foodstuffs. In fact, it is so
wholesome that a growing child is able survive on one litter of this per day, as it contains protein,
starches, calcium, vitamins and other essential trace elements. We have the ability to produce a long
life Z that needs NO refrigeration, which can be sold from the shelf in the same fashion as Ultra Mel
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and similar products. This means that it can be bought by consumers who might not always have
access to cooling or refrigeration facilities, to be consumed later, as a food whilst way from home, or
as an emergency food supply. This is available in several flavors, such as x, y, w, t, s and other xx
flavors that the market might want. It is also a good product to use in school feeding schemes and
similar projects.

3.2 Competitive Comparison

Identifying competition in terms of companies that fill the same needs that we do, our competitors
are few in our main product lines, though dominant in the market. Hence there will be a need to
strongly differentiate ourselves from these other businesses. However on a broader scale our
competition comes in several forms:

1. The most significant competition is that of XX Breweries, which is arguably the market leader.
Having been on the market for a relatively long period of time added to the fact that they are
backed by Y Breweries' financial, technological and human resources acumen. They have a wide
and established distribution network that they utilize to their advantage. Our key advantage in
competition with XX Breweries is that we are accessible in extremely remote areas. We intend to
vigorously undertake new channel and distribution development in addition to deploying
aggressive marketing strategies. Also, strategic alliances shall assist in our attainment of goals
and objectives.
2. Other manufacturers of traditional brews including homes and local bars will also constitute our
competitors. They often have access to the local and remote areas and knowledge of these areas.
However the product is not constantly of high standard, which we shall fully exploit.
3. On a larger scale manufacturers of other beverages including soft drinks and coffees also
constitute competition, but of a generic nature, as people have to choose between them as
refreshments. These products being marketed in supermarkets are often advertised on an
extensive basis. To this end we intend to implement a strategy that will integrate the various
promotional elements or tools such that our products are well known and appreciated on the
market.

3.3 Macro-environment

Over the last few months abnormal weather has affected many parts of Southern Africa, including
Botswana, during the key summer season. It has been extraordinarily severe with heavy rainfall,
flooding and there definitely promises to be low temperatures, particularly in the winter season. This
is likely to have an adverse effect on our initial financial performance, though marginal as
consumption levels may decrease slightly.

At a large scale, market research demonstrates that the brewing industry market is growing and
changing. Generally there is a trend toward more appealing and attractive brews as potential
customers either are moving to the urban areas as a result of urbanization or are satisfied with an
existing brew in their area. Research indicates that those in the rural areas are often satisfied with the
existing brew due to lack of access to other higher-quality brews, whilst the new generation of
executives being more educated and aware of the global environment wants to be seen drinking
something attractive and recognized by others--status recognition. In addition this same market is not
only more image conscious but appreciative of a quality brew as it is more selective. Therefore with
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the emergence of this generation of individuals, the appreciation of quality brews and packaging,
dictates that our product lines will be popular.

Private sector development has been recognized as a vital ingredient in creating employment and
training opportunities, and realizing the national goal of sustainable economic diversification. In
addition to the country increasingly becoming a tourist destination, we foresee the demand for our
products especially in the resorts and lodges where it will be promoted. Through undertaking of our
professional business activities we foresee that it should not be too difficult to gain market
acceptance provided we deliver the final product on time, of good quality, and at competitive prices.

3.4 Technology

BGI Breweries will strive to maintain the latest and most efficient assembly technology so as to
ensure quality-brewed beverages, and maintain low production costs ultimately benefiting the
consumer. Keeping abreast with technological developments will ensure we gain and maintain a
competitive advantage utilizing the latest production techniques.

3.5 Future Products

In putting the company together we have attempted to offer enough products to allow us to always
be in demand by our customers and clients. The most important factor in developing future products
is market need. Our understanding of the needs of our target market segments shall be one of our
competitive advantages. It is critical to our effort to develop the right new products. We also intend
to have what we call a "core product engine" that will be the foundation of future products. This
shall be established in time as we determine our core product. In the future, BGI Breweries will
broaden its coverage by expanding into additional markets (i.e., the whole of Southern Africa) and
additional product areas. In doing so we will strive to ensure that it is compatible with the existing
products and assembly technology.

3.6 Fulfillment

1. The key fulfillment and delivery will be provided by the principals and values of the business.
The real core value will be the provision of a thirst quenching refreshing brew, provided by a
combination of quality ingredients, good production techniques, hard work, and education (in
that order). Hence we intend to ensure that the products we produce are always of high quality
and standards, and available to the relevant target market.
2. We will turn to reliable farmers, suppliers and distributors who will assist in ensuring that the
products are delivered timely and are of the highest quality. We will also rely on these
stakeholders for relevant information on the market situation (trends, consumer tastes, feelings
and comments amongst other things).

4.0 SWOT Analysis

We are in a highly lucrative market in a rapidly growing economy. We foresee our strengths as the
ability to respond quickly to what the market dictates and to provide quality brew in a growing
market. In addition, through aggressive marketing and quality management we intend to become a
well-respected and known entity in our respective industry. Our key personnel have a wide and
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thorough knowledge of the local manufacturing market and expertise, which will go towards
penetrating the market. However we acknowledge our weakness of a medium-sized company
without a lot of experience, and the threat of new competition taking aim at our niche. Below are the
summarized strengths, weaknesses, opportunities and threats.

4.1 Strengths

 Strategic market segmentation and implementation strategies.

 Diversified market segments: ensuring the lack of dependency on one particular market.
 Combination of skills in directorship. The directors intend to jointly develop business strategy
and long-term plans, having wide experience in product and business know-how.
 Establishment and maintenance of strong capital base.
 An aggressive and focused marketing campaign with clear goals and strategies.

4.2 Weaknesses

 Lack of a reputation in comparison to our competitors.

 The introduction of new organizational practices and personnel who have not previously worked
together presents a challenge to the company.
 A limited financial base compared to the major players in the industry.
 Lack of clear-cut channels of distribution.
 Establishment on the Internet will produce technological challenges.

4.3 Opportunities

 Specific niche: Appreciation for high-quality brew, enjoyment, and refreshment (and integration
therein).
 The new generation of individuals and families has a far greater appreciation of attractive
packaging (image conscious).
 Current drive by government and specialized institutions such as the Botswana Export
Development and Investment Authority towards export of locally manufactured products.
 Internet marketing and sales--though still in its infancy.
 Increasing number of foreign firms, especially from South Africa looking at penetrating the
market.

4.4 Threats

The present growth in the market may result in market saturation, through competition. This
competition could emerge from a variety of given sources including:

1. Established mass-market companies' development of new lines and vertically integrating so as to

be totally in control of supplies and products being sold on the respective markets.
2. New marketing strategies and tactics by established products and companies.
3. Existing competition.
4. Other start-up companies generated by healthy economic growth nationwide.
5. Intolerable price increases by foreign suppliers may occur.
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5.0 Market Analysis Summary

Today we are experiencing rapid growth in the economy of unsurpassed nature. This has been
brought about by (amongst other things) the relaxation of foreign exchange policies and macro
economic policies geared towards attracting foreign investors into the country. The fiscal and
monetary policies of the government geared towards maintaining growth with social justice have
largely contributed towards this, evidenced by our economy averaging a growth rate of 7% since
1990--very high by international standards.

The current drive and emphasis by the government on diversification of the industrial base away
from the minerals sector presents an opportunity for BGI Breweries to make a valuable contribution
towards achieving this goal. This will result in implementation of modern production techniques and
transfer of knowledge. Having undertaken a thorough and comprehensive research of the market we
realized that there was a need for a manufacturer that focuses on producing affordable thirst
quenching brew tailored to satisfying client's needs. Though there are breweries currently on the
market, some of whom have been in existence for a relatively long period of time, we believe that
there is a market need for one (ourselves in this instance) that particularly focuses on the low to
medium earning individuals. We intend to provide products of extremely high quality--something
that cannot be over-emphasized in the international arena with the current drive towards
globalization. The marketing mix of the products has been carefully and strategically put together to
position them in the market.

Aware of the fact that we will be operating in a predominantly monopolistic market structure we
intend to ensure that our marketing strategies are considerate of the importance of the fit between our
products capabilities and benefits, and the target market, so as to develop a strong sustainable
competitive position in the market. As a result we intend to implement a niche marketing strategy,
focusing on certain target markets, particularly in view of XX Breweries dominance on the market.
Our initial overall target market share shall be 6% of the local market. This share will vary with the
actual products, with ginger beer having a larger share than traditional beer due to its uniqueness.

We appreciate that entering such a market is not a bed of roses, particularly as it is monopolistic.
Hence we intend to implement an aggressive marketing strategy, well supported by the other
business functions. The above prognosis influenced our decision to enter the brewing industry.

5.1 Market Segmentation

BGI Breweries will be focusing on the corporate and working class who appreciate good quality
traditional beer. The working class will range from the miners who constitute a large portion of the
market, to administrative personnel appreciative of good quality traditional beer. The corporate or
managerial segment will constitute those managers who though aware of their image and reputation,
want to put aside their ties and jackets after hours and/or on weekends to drink good traditional beer,
easily accessible in the urban areas.

Our most important group of potential customers are those in the rural areas who often converge
after hours to socialize and update one another on local news. These are potential customers who
want to have an enjoyable time whilst drinking a good refreshing beverage. They do not want to
waste their time making their own brew, but appreciate a good quality brew at a reasonable price.
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We also intend to appeal to the foreign and local tourists who would be looking at experiencing
traditional foods and drinks, a change from the usual beverages they often have.

Chart: Market Analysis (Pie)

Market Analysis (Pie)

White Collar Drinkers

Blue Collar Drinkers

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Growth CAGR
Customers
White Collar 4% 100,147 104,153 108,319 112,652 117,158 4.00%
Drinkers
Blue Collar 2% 693,675 709,630 725,951 742,648 759,729 2.30%
Drinkers
Total 2.52% 793,822 813,783 834,270 855,300 876,887 2.52%

5.2 Target Market Segment Strategy

Our marketing strategy will be based mainly on making the right product available to the right target
customer. We will ensure that our products' prices take into consideration peoples' budgets, and that
these people appreciate the product and know that it exists, including where to find it. The marketing
will convey the sense of quality in every picture, every promotion, and every publication. There is
already a sense of segment strategy in the way we define our target market. We are choosing to
compete in areas that lend themselves to local competition, service and channel areas that match our
strengths, and avoid our weaknesses.

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Our strategy calls for the development of relationships with suppliers, distributors and retailers to
support our business. Regular visits will be undertaken to these areas so as to ensure that we are
meeting their expectations.

5.2.1 Market Trends

Our target markets are increasingly growing towards recognizing the difference between poor
quality brews and those of high quality. This development is an important trend for us as it
represents our target market. We now are having an increasing number of people who appreciate the
traditional brews whilst living in the urban areas. With this in mind we intend to ensure that our
packaging is respectable and attractive.

Today's extremely stressful work environment dictates that individuals consume healthy drinks
especially in the summer season, this presents an opportunity that we may exploit, marketing the
health aspect of our beverages.

5.2.2 Market Growth

Import statistics provide a reliable guide as to the size of the brewing industry. According to the
Trade Department, the market has been growing at a steady rate of 7% per annum although it is
projected to increase slightly in 1999 and 2000.  According to the most recent Trade Department
import statistics for beer and wine, total beer and wine imports stood at 10,421,968 liters
($14,473,000) in 1998 whilst total exports stood at 864,668 liters ($281,363) in the same year. This
brought about a total market size estimated at just over 11,286,636 liters in 1998. Specifically,
imports for traditional beer stood at 310,627 liters in 1998 which represented an increase of
approximately 32.56% from the previous year (1997). In 1997 these imports had risen by
approximately 66.14%.

5.2.3 Market Needs

BGI Breweries will set out to provide good quality products that will help instill a jovial
environment. BGI Breweries intends to provide the customer with more than a drink to quench one's
thirst. We intend to provide a quality brew that not only quenches one's thirst but enables one to
enjoy themselves and be proud of it. The quality of raw materials and assembly technology evident
in our products will serve to enhance the appearance of our customers, in turn adding to their status.
The large market is due to the fact that opaque beer is traditional beer for most Botswana. It is
consumed for social, ritual and ceremonial purposes and hence appeals to a vast majority of the rural
population in particular.

5.3 Industry Analysis

Industry analysis information is presented in the following subtopics.

5.3.1 Competition and Buying Patterns

The key element in purchase decisions made at the BGI Breweries customer level is the availability
of an affordable, thirst-quenching product of good quality. The most important factor in this market
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is the distribution network. This is particularly so considering the good distribution network that XX
Breweries Limited has in place enabling them to produce products that are constantly in demand
throughout the country.

5.3.2 Main Competitors

Being in a predominantly monopolistic market structure, competition in the brewery manufacturing

market as a whole is not that intense (in terms of numbers) at the current time due to the dominance
of XX Breweries Limited, which has been on the market for a relatively long period of time.
Cognisance should also be taken of home brewers who represent competition on our intended
market. However upon closer research we identified several niches in the market that we may
exploit, not wanting to confront XX Breweries one-on-one.

In general, our competition will be stiff, as we intend to penetrate the low to medium earning
customer. At the same time we shall be differentiating ourselves from XX Breweries. We intend to
market ourselves in such a way that with time competitor customers will choose our products over
competitors' on the basis of our higher quality, thirst-quenching brews. We shall now provide a more
thorough outline of our main competitors in the same strategic group as ourselves, including their
strengths and weaknesses.

XX Breweries Limited and ZZ Breweries - T Brewery Holdings

Arguably the largest and most reputable manufacturer, supplier and marketer of alcoholic and non-
alcoholic beverages in the country, XX Breweries has been on the market for a considerable period
of time now. Part of the large and extremely reputable conglomerate, YY Breweries International,
XX Breweries is currently the dominant domestic producers of beer, sorghum and Coca-Cola
products in the country, with an overall market share of more than 95%. XX Breweries is able to
take advantage of the financial, managerial and technical clout that it has through YY Breweries
International. Due to its size it enjoys an economy of scale and thus the competitive advantage of
being able to offer low priced beverages in large quantities to its target markets. YY Breweries
International Africa enjoys strong cash flows in the form of royalty payments, management fees and
dividends from its Botswana operations due to its dominance.

One of XX Breweries' main products is S traditional beer, which will be one of our main competitor
products. S is currently mass marketed in the whole of Botswana and is popular amongst the rural
and town folk. It is also present in the regional countries, including Zimbabwe, Zambia and
Mozambique, with current intentions of going beyond these borders. This is mainly because it is in
its maturity stage and these efforts of going international are meant to extend its product life.
However a frailty of S is that the product does not maintain freshness for a long period, which is
debilitating when its intentions are export. Hence BGI intends to take advantage of this weakness.

Establishment Location Employment Size

XX Breweries Gaborone 100+ Employees
XX Breweries Lobatse 50-99 Employees
XX Breweries Francistown 100+ Employees
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XX Breweries Gaborone 100+ Employees

XX Breweries In Botswana

Recent financial results from T Brewery Holdings indicate that the organization as a whole has
continued to perform exceptionally well on the back of a buoyant Botswana economy. Turnover
grew by 42% whilst operating profit is up 60% from $21.5 million to $34.5 million. For the 12
months to 31 March 2000, volume growth exceeded non-mining GDP growth by more than 2%,
resulting in turnover growth of 12%. According to the audited results, higher volumes and turnover
coupled with greater productivity and stringent cost controls translated into excellent earnings
growth. With this in mind we strongly believe that there is an extremely lucrative market we may
exploit.

6.0 Strategy and Implementation Summary

Our marketing strategy emphasizes focus. This will be the key. We are a relatively new company
and hence must focus on certain kinds of products with certain kinds of consumers. Initially BGI
Breweries will focus on the local market and in the remote and previously inaccessible areas where
there is a large market for our products. Hence the form of growth that shall be initially pursued will
be that of organic growth mainly due to limited resources and the need to instill confidence in our
products. The target customers will include key decision-makers in the retail and supermarket chains
who often order or recommend on behalf of the whole organization, the aim being to obtain an initial
order and fully satisfy the customer from then on.

 We are currently building image and awareness through consistency and distinctiveness in our
product provision.
 We intend to focus on delivering quality products that in turn produce good referrals, which can
then generate revenue. We intend to always have a relatively heavy personal selling component
to our marketing strategy as previously discussed. Hence we intend to always be active in
personal relationships with clients and strategic allies keeping abreast of their needs and wants.
 We are focusing advertising on several key media.

We intend to achieve growth by creating a more enthusiastic customer culture than that of our
competitors. All criteria from price competitiveness to staff attitudes are to be initially measured six-
monthly, and then on a more regular basis as time goes on. The results will go down to depot level
and be compared with the overall target. This form of consistent measurement of strategic goals will
ensure that the organization remains focused on its goals and objectives, making any necessary
adjustments where need be.

6.1 Value Proposition

Our value proposition is offering our customers refreshness and enjoyment at reasonable prices
ensuring peace of both body and mind. Hence we intend to:

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1. Market the benefit, not the product.

2. Ensure customer satisfaction.
3. Develop long relationships.
4. Market the company.

This value proposition shall be communicated through advertisements, personal selling, sales
literature and catalogues, and referrals that emphasize how the company is able to provide
refreshment, enjoyment and fulfillment to the customers.

6.2 Competitive Edge

Our competitive edge will be our dominance of access to previously remote areas, customer
orientation and traditional high-quality brew through stringent quality control. Although XX
Breweries dominates the local market, it does not penetrate the remote areas as much as we intend
to.

Though we shall be serving different market segments we intend to focus on (discussion removed
for confidentiality).

6.3 Sales Strategy

We intend to focus on improving our implementation, by working on key objectives and better

coordination of marketing efforts. For the short term at least, the selling process will depend on
personal selling and advertising to lure and inform potential clients about the products we offer and
the benefits of consuming our products. Our marketing does not intend to affect the perception of
need as much as knowledge and awareness of the product categories.

6.3.1 Sales Forecast

The sales forecast monthly summary is included below. The annual sales projections are included
later in the plan. It should be noted that as we become established and known on the market we
project sales to increase at a faster rate than the initial year.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
X Beer $659,712 $725,683 $812,765
Y Beer $527,769 $580,546 $650,211
Z Beer $278,545 $306,400 $343,167
Total Sales $1,466,026 $1,612,629 $1,806,144

Direct Cost of Sales Year 1 Year 2 Year 3

X Beer $369,439 $406,383 $455,149
Y Beer $295,551 $325,106 $364,118
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Z Beer $155,985 $171,584 $192,174

Subtotal Direct Cost of Sales $820,975 $903,072 $1,011,441

Chart: Sales Monthly

Sales Monthly

$200,000

$180,000

$160,000

$140,000 X Beer
$120,000
Y Beer
$100,000
Z Beer
$80,000

$60,000

$40,000

$20,000

$0
Month 1 Month 3 Month 5 Month 7 Month 9 Month 11
Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

6.4 Marketing Strategy

One core element of our marketing strategy will be that of differentiation from our competitors. In
terms of promotion, we intend to sell our company as a differentiated strategic ally, not just our
products. In price, we intend to offer extremely reasonable prices in comparison to the competition
and we need to be able to sustain that. Market penetration through lower prices shall be undertaken
where need be, while premium pricing will be the case of the upper-end of the market.

6.4.1 Service Provision

The service aspect of BGI Breweries marketing mix shall constitute an important element in
delivering total quality. This is due to the high degree of exposure our competitors already have. As
such we intend our customer service to be key to the retention of customers. We shall follow-up with
our clients on a regular basis so as to ensure they are satisfied with our products and delivery times.
This is mainly because we intend our customers not to be one-time buyers but regular order seekers.
The establishment of a rapport and understanding between our customers and ourselves is going to
be an ongoing processes.

We intend to implement database marketing whereby we shall be targeting customers based on their
previous purchases, in terms of size, frequency and actual products, so as to forecast their demands
and establish long beneficial relationships. Customer service shall be enhanced through

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infrastructure support in the form of merchandising and credit facilities, and alternative distribution
facilities where possible and viable.

6.4.2 Pricing Strategy

Initially our prices will not be under our control but dictated by the market conditions prevailing at
the particular time. This is particularly so in the case of products which are also produced by our
competitors, as they are often representing a scale for consumers. However we realize that we must
charge appropriately for the quality and work we shall be providing, in addition to the distribution of
the products. Hence we intend the price will accommodate the mark ups prevailing in the industry,
as well as our own costs. To be competitive in the market we intend to offer discounts to customers
making bulk orders, which are in competition with the industry. This will also assist in the
establishment of customer loyalty. Hence our prices shall be as follows: (discussion removed for
confidentiality).

We intend our income structure to match our cost structure, so as to ensure that the salaries we pay
to assure good workmanship is balanced by the price we charge. We will make sure that we charge
for the product, workmanship and delivery with our aim being to achieve a gross profit margin of at
least 30% in our initial years of operation. All in all we intend our prices to be extremely competitive
on the market.

6.4.3 Promotion Strategy

Our promotion strategy will be based primarily on informing potential customers of our existence
and making the right information available to our target customer. Since we shall be targeting
different segments, the promotional tools and messages may vary slightly to match the intended
market. However in all cases the marketing will convey the sense of quality, refreshness and health
in every picture, every promotion and every publication. Promotional campaigns will seek to
promote the 'sharing aspect' of the beer, customers drinking these products in groups. Our
promotional activities shall be focused towards driving the organization's overall strategy
relentlessly, developing internal consistency and prepare it to confront any radical changes that may
arise. In such a market we cannot afford to appear in, or produce, second-rate material that make our
products look less than they are. We intend to leverage our presence using quality brochures and
other sales literature, including promotional material such as pens, complimentary slips and stickers.
Due to the fact that our products are in the introductory phase on the market, promotional expenses
are high in order to generate customer attention and knowledge of our products existence.

We intend to spread the word about our business through the following:

Advertising

In view of the fact that we are entering a market largely dominated by XX Breweries Limited which
has an approximate market share of approximately 95% (as previously discussed) we intend to
undertake extensive advertising of our products in addition to our brand name--company name. This
is so as to instill awareness and knowledge of our existence in the market place, which hopefully
shall convert into market share. Hence the need to ensure that our products are constantly available
to our target market, and of consistent high quality. Whilst we are committed to providing products
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of uncompromising quality to meet the needs and expectations, the company believes its products
should be advertised and promoted in an honest and ethical manner that respects the values of our
consumers' societies. Examples include the Boccim Business Directory which will require us being
members of Boccim, Botswana--a review of commerce and industry, Contacts Botswana, and other
telephone directories. A constant look out will also be made of any special editions in the local
newspapers, which may provide an opportunity to advertise.

Events

These are increasingly becoming important as more firms establish in the country and hence the
need to be known. The organization aims to participate in trade shows and quality taste tests. Not
only will these increase awareness of the products, but if a particular product were to gain
recognition, for example through being chosen #1 at a taste test, the organization will be able to take
advantage of this in all its promotional campaigns, adding leverage to its reputation and image.
Undoubtedly this would add confidence and pride in our staff complement as their hard work would
be recognized often at the highest levels. Communicating such achievements often gives customers a
feeling that they can rely on the product, and this builds strong customer loyalty. An example of a
trade show we intend to participate at is BITEC. The aim of this exhibition is to provide a conducive
environment for companies to display their products in a specialized exhibition. The exchange of
technologies, ideas, and contacts will serve as a fertile ground for the blooming of healthy trade
relationships and partnerships.

We also intend to participate at the Botswana International Trade Fair (BITF) in August so as to
expose our business to potential customers and suppliers. Such fairs serve as important eye openers
for both potential customers and ourselves. With time it shall be necessary for us to participate in
regional trade shows and fairs such as the South African Exhibition Show so as to gain awareness
and ultimately orders from outside the country.

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Public Relations

Recognizing that we are relatively new on the market there will be a need to organize an event, of
grandeur nature, introducing ourselves onto the market. At this we intend to invite potential
customers, senior officials, including the Minister of Industry and Commerce, and other stakeholders
so as to penetrate the market. In collaboration with this we also intend to place news stories and
features in magazines and newspapers to keep stakeholders updated on the latest developments and
to increase awareness. We also plan to have a major festival initially in Selebi Phikwe, appropriately
named, that maintains and promotes Botswana culture. This will assist in the recognition and
appreciation of our company in the surrounding community especially. Our efforts on community
service will show that the company has its community at heart, contributing towards the
establishment of a good and reputable image. Homes for the under privileged will be also be built in
the medium, to long term as we plough back into the society we operate in. In addition we intend to
pursue educational sponsorship for the less advantaged but promising young individuals in the
community. This will constitute some of our corporate social responsibility details of which are
provided in the respective section.

We also intend to experiment with a road show in the various often-neglected remote areas giving
out caps, bags, and other such prizes to individuals who answer questions correctly. This will also
enable our business name and products to be better known by the respective communities. However
we are extremely confident that these road shows if well planned will be a success as they encourage
community participation. Brewery tours shall also be arranged with interested stakeholders including
school children and college students. This is so as to increase awareness of our facilities and
products and also showing confidence in our production process and standards. Hopefully visitors
will leave impressed and confident in our products, adding to the possibility of positive referrals.
These same tours will also be arranged with prospective clients/order-takers.

Still in the infancy idea stage we have in mind the hosting of a 'fest' whereby guzzlers of our brews
as well as first-timers are encouraged to drink as much as possible whilst enjoying themselves. This
is likely to be held in the hottest month of the year (October) when people are often extremely
thirsty. Hence the name 'October fest' might be appropriate. Proceeds of such festivities are to be
donated to charities.

Personal Selling

This shall be undertaken in the form of sales calls whereby a sales person will go out to potential
customers and distributors informing them what products we are able to offer them. In addition the
sales person will listen to client's needs at close hand, so as to ensure that the product is delivered
timely and that it is the right product as demanded by the surrounding community. Close analysis
shall also be undertaken of the consumption patterns of the respective communities, that is whether
they prefer larger or smaller containers. This will ensure that our products are customized as much as
possible to the surrounding community's needs and wants. In cases where there is the opportunity of
obtaining a large order it may be necessary for the top management to go out personally, especially
considering the fact that we are still a relatively new firm in the market.

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Direct Marketing

This will be used, but only to a limited extent, in the form of telemarketing and informing potential
customers and obtaining referrals where possible. In the case of telemarketing it will involve our
targeting potential customers/distributors of our products and informing them of our existence and
the products we offer. We may then arrange for an appointment with the respective decision-
maker/order-maker, with the intention being to lure them into ordering one or more of our product
lines.

Internet Marketing

The increasing growth of the Internet as an information source provides an opportunity that we may
exploit. This is particularly so in view of the increasing investment and global trade amongst
countries, as both large and small organizations look at obtaining the best deal possible. More often
than not these organizations will seek out potential clients over the Internet due to the cost of
transport and accommodation, apart from the obvious time factor, which is increasingly becoming of
importance in view of the dynamic environment. However this will require adequate planning and
research so as to establish a professionally done website. This will mainly serve foreign customers
and other stakeholders including potential investors.

In all the above we intend to communicate our ability to manufacture good quality brews that will
satisfy the customers needs. Hence our messages will influence the buying decision of prospective
customers and distributors by emphasizing our unique selling proposition, and persuade prospective
buyers that we are different from our competitors. All the above promotional tools shall be well
integrated and utilized in tandem so as to maximize their effect.

6.4.4 Distribution Strategy

We believe that through our obsession for improvement, and commitment to a leadership position in
our respective markets, we can overcome the traditionally binding constraints of resource base, firm
size and narrow conceptualization of our business domain. This shall be undertaken through
coordination and logical integration of our distribution operations. We aim to reduce cycle time for
key processes, eliminate rework and waste, and optimize our human resources utilization. To attain
low lead-times we intend to (discussion removed for confidentiality).

Trade Channels:

 Wholesale Distribution Channels (discussion removed for confidentiality).

 Retail Distribution Channels (discussion removed for confidentiality).

We intend to ensure that our breweries are located close to our major distribution centers not only to
minimize costs but also to enable our products to be easily available, in the best condition, in the
different markets nationwide. By engaging and establishing good relationships with shebeen owners
we intend our products to be readily available to our target market. In terms of actual delivery for
every vehicle the daily fuel used, kilometers driven, repairs and maintenance costs must be recorded
and compared with the set standard. (Discussion removed for confidentiality.)

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6.4.5 Product Marketing

Our product marketing will emphasize the benefits of consuming our products, including
refreshment and enjoyment of top-quality brews. We intend to sell the opportunity to enjoy oneself
amongst friends, family and/or colleagues. This will come out in our advertising, delivery and
collateral such as sales literature and business cards. Our product marketing's most important
challenge will be the problem of being accepted and appreciated on the market as a provider of
quality products. Hence we intend to not only meet customers' expectations but to exceed them,
initially targeting a market share of 6%.

We intend to focus on the individual or group who want to enjoy themselves through the
consumption and sharing of refreshing healthy beverages. However, not wanting to limit our
horizons in the initial period, we intend to be continually looking out for opportunities that we may
exploit. In all cases we intend to provide a thorough understanding and appreciation of the products
to the customer and the benefits of consuming them.

6.4.6 Product Packaging

Our product packaging shall be of utmost importance, as it will definitely influence our potential
customers on whether to try out our products or not. As such we shall ensure that it is not only
attractive to consumers but also hygienic. As time progresses we intend to have packaging that
enables the container to be used for other purposes after beer consumption, for example keeping
water and being able to be deposited to retailers, the former of which we have identified as already
being done. In the medium to long term we intend our product packaging to also be recyclable and
hence more environmentally friendly--a continuous improvement process. Continuous improvement
on packaging will also be undertaken so as to maintain, if not improve product appeal.

Currently the products are served in X ml and Y ml packs. However depending on the dictates of the
market, there might be need to introduce new product packs. Hence we intend to ensure that we are
flexible if such changes are to occur. A specific example is the X ml T beer pack, which is not being
produced by any of the other breweries at the moment, representing an opportunity to be realized.

6.5 Corporate Social Responsibility

BGI Breweries intends to be involved in a wide range of social responsibility engagement

programs to invest back into the community in which we operate. Through our social responsibility
program we can assist in improving peoples lives. If we contribute to development in a sustainable
way, we need to support projects that communities bring to us, rather than strictly creating our own
solutions for our communities. This is because if we impose our solution and drive a project it is an
artificial response, and the risk is that the project will then always 'belong' to us. Whenever the
project comes up against a new challenge, we will be expected to fix it, and will be forced to stay in
a situation where we have to look after the same few projects forever. Rather we intend to fund
several projects that belong to, and will be driven by, the community and become sustainable.
However, before we commit ourselves to projects we intend to ensure that skills will be transferred,
communities are involved and the projects will be able to become self-sustaining. We know that we
cannot address all the development needs of our society. Where we can, we assist and sometimes
may form partnerships so as to increase capacity.
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We intend to be involved in the following activities:

1. Community (discussion removed for confidentiality).

2. Education (discussion removed for confidentiality).
3. Health (discussion removed for confidentiality).
4. Environment (discussion removed for confidentiality).
5. Arts and Culture (discussion removed for confidentiality).

7.0 Production Summary

Our production system shall strive to attain service excellence in addition to manufacturing safe,
quality products. This shall be undertaken through the engagement of modern production techniques
using up-to-date assembly technology. This will also result in low production costs being attained by
the company. We also intend to ensure that the suppliers we engage are committed and reliable so as
not to let down the final consumer in terms of the quality of the product and time of delivery.

In order to improve productivity in our plants we intend to reduce waste and duplication in our
breweries by streamlining administrative functions and promoting and instilling a business culture
that focuses on the teamwork rather than individual productivity. By the undertaking the above we
will optimize our productivity given our available resources.

7.1 Suppliers

Currently the company obtains the vast majority of its raw materials from South African suppliers.
However as we are committed to fair terms of trade and promotion of local business we intend to
engage local suppliers. Hence raw materials, including x and y, may be sourced from local
communal and commercial farmers avoiding intermediaries so as to minimize costs, ultimately
benefiting the final consumer. The major advantages of doing so being higher margins, faster
payments and lower risks of payment default. Through the use of economies of scale we aim to
maintain low input and production costs. This may be undertaken through (discussion removed for
confidentiality).

Hence we intend to establish good rapport with all our suppliers and hence long mutually beneficial
business relationships. This shall be undertaken through working closely with suppliers to ensure
uninterrupted deliveries.

7.2 Receiving

Recognizing that the receiving of our raw materials is an essential element in our entire business, we
intend to ensure that it is done by responsible persons who will be present during off loading to
check the quantity and condition of the consignment. During the actual off loading the receiving bay
personnel will mass check on at least X% of the consignment. Non-confirming raw materials in
terms of quality will only be approved with the consent of the managing director who would have
undertaken further analysis of it.

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7.3 Storage

It shall be the policy of the company to ensure that all raw materials are stored in a secure, clean and
pest free manner. Stock takes and reconciliations shall be undertaken on a regular basis, initially
done at least once a week. The stock principle of First In First Out (FIFO) shall be implemented.
Whenever stock is taken out it shall be recorded on a separate stock or bin card, with reconciliations
of raw materials issued to the brewery, issued to production, losses, opening and closing stock taken.
Should any deviations arise these must be explained.

7.4 By-Products

BGI Breweries intends to utilize every resource it has to the fullest possible extent. We realize that
there shall be a lot of by-products that will be produced from our production of the main product
lines. However not wanting to pollute the environment, and our community at large, we plan to
utilize by-products whenever possible. This will ensure that our resources are fully utilized.

8.0 Management Summary

BGI Breweries shall evaluate the jobs it provides, paying competitive remuneration packages against
market benchmarks to employees for their agreed and set out tasks. Consonant with its efforts to
create added value by employees, BGI Breweries seeks to negotiate the provision of incentive pay
delivery mechanisms against achievement of agreed targets relating to accomplishment in the areas
of productivity enhancement, savings and other specific successes, that is, the implementation of an
effective performance management system.

Hence our human resources strategy will revolve around:

 Communicating openly and transparently; addressing strong and trusted:

o Internal communication.
o External communication.
o Stakeholder inclusivity.
 Responding and promoting human rights issues, such as equity in the workplace and in
community relations.
 Adoption of a good remuneration policy aimed at developing our people through employee
benefits, training and group initiatives.
 Maintaining preventative health and safety structures for employees and support for surrounding
communities.

8.1 Management Team

The management team, mainly comprising of the shareholders, has wide expertise and broad
knowledge of the products and markets, which if well planned for, will enable the business to realize
its goals and objectives. Daily management will consist of Mr. B in the role of technical and
operations, and Mr. G in dealing with government, corporate bodies, and public relations.

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 Sedibeng Breweries

Management style will reflect the participation of the shareholders. The company intends to respect
its community and treat all employees well. We will develop and nurture the company as
community. We do not intend to be overly hierarchical. Management's ongoing initiatives to drive
sales, market share and productivity will provide additional impetus.

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 Sedibeng Breweries

8.2 Personnel Plan

We intend to compensate our personnel well, to retain their invaluable expertise and to ensure job
satisfaction and enrichment through delegation of authority. Our compensation will include health
care, generous profit sharing, plus a minimum of three weeks vacation. As an equal opportunity
employer, we respect the diversity and human rights of our people, and strive to achieve optimal
productivity, while realizing the full potential of each employee. Awards will be given out to
outstanding individuals, groups and plants for hard work and production so as to instill a sense of fun
into the work and promote the maintenance of high standards. BGI Breweries recognizes that our
employees contribute fundamentally to the company's long-term prosperity. We intend to enhance
our capacity to attract and retain people of quality, through benefits such as housing and family
education grants.

Employee health shall be of extreme importance. This is because the health of our people is an
integral element of employee well-being at work and at home. Compliance with relevant legislation
is a minimum target in our organization. We also intend to minimize if not totally eliminate the
number of isolated incidents of intimidation in the workplace, so as to ensure that production and
distribution are not materially affected and sound relationships are maintained between employee
and employer and between employees as a whole.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
President and CEO $48,000 $48,000 $52,000
Operations Manager $48,000 $48,000 $52,000
Marketing Manager $36,000 $36,000 $42,000
Brewmaster $36,000 $36,000 $40,000
Brewmaster $36,000 $36,000 $40,000
Office Manager $19,200 $19,200 $22,000
Bottler #1 $12,000 $12,000 $15,000
Bottler #2 $12,000 $12,000 $15,000
Bottler #3 $12,000 $12,000 $15,000
Packager #1 $12,000 $12,000 $15,000
Packager #2 $12,000 $12,000 $15,000
Packager #3 $12,000 $12,000 $15,000
Packager #4 $12,000 $12,000 $15,000
Shipper #1 $12,000 $12,000 $15,000
Shipper #2 $12,000 $12,000 $15,000
Total People 15 15 15

Total Payroll $331,200 $331,200 $383,000

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 Sedibeng Breweries

8.3 Training

In-house training shall be continuous with regular external training being undertaken particularly
following any new developments in the market. This is so as to ensure that we are continuously able
to anticipate our markets needs--a proactive approach, which is so essential if we are to gain and
maintain a competitive advantage. Courses on brewing will be undertaken primarily in South Africa,
preferably with the established and reputable firms, such as YY Breweries. This will ensure that our
personnel are exposed to the latest production techniques and are able to set their standards, or
benchmark, using these organizations standards. Internal training will not only include product and
technical aspects, but also expand to give much greater knowledge of customers, market trends,
products, new technology aids, time management amongst other such variables. We intend to
conduct health education sessions for groups and individuals on health risks in the workplace,
balanced with lifestyle education and employee assistance programs that incorporate rehabilitation
and counseling in a range of illnesses and social or personal problems. This is of particular
importance in view of the AIDS epidemic that has grappled the country and continent as a whole to
unparalleled levels.

We acknowledge the fact that successful recruiting, motivation and discipline procedures are keys to
the growth of the organization. Hence we intend to promote and maintain good labor relations,
strong morale and high quality work per employee.

8.4 Feedback and Control

1. We intend to use employee satisfaction surveys to shape the business, making sure that the
employee understands the goals of the firm, is customer focused, proud of their work and work
as a team. This will encourage employees to become entrepreneurial and customer responsible,
in addition to unifying staff in customer focus and values.
2. Important notices and developments will be continuously communicated to employers so as to
keep them abreast of developments and promoting a sense of belonging and oneness in the
organization.
3. We will encourage our employees to put forward any suggestions they might have regarding the
improvement of any of the company's functions--an open door philosophy. Such a culture will
enhance innovativeness and creativity in turn leading to job satisfaction and enrichment.

9.0 Financial Plan

We want to finance growth mainly through cash flow and equity. We recognize that this means we
will have to grow more slowly than we might like.

The most important factor in our case is collection days, particularly with the bulk order customers.
We can't push our customers hard on collection days, because they are extremely sensitive and will
normally judge us on our terms. Hence they tend to have a certain degree of financial authority.
Therefore we need to develop a permanent system of receivables financing systems, using a well-
coordinated accounting department. In turn we intend to ensure that our investors are compatible
with our growth plan, management style and vision.

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 Sedibeng Breweries

Compatibility in this regard means:

 Fundamental respect for giving our customers value, and for maintaining a healthy and congenial
workplace.
 Respect for realistic forecasts, and conservative cash flow and financial management.
 Cash flow as first priority, growth second, profits third.
 Willingness to follow the company and contribute valuable input to strategy and implementation
decisions.

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 Sedibeng Breweries

9.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following
table as annual assumptions. The monthly assumptions are included in the appendix. From the
beginning, we recognize that collection days are critical, but not a factor we can influence
easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.

Some of the more important underlying assumptions are:

 We assume a strong economy, without major recession.

 We assume, of course, that there are no unforeseen changes in economic policy to make our
products immediately obsolete.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0

9.2 Break-even Analysis

Our break-even analysis will be based on running costs, that is costs we shall incur in keeping the
business running, including salaries and wages, rent, water and electricity, insurance amongst others.
Hence many fixed costs shall be included in these costs. We will thus aim to ensure that our sales
levels are running comfortably above break-even.

The following chart and table summarize our break-even analysis. With fixed costs of approximately
$41,040 per month at the outset (a bare minimum), we need to bill approximately $93,000to cover
our costs. We don't really expect to reach break-even until several months into the business
operation.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $93,273

Assumptions:
Average Percent Variable Cost 56%

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 Sedibeng Breweries

Estimated Monthly Fixed Cost $41,040

Chart: Break-even Analysis

Break-even Analysis
$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

($10,000)

($20,000)

($30,000)

($40,000)
$0 $40,000 $80,000 $120,000 $160,000 $200,000
$20,000 $60,000 $100,000 $140,000 $180,000 $220,000

9.3 Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing from more than
$1,466,000 the first year to more than $1,612,000 the second, and approximately $1,806,000 in the
third year. Profits are calculated to be around $152,000 before tax the first year during the start-up
phase of this business. This will be representative of a net profit margin of approximately 7%, which
though may not seem that impressive is relatively good for a start-up firm in our line of business. As
with the break-even, we are projecting very conservatively regarding cost of sales and gross margin.
Our cost of sales should be much lower, and gross margin higher, than in this projection.

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 Sedibeng Breweries

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $1,466,026 $1,612,629 $1,806,144
Direct Cost of Sales $820,975 $903,072 $1,011,441
Other $0 $0 $0
Total Cost of Sales $820,975 $903,072 $1,011,441

Gross Margin $645,051 $709,557 $794,703

Gross Margin % 44.00% 44.00% 44.00%

Expenses
Payroll $331,200 $331,200 $383,000
Sales and Marketing and Other Expenses $54,000 $56,700 $59,535
Depreciation $10,200 $10,200 $10,200
Leased Equipment $2,400 $2,520 $2,646
Utilities $4,800 $5,040 $5,292
Insurance $4,200 $4,410 $4,631
Rent $36,000 $37,800 $39,690
Payroll Taxes $49,680 $49,680 $57,450
Other $0 $0 $0

Total Operating Expenses $492,480 $497,550 $562,444

Profit Before Interest and Taxes $152,571 $212,007 $232,260

EBITDA $162,771 $222,207 $242,460
Interest Expense $2,000 $1,000 $0
Taxes Incurred $37,020 $52,752 $59,033

Net Profit $113,552 $158,255 $173,227

Net Profit/Sales 7.75% 9.81% 9.59%

9.4 Key Financial Indicators

The following benchmark chart indicates our key financial indicators for the first three years. We
foresee major growth in sales and operating expenses, and a bump in our collection days as we
spread the business during expansion.

Collection days are very important. We do not want to let our average collection days get above 30
under any circumstances. This could cause a serious problem with cash flow, because our working
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 Sedibeng Breweries

capital situation is chronically tight. However, we recognize that we cannot control this factor easily,
because of the relationship with our clients.

Chart: Benchmarks

Benchmarks

Year 1
1.0
Year 2

Year 3

0.0
Sales Operating Expenses Inventory Turnover
Gross Margin% Collection Days

9.5 Expense Forecast

Initial marketing expenses are relatively high as we seek to become known on the market. This will
be brought about by the development of sales literature, advertising expenses, and function expenses
(including lunches and dinners with interested stakeholders). As our market share increases and
capital is generated, further marketing programs and the expansion of those in existence at the time
will be undertaken, to ensure market development. Once these programs will start generating
revenue for the business, which we shall in turn reinvest.

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9.6 Projected Cash Flow

Cash flow projections are critical to our success. Detailed monthly numbers are included in the
appendix. However it should be noted that they do not take into account the required capital
injection.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $366,507 $403,157 $451,536
Cash from Receivables $821,689 $1,181,688 $1,317,934
Subtotal Cash from Operations $1,188,195 $1,584,846 $1,769,470

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $77,000 $0 $0
Subtotal Cash Received $1,265,195 $1,584,846 $1,769,470

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $331,200 $331,200 $383,000
Bill Payments $977,833 $1,138,456 $1,238,371
Subtotal Spent on Operations $1,309,033 $1,469,656 $1,621,371

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $20,000 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0

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 MonthMon
7
Sedibeng Breweries

MonthMonth
5 6
Subtotal Cash Spent $1,309,033 $1,489,656 $1,621,371

MonthMonth
3 4
Net Cash Flow ($43,838) $95,189 $148,099

2
Cash Balance $36,162 $131,351 $279,450

MonthMonth
1
Chart: Cash

Cash
$70,000

$60,000

$50,000

$40,000
Net Cash Flow
$30,000
Cash Balance
$20,000

$10,000

$0

($10,000)

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 Sedibeng Breweries

9.7 Projected Balance Sheet

The balance sheet shows healthy growth of net worth, and strong financial position. The three-year
estimates are included in the appendix.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $36,162 $131,351 $279,450
Accounts Receivable $277,831 $305,614 $342,287
Inventory $123,414 $91,060 $103,841
Other Current Assets $0 $0 $0
Total Current Assets $437,407 $528,025 $725,579

Long-term Assets
Long-term Assets $750,000 $750,000 $750,000
Accumulated Depreciation $10,200 $20,400 $30,600
Total Long-term Assets $739,800 $729,600 $719,400
Total Assets $1,177,207 $1,257,625 $1,444,979

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $146,655 $88,818 $102,945
Current Borrowing $20,000 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $166,655 $88,818 $102,945

Long-term Liabilities $0 $0 $0
Total Liabilities $166,655 $88,818 $102,945

Paid-in Capital $938,700 $938,700 $938,700

Retained Earnings ($41,700) $71,852 $230,107
Earnings $113,552 $158,255 $173,227
Total Capital $1,010,552 $1,168,807 $1,342,034
Total Liabilities and Capital $1,177,207 $1,257,625 $1,444,979

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 Sedibeng Breweries

Net Worth $1,010,552 $1,168,807 $1,342,034

9.8 Business Ratios

The table below shows our business ratios.

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 Sedibeng Breweries

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 10.00% 12.00% 4.60%

Percent of Total Assets

Accounts Receivable 23.60% 24.30% 23.69% 5.30%
Inventory 10.48% 7.24% 7.19% 0.70%
Other Current Assets 0.00% 0.00% 0.00% 24.80%
Total Current Assets 37.16% 41.99% 50.21% 30.80%
Long-term Assets 62.84% 58.01% 49.79% 69.20%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 14.16% 7.06% 7.12% 20.20%

Long-term Liabilities 0.00% 0.00% 0.00% 30.70%
Total Liabilities 14.16% 7.06% 7.12% 50.90%
Net Worth 85.84% 92.94% 92.88% 49.10%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 44.00% 44.00% 44.00% 49.60%
Selling, General & Administrative
36.30% 34.19% 34.36% 26.10%
Expenses
Advertising Expenses 1.64% 1.56% 1.46% 2.50%
Profit Before Interest and Taxes 10.41% 13.15% 12.86% 10.60%

Main Ratios
Current 2.62 5.95 7.05 1.67
Quick 1.88 4.92 6.04 1.42
Total Debt to Total Assets 14.16% 7.06% 7.12% 50.90%
Pre-tax Return on Net Worth 14.90% 18.05% 17.31% 8.20%
Pre-tax Return on Assets 12.79% 16.78% 16.07% 16.70%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 7.75% 9.81% 9.59% n.a
Return on Equity 11.24% 13.54% 12.91% n.a

Activity Ratios
Accounts Receivable Turnover 3.96 3.96 3.96 n.a
Collection Days 56 88 87 n.a
Inventory Turnover 10.91 8.42 10.38 n.a
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 Sedibeng Breweries

Accounts Payable Turnover 7.67 12.17 12.17 n.a

Payment Days 27 40 28 n.a
Total Asset Turnover 1.25 1.28 1.25 n.a

Debt Ratios
Debt to Net Worth 0.16 0.08 0.08 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $270,752 $439,207 $622,634 n.a
Interest Coverage 76.29 212.01 0.00 n.a

Additional Ratios
Assets to Sales 0.80 0.78 0.80 n.a
Current Debt/Total Assets 14% 7% 7% n.a
Acid Test 0.22 1.48 2.71 n.a
Sales/Net Worth 1.45 1.38 1.35 n.a
Dividend Payout 0.00 0.00 0.00 n.a

10.0 Controls

The local brewing market has been growing steadily over the last few years due to increases in
people's disposable income and opening of the economy. With this in mind we intend our marketing
programs to expand accordingly. The introduction of quality catalogues and sales literature will
enable BGI Breweries to market to potential customers. We project sales to increase accordingly,
though slightly slower as we establish a reputation for ourselves. With time, a presence on the
Internet and participation in regional trade shows will be key milestones to expanding sales and
marketing potentials through the utilization of new channels and identification of potential
customers.

Throughout the year we intend to undertake regular evaluations of our marketing programs so as to
ensure that we are in-line with our intended objectives.

In summary we intend to undertake the following:

1. Tracking and follow-up: We intend to have the discipline, as an organization, to track results of
the business plan and make sure that we implement.
2. Market segment focus: We intend to have the discipline to maintain the market segment focus.
3. Saying no: Though difficult initially, we intend to be able to say no to special deals that take us
away from the target focus and are unprofitable.

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10.1 Contingency Planning

1. We intend to watch our results very carefully. We may need to drop production of certain
products if we cannot get the margin up or material becomes difficult to obtain. We might be
able to avoid the straight competition with the major companies by focusing more on the
previously mentioned products.
2. Another possibility is the introduction of a new company(s) in our niche. Hence the need to
undertake aggressive marketing and networking.
3. An established beverage manufacturer may begin targeting to our target market niche. Hence the
need for commitment in our work and striving of total quality in our organization.
4. Though Botswana overall is rather secure on the labor front in terms of strikes we intend to have
in place a mechanism that will ensure that were this to occur the negative effects would be
minimized. However further research and analysis into the above is still being undertaken.

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 Appendix

Table: Sales Forecast

Sales
Forecast
Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
1 2 3 4 10 11 12
Sales
X Beer 0% $29,399 $32,14 $38,415 $42,33 $46,254 $48,214 $54,878 $61,542 $64,286 $72,909 $79,181 $90,157
3 4
Y Beer 0% $23,519 $25,71 $30,732 $33,86 $37,003 $38,571 $43,902 $49,233 $51,429 $58,328 $63,345 $72,125
4 8
Z Beer 0% $12,413 $13,57 $16,219 $17,87 $19,530 $20,357 $23,171 $25,984 $27,143 $30,784 $33,432 $38,066
1 5
Total $65,331 $71,42 $85,366 $94,07 $102,787 $107,14 $121,951 $136,75 $142,85 $162,021 $175,95 $200,348
Sales 8 7 2 9 8 8

Direct Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
Cost of 1 2 3 4 10 11 12
Sales
X Beer $16,463 $18,00 $21,512 $23,70 $25,902 $27,000 $30,732 $34,464 $36,000 $40,829 $44,341 $50,488
0 7
Y Beer $13,171 $14,40 $17,210 $18,96 $20,722 $21,600 $24,585 $27,570 $28,800 $32,664 $35,473 $40,390
0 6
Z Beer $6,951 $7,600 $9,083 $10,01 $10,937 $11,400 $12,976 $14,551 $15,200 $17,239 $18,722 $21,317
0
Subtotal $36,585 $40,00 $47,805 $52,68 $57,561 $60,000 $68,293 $76,585 $80,000 $90,732 $98,536 $112,195
Direct 0 3
Cost of
Sales

Page 1
 Appendix

Table: Personnel

Personnel Plan
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
President and 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
CEO
Operations 0% $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Manager
Marketing 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Manager
Brewmaster 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Brewmaster 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Office Manager 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Bottler #1 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Bottler #2 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Bottler #3 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Packager #1 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Packager #2 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Packager #3 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Packager #4 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Shipper #1 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Shipper #2 0% $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Total People 15 15 15 15 15 15 15 15 15 15 15 15

Total Payroll $27,600 $27,60 $27,600 $27,60 $27,60 $27,600 $27,60 $27,600 $27,60 $27,60 $27,600 $27,600
0 0 0 0 0 0

Page 2
 Appendix

Table: General Assumptions

General
Assumptions
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Rate
Long-term 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Interest Rate
Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3
 Appendix

Table: Profit and Loss

Pro Forma
Profit and
Loss
Month 1 Month Month Month Month Month Month Month Month Month Month Month
2 3 4 5 6 7 8 9 10 11 12
Sales $65,331 $71,42 $85,36 $94,07 $102,78 $107,14 $121,95 $136,75 $142,85 $162,02 $175,95 $200,34
8 6 7 7 2 1 9 8 1 8 8
Direct Cost $36,585 $40,00 $47,80 $52,68 $57,561 $60,000 $68,293 $76,585 $80,000 $90,732 $98,536 $112,19
of Sales 0 5 3 5
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost $36,585 $40,00 $47,80 $52,68 $57,561 $60,000 $68,293 $76,585 $80,000 $90,732 $98,536 $112,19
of Sales 0 5 3 5

Gross $28,746 $31,42 $37,56 $41,39 $45,226 $47,142 $53,658 $60,174 $62,858 $71,289 $77,422 $88,153
Margin 8 1 4
Gross 44.00% 44.00% 44.00% 44.00 44.00% 44.00% 44.00% 44.00% 44.00% 44.00% 44.00% 44.00%
Margin % %

Expenses
Payroll $27,600 $27,60 $27,60 $27,60 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600
0 0 0
Sales and $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500
Marketing
and Other
Expenses
Depreciatio $850 $850 $850 $850 $850 $850 $850 $850 $850 $850 $850 $850
n
Leased $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Equipment
Utilities $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Insurance $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350

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 Appendix

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Payroll 15 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140 $4,140
Taxes %
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total $41,040 $41,04 $41,04 $41,04 $41,040 $41,040 $41,040 $41,040 $41,040 $41,040 $41,040 $41,040
Operating 0 0 0
Expenses

Profit ($12,294 ($9,612 ($3,479 $354 $4,186 $6,102 $12,618 $19,134 $21,818 $30,249 $36,382 $47,113
Before ) ) )
Interest and
Taxes
EBITDA ($11,444 ($8,762 ($2,629 $1,204 $5,036 $6,952 $13,468 $19,984 $22,668 $31,099 $37,232 $47,963
) ) )
Interest $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167
Expense
Taxes ($3,738) ($2,445 ($911) $47 $1,005 $1,484 $3,113 $4,742 $5,413 $7,521 $9,054 $11,737
Incurred )

Net Profit ($8,723) ($7,334 ($2,734 $140 $3,015 $4,452 $9,339 $14,225 $16,238 $22,562 $27,161 $35,210
) )
Net -13.35% - -3.20% 0.15% 2.93% 4.16% 7.66% 10.40% 11.37% 13.93% 15.44% 17.57%
Profit/Sale 10.27%
s

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 Appendix

Table: Cash Flow

Pro Forma Cash Flow

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

Cash from Operations

Cash Sales $16,333 $17,857 $21,342 $23,519 $25,697 $26,786 $30,488 $34,190 $35,715 $40,505 $43,990 $50,087
Cash from
$0 $1,633 $49,151 $53,919 $64,242 $70,776 $77,199 $80,727 $91,833 $102,722 $107,623 $121,864
Receivables
Subtotal Cash from
$16,333 $19,490 $70,492 $77,439 $89,939 $97,561 $107,687 $114,916 $127,548 $143,227 $151,612 $171,951
Operations

Additional Cash
Received
Sales Tax, VAT,
0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST Received
New Current
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
New Other Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(interest-free)
New Long-term
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Sales of Other Current
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Sales of Long-term
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
New Investment
$0 $77,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received
Subtotal Cash
$16,333 $96,490 $70,492 $77,439 $89,939 $97,561 $107,687 $114,916 $127,548 $143,227 $151,612 $171,951
Received
Page 6
 Appendix

Month Month Month

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

Expenditures from
Operations
Cash Spending $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600 $27,600
Bill Payments $2,528 $75,122 $54,540 $68,323 $71,047 $76,695 $77,468 $93,615 $103,163 $102,623 $123,017 $129,691
Subtotal Spent on
$30,128 $102,722 $82,140 $95,923 $98,647 $104,295 $105,068 $121,215 $130,763 $130,223 $150,617 $157,291
Operations

Additional Cash Spent

Sales Tax, VAT,
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST Paid Out
Principal Repayment
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
of Current Borrowing
Other Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment
Long-term Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment
Purchase Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets
Purchase Long-term
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $30,128 $102,722 $82,140 $95,923 $98,647 $104,295 $105,068 $121,215 $130,763 $130,223 $150,617 $157,291

($13,796
Net Cash Flow ($6,231) ($11,648) ($18,485) ($8,708) ($6,734) $2,619 ($6,299) ($3,215) $13,004 $995 $14,660
)
Cash Balance $66,204 $59,973 $48,326 $29,841 $21,133 $14,398 $17,017 $10,718 $7,504 $20,508 $21,502 $36,162

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 Appendix

Table: Balance Sheet

Pro
Forma
Balance
Sheet
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Assets Startin
g
Balanc
es

Current
Assets
Cash $80,00 $66,20 $59,97 $48,32 $29,84 $21,13 $14,39 $17,017 $10,718 $7,504 $20,508 $21,502 $36,162
0 4 3 6 1 3 8
Accounts $0 $48,99 $100,9 $115,8 $132,4 $145,2 $154,8 $169,14 $190,98 $206,29 $225,08 $249,43 $277,83
Receivabl 8 36 10 48 96 77 1 4 4 8 4 1
e
Inventory $10,00 $40,24 $44,00 $52,58 $57,95 $63,31 $65,99 $75,122 $84,244 $88,001 $99,805 $108,39 $123,41
0 4 0 5 1 7 9 0 4
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets
Total $90,00 $155,4 $204,9 $216,7 $220,2 $229,7 $235,2 $261,28 $285,94 $301,79 $345,40 $379,32 $437,40
Current 0 47 09 21 41 46 75 0 6 8 0 6 7
Assets

Long-term
Assets
Long-term $750,0 $750,0 $750,0 $750,0 $750,0 $750,0 $750,0 $750,00 $750,00 $750,00 $750,00 $750,00 $750,00
Assets 00 00 00 00 00 00 00 0 0 0 0 0 0

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 Appendix

Accumula $0 $850 $1,700 $2,550 $3,400 $4,250 $5,100 $5,950 $6,800 $7,650 $8,500 $9,350 $10,200
ted
Depreciati
on
Total $750,0 $749,1 $748,3 $747,4 $746,6 $745,7 $744,9 $744,05 $743,20 $742,35 $741,50 $740,65 $739,80
Long-term 00 50 00 50 00 50 00 0 0 0 0 0 0
Assets
Total $840,0 $904,5 $953,2 $964,1 $966,8 $975,4 $980,1 $1,005,3 $1,029,1 $1,044,1 $1,086,9 $1,119,9 $1,177,2
Assets 00 97 09 71 41 96 75 30 46 48 00 76 07

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

Current
Liabilities
Accounts $0 $73,31 $52,26 $65,96 $68,49 $74,13 $74,35 $90,175 $99,765 $98,529 $118,72 $124,63 $146,65
Payable 9 5 1 1 1 9 0 4 5
Current $20,00 $20,00 $20,00 $20,00 $20,00 $20,00 $20,00 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Borrowin 0 0 0 0 0 0 0
g
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Liabilities
Subtotal $20,00 $93,31 $72,26 $85,96 $88,49 $94,13 $94,35 $110,17 $119,76 $118,52 $138,72 $144,63 $166,65
Current 0 9 5 1 1 1 9 5 5 9 0 4 5
Liabilities

Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Total $20,00 $93,31 $72,26 $85,96 $88,49 $94,13 $94,35 $110,17 $119,76 $118,52 $138,72 $144,63 $166,65
Liabilities 0 9 5 1 1 1 9 5 5 9 0 4 5

Paid-in $861,7 $861,7 $938,7 $938,7 $938,7 $938,7 $938,7 $938,70 $938,70 $938,70 $938,70 $938,70 $938,70
Capital 00 00 00 00 00 00 00 0 0 0 0 0 0

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 Appendix

Retained ($41,70 ($41,70 ($41,70 ($41,70 ($41,70 ($41,70 ($41,70 ($41,700 ($41,700 ($41,700 ($41,700 ($41,700 ($41,700
Earnings 0) 0) 0) 0) 0) 0) 0) ) ) ) ) ) )
Earnings $0 ($8,723 ($16,05 ($18,79 ($18,65 ($15,63 ($11,18 ($1,845) $12,381 $28,619 $51,181 $78,342 $113,55
) 6) 1) 0) 6) 4) 2
Total $820,0 $811,2 $880,9 $878,2 $878,3 $881,3 $885,8 $895,15 $909,38 $925,61 $948,18 $975,34 $1,010,5
Capital 00 77 44 09 50 64 16 5 1 9 1 2 52
Total $840,0 $904,5 $953,2 $964,1 $966,8 $975,4 $980,1 $1,005,3 $1,029,1 $1,044,1 $1,086,9 $1,119,9 $1,177,2
Liabilities 00 97 09 71 41 96 75 30 46 48 00 76 07
and
Capital

Net $820,0 $811,2 $880,9 $878,2 $878,3 $881,3 $885,8 $895,15 $909,38 $925,61 $948,18 $975,34 $1,010,5
Worth 00 77 44 09 50 64 16 5 1 9 1 2 52

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Appendix

Page 1