Business Plan for: Vitality Drinks Limited

Please

Name:
Business Plan for: Vitality Drinks Limited

(Please use this template in conjunction with the guide Prepare a business plan,
where you will find information about how to use your business plan as well
as instructions on how to use this template)
Document Version:
Date:
Completed by:

Business plan contents

Executive summary. 4
1 Executive summary. 4

2 Business details. 5
3 Key personnel 6
Vision. 8
4 The business idea. 8
5 Business goals. 9
6 What the business does. 10
7 What makes the business different 11
8 Legal requirements. 12
Sales and marketing. 13
9 Market research. 13
10 Profiling customers. 14
11 Profiling competitors. 15
12 Managing market risks. 16
13 Pricing. 17
14 Promotion and advertising. 18
Running the business. 19
15 Staff 19
16 Premises. 20
17 Suppliers. 21
18 Equipment 22
19 Managing operational risks. 23
Finance. 24
20 Start-up costs. 24

21 Profit and loss forecast 25

22 Sourcing finance. 26
23 Managing financial risks. 27
24 Cashflow forecast 28

Executive summary
1 Executive summary
This business plan is for vitality drinks company Limited, a proposed energy drinks company.
The company will venture into the drinks market and specialize on the production of soft drinks,
energy drinks and packaged water.
The business will be a limited liability company with perpetual succession. This structure was
chosen because the owner of the business does not want to bear any more liability than the
capital which was contributed to the company as share capital. However, it is appreciated that
operating a limited liability company has more legal requirements to be followed, than
operating other forms of businesses. This is because a limited liability company is regarded as a
legal person.
The owner will first employ a limited number of employees, so as to cut on costs. However,
these will be increased as the business grows. The owner will be the manager of the entity, and
will also oversee some extra functions such as human resources.
The finance to start and operate the company will be sourced from the owners personal
savings. However, this is not enough and the company will have to seek external financing from
banks and other financial institutions. This will, however, have an interest which acts as the cost
of the finance.
From the forecasts which were undertaken, the company is viable. The company will make
minimal profits in the first year of operations, and this is expected to increase as the brand name
of the business continues to grow.

2 Business details
Company name:
Vitality Soft Drink Company Limited
Address:
New South Wales
Telephone number:
The company is yet to be set up.
Legal status:
The business is a limited liability company, with the ability to own property, sue and be sued in
its own name. It also has a perpetual succession. This business structure was chosen because the
liability of the owner to the creditors and other third parties who are owed by the company is
limited to the amount of capital which has been injected by the owner to the company. It is good
for businesses which are starting up because it is not clear how the same will be.
The business will:
The business will be in the manufacture of soft drinks. The soft drinks will be manufactured in
New South Wales, and then transported to various consumers. As the business grows, other
manufacturing and bottling plants will be opened. The company will also start with less than 10
employees, but the same will be increased as the time goes by. This is in a bid to save on costs.
The costs of starting up the business will be sourced from the owners savings, and the deficit
will be filled by a bank loan to be obtained. However, it is appreciated that the financing to be
sought has a cost which has to be footed by the company in the form of interests. This is very
delicate for businesses which are staring up because the interest has to be paid regardless of
whether the company makes profits or losses. This puts the company at risk.

3 Key personnel
Details of owner(s):
Name: Arthur
Position/main responsibilities: As the owner of the business, the same will be in charge of
general operations of the company. He will also be in charge of human resources and production
management.
Experience and knowledge of our industry: The owner has had a wide experience in the soft
drink industry, after working with the coca cola company first as a promoter, and later as a
supervisor in one of the bottling plants. The owner also has interests in the manufacture and
bottling of soft drinks, and he is optimistic that the introduction of another soft drink in the
market will be met with enthusiasm by the consumers. Apart from the above knowledge and
experience on soft drink, the owner is also a management student, and he is eager to apply what
he has learnt in school to his business.
Previous employment: He has worked with Coca Cola company on previous occasions, as a
supervisor and as a promoter. He also has managerial experience from a company he has
previously worked with.
Key skills brought to the business: Managerial skills.
Business experience and any training undertaken: The owner has a managerial as well as
marketing experience.
Academic/professional qualifications: The owner has various managerial as well as marketing
experiences.
Most recent salary : 6,000 p.a

Other key personnel (including shareholders):

Name(s): MargaretPosition/main responsibilities: Margaret will be in charge of accounting and
Finance in the company.

Experience and knowledge of our industry: Margaret does not have much experience in the
production sector, and in particular the beverage industry. However, she has a wide experience
in the management of companies which are starting up. She has taken a number of decisions on
whether to borrow loans or raise share capital, or employ any other capital available.
Previous employment: She has worked in the accounting department of many companies,
especially companies which are being started. She has also worked as a consultant as a part time
activity, something she still does to date.
Key skills brought to the business: Financial planning and management. Auditing will also fall
under her docket.
Business experience and any training undertaken: She has not done any business on her own,
but she has been the head of various accounts departments of companies. She has done small
courses on business financing, and she has also been able to attend many business conferences
dealing with business financing and management. She is very crucial on the success of the
business, noting that many businesses which are started do not finish the first two years of their
operations. Finances also play a critical role as well as the survival of any business entity, and it
is paramount that we get a person we can be able to trust.
Academic/professional qualifications: She has a degree in accounting, as well a masters degree
in business administration. In her studies, she has had a bias in accounting and finance.
Most recent salary/salaries : 9,000 p.a

Vision
4 The business idea
The idea is to bring into the market a drink which has the combinations of a soft drink and an
energy drink. The nutritional value of the drink will also be considered. This is because there is no
particular drink in the market which serves the two purposes in the market. The drinks available are
either purely soft drinks or purely energetic.Another reasoning is that there is an increasing number
of persons who are continuously getting concerned about their weights. These persons prefer low
calorie drinks which are limited in the market. It is also appreciated that the drink should be able to
provide the needed energy despite the fact that it has low calorie content.

The company will be started small, and left to grow gradually until it is able to compete on a
level footing with the majority of the competitors who are present in the market today. The
company should also be able to curve its own niche by manufacturing specialised products.
Company mission: To incorporate hard work and integrity into becoming the leading
manufacturer of energetic soft drink.
Company Vision: The mission of the company is to be the world manufacturer of the soft drink
of choice.

5 Business goals
What do you want to achieve in your first year of business?
For example business goals could include turnover of 100,000 or trading at breakeven.

To achieve profit and increase the stakeholders wealth

To achieve competitive edge over its competitors

To achieve a very low staff turnover

To open an additional bottling plant within two years of operations.

To increase employees by 50% within the first year of operations

To repay any additional financing the company may seek

To achieve considerable goodwill and brand image

To achieve break-even point and at least 20,000 profit

To have no accruements in terms of salaries and wages

Where do you see

your business in 3-5
years time?
In 3-5 years the
owner of the
company hopes that

the business will

have stabilised. It is
hoped that all the
finances which will
have taken from
banks and financial
institutions will have
been paid in
completion, and the
company will not
owe any money.
Another issue which

should have
occurred in the next
five years is that the
company should
have gone outside its
jurisdiction to have
branches and
distributors in other
districts outside New
South Wales. In fact
in five years time
the company should

have branches all

over Europe, and
there should be
strategic plans to
globalise the
operations of the
company. The
company should be
considering offers
from overseas
bottlers on the
bottling and

packaging of the soft

drink.
6 What the business
does
Product/service

Soft drinks

Energy drinks

Combined
benefits

Water

Mineral water

Highly purified
and packaged.

Soft drinks

Diet drinks

No calorie
drinks for those
watching their
calorie intake

Features

Benefits

7 What makes the

business different
Your product/service is unique or different compared with the competition because: (Use as
many fields as is applicable and add more if you need to.)

It combines the properties of soft drinks with energy drinks

It is suitable for consumption for all categories of persons, and it is clinically tested. This is
because some categories of persons such as diabetics have very restricted diets, and no company
has looked into their interests.

The drink will also be cost effective. The company will undertake a cost leadership strategy
in the first years of operations before it develops a strong goodwill.

It will be packaged in environmentally friendly packages

It will take into consideration corporate social responsibility

Corporate governance best practices will be observed diligently by the management for the
company

The company will also maintain an open door policy to its employees for greater efficiency

8 Legal requirements
(including
regulations and
licences particular to
your business)
The legal and insurance requirements that apply in your business are: (Use as many fields as is
applicable and add more if you need to.)
1.

Name search

2.

Business registration/ Incorporations of the company

3.

Employee insurance

4.

Safety and quality certification

5.

Tax registration

You will meet your legal and insurance requirements by: (Use as many fields as is applicable
and add more if you need to.)
1.
2.

Applying for a name search and preparation of articles necessary for the registration of the
company
Taking out insurance policies for the benefit of the workers

Sales and marketing

9 Market research
Trends in your chosen market are:
1.

Most soft drinks companies are going global

2.

Most of them are also adopting digital technology and e- selling

3.

There is rising competition in the soft drunks market.

How you know this: (Use as many fields as is applicable and add more if you need to.)
1.

Market research

2.

From business news

3.

Information from the competitors websites

4.

Horizontal analysis of competitors

5.

Stock exchange news

10 Profiling
customers
The customer groups you will be selling to are:
1.

Students

2.

People involved in manual work

3.

Travellers and those who are in outings and hikes

Your customer research has shown what your customers want is: (Use as many fields as is
applicable and add more if you need to.)
1.

Cost effective drink- They want drinks which will give them value for their money.

2.

Quality assurance The drink should also be of high quality.

3.

Healthy drinks

How you know this: (Use as many fields as is applicable and add more if you need to.)
1.

Through customer survey- A survey was conducted on the prospective customers of the
company.

2.

Through experience from existing energy drinks

3.

Through a pilot study

Number of customers you expect to win in each group and what they might pay: (Use as many
fields as is applicable and add more rows if you need to.)
Group

Number of customers

Students
10000
Sick and those who are 8700
recovering
Long distance drivers 2000
Other consumers
8000

Price they might pay

per unit
1.5
2.0
1.5
1.5

11 Profiling
competitors
Use as many fields as is applicable in the table below and add more rows if you need to.
Competitor name

Coca-cola

Established brand
name

No reliable bottlers
around the world

Pepsi-Co

Cost leadership
strategies

High employee
turnover

BertShell Pty Co.

Local acceptance

No publicity in
other places other than
Sydney

Yuvenay Pty Co.

The company is
gaining considerable
goodwill

Limited number of
employees

Redbull Australia

This company has

international acceptance

Products sold at
high prices

Strengths

Weaknesses

How you can improve on their offer and/or price(s): (Use as many fields as is applicable and
add more if you need to.)
1.

Manufacture of high quality drinks

2.

Maintain high customer satisfaction and follow up

12 Managing market
risks
Write down the risks you have identified: (Use as many fields as is applicable and add more if
you need to.)
1.

Market risks

2.

Financial risks

3.

Management risks

4.

Operations risks

5.

Competition risks

How will you manage these risks so that they become less of a threat: (Use as many fields as is
applicable and add more if you need to.)
1.

Doing a proper market survey before the launch of the soft drink. The market survey will
enable the company to come up with strategies which will aid it in cost reduction.

2.

Employment of competent employees who can make rational decisions. This is important
because a limited liability company is just but a legal person. All the decisions of the company are
to be made by employees who are physical persons working for the company.

3.

Proper monitoring of the operational activities of the firm

4.

Implementing proper competitive strategies such as differentiation strategy. However, a

SWOT analysis will have to be conducted before the correct strategy can be arrived at.

5.

Training the management on corporate governance and on contemporary issues in

management so as to be able to face contemporary challenges.

13 Pricing

How you can calculate your prices: (Use as many fields as is applicable and add more if you
need to.)

Adding a small mark up on the overall cost of manufacturing the drink including the
overheads

Considering comparable products in the market

o

Determining the overall profit anticipated dividing this among all the products which
will be produced by the company. This is very complicated, and may not be practicable in this
case.

How your prices compare with the competition: (Use as many fields as is applicable in the table
below and add more rows if you need to.)
Product/service

Your price(s)

Soft Drink
Energy Drinks
Water

1.5
2.0
1.0

Range of competitor
prices (per unit)
1.5- 2.0
2.5- 3.0
1.2-1.5

Reasons for the difference between your price(s) and your competitors price(s):

Our company is starting up, while the competing companies have been in the market for a
considerable period of time, and have goodwill to sell. My company is still building up a goodwill

My company is also seeking low contribution margins in a bid to attract more customers
o

The competitors use different production techniques, which may lead to different
cost of production in the end.

14 Promotion and
advertising
How and where will you promote your product/service? (Use as many fields as is applicable
and add more if you need to.)

With the advent of technological advancement, internet tools such as the social media are
gradually becoming a very important advertising tool, especially for upcoming companies, due to
the cost saving involved. The company will, therefore, use the social media by opening up
facebook pages and twitter trends for the purpose of the company.

The company will also have a well structured website where consumers and suppliers can
get in touch with it to negotiate on business tools. This will also save the company of employee
costs because a person will also only come to the company premises when they have sufficient
knowledge of the products, and the visit will be to conclude businesses.

Print and media broadcasts will also be undertaken. The broadcast which will be employed
will be on the local media, because that will be the focus of the company upon the inception of
operations. This will however, be evaluated with time to ensure that the company is benefiting
from it because it is known to be very expensive compared to other advertising methods.

The employees of the company will also act as goodwill ambassadors of the company. What
this means, is that they will wear the company t-shirts and have their cars branded at their
requests. This will enable a wider knowledge of the company to third parties.

Another way in which the company can advertise its services is through the use of
billboards. These expire after a certain period of time, and their cost effectiveness should be
considered before the company resorts to the same. These billboards will be placed at strategic
locations where the companys potential customers can be found. This requires a prior market
analysis.

Running the
business
15 Staff
Use as many fields as is applicable in the table below and add more rows if you need to.
Role

Total cost
General Manager

12000pa

12000pa

8000pa

Necessary experience Specialist skills and/or

qualifications

Wide
experience in
managerial and
supervisory work

Degree in
business

Finance
manager

Extensive
financial work.

Master of
Business
administration

Production
Manager

Wide
experience in

17 Suppliers
Your key suppliers and their credit terms: (Use as many fields as is applicable and add more
rows if you need to.)

Supplier

What youll buy from them Number of days credit

Chemical
Suppliers
The chemicals
needed to manufacture
the drinks

30

Water suppliers

They will be
responsible for the
supply of the water to be
used in the
manufacturing plant

30

Bottle
manufacturer

It will
manufacture the bottles
which are required to
package the drinks.

18 Equipment

30

Designers

These will design

Use as many fields as is applicable and add more rows if you need the
to. bottles and the
outward appearance on
Resource
When
How funded
Costthe
per
unit
same.
Manufacturing
At the inception of Debt finance
10,000 30
equipment
business

Bottling equipment
At the inception of Debt finance
5,000

business
Computers and other At the inception of Personal savings
1,000

office accessories
business

Packaging equipment/ At the inception of Personal savings

2000

machine
business
Bottles and other
At the inception of Debt finance
2000

packaging equipment business

19 Managing
operational risks
Risk
Staff

Solution
Turnover

Breach of confidentiality
and divulging the company
secrets

De-motivation

Ghost workers

Fraud

Suppliers

Poor quality supplies

Enter into confidentiality

agreements at the inception of
employment contracts. There
should be restriction of trade
clauses in the contacts of
employment.

perform a constant
employee appraisal

Investigate into the

possible causes of turnover and
rectify the same.

Undertake employee
fidelity insurance covers

Perform audit procedures

on the payroll frequently to
ensure that ghost workers are not
paid by the company.

Contracts should be
enforced strictly to protect the
company.

Late supplies

Market risks

The company should

implement supply techniques
which save the company from
detrimental effects of late
suppliers. JIT techniques may not
work for new suppliers

Finance
The finance section of this template is intended for business planning purposes only.
If financial tables are to be used for any purpose other than internal financial
management, we strongly recommend you consult an accountant or tax advisor.
Click on the links below to access a range of Microsoft Excel work sheets to input
your figures, Microsoft Excel will automatically update the totals for you. (If you do
not have access to Microsoft Excel you can save the files on to your PC. You can then use
Open Source Software such as Google Docs orOpenOffice to access the information by
uploading the files into this software. We have provided Open Document Format versions
of the tables in this section as well.)
Please note that all tables can be customised and additional rows and categories can be
added.
If you need to print out this business plan and the associated tables (once you have
completed them) eg to show your accountant or your bank, place the tables behind the
next pages in this template.
You can find information about Microsoft Excel and accessibility on the Microsoft
website.

20 Start-up costs
Calculate how much money you need before you start trading (This helps you to calculate the costs
of starting your new business.)

equipment required
Manufacturing equipment

Estimated cost
10,000

Bottling equipment

5,000

Motor vehicle

10,000

Bottles

1,000

Computers and other accessories 2,000

Chemicals needed

5,000

Rent

10,000

Distribution costs

2,000

Salaries and wages

30,000

Total

78,000

Personal survival budget:

Estimated annual personal expenditure (This helps you work out the minimum amount you need to
earn from your business in the first year and how much money you might need to borrow to start
the business.)

Personal survival items

Rent

Cost
2,400

Transport

2,000

Food

3,000

Entertainment

1,500

Clothing

2,000

Miscellaneous

3,000

and loss expectations.)

Please note:
Where the business holds and sells stock this cost should be included in direct costs. It is
calculated as: opening stock + purchases closing stock.

22 Sourcing finance

Total borrowing requirement for the business (This helps you to understand how much money you
will need to find in order to close the gap between your start-up costs as well as the costs of
operating before your business will make a profit, and the money that you have available to put into
the business yourself.)
This is in a separate excel worksheet which has been provided.

23 Managing financial risks

The risks that you have identified for your financial forecast are:
1.

Interest rates risks

2.

Inflation which will lead to changes in the cost of sales

3.

Inability to achieve the intended sales

4.

Poor estimation of the costs of goods

5.

Poor repayment by the creditors, compromising the liquidity of the company

6.

Happening of events which will make the company unable to repay the bank loan it borrowed,
and thereby threatening foreclosure.

How you will minimise their impact:

1.

The risk of the loan which was taken by the company can be reduced through the use of hedging
financial instruments such as derivatives.

2.

The finance department to do an evaluation of the market from time to time so as to know
whether there is any change which is expected in the market. It is only then that the company can take
corrective action.

3.

The company should restrict the credits it offers, at least during the first year of operations, or
until it can determine the creditworthiness of the person who is seeking the credits.

4.

When estimating the costs of goods and other capital equipment, regard should be had on the
upper margin. It is better to be overstated that being understated because this is a new business.

5.

However, it is unfortunate that most of the factors which give rise to financial risks are external to
the firm, and the firm has no control over them. Factors such as inflation and the fluctuation of money
markets cannot be controlled by the company.

24 Cashflow forecast (Use

the tabs within the
Microsoft Excel work sheet
to view the second 6
months and summary)
You only need to complete the VAT line in the cashflow forecast if you are VAT registered. For
information about VAT, VAT threshold, VAT schemes and turnover threshold, please visit the HMRC
website: VAT rates, thresholds, fuel scale charges, exchange rates
Please note that if you are VAT registered all sales and costs records should be entered excluding
VAT. If you are not VAT registered then you will need to include VAT in your costs where it is
charged.
This has been done on the Microsoft Excel worksheet which has been uploaded differently.