business plan assignment A level

8/7/2019 business plan assignment A level

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FINANCING PROPOSAL FOR

B.BROTHERS COMPANY

Business Plan

To be submitted toThe Royal Bank of Scotland

Brock JohnsonBen Johnson

B. Brothers Company17 Queens Road

BournemouthBH2 6BA

Plan prepared March, 2010


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Table of Contents

1.0 Executive Summary ------------------------------------------------- 1

2.0 Company Summary ------------------------------------------------- 22.1 Vision ----------------------------------------------------------- 22.3 Mission --------------------------------------------------------- 2

3.0 Products & Services ------------------------------------------------- 3

4.0 Market Segmentation & Competitors --------------------------- 4

5.0 Sales & Marketing Strategy ---------------------------------------- 5

6.0 Management Summary --------------------------------------------- 76.1 Personnel ------------------------------------------------------- 7

7.0 Financial Planning ---------------------------------------------------- 87.1 Summary of Financial Needs ------------------------------- 87.2 Cash Flow Projection ----------------------------------------- 87.3 Profit & Loss Projection ------------------------------------- 8

8.0 Risks & Conclusions ------------------------------------------------ 9

Appendix I ----------------------------------------------------------------- 10

Appendix II -----------------------------------------------------------------11

Appendix III ----------------------------------------------------------------12

1.0 E xecutive S ummary Formed in 2004, B. Brothers is the manufacturing company owned

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and operated by two owners, Brock and Ben Johnson, located at 17Queens Road, Dorset, and Bournemouth with 10,000 square footwarehousing space. In the last five years the company hasdeveloped the strong brand and strong market position in differentsegments. Due to its quality and innovative cleaning products thecompany has developed the close working relationship with thedistributors, retailers and consumers. And it's newly launchedproduct the oven-bomb is beating any other product in the markettoday. The company currently serves 30% of the total market withgross revenues of 2,650,000 in Bournemouth. We are expecting togrow our customer base and market by 50% based on the previousyears records, our unique offering, and planned marketingactivities.

The company is seeking growth capital in the amount of 5,000,000 over the next three years for the purpose to

relocate its factory in order to cut costs purchase new equipment expand its business all over the UK so that our business can

operate at a higher level of profitability train the employees on the new equipment increase the marketing activities to modernize and renovate the machines & to invent and launch the new product

Based on the financial projections presented in this plan, itindicates that with the investment of 5million, the company willmaintain good cash flow, increase profitability and provide a timelyand healthy repayment of loan with interest. Projection shows theturnover of 2 million per annum with high sales growth and netprofit of 1.5 million year over the next three years. As owners, ourcommitment is to take personal responsibility for all financial debt.So we have taken necessary precautions and steps to ensure thatthe investment is fully implemented. Repayment of 3-year loan,plus interest, can begin promptly in July. Early retirement of loan is

anticipated, possibly by the end of tax year 2013. The companyaims to become one of the top manufacturing company in UK. Andwe can do it. It is not our ego; it is our self confidence to be in thetop.

2.0 C ompany S ummary B. Brothers is the Bournemouth's leading manufacturing companyof innovative cleaning products established in 2004. B. Brothers isowned by two brothers Brock and Ben Johnson. Five years ago the

Johnson brothers lived in London providing the cleaning services;

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cleaning the schools, big offices and pubs and make money out of it. At that time, there were lots of manufacturer of cleaningproducts but they had mind blowing ideas to build exciting cleaningproducts. It is their concepts and hard work how this company is inthis position now. It employs 90 people on a single site at Queensroad in Bournemouth, which accommodates both administrativeand manufacturing functions. It has earned a reputation withinthese three years for making innovative line of biodegradable,environmentally safe cleaning products, which are sold insupermarkets household stores and DIY/hardware outlets. Itsturnover is 2M per annum and the company has some extremelysuccessful products which are household names. The company isranked as the top manufacturing company for its creative cleaningproducts in Bournemouth by industry regulator, Ross Stone. Asidefrom manufacturing, the company also offer residential house

cleaning, school cleaning and pubs cleaning services. RogerHarrington has been appointed as the managing director who isresponsible for operations and management of cleaning services.2.1 V isionIts new revolutionary product 'Oven Bomb' makes B. Brothers oneof the most comprehensive manufacturing company inBournemouth. Our expertise lies in high quality manufacturingresearch, service, technology, quality and efficiency in all our areasof activity. This forms the basis for our success and safeguards thefuture. However, our focus is firmly on optimising the availablefunding and delivering the best product and cleaning services.2.2 M issionB. Brothers company is dedicated first and foremost to theproduction of highest quality and exciting products to meet theneeds and demands of our customers while achieving anacceptable return on investment. The launch new product is aninnovative self-cleaning oven cleaner and our lead market all overthe UK, following the successful testing and launch of product inBournemouth. The immediate goals are to gain funding, to expand

the business all over the UK, relocate the factory, provide anexcellent product at good value for money for customers withinbudget and deliver the outstanding cleaning services.

3.0 P roducts & S ervicesB. Brothers produce wide range of environmentally friendly safe touse cleaning products. All products are designed to be effective atcleaning, yet easy and strong but harmless. The cleaning productswill be developed and produced at our manufacturing facilities inBournemouth.

The product line of B. Brothers includes: Household cleaners

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Industrial cleaners Degreasers Automotive cleaners Oven cleaners Concrete cleaners Tar remover Vehicle wash products Hand cleaners

B. Brothers products will be used by house wives, hospitals, hotels,car washes, schools and cleaning specialist. Next to the cleaningproducts, the newly launched revolutionary product is the ovenbomb which is self oven-cleaning product with a difference. Theoven bomb is a time saving small sized product which can fit intoany conventional oven. This product can be used for bothdomestic and commercial uses. It is safe and very easy to use. Thisis an exceptional product superior to any other oven cleaningproduct in the market today. A number of B. Brothers products willbe available from supermarkets and household stores. Also theproducts can be purchased from the company's secure website:www.brothersinvention.com

The B. Brothers company also offers professional cleaning servicesin Bournemouth which also support in advertising the product of

the company. It provides the cleaning services to residentialhouses, pubs and schools. The company offer wide range of services to the clients from general room cleaning to bathroom,kitchen, bedroom as well as others usual jobs.

4.0 M arket S egmentation & C ompetitors

The company will be focusing on wholesale distributors, cleaningspecialists and also the consumers who want to buy it online fromcompany website. The wholesale distributors play the importantrole for company to achieve its goal and success because they arethe critical supplier to commercial retail outlets. We consider B.

Brothers products are the most desirable and a first-class weaponto cleaning specialists. So to give the outstanding outcome forcleaners B. Brothers product is the best choice. As we expand the

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business we plan to switch to retail consumers more thanwholesalers. The wholesale demand is constant and increasing. Wefeel that the latter can be improved by more direct selling efforts.Retail business should grow over the next few years, but thegreatest growth will be in wholesale accounts.

Also with the revolutionary new product the oven bomb will betargeted at: Housewives, commercial market such as restaurantand hotels and the smaller segment would be cleaningprofessionals. Although there are lots of competitors who are alsomanufacturing the cleaning products but we believe we are onlythe company who delivers the high quality and innovative productto the consumers at good value. And the oven bomb is one of theexceptionally invented self oven cleaning machine for which thecompany is really proud of.

70%

20%

10%

Market segmentation for B.Brothers products

WholesaleDistributorsCleaning specialistOnline consumers

60%

10%

20%

10%

Market segementation for new product:oven bomb

HousewivesCleaning specialistHotels andrestaurantsOthers

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Also B. Brothers cleaning business, they offer both residential aswell as commercial cleaning service. The company service will befocusing on residential homes, school and pubs. There are manycompetitors in the local market. Although each of them provide agood cleaning service but we feel they provide to fail the level of professionalism, trustworthiness , attention to detail and use of quality cleaning products.

5.0 S ales & M arketing S trategy

The B. Brothers products are very popular among the marketnowadays with its logo and its slogan Cleaning matters: Nothingadvanced than B. Brothers product. The company will use adifferent marketing and sales strategies on three different marketsegments that it seeks to reach. The company will have differentmarketing and sales approaches which is detailed below:

For individual and online consumers : Marketing for thesesegments will be done generally over the internet. The companywill give more focus on building the good quality websitepromoting the website through different popular search engineslike Google and yahoo. But unless our website is optimised to get alisting at the top of search results, theres a chance the consumerswill buy from competitors instead. So the company will be usingpay-per-click advertising. It is an effective marketing scheme forthe internet. Pay per click assures that we are reaching our targetmarket. People who are searching for

some specific information on the subject will only come to ourwebsite. Also the company will produce adds on the popularmagazines like Housekeeping, C& M: Cleaning and Maintenance

magazine. As a pricing strategy, we will use market penetrationpricing strategy. Here we set a low price as an introductory releaseoffer to attract segment. And after we first reach the market toattract the higher end consumers we would set the price at a highprice which is called price skimming strategy.

For whole sale distributors : B. Brothers have already have somereliable wholesale distributors. One of them is our cleaning servicecompany. As a pricing strategy we will offer them 25% discount forwholesale purchases for the first two months of productperformance. It will enlarge the relationship between thedistributors and the company .B. Brothers will work hard onconvincing distributors that it will be able to meet all of the needs

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of the distributor, that production can be scaled quickly if necessary,

For cleaning specialist : Our cleaning service company willmarket our products to specialist firms. The advertising channellike magazines, newspaper, yellow pages, flyers, posters, busboards, radio broadcasting will be used to create marketawareness. As a pricing strategy we will offer them the whole saleprices for the first five months of operation.

Although it is not on the top of our plan, but we will be usingBOGOF pricing strategy to get rid of old stock.And for the promotion of newly launch oven bomb we will havestand in front of the superstores giving samples as testers with avideo demonstration showing how the product work. To get freepublicity and media attention, samples would be given to journalistto test the product and write review based on the productperformance. We also have contacted Kim and Aggie from howclean is your house from channel4. They have agreed to endorsethe product via internet, blogs, twitter, cleaning tips websites andalso new series of how clean is your house. For pricing strategieswe will be using market penetration and price skimming strategiesas above.

6.0 M anagement S ummary

The Brock and Ben Johnson has ten years of experience in cleaningspecialist and five years of experience in manufacturing thecleaning product. Basically it is the family business. During theseyears of manufacturing, Johnson brothers have made invaluablecontacts with wholesale distributors, cleaning specialist and alsowith commercial retail outlets. Brock Johnson will be responsible forsales, marketing & day-to-day control and Ben Johnson will beresponsible for the production, purchasing and transport. They willset the policies together and personnel decisions will be made

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jointly. Both men are inventive and energetic. They believe theirenergies complement each other and will help them make B.Brothers company a great success to the top of the Mount Everest.

6.1 P ersonnel

Management believes that the strength of the Company'spersonnel is a key to success. As such, plans include filing staff positions with professionals who have proven success and recordsin manufacturing world and have an understanding of the industry.

The company plans to hire one office manager with salary of 22,00 per year, two production and administrative assistants withsalary of 15,000 per year and all the other production staff ; 8hours employees at a minimum wage rate. The table shows thesalary for the whole company. (See Appendix I)

7.0 F inancial S ummary

7.1 S ummary o f F inancial N eeds

B. Brothers Company, a limited partnership of two brothers, isseeking a loan of 5,000,000. The funds will be utilize to expandthe business all over the UK , to modernize the equipment, torelocate its factory 250 miles north in order to cut costs and toincrease our marketing activities. The whole debt with the RoyalBank of Scotland is secured by owners and company collateral. Weplan to support our debt accountability through increased sales,profit and cash flow.

7.2 C ash F low P rojection

In our cash flow projection, we have assumed that the wholefinance of 5 million has come from the bank loan. We have

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allowed for interest on the full amount for the whole period. Weexpect to grow sufficient cash flows over the next three years withhealthy repayment of loan with interest. This loan will be repaidquarterly over three years.Our cash flow forecasting for the three years is shown in the table:(See Appendix II.)

7.3 P rofit & L oss F orecasting

B. Brothers expect a significant increase in profitability to the nextthree years and in the future also based on our experiences andmarket research. We anticipate that sales will grow quickly within 4month of operation. But certain expenses are assumed likemarketing, advertising, training & development, salaries andwages to bring our products to prominence. We assume inincreasing 20 distributor clients within a first year and so on, whichgive us an estimated turnover of 2 million every year. We expectto see very strong net profit every year. We anticipate our annualgross profit will be 1.5 million over the next three years andexpected more profit in future.Our projected profit and loss for the three years is shown in thetable: (See Appendix III)

8.0 R isks & C onclusions

We have taken into consideration that equipment from theprevious location could present a risk of costly repair andreplacement fees. So, we have an insurance of 24,000 per year toreduce this risk. Also if in case we have the latest equipment onthe stock if the equipment are damaged or failed.

It is our goal to relocate our company and expand our business allover the UK and making it top manufacturing company. In order toachieve this goal, we are asking for a term loan of 5 million. Oncewe have secured this loan, and relocated the company, weanticipate that our sales will increase by 200,000, approximately1.5 million of which we are projecting as net profit. The companyis confident of its ability to achieve growth, success andsustainable profitability.

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A ppendix I

Employer &employee

Salaries

Brock Johnson (owner) 32,000.00 per year Yearly increasedepending upon

profitability

Ben Johnson (owner) 32,000.00 per year Yearly increasedepending upon

profitability

Office Manager 22,000.00 per year Stays same

Production & AdministrativeAssistants(2)

15,000.00 per year Stays same

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Part Time workers(15) @6 per hour More added as productionincreases.

Full time workers(20) @7 per hour 40 hours a week

A ppendix IICash Flow Projection

A ppendix III

Profit & Loss Projection

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