Delicious Pizza Inc's Perspectives - Business Plan Example

BUSINESS PLAN: DELICIOUS PIZZA INC. Business Plan: Delicious Pizza Inc. s Table of Contents Table of Contents 2 Executive Summary 4 Company Summary 5 Start-up Costs and Funding 5 Company Ownership 7 Products and Services 7 Market Analysis 8 Market Segmentation 9 Target Market 9 Strategy and Implementation Summary 10 Sales Forecasts 10 Management Summary 13 Financial Plan 14 Break-even Analysis 15 Projected Profit and Loss 16 Reference List 20 Executive Summary My business plan will show how a total investment of $102,500 will yield cumulative, which is in excess of $600,000 over a period of five years, and average monthly sales of about $72,000, whilst maintaining sufficient levels of liquidity. In addition, the purpose of my business plan is to secure additional funding from a bank and an investor ($29,500 five-year term business loan, and $30,000 investment), to take care of start-up costs. Delicious Pizza, Inc. is my own business devoted to offering exceptional quality Abu Dhabi-style pizza to the residents of Abu Dhabi Ice Rink area, in a way that generates fair and impartial returns for present and future owners, and greater value to my customers. My company will specialize in creating and offering a variety of delectably different pizza (Samson & Daft 2011). The Abu Dhabi Ice Rink area has experienced explosive growth in the past five years. In addition, over one million residents currently live in the area. Local businesses are gradually catching up with this new opportunity. I am opening a new pizza take-out and delivery service, which will focus on the Abu Dhabi Ice Rink area. At present, the nearby pizza restaurant is one mile away from our anticipated site in the Abu Dhabi Ice Rink area. Delicious Pizza, Inc. will offer a better product, at a realistic price, and will deliver it on time to the customers door. Company Summary Start-up Costs and Funding After spending many months looking for a convenient site, I made a decision to rent a commercial space in a densely populated region of Abu Dhabi Ice Rink area. The start-up capital for the business will be used for purposes of legal costs, kitchen equipment and inventory, insurance, packing and other materials, promotion, rent, business design, and inventory as indicated in the company summary section of this business plan. I have projected total start-up expenses of $131,500. The numbers in the start-up and the start-up funding tables are designed to replicate these projections. The firm capital will be $101,500. I will give the bulk of start-up funding in the amount of $72,000. About $59,500 extra funding is required. The rationale of this business plan is to secure funding for that amount (Samson & Daft 2011). I welcome anyone who wishes to be a co-owner and an investor to take part in the companys capital for the amount of $29,500, and I could offer a portion of 29.06 p% ownership of the $101,500 corporation capital. The funds provided by the investor will be utilized to purchase equipment, and to cover part of the start-up costs. For the remaining about $30,000 additional financing required to cover the start-up expenses, I plan to get a five-year term commercial loan facility that will meet the cash flow needs. My company’s cash-flow analysis shows the companys capability to pay back the loan and meet the interest payment responsibilities, whilst maintaining satisfactory liquidity and generating positive cash flow, and adequate cash reserves for unanticipated future events (Walker 2008). Start-up Requirements Start-up Expenses Legal $1,200 Kitchen Inventory $6,000 Packing Materials $1,500 Kitchen Equipment $20,000 Insurance $1,500 Rent $2,000 Promotion $1,800 Business Sign $3,000 Permits $1,500 Other Expensed Equipment $5,000 Office Supplies $1,000 Other $3,000 Total Start-up Expenses Start-up Assets $47,500 Cash Required $ 10,000 Start-up Inventory $15,000 Other Current Assets $9,000 Long-term Assets $50,000 Total Assets $84,000 Total Requirements $131,500 Company Ownership Delicious Pizza, Inc. will be a company owned by myself. The outstanding and issued common stock will be $101,500. I will get 3,600 shares, at $100 per share. In addition, my total capital contributed would be $72,000. In return for investing the $29,500 in the firm’s capital, the new investor would get 2,950 shares at $100 par value, or 29.06 % ownership. The new investor would be invited to talk about the quality and quantity of the stock to be issued, before the integration procedures are started (Walker 2008). Products and Services Delicious Pizza, Inc. will offer different Abu Dhabi-style pizza, and sodas, desserts, sauces, and fruit juices. This type of pizza is known to have wide, thin, and foldable slices. The toppings of the pizza comprise mozzarella cheese and tomato juice. Typically, the Abu Dhabi-style pizza is light-sauced, hand-tossed, and the slices are frequently eaten folded in half, as street snacks. It differentiates itself from other Abu Dhabi pizza by its explicit crust, made of high-gluten bread flour with notable flavor. Pizza is served at the counter, for take-out, or delivered to the place shown in our customer orders. The company takes orders online, by phone, or at our site (Samson & Daft 2011). Market Analysis The Abu Dhabi Ice Rink area is a growing middle-to-high class area, counting over one million residents. There are around five hundred businesses close to my site. Majority of these residents are families of three or more. The average revenue for the area is about $45,000. In addition, the boom in the region is principally in response to new business as well as employment opportunities in the adjacent Abu Dhabi Airport. Similar food services businesses, which traditionally thrive with this populace, have proved the potential for Delicious Pizza, Inc (Walker 2008). With continued as well as sustained growth in the area, opportunities to serve the Abu Dhabi Ice Rink area inhabitants will increase. My firm will sell to individuals, although it will also allow some intermittent catering jobs to individuals and firms in the region. The company projects that over 90% of our sales will go to individuals (retail clients) and the remaining balance to accessible and future businesses (corporate clients). Though, it is significant to note that, classically, corporate customers make bigger orders for their employees requirements or special business events (Walker 2008). Market Segmentation The main market segment for the new business are individuals , which accounts for more than 90% of our sales , and local companies, which, in terms of purchase orders, classically make bigger orders for their employees as well as business needs. The next illustration indicates the market segmentation, considering, for conservative purposes, only the possible number of individuals , which will order pizza (around 100 thousand residents, or 10 % of the populace in the Abu Dhabi Ice Rink area, plus 500 businesses), and less than 5 % average growth rate (Walker 2008). Target Market My company will focus on its target market, low-to-middle class population in the Abu Dhabi Ice Rink area, along with local companies, which are situated outside or inside the area. The company will attempt to establish a reputable image from that target market’s view, by providing outstanding quality Abu Dhabi style-pizza, service excellence, expedient delivery services, convenience, and through partnering with local businesses as well as other interested companies in the community (Walker 2008). Strategy and Implementation Summary Delicious Pizza, Inc. strategy is founded on delivering a well-built customer value proposal in a niche market. It is looking to offer the Abu Dhabi Ice Rink area and its nearby areas a new choice in pizza options. The company is building a marketing infrastructure so that I may ultimately reach more customers with similar pizza offering. The firm focuses on satisfying the requirements of low-to-middle class inhabitants and companies situated inside or outside the area. Furthermore, Delicious Pizza, Inc. will use effectual advertising tools to sponsor the business. The Abu Dhabi Ice Rink flyer is a common method to advertise in the area. I will also hire people to hold signs near Abu Dhabi Airport. Door handle flyer promotion can be supportive all through the Abu Dhabi Ice Rink neighborhoods (Samson & Daft 2011). Sales Forecasts The important components of the sales forecast are indicated in the Total Sales by Month in Year 1 table. The food sales are anticipated to increase to about $2 million total in the third year. Sales Forecast Unit Sales 2015 2016 2017 Equipments 2,255 2,500 2,800 Service 3,128 6,000 7,500 Software 3,980 5,000 6,500 Training 2,230 4,000 8,000 Other 2,122 2,500 3,000 Total Unit Sales 13,715 20,000 27,800         Unit Prices 2015 2016 2017 Equipments $1,980.80 $1,984.50 $1,980.80 Service $68.54 $84.00 $87.00 Software $212.87 $195.00 $180.00 Training $46.54 $72.00 $79.00 Other $394.21 $300.00 $394.00         Sales       Equipments $4,466,708 $4,961,240 $5,546,245 Service $214,388 $504,000 $652,500 Software $847,220 $975,000 $1,170,000 Training $103,795 $288,000 $632,000 Other $836,520 $750,000 $1,182,000 Total Sales $6,468,631 $7,478,240 $9,182,745         Direct Unit Costs 2015 2016 2017 Equipemnts $1,700.00 $1,686.82 $1,683.68 Service $58.08 $33.60 $34.80 Software $120.00 $117.00 $108.00 Training $11.10 $21.60 $23.70 Other $90.00 $90.00 $118.26         Direct Cost of Sales 2015 2016 2017 Equipments $3,833,500 $4,217,050 $4,714,304 Service $181,680 $201,600 $261,000 Software $477,600 $585,000 $702,000 Training $24,753 $86,400 $189,600 Other $190,980 $225,000 $354,780 Subtotal Direct Cost of Sales $4,708,513 $5,315,050 $6,221,684 Management Summary I anticipate to use resources intelligently, pay debts, operate profitably, and abide by laws and regulations. The employee philosophy is founded on team work, responsibility as well as mutual respect. People who will work for me at Delicious Pizza, Inc. would want to be part of the team since the firm operates in an environment, which promotes creativity, growth, diversity, and performance. I will be the manager of Delicious Pizza, Inc., and will I will be assisted by several employees. I have experiences in the hospitality industry that spans for many years. The personnel plan reflects the need to strengthen company’s capabilities to equal the positioning (Walker 2008). Delicious Pizza, Inc. will have the following staff: • Manager • Cook • One kitchen staff member • Two servers Financial Plan According to the conservative projections, Delicious Pizza, Inc. is anticipated to maintain a healthy and sound financial position during the next five years. The following plan outlines the financial development of the firm. The company will be initially funded by a $30,000 five-year term loan from the bank and a total investment of $101,500. Furthermore, the source to pay back the loan will be the cash flow accrued from operations. The firm will too finance growth via cash flow. After an opening period of five years, the corporation will be able to make a further expansion. At that time, it is envisaged whereby a bank loan or equity financing will be sought to fund the new development, in addition to retained earnings. The estimated financial statements have been prepared in agreement to the general accounting principles, and essentially comprise some amounts that are based on sensible estimates and judgment. For accounting uses, the long-term assets are expensed utilizing the straight-line depreciation technique, and inventory is accounted for founded on the First-In, First-Out (FIFO) technique (Walker 2008). Break-even Analysis For company’s break-even analysis, it is assumed that running costs of about $16,874 per month, which comprises payroll, insurance, utilities, rent and other fixed costs. There is need to sell around 1,996 pies for minimum $35,155 monthly to break even, founded on company’s assumptions. Because the normal operating capacity is 300 pies daily (4,224 pies for $122,400 monthly), and the average projected sales of $72,000 monthly, or 176 pies daily (at only 58 percent of normal operating capacity) are projected to be much larger than the computed break-even point, the company suppose that there is likely to easily reach and maintain profitability. Delicious Pizza, Inc. is anticipated to break even in the third month of operations (Walker 2008). Projected Profit and Loss The most important assumption in the Projected Profit and Loss statement is that of gross margin that is believed to increase. This is up from just 21 % in the first year. The increase in gross margin is based on changing the sales mix, and it is essential (Welch et al, 2007). Profit and Loss (Income Statement)   2015 2016 2016 Sales $6,468,631 $7,478,240 $9,182,745 Direct Cost of Sales $4,708,513 $5,315,050 $6,221,684 Production Payroll $139,000 $202,500 $203,500 Other $0 $0 $0   ------------ ------------ ------------ Total Cost of Sales $4,847,513 $5,517,550 $6,425,184 Gross Margin $1,621,118 $1,960,690 $2,757,561 Gross Margin % 25.06% 26.22% 30.03% Operating expenses:       Sales and Marketing Expenses       Sales and Marketing Payroll $344,000 $422,000 $486,000 Ads $125,000 $140,000 $175,000 Catalog $25,000 $19,039 $19,991 Mailing $113,300 $120,000 $150,000 Promo $16,000 $20,000 $25,000 Shows $20,200 $25,000 $30,000 Literature $7,000 $10,000 $12,500 PR $1,000 $1,250 $1,500 Seminar $31,000 $45,000 $60,000 Service $10,250 $12,000 $15,000 Training $5,400 $7,000 $15,000   ------------ ------------ ------------ Total Sales and Marketing Expenses $698,150 $821,289 $989,991 Sales and Marketing % 10.79% 10.98% 10.78% General and Administrative Expenses       General and Administrative Payroll $155,000 $179,000 $234,000 Payroll Burden $107,840 $139,760 $160,080 Depreciation $12,681 $13,315 $13,981 Leased Equipment $30,000 $31,500 $33,075 Utilities $9,000 $9,450 $9,923 Insurance $6,000 $6,300 $6,615 Rent $84,000 $88,200 $92,610 Other $6,331 $6,648 $6,980   ------------ ------------ ------------ Total General and Administrative Expenses $410,852 $474,173 $557,264 General and Administrative % 6.35% 6.34% 6.07% Other Expenses       Other Payroll $36,000 $70,000 $77,000 Contract/Consultants $1,500 $5,000 $30,000   ------------ ------------ ------------ Total Other Expenses $37,500 $75,000 $107,000 Other % 0.58% 1.00% 1.17%   ------------ ------------ ------------ Total Operating Expenses $1,146,502 $1,370,462 $1,654,255 Profit Before Interest and Taxes $474,616 $590,228 $1,103,306 Interest Expense Short-term $8,200 $40,000 $40,000 Interest Expense Long-term $29,628 $28,531 $24,558 Taxes Incurred $87,357 $104,340 $207,750 Extraordinary Items $0 $0 $0 Net Profit $349,430 $417,358 $830,998 Net Profit/Sales 5.40% 5.58% 9.05% Reference List Samson, D., & Daft, R. L, 2011, “Management”, South Melbourne, Vic: Cengage Learning. Walker, John R,2008, “The Restaurant: From Concept to Operation”, Hoboken, N.J: John Wiley & Sons, 2008. Internet resource. Read More