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c 


 

Parkdale Meats, is a startup specialty butcher shop to be launched in the coming year. It will sell
a wide menu of meats to customers including medium- and high-income residents of Parkdale, as
well as high-income residents of neighboring towns, and high-end caterers.

 


Parkdale Meats is established as a limited liability company owned by its two co-founders.
The store will be managed and directed by Robert Suidae, a veteran butcher with fifteen
years experience in butcher shops and Eryka Auroch, an experienced retail food-service
manager. Auroch will serve as the company's CEO and Suidae as the company's COO.

 
 

Parkdale Meats will sell aged beef, free-range poultry, fresh pork and domestic lamb. Upon
request, the store will sell wild game such as buffalo, alligator, kangaroo, quail, and other
specially requested items. The products will be purchased from suppliers within a 100-mile
radius of the store to have minimal impact on the environment and to maintain product
freshness. Products will be purchased as whole animals and butchered in the store by trained
butchers. The sales staff will offer suggestions of substitutions or help customers fulfill their
orders through special orders in order to make sure all customers leave satisfied.




The meat and poultry industry is the largest segment of U.S. agriculture. Total meat and poultry
production in 2007 reached more than 91 billion pounds. U.S. meat consumption was 55% red
meat (beef, veal, lamb, pork, and mutton), 8.2% fish, and 36.8% poultry in 2007. Meat is sold
through retail establishments including restaurants, grocery stores, and butcher shops.
Independent butcher shops have decreased in number over the last ten years, as sales of meet
have fallen slightly and moved increasingly to grocery stores and big box retailers. However,
this has created an opportunity for specialty butcher shops in markets which provide only basic
options through these larger retailers.

 

Competitors for Parkdale Meats fall into the following categories:

à? rocery Stores - 7 stores in greater Parkdale area


à? -ig box retailers (Wal-Mart and Costco)
à? -utcher shops (Red's Meats and -ay Avenue -utchers)

Parkdale Meats will establish its competitive edge through the expertise of its founders. Robert
Suidae brings with him existing relationships with the best suppliers of meat as well as an
understanding of the craft of butchering. Coupled with Eryka Auroch's understanding of food
service management, sales record in business to business sales, and financial acumen, the pair
will have an edge over the town's other butcher shops and grocery stores within its niche market.

[




Funding for the launch of the business will be provided primarily by equity from the two
partners. Each will contribute in equal share from their savings to launch the business. The
remainder of financing will be made up in temporary credit card debt taken on by the two
founders and accounts payable from delayed payments on start-up costs. The business seeks a
business loan to finance the purchase of the equipment needed.

The business will reach positive cash flow in its 8th month of operation, allowing for expedited
repayment of its loan obligations, as well as for dividends to be paid to the owners. Revenue will
top $XXXXX and profit will reach about $XXXX in the third year of operation.



Parkdale Meats will measure its success by its ability to achieve the following objectives:

1.? -uild sales to $XXXXX annually within three years.


2.? Receive 60% of sales through advance orders, either by phone or Internet, with 40% of
sales through walk-up traffic.
3.? Achieve cash flow break-even within six months.
4.? -ecome profitable by the second year of operation.


Parkdale Meats is a specialty butcher shop which seeks to serve the highest quality meats, cut to
customer specifications, and become the foremost specialty meats provider in the greater
Parkdale area.

Î 

Parkdale Meats must follow these principles in order to achieve success in its market:

1.? Maintain high quality standards for its suppliers and continuously monitor this quality.
2.? Preserve meats in optimal conditions to maintain freshness while in the store.
3.? Maintain excellence in the skill of butchering meats through hiring, training, and
supervision of staff.
4.? Listen carefully to customer needs and respond with custom-cut products, whether in
person, over the phone, or through Internet orders.

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LN

 
 

Parkdale Meats is a startup specialty butcher shop to be launched in the coming year. It will sell
aged beef, free-range poultry, fresh pork and domestic lamb. Upon request, the store will sell
wild game such as buffalo, alligator, kangaroo, quail, and other specially requested items.
Customers will include medium- and high-income residents of Parkdale, as well as high-income
residents of neighboring towns, and high-end caterers and restaurants.

The store will be managed and directed by Robert Suidae, a veteran butcher with fifteen
years experience in butcher shops and Eryka Auroch, an experienced retail food-service
manager. Auroch will serve as the company's CEO and Suidae as the company's COO.

 
   

Parkdale Meats is established as a limited liability company with 49% ownership by Robert
Suidae and 51% ownership by Eryka Auroch. The partners will share in management
responsibilities with final decisions falling to Eryka Auroch where there are differences of
opinion. The partnership agreement allows for one partner to buy out the other in the case that
the partnership must be dissolved and sets predetermined methods to determine the company's
valuation in that case.




The following summary table shows the projected start-up costs over the three months prior to
the store's opening.

Start-up expenses for Parkdale Meats include initial insurance premiums covering both general
liability and product liability, as well as business renter's insurance, rent for 1 month's security
and 2 months to allow for build-out of the retail space, pre-launch marketing to cover flyers, a
direct mail campaign, and advertisements in local papers, the development of a website with e-
commerce capabilities to take orders and sell meats directly, and the normal legal expenses for
consultation and permitting.

Inventory on-hand at any given time must be low as all meats must be kept extremely fresh and
so will be ordered on a weekly basis or even more often. Other current assets include office and
store furniture, shelving, a computer, phone system, and tools. Long-term assets include the
refrigerator unit for the shop, refrigerated display cases, window displays, store fixtures, a
refrigerated delivery van and additional investments in improvements to the retail location.

A significant amount of cash is required to fund the first year of operations until the business
reaches break-even.

Start-up
Requirements
Start-up Expenses
Legal $10,000
Stationery etc. $1,000
Insurance $2,000
Rent $4,800
Pre-Launch Marketing $5,000
Website Development $10,000
Total Start-up Expenses $32,800
Start-up Assets
Cash Required $80,000
Start-up Inventory $2,000
Other Current Assets $20,000
Long-term Assets $80,000
Total Assets $182,000
Total Requirements $214,800

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fy

 
Parkdale Meats will provide the following products on a regular basis:

Aged -eef:

à? Filet Mignon
à? Kebab
à? London -roil
à? Porterhouse Steak
à? Rib-Eye Steak
à? Roast -eef
à? Shell Steak
à? Sirloin -urger
à? Sirloin Steak
à? Skirt Steak
à? Strip Steak
à? T--one Steak

Domestic Lamb:

à? Chop
à? Flank
à? Leg

Fresh Pork:

à? -oiling -acon
à? Chop
à? Rasher
à? Sausage

Free-Range Poultry:

à? Chicken Kiev
à? Chicken Cordon -leu
à? Cutlet
à? Kebab

Upon request, the store will sell wild game such as buffalo, alligator, kangaroo, quail and more.
All products can be cut to the customer's specifications.

The products will be purchased from suppliers within a 100-mile radius of the store to have
minimal impact on the environment through trucking costs and to maintain product freshness.
Products will be purchased as whole animals and butchered in the store by trained butchers.
They will be sold while fresh. While products may be replenished within a few days, there is the
possibility of certain items running out because of high sales and going out of stock until new
shipments may arise. The sales staff will offer suggestions of substitutions or help customers
fulfill their orders through special orders in order to make sure all customers leave satisfied.

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The American Meat Institute provides the following statistics about the American meat industry:

The meat and poultry industry is the largest segment of U.S. agriculture. Total meat and poultry
production in 2007 reached more than 91 billion pounds.

j  

     
9 billion chickens
34.2 million cattle
271 million turkeys
2.7 million sheep
109 million hogs and lambs

j  
 

   
36.6 billion pounds of chicken
26.5 billion pounds of beef
21.9 billion pounds of pork
6 billion pounds of turkey
334 million pounds of veal, lamb and mutton

    



Cattle - Colorado, Texas and Nebraska
Hog - Iowa, North Carolina and Illinois
Chicken - eorgia, Arkansas and Alabama
Turkey - Minnesota, North Carolina and Arkansas
There are 6,032 federally inspected meat and poultry slaughtering and processing plants in the
United States.

U.S. meat consumption was 55% red meat (beef, veal, lamb, pork, and mutton), 8.2% fish, and
36.8% poultry in 2007. Americans spend 6.4% of disposable income on food at home.

Meat is sold through retail establishments including restaurants, grocery stores, and butcher
shops. Independent butcher shops have decreased in number over the last ten years, as sales of
meet have fallen slightly and moved increasingly to grocery stores and big box retailers.
However, this has created an opportunity for specialty butcher shops in markets which provide
only basic options through these larger retailers.


 


Parkdale potential customers are divided into the following groups as shown in the market
analysis table:



 !  " Annual household income of over $100,000 in Parkdale
(80% of which consist of two adults).



 !  " Annual household income of $50,000 to $100,000 in
Parkdale (50% of which consist of two adults and 50% of which consist of one adult).

#  !  "Annual household income of over $100,000


in the five towns bordering Parkdale (80% of which consist of two adults).


  " Upscale catering businesses in a 15 mile radius of Parkdale.

$

" Upscale restaurants in a 15 mile radius of Parkdale.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers rowth CAR
Parkdale High-Income
3% 9,000 9,225 9,456 9,692 9,934 2.50%
Households
Parkdale Medium-Income
3% 25,000 25,625 26,266 26,923 27,596 2.50%
Households
Neighboring Town High-
3% 25,000 25,625 26,266 26,923 27,596 2.50%
Income Households
Caterers 4% 25 26 27 28 29 3.78%
Restaurants 5% 60 63 66 69 72 4.66%
Total 2.50% 59,085 60,564 62,081 63,635 65,227 2.50%



 
 

Market segmentation for Parkdale Meats is based on the specific market opportunity in the
Parkdale area. While low-income households are perfectly content with purchasing the meat
options at local grocery stores and big box retailers, households with a greater level of disposable
income are interested in expanding their options for home cooked meats. Furthermore, these
customers entertain in their homes to a greater extent than low-income households and prefer to
offer high-quality or rarer meat options at these events.

It is expected that customers from neighboring towns will be more likely to travel to Parkdale if
they have higher levels of disposable income to allow for the time and gas expense of this travel.
For this reason, high-income households will be targeted at first in neighboring towns.

Caterers, especially those serving high-end corporate and private events, and upscale restaurants
seek high-quality specialty meats at wholesale prices. Parkdale Meats will sell in bulk to
catering businesses and restaurants at a substantial discount from retail prices, while still
allowing for margin. Caterers and restaurants will be required to order in advance to allow for
specialty orders of meats and not deplete the products available at the retail location for
immediate purchase.

! 
 

The American Meat Institute provides the following analysis:

"The meat industry is unique because it relies on live animals as its raw materials. Within
livestock production, there is a classic, livestock price cycle. Prices rise and fall as producers
raise more animals in response to high prices or low supply, and then cease producing when
livestock inventories become high and prices fall. At the low points in the livestock price cycle,
some livestock producers have called for reviews of meat packing industry structure to determine
if the structure may be causing a price decline. Each review has found that industry structure is
not to blame for livestock prices. Rather, the basic laws of supply and demand most often are the
cause."

Elsewhere, researchers find a wave of consolidation occurring in the meat industry since the
1990s, spurred by the growth of several major grocery chains such as Wal-Mart.
In general, "consumers are eagerly buying more conveniently prepared food products of
consistent quality, despite the sluggish growth of overall food spending" write researchers
-arkema, Drabenstott and Novack, "...and nearly 40 percent of the consumer's food dollar is
spent in restaurants and other eating establishments".

Despite, and in fact because, of these changes, there is a growing need for sales of specialty
meats to the niche market who can afford and desire them, as they are no longer served well
by grocery stores and large retailers.

 
% 
 

Competitors for Parkdale Meats fall into the following categories:

à? rocery Stores (Stop & Shop, A & P, orman's Market, etc.) - 7 stores in greater
Parkdale area
à? -ig box retailers (Wal-Mart and Costco)
à? -utcher shops (Red's Meats and -ay Avenue -utchers)

rocery stores provide basic meat options at relatively low prices. They are chosen by
customers interested in buying meat along with all of their grocery and food needs, and not
traveling far from their home. These customers will sacrifice some quality and options for price
and convenience.

-ig box retailers serve clients interested in the lowest price and able to sacrifice some
convenience (longer waits and longer travel times) for the lowest price. They offer meats of the
same range of options and quality as grocery stores.

Red's Meats has been in existence for 25 years and primarily serves customers who value the
store's history. These customers have typically been buying meats at Red's for at least five years
and live within five miles of the store in Parkdale. The customers are aging, on average.
-ecause its meats are only slightly higher quality than grocery stores, Red's does not serve
caterers and restaurants, but sells products primarily to medium income households.

-ay Avenue -utchers was established ten years ago and focuses only on high-quality red meat
and not poultry. They sell meats to caterers and restaurants, but these businesses would likely
consider using a different vendor which could provide a wider range of options. -ay Avenue
-utchers has high prices for its retail meats and serves only high-income households.

Indirect competitors (and also potential competitors) include restaurants, as consumers interested
in specialty meats may choose to eat out instead of cook the meal themselves.

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!  


To implement its plan, Parkdale Meats will attempt to:

1.? Establish its retail location by signing a lease once funding is secured.
2.? -egin by targeting high-income residents of Parkdale and the surrounding towns, as well
as medium-income residents of Parkdale and business customers (upscale caterers and
restaurants).
3.? -usiness customers and retail customers will be grown as separate revenue streams, but
will reinforce each other.

 c

Parkdale Meats will establish its competitive edge through the expertise of its founders. Robert
Suidae brings with him existing relationships with the best suppliers of meat as well as an
understanding of the craft of butchering. He has trained a number of assistant butchers who have
gone on to take head positions at grocery stores and butcher shops. Coupled with Eryka
Auroch's understanding of food service management, sales record in business to business sales,
and financial acumen, the pair will have an edge over the town's other butcher shops and grocery
stores within its niche market.



 

The marketing strategy of Parkdale Meats is to establish anticipation of the store's opening in the
community so that it can hit the ground running with retail sales immediately upon launch. To
that end, the following tactics will be used:

à? Direct mail of flyers to a select list of 5,000 high income households.


à? Advertisements in local newspapers and magazines.
à? Flyers in the downtown area around the site of the store.
à? Launch of the website in anticipation of opening.
à? Yellow Pages listing.

To market to businesses, Parkdale Meats will join the local Chamber of Commerce and Food
Provider organizations to network and market to other members.

After opening, the following tactics will be used going forward:

à? Direct mail to additional households with higher incomes.


à? Search engine marketing via local oogle ads.
à? Email newsletter describing developments in meat offerings to business customers and
certain households.



 
The sales strategy for the business includes both retail sales and business sales strategies.

Retail sales will be based on the marketing of the store and its location, explained in the
marketing plan section. At an operational level, orders will be taken in person by clerks working
the floor of the store (two on duty at any given time), or by the office clerk over the phone or
Internet. Orders for specific cuts will be transmitted from these clerks to the butchers on duty
who will prepare the cuts. They will be packaged, priced, and prepared for sale by the floor
clerks.

Customers will be greeted with a standard greeting and served to meet their satisfaction with the
greatest care taken to provide quick service to walk-in customers. A machine will give numbers
to waiting customers so they can be served in an orderly fashion. Waiting customers will have a
few seats in the store to sit in while waiting.

The business sales strategy relies on prospecting by Eryka Auroch to establish sales to caterers
and restaurants. She will research, contact, and present to these businesses, drawing on her past
sales experience. As a partner of the business, she will work to maximize this revenue stream to
increase profits, rather than because of commissions on sales.


[ 


The sales forecast table represents the business scaling up sales quickly in the first year as the
community recognizes the high quality of its products and as in-roads are made with the dozens
of area caterers and restaurants.

Retail sales will be the greatest driver of sales growth and represents the best margins for the
business, with a 100% markup over cost. Special orders are more expensive to provide, but will
provide a vital line of business that will encourage high-income customers to use the store. Their
cost of sales will be 60% of sales.

Products sold to businesses will be sold at lower rates, but costs will also be reduced through
bulk ordering and the ease of working with businesses in an ongoing way. The cost of sales to
businesses will be 60% as well. This category, including both catering and restaurant sales, will
represent a larger portion of sales than retail sales. The presence of the store and the brand name
it establishes will allow caterers and restaurants to advertise the fact that they purchase their
meats from Parkdale Meats without any fear, as customers will see it as a mark of quality.
Sales Forecast
Year 1 Year 2 Year 3
Sales
Retail Regular Sales $197,904 $300,000 $375,000
Retail Special Orders $79,151 $150,000 $185,000
Catering -usiness Sales $71,840 $150,000 $200,000
Restaurant Sales $129,816 $225,000 $325,000
Total Sales $478,711 $825,000 $1,085,000
Direct Cost of Sales Year 1 Year 2 Year 3
Retail Meats $98,952 $150,000 $187,500
Special Order Meats $47,491 $90,000 $111,000
-usiness Meats $120,994 $225,000 $315,000
Subtotal Direct Cost of Sales $267,436 $465,000 $613,500


Eryka Auroch will manage all marketing and sales activities. As discussed earlier, the business's
website must be completed month's before opening to provide information for those who see
flyers and ads prior to the launch. Search engine marketing will be an ongoing expense after the
launch, and business prospecting by Eryka Auroch will be continued as needed to establish a
foundation of restaurants and caterers to sell to.

Milestones
Milestone Start Date End Date -udget Manager Department
Website Development 8/1/2009 10/1/2009 $10,000 EA Sales
Design Flyers and Ads 8/1/2009 9/1/2009 $1,000 EA Sales
Direct Mail Campaign 9/1/2009 10/1/2009 $2,000 EA Sales
Newspaper Ad Campaign 9/1/2009 10/1/2009 $2,000 EA Sales
Search Engine Marketing 10/1/2009 9/30/2010 $10,000 EA Sales
-usiness Sales
9/15/2009 12/1/2009 $500 EA Sales
Prospecting
Totals $25,500

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The management of Parkdale Meats will consist of Eryka Auroch and Robert Suidae.

Eryka Auroch, CEO, will manage sales, marketing, and finances for the business. This will
include training sales staff, managing all marketing programs, and being the liaise to the website
developer and accountant for the business.
Robert Suidae, COO, will design the store's floor plan, plan, order and install all equipment
purchases, establish operations procedures, train butchering staff and operations staff, and
establish relationships with all suppliers.

Two employees will initially include a full-time sales/operations clerk and one assistant butcher.

 


The personnel forecast reflects modest raises for all staff each year. The CEO and COO will be
primarily compensated through profits. It is expected that lower-level staff may turn over, but
the positions will be systematized to an extent that this does not disrupt the business.

Personnel Plan
Year 1 Year 2 Year 3
CEO $36,000 $36,000 $36,000
COO $36,000 $36,000 $36,000
Assistant -utcher $38,400 $40,000 $42,000
Sales & Operations Staff $36,000 $38,000 $40,000
Total People 4 4 4
Total Payroll $146,400 $150,000 $154,000

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[



The business will grow after startup from its own cash flow. Significant growth is possible in the
initial target markets before there is a need to take on additional staff or move to a larger facility.
These are possibilities after the first three years, as is opening an additional retail location in an
area that will not compete with Parkdale Meats' first location.


[

Funding for the launch of the business will be provided primarily by equity from the two
partners. Each will contribute in equal share from their savings to launch the business.

The remainder of financing will be made up in temporary credit card debt taken on by the two
founders and accounts payable from delayed payments on start-up costs.
The business seeks a business loan to finance the purchase of the equipment needed. These
assets can be held as collateral in this loan.

Start-up Funding
Start-up Expenses to Fund $32,800
Start-up Assets to Fund $182,000
Total Funding Required $214,800
Assets
Non-cash Assets from Start-up $102,000
Cash Requirements from Start-up $80,000
Additional Cash Raised $0
Cash -alance on Starting Date $80,000
Total Assets $182,000

Liabilities and Capital


Liabilities
Current -orrowing $40,000
Long-term Liabilities $40,000
Accounts Payable (Outstanding -ills) $4,800
Other Current Liabilities (interest-free) $0
Total Liabilities $84,800
Capital
Planned Investment
Robert Suidae $65,000
Eryka Auroch $0
Additional Investment Requirement $65,000
Total Planned Investment $130,000
Loss at Start-up (Start-up Expenses) ($32,800)
Total Capital $97,200

Total Capital and Liabilities $182,000


Total Funding $214,800

!  
 

Interest rates and the tax rate reflect the current economic environment that Parkdale Meats will
operate within.

% 

 

Due to the monthly break even in sales, overall company break even is expected in the tenth
month of operation.
-reak-even Analysis

Monthly Revenue -reak-even $42,371


Assumptions:
Average Percent Variable Cost 56%
Estimated Monthly Fixed Cost $18,700

  &
'

Additional direct cost of sales reflects the costs of packaging, gas for deliveries, credit card
transaction fees, and other direct costs of the meat preparation and order fulfillment processes.
ross margins are based on the industry markup for butchered meats.

Marketing expenses will be higher in the first year to announce the opening of the firm and will
drop after that. Most expenses will show small increases each year as the business will remain in
the same location over the first three years. Profit will rise sharply over the first three years as
sales are spread over these relatively stable expenses.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $478,711 $825,000 $1,085,000
Direct Cost of Sales $267,436 $465,000 $613,500
Other Costs of Sales $23,936 $41,250 $54,250
Total Cost of Sales $291,372 $506,250 $667,750
ross Margin $187,339 $318,750 $417,250
ross Margin % 39.13% 38.64% 38.46%

Expenses
Payroll $146,400 $150,000 $154,000
Marketing/Promotion $18,000 $13,000 $14,000
Depreciation $8,040 $8,040 $8,040
Rent $19,200 $20,160 $21,168
Utilities $2,400 $2,520 $2,646
Insurance $2,400 $2,520 $2,646
Payroll Taxes $21,960 $22,500 $23,100
Other $6,000 $6,300 $6,615
Total Operating Expenses $224,400 $225,040 $232,215
Profit -efore Interest and Taxes ($37,061) $93,710 $185,035
E-ITDA ($29,021) $101,750 $193,075
Interest Expense $7,725 $3,933 $1,400
Taxes Incurred $0 $26,933 $55,090
Net Profit ($44,786) $62,844 $128,544
Net Profit/Sales -9.36% 7.62% 11.85%

 
[

The business will pay back its current borrowing in credit card debt over the first and second
years of operation, and its long-term loan over the first three years of operation, after smaller
payments in the first year.
Cash on hand will allow for dividends to be paid to the partners in the second and third years of
operation.

Pro Forma Cash Flow


Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $478,711 $825,000 $1,085,000
Subtotal Cash from Operations $478,711 $825,000 $1,085,000
Additional Cash Received
Sales Tax, VAT, HST/ST Received $33,510 $57,750 $75,950
New Current -orrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $512,221 $882,750 $1,160,950
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $146,400 $150,000 $154,000
-ill Payments $321,065 $621,800 $779,090
Subtotal Spent on Operations $467,465 $771,800 $933,090
Additional Cash Spent
Sales Tax, VAT, HST/ST Paid Out $33,510 $57,750 $75,950
Principal Repayment of Current -orrowing $24,000 $16,000 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $6,000 $13,332 $13,332
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $50,000 $100,000
Subtotal Cash Spent $530,975 $908,882 $1,122,372
Net Cash Flow ($18,754) ($26,132) $38,578
Cash -alance $61,246 $35,113 $73,691

 %



The balance sheet shows long-term liabilities will be paid off over the first three years and
retained earnings will increase in the company, despite dividends being paid. The business will
increasingly develop means to finance its own growth in future years.

Pro Forma -alance Sheet


Year 1 Year 2 Year 3
Assets
Current Assets
Cash $61,246 $35,113 $73,691
Inventory $13,219 $16,844 $16,863
Other Current Assets $20,000 $20,000 $20,000
Total Current Assets $94,465 $71,957 $110,554
Long-term Assets
Long-term Assets $80,000 $80,000 $80,000
Accumulated Depreciation $8,040 $16,080 $24,120
Total Long-term Assets $71,960 $63,920 $55,880
Total Assets $166,425 $135,877 $166,434
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $64,010 $49,951 $65,296
Current -orrowing $16,000 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $80,010 $49,951 $65,296
Long-term Liabilities $34,000 $20,668 $7,336
Total Liabilities $114,010 $70,619 $72,632
Paid-in Capital $130,000 $130,000 $130,000
Retained Earnings ($32,800) ($127,586) ($164,742)
Earnings ($44,786) $62,844 $128,544
Total Capital $52,414 $65,258 $93,802
Total Liabilities and Capital $166,425 $135,877 $166,434
Net Worth $52,414 $65,258 $93,802

%$


The business ratios for Parkdale Meats are compared here against specialty food stores of over
$1 million annual revenue.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales rowth n.a. 72.34% 31.52% -0.06%
Percent of Total Assets
Inventory 7.94% 12.40% 10.13% 23.32%
Other Current Assets 12.02% 14.72% 12.02% 33.42%
Total Current Assets 56.76% 52.96% 66.43% 82.61%
Long-term Assets 43.24% 47.04% 33.57% 17.39%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 48.08% 36.76% 39.23% 37.13%
Long-term Liabilities 20.43% 15.21% 4.41% 30.43%
Total Liabilities 68.51% 51.97% 43.64% 67.55%
Net Worth 31.49% 48.03% 56.36% 32.45%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
ross Margin 39.13% 38.64% 38.46% 19.29%
Selling, eneral & Administrative Expenses 48.49% 31.02% 26.61% 8.62%
Advertising Expenses 3.76% 1.58% 1.29% 0.29%
Profit -efore Interest and Taxes -7.74% 11.36% 17.05% 1.72%
Main Ratios
Current 1.18 1.44 1.69 1.90
Quick 1.02 1.10 1.43 1.28
Total Debt to Total Assets 68.51% 51.97% 43.64% 67.55%
Pre-tax Return on Net Worth -85.45% 137.57% 195.77% 26.22%
Pre-tax Return on Assets -26.91% 66.07% 110.33% 8.51%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -9.36% 7.62% 11.85% n.a
Return on Equity -85.45% 96.30% 137.04% n.a
Activity Ratios
Inventory Turnover 48.00 30.94 36.40 n.a
Accounts Payable Turnover 5.94 12.17 12.17 n.a
Payment Days 27 34 26 n.a
Total Asset Turnover 2.88 6.07 6.52 n.a
Debt Ratios
Debt to Net Worth 2.18 1.08 0.77 n.a
Current Liab. to Liab. 0.70 0.71 0.90 n.a
Liquidity Ratios
Net Working Capital $14,454 $22,006 $45,258 n.a
Interest Coverage -4.80 23.82 132.15 n.a
Additional Ratios
Assets to Sales 0.35 0.16 0.15 n.a
Current Debt/Total Assets 48% 37% 39% n.a
Acid Test 1.02 1.10 1.43 n.a
Sales/Net Worth 9.13 12.64 11.57 n.a
Dividend Payout 0.00 0.80 0.78 n.a

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Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Retail Regular Sales $5,000 $6,000 $7,200 $8,640 $10,368 $12,442 $14,930 $17,916 $21,499 $25,799 $30,959 $37,151
Retail Special Orders $2,000 $2,400 $2,880 $3,456 $4,147 $4,976 $5,971 $7,165 $8,598 $10,318 $12,382 $14,858
Catering -usiness Sales $0 $1,000 $1,675 $2,252 $2,887 $3,911 $5,601 $6,756 $8,546 $9,932 $12,588 $16,693
Restaurant Sales $0 $2,000 $3,291 $4,446 $6,063 $7,769 $10,289 $13,333 $15,853 $19,213 $21,942 $25,617
Total Sales $7,000 $11,400 $15,046 $18,794 $23,465 $29,098 $36,790 $45,170 $54,496 $65,261 $77,871 $94,319

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Retail Meats $2,500 $3,000 $3,600 $4,320 $5,184 $6,221 $7,465 $8,958 $10,750 $12,900 $15,480 $18,576
Special Order Meats $1,200 $1,440 $1,728 $2,074 $2,488 $2,986 $3,583 $4,299 $5,159 $6,191 $7,429 $8,915
-usiness Meats $0 $1,800 $2,980 $4,019 $5,370 $7,008 $9,534 $12,053 $14,639 $17,487 $20,718 $25,386
Subtotal Direct Cost of Sales $3,700 $6,240 $8,308 $10,413 $13,042 $16,214 $20,581 $25,310 $30,548 $36,577 $43,627 $52,876

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
CEO $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
COO $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Assistant -utcher $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200
Sales & Operations Staff $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Total People 4 4 4 4 4 4 4 4 4 4 4 4

Total Payroll $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200

Pro Forma Profit and Loss


Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11
12
Sales $7,000 $11,400 $15,046 $18,794 $23,465 $29,098 $36,790 $45,170 $54,496 $65,261 $77,871 $94,319
Direct Cost of Sales $3,700 $6,240 $8,308 $10,413 $13,042 $16,214 $20,581 $25,310 $30,548 $36,577 $43,627 $52,876
Other Costs of Sales $350 $570 $752 $940 $1,173 $1,455 $1,840 $2,259 $2,725 $3,263 $3,894 $4,716
Total Cost of Sales $4,050 $6,810 $9,060 $11,352 $14,216 $17,669 $22,421 $27,569 $33,272 $39,840 $47,520 $57,592

ross Margin $2,950 $4,590 $5,986 $7,442 $9,250 $11,428 $14,370 $17,601 $21,223 $25,421 $30,351 $36,727
ross Margin % 42.14% 40.26% 39.79% 39.60% 39.42% 39.28% 39.06% 38.97% 38.95% 38.95% 38.98% 38.94%

Expenses
Payroll $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200
Marketing/Promotion $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Depreciation $670 $670 $670 $670 $670 $670 $670 $670 $670 $670 $670 $670
Rent $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Payroll Taxes 15% $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830 $1,830
Other $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Total Operating Expenses $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700 $18,700

Profit -efore Interest and


($15,750) ($14,110) ($12,714) ($11,258) ($9,450) ($7,272) ($4,330) ($1,099) $2,523 $6,721 $11,651 $18,027
Taxes
E-ITDA ($15,080) ($13,440) ($12,044) ($10,588) ($8,780) ($6,602) ($3,660) ($429) $3,193 $7,391 $12,321 $18,697
Interest Expense $804 $775 $746 $717 $688 $658 $629 $600 $571 $542 $513 $483
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($16,554) ($14,885) ($13,460) ($11,975) ($10,138) ($7,930) ($4,960) ($1,699) $1,953 $6,180 $11,138 $17,543
Net Profit/Sales -236.49% -130.57% -89.46% -63.71% -43.20% -27.25% -13.48% -3.76% 3.58% 9.47% 14.30% 18.60%

Pro Forma Cash Flow


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

Cash from Operations


Cash Sales $7,000 $11,400 $15,046 $18,794 $23,465 $29,098 $36,790 $45,170 $54,496 $65,261 $77,871 $94,319
Subtotal Cash from Operations $7,000 $11,400 $15,046 $18,794 $23,465 $29,098 $36,790 $45,170 $54,496 $65,261 $77,871 $94,319

Additional Cash Received


Sales Tax, VAT, HST/ST Received 7.00% $490 $798 $1,053 $1,316 $1,643 $2,037 $2,575 $3,162 $3,815 $4,568 $5,451 $6,602
New Current -orrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $7,490 $12,198 $16,099 $20,110 $25,108 $31,135 $39,366 $48,332 $58,311 $69,830 $83,322 $100,921

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

Expenditures from Operations


Cash Spending $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200 $12,200
-ill Payments $5,120 $9,757 $14,120 $16,228 $18,524 $21,509 $25,118 $30,145 $35,375 $41,207 $47,983 $55,978
Subtotal Spent on Operations $17,320 $21,957 $26,320 $28,428 $30,724 $33,709 $37,318 $42,345 $47,575 $53,407 $60,183 $68,178

Additional Cash Spent


Sales Tax, VAT, HST/ST Paid Out $490 $798 $1,053 $1,316 $1,643 $2,037 $2,575 $3,162 $3,815 $4,568 $5,451 $6,602
Principal Repayment of Current
$2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
-orrowing
Other Liabilities Principal
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment
Long-term Liabilities Principal
$500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Repayment
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $20,310 $25,255 $29,873 $32,244 $34,867 $38,246 $42,393 $48,007 $53,889 $60,475 $68,133 $77,281

Net Cash Flow ($12,820) ($13,057) ($13,774) ($12,134) ($9,759) ($7,111) ($3,028) $325 $4,421 $9,354 $15,189 $23,640
Cash -alance $67,180 $54,122 $40,348 $28,214 $18,455 $11,344 $8,316 $8,641 $13,062 $22,417 $37,605 $61,246

Pro Forma -alance Sheet


Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting -alances

Current Assets
Cash $80,000 $67,180 $54,122 $40,348 $28,214 $18,455 $11,344 $8,316 $8,641 $13,062 $22,417 $37,605 $61,246
Inventory $2,000 $925 $1,560 $2,077 $2,603 $3,261 $4,054 $5,145 $6,328 $7,637 $9,144 $10,907 $13,219
Other Current Assets $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Total Current Assets $102,000 $88,105 $75,683 $62,425 $50,818 $41,716 $35,398 $33,462 $34,969 $40,699 $51,561 $68,512 $94,465

Long-term Assets
Long-term Assets $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000
Accumulated Depreciation $0 $670 $1,340 $2,010 $2,680 $3,350 $4,020 $4,690 $5,360 $6,030 $6,700 $7,370 $8,040
Total Long-term Assets $80,000 $79,330 $78,660 $77,990 $77,320 $76,650 $75,980 $75,310 $74,640 $73,970 $73,300 $72,630 $71,960
Total Assets $182,000 $167,435 $154,343 $140,415 $128,138 $118,366 $111,378 $108,772 $109,609 $114,669 $124,861 $141,142 $166,425

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

Current Liabilities
Accounts Payable $4,800 $9,289 $13,582 $15,614 $17,811 $20,677 $24,119 $28,973 $34,009 $39,617 $46,128 $53,771 $64,010
Current -orrowing $40,000 $38,000 $36,000 $34,000 $32,000 $30,000 $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 $16,000
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $44,800 $47,289 $49,582 $49,614 $49,811 $50,677 $52,119 $54,973 $58,009 $61,617 $66,128 $71,771 $80,010

Long-term Liabilities $40,000 $39,500 $39,000 $38,500 $38,000 $37,500 $37,000 $36,500 $36,000 $35,500 $35,000 $34,500 $34,000
Total Liabilities $84,800 $86,789 $88,582 $88,114 $87,811 $88,177 $89,119 $91,473 $94,009 $97,117 $101,128 $106,271 $114,010

Paid-in Capital $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 $130,000
Retained Earnings ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800) ($32,800)
Earnings $0 ($16,554) ($31,439) ($44,899) ($56,874) ($67,011) ($74,941) ($79,901) ($81,600) ($79,647) ($73,467) ($62,329) ($44,786)
Total Capital $97,200 $80,646 $65,761 $52,301 $40,326 $30,189 $22,259 $17,299 $15,600 $17,553 $23,733 $34,871 $52,414
Total Liabilities and Capital $182,000 $167,435 $154,343 $140,415 $128,138 $118,366 $111,378 $108,772 $109,609 $114,669 $124,861 $141,142 $166,425

Net Worth $97,200 $80,646 $65,761 $52,301 $40,326 $30,189 $22,259 $17,299 $15,600 $17,553 $23,733 $34,871 $52,414

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