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CHAPTER 5

The Business Plan

CHAPTER 5 The Business Plan

Appendi'( SA

for salads (such as lettuce, beans, or chicken)

or as a marinade for meat and vegetables.
Three attributes will provi"d e consumer benefits that make this product truly unique: "

The DeL Canol Inc., Bwin&M Plan

I. BACKGROUND AND

PURPOSE
History
The concept of using dressings,
sauces, and marinades to flavor food has ex
isted for many years. In this century, the pro
liferation of packaged consumer goods has
provided consumers with an array of
choices. Today, choices exist for a broad variety of tastes and preferences.
Our new venture seeks to identify and
develop a market that we believe is underserved. The market is for dressings and marinades from international cuisines such as
Japanese, Moroccan, and Thai. As people are
exposed to these cuisines through ethnic
restaurants, travel, and the media, they become interested in preparing these foods
at home. This is the market in which will we
operate.
Over the past several years, social and
economic changes have brought about a
tremendous shift in the way people prepare
meals and eat both in and outside the home.
Just 30 years ago, most meals, particularly
dinners, were prepared in tbe home by using
fresh ingredients and recipes that were
passed from parents to children.
Several trends contributed to the decline of this 'tradition. Erst. many women
work full-time outside the home. They simply don't have time to prepare complex
meals in the evening. Second, as the children
of these families reach adulthood, many have
never developed basic cooking skills that for
many years were learned as children at
home. Third. the availability of alternatives,
from restaurants, to prepared foods at the
grocery store, to frozen meals, has created viable alternatives to the traditional meal.

-----

These alternatives are attractive to

many consumers much of the time. However, we believe a market exists (and our
data support this belief) for a line of highquality, natural dressings and marinades.,
representing cuisines from around the
world that allow consumers to prepare delicious meals at home. The benefits of the
product include:
The simplicity 'it brings to meal preparation. from selecting the ingredients at
the grocery store to setting them on the
dinner table (we have created a meal solution. not just a prOduct.)
The variety it provides in tenns of
flavors and ingredients, from basic
vinaigrette dressings to sophisticated
marinades such as Moroccan and
Japanese Sesame
The pleasure it brings to people who are
not accustomed to cooking at home, who
can now prepare delicious meals for
themselves, their family, and their friends
The excitement and romance associated with trying something new and different, especially if it evokes memories
of travel or a special dinner at a favorite restaurant
The positive health effects from eating a
freshly ?repared meal with less fat and
sodium than most prepated foods, especially 'When"accompanied by vegetable
or other low-fat side dishes

Current Situation
The Product
Del Cano Salad Dressing
and Marinade is a ready-te-use bottled
product that will initially be available in six
to eight varieties. It can be used as a dressing

-~

Erst. it is positioned not as a dressing

that can also be used as a marinade, but
as a meal starter with clear instructions
on a variety of uses. Del Cano has done
the preparation-now you simply finish
the journey! The bottle will include an
attractive card attached to the neck of
the bottle with recipes and shopping
lists for two or three dishes. This way, the
entire meal can be visualized, understood. and planned in one step. We will
make cooking easy for novices!
Second, it will be presented in nontraditional. porcelain-capped bottles that are
attractive on the shelf, functional as resealable containers, and fun to use as
storage bottles when the product is
gone. The package will make a statement about the buyer, reflecting sophisticated international tastes., a sense of
adventure, and a willingness to try new
things in the kitchen.
Third. it will help people to connect
with the very basic human need to create. Cooking has long been a pleasurable experience for many people, but
there have been very few innovations
thflt simplify fresh meal preparation.
Most nonrestaurant-prepared foods are
either frozen or prepared in-store. This
product will promote cooking as an activity in itself. a pleasurable experience
to be enjoyed with friends, where the
resul ts can be shared and enjoyed in
your own home.
The Market
The primary target for this
product will be young adults who are not accustomed to preparing meals at home and
young families looking for an exciting alternative to traditional dishes. Ifwill initially be
available in specialty stores via food brokers

----

"-

~'15S"~

and other distributors., with expansion into

national grocery stores as soon as sales data
enable us to obtain shelf space.
The central element in our marketing
strategy is the positioning of Del Cano Salad
Dressing and Marinade. In any specialty or
national grocery chain , there is a sec;tion for
prepared foods, which includes bottled
marinades. and a section for condiments,
which includes bottled salad dressings. Our
product will be placed with the salad dressings for three specific reasons:

1. Merchandising. It is a high-traffic area,

and it is easier to link use as a marinade
to salad dressings than use as salad
dressing to marinades. Our research indicates that salad ingredients are among
the most frequently purchased items at
the grccery store. Our goal is to ts.ke a
segment of these buyers and get them to
try our product.
2. Convenience. Infrequent and time-conscious cooks are more likely to explore
the dressing than the marinade aisle. Because this is our target consumer, we
want to be located where we will be seen.
3_ Uniqueness. Our distinctive packaging
will stand out in this aisle.The preparedfood aisle already has bottles of all
shapes, cans, boxes, and a general sense
of clutter. We want to rise above this and
be seen as distinctive and sophisticated.
The Technology
We will outsource our
manufacturing and packaging to a contractor.
The role of our company will be to
identify profitable product and market opportunities, develop business and operating
plans that allow us to capitalize on these opportunities, and, througflsuccessful execution
of these activities, build equity in the brand.

Resources
Financial
The founding partners will
provide some of the equity, with the balance
provided by venture capital investors.

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CHAPTER 5 The Business Plan

CHAPTER 5 The Business Plan

Physical
Rented facilities will include
administrative offices and a test kitchen
used for product development and quality assurance testing. We will outsource
manufacturing.

Human
OUf team has experience in
each of the primary functional areas required for this business, including mar-

keting, sales, finance, operations, and

information technology.
Technological
The
technology
resources will be the recipes we create, which
will be formulated in our own kitchens as we
receive customer feedback through our Web
site and other primary research. Recipes will
be secret and protected by any employees
with access to them, ensuring they remain
within the finn.

Reputational

Our

reputational

re-

sources will be the brand identity we develop_ This identity is composed of our
distinctive logo, packaging. any trademarks
we acquire, and the skill of our management
team. Our message to consumers is that they
can prepare delicious meals easily and enjoy
healthful alternatives to frozen, prepared,
and restaurant foods.

Organizational
Del Cano creates value
by developing a product, facilitating its manufacture, getting it into the hands of consumers through distributors and retailers,
and even educa~g consumers in its use
through packaging and marketing communications strategy.

il.OBJECTIVES
Short Term
The near-term objective of
Del Cano, Inc., is to gain acceptance in the
natural and specialty food industry, with
plans to enter the conventional grocery market in the long term. We will market ,our
product to the natural foods market, working with food. brokers and distributors. Initially, we will launch our product in the

Last year saw a_ new entrant in the

pourable salad dressings market: CPC has
launched a line of Hellmann's and Best
Foods pourable salad dreSSings in the United
States. with the HeUmann's brand being used
in the eastern United States and the Best
Foods brand in the west. Although this new
entry is likely to change the competitive pattern, especially in terms of market le3dership. Del Cano's strategy is differentiated
enough to appeal to consumers.
Private-label brands (about 5 percent in
dollars and the same in units). many of tbem
upscale lines or enhanced products, are also
getting a Jot of attention these days. In the
52 weeks ended January 29, 1996. dollar
.sales of private-label dressings shot up
16.6 percent, a rate threc times better than
the category itself. according to Information
Resources. Inc.. Chicago.

Midwest, targeting midsize to large-size

cities including Cincinnati, Minneapolis,
Columbus (Ohio). Indianapolis, and
Chicago. We will educate the sales representatives of the superior quality and benefits of
our products through trade shows, personal
selling, and demonstrations.
Long Term '
Our long-term objectives
are to gain commercial acceptance in the
mass market. After 4 years in the natural
foods market, reaching anticipated sales at
$3.73 million, our products' proven sales
record will increase the likelihood of gaining
acceptance in national grocery chains. To enable this. we must gain distribution into national grocery chains. such as Kroger's.
Dominick's, and Star Market.

ill. MARKET
ANALYSIS
Over3l1 Market
Supermarket sales of pourable salad dressing 'totaled approximately $1.4 billion in
1996, up 6 percent over the year before, according to Information Resources, Inc., statistics. Despite the fact that many view it as
a mature category, there is still growth potential in salad dressings. marketers say. In
fact, the boom in sales of prepared salad
mixes has been a major boom to salad dressing sales. Besides, trends toward healthier
eating have endorsed the consumption of
salads, which has had a direct impact on the
dressing category.
The market leaders include:
Kraft. with a 39.3 percent share of the
total pourable salad dressings market,
has a handful of brands including regular Kraft. Kraft Free. and Seven Seas
Unilever's Thomas J. Lipton Co. (17.7
percent). with Wishbone,
Clorox Co. (15.1 percent). with Hidden
Valley Ranch

Specific Market
-;-

Major players in the pourable salad dressings category are finding it pays to segment
the business into three distinct product
niches: regular. light or reduced calorie. and
fat free. Fat-free dressings are currently providing better than 60 percent of the category's sales. As in many other product
categories. '"'fat free" is a major consumer
hot button for salad dressings, mark::ters report. Kraft sells close to 50 percent of fatfree. reduced-fat pourable dressings. Del
Cano will serve two of these categories: the
regUlar and the fat free. We will not provide
reduced-calorie dressings. because they generally contain chemical additives to achieve
the texture of the regular dressings.
The growth of fat-free dressings can be
attributed to consumers' healthier eating
habits. More people are buying fat-free
products. especially with the growth of
bagged salads. Organic food sales have been
growing 20 percent to 25 percent a year since
1990-versus 3 percent to 5 percent for the
food industry overall. In contrast to the organic shopper nf 20 years 3g0, today's typi-

IS7.}

cal organic consumers are urban, affluent,

educated, and very health conscious. They

are looking for nutritious. wholesome, pure
foods. spending 20 percent more than the average shopper. The existence of this segment
highlights the premium people are willing to
pay for quality, natural ingredient products.
Consequently. we are planning a line extension into this area in the future.
In addition to the trend toward low-fat
and fat-free products, there is also a trend toward more highly seasoned products and
more exotic and ethnic offerings. Del Cano
is re5ponding to these trends by offering exotic flavors.
The new introd.uc~ions to sa1ad dressings are thus low- and no-fat, organic, allnatural, and gourmet-oriented. Many small
companies try to establish themselves in
these niches. Thus. prepackaged salads, the
continuing influx of fat-free products, and
the introduction of upscale, regional brands
are helping to keep things flowing in the
$1 billion-plus salad dressing category.
Competitive Factors
A comprehensive analytical tool for determining the attractiveness of the industry is
Porter's model of competitive industry
analysis.

The Bargaining Power of Buyers

Because there are numerous sa1ad dressings
available in the market, the buyer has
power. If buyers have the choice, they naturally look for a reason to buy from a particular seller. and one good reason is a lower
price. If the selling flrm wants to draw the
buyer's attention, it should then communicate to the buyer that its product is of high
q:uality or has special features. Del Cano will
differentiate its products, discouraging the
buyer from basing its purchasing decisions
exclusively on price.
Also, the buyer does not really face
switching costs, whicb makes him all the
more powerful. The buyer can make hi.!. own

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CHAPTER 5 The Business Plan

salad dressing ifhe wants to (and if he is able

to do so, as well). In any case, such a probability is a threat for full integration.

The Bargaining Power of Suppliers

Suppliers in the salad dressing industry are
not that powerful because there are many
substitutes. The only way suppliers may gain
bargaining leverage over their customers is
by manufacturing their own produces. In a
word: integration.
The Threa/ of Relevant Substitutes
FacT large competitors (Kraft,

CPC.

Unilever. and Clorox) share over rhreequarters of the market among themselves.
The rest is shared by a vast number of small-

and medium-sized companies. not to mention the trend toward the development of
private-label brands. The industry may also
encounter an indirect substitute-product rivalry: The homemade salad dressing is an
option and is most likely to jeopardize the
sales in the pourable market.

The Threat of New Entrants

into the Industry
The entry barriers are low as long as the entrant does not play on the same playground
as the "Big Four," which means that a new
entrant. if small. has to differentiate its prod- .
ucts as well as its distribution channels so as
not to encounter direct competition from established brands. Retaliation would indeed
turn out to be decisive. New entrants do not
usually have the financial assets to face large
competitors.
However, the structural barriers are low
because no tremendous financial resources
are required to launch a new venture. This
implies that the entrant focuses, at least in
the short run. on particular nontraditional
distribution channels, given the considerable
access costs to national supermarkets. Del
Cano will utilize a two-tiered approach for
the industry. targeting the natural foods
industry in the short run and conventional
supermarkets in the long run.

CHAPTER 5 The Business Plan

The Rivalry Among Existing Finns

The presence of industry leaders helps maintain price discipline/reference and keeps the
industry from engaging in destructive price
wars. Within the "generic" dressing market. the intense competition can be noted
through examining the advertising budgets
of the majorplayers.Kraft.for example, budgets approximately $40 million annually for
their salad dressings. Thus. competitors are
encouraged to difie:entiate. Although the
salad dressing market is a fairly competitive
and mature market, there is growth potential
given the existence of several barely tapped
niches with the organidnaturallfat-free/
gourmet/ethnic trends.
Summary of the Competitive Forces
The salad dressing industry as a whole is
marked by strong rivalry: low entry barriers:
strong buyer, low supplier power: and high
substitution. Although the general market is
mature. the natural segment is growing
rapidly. In addition, the margins an~ significantly higher for specialty and natural food
products. such as Del Cano, than for the typical "commodity" salad dressing.

Macroenvironmental Influences
Political and Government .4.na/ysis
Reports in recent years about the possible
cancer-causing effects of pesticides and
chemical additives have raised consumer
concern about conventionally cultivated
food. Because of this-and the improved
quality and lower prices of organic prodw;:ts as larger, more sophisticated producers
have entered the field-industry analysts
project wholesale organic product revenues to hit $4.4 billion this year. 25 percent
higher than in 1996. The industry should
also benefit from federal standards for organic products that are set to become law
next year. Only 17 states now have rules
pertaining to organic products, and their
rigor and enforcement vary. The credibility
conferred by a USDA-certified organiC seal

on everything from meat to processed foods

will encourage many consumers to buy organic. which is a major asset in the organic
salad dressing market.

Macroeconomic Ana/ysis
The 1990s witnessed the emergence of the
"environmental market." This is the market
for equipment to clean and purify air and
water and for agri-biological products to replace pesticides and herbicides. That green
revolution has a strong effect on agricultural
technology.
Technological Analysis
Research and development have been focusing recently on light, low-calorie, lowcholesterol products, easyto-prepare, and
individual-portion products. These are targeted at very specific consumer segments
with a certain amount of purchasing power.
They must be able to respond to the assumed or actual consumers ' demands: flavor, service, safety, and health. To .obtain
those new product formulas. the food industry has been studying tbe use of alternative
products among foodstuffs themselves, especially in terms of substitution:The fats are
being replaced by substances having the
same technical and organoleptic properties,
but lower in calories because they have been
lightened. Thus, the agri-food industry has
been taking on a new dimension these last
few years: Cracking agricultural products
and assembling ingredients have become its
new business. As a result. new technologies
are being developed to allow product manufacturing under the most profitable conditions. They require significant investment in
equipment rather than l~bor and are supposed to increase processing capacities.
Sociodemographic AnalysiS
Changing attitudes. demographics, and
lifestyles are altering what Americans eat,
how much they eat, and where they eat. A
study conducted by McKinsey & Co. sees
age. income. family composition, and ethnic

159 ,
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ity as the drivers of total food spending, as

well as the amount of money spent on food
away from home and preference in eating
places. McKinsey projects that by 2005, the
population will have shifted Significantly
toward older groups, baving an extremely
positive impact on food spending. The perc~ntage of people 45 or older will grow from
32 percent in 1995 to 38 percent in 2005.
McKinsey analysts anticipate this group will
continue its high relative spending on food.
Like other observers, McKinsey foresees a polarization of income in the United
States in the future. but unlike some observers, the consultancy believes the middle
class will shrink, increasing the ranks of the
affluent. It is this segment of the population
that we will target. McKinsey has identified
six primary changing consumer attitudes
and lifestyles.

Consumers' greater need for conve

nience will lead to "just-in-time" meals.
Consumers will be seeking more plea
sure and fun from everyday life.
More of life 's meaning and enjoyment
will be driven by family experiences.
Continued concerns for health will be
reinven.ted as total nutrition management.
Consumers will demand more variety
through customized eating experiences.
Expectations for value will include no
premiums for extras.

Ecologicnl Analysis
Although all glass salad bottles are -recyclable. ours are reusable: This will be ~n
couraged on our packaging. We have chosen
not to use plastic. even though it weighs less,
due to its negative ecological reputation.
The markets we will serve will definitely
note the packaging materials utilized. Companies are expected to make allowances for
ecological issues. As a result, the budgets of
many larger firms have allocations for that
area to comply with the macroenvironmental trend and avoid any possible conflicts.

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CHAPTER 5

CHAPTER 5 The Business Plan

The Business Plan

Iv. DEVELOPMENT Al'ID

PRODUCTION

,/

to ensure frequent visits to the plant to resolve problems and to create a close working relationship.

Manufacturing

Selection Criteria
Del Cano products will be manufactured at
As mentioned ea rlier. LaSalle has prior exa contract manufacturer's facility to be deperience in the food industry. One of the pritermined on the criteria discussed here. Del
mary requirements was certification to meet
Cano views its recipes and marketing ability
governmental regulations. Production facilias critical to its success. Production capability. although important in terms of cost "" ties must meet strict guidelines to safely produce goods for human consumption. LaSalle
structure, will not lead to competitive admeets and exceeds all certification requirevantage in the marketplace.
ments and maintains this record. This allows
We have selected a contract manufacDel
Cano to focus on innovative products
turer located north of Cincinnati. Ohio:
instead of production processes.
LaSalle Manufacturing. laSalle is an experienced manufacturer, meeting the needs of
large companies such as Procter & Gamble
in the food industry. Del Cano strives to provide only the best dressings and sauces using

the best ingredients. LaSalle uses a similar

pursuit-of-excellence mentality in its production processes.
Advantages of Contract Manufacturing
Contract manufacturing provides Del Cano
with a flexible production capability wbile
avoiding the excessive amounts of capital
that would be required to build a plant of its
own. This will be a clear advantage in the
early stages of the company, because we expect some development time for our products to penetrate the marketplace. As our
volume demand grows, LaSalle will be able
to increase production, and Del Cano will be
able to receive a lower rate per case on production costs. Our flexible contract provides
the incentive to increase volume quickly to
realize the lower rate schedule. The contract
also highlights the increasing profit potential' as the business develops.
We should note, however. that using a
contract manufacturer does not eliminate
the need to provide guidance in the production process and take ownership for the
product qual ity. We have selected a facility
that is reasonably close to our headquarters

,"

.1.61',

Measurement Control
LaSalle is accustomed to working closely
with clients to ensure that products meet the
hig~est quality standards. The production
facility uses equipment with current measurement control systems to guarantee consistent quality of products. Precision is a
critical element in both the producer and
consumer areas. When consumers buy a botM
tie of Del Cano. they want to know that they
are receiving a product that delivered the
same unique flavor as a previous purchase.
LaSalle's quality control will provide for
consistent flavor for the consumer. Precision
also is a critical factor in our ability to accurately forecast production costs by avoiding
usage variances in ingredients.

ReceivingIHolding - Ory Materials

Dry
ingredients such as b"e rbs and spices will be
received in bulk supersacks. These are largecapacity plastic bags in various sizes up to
2,000 pounds. Use of incremental sizes has
two' advantages for Del Cano. Variability
will allow some flexibility to increase order
sizes as production needs grow. Flexibility
also avoids excessive investment in working
capital because raw material inventory can
be minimized.
Production P.rocess
Production is begun
by running liquid materials from holding
tanks to a mixing tank. Measurement control
will be accomplished either through flow
meters or weight. Dry materials will be
added by dumping premeasured quantities
into the mixing tank from the supersacks as
recipes warrant. Once all ingredients are
added, an agitator (homogenizer) inside the
mixing tank will be started to ensure that ingredients are thoroughly mixed before packaging. The agitator must continue to function
throughout the packaging process to ensure
consistent qUality.
Note: In some cases, an ingredient to increase viscosity (xanthan gum) may be
added to ensure ingredients remain mixed
while in packaging lines. Xanthan gum,
though listed in ingredient statements, does
not compromise taste and often breaks
down after time.
Packing

Production
Steps in the production process are described
here. and illustrated later in this section.
ReceivingIHolding-Liquids
An addmix process will be used at LaSalle. This necessitates having holding tanks for bulk
liquids to be delivered to LaSalle by tank
car. Separate tanks will be used for liquids.
such as various oi ls (olive, vegetable. canola.
etc.) and vinegars (red wine. white wine.
cider, etc.).

Mixed product will run from the

mix tanks directly to the filling lines where

bottles will be filled. Bottles will then be mechanically capped and boxed for shipping.

Resource Requirements
Recipes and personnel constitute the primary assets of Del Cano. To that end, we will
strive to develop the most unique yet genume dressings and marinades qf any offered
in the marketplace. Company management
takes pride in innovation and has a passion
to pursue cooking-related Oppoftu.nities

that have the potential to have a larger exploitation in the high-end food market.
As our business grows, we will continue
to develop new recipes and will strive to hire
people wbo also possess the drive to continue the Del Cano legacy of fine gastronomical flavors from around the globe.

Quality Assurance
Del Cano will strive to have the highest quality standards in the manufacture of its products. This desire has already been evidenced
by the selection of a high-quality manufacturing site. We will also implement statistical
sampling of our completed products for
quality and taste characteristics. The sampling process will include the following areas:
Ingredient Content
1bis is to ensure
that bottles contain the correct proportions
of ingredients to deliver a consistent flavor
to the customer.

Fill Weights
A scale system is included
in the packing line to verify bottle content
weight. Product fill levels must be measured
to ensure that customers receive the amount
as stated on the bottle, thus. avoiding civil
penalties. Control charts will be used to
track performance and to identify problems
as (if) they occur.
Leakage
Leakage is a primary concern
for liquid products. This is predominantly a
measure of customer satisfaction (distributors and grocery chains) versus consumer
satisfaction. Chains have been known to
charge back amounts or to deduct from invoices when they receive leaking products.
To avoid this consequence, we will perform
ship tests of Del Cano cases and resolve any
issues during th~ beginning rollout stages of
production.
Breakage
Breakage will be tested in the
same manner as the leakage test.
Product quality is only one aspect of
the benefits a customer receives when they
purchase Del Cano Salad Dressings and

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CHAPTER 5 The Business Plan

CHAPTER 5 The Business Plan

Marinades. We will strive to acquire the

highest quality ingredients. assuring cu~
tomers a taste "voyage" unlike any other.
The unique positioning of Del Cano as a
salad dressing and as a marinade also gives
our product a unique use and value quality
discussed. Further, our price point, combined with our larger size, will also provide
customers with a superior value impression.

V. MARKETING ORIENTATION
Marketing Segments

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Today's dual income family has less time to

plan and prepare healthful and nutritious
meals. They are actively seeking fast and .
easy solutions to meet these, needs. Supermarkets and restaurants are responding by
offering home-meal replacements.
This trend is paralleled by a shift in consumer taste preferences. Twenty years ago,
healthful and tasty cuisine from exotic parts
of the world were generally unavailable unless one lived in a major metropolitan area.
As ethnic groups continue to flourish in the
United States, specialized food-oriented
businesses have sprung up to meet their
needs, but also to offer more entrenched
Americans something new. Just as cultural
traditions can defme a nation or region of
the world, cuisines have their own definitive
spices, vegetables. and 'methods of cooking.
Finally. there is a dramatic shift in consumer demand for natural and organic
foods. According to a recent survey conducted by the National Nutritional Foods
Association, U.S. consumers can 'b e segmented into the following six categories
with regard to natural foods: unconcerned
(18 percent). overwhelmed (30 percent),
young recyclers (10 percent), affluent healers (12 percent). new green mainstream
(23 percent). and true naturals (7 percent).
The unconcerned tend to be male and
reject the idea that chemicals harm the environment. The overwhelmed tend to be

women and in general are not optimistic:

they feel they are struggling [0 just get by.
The unconcerned and overwhelmed open
no opportunities for our product. On the
other hand, we will target the following four
segments. with the greatest emphasis placed
on the affluent healers and true naturals.
Young recyclers tend to be unmarried
and are most concerned with packaging and
recycling; they reject the notion of paying a
premium for environmentally friendly products. Their eating habits are marked by a
preference for eating more convenience
foods than they should.The new green mainstream are interested in the environment
but need a reason before they Will act: t~ey
are not out to save the world. This group offers potential to be converted. The affluent
healers tend to be l:tighly educated. upscale.
and are family and goal oriented. They are
concerned about nutrition, exercise, and
personal health and are willing to spend
more for quality products that will benefit
themselves or their family. Finally, the true
naturals tend to shop at natural food stores
and tend to be highly educated. They are totally committed to environmentally sound
products, feel knowledgeable about environmental food issues. and like to learn
more. They will go out of their way when
they see quality and added value.
Other key trends indicate that people.
due to their busy schedules, are purChasing
or seeking "speed scratch" cooking solutions. more takeout, and more distinct ethnic
food. Baby boomers, comprising 26.4 percent of the population, are value oriented
and desire quality food, strong packaging.
convenience. and good taste.
We will follow a two-tiered approach to
reaching our target markets. First. we will
enter the natural foods market via small and
large specialty foods stores both directly as
well as through natural foods distributors
and brokers. Second. we will approach national distributors to help attain national
presence in large chain supermarkets.

Marketing Strategy .

Our primary strength lies in the value

proposition our product offers. Currently,
there are only two or three existing dressings and sauces that attempt to cross cultural segments. Product lines exist within
certain cuisine, such as Asian and Mexican,
or they tend to be Americanized in flavor
and taste, such as "French" and "Italian"
dressings. Our product, in contrast, offers ingredients providing a truer flavor that our
food-conscious consumer desires. Tracking
consumer trends will enable us to maintain
up-to-date flavors, providing a competitive
advantage. Recipes cannot be patented, as
the slightest modification would allow the
product to be virtually copieq without legal
ramifications. As such, we will leverage our
own strengths, such as quality, product innovation, and marketing communications, to
build brand equity that will solidify our
competitive advantage.

Product
We will offer "food dressings" that can be
used as both salad dressings and marinades.
Our competitive advantage will be both
quality an~ our ability to keep up with
changing food trends.
Pricing
Our research indicates, not surprisingly. that
the consumer wishes to pay the lowest price
possible. After comparisons with other highquality products, we have set a retail price of
$3.99. In general, distributors demand a
gross profit of 10 percent, and the retail grocer requires 20 percent. Working backwards,
this .leaves us with a wholesale price to distributors of $3.02. We will sell all products at
the same wholesale price, encouraging retail
prices to be identical across the product line.
This will be encouraged for several reasons.
Primarily, it will provide the consumer with
the notion that all our products are identical
in terms of quality, regardless of the ingredients. It will also simplify decision making

<l~

'"

during their shopping experience. Instead of

purchasing by price, they will purchase
based on their taste preferences. 1bis will allow us to accurately assess which products
are preferred due to taste and concept, as
. opposed to perceived price value.

Distribution
Initially, we will offer our product through
specialty foods and natural foods distributors, such as Tree of Life and Blooming
Prairie (natural foods distributors) and
Kehe (a specialty food distributor located in
Indianapolis. Indiana). We will utilize our
contacts with the management and sales
teams of these !inns to help gain entrance
into their product catalogs and order guides.
To gain acceptance, we will me~t with the
distributor representatives and present our
program. We anticipate a move into the national grocery chains during our fifth year.
The first national chain we will target is
Kroger. Their distribution is organized geographically. with 16 regional buying centers.
We will present our product lines to each of
the individual buying offices. Once three of
the regions have accepted the product, it will
be distributed through Kroger's central dis. tribution center, Paytons. This will allow the
product to be sold through all Kroger stores
at a national level. We will use this same
process to gain acceptance into other large
chains, such as Star Market and Dominicks.
At this time, we will also move into the large
national distributors, such as Sysco.
Advertising and Promotion
The advertising and promotion budget is set
at $200,000 for year 1; $200,000 for year 2;
$400,000 for year 3: $600,000 for year 4; and
$800,000 for year 5. These expenditures will
be divided among both advertising (55 percent) and promotions (45 percent). This ra
tio will be maintained for the first 5 years.
Advertising
Print and radio advertising will be used
to raise awareness of our product .and

-y-

164.
,/

CHAPTER 5 The Business Plan

encourage consumers to try it. Its position as

a combination salad dressing and marinade
will be explained. OUT research indicates
that people are comfortable with this positioning, but when you walk through the grocery aisles, only a couple of products in the '
salad dressing and marinade aisles mention
both uses on the label. We want to leverage
consumer acceptance of this positioning and
build a brand image that reinforces quality
natural ingredients. international flavor, and
ease of use.
We will allot $30,000 for print ads, targeting consumers. They' will be placed in
local/regional natural food magazines such

as Conscious Choice for the first 4 years.

As sales expand, we will move to more
national/mainstream magazines. We will

spend $45.000 on radio advertising, airing

commercials on hip radio stations with listeners between ages 25 and 40.
From the supply side, we will advertise
our product in Natural Foods Merchandiser.
We plan to join several trade group associations to build awareness in the industry.
We will place the ads at the beginning of
each quarter. First-year costs are estimated
at $35,000.
.

Promotion
We will administer several promotional activities as part of our marketing concept.
Despite the high design and. printing costs,
we will ~clude hang tags as part of our packaging. because they will further differentiate
our product as well as offer immediate
recipes and alternative cooking solutions to
the customer. These costs are estimated to
be $5,000 for design and $20,000 for printing. In addition, we will ask the consumer to
visit our Web page, where they can download and prinr these cooking solutions, devoted primarily to the fun exploration of DeI
Cano Salad Dressing and Marinade. We estimate the server costs and development
costs to be $5.000 for the first year. This may
seem low, but we will utilize our own pro-

CHAPTER 5 The Business Plan

gramming and design expertise to create our
Web page. In addition, the Web page will allow us to quickly and easily update the
recipe catalog. Finally. it will allow us greater
input and feedback from the consumer.
Consumers can easily e-mail us with their
comments, suggestions, and perhaps even
their own recipes.
Mail-in oHers will increase purchasing
continuity and broaden usage. Our initial
program will. offer a high-quality baking dish
that can also be used for refrigerated storage
and marinating. This product will be available at a discounted price when five UPC
labels are submitted. This production is estimated at $50,000.
In ad~tion, we will offer in-store sampling of the dressings to help promote the
product. It has been shown that sampling
can increase sales by up to 30 percent. This
method will also help educate the consumer
about the advantages and possibilities of our
dressings as a cooking solution. Promoti"n
of our product will be accomplished initially
through in-store fiyers and sampling. We will
outsource this project. We will offer 50-cent
coupons during the first month of the launch
to increase impulse sales and product
awareness. Costs for the coupons and instore sampling are estimated at $17.000.

1-

It-

Product Packaging
Del Cano will be packaged in 16-ounce
bottles that have resealable flip-top lids,
similar to a Grolsch beer bottle. costing
30 cents each. There are several reasons for
this packaging.
It is distinctive on the store shelf and
will create immediate interest due to its
uniqueness. This is critical. given the
large number of products and the uniformity of the packaging currently on
the shelf.
It is practical and reuseable. We will encourage buyers to reuse the bottles for
other purposes, creating an environment friendly image. This packaging will

-:;.;. . ~

make the product more appealing to the

new green mainstream.
It reflects the image of the product itself:
sophisticated, distinctive. and worldly.

Competitor Strengths
Our competitors in the major supermarket
chains are formidable. They include the major dressing manufacturers, such as Kraft
and Wishbone. The primary marinade producer is Lawry's. Although they may pose a
threat in terms of shelf space and distribution. we will carve out a unique position as
the only natural, ethnically diverse combination salad dressing/marinade. Therefore.
these flrms will compete at the margin of
our target usage segment. These competitors can be viewed more as low-cost
providers; we are positioning omselves as a
high-quality, superior value cooking solution provider. Their strengths also lie in their
ability to manufacture with enormous
economies of scale.
Because we are using a two-tiered market approach, the negative impact of the
maj.or dressing and marinade producers will
be minimal. During the first 4 years, we will
be selling through the natural food chains,
thus competing within the second tier: the
natural foods dressings, such as Annie's and
Cardini 's. By the time we gain acceptance
into the national grocery chains, we will have
developed bran9 recogtiitioti and a strong
following. In addition to our market approach, it is our positioning, packaging, and
superior flavors that further differentiate
our products. cushioning Del Cano from
competitive forces.
Our survey indicated that at a price of
$3.99. nearly 50 percent of respondents perceived our product as unique and indicated
high intention to purchase.

Sales Forecasts
In forecasting sales, we have used the
market-potenciallsales-requiI"ement (MP/SR)
method. This method allowed us to analyze

lh

165

anticipated sales from the top down; analyze

needed sales levels from the bottom up; and
compare the two to ensure that our needed
sales levels were not greater than the market
would support.
.
Our first step was to detennine the market potential for our product. We will begin
by producing and selling the six meal starters
that were rated the highest by the respondents to our survey. Census data was collected for the metropolitan areas of the 20
cities selected for penetration during the
first 2 years (see Exhibit IV). We defined Del
Cano's target market as approximately
10 percent of the total population. We then
defined the Del Cano trade area as 60 per'cent of our target market. Of this trade area.
we assumed 3 percent market penetration
~nd six annual purchases per customer.
Years 3 to 5 show regional and then national
expansion as the popularity of Del Cano's
increases.
Second, we derived sales requirements.
We did this by determining Del Cano's overall cost structure by adding estimated fixedasset costs to estimated one-time start-up
expenses and to estimated operating
expenses-f"L'Ced and variable costs.
All pro forma financial statements are
calculated based on the most likely sales scenario (see Exhibits I, II. and III).

VI. FINANCIAL PLANS

Financial Strategy
Source .o f Funds
Del Cano's preference for ongoing funding
is to use proceeds generated from continuing operations. The firm is targeting a total
initial debt of $30,000.

Uses oj Funds
Our intended use of excess cash generated by
operations and financing will be growth
and expansion. Del Cano products have
tremendous opportunity that can only be

lEXiIiBIT I
_ ____

cf:'

. . . . .1

_ __. . . .

..

\Pro F~F~aJnc()u,e
State~~nt~
.riLh-'..........' -. {-i~; _j ;'!"~r'r ;t;;~l;i.: :tLr~~A1~~:~~~'~'~ j
_----'--- _ _
_ _ __ for Del CnnLt:- 'P:l:".
I't'Or 1
l'ar 5
Year 2
Year 3
Year"

...:;..t><---_,.

Sales
Less Expenses:
COGS
Selling
Administrative
Salaries
~
SNRl
Depreciation
Interest

....

Total E:.:pel/ses .

Net lBT
II/come 7in: Expel/se'
Net Income

~~

._____'~

~..........-... ~

1,045,501

1,072,106

1,886, 182

3,172,364

1,111,219

466,411
250,000
41,820
125,000
300,000

631,334
250,000
42,884
125,000
300,000

1,110,720
500,000
15,441
125,000
100,000

2,221,440
150,000
150,895
125,000

4,519,823
1,000,000
311,091
125,000

3,000
1,186,237
(140,730)
(39,404)
(101,325)

2,812
1,352,030
(279,923)
_ (78,379)
(201,545)

2,605
1,913,712
(21,590)
(7,725)
(19,865)

2,377

2,126

3.249.711

6.018.041

552,652
146,343
376,310

1,759,238
492.587
1,266,652

Includes marketing 10 develop brand awareness

Assumed 4% of sales
5 partners@$25,000
Computers and office equipment, slotting fees
No PP&E to depreciate
$30,000 bank loan@ 10% over 10 years

Assumed 28 % of IBT

-1
r~Xinfi!:r'i1: J>~;-F~;;;a '~h1h~w ~tl'.!e~en!!~I.D~(~~'~ ,-:

~~~tillD~: ~.---.l..",:~{; ..;-:- 7~.~:"'-jL:~..2:"';~1:

YEltR J (Firs' JlalJ)

Operations

Net Income
Depreciation
(increase) Decrease in Accounts Receivable
(increase) Decrease in Inventories
Increase (decrease) in Al;l?ounls Payable
Increase (decrcase) in Salaries Payable
I"crease (decrease) in It.l come Taxes Payable
Cash FloW from Operations
Investing

Yearl

laIHmry

Febnmry

March

April

May

Jllne

(101,325)

(7,000)

(3,500)

(4,000)

(5,000)

(6,000)

(7,000)

(2000)
(15,000)
1,000

(138)
(1,036)
69

(69)
(518)
35

(79)
(592)
39

(99)
(740)
49

(118)
(888)
59

(138)
(1,036)
69

(39,404)
(156,730)

(2,722)
(10,828)

l!2ill

(5,414)

(6,187)

~
(7,734)

(2,333)
(9,281)

(2,722)
(10,828)

30,000

2,500

2,500

2,500

2,500

2,500

2,500

48,333
37,506

48,333
42,920

48,333
42,146

48,333
40,599

48,333
39,053

48,333
37,506

31,506

42,920

42,146

40,599

39,053

37,506

Acqllisitioll of Property, Plant, and Equipment

Cash Flow from Investing

Financing
Issue of Long-Term Debt
A PIC
Cash Flow from FilUlllcilig

Change in Cash
Casll, December 31, Last Year

Cash, December 31, Current Year

550.000
580,000

423,270
~

423,270

(contil/lled)

-111~ _ ..~ ~ .. o, -- "j

':

~.

~:~~-:.-_:-

rear 1 (Suomi llalj)

OpuatJOIIS

Jllly

AllgUft

Septembu

October

Net Income
Depreciation
(increase) Decrease in Accounts Receivable
(increase) Decrease in Inventories
Increase (decrease) in Accounts Payable
Inarease (decrease) in Salaries Payable

(8,000)

(7,000)

(5,000)

(4,690)

(4,000)

(158)
(1,184)
79

(138)
(1,036)
69

(99)

(93)
(694)
46

(79)

(792)

(740)
49

(592)

(5,942)
396

;11 II/ come Taxes Payable

.illi!l

lhllil

(10,828)

(1,944)
(7,734)

1!ml

(12,374)

(7,254)

(6,187)

(15,608)
(62,081)

2,500

2,500

2,500

2,500

2,500

2,500

48,333
35,959

48,333
37,506

48,333
40,599

48,333
41,079

48,333
42,146

48,333
(13,748)

35,959

37,506

40,599

41,079

42,146

(13,748)

Increase (decrease)

00

Cash Flow from Operations

Investing

Deumbu

39

(40, 135)

Acquisitioll of Property, Plall', ami Eqllipment

Cash Flow from Invest ing

Financing
Issue of Long-Term Debt
APIC
Cash Flow from Fillal/cillg

Change in Cash
Cas/I, December 31, Los t Year

Cash, December 31, Current Year

Operatiolls

Year 2

l'ear J

Year 4

YenrS

Net Income

(201,535)

(19,865)

376,310

1,266,652

(increase) Decrease in Accounts Receivable

(increase) Decrease in Inventories
Increase (decrease) in Accounts Payable
increase (decrease) in Salaries Payable

(10,000)
(30,000)
5,000

(15,000)
(60,000)
10,000

(20,000)
(120,000)
20,000

illcrease (decrease) ;lIll1come Taxes Payable

(78,379)
(314,923)

70,653

75.689

(14,212)

331 ,999

Depreci~tion

'"

Cash Flow from Operations

Investing

(20,000)
(240,000)
40,000
416,897
1,463,549

ACqllisitioll of Property, Plant, and Equipment

Cash Flow from Investing

Financing
Issue of LongTenn Debt
A PIC
Casll Flow from Financing

Change in Cash

(314,923)

(14,212)

331,999

Cash, December 31, Last Yenr

423,270

108.347

Cash, December 31, CUrrent Year

108,347

94,135

~
426,134

(,463,549
426,134
1,889,683

'I

f.tXH1~!.~~m:: y~p ~onnrB;J~~h~tj:o~~rCk~J~p'D1a~~~I3Ul;~~,a~'~:;~-=3Sfri:~~'"

Assets
"

Cash
Accounts Receivable
Inventories

Total Current Assets

Properly, Plant and Equipment (net)
Total Assets
Liabilities and Owners' Equity
Accounts Payable
Salaries. Payable
Income Taxes Payable
Total Current Liabilities
Donds Payable
Total Liabilities

ai

AP1C

Retained Earnings
Total Owners' Equity
Total Liabilities and Owners'. Equity

}~ar3

Yt'or4

YearS

94,135
27,000
105,000
226,135

426,134
47,000
225,000
698,134

1,889,683
67,000
465,000
2,421,683

165,347

226,135

698,134

2,421,683

6,000

16,000

36,000

76,000

(47,130)
(31,130)
30,000
(1,130)

28,560
64,560
30,000
94,560

445,457
521,457
30,000
551,457

603,575
603,575
698,134

1,870,226
1,870,226
2,421,685

l't'or 1

Yt'or2

423,270
2,000
15,000
440,270

108,347
12,0CI0
45,000
165,347

440,270
1,000
(39,404)
, (38,404)
30,000
(8,404)
550,000
(101,325)
448,675
440,270

(117,783)
(! 11 ,783)
30,000
(81,783)
247,130
247,130
165,347

227,265
227,265
226,135

f,g.~~~W~\;W'#ti\,!,$:*!l}~n_Wi'~4Wi_mWJi'i}.m:$'f)'j@ljlm'\iml
PoplIlation

U.S.

emSflS

1995 Estimates

1 Akron,OH
2 Bloomington, IN
3 Cincinnati,OIl

678,834
115,208
1,900,438
8,589,913
2.224,974
1,437,512
956,412
5,279,500
210,303
1,476,865

4 Chicago,lL
5 Clc\'cland, DB
6Columbus,OH

7
8
9
10

Dayton,OH
Detroit, MI
Green Day, WI
Indianapolis.IN

Yl"ar1

Market Potential
Thrget Market
Trade Area
Number of Customers
Purchase Frequency
TO/Ill Volllllle

Tolal Sales
ltade Area % of
Target Market

Total

January

Fl"bnlary

March

April

!tIay

June

1s16 mos.

Not~s

18,196,663
1-,819,666

13,516,367
1,351,637
810,982

13,516,367
1,351,637
810,982
32,439
0.500

1.3,516,367
1,351,637 .
810,982
32,439

0.500

13,516,367
1,351,637
810,982
32,439
0.500

13,516,367
1,351,637
810,982
32,439
0.500

~
$64,716

~
$64,716

~
$64,716

~
$64,716

~
$64,716

~
$64,716

13,516,367
1,351,637
810,982
32,439
3,000
97,318
$388,298

10 cities
10% of market potential

43,672
6,000
262,032
$1,045.507

13,516,367
1,351,(137
810,982
32,439
0.500

35,435

60%

60%

60%

60%

60%

60%

1,091,800

32.43~

0,500

4% penetration
A,'erage annual purchases

(co1lfinued)

.
... .2 "
.'E

8E
Q

.~

~<

!
""

'=

CHAPTER 5 The Business Plan

~ ~
~ ~

:Co

e9* *"

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~Ig

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~
~

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t

<:
t

,: 0
t

e-

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-~

.
.
.
.
.

~~~~8T
~$.~8."'!~_Cls
"O .....

N~Cr-S

~~5....,

N~

~~~~8T
::;ps. ::0, ~_ "'! ~. :;::.

..0"'" 1"'01"'" 0 " ' "

S~5....,

N;;;

~~~~8T
~$.~_~."1~:;:s
;e&:;~~ONs

co

t"

~....;

-=

.~

.....

~~~~8T
~$_~8."1~:;::S
:e&;~~O~S

~ ~.::::

z;

~~~~8T
~$.::D_~."'! ~Cls
!l' ~f!~;J;Nl
~

NN"':

v.

""
"'j S': ~ ~ ~ "il;<;"
S
S
N

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-0""

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0:-,1

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~ S~5""

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N;;

U.s. Ccnsus 1995 Estimates

:1:

5 C1eveland.OH
6 Columbus. OH
7 Dayton,OH
8 Detroit. Ml
9 Green Bay
10 Indianapolis. IN
11 Kansas City. MO
12 Lexington, KY
13 Louisville. KY
14 Madison, WI
15 Milwaukee. WI
16 Minneapolis-St. Paul,:MN
170maha. NE
18 Pittsburgh. PA
19 St. Louis. MO
20 Toledo, OH

1
E:

I'"

.-~

~]

>-

E g

~ ~

a [ ,~

> u
8~

*i

_ _ ..
u _ _ ..
.P:;~'Otl..~~u
oo

u~<i:::~<:;

-'t~.g=~~-;::;.gF

i~~z:!:~!~

172

678.834
115.208
1.907.438

8,589.913
2.224.974
1.437.512

956.412
5.279,500
210.303

1.476.865
1.663.453
435.736

987.102
393.2%
1,640,831
2.723,137

670,322
2.394.702
2.547.686
612.798

Year 2
Total

Market Potential
Target Market
Trade Area
Number of Customers
Purchase Frequency
TOlal Volume

36.946.022
3.694.602
1.477.841
59.114
6.000

Notes

20 Cities
10% of market potential
4% penetration
Average annual purchases

354.682
$1,07"..,106
40%

Y..,.3

'0
~

r_C.i

Population

City
1 Akron.OH

20 Midwest Cities
o

;!~.

Total Sales

"s

Populatl'on

2 Bloomington. IN
3 Cincinnati,OH
4 Chicago, IL

-or-o:"I.., ............

~~~

rEXiaBrrIV

173 .

Total

Market Potential
Target Market
Trade Area
Number of Customers
Purchase Frequency
Total Volume

Total S21es
Midwest

65.000.000
6,500.000
2.600.000
104.000
6.000
624.000
. 1,.886,182

Notes

Midwest
10%

4%

40%
(con.tin.ued)

.z1~

CHAPTER 5

CHAPTER 5 Th~ Business Plan

The Business Plan

~lY~(c:it.)- ;~~~ .._\~~~ ~i' ~-,-:.:..:;'-~Al-;~~~"'-.!';~:~. ~:::,;~'"1.~:;r'S:::::-:;.E;.::; :: -:]

Human Resource Management Strategy

Year"

Del Cano, Inc. , will be run by the current

team., each of us having developed skills in
specific areas that will help the company
reach a cruise speed. As a result, no tremendous financial resources should be involved
in the human resources field because the
company intends to remain closely supervised for the first couple of years. Also, this
will enable us to be flexib~e about our wages
according to the company's sales. Additional
salespeople are nevertheless likely to be required from year 2 on, according to the
company's net sales income. That number
should then be doubled every other year,
starting from the third year to meet the consumers' anticipated demand.

TOlal

Market Potential
Target Market
Trade Area
Number of Customers
Purchase Frequency
Total Volume
Total Sales
Midwest, West Coast

130,000,000
13,000,000
5,200,000
208,000
6.000
1.248.000

NOles
Midwest. West Coast
. 10%

4%

$3,772,364
40%

YearS
TOlal

1
\

Market Potential
Target Market
Trade Area
Number of Customers
Purchase Frequency
Total Volume
Total &des
Nationwide

268,014,000
26,801,400
10,720,560
428,822
6.000
2,572.934
S1,771;n9

NOld

u.s. domestic market

10%
4%

VITI. OWNERSHIP
Form of Business

40%

fully exploited through rapid growth maximizing penetration with major supermarket
chains.

Internal CC!ntrol and Monitoring Systems

Cash flow will initially.be monitored by Rob
Reader. A secondary, regular check will be
performed by Andy Rockafellow. FLriancial
records will also be reviewed by Bloomington, Indiana, accounting firm Hayden & Co.,
P.C-a local accounting firm that specializes in h~dling business start-ups.

VII, ORGANIZATION AND

MANAGEMENT
Key Personnel Resources
Karen Chatas. in addition to her marketing
and design background, has developed a
strong understanding of the natural food

market as part of her work experience and

cooking skills. She subsequently developed
a number of contacts with distributors as
well, which will be a definite asset to our
company. Rob Reader, who has a finance
background, will help the company assess
and foresee its financial resources. Andrew
Rockafellow is a finance major and acquired
a solid experience of the consumer products
mark~t while working at Pillsbury and Procter & Gamble. Patrick Seiffert is a marketing major, with skills and experience in
finance and Sales. Bich-Quan Tran has a
marketing and sales background with work
experience in the consumer products market as well. She will also be able to provide
an understanding of international prospects.
The team's strength rests upon its balanced
skills between finance and sales, which
should enable the firm to grow safely.

The business is a limited liability partnership. As such, each partner is liable only for
the amount of hislher personal investment
in Del Cano, Inc. No other legal liability exists. The actual partnership agreement contains no special conditions or clauses.

Equity Positions
Owners' Equity Posicion.l
Partn~r

Karen Chatas
Rob Reader
Andy Rockafellow
Patrick Seiffert
Bich-Quan Tran
Total Owne r's
Equity

Investment

$10,000
$10,000
$10,000
$10.000
$10.000
$50,000

Deal Structure
Del Cano, Inc., will require $500.000 to start
up and grow at the rapid rate necessary for

175

the organization to achieve its potential.

The deal structure is to be negotiated with
the investor.

IX. CRITICAL RISKS ."IND

CONTINGENCIES
We feel that our company will be a success.
As with any new venture, certain risks exist.
No product currently exists: we are currently testing flavors and recipes.
Although this is a start-up. we have
strong experience in the foods and consumer products industries and can bring
that knowledge to this company.
Because we are in the food industry. we
will not be able to obtain a patent for
our product.
We will outsource our salad dressing
and marinade product to LaS~e Manufacturing. Although we feel we can
maintain a strong relationship With this
company, there is the potential that they
may choose to manufacture our product
for their own purposes. In addition, the
company may cease production of our
product for any variety of reasons. This
could cause a shortage in supply. Inconsistent quality in the production of our
dressing and marinade is possible, because we can not directly supervise its
production. We feel this is highly unlikely due to LaSalle's reputation.
The mainstream tier of competition
(Kraft) has significantly more resources
than Del ("..ano. but they focus on a
larger mass market and cannot attack
our strengths without incurring enormous costs.
Although we have contacts within the
midwestern natural and specialty food
distributors, this is no guarante e that
they will accept our product.
Sales may grow rapidly. requiring additional capital to meet these needs. We
feel that our producers will be able to

...

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CHAPTER 5 The Business Plan

handle the increased demand, because

they already produce for large companies such as Procter & Gamble.

Sales may be less than expected. To

counter this effect, we may have to temporarily reduce our profit margins, shifting the margin over to our distributors,
encouraging them to push our product
into-the marketplace. We feel that our

team has substantial selling expertise

and thus will be able to obtain our desired growth rate through intense selling efforts.
We are trying to inl,tiate a shift in bow
salad dressings are 'viewed and used.
This will depend greatly on how well
this concept is accepted by the cpnsumer. Our research and surveys have
shown that the idea is acceptable, so we
do not feel that this is a great threat.
Significant delays in payment from our
customers may cause a shortage of cash
during the first year; this could be detrimental to the success of our company.

CHAPTER
The company cUrrently has no contingent liabilities as of October 1997. Each of
these risks has been carefully assesSed; we
have incorporated preventative measures
into the plan where possible. Although there
are no guarantees, we have attempted to reduce risks wherever possible, and we anticipate the achievement of our goals.

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The E-Entrepreneur
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Everything has changed, nothing has changed.

X SUMMARY AND
CONCLUSIONS
We believe that our dressing and marinade
concept will be accepted for the following
reasons. FIrst, market trends indicate a shift
towards quick, easy, and tasty meal preparation. Our product is differentiated through
its use and packaging, helping the end user
to solve the problem of how to cook an exciting, fast, and nutritious meal. The sales,
marketing, and financial experience of our
team will provide the venture with the requisite skills to make this'venture a success.

'0.{

- ANONYMOUS INTERNET PuNDIT

Outline

Where Are the E-Entrepreneurs?

Who Are the E-Entrepreneurs?
Wmnen; and Losers
The Resource-Based View and E-Entrepreneurship
Information Rules
Value Pricing
Versioning
Intellectual Property
Lock-In
Networks and Positive Feedback
Cooperation and Compatibility
Business Models and Strategies

B2C
B2B
B2B2C
Niches
Clicks and Bricks '
Roll-Ups
Advertising Models
Pay-for-Content Models
What Have We Learned?
Summary

Learning Objectives
After rea.ding this c6pter, you will understand:

Where the Internet is making the most impact

Who is best positioned and enab:Ied to take advantage.
Why value creation must be followed by value capture

,I

177

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