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Page 1: Business Plan- Fresh Living - EF

BBUUSSIINNEESSSS PPLLAANN

Page 2: Business Plan- Fresh Living - EF

Entrepreneurial Finance

MBA -5B

Submitted to:

Sir. Ajab Khan Burki.

By

1. Maryam Ahmed

2. Usman Shabbir.

3. Neelofar Niazi.

Page 3: Business Plan- Fresh Living - EF

EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

“From seed to Shelf, Organic Farming, Good for nature, Good for health”

Fresh living is a new farming venture that is focusing on producing and selling organic vegetables in

Islamabad.

Organic vegetables are produced without the use of chemical fertilizers and pesticides and non-

genetically engineered seeds, thus organic vegetables are free from harmful effects of toxins and are

more nutritious.

The vegetable industry is an ever growing business and demand is directly proportional to increase in

population. The structure of the industry has remained same for many decades now. The prices of

vegetables vary in different localities and profit margins are considerable especially for middle men.

Keeping in vogue with international trends, and with increased awareness about the benefits of using

organic vegetables, affluent and health conscious people living in Islamabad have desire to consume

organic vegetables. Company is focusing on this niche market and customers will be attracted by

promotional activity. Sales strategy focus on use of direct sales through company website and

indirect sales through existing brick and mortar vegetable retailers who will be offered 15% of

commission on sale price for carrying the company’s products.

The management team comprises business management students, who will manage the intricate and

innovative selling process. The production team will comprise of skilled manpower, supervised by a

diploma holder in agriculture.

The company intends to construct the required infrastructure on the farm. Most of the production

machinery will be acquired. The employees required for the production will be permanently

employed and to cater with the variation in production daily laborers will be hired when required.

The financial plan, calculated on basis of some assumptions mentioned in the relevant chapter show

promising result. ROI for the first five years are 1.5%, 29.29%, 21.46%, 20.08%, and 18.91%

respectively. It is estimated that the business will manage to get investment breakeven based on cash

flows in 3.13 years.

Page 4: Business Plan- Fresh Living - EF

Page i

TABLE OF CONTENTS

11.. IINNTTRROODDUUCCTTIIOONN ..........................................................................................................................1

1.1 Company description ................................................................................................................... 2

1.2 What is organic food? .................................................................................................................. 2

1.3 Company history ......................................................................................................................... 2

1.4 Mission statement ........................................................................................................................ 2

1.5 Vision .......................................................................................................................................... 2

1.6 Goal ............................................................................................................................................. 3

1.6.1 Personal ................................................................................................................................... 3

1.6.2 Business................................................................................................................................... 3

1.6.3 Strategic................................................................................................................................... 3

1.7 Purpose ........................................................................................................................................ 3

1.8 Product and services .................................................................................................................... 3

1.9 Current status ............................................................................................................................... 3

1.10 Legal status .................................................................................................................................. 3

22.. IINNDDUUSSTTRRYY AANNAALLYYSSIISS .................................................................................................................4

2.1 Industry size and growth rate ....................................................................................................... 5

2.2 Nature of Participants and Industry Structure ............................................................................. 5

33.. MMAARRKKEETT AANNAALLYYSSIISS ...................................................................................................................6

3.1 Ideal Customer ............................................................................................................................. 7

3.2 Market Segmentation and Target Market Selection .................................................................... 7

3.2.1 Chain Ratio.............................................................................................................................. 7

3.2.2 ATAR Model .......................................................................................................................... 8

44.. MMAARRKKEETT NNEEEEDDSS,, TTRREENNDDSS,, && DDEESSCCRRIIPPTTIIOONN .............................................................................9

4.1 Market Needs ............................................................................................................................. 10

4.2 Market Trends ........................................................................................................................... 10

4.3 Market Description .................................................................................................................... 10

4.3.1 Demographics ....................................................................................................................... 10

4.3.2 Psychographics ...................................................................................................................... 10

4.3.3 Behavior ................................................................................................................................ 10

4.3.4 Geographic ............................................................................................................................ 10

4.4 Competitor Analysis .................................................................................................................. 10

4.4.1 Differentiators ....................................................................................................................... 10

4.4.2 Direct competitors ................................................................................................................. 11

4.4.3 Indirect competitors .............................................................................................................. 11

55.. MMAARRKKEETTIINNGG PPLLAANN ...................................................................................................................12

5.1 Overall Market Strategy ............................................................................................................ 13

5.1.1 Core Strategy ......................................................................................................................... 13

5.1.2 Core message ........................................................................................................................ 13

5.1.3 Positioning goal ..................................................................................................................... 13

5.1.4 Core Branding Elements ....................................................................................................... 13

Page 5: Business Plan- Fresh Living - EF

Page ii

5.2 Price Rationale ........................................................................................................................... 13

5.3 Marketing Material .................................................................................................................... 14

5.3.1 Marketing kit ......................................................................................................................... 14

5.4 Lead Generation Plan or Business Creation .............................................................................. 15

5.4.1 Lead Generation Strategy ...................................................................................................... 15

5.4.2 Push strategy from distributor(s) i.e. vegetable shops ........................................................... 16

5.4.3 Referrals ................................................................................................................................ 16

5.5 Lead Conversion Plan ................................................................................................................ 16

66.. SSAALLEESS SSTTRRAATTEEGGYY ....................................................................................................................17

6.1 Sales process .............................................................................................................................. 18

6.1.1 Indirect sales .......................................................................................................................... 18

6.1.2 Direct sales ............................................................................................................................ 18

6.2 Transaction ................................................................................................................................ 18

6.3 Follow – up ................................................................................................................................ 18

6.4 Service Experience .................................................................................................................... 18

6.5 Loyalty Product/Service Offerings ............................................................................................ 18

6.6 Marketing calendar .................................................................................................................... 19

6.7 Marketing Tools and Budget ..................................................................................................... 19

77.. OORRGGAANNIIZZAATTIIOONNAALL PPLLAANN .........................................................................................................20

7.1 No. of Employees ...................................................................................................................... 21

7.2 Organizational Chart.................................................................................................................. 21

7.2.1 CEO ....................................................................................................................................... 22

7.2.2 CFO / CTO ............................................................................................................................ 22

7.2.3 CMO ...................................................................................................................................... 22

7.2.4 COO ...................................................................................................................................... 22

7.2.5 Delivery Boys ........................................................................................................................ 23

7.2.6 Tractor driver ........................................................................................................................ 23

7.2.7 Pickup driver ......................................................................................................................... 23

7.2.8 Harvesters .............................................................................................................................. 23

7.2.9 Laborers (daily basis) ............................................................................................................ 23

7.2.10 Account office ....................................................................................................................... 24

7.2.11 Staff supervisor ..................................................................................................................... 24

7.2.12 Security guards ...................................................................................................................... 24

7.2.13 Office attendant ..................................................................................................................... 24

7.3 Payment Salaries ....................................................................................................................... 24

7.3.1 Staff requirement ................................................................................................................... 25

7.4 Expansions ................................................................................................................................. 25

7.5 Level of motivation ................................................................................................................... 26

88.. PPRROODDUUCCTTIIOONN PPLLAANN .................................................................................................................27

8.1 Area requirement ....................................................................................................................... 28

8.2 Usages details ............................................................................................................................ 28

8.3 Infrastructure requirements ........................................................................................................ 29

8.3.1 Irrigation source and energy source ...................................................................................... 29

Page 6: Business Plan- Fresh Living - EF

Page iii

8.3.2 Seed store and organic manure shed ..................................................................................... 29

8.3.3 Water channels ...................................................................................................................... 29

8.3.4 Fencing .................................................................................................................................. 29

8.3.5 Farm Security ........................................................................................................................ 29

8.3.6 Administrative (office) building ............................................................................................ 30

8.3.7 Machinery sheds .................................................................................................................... 30

8.3.8 In farm roads ......................................................................................................................... 30

8.4 Machinery requirements ............................................................................................................ 30

8.4.1 1 Tractor (Fiat 240) ............................................................................................................... 30

8.4.2 1 Rota Vator (Tractor Mounted) ........................................................................................... 30

8.4.3 1 cultivator (Tractor Mounted) .............................................................................................. 30

8.4.4 1 Seed Drill (Tractor Mounted) ............................................................................................. 31

8.4.5 Ridger .................................................................................................................................... 31

8.4.6 1 Mould Bold Plough ............................................................................................................ 31

8.4.7 1 Chopper .............................................................................................................................. 31

8.4.8 Pickup van-Suzuki ................................................................................................................ 31

8.4.9 Knapsack hand sprayer-steel body ........................................................................................ 31

8.5 Average product of various vegetables farmed organically ...................................................... 31

8.5.1 Scale ...................................................................................................................................... 31

8.5.2 Summer vegetables ............................................................................................................... 32

8.5.3 Winter Vegetables ................................................................................................................. 32

8.6 Production Process .................................................................................................................... 33

8.6.1 Soil preparation ..................................................................................................................... 33

8.6.2 Sowing................................................................................................................................... 33

8.6.3 Water application .................................................................................................................. 33

8.6.4 Plant protection ..................................................................................................................... 33

8.6.5 Harvesting ............................................................................................................................. 33

8.6.6 Grading/Washing/packaging ................................................................................................. 33

8.6.7 Transport ............................................................................................................................... 34

8.6.8 Production and Delivery Process .......................................................................................... 34

8.6.9 Total Fixed Asset .................................................................................................................. 35

99.. FFIINNAANNCCIIAALL PPLLAANN .....................................................................................................................36

9.1 Assumptions .............................................................................................................................. 37

9.2 Contingency Plan ....................................................................................................................... 39

9.3 Exit strategy ............................................................................................................................... 39

1100.. EEXXHHIIBBIITT((SS)) ................................................................................................................................. I

10.1 Fresh Living – Organic food, Business Model ............................................................................. I

10.2 Market Comparison .....................................................................................................................II

10.3 Cost of Land .............................................................................................................................. III

10.4 Cycle Plantation Cost ................................................................................................................ IV

10.5 Production Cost per Kg (Summer Vegetables) ......................................................................... VI

10.6 Production Cost per Kg (Winter Vegetables) ........................................................................... VII

10.7 Complete Cost of Vegetables ................................................................................................. VIII

10.8 Income Statement ...................................................................................................................... XI

Page 7: Business Plan- Fresh Living - EF

Page iv

10.8.1 Monthly ................................................................................................................................. XI

10.8.2 Yearly ................................................................................................................................... XII

10.9 Statement of Retained Earnings ............................................................................................. XIII

10.11 Sales Schedule .................................................................................................................... XIV

10.12 Wages and Commission Schedule ...................................................................................... XV

10.13 Cash Budget ....................................................................................................................... XVI

10.14 Balance Sheet .................................................................................................................... XVII

10.14.1 Monthly ............................................................................................................................. XVII

10.14.2 Yearly .............................................................................................................................. XVIII

10.15 Cash Flow Statements ........................................................................................................ XIX

10.15.1 Monthly .............................................................................................................................. XIX

10.15.2 Yearly .................................................................................................................................. XX

10.16 Expected value of growth ................................................................................................... XXI

10.17 Sustainable Growth ............................................................................................................ XXI

10.18 Break-even Time ............................................................................................................... XXII

10.19 Survival Revenue .............................................................................................................. XXII

10.20 Financial ratios ................................................................................................................ XXIII

10.21 Venture Valuation ........................................................................................................... XXIV

10.22 In case of Equity investment .............................................................................................XXV

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CCHHAAPPTTEERR 11

11.. IINNTTRROODDUUCCTTIIOONN

Page 9: Business Plan- Fresh Living - EF

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1.1 Company description

Fresh living is a farming company that is focused on producing and selling organic vegetables

that are produced by using environmentally friendly farming techniques and without the use of

chemical fertilizers and pesticides, in local market. Vegetables currently available in local

market are inorganic that are produced by using chemical fertilizer and pesticides. The

vegetable retail business is a fragmented business that follows a 4 tier approach. Fresh living

is vertically integrated where production of organic vegetables is done on leased farm and

product is sold to final customer thus reducing the tier of whole sellers (shown in Exhibit 1).

This provides company control over production to ensure quality of the product and is

financially beneficial for the company as it removes the tier of whole sellers where profit

margins are considerable. Before we launch upon the technical aspect of business below we

briefly explain what organic food and what are its benefits.

1.2 What is organic food?

Organic vegetables are grown on such lands which are free from chemicals fertilizers,

pesticides, and any other environmental and health damaging agent for at least three years as

well as no chemical is used in its production. Moreover, these vegetables are not genetically

engineered as genetically engineered vegetables seeds are not used for production. Organic

food is healthier because it does not contains chemical that are left in vegetables due to use of

chemical fertilizers and pesticides but these vegetables also contains higher amount of trace

minerals, anti-oxidants and vitamin C. Studies conducted in the west have proved time and

again that organic vegetables tastes better than in-organic vegetables. In-organic production

techniques effect the environment because of excessive use of pesticides and fertilizers, which

results in environmental pollution, pollutes farm and kills wild life i.e. beneficial insects,

micro-organisms. Organic farming reduces soil erosion and improves soil fertility. Organic

production techniques are also beneficial for farmers as it saves them from the toxin exposure

which they have to cope with in in-organic production techniques.

1.3 Company history

Fresh living is a newly formed company, with an aim and purpose of promoting organic

farming and production in Pakistan.

1.4 Mission statement

“To make aware about and to promote healthy lifestyles”

1.5 Vision

Fresh living’s vision is to create awareness among people that organic food is good for them,

animals, and environment.

Page 10: Business Plan- Fresh Living - EF

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1.6 Goal

1.6.1 Personal

To reach salary of Rs. 200,000 by the start of second year.

1.6.2 Business

To recover at least 15% of initial investment.

Expanding geographical segment to at least 3 sectors within a two year.

To keep the maximum revenue in business for future growth.

1.6.3 Strategic

To be a top provider of fresh and healthy organic vegetable(s) on the customer’s doorstep.

To build a strong repute in market.

1.7 Purpose

Fresh living’s purpose is to provide nutritious organic vegetables to their customers.

Management at “Fresh Living” also wants to create awareness in consumers about the benefits

of organic food for humans, animals, and environment and about harmful effects of inorganic

eatables.

1.8 Product and services

We will aim to provide very pure, high quality, free of contamination and bacteria seasonal

organic vegetables to our customers. Our product line will initially consists of vegetables sold

through brick and mortar shops and delivered at the customers’ doorstep in proper packaging

which will keep them fresh.

1.9 Current status

The current status of the company is that the basic feasibility is complete and the project is

ready for the launch.

1.10 Legal status

The company is a partnership based business with three owners with equal share in the

ownership. The owners are also office bearers holding key management positions in the

company.

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CCHHAAPPTTEERR 22

22.. IINNDDUUSSTTRRYY AANNAALLYYSSIISS

Page 12: Business Plan- Fresh Living - EF

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2.1 Industry size and growth rate

Vegetables are one of the most used edible items in south Asia, thus one of the major FMCG

and regular part of local diet. As the population keeps on increasing, the demand for

vegetables is also increasing. Though the organic vegetable segment is new, but since the

purchasing power of the consumers has increased considerably, the potential for growth within

a niche segment is very high.

2.2 Nature of Participants and Industry Structure

The vegetable retail business is a fragmented business that follows a 4 tier approach (shown in

Figure 1) that involves farmers (grower vegetables on small self-owned farms), wholesalers

(purchase vegetables in bulk from the farmers), vegetable retailers (shop owners who retail

vegetables to final customer) and customers (the end users of vegetables). The current industry

structure relies on traditional brick and mortar businesses with no particular advertising or

differentiation of a target segment. Vegetable business is considered to be a homogeneous

product business.

Figure 1

Page 13: Business Plan- Fresh Living - EF

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CCHHAAPPTTEERR 33

33.. MMAARRKKEETT AANNAALLYYSSIISS

Page 14: Business Plan- Fresh Living - EF

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3.1 Ideal Customer

The ideal customers of “Fresh living” are health conscious households, patients, and senior

citizens living in posh areas of the city, which have some knowledge about the harmful effects

of inorganic products and have purchasing power to buy premium priced organic vegetables.

3.2 Market Segmentation and Target Market Selection

Organic vegetables are expensive to produce because their production time is comparatively

more than inorganic vegetables. Moreover, the yield of organic vegetables is comparatively

less which increases the cost and consequently the price. Thus the product cannot be marketed

to a wider consumer base. Initially the target segment will be a niche segment residing in a

particular geographical location that is the posh sectors of Islamabad i.e. F-6 and F-7. To

further elaborate the target segment, we have used Chain Ratio and ATAR model.

The population according to the 1998 census of F-6 and F-7 was 16,791 and 11,817

respectively. The average growth rate of population of Islamabad as identified in 1998 census

was 5.75% per annum. The average house hold comprised of 6 members. To get the average

population of Islamabad in 2013, we have compounded the annually growth rate and have

come up with following calculations:

Growth Rate factor = (1+g) n

= (1+0.0575)14

= 2.1873

Population of F-6 = Population * Growth Factor = 16,791 * 2.1873 = 36,728

Population of F-7 = Population * Growth Factor = 11,817 * 2.1873 = 25,848

Total Population = Population of F-6 + Population of F-7 = 62, 576

3.2.1 Chain Ratio

Target Market = 62, 576 * 0.4875 = 30, 505.8

Target Market = 62, 576 * 0.478125 = 29919.15

Sales through Shop

People interested in organic food 75%

Access to product 65%

Income to purchase the product 100%

Total 0.4875

Sale through Home Delivery

People interested in organic food 75%

Access to product 85%

Income to purchase the product 75%

Total 0.478125

Page 15: Business Plan- Fresh Living - EF

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3.2.2 ATAR Model

Sales through Shop

Awareness Trial Availability Repeat Total

70% 30% 60% 20% = 0.0252

Customers = 30, 505.8 * 0.0252 = 768.74616

House Holds = 768.74616 / 6 = 128.12436

Sale through Home Delivery

Awareness Trial Availability Repeat Total

70% 10% 100% 15% = 0.0105

Customers = 29919.15 * 0.0105 = 314.15108

House Holds = 314.15108 / 6 = 52.36

Page 16: Business Plan- Fresh Living - EF

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CCHHAAPPTTEERR 44

44.. MMAARRKKEETT NNEEEEDDSS,, TTRREENNDDSS,, && DDEESSCCRRIIPPTTIIOONN

Page 17: Business Plan- Fresh Living - EF

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4.1 Market Needs

With increased awareness and globally shrinking gap of communications, affluent people,

members of high society and people living in posh areas are getting aware of health benefits of

organic edibles. Thus the need for organic edibles is arising in local market.

4.2 Market Trends

People living in posh areas and following international trends and are getting more health

conscious. With increased awareness, backed by requisite purchasing power people living in

selected areas are making a conscious effort to use products that are more beneficial for health.

4.3 Market Description

4.3.1 Demographics

The target market of “Fresh Living” comprises of Patients, Senior citizens, households and

foreigners.

4.3.2 Psychographics

Aware about the importance of health, these people make conscious effort to use products that

are beneficial for health of an individual.

4.3.3 Behavior

These people have the requisite purchasing power and can afford to buy vegetables at

premium prices.

4.3.4 Geographic

Our ideal customers are located in posh sectors of Islamabad i.e. F-6 and F-7.

4.4 Competitor Analysis

4.4.1 Differentiators

a) Differentiating and introducing organic vegetables for the first time.

b) Delivery of fresh organic vegetable at door step.

c) Creating awareness among people about the benefits of using organic vegetables.

Page 18: Business Plan- Fresh Living - EF

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4.4.2 Direct competitors

The concept of delivering fresh vegetable at the door step is new and unique in Islamabad. Our

concept is innovative in sense that we are creating a service model which servers a niche in

market by providing them a product which is not differentiated by traditional whole sellers

and retailers. We being the first movers in this business will adopt different strategies to create

value for our clients. Initially, we do not have any direct competitors, who can affect our

business.

4.4.3 Indirect competitors

We do have indirect competitors, who are the traditional vegetables retailers (shop keepers) in

Islamabad and Rawalpindi and are located in small markets, Sunday markets and big stores

like Metro, Barsa cash & carry, Sabzzi Mandi, and so on.

Page 19: Business Plan- Fresh Living - EF

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CCHHAAPPTTEERR 55

55.. MMAARRKKEETTIINNGG PPLLAANN

Page 20: Business Plan- Fresh Living - EF

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5.1 Overall Market Strategy

5.1.1 Core Strategy

We intend to become the choice organic vegetable organization in twin cities initially and in

the country in long run. We intend to identify aspired customer needs regarding organic

vegetables and endeavor to fulfill them in a socially responsible manner that is beneficial for

society and natural eco system in the long run.

5.1.2 Core message

"To keep the body in good health is a duty, otherwise, we shall not be able to keep our mind

strong and clear".

5.1.3 Positioning goal

The goals of management at “Fresh Living” to position its product are:

1. Fresh organically produced vegetables that is good for health.

2. Premium product that offers good value for money.

3. Produced using methods that are environment friendly and help protect eco system in long

run.

5.1.4 Core Branding Elements

1. Color

The color used for Fresh living is green which represents nature. It is a symbol of harmony,

freshness, growth, and fertility. It has a strong emotional association with safety.

2. Logo

3. Slogan

“From seed to Shelf, Organic Farming, Good for nature, Good for health”

5.2 Price Rationale

Compared with in-organic vegetables, Organic vegetables take more time to grow and have

less yield; our strategy would be to charge a 10% premium price from our customers who are

Page 21: Business Plan- Fresh Living - EF

14

willing to pay a little extra for the quality fresh vegetables supplied directly from farm, and are

free from harmful toxins and rich in nutrients.

The positioning of our brand as a premium product, delivering quality is of vital importance

and one of the reasons of setting a premium price, so that the perceived value is high in the

minds of customers. Our indirect competitors are not offering home delivery service to their

customers, and one reason of the premium price is that we are offering more service to our

customers and also have to incorporate part of its cost in price.

Sensitivity analysis including (what-if scenarios) shall be conducted to seek how prices

will affect current and future profitability at each level between cost and market demand.

5.3 Marketing Material

5.3.1 Marketing kit

Our marketing kit will be comprised of following materials and mediums:

1. Pamphlets

We will distribute our pamphlets to home, offices, restaurants, etc and will paste our

pamphlets in all small and big markets.

2. Social media

Social media is very popular means of targeting intended customer segment. Our customers

are educated, affluent and tech savvy, most of them have access to internet. Keeping this in

view, we will purchase ads of facebook, and the cost plan of these ads will be CPM.

a) CPM method

CPM (cost per Millie or cost per 1000) is a commonly used advertising measurement in radio,

television, newspapers and magazines. Similar approach is also followed by social media for

paid advertisement and we will use this method for our promotional campaign on social

media.

3. Samples

Initially, to give our customers a feel of the difference in organic and inorganic vegetables we

will distribute free samples.

4. Website

The company will maintain an interactive web site where customers will be able to find

relevant information about organic food and cooking recipes etc. The site will also serve as a

contact point between customers and company as customers will be able to place their orders

on the website. For uninterrupted service, the company will get its domain registered and

hosted by a reputable web hosting company.

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5. Facebook Fan page

The management will maintain a facebook fan page. The page will also have information

relevant to organic food. Customers will also be able to leave their feedback and comments on

the page.

6. Panaflex banners and standees

To make customers aware of our products at vegetable shops which form the indirect channel

of selling customers products, marketing team will get panaflex banners and standees printed

for the purpose of displays in these shops.

7. Article in “You” magazine

“You” magazine is a weekly publication with “THE NEWS”. The magazine is targeted at

women and housewives with articles that are of particular interest to them. Since housewives

and women are responsible of kitchen related matters in Pakistan, we have developed an

article about benefits of Organic vegetables in particular and Organic food in general and we

will get it published in you magazine to create awareness in our target segment.

8. Personal selling

Initially, the management team intends to do personal selling in the geographical location

where our target segment is located. The goal is to create maximum possible awareness.

Pamphlets and free samples will be distributed in these sessions.

9. Helpline

Company will maintain a UAN helpline. The management team will answer queries of the

customers during the office timings.

10. Trained delivery boys

Delivery boys will be trained to the extent that they have information about organic vegetables

and their benefits, so they can comfortably answer the questions and queries of existing and

potential customers.

11. Testimonial plan

We intend to get regular feedback from our customers and their testimonials will be used in

our promotional material such as pamphlets, social media, or on company website etc.

5.4 Lead Generation Plan or Business Creation

5.4.1 Lead Generation Strategy

1. Free Offering for Suspects

Fresh living will give pamphlets and brochures to the people.

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2. Trail Offerings for Prospects

Fresh living will offer free samples of organic vegetables so that people will try it.

3. Core Offerings for Prospects and Clients

Initially, Fresh living will deliver its products. In long run, we plan to introduce loyalty cards

for our permanent clients.

5.4.2 Push strategy from distributor(s) i.e. vegetable shops

Pursuing the push strategy, our packaged product will be available in local market vegetable

shops along with inorganic vegetables for those customers who are not aware about our

product as well as for those who will seek our product as result of our promotional campaign.

5.4.3 Referrals

Whenever, our customers will refer a new customer to us (i.e. word of mouth) from among

their friends and family.

5.5 Lead Conversion Plan

Fresh living plans to maintain the helpline open for limited hours every day on which

customer(s) may call and ask for information related to organic food as well as health tips. The

customer service officer at “Fresh living” will ask them for their addresses informing them

that we will gift them a free sample of organic vegetable(s) for once so that they can try and

feel the difference.

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CCHHAAPPTTEERR 66

66.. SSAALLEESS SSTTRRAATTEEGGYY

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The sales strategy of “Fresh Living” is to push its product by using indirect sales channels and

to pull customers to direct and indirect channels by targeted promotional campaign in the

geographical segment.

6.1 Sales process

Sales process at “Fresh Living” is based on two methods i.e. indirect and direct sales.

6.1.1 Indirect sales

Indirect sales will be made through the existing vegetable retailers who already have shops in

the geographical area we intend to target. “Fresh Living” will provide these shop keepers 15%

commission.

6.1.2 Direct sales

The direct sales will be made through the company managed website and telephone order.

6.2 Transaction

The transaction of indirect sales will at the sale point where the product will be left with shop

keepers for selling and everyday cash will be collected from them for the days sales.

For direct selling our delivery boy will collect the payment at the time of delivery. The

company in long run intends to incorporate credit and debit card payment facility on its web

site for the ease and convenience of its customers.

6.3 Follow – up

Record will be maintained of direct sales and regular customers and from time to time, a

representative of “Fresh living” will call the customers to get their feedback about the product.

6.4 Service Experience

More focused towards service the management at “Fresh living” will make every possible

effort to provide its customers with best possible service by ensuring that they get the best

quality product and promptly at time. To enhance and improve service experience customers

will be provided with suggestion cards so that they may fill the cards resulting in valuable

feedback and suggestions which will help to make our product and service better.

6.5 Loyalty Product/Service Offerings

“Fresh Living” will give discount offers to those customers who are loyal to our product and

are regular buyers. The offering will be planned according to the response “Fresh Living” will

receive after its launch.

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6.6 Marketing calendar

To reinforce the image of the company and enhance awareness in the market the management

at “Fresh Living” intends to distribute pamphlets/brochures from especially in early months

and then from time to time in geographical area where it intends to initially launch its product.

6.7 Marketing Tools and Budget

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20

CCHHAAPPTTEERR 77

77.. OORRGGAANNIIZZAATTIIOONNAALL PPLLAANN

Page 28: Business Plan- Fresh Living - EF

21

7.1 No. of Employees

Our business is based on partnership. There are three partners who will be investing equally in

this business. Each partner has an equal percent of share which is 33.3%. Each partner will

assume an important position in the organization each having the authority according to their

post.

Apart from the management staff the organization is divided into two activities i.e. production

and selling. The selling department will initially have 5 employees which include the

management positions of CEO, CFO/CTO, CMO, COO as well as 2 delivery boys. Initially

management officers will be three and from among them one will also serve as the CEO. The

production activity will be overseen by the CTO and it will have 17 employees. The duties of

each of the employees along with organizational budget are explained in detail below.

7.2 Organizational Chart

COO Neelofar Niazi

Tractor Driver Pickup Driver Harvester (3)

Labourer Office Attendant Security Guard

Delivery Boy

1

Delivery Boy

2

CEO

CFO / CTO Usman Shabbir

CMO Maryam Ahmed

Staff Supervisor Accountant

Page 29: Business Plan- Fresh Living - EF

22

7.2.1 CEO

CEO being highest ranking officers and administrator will be in charge of total management

of the organization; having the vast range of responsibilities as a communicator, decision

maker, leader, manager and executor. He will also oversee day to day operations and

motivation of employees. Chief Executive Officer will develop annual planning guidelines;

will oversee the development of the corporation’s annual service, will make plans and

recommend strategies to achieve the organizations goals and objectives.

CEO will be selected from among the partners with the consent of all and will consult other

partners before making a key decision. He is liable to take affirmative consent from other

partners before execution of all major activities.

7.2.2 CFO / CTO

Usman shabbir is a partner in venture “Fresh Living”. He will act as CFO (Chief Financing

Officer) for the organization. He will deal and supervises accounting and financial matters and

will also act as chief financial spokesperson for the organization. His responsibilities also

include financial planning, financial forecasting and record keeping. He will deal with all

external parties for matters such as raising funds for the organization. CFO will report directly

to the President (CEO), will assists the Chief Operating Officer (COO) and Chief Marketing

Office (CMO) on all strategic and tactical matters related to budget management, cost benefit

analysis, forecasting needs and the securing of new funding.

The CFO will also be the bearer of the office of the CTO (Chief Technical Officer). He will

oversee the production activity. In this capacity, he will be responsible of the planning the

production process, overseeing from time to time production activity to ensure that the process

are running according to the plan. He will deal with all matters regarding the production

activity.

7.2.3 CMO

Maryam Ahmad, another partner in the venture will act as CMO (Chief Marketing

Officer). She will be the executive, responsible for marketing activities, growth and

marketing strategy. She will also share part of responsibilities of sales management,

product development, distribution channel management, marketing communication

which will include advertisement and promotion campaign, customer services and

customer relationship management. Market and customer needs will be identified by

her that will help management team to make decisions about which market or segment

to enter, and which product should be developed. She is also member of executive

team and will report to the CEO.

7.2.4 COO

Neelofar Niazi, partner in the venture is the chief operating officer (COO). She will manage

day to day activities and will monitor the daily operations of the company. She is responsible

Page 30: Business Plan- Fresh Living - EF

23

for operations management; development, design and improvement of the systems, so to

create and deliver the firms product and services to customers. Her primary concern will be

operations and she will ensure that day to day activities are performed efficiently. She will

oversee the packaging and distribution of goods and services to the customers by deliver boys.

7.2.5 Delivery Boys

We will hire two delivery boys, at the start of business whose job will be to deliver orders to

the customer. The duty of delivery boy will also include packaging of the food.

1. Packing Staff

Packing staff will pay strict attention to the grade and quality of produce. Vegetables will be

cleaned and graded to comply with quality regulations. Special consideration will paid to the

cleaning, grading of produce.

2. Delivery personnel

They will handle the fruits and vegetables carefully with clean gloves to ensure the maximum

protection all times.

7.2.6 Tractor driver

The company will hire a tractor driver, who will be responsible of preparation of land for

vegetable sowing. He will also perform all activities on the farm that are related to use of

tractor.

7.2.7 Pickup driver

The pickup driver will be responsible for all the activities that involve the use of pickup van

on the farm. He will also be responsible of delivering the vegetables to the office in city for

sales as well as to the shops that will form the indirect sales channel.

7.2.8 Harvesters

Harvesters will be responsible for day to day production related activities on the farm. After

sowing process is complete, they will be responsible for the harvesting (picking) of the

vegetables from the fields. These harvesters will be permanent employees.

7.2.9 Laborers (daily basis)

As the picking process is not on daily basis and requires variable manpower, the company will

hire laborers on daily wage basis when required. This is important to mention here that the

nature of work does not require skilled workers so an ordinary labor is capable enough to

perform this work.

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24

7.2.10 Account office

The accounts officers will be responsible of maintaining accounts related to the farm and

production process.

7.2.11 Staff supervisor

Staff supervisor will be a diploma holder in agriculture with relevant vegetable production

experience. He will oversee the work of sowing, watering, plant protection and harvesting of

vegetables. He will supervise the activities of all the manpower involved in the vegetable

production process.

7.2.12 Security guards

Security guards will be responsible of the security of the farm premises. They are required

because of the farm machinery that will be permanently stationed on the farm.

7.2.13 Office attendant

The duty of the office attendant will be to facilitate the farm staff in their day to day working

by doing petty work that is usually required in offices.

7.3 Payment Salaries

Sr.

no

Designation Monthly

salary

No of

Employees

Total

Monthly

Salary

Total

annual

salary

Salary Per

Production

Cycle*

1 Chief Executive

Officer

10000 1 10000 120000 60000

2 Chief Financial

Officer /CTO

10000 1 10000 120000 60000

3 Chief Marketing

Officer

10000 1 10000 120000 60000

4 Chief Operational

officer

10000 1 10000 120000 60000

5 Delivery boys 8000 2 16000 192000 48000

Total 48000 6 56000 672000 288000

*Production Cycle= 6 Months

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25

7.3.1 Staff requirement

Organizational staff for production

Sr.no Designation

Monthly

Salary

No of

Employees

Total

Monthly

Salary

Total

Annual

Salary

Salary Per

Production

Cycle*

1 Tractor Driver 12000 1 12000 144000 72000

2 Pickup Driver 12000 1 12000 144000 72000

3

Harvester

(permanent) 10500 3 31500 378000 189000

4

Labourer (on daily

basis)* 5250 7 36750 441000 220500

5 Account Officer 11000 1 11000 132000 66000

6 Staff Supervisor 18000 1 18000 216000 108000

7 Security Guards 8000 2 16000 192000 96000

8 Office Attendant 5500 1 5500 66000 33000

Total: 142750 1713000 856500

7.4 Expansions

The partnership business is initially being started in which every partner has a share of 33.3%.

It is planned initially to take some loans. The partners intend not to take their profit for at least

first 2 years so that enough cash is left in the business for expansion purposes. After the

breakeven point or when most of the costs are recovered and partners agree among themselves

that the time is good to takeout cash from the venture the partners will divide profit among

themselves according to their share percentage in the business. Partners can alter the division

percentage with mutual consent and agreement if need arises.

Page 33: Business Plan- Fresh Living - EF

26

7.5 Level of motivation

To properly motivate employees the management will set their pays according to prevalent

market standards. Depending on the response we get from the market and how business is

projected to do in the long run. We will also pay out bonuses and provide other facilities like a

free meal to staff members. The nature of our model has a mixture of product and service so

the motivation of staff is of extreme importance for delivery of value to end customer.

Page 34: Business Plan- Fresh Living - EF

27

CCHHAAPPTTEERR 88

88.. PPRROODDUUCCTTIIOONN PPLLAANN

Page 35: Business Plan- Fresh Living - EF

28

8.1 Area requirement

The above figure displays the blue print of the farm. The farm will be made on an area of 15

Acre and 3 canals. The perimeter of the farm will be fenced. An 8 foot wide road will run

along the perimeter for ease of the movement and operational purposes. In the north east side

of the farm most of the infrastructure will be built, which includes tube well, machinery shed,

seed store and canopied corridors for manure preparation, and on site office building. A guard

post will be in the center of the farm and another in the administrative block mentioned above.

Basic area required = 15 acres + 3 canals

8.2 Usages details

The basic area has to be divided in to two portions of 9 acres (A) and 6 acres (B). The

plantation of vegetables has to be done in area A initially (summer), while area B is to be

prepared for the next sowing (winter). The reason for this division is that while area A is still

in the last phase of production the season for the next crop comes in. So to save time the next

crop is planted in area B while area A prepared again for coming plantation.

The 3 canals of land are for the onsite vegetable nursery where seedling (paneri) for some

vegetables is prepared. This helps in ensuring quality of the end product and considerable cost

savings.

Road 8`

Guard Post

1. Office Building

2. Machinery Shed

3. Seed Shed

4. Organic Menure

Shed

Page 36: Business Plan- Fresh Living - EF

29

8.3 Infrastructure requirements

8.3.1 Irrigation source and energy source

For proper irrigation of the planted area and to meet the water requirements, an onsite well is

required. The construction of the well for solar powered water pumping system is to be

according to following specifications:

The basic well will be dug up to 35 feet into the ground after which it is further dug using

boring technology to a depth of ≥190 feet. The purpose of this depth is to ensure that water

source lasts for a long period of time. This well/ solar powered tube well has to be

installed at a point in north east of the farm at a slightly higher place.

The well dug according to these specifications will give enough water for a 5” inch outlet

from a depth of 60 feet from 9 am to 6 pm. This source of water is sufficient for the irrigation

need of 20 acres of land.

The electricity for the irrigation system as well as for the other needs of the farm will be

provided by an additional facility with extra batteries at the solar power plant. The system

produces sufficient power to meet the need of water pumping system as well as other electric

need of the farm. The capacity of the system can be increased by installing additional

batteries. Batteries having limited life have to replaced after 3 years and the replacement is

cost is around Rs. 0.040 mil (40000).

The initial cost of setting up this solar water irrigation plant is Rs 1.6 million.

8.3.2 Seed store and organic manure shed

To store the seed and on site store has to build. The store will be on area of 35`*18` along with

canopied corridor. This will meet the storage requirements of organic procedure. The shed is

for the making organic manure by stashing different organic material there. The expenditures

regarding the construction are Rs. 0.25M (250000).

8.3.3 Water channels

Initially the water channels will be made according to the need of field conditions, but after 3

years the water channels will be cemented to reduce water losses. The channels will be formed

from north with an inclination towards south.

8.3.4 Fencing

The farm will be fenced using cement poles and barbed wire. The cost of setting up such

parameter fencing in related farms is roughly Rs. 0.3M (300000).

8.3.5 Farm Security

Two post for the security staff will be constructed, one at the entrance and one at another

convenient location in the farm to prevent the theft of vegetables from the farm. An elevated

Page 37: Business Plan- Fresh Living - EF

30

security post will be constructed in the middle of the farm where roads separating each acre

intersect.

8.3.6 Administrative (office) building

The administrative building will be constructed to facilitate the onsite staff members who will

be there during working hours.

8.3.7 Machinery sheds

Machinery sheds will be constructed for the agricultural machinery and for tools and

equipment.

8.3.8 In farm roads

Eight 8 feet wide roads will be constructed in the farm along the perimeter.

Sr No. Dimensions Price (Rs)

1. Seed store and canopied corridor (35` * 18`) 250,000

2. Machinery Shed (72` * 20`) 150000

3. Farm Security (6` * 6`) 30,000

4. Office Facility (35` * 18`) 350000

5. Cost of Road 8` 40,000

6. Fencing 300,000

7. Tube well and solar pumping 1,600,000

8.4 Machinery requirements

8.4.1 1 Tractor (Fiat 240)

Tractor is required for the preparation of the land and for other operations at the farm.

8.4.2 1 Rota Vator (Tractor Mounted)

To cut, pulverize and mix the previous crop debris with the soil.

8.4.3 1 cultivator (Tractor Mounted)

To prepare rows up 9-13 inch apart.

Page 38: Business Plan- Fresh Living - EF

31

8.4.4 1 Seed Drill (Tractor Mounted)

To pore, vegetable seeds from various holes in seed box for sowing.

8.4.5 Ridger

To make ridges, at 45cm – 75 cm apart for sowing of vegetables.

8.4.6 1 Mould Bold Plough

To make shuffle the soil.

8.4.7 1 Chopper

To chop grass and other plant waste to use in organic fertilizer.

8.4.8 Pickup van-Suzuki (to be used for transportation purposes)

To deliver the vegetables to office located in city and, to make supply rounds to distributors

for delivery of vegetables.

8.4.9 Knapsack hand sprayer-steel body (To be used for plant protection

purposes)

Shoulder mounted sprayer to spray plant protection on plants, has capacity of holding 12-16

liters of water.

8.5 Average product of various vegetables farmed organically

8.5.1 Scale

The average product in table below is based upon product in a normal 4 month season

(exceptions mentioned specially in table) in an area of 272 sqft (1 Marla).

Page 39: Business Plan- Fresh Living - EF

32

8.5.2 Summer vegetables

Summer vegetables are normally planted in month of February. The list of vegetable is as

follows:

Sr. no Vegetable name Time period Quantity Pickings

1. Bitter gourd 4 months 50 Kg

2. Sponge gourd 4 months 60 Kg

3. Okra 7 months 9 Kg per picking 7 picking / month

4. Egg plant 4 months 50 Kg

5. Green chilies 6 months 20Kg per picking 7 Picking per month

6. Onions 4 months 35 Kg

7. Garlic 4 months 35 Kg

8. Tomato 4 months 55 Kg

9. Long gourd 4 months 55-60 Kg

10. Cucumber 4 months 50 Kg

11. Potatoes 6 months 25 Kg

8.5.3 Winter Vegetables

Winter vegetables are normally planted in the months of October till December. The list of

vegetables is as follows:

Sr. no Vegetable name Time Period Quantity Pickings

1. Turnip 4 months 55 Kg

2. Radish 4 months 55 Kg

3. Carrot 4 months 60 Kg

4. Spinach 4 months 36 Kg 6 picking per month

5. Coriander 4 months 36 Kg 6 picking per month

6. Peas 4 months 20 Kg

7. Beat root 4 months 55 Kg

8. Salad 4 months 36 Kg 6 picking per month

9. Maithi 4 months 36 Kg 6 picking per month

10. Podina 4 months 36 Kg 6 pickings per month

Page 40: Business Plan- Fresh Living - EF

33

8.6 Production Process

The production process starts in the month of January for summer vegetables, and in the

months of September/October for winter vegetables. Various steps in the process are

explained as follows:

8.6.1 Soil preparation

These steps encompass two activities. The first is tilling of soil which is done with the help of

cultivator. The second step is putting manure in the tilled soil which is left for at least a month

before vegetable seeds are sowed in the prepared land. Before the seeds are sowed land is

prepared for sowing using ridger which makes ridges 45-75 cm apart. This space between the

plants is important for their growth. The activity of preparation of land takes 2h of tractor

work/acre.

8.6.2 Sowing

For summer vegetables sowing is done in the month of February and for winter vegetables it is

done in the month of October. This is done with the help of tractor mounted seed drill and

takes 1 ½ to 2 hours of time per acre.

8.6.3 Water application

For summer vegetables water has to be applied every 7-10 days during the whole cycle of

production. For winter vegetables water is applied every 15 days during the cycle. Water

application takes 2 hours per acre.

8.6.4 Plant protection

Protection medications are sprayed on plants 8-10 times for summer vegetables. For winter

vegetables 4 sprays are required. It takes roughly 0.5 hours to spray medication in 1 acre.

8.6.5 Harvesting

Harvesting of vegetables starts 1 ½ month after sowing. On normal days it takes about ½ to 1

hour for harvesting activity per acre for one person.

8.6.6 Grading/Washing/packaging

In this step the harvested vegetables will be washed with fresh water. Harmed/degraded

vegetables will also be removed from the harvested vegetables. Vegetables for sale through

indirect channel (shops) will be packed on the farm before transportation to the city office.

Page 41: Business Plan- Fresh Living - EF

34

8.6.7 Transport

Vegetables will be transported to the city office. The pickup driver will deliver the vegetables

on the shops and will leave the vegetables in office for home delivery and cooking as required.

8.6.8 Production and Delivery Process

Soil Tilling Menuring Soil Preparation Sowing Watering

Plant Protection Harvesting Washing Delivery Packaging

Shops / Home Delivery

Page 42: Business Plan- Fresh Living - EF

35

8.6.9 Total Fixed Asset

Cost of Farm Machinery

Sr.No Machine No of

units

Price Total

cost

Depreciation

Period (yrs)

Yearly

depreciation

Monthly

depreciation

1 Tractor 1 600000 600000 7 85714.28571 7142.857143

2 Rota Vator 1 32000 32000 7 4571.428571 380.952381

3 Cultivator 2 17000 34000 7 4857.142857 404.7619048

4 Chisel Plough 1 18000 18000 7 2571.428571 214.2857143

5 Seed Drill 1 55000 55000 7 7857.142857 654.7619048

6 Mould Bold

Plough 1 19000 19000 7 2714.285714 226.1904762

Ridger 1 35000 35000 7 5000 416.6666667

7 Chopper 1 45000 45000 7 6428.571429 535.7142857

8 Pickup Van 1 650000 650000 7 92857.14286 7738.095238

9 Knapsack Hand

Sprayer 2 2500 5000 7 714.2857143 59.52380952

10 Solar powered

Water Pump 1 1200000 1200000 7 171428.5714 14285.71429

11 Additional

Batteries 2 40000 80000 7 11428.57143 952.3809524

Sub Total: 15 2773000 396142.8571 33011.90476

depreciation formula Straight line

Cost Of fixed Infrastructure

Sr.No Facility No of

units

Price Total cost Depreciation

Period

Yearly

depreciation

Monthly

depreciation

1 Water Well 1 400000 400000 7 57142.85714 4761.904762

2

Seed Store and

Manure shed

(35*18) 1 250000 250000 7 35714.28571 2976.190476

3 Fencing 1 300000 300000 7 42857.14286 3571.428571

4 Farm Security 2 30000 60000 7 8571.428571 714.2857143

5 Office Facility 1 350000 350000 7 50000 4166.666667

6 Machinery

Shed 1 150000 150000 7 21428.57143 1785.714286

7 In Farm Road 1 40000 40000 7 5714.285714 476.1904762

Sub Total: 1550000 221428.5714 18452.38095

Total Fixed Asset Investment: 4323000

Total Depreciation (yearly) 617571.4286

Total Depreciation (monthly) 51464.28571

working capital 1677000

total investment 5115000

investment per person 1500000

Loan from Bank 615000

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CCHHAAPPTTEERR 99

99.. FFIINNAANNCCIIAALL PPLLAANN

Page 44: Business Plan- Fresh Living - EF

37

9.1 Assumptions

For the purpose of making financial projection several assumptions are taken which are as

follows:

1. The initial investment is expected to be Rs. 5.115 million out of which Rs. 4.5 million will

be provided by the owners and 0.615 million will be taken as loan against some personal

property of the owners.

2. Out of the initial investment, 4.232 million will be spent on building the farm

infrastructure and acquiring agricultural machinery and rest will be kept as working capital

for the smooth functioning of the organization.

3. It is assumed that 0.615 million taken as loan from bank will be used to pay advance rent

of 123 canals of farming area. The interest rate on the loan is taken from ZTBL i.e. 12.5%.

4. The 10% growth rate is calculated on the basis of weighted probability distribution and

three possible scenarios are shown in exhibit.

5. Vegetable industry is highly fragmented and frequent rate fluctuations are common, that

the rates that are calculated are best possible estimations under the given circumstances.

6. The price of the product is set on the basis of the price taken from Kohsar market + 10%

addition is made in that price.

7. It’s assumed that an average house hold comprises of 6 people, and the same method has

been used in chain ratio and ATAR analysis earlier in the document to identify the number

of customer households.

8. It is assumed that for summer season, the average consumption of vegetables in a

household of 6 is 58 kg per month (for detailed description consult the exhibit). And we

are pricing that package for Rs. 4818.

9. It is assumed that for winter the average consumption of vegetables in a household of 6

will be 42 kg per month. And we are pricing that package for Rs. 3465.

10. Financial calculations are based on assumption that households not individual will

purchase vegetables. For ease of revenue calculation a consumption package is designed

and the price of that consumption package is calculated. This price is used to get the sales

revenue. (see exhibit)

11. For financial projections, we have assumed that out of all target customers in initial month

are 8 household customers and 13 customers who will purchase from shops. These

customers will reach to 52 and 135 respectively by the end of first year. From this point

onwards, we have assumed that our customers will grow by 10% in subsequent years.

12. For ease in setting the price it is assumed that there are 2 production cycles in a year and

each cycle has an average yield of vegetables.

Page 45: Business Plan- Fresh Living - EF

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13. A consolidated COGS is calculated which comprises cost of production of vegetables,

organizational cost per kg, of production per cycle (organizational cost per cycle/ avg

production per cycle), promotional expense per kg, packaging expense per kg. COGS are

used in contingency plan, in case our products are not sold as expected.

14. The initial outflow for the plantation cost is very small and the cycle plantation cost is

spanned over the period of six months. So for the ease of calculation, we have taken cost

of goods sold directly at the beginning of the sale cycle.

15. The method of depreciation is assumed to be 7 years straight line.

16. The marketing expense amount are very small and will be outlaid when we start selling

because of it very minuet nature, we have taken average monthly expense for

advertisement.

17. An average packing cost of Rs. 7/ kg is used for the purpose of financial calculations. The

package material is easily available so it does not require keeping it in inventory.

18. We assumed that the short term financial needs will be met by an angel investor who will

provide us short term loans when we require them. For the purpose of smooth running of

the business, we have assumed that the business will have 100,000 of cash at the beginning

of each month. The rate of this short term loan will be 12.5%.

19. An average cost of Rs.0.5/kg for advertising is used for the purpose of financial

calculations.

20. For the purpose of financial calculations the COGS is increased 10 % till year 5 however

the price of vegetable package will remain fixed for this period.

21. We have assumed that it will take us five days to collect the payment from shops so our

account receivable will be five days worth of sale of each month.

22. The wages and the commissions will be paid immediately so we will have any accruals

regarding both of them.

23. Since our business is of such a nature that we cannot keep our items in inventory. In

contingency plan, we have calculated a price that covers our all cost but in the financial

plan we have not incorporated that part because of ambiguity about what the actual

situation will be.

24. For pre-money valuation, though the growth rate is 10% from year 2 onwards, we have

assumed that the investors required rate of return will change from 35% to 40% after the

break-even. Hence, we have taken year 4 as the steeping stone year because in that year,

the rate will change.

25. For the purpose of ratio calculations, wherever applicable we have used average balances

rather than taking end of the year data except year 1.

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39

26. For the purpose of valuation of the venture, we have done two valuations i.e. first

valuation is on the basis of constant growth rate which we assumed that we will reach in

the beginning of year 2, and the second valuation is based on the assumption that after the

business will reach its break-even, the investor required rate of return will fall down from

35% to 20% and will remain so indefinitely.

27. For the yearly projections after year 2, percentage of sales method is used.

28. In first year’s net income calculations, the tax applied to different months is according to

the proportion of income that month contributed to total taxable income.

29. Just to show that if we are not taking loan and instead have provided an investor to buy the

equity share, the last exhibit shows the equity share owners have to give out to the new

investors for short and long term loans.

30. Detailed financial statements are shown in the exhibits.

9.2 Contingency Plan

In every business, there are several factors that can affect the performance of the business. To

cater to these lapses, contingency measures have to be thought to reduce the losses to a

minimum. Vegetables are perishable and cannot be stored for long period of time. Moreover,

the production of vegetables is variable and it cannot be said that a fixed amount will be

produced on daily basis. To cater these contingencies, we have calculated separate COGS that

comprises of cost of production of vegetables, organizational cost per kg of production per

cycle (organizational cost per 6 month cycle/ avg production per cycle), promotional expense

per kg, packaging expense per kg. This COGS gives us a reference price that covers roughly

all the cost incurred in production of vegetables. In case our products are not sold in our target

segment or in days where it may happen that we have much in excess production than

required, we will sell vegetables at this price or at a price close to reference price to cover the

basic costs, and prevent business from shutdown.

9.3 Exit strategy

In case the business fails to perform as expected, the management intends to plant an

inorganic vegetables in the land till the tenure for which land is leased.

Page 47: Business Plan- Fresh Living - EF

I

1100.. EEXXHHIIBBIITT((SS))

10.1 Fresh Living – Organic food, Business Model

Selling

Website

Direct sales through website with

customization Options.

Business to

Business

Directly selling to

hospitals and

restaurants.

Business to

Customer

Customer(s),

patients, House

Holds, old people.

Distribution

Network

Using existing

vegetable and food

sellers to push the

product.

Self Production

1. Cost of Acquiring Land

a. Purchasing.

b. Rent/lease.

2. Cost of Production

a. Actual Production.

b. Transportation and Delivery.

Customer(s)

Patient(s) Household(s)

Senior Citizen(s)

Page 48: Business Plan- Fresh Living - EF

II

10.2 Market Comparison

Page 49: Business Plan- Fresh Living - EF

III

10.3 Cost of Land

cost of Land

Lease price per canal for 5 years Land to be Leased Total

5000 123 Canals 615000

Page 50: Business Plan- Fresh Living - EF

IV

10.4 Cycle Plantation Cost

No. Preparation of Soil / Per acre / 5 Month Organic (Rs) In organic (Rs)

1 Disk Plough 800 800

2 2 Ploughings and Planking 1200 1200

3 Rota Veter 1000 1000

4 Ridger 700 700

5 Bed Shopper 300 300

6 Ditcher 200 200

Sub Total: 4200 4200

No. Vegetable Plantation Organic (Rs) In organic (Rs)

1 Seed 1200 1200

2 Labour 1000 1000

3 Irrigation 800 800

4 Plant Protection* 400 17500

5 Fertilizer* 4000 8600

6 Transportation (300 * 15* 5) 22749.75 22749.75

Sub Total: 30149.75 51849.75

Total per Acre Cost of vegetable Plantation: 34349.75 56049.75

Total per Marla Cost of Vegetable Plantation:* 214.6859375 350.3109375

Page 51: Business Plan- Fresh Living - EF

V

*

Plant Protection Inorganic: (350 *10 *5)= 17500

Fertilizer Inorganic: (4100 +3500 +1000)= 8600

Cost per cycle of plantation (Cost of Land)

1 Rent of Land/ Canal

Rent of

Land/Acre

(Acre=8

Canal)

Tenure of lease

(years )

Cost of

Land

per

Year

No of

plantations

cycles per

year

Cost Per

Plantation

cycle

5000 40000 5 8000 2 4000

2 No of Marla in an Acre

Cost of

Organic

Plantation /

Acre

Cost of Organic production/

Marla

Cost Of

Inorganic

Production/

Acre

Cost of

Inorganic

Productio

n/Marla

160 34350 214.6875 56050 350.3125

Note: The Cost of per Acre plantation includes Cost of Preparat ion of Land for Plantation per Cycle and Cost of Plantation;

and its Protection per Cycle.

Page 52: Business Plan- Fresh Living - EF

VI

10.5 Production Cost per Kg (Summer Vegetables)

Summer Vegetables

Sr.

No

Vegetable

name

Production

Time

(months )

Pickings

per

month

Yield

per

picking

(Kg)

Production

per Marla

(Kg)

Plantation

+ land

Cost/Marla

per cycle

Avg

Production

Area(Marla)

Expected

Yield

(kg) Per Kg Cost

avg purchase per

household per

month

COGS (for

accounts)

1 Onion 4 35 214.6875 185.6365714 6497.28 6.133928571 6 36.803571

2 Potato 6 25 214.6875 259.8912 6497.28 8.5875 6 51.525

3 Tomato 4 55 214.6875 118.1323636 6497.28 3.903409091 6 23.420455

4 Cucumber 4 50 214.6875 129.9456 6497.28 4.29375 6 25.7625

5 Lady Finger 7 7 9 441 214.6875 14.73306122 6497.28 0.486819728 6 2.9209184

6 Bitter

Gourd 4 50 214.6875 129.9456 6497.28 4.29375 6 25.7625

7 Brinjal 4 50 214.6875 129.9456 6497.28 4.29375 6 25.7625

8 Garlic

(thom) 4 35 214.6875 92.81828571 3248.64 6.133928571 3 18.401786

9 Sponge

Gourd 4 60 214.6875 108.288 6497.28 3.578125 6 21.46875

10 Long Gourd 4 55 214.6875 118.1323636 6497.28 3.903409091 6 23.420455

11 Green

Chillies 6 7 20 840 214.6875 1.289142857 1082.88 0.255580357 1 0.2555804

Total cycle Yield: 62807.04 58 255.50401

Page 53: Business Plan- Fresh Living - EF

VII

10.6 Production Cost per Kg (Winter Vegetables)

Winter Vegetables

Sr. No

Vegetable Name

Production Time(months)

Pickings Per

Month Yield per

Picking(Kg)

Production per Marla

(Kg)

plantation + land

Cost/Marla per cycle

Avg Production

Area(Marla) Expected Yield (kg) Per Kg Cost

avg purchase per household

per month COGS (for accounts)

1 Turnips 4 55 214.6875 118.1323636 6497.28 3.903409091 6 23.42045455

2 Radish 4 55 214.6875 118.1323636 6497.28 3.903409091 6 23.42045455

3 Carrot 4 60 214.6875 108.288 6497.28 3.578125 6 21.46875

4 Spinach 4 6 36 864 214.6875 7.52 6497.28 0.248480903 6 1.490885417

5 Coriander 4 6 36 864 214.6875 1.253333333 1082.88 0.248480903 1 0.248480903

6 Pea 4 20 214.6875 324.864 6497.28 10.734375 6 64.40625

7 Salad 4 6 36 864 214.6875 2.506666667 2165.76 0.248480903 2 0.496961806

8 Maithi 4 6 36 864 214.6875 7.52 6497.28 0.248480903 6 1.490885417

9 Beat root 4 55 214.6875 59.06618182 3248.64 3.903409091 3 11.71022727

Total cycle Yield: 45480.96 36 148.1533499

Page 54: Business Plan- Fresh Living - EF

VIII

10.7 Complete Cost of Vegetables

Summer Vegetables

Sr

.

N

o

Vegetable

name

Production

Time

(months )

Pickings

per

month

Yield

per

pickin

g (Kg)

Producti

on per

Marla

(Kg)

Plantation +

land

Cost/Marla

per cycle

Per Kg

Cost

product

ion

Cycle salary

Cost of

Organizatio

n of Per Kg

yield

Packing

cost (per

kg)

Per Kg

Cost

Promot

ion

Total

cost avg

purchase

per

househol

d per

month

cost of

packag

e

(COGS

)

Price Pack

age

price

1 Onion

4 35 214.6875

6.13392

857 19.17778644 7 0.5 32.812 6 196.87 61.6 369.6

2 Potato 6 25 214.6875 8.5875 19.17778644 7 0.5 35.265 6 211.592 59.4 356.4

3 Tomato

4 55 214.6875

3.90340

909 19.17778644 7 0.5 30.581 6 183.487 66 396

4 Cucumber 4 50 214.6875 4.29375 19.17778644 7 0.5 30.972 6 185.829 88 528

5

Lady

Finger 7 7 9 441 214.6875

0.48681

973 19.17778644 7 0.5 27.165 6 162.988 88 528

6

Bitter

Gourd 4 50 214.6875 4.29375 19.17778644 7 0.5 30.972 6 185.829 88 528

7 Brinjal 4 50 214.6875 4.29375 19.17778644 7 0.5 30.972 6 185.829 66 396

8

Garlic

(thom) 4 35 214.6875

6.13392

857 19.17778644 7 0.5 32.812 3 98.4351 198 594

9

Sponge

Gourd 4 60 214.6875

3.57812

5 19.17778644 7 0.5 30.256 6 181.535 88 528

10

Long

Gourd 4 55 214.6875

3.90340

909 19.17778644 7 0.5 30.581 6 183.487 88 528

11

Green

Chillies 6 7 20 840 214.6875

0.25558

036 19.17778644 7 0.5 26.933 1 26.9334 66 66

Total cycle Yield: 339.32 58 1802.82 87 4818

Page 55: Business Plan- Fresh Living - EF

IX

Winter Vegetables

S

r.

N

o

Vegeta

ble

Name

Productio

n

Time(mon

ths)

Pickin

gs Per

Mont

h

Yield per

Picking(

Kg)

Producti

on per

Marla

(Kg)

plantati

on +

land

Cost/Ma

rla per

cycle

Per Kg

Cost

Cycle

salary

Cost of

Organizat

ion of Per

Kg yield

Packi

ng

cost

(per

kg)

Per Kg

Cost

Promoti

on

Tota

l

cost avg

purcha

se per

househ

old per

month

cost

of

packa

ge

(COG

S)

Pric

e

Packa

ge

price

1 Turnips

4 55 214.6875

3.90340

909

26.483609

84 7 0.5

37.8

87 6

227.3

22 66 396

2 Radish

4 55 214.6875

3.90340

909

26.483609

84 7 0.5

37.8

87 6

227.3

22 44 264

3 Carrot

4 60 214.6875

3.57812

5

26.483609

84 7 0.5

37.5

62 6

225.3

7 99 594

4 Spinach

4 6 36 864 214.6875

0.24848

09

26.483609

84 7 0.5

34.2

32 6

205.3

93 44 264

5 Corian

der 4 6 36 864 214.6875

0.24848

09

26.483609

84 7 0.5

34.2

32 1

34.23

21 77 77

6 Pea

4 20 214.6875

10.7343

75

26.483609

84 7 0.5

44.7

18 6

268.3

08 220 1320

7 Salad 4 6 36 864 214.6875

0.24848

09

26.483609

84 7 0.5

34.2

32 2

68.46

42 77 154

8 Maithi 4 6 36 864 214.6875

0.24848

09

26.483609

84 7 0.5

34.2

32 6

205.3

93 44 264

9 Beat

root 4 55 214.6875

3.90340

909

26.483609

84 7 0.5

37.8

87 3

113.6

61 44 132

Total cycle Yield:

332.

87 42

1575.

46

79.4

44 3465

Page 56: Business Plan- Fresh Living - EF

X

Cycle salary cost of Organization on Avg per Kg Yield (Summer)

Cycle salary cost of

Organization/Total Yield Cycle= 19.177786

Cycle salary cost of Organization on Avg per Kg Yield (Winter)

Cycle salary cost of

Organization/Total Yield Cycle= 26.48361

Page 57: Business Plan- Fresh Living - EF

XI

10.8 Income Statement

10.8.1 Monthly

Page 58: Business Plan- Fresh Living - EF

XII

10.8.2 Yearly

Page 59: Business Plan- Fresh Living - EF

XIII

10.9 Statement of Retained Earnings

Projected statement of retained earnings

Time 0 Year 1 Year 2 Year 3 Year 4 Year 5

Beginning balance 0 0 78246 1860269.496 3537726.95 5469488.377

Net income current year 0 78246 1782023.496 1677457.455 1931761.43 2211495.793

subtotal 0 78246 1860269.496 3537726.951 5469488.38 7680984.17

owners take 0 0 0 0 0 0

ending balance 0 78246 1860269.496 3537726.951 5469488.38 7680984.17

Owners Equity 4500000 4500000 4500000 4500000 4500000 4500000

Total Equity 4500000 4578246 6360269.496 8037726.951 9969488.38 12180984.17

Page 60: Business Plan- Fresh Living - EF

XIV

10.11 Sales Schedule

Page 61: Business Plan- Fresh Living - EF

XV

10.12 Wages and Commission Schedule

Page 62: Business Plan- Fresh Living - EF

XVI

10.13 Cash Budget

Page 63: Business Plan- Fresh Living - EF

XVII

10.14 Balance Sheet

10.14.1 Monthly

Page 64: Business Plan- Fresh Living - EF

XVIII

10.14.2 Yearly

Projected Balance sheet

Beginning

Year 2

Ending

Year 2

Beginning

Year 3

Ending

Year 3

Beginning

Year 4

Ending

Year 4

Beginning

Year 5

Ending

Year 5

Current assets

Cash 1100606 3589206 3589206 5993033 5993033 8649744 8649744 11533378

Accounts receivable 107993 141984 141984 156182 156182 171801 171801 188981

Total current assets 1208599 3731190 3731190 6149215 6149215 8821545 8821545 11722359

Prepaid Rent 440750 317750 317750 194750 194750 71750 71750 0

machinery 2773000 2773000 2773000 2773000 2773000 2773000 2773000 2773000

fixed assets 1550000 1550000 1550000 1550000 1550000 1550000 1550000 1550000

Accumulated depreciation 779103 1396671 1396671 2014239 2014239 2631807 2631807 3249375

Net fixed assets 3984647 3244079 3244079 2503511 2503511 1762943 1762943 1073625

Total assets 5193246 6975269 6975269 8652726 8652726 10584488 10584488 12795984

Current liabilities

Accounts payable

Accrued wages and commissions payable

Loan 615000 615000 615000 615000 615000 615000 615000 615000

Total liabilities 615000 615000 615000 615000 615000 615000 615000 615000

Owners’ equity 4500000 4500000 4500000 4500000 4500000 4500000 4500000 4500000

Retained Earnings 78246 1860269 1860269 3537726 3537726 5469488 5469488 7680984

Total equities 4578246 6360269 6360269 8037726 8037726 9969488 9969488 12180984

Total equities & liabilities 5193246 6975269 6975269 8652726 8652726 10584488 10584488 12795984

Page 65: Business Plan- Fresh Living - EF

XIX

10.15 Cash Flow Statements

10.15.1 Monthly

Page 66: Business Plan- Fresh Living - EF

XX

10.15.2 Yearly

Projected Cash Flow Statement

Year 2 Year 3 Year 4 Year 5

Cash flows (CF) from activities

Net income 1782023.496 1677457.455 1931761.426 2211495.793

Adjustments to net income for CF

Depreciation expense 617568 617568 617568 617568

Change in Accounts Receivable -33991.425 -14198.4425 -15618.28675 -17180.1154

Rent paid

(+)Change in prepaid rent 123000 123000 123000 71750

Change in Accounts Payable

Change in accrued liabilities

Total adjustments 2488600.071 2403827.013 2656711.139 2883633.678

Net cash flow from operations

Cash flows from investing 0 0 0 0

Capital expenditures (CAPEX) 0 0 0 0

Net cash used by investments 0 0 0 0

Cash flows from financing 0 0 0 0

Equity issues 0 0 0 0

short term loan 0 0 0 0

Net cash flows from financing 0 0 0 0

Net change in cash 2488600.071 2403827.013 2656711.139 2883633.678

Beginning cash balance 1100606 3589206.071 5993033.084 8649744.223

Ending cash balance 3589206.071 5993033.084 8649744.223 11533377.9

Page 67: Business Plan- Fresh Living - EF

XXI

10.16 Expected value of growth

10.17 Sustainable Growth

ECONOMIC SCENARIO

PROBABILITY OF

OCCURRENCE × SALES GROWTH

RATE = COMPONENTS TO SUM %

Rapid growth 0.25 × 15% = 3.75

Average growth 0.5 × 10% = 5

Slow growth 0.25 × 5% = 1.25

1 Expected value (Sum) = 10

Sustainable growth

Year 1 Year 2 Year 3 Year 4 Year 5

Ending Equity 4578245.44 6528517.028 8760374.5 11301976 14184295.7

Beginning Equity 3885918.4 4578245.44 6528517 8760374.5 11301975.9

Retention rate 1 1 1 1 1

Sustainable growth(g)% 15.12210407 29.87311788 25.476736 22.488116 20.3204999

Page 68: Business Plan- Fresh Living - EF

XXII

10.18 Break-even Time

10.19 Survival Revenue

Breakeven time

Outflow inflows Net cash flow Breakeven(Years)

year 1.5 -5362253.95 1347862.57 -4014391.38

3.134734272 year 2.5 -4014391.38 2488600 -1525791.38

year 3.5 -1525791.38 2403827 878035.62

Survival Revenue

COGS VCRR Salaries

Office

Expense Advertising

transportation

& delivery Packaging

Interest

Expense CFC

Survival

Revenue EBDAT

November 0 0 16000 0 0 0 0 6406 22406 22406 0

December 0 0 28000 0 0 0 0 6406 34406 34406 0

January 0 0 28000 0 0 0 0 6406 34406 34406 0

February 0 0 77500 10,000 0 0 0 6406 93906 93906 0

March 5110 0.053030303 111000 10,000 1160 4500 8120 6406 141186 149092.42 0

Month 1 10220 0.053030303 198750 25000 1160 9000 16240 6406 266776.053 281715.51 0

Month 2 14052.5 0.053030303 198750 25000 1595 9000 22330 6406 277133.553 292653.03 0

Month 3 17885 0.053030303 198750 25000 2030 9000 28420 6406 287491.053 303590.55 0

Page 69: Business Plan- Fresh Living - EF

XXIII

10.20 Financial ratios

Year 1 Year 2 Year 3 Year 4 Year 5

EBITDA (for calculations) 1083797.27 2959472.4 3267719.61 3606791.57 3979770.72

Ratios

Interest Coverage = EBITDA/Interest 8.48704264 38.49720156 42.50692172 46.91761389 51.7693753

Gross Profit Margin= Net Sales - Cost of Goods Sold /

Net Sales 95.30122895 95.12676566 95.12676566 95.12676566 95.1267657

Net Profit Margin= Net Income / Net Sales 1.379144239 17.43171924 14.91714206 15.61690311 16.2530495

Total-Debt-to-Total-Assets Ratio = Average Total

Debt/Average Total Assets 0.118423 0.1010805 0.07870491 0.0159846 0.013152

Return on Assets = Net Income/Average Total Assets 1.5066895 29.289087 21.4673406 20.083588 18.917461

Return on Equity=Net Income/Average Owners' Equity 1.7090845 32.582549 23.3012647 21.455417 19.967934

Ratios January February March month 1 month 2 month 3 month 4 month 5 month 6

Current Ratio = Current

Assets/ Current Liabilities 48.124769 6.2250279 3.4708387 2.3264807 1.9795643 1.993834 2.382138 3.74456 37.5571

Quick Ratio = Current

Assets - Inventories

Current Liabilities 48.124769 6.2250279 3.4708387 2.3264807 1.9795643 1.993834 2.382138 3.74456 37.5571

Page 70: Business Plan- Fresh Living - EF

XXIV

10.21 Venture Valuation

Variables

Growth Rate (g)% 10

Required rate of investors for first 3 years % 35

Required rate of investors for after breakeven % 20

Cash Flows Year 1 1347862

Cash Flows Year 2 2488600

Cash Flows Year 3 2403827

Cash Flows Year 4 2656711

Cash Flows Year 5 2883633

stepping stone year 4

Pre Money Valuation (1)

Time 0 Yr 1 Yr2

Annual Cash Flow 1347862 2488600

Terminal Value 9954400

Total Flow to Discount 11302262

Present Value 8,372,045.93

Pre Money Valuation (2)

Time 0 Yr 1 Yr2 Yr 3 Yr 4 Yr 5

Annual Cash Flow 1347862 2488600 2403827 2656711 2883633

Terminal Value 28836330

Total Flow to Discount 1347862 2488600 2403827 31493041

Present Value 12,822,473.82

Page 71: Business Plan- Fresh Living - EF

XXV

10.22 In case of Equity investment

initial investments of owners 4500000

expected income in year 5 2200000

Investor willing to pay 615000 350000

Return on every rupee of investment in industry (assumption) 0.2

price of venture at the end of five years 11000000

investor's required rate of return 0.35 0.2

number of shares issued to owners at the beginning of the venture 4500000

Acquired percentage by the investor 0.250698233 0.038182

new shares to be issued 1505591.07 241616.3

total outstanding shares after first investor 6005591.07 6328046

share Price 0.408477449 0.387663

Pre-money valuation 1838148.522 2359483

Post-money valuation 2453148.522 2453149

present value of the future value 2453148.522


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