Seeds Ltd.
Business Plan For A
New and Improved Seed Cleaning Plant
Nav Khinda, Sean McAlpine and Noor Syed
April 05, 2007
Contents of the Plan
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Introduction
Background
Current Situation
Goals
Key Questions
Operational Plan
Marketing Plan
Financial Plan
Introduction
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Seeds is an on-farm cleaning and packaging
plant in Sask.
•Cereals, pulses and oil seeds are cleaned
and quality tested to broker’s specification
•Four machines clean and sort the seeds
according to color, size, shape and density.
•Six employees
size and color comparison of beans
Color, Weight and Size Variations in Seeds
Variety of pulses
black mustard
coriander
soya beans
oats
Pinto beans
green lentils
Golden flax
fenugreek
green split peas
dried peas
wheat germ
hemp
wheat grain
Assorted beans
Background
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began seed cleaning
operation in 1985
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Authorized for pedigree and certified for
organic seed cleaning
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Seeds Ltd. became incorporated in 1997
Current Situation
Seed variety
Unmet Requirements Comments
Chickpeas, Lentils,
Peas and Beans
Not able to process
fragile crops
Flax
Unable to meet
99.99% purity
Not able to remove
cereals
Gluten is allergen,
100% wheat free
Unable to meet
99.9% purity
Unable to remove
splits and wheat
Wheat is an
allergen
Small Lentils
Mustard
Coriander
Current Situation
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Seeds Ltd. Business Plan
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New equipment will further improve capability to
clean seeds to customer specifications
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Increase the plant capacity
Goals of New Plant
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Reach sales of $1 M
Continue superior quality service
ORGANIZATIONAL CHART
President
Administrative Asst.
Plant Operator
Plant Assistants
Warehouse Technologist
Warehouse Technologist
3rd technologist
Plan View of Operations
Long Term
Storage
Warehouse
Future
Development
Area
Screenings
Shipping
Processing
Raw
Material
Storage
Receiving
Bulk Shipping
Screenings
Burning
Area
WORK FLOW PLAN
1.
2.
RECEIVING
CLEANING
3.
PACKAGING
Packaging
HACCP and ISO
•Seeds Ltd. meets HACCP inspection
regulations
•Currently no certification for seed cleaning
plants exists
•Voluntary compliance and free inspection is
available
•New plant is designed with improvements in
critical control points
•According to customers specifications lab
tests are outsourced
Canadian Food Inspection Agency
Marketing Questions
•Organic industry expanding?
•Who are the current competitors?
•Unique services?
•Supply a niche market successfully?
•Buying and selling direct
•Will HACCP be a factor in the future?
•Should a quality control lab be part of the QC system?
In-house?
The Four P’s
1. Products and Services
- cleaning, storage and packaging of various
seeds
- high quality of service
2. Pricing
- cost plus; time required for processing
- below or in par with others
3. Promotion
- develop relations with existing and new brokers
STP
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Segmentation
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Targeting
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Geographical location
Broker specifications
Continue to focus on organic market
Positioning
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Consistent high quality std.
Approachable, professional and dependable
SWOT Analysis
•Strengths
•knowledge & experience
•solid reputation
•economy of scope
•Weaknesses
•location (rail)
•company size
•Opportunities
•emerging trend of higher quality standards
•growth in organic industry
•Threats
•power of buyers
•environment
•large competitors
•demand
Marketing Strategies
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Sales and Profit Objectives
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Channels of Distribution
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Cost plus
We recommend a market value approach
Select Markets/Products/Service Mix
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Customers arrange for delivery and pickup
Pricing Policy
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$1 million in sales
Organic, Export, High purity demands
Selling and Advertising
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Minimal effort
$10,000 per year in trade shows
Debt and Equity
Breakdown of funding for BirdSeeds Ltd.
Finance Source
Owner Equity
Venture Capital
Long Term Debt
Total Financing
Cdn $
$ 598,300
$ 1,015,872
$ 356,928
$ 1,971,100
Financial Analysis and Overall Financial
Performance
Summary of the Financial Situation (Base case scenario)
Year
2008
2009
2013
2017
$1,030,857
$1,149,312
$1,253,838
$1,367,870
COGS
$809,634
$913,426
$727,290
$709,740
Gross Profit
$221,223
$235,885
$526,548
$658,131
$72,685
$72,554
$71,326
$68,607
$148,538
$163,331
$455,221
$589,524
Income Tax
$14,854
$16,333
$59,327
$106,333
Net Income
$133,684
$146,998
$395,894
$483,190
Net Cash Flow to
Equity
$369,912
$483,930
$497,037
$504,836
Net Present Value
(NPV)
$287,909
Sales
Expenses
Net Income Before
Taxes
IRR
25.11%
Risk Analysis
Variable
Level of
Importance
(1, 2, 3)
Capacity
1
Cleaning Price
1
Grade Changes
2
Number of
Employees
2
Wage rates
2
Seed Price
2
Interest rate
2
Inflation rate
2
Tax rate
3
Key for the table.
1. Critical for success and
feasibility
2. Important for financial
performance
3. Minor importance, but has
damaging effect on financial
performance.
Scenario Analyses
Variable
Capacity
%
Capacity
Grade
Changes
Packaging
Price
$
NPV
$
IRR
Base
Case
Worst
Case
Best Case
100%
27.8
80%
24.2
100%
27.8
1
3
0
38.86
36.91
$
40.80
287,909 $(1,027,617)
$
855,391
25%
$
-6%
35%
Break even Analysis
IRR
Cash Flow
Net Income
20000
15000
10000
5000
Year
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
0
20
Annual Tonnage/t
25000
Break even Analysis
IRR
Cash Flow
Net Income
$20.00
$15.00
$10.00
$5.00
Year
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
$-
20
Average Cleaning Price/$/t
$25.00
Summary
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Volume is key
Marketing will play an important role
Viable Business Plan
Interactive Session
Thank You