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Blends of Paradise
Blends of Paradise 6252 S. Lakeshore Dr. Shreveport, LA 71119 Phone: 318-635-4809 Fax: 318-635-4809
Confidentiality Agreement
This Business Plan and its contents are confidential and remain the sole property of Teresa Bonnett and Blends of Paradise (the Company). Its use is strictly limited to those readers authorized by the Company. Any reproduction or divulgence of the content of this Business Plan without written consent of the Company is strictly prohibited. It is acknowledged by the undersigned reader that the information provided by Teresa Bonnett or Blends of Paradise in this Business Plan is in all respects confidential in nature, other than information which is in the public domain through other means. Any disclosure or use of same by the reader may cause serious harm or damage to Teresa Bonnett and Blends of Paradise. Paradise. The undersigned reader agrees not to disclose any information without the express written permission of Teresa Bonnett and Blends of Paradise. Paradise. Upon request, this document is to be immediately returned to Teresa Bonnett and Blends of Paradise. Paradise. This Business Plan is not an offer. An offer is only valid with an approved Private Placement Memorandum. Participatory interest will only be to Accredited Investors. This Document includes forward-looking statements. All statements other than statements of historical fact within this Document, including statements regarding Blends of Paradise for its subsidiaries strategies, plans, objectives and expectations, are all forward-looking statements. Although Blends of Paradise believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. Certain important factors that could cause actual results to differ materially from expectations are set forth herein. Any subsequent written and oral forward-looking statements attributable to Blends of Paradise or persons acting on its behalf are expressly qualified in this regard. ___________________ ___________________
Signature
___________________ Name (typed or printed)
Date
Table of Contents
I. Overview......................................................................................................................................5 Introduction..........................................................................................................................5 The Market and Opportunity...............................................................................................6 The Local Area....................................................................................................................7 Candles and Candle Users.................................................................................................12 Business Model..................................................................................................................13 Products and Services........................................................................................................13 II. The Company............................................................................................................................14 Mission Statement..............................................................................................................14 Organization.......................................................................................................................14 1. Legal Structure.........................................................................................................14 2. Location...................................................................................................................14 3. Intellectual Property.................................................................................................14 III. Growth Strategy.......................................................................................................................15 Business Objectives...........................................................................................................15 Target Market.....................................................................................................................15 Strategic Initiatives............................................................................................................16 Competition and Competitive Advantage..........................................................................16 Marketing Strategy.............................................................................................................16 IV. Management............................................................................................................................18 V. Financials..................................................................................................................................18 Financial Needs and Use of Funds.....................................................................................18 Projected Profit and Loss...................................................................................................20 Balance Sheet.....................................................................................................................23 Breakeven Analysis...........................................................................................................23 VI. Appendix..................................................................................................................................27 References..........................................................................................................................27
Table of Figures
Figure 1. Population Change, 1980 2000.....................................................................................9 Figure 2. Change in Ethnic Group Representation, 1990 2000.................................................10 Figure 3. Projected Annual Revenues, 2008 2012.....................................................................20 Figure 4. Net Income 2008 2012...............................................................................................21 Figure 5. Projected Profit..............................................................................................................22
Table of Tables
Table 1. Selected Statistics by Economic Sector, 2002..................................................................8 Table 2. Ethnic and Racial Composition........................................................................................9 Table 3. Area Income Changes, 1980 2000...............................................................................11 Table 4. Anticipated First-Year Sales by Quarter.........................................................................19 Table 5. Five-Year Projection.......................................................................................................23 Table 6. Cash Budget....................................................................................................................25
Blends of Paradise
I. Overview
Introduction
Blends of Paradise (Blends of Paradise or the Company) is a startup company located in Blends Shreveport, Louisiana. The initial focus of the business will be as a manufacturer, wholesaler and retailer of soy-based and palm wax candles. Future expansion plans include greatly expanding manufacturing capabilities as well as expansion into personal care items. All products will contain fragrances consistent with the principles of aromatherapy. These product lines will establish the business and make the Company known to customers in the local area, but the plan is to expand into much larger markets by means of being accepted by retailers on the order of Wal-Mart or Cracker Barrel. Though each of these large businesses operates in very different industries, each also attracts the market segments that Blends of Paradise seeks. The Companys location is in a growing and bustling area. Shreveport, Louisiana is in the upper Northwest corner of the state, less than 200 miles from Dallas and easily accessible from other large Southern cities. Shreveports location is protected from the ravages of the annual hurricane season: it is more than 200 miles inland from the nearest coastal town. Situated on Interstate 20 it is convenient either for receiving supplies or shipping finished product. Shreveport was highly dependent on the domestic oil industry in the past and suffered economic stagnation in the wake of the decline of that industry in the early 1980s (Hasten, 2005), but in recent years its industrial base has broadened significantly and it has developed a strong foundation in services. Demographic data below demonstrates that attractive growth, increasing diversity and greatly increased incomes have been characteristics of the recovery and prosperity of the Shreveport / Bossier City area. The Company expects to gain a profitable market share within a very short period of time. Determinations have been made for the size of the market, amounts of budgeted advertising and marketing dollars the Company will use. In the last six months of 2007, the Company will generate revenues of $61,400. By 2009, Blends of Paradise will achieve over $279,000 in revenues.
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with retailers such as Wal-Mart and Cracker Barrel. And all of the preceding applies only to the candle industry as it currently exists and has
existed for decades. There is a reason that old businesses succeed when opening new outlets and companies specializing in old products: people recognize the value of the product; they need the product; or they merely enjoy it. Every community needs, wants and has video stores, grocery stores, fast food restaurants, auto repair shops and similar businesses; there are more than 11,000 Starbucks locations; banks generally are easy to find. All of these are old businesses or newer companies dealing exclusively in old products. Page 6
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This is where Blends of Paradise has a decided advantage over makers of conventional candles. Until recently, beeswax was the only alternative to standard petroleum-based candles, and beeswax candles were expensive even before we recognized the decline in the bee population. A cleaner-burning and more fragrant alternative holds much promise; soy and palm wax allow Blends of Paradise to differentiate itself and its products from the many other candle manufacturers currently operating.
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Blends of Paradise
Industry Description
Number of Employees
Utilities Manufacturing Wholesale trade Retail trade Transportation & warehousing Information Finance & insurance Real estate & rental & leasing Professional, scientific, & technical services Administrative & support & waste management & remediation service Educational services Health care & social assistance Arts, entertainment, & recreation Accommodation & food services Other services (except public administration)
72 352 545 1,672 260 139 689 372 822 353 39 995 135 647 679
N 6,423,671 4,912,118 4,442,398 396,127 N N 272,736 462,839 344,028 17,083 2,209,388 186,381 1,361,543 291,608
70,553 632,715 243,635 408,534 106,892 132,129 169,527 53,927 161,737 189,436 5,712 949,149 30,620 333,993 86,951
1,410 15,507 7,025 21,453 3,378 4,061 4,939 2,273 5,598 12,830 371 28,754 1,890 22,032 4,443
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Blends of Paradise
Figure 1 and Table 2 illustrate how the nature of the local population has changed over the past 20 years. Both the number of people and the number of households have increased during each of the past two decades.
Source: http://www.freedemographics.com/freed_automated/AllocateOnline.dll
1980 Am. Indian, Eskimo Asian Black White Hispanic 698 1,205 155,016 290,422 6,393
Source: http://www.freedemographics.com/freed_automated/AllocateOnline.dll
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The largest groups continue to be the black and white segments of the community, but they are not the fastest growing groups. That distinction belongs to American Indians, Asians and Hispanics, as illustrated in Figure 2.
Source: http://www.freedemographics.com/freed_automated/AllocateOnline.dll
Demographic, technological and social factors combine to create highly favorable conditions in the Companys external environment. Evidence can be seen in the record of increased income, illustrated in Table 3.
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Household Income $ 0 - $9,999 $ 10,000 - $14,999 $ 15,000 - $19,999 $ 20,000 - $29,999 $ 30,000 - $39,999 $ 40,000 - $49,999 $ 50,000 - $74,999 $ 75,000 + $ 75,000 - $99,999 $100,000 + $100,000 - $124,999 $125,000 - $149,999 $150,000 +
1980 55,63 9 24,98 5 21,96 5 18,16 3 21,28 2 5,254 4,999 6,148 3,669 2,480
1990 41,96 2 18,30 9 16,22 3 28,66 0 21,63 9 14,39 2 16,24 5 7,485 3,923 3,562 1,352 661 1,549
% Change 1980 1990 -24.60% -26.70% -26.10% 57.80% 1.70% 173.90% 224.90% 21.70% 6.90% 43.70%
2000 27,622 15,540 14,419 26,646 22,017 17,987 28,530 24,640 12,647 11,992 5,260 2,418 4,314
Source: http://www.freedemographics.com/freed_automated/AllocateOnline.dll
The type of economic activity present in the area also provides a favorable profile. Manufacturing and industry accounts for only one of every 8.8 jobs, with services much more highly represented in the region than either industry or agriculture. This reliance on services provides several benefits: business is less subject to the influences of changes in national and international industry, and there is much less direct effect on the physical environment of the
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area. It is in this thriving economic climate that the Company seeks to operate the first location of Blends of Paradise. Paradise
Blends of Paradise
available to Blends of Paradise is that not only does the product itself serve to differentiate it from the petroleum-based candles available everywhere, it also provides an attractive selling point to Wal-Mart and other retailers. Blends of Paradise products retail at a midrange price, significantly higher than Wal-Marts current selections but also much less than Yankee Candle products and the products of other high-end producers.
Business Model
Blends of Paradise first will target customers in the local area while expanding the companys production capabilities and beginning to serve larger retailers. At present the products are distributed through direct sales and consignment arrangements, as well as through bulk sales to other retailers. The owner seeks to establish a small retail space that also can house the business expanded production capabilities. The benefits of approaching its business in this manner are threefold: Blends of Paradise has a unique product; Close customer contact provides information the owner can use to maintain relevance to the companys customers; and The company can pursue stated strategy for the future while also remaining flexible enough to respond to market changes.
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Blends of Paradise
Mission Statement
It is the mission of Blends of Paradise to offer specialty soy- and palm-wax candles, first to the local community and then to wider markets. This activity will support the business as it also seeks to promote and support the positive environmental benefits of the use of nonpetroleum candles.
Organization
1. Legal Structure Blends of Paradise currently is organized as a sole proprietorship. This structure likely will change as the business grows; we envision incorporating in the future or reorganizing as a limited liability company (LLC) in the future. For the first years, however, Blends of Paradise will operate as a sole proprietorship. 2. Location The Companys principal place of business will be in a dedicated space of 375 square feet located at the owners residence. Blends of Paradise will seek retail space as the business continues to grow to provide easy access to customers and employees. 3. Intellectual Property Blends of Paradise maintains a website to promote and sell its products, and the owner has formulated custom fragrance blends unique to Blends of Paradise products.
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Blends of Paradise
Business Objectives
Blends of Paradise will be and remain a profitable and growing business. To accomplish this, the Company in the next twelve months will: Expand its marketing and advertising campaign; Become known in the active shopping area of Shreveport where it is located; and Grow annual revenue to exceed $245,000. In succeeding years, Blends of Paradise will: Grow annual by an average of 25 percent each year during the first five years; Develop a reputation that will exceed competitors in every area; Achieve excellent customer loyalty; and Attain $335,000 in annual sales in 2009.
Target Market
Blends of Paradise will target the following types of persons as customers: Committed candle devotees; Casual shoppers; Those with interest in and knowledge of aromatherapy; and Those seeking to decorate their personal space with candles.
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Blends of Paradise
Strategic Initiatives
Blends of Paradise has developed the following initiatives to achieve its growth goals: Launch its marketing efforts to reach its target audience Establish an aggressive sales program to identify and secure clients Hire and train qualified staff as growth requires Provide a safe and appropriate atmosphere Provide a satisfying experience for every customer The Company believes it can reasonably achieve these goals.
Marketing Strategy
Blends of Paradises marketing strategy will be focused on the value that is provided Paradises through its products. Marketing efforts will emphasize its unique products as well as the continued growth of interest in the use of candles in a variety of settings. The Company will closely integrate all of its marketing and sales efforts to project a consistent brand image and a consistent positioning of its services. Blends of Paradise will employ a variety of marketing activities to fuel its client acquisition process. These include:
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Blends of Paradise
Website Maintain the web site to describe and promote the business and its products. The Company uses its web site to communicate to all targeted market segments.
Direct mail activities to targeted audiences. Blends of Paradise will buy lists of potential targets to send direct mail pieces (postcards, letters, etc.) to attract them as customers. The Company may purchase list sources from list vendors.
Print advertising. The Company may take out ads in local publications that are matched to its targeted audiences.
Signage and posters. Blends of Paradise will locate its retail space in a shopping center where there are other businesses that cater to the public.
Community Events The Company will sponsor and/or participate in various community events. It will partner with local organizations, particularly in instances where the organization and Blends of Paradise complement each other.
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Blends of Paradise
IV. Management
The principal, Teresa Bonnett, will provide all management and a significant portion of Bonnett necessary labor for the first year. Ms. Bonnett has more than 20 years business experience.
V. Financials
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Blends of Paradise
Sales July August September October November December January February March April May June
Qtr
0 2,000 Q307 8,400 13,200 16,500 Q407 19,800 11,880 13,068 Q108 15,028 18,034 19,837 Q208 21,821
49,500
39,976
59,692
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The profit on totals projected in Figures 3 and 4 is shown in Figure 5. These profit projections are based solely on candle business operation and does not include or consider further expansion, which in the future could include the addition of personal care products or large-scale production and distribution. Rather, Figure 5 provides a projected profit only on soy candle production and sales.
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The preceding charts are based on the information provided in Table 5, which as mentioned above considers only the business focus discussed in this plan. It does not include revenue projections from any activity that the company may expand to in the future.
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Balance Sheet
Assets Opening Balance Sheet Cash Inventory (Plus Equipment Additions) Fixtures and Remodeling Pre-Opening Costs Liabilities and Equity Accounts Payable Notes Payable Owner's Equity Est Profit to Date 0 0 105,000 0 105,000 0 0 105,000 16,662 121,662 August 1, 2007 88,700 9,500 6,000 800 105,000 July 31, 2008 115,162 6,500 0 0 121,662
Breakeven Analysis
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Blends of Paradise
August, 2007 Through July, 2008 Estimated Fixed Expenses: Salary Payroll Taxes Rent Advertising Supplies Telephone Utilities Taxes and Licenses Insurance Legal and Accounting Estimated Annual Fixed Expenses Daily Breakeven Sales ($128,609 340 days) Estimated Breakeven Sales Required: Monthly Weekly Daily 10,717 2,473 378 38,500 6,930 11,000 7,800 2,950 1,040 2,600 52,089 3,600 2,100 128,609 378
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Blends of Paradise
Sales Beg. Cash Salary Payroll Taxes (18%) Rent Advertising Supplies Telephone Utilities Taxes (permits, 34% rate) Insurance Legal and Accounting Purchases Fixturing Subtotals Month End Cumulative Month End 105,0 00 2,000 360 0 600 1,500 80 200 200
2,00 0 2,00 0 360 0 600 85 80 200 0 300 600 8,000 6,000 19,54 0 85,46 0 85,46 0 125 4,40 0 8,15 0 (6,15 0) 79,3 10
8,40 0 2,00 0 360 1,00 0 600 85 80 200 0 300 125 5,65 0 10,4 00 (2,00 0) 77,3 10
13,2 00 3,50 0 630 1,00 0 600 115 80 200 0 300 125 3,15 0 9,70 0 3,50 0 80,8 10
16,5 00 4,00 0 720 1,00 0 600 130 80 200 0 300 125 3,15 0 10,3 05 6,19 5 87,0 05
19,8 00 3,50 0 630 1,00 0 600 130 80 200 0 300 125 2,00 0 8,56 5 11,2 35 98,2 40
11,88 0
13,0 68 2,00 0 360 1,00 0 600 115 80 200 0 300 125 1,35 0 6,13 0 6,93 8 74,2 30
15,0 28 3,50 0 630 1,00 0 600 115 80 200 0 300 125 1,35 0 7,90 0 7,12 8 81,3 58
18,0 34 3,50 0 630 1,00 0 600 130 80 200 5,46 3 300 125 2,50 0 14,5 28 3,50 6 84,8 65
19,8 37 3,50 0 630 1,00 0 600 130 80 200 0 300 125 1,60 0 8,16 5 11,6 72 96,5 37
21,82 1
24,00 3
183,5 71 38,50 0 6,930 11,00 0 7,800 2,950 1,040 2,600 52,08 9 3,600 2,100 38,80 0 6,000 173,4 09 115,1 62
2,000 360 1,000 600 115 80 200 36,69 8 300 125 1,350 42,82 8 (30,9 48) 67,29 2
3,500 630 1,000 600 150 80 200 9,729 300 125 2,500 18,81 4 5,189 115,1 62
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VI. Appendix
References
Bissonnette, Zac (2007, April 2). Burnout in candle industry? Retrieved June 18, 2007 from http://www.bloggingstocks.com/2007/04/02/burnout-in-candle-industry. Candle sales glow. (2006, March 20). Drug Store News, 28(4), p. 42. Candles are a way of life for Hispanics. (2006, April 24). MMR, 23(7), p. 40. Census Trend 1980 to 2000 Summary Report. (2004). Free Demographics.com. Retrieved June 18, 2007 from http://www.freedemographics.com/freed_automated/AllocateOnline.dll. Falk, Jeff (2006, December). Inviting aromas: delivery systems in the growing home air care market must be accommodating to consumer desires and as welcoming as the scents they deliver. Global Cosmetic Industry, 174(12), p. 47. Hasten, Karl (2005). Going Up: Explosive growth from continued development predicted. City of Shreveport, Louisiana. Retrieved June 18, 2007 from http://www.ci.shreveport.la.us/BringHome/goingup.html.
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