Agriculture Fruit Farm Business Plan

Executive Summary
Introduction
Farmers Group is being formed from the acquisition of two successful vegetable farm, Green Acres
Vegetable Farm and Mobile Farmers Vegetable Farm. The latter has long-researched horticultural and
agronomic techniques, as well as compost and soil blending technology now being promoted by the
DEO, the USDA, the EPA, and other government agencies.
The company is a combination of cutting edge, highest quality, and efficient food technology and
production. It is committed to the improvement of food taste and nutritional quality. It is being founded
to build upon an extensive array of biological and horticultural education, experience, and the research
of its founders. This is further coupled with the experience of James Jackson, the current manager of
Mobile Farmers Vegetable Farm, and consultation with the present owner of Green Acres Vegetable
Farm, Errol Grantham.
The Company
Farmers Group is an Alabama-based company, located in Calhoun county, whose mission is to provide
high quality, nutritional, and flavorful vegetables and strawberries for consumption in both near and
remote regions of the United States. Additionally the company will provide high quality planting
materials for use nationwide.
Farmers Group is the buyout and merger of two successful vegetable farms. The idea behind the
business is to provide healthy and delicious vegetables and fruit to the public. In addition to vegetables
and fruits, the company plans to produce and market manure compost garden amendment products.
Farmers Group's management team is led by Mr. James Jackson as Business Manager, who has
extensive knowledge of the industry. The company expects to employ five temporary employees during
the equipment re-location phase, four employees on a permanent basis, and three part-time
employees.
Products
Farmers Group's plans to concentrate on vegetables as its primary product. This includes growing
carrots, romaine lettuce, leeks, red onions, summer squash, spinach, pumpkins, winter squash, globe
beets, and winter greens. The company's farm, will have a capacity sufficient to produce in excess of
200,000 lbs. of vegetables per year.
The company plans to utilize traditional and more advanced plant technologies to produce new
cultivars of strawberries and lima beans with locally-adapted superior characteristics for the Gulf-South
growing area.
This strategy will allow Farmers Group to produce crops during most of the year and will allow double
cultivation of the greenhouses with almost no additional heating necessary in the winter months.
The Market
Over the past decade the market for organic food has grown by 15% to 20% and every year 40% of
U.S. consumers occasionally reach for something labeled organic. Sales for organic foods are expected
to top $11 billion this year. Sales by farmers' markets have increased by 79% since 1994, to 3,137
markets in all 50 states, and the number of farmers who sell at them has more than tripled to 67,000.
About three million Americans a week now get their fresh food directly from the farmers who grew it.
This makes for an excellent environment for a industry participant such as Farmers Group that is willing
to compete in a niche market and be first to the market with new products.
Financial Considerations
The company is seeking $830,000 in both short-term and long-term loans to finance the purchase of
Farmers Group's new farm, upgrade the facilities, and cover start-up expenses and first year losses. It is
estimated that the company will begin to make a profit in Year 2 of operations. The company does not
expect to have any cash flow problems during the first four years of operations.
1.1 Mission
Farmers Group is an Alabama-based company, whose mission is to provide high quality, nutritional, and
flavorful vegetables and strawberries for consumption in both near and remote regions of the United
States. Additionally the company will provide high quality planting materials for use nationwide.

Company Summary
Farmers Group is the buyout and merger of two successful vegetable farms. The idea behind the
business is to provide healthy and delicious vegetables and fruit to the public. In addition to vegetables
and fruits, the company plans to produce and market manure compost garden amendment products.
2.1 Start-up Summary
Projected revenues for 2000 to 2004 are $-40,000, $8,500, $50,000, $70,800 and $82,500 respectively.
Additionally the company estimates that once fully operational, income per product, per annum would
be as follows; vegetable ($50,000) manure ($20,000) and horticulture ($10,000).

Start-up

Requirements

Start-up Expenses
Legal

$19,000

Facilities modification

$300,000

Seed

$600

Organic Herbicides/Pesticides $5,000

Consultants

$25,000

Insurance

$10,000

Research and development

$25,000

Expensed equipment

$250,000

Other

$50,000

Total Start-up Expenses

$684,600

Start-up Assets
Cash Required

$245,400

Start-up Inventory

$150,000

Other Current Assets

$250,000

Long-term Assets

$500,000

Total Assets

$1,145,4
00

Total Requirements

$1,830,0
00

2.2 Company Locations and Facilities

The farm is located in Calhoun county approximately 4.5 miles outside of Jasper.
The operation will utilize:

One large greenhouse, enclosing the vegetable area.

Horticultural greenhouse.

Filters, water treatment devices.

Backwash facilities.

Outdoor vegetable facilities.

Business office building.

An additional portion of the operation will be the manure composting facility. Local and regional dairy
operations have trouble with manure accumulations, and the company hopes to enter into contracts in
removing the manure. Farmers Group will then turn this into a saleable product. The company plans to
supply the region's nursery outlets with a top-quality, premium garden and soil amendment product for
area horticulture.

Products
While at Mobile Farmers Vegetable Farm James Jackson, steadily used and experimented with compost
and fertilized with manure of different kinds. The most important things with manure usage is to
eliminate the viable weed seed drawback by thoroughly composting the manure, to add enough
cellulose on product to bring it to the proper ratio and to bring its water content to proper levels. A
properly composted manure product has no seeds that will germinate and proliferate in it. Additionally,
a properly composted manure product has something a chemically formulated synthetic fertilizer does
not have: enzymes. Enzymes are critical for producing a truly nutritious and superior flavored product.
Research has shown that the superior flavor of a fruit or vegetable is closely related to vitamin content
and folic acid content in green vegetables.
The state-of-the-art vegetable equipment starting up in the new location utilizes revolutionary harvest
designs that:

Allow faster, longer growth

Cut the harvest labor by over 80%

Cut the harvest time and by so doing:

o

Decrease loss in weight gain, and

Eliminate weight loss from shock.

3.1 Product Description

Vegetables
Farmers Group's first line of production will be the green vegetable and red vegetable. During the
summer months Farmers Group will be growing carrots, romaine lettuce, leeks, red onions, summer
squash, and spinach. In the fall, production will center on pumpkins, winter squash, globe beets and
winter greens. With the growth of the popular organic food niche, and the federal government's new
organic labeling policy, Farmers Group will focus its produce on the intermediate organic label. This
means that approximately 70% of the food production process will be organic and all foods produced by

Farmers Group will be eligible for the "contains organic ingredients" label. The company's farm will have
a capacity sufficient to produce in excess of 200,000 lbs. of vegetables per year.
Strawberries
The company's more technical horticultural aspects include efforts to utilize traditional and more
advanced plant technologies to produce new cultivars of crops such as strawberries and lima beans
with locally-adapted superior characteristics for the Gulf-South growing area. Flavor, disease resistance,
adaptability to green-house culture, fall and winter season production are factors being combined in
greens cultivation to tap into the $2.99 pint berry market of the fall and winter.
Farmers Group's strategy is a combination of the two technologies during the cool winter months which
will allow the utilization of normally wasted space in the greenhouses for the high price winter greens
production. This will allow double cultivation of the greenhouses with almost no additional heating
necessary in this climate.
3.2 Technology
The company is currently seeking contact with Alabama universities in order to learn about and acquire
new hybrids of strawberries and vegetables that are hardier and grow faster in our local microclimates.
These and other available species and systems will be constantly tracked.
In addition to the above, the company is seeking contacts at Universities in Italy and Germany that are
involved in greens, and will continue the quest for the best flavored, large, and firm fall and winter
strawberries.
Currently, Farmers Group is conducting research to test certain clay-sand-manure mixture levels to
obtain better, cheaper bedding and agronomic soil mixtures that are more effective than the standard
used in the industry in Alabama (Pine bark mulch-composted).
3.3 Future Products
In the meantime, the company would like to explore the possibilities of crayfish production. Farmers
Group believes this to be a high revenue venture with retail prices running in excess of $15.00 per
pound in most places. The company also believes that if crayfish production is successful then it could
become the number one endeavor of Farmers Group.
Currently there is a defunct fish farming production facility with all the necessary capital equipment
approximately two miles from the current farm. Purchase of this facility would allow Farmers Group to
begin production and to capitalize on this higher margin product. What makes this most attractive is
the two ventures have significant joint cost potential, allowing for a reduction in marginal costs for all
products and creation of real economies of scale that would provide Farmers Group with a competitive
advantage.

Market Analysis Summary

At a time when eating has become a political statement, the government is paying up to $19 billion a
year to subsidize commodity crops in a glutted global market. Federal officials say that nearly 40% of
all farm income now comes directly from government subsidies, and the farm bill signed by President
Bush this year will pay $190 billion over 10 years, which includes $83 billion in new spending. However,
there are two market niches that are growing at an amazing rate, the organic market and the simple
farmers' market.
The organic market provides less than 2% of the nation's food supply and takes up less than 1% of its
cropland. But organic farms are flourishing as never before. Over the past decade the market for
organic food has grown by 15 to 20% and every year 40% of U.S. consumers occasionally reach for
something labeled organic. Sales for organic foods are expected to top $11 billion this year.
Conglomerates as big as Heinz and General Mills are now launching or buying organic lines and selling
them in mainstream supermarkets.*
With no subsidies and no middle men, farmers' markets have increased by 79% since 1994, to 3,137
markets in all 50 states, and the number of farmers who sell at them has more than tripled to 67,000,
the Agriculture Department has reported. About three million Americans a week now get their fresh
food directly from the farmers who grew it. "Right now, green markets are growing faster than anything
in agriculture," said Dr. Steven Blank, a farm economist at the University of California at Davis and the
author of three books on the subject.
These numbers, of course, represent a very thin slice of the big pie of national food. Farmers' markets
reported about $1 billion in sales last year, compared with more than $200 billion in overall farm
revenue. Barely 3% of the nation's two million farmers sell some of what they grow directly to
consumers.

But in an era of big-box food stores, when 10 major grocery chains control the purchase of 50% of fresh
food, the proliferation of open-air markets has come out of nowhere, giving more consumers an option
and allowing many small farmers to stay in business.**
With these trends in mind, Farmers Groups will concentrate on:

Wholesale live vegetable markets nationwide that sell organic produce.

Fresh farmers' markets.

Fall and winter greens market.

Nursery outlets selling composted manure.

4.1 Market Segmentation

The target customers include oriental vegetable markets demanding organic and semi-organic green
vegetables, vegetable processors, and private individual buyers through direct selling and farmers
markets. The company will continue to service the existing customers of the purchased vegetable
farms. In its greens production the company will target virtually all main food outlets. The company
plans to use the Internet as one of its marketing channels in the future.
The company's target customers will be as follows:
Vegetables:

Oriental vegetable markets demanding organic and semi-organic vegetables.

Vegetable processors.

Alabama National Guard.

People approaching the farm.

Roadside stands and farmers' markets.

Product-Bagged Manure:

Nursery and Garden Centers.

Private customers approaching facility.

Bulk customers.

The company will also take over customers from the previous owner of the vegetable facility. Farmers
Group has an established list of present customers of Errol Grynthum's vegetable farm, which is a major
asset to the sales of the company.
4.2 Industry Analysis
Alabama is one of the premier farming areas of the eastern United States. This creates an intensely
competitive environment with a large number of industry participants. Since almost all of the produce is
considered to be commodities, and large scale buyers are more consolidated than the farmers
themselves, overall margins are small and rivalries for wholesaler contracts are strong. Competitive
threats come from three main segments:

Imported vegetables of lower quality.>

Mississippi pound raised vegetables.

Alabama vegetable producers.

Direct competition in the individual buyers market segment comes from three farms in the immediate
area including the Anniston farm, Organics-To-You farm, and the Terrance Livingston vegetable farm.
Each of these competitors has produce stands as well as selling to local farmers' markets. However,
with the exception of Organics-To-You Farm, none of the others focus on a niche market and depend
heavily on federal subsidies.
4.3 Target Market Segment Strategy
The Market Analysis Pie shown below reflects the total number of potential customers for Farmers
Group. The number of Oriental markets and vegetable processors represent national estimates of
industry participants, whereas the number of individual buyers represents the estimated annual
number of individuals that will be driving by the farm.

Market Analysis
2000

2001

2002

2003

2004

Potential Customers

Growth

Vegetable processors

3%

5,000

5,150

5,305

5,464

5,628

3.00%

Oriental
markets

1%

25,000

25,250

25,503

25,758

26,016

1.00%

Individual buyers

5%

300,000

315,000

330,750

347,288

364,652

5.00%

Total

4.68%

330,000

345,400

361,558

378,510

396,296

4.68%

vegetable

CAGR

Strategy and Implementation Summary

The Farmers Group strategy is to profitably and efficiently utilize present and future agricultural
technology in the production of vegetables. The company, by acquiring an existing profitable vegetable
farm with all the necessary custom-innovated equipment, will gain a significant industry advantage.
Additional application and utilization of horticultural technology in the production of strawberries will
allow double utilization of the climate controled portion of the overhead. Farmers Group hopes to
consolidate considerable goodwill already created by exercising the option of not adding another highproduction facility to the present supply-demand scenario.
The company's goals in the first year are to:

Prepare the future site.

Relocate and expand Green Acres vegetable system and get it operational.

Integrate greens culture into the system.

Have the composting system in full production by early spring of the second year.

The company's long-term plan is to phase out whichever products are least lucrative and replace them
with products that are practical and cost efficient.
5.1 Competitive Edge
Farmers Group's main competitive advantages are:

Efficient production utilizing greenhouses.

Reduced overhead by fully realizing crop output potential and economies of scale through joint
costs.

Knowledge due to research since 1988.

5.2 Marketing Strategy

Farmers Group will initially market and supply its products to target customers. The company is further
exploring marketing opportunities on the Internet. To this extent, the company would like to set up a
website to market its products.
The company will utilize aggressive advertising strategies to further market its products. These
strategies include the promotion of products through the sponsoring of spots on cooking shows and
exhibitions, and also engaging prominent chefs to help promote this fledgling industry.
5.2.1 Pricing Strategy
The company sets its pricing based on market rates as far as vegetable products are concerned.
Farmers Group's pricing for strawberries will exceed the average market price for the following reasons:

Taste sampling at outlets will be encouraged.

Unparalleled flavor superiority will addict greens tasters.

Promotion of pesticide-free, fumigant-free cultural techniques of soil, environment, ozone, and

health-friendly production techniques.

5.3 Sales Strategy

At Farmers Group, the sales process is primarily the same for vegetables as it is for composting
products, in that both products will be mainly sold through wholesale marketing. As in the past, live
shipments will be delivered by contract carriers in special oxygenated tanks carrying 8,000 vegetables
or more, and will be continued as demanded. Farmers Group's bagged manure products will be
delivered and unloaded in sizable wholesale quantities by the pallet.
Smaller, more local orders will significantly increase the overall sales when the 300-450 live vegetables
carrying tank system is put into service late in 2000 or early in 2001.
The company's average sales cycle from first contact to closing of the sale is approximately 3 to 12
days for vegetable products. Farmers Group plans to shorten this cycle. Furthermore, the company
estimates that from first contact to sale conclusion, the cycle for fresh strawberries will run 3 days or
less. Composted products sale cycle should run from 3 to 12 days.
Direct sales contacts of vegetable markets by delivery personnel, as well as cold calling by telephone of
potential market outlets, will also be employed.
5.4 Strategic Alliances
The company has strategic alliances with:

Alabama State University Horticulture Department

Southeastern Alabama State University Biology Department

Dr. Michael Smith - Vegetable Specialist

James Edwards - Horticultural Inspection

Charles Newton - Wildlife

Alabama Wildlife

Mobile Nursery Center

Sales Forecast
The following table and charts show our projected sales.

Sales Forecast
2000

2001

2002

2003

2004

Sales
Sales

$575,000 $700,000 $850,000 $889,100 $927,331

Other

$0

Total Sales

$575,000 $700,000 $850,000 $889,100 $927,331

Direct Cost of Sales

2000

Sales

$391,000 $478,100 $578,850 $601,032 $627,803

Other

$0

$0

2001

$0

$0

2002

$0

$0

2003

$0

$0

2004

$0

Subtotal Direct Cost of Sales $391,000 $478,100 $578,850 $601,032 $627,803

Management Summary
Farmers Group's management team is led by Mr. James Jackson, Business Manager, and the current
manager of Mobile Farmers Vegetable Farm, who has extensive knowledge of the industry and has been
tracking vegetable trends for 30 years.
The company's management philosophy is based on responsibility and mutual respect. Farmers Group
has an environment and structure that encourages productivity and respect for customers and fellow
employees.

7.1 Personnel Plan

Overall, Farmers Group will have 12 personnel. The company expects to employ 5 temporary
employees during the equipment re-location phase, 4 employees on a permanent basis, and 3 parttime employee. The Farmers Group team is organized into three groups:
Management
Management will be responsible for supervising and participating in the daily operations of the facility.
Management consists of:

James Jackson, Business Manager, Full Time

Terry Howard, Executive Director, Full Time

Kevin Perry, Management Trainee, 3/4 Time

Victor Green, Management Trainee, 1/4 Time

Daily Maintenance
This group will consist of the following:

Henry Jones, Logistical Engineer, Full Time

Colin Henry, Heavy Equipment, Full Time

Michael Owen, Welder, 1/2 Time

Contract Personnel
They will be utilized initially for the moving and setting up of the vegetable farm, greenhouses, and the
building of the manure composting facility.
Personnel Plan
2000

2001

2002

2003

2004

Business Manager

$25,000

$30,000

$30,000

$30,000

$30,000

Executive Director

$25,000

$30,000

$30,000

$30,000

$30,000

Manager Trainee

$9,000

$6,000

$6,000

$6,000

$6,000

Manager Trainee

$4,000

$6,000

$6,000

$6,000

$6,000

Logistic engineer

$18,000

$18,000

$18,000

$18,000

$18,000

Heavy equipment

$18,000

$18,000

$18,000

$18,000

$18,000

Welder

$3,500

$3,000

$3,000

$3,000

$3,000

Contract workers

$15,000

$0

$0

$0

$0

Total People

Total Payroll

$117,500 $111,000 $111,000 $111,000 $111,000

Financial Plan Summary

The following topics and tables outline our financial plan.
8.1 Start-up Funding
Funding Requirements and Uses
The company is seeking to raise of $830,000 for the purpose of financing the acquisition of the Green
Acres Vegetable Farm and Mobile Farmers Vegetable Farm, facilities modifications, equipment, and
funding operating expenses. Another $1,000,000 will be invested in the company by its four co-owners.
The following is a breakdown of how the funds will be used:
Breakdown of Use of Funds

Acquisition:
Property

$1,300,000

Equipment System

$400,000

Sub-total

$1,700,000

Operating Expenses:
Salaries

$80,000

Marketing and promotion

$10,000

Other operating expenses

$10,000

Sub-total

$100,000

Total

$1,800,000

Start-up Funding
Start-up Expenses to Fund

$684,600

Start-up Assets to Fund

$1,145,400

Total Funding Required

$1,830,000

Assets
Non-cash Assets from Start-up

$900,000

Cash Requirements from Start-up $245,400

Additional Cash Raised

$0

Cash Balance on Starting Date

$245,400

Total Assets

$1,145,400

Liabilities and Capital

Liabilities
Current Borrowing

$400,000

Long-term Liabilities

$400,000

Accounts Payable
Bills)

(Outstanding

$30,000

Other Current Liabilities (interest$0

free)
Total Liabilities

$830,000

Capital

Planned Investment
Investor 1

$250,000

Investor 2

$250,000

Investor 3

$250,000

Investor 4

$250,000

Other

$0

Additional
Requirement

Investment

$0

Total Planned Investment

$1,000,000

Loss
at
Expenses)

($684,600)

Start-up

(Start-up

Total Capital

$315,400

Total Capital and Liabilities

$1,145,400

Total Funding

$1,830,000

8.2 Important Assumptions

Nature and Limitation of Projections
This financial projection is based on sales volume at the levels described in the sales forecast section
and presents, to the best of management's knowledge, the company's expected assets, liabilities,
capital, and revenues and expenses. The projections reflect management's judgement of the expected
conditions and its expected course of action given the hypothetical assumptions.
Nature of Operations
The company is in the business of vegetable farming, greens cultivation, and composting. The company
expects to be operating in 2000.
Revenues
The company's revenue is derived primarily from the sale of vegetables, strawberries, and bagged
composted manure products.
Expenses
The company's expenses are primarily those of salaries, utilities, and insurance costs. Other expenses
are based on management's estimates and industry averages.
General Assumptions
2000

2001

2002

2003

2004

Current Interest Rate 7.00%

7.00%

7.00%

7.00%

7.00%

Long-term
Rate

7.00%

7.00%

7.00%

7.00%

7.00%

Tax Rate

20.83%

20.00%

20.83%

20.00%

20.83%

Other

Plan Month

Interest

8.3 Break-even Analysis

The company's break-even analysis is given below.

Break-even Analysis

Monthly Revenue Break$36,974

even

Assumptions:
Average Percent Variable
68%
Cost
Estimated Monthly Fixed
$11,832
Cost
8.4 Projected Profit and Loss
As the profit and loss table shows, Farmers Group expects a steady growth in profitability over the next
few years.

Pro Forma Profit and Loss

2000

2001

2002

2003

2004

Sales

$575,000

$700,000

$850,000

$889,100

$927,331

Direct Cost of Sales

$391,000

$478,100

$578,850

$601,032

$627,803

Other

$10,000

$10,000

$10,000

$10,000

$10,000

Total Cost of Sales

$401,000

$488,100

$588,850

$611,032

$637,803

Gross Margin

$174,000

$211,900

$261,150

$278,068

$289,528

Gross Margin %

30.26%

30.27%

30.72%

31.28%

31.22%

$117,500

$111,000

$111,000

$111,000

$111,000

Sales and Marketing and Other

$11,400
Expenses

$11,100

$16,550

$15,300

$17,550

Depreciation

$0

$0

$0

$0

$0

Gas and Oil

$2,040

$3,000

$3,000

$3,000

$3,000

Utilities

$6,000

$6,000

$6,000

$6,000

$6,000

Insurance

$5,040

$5,500

$5,500

$5,500

$5,500

Payroll Taxes

$0

$0

$0

$0

$0

Other

$0

$0

$0

$0

$0

Total Operating Expenses

$141,980

$136,600

$142,050

$140,800

$143,050

Profit Before Interest and Taxes

$32,020

$75,300

$119,100

$137,268

$146,478

EBITDA

$32,020

$75,300

$119,100

$137,268

$146,478

Interest Expense

$54,664

$47,845

$39,095

$32,095

$26,495

Taxes Incurred

$0

$5,491

$16,668

$21,035

$24,996

Net Profit

($22,644)

$21,964

$63,337

$84,139

$94,987

Net Profit/Sales

-3.94%

3.14%

7.45%

9.46%

10.24%

Expenses
Payroll

8.5 Projected Cash Flow

The chart and table below contain the cash flow assumptions and projections for Farmers Group during
the first five years of plan implementation. Year 1 monthlies are presented in the appendix.

Pro Forma Cash Flow

2000

2001

2002

2003

2004

Cash Received

Cash from Operations

Cash Sales

$143,750

$175,000

$212,500

$222,275

$231,833

Cash from Receivables

$431,250

$525,000

$637,500

$666,825

$695,498

Subtotal Cash from Operations

$575,000

$700,000

$850,000

$889,100

$927,331

Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

New Current Borrowing

$0

$0

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$97,000

$0

$0

Subtotal Cash Received

$575,000

$700,000

$947,000

$889,100

$927,331

Expenditures

2000

2001

2002

2003

2004

Cash Spending

$117,500

$111,000

$111,000

$111,000

$111,000

Bill Payments

$408,920

$538,815

$680,942

$697,123

$722,814

Subtotal Spent on Operations

$526,420

$649,815

$791,942

$808,123

$833,814

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

Principal Repayment
Borrowing

$54,000

$100,000

$100,000

$25,000

$35,000

Other Liabilities Principal Repayment $0

$0

$0

$0

$0

Long-term
Repayment

$0

$25,000

$25,000

$50,000

$50,000

Purchase Other Current Assets

$0

$0

$0

$0

$20,000

Purchase Long-term Assets

$0

$0

$0

$0

$0

Dividends

$0

$25,000

$20,000

$10,000

$10,000

Subtotal Cash Spent

$580,420

$799,815

$936,942

$893,123

$948,814

Net Cash Flow

($5,420)

($99,815)

$10,058

($4,023)

($21,483)

Cash Balance

$239,980

$140,165

$150,223

$146,200

$124,717

Additional Cash Received

Expenditures from Operations

Additional Cash Spent

of

Liabilities

Current

Principal

8.6 Projected Balance Sheet

We project solid cash balance and net worth over the years of the plan.

Pro Forma Balance Sheet

2000

2001

2002

2003

2004

Assets

Current Assets
Cash

$239,980 $140,165 $150,223 $146,200 $124,717

Accounts Receivable

$0

$0

$0

$0

$0

Inventory

$55,760

$68,181

$82,549

$86,346

$90,059

Other Current Assets

$250,000 $250,000 $250,000 $250,000 $270,000

Total Current Assets

$545,740 $458,346 $482,772 $482,546 $484,776

Long-term Assets
Long-term Assets

$500,000 $500,000 $500,000 $500,000 $500,000

Accumulated
Depreciation

$0

Total Long-term Assets

$500,000 $500,000 $500,000 $500,000 $500,000

Total Assets

$1,045,7
$958,346 $982,772 $982,546 $984,776
40

Liabilities and Capital

2000

2001

2002

2003

2004

Accounts Payable

$6,984

$47,627

$56,715

$57,350

$59,594

Current Borrowing

$346,000 $246,000 $146,000 $121,000 $86,000

Other Current Liabilities

$0

Subtotal
Liabilities

$352,984 $293,627 $202,715 $178,350 $145,594

$0

$0

$0

$0

Current Liabilities

Current

$0

$0

$0

$0

Long-term Liabilities

$400,000 $375,000 $350,000 $300,000 $250,000

Total Liabilities

$752,984 $668,627 $552,715 $478,350 $395,594

Paid-in Capital

$1,000,0 $1,000,0 $1,097,0 $1,097,0 $1,097,00

00
00
00
00
0

Retained Earnings

($684,60 ($732,24 ($730,28 ($676,94 ($602,80

0)
4)
0)
3)
4)

Earnings

($22,644) $21,964

Total Capital

$292,756 $289,720 $430,057 $504,196 $589,182

Total
Liabilities
Capital

$63,337

$84,139

$94,987

and $1,045,7
$958,346 $982,772 $982,546 $984,776
40

Net Worth
8.7 Business Ratios

$292,756 $289,720 $430,057 $504,196 $589,182

The business ratios given below are contrasted to industry standards for SIC code 0161 which covers
vegetable and melon growers. Within this category, research has shown that there can be significant
deviations from industry standards due to farm size, product life cycle, and capital resources.
Farmers Group is a start-up venture, and therefore has a more heavy debt to equity ratio than most
existing farms. Furthermore, due to its move into a niche market, the company is expected to spend
more on advertising than its competitors. The first two years of operations are expected also to have a
higher growth rate than average as it gains market share.

Ratio Analysis
2000

2001

2002

2003

2004

Industry
Profile

0.00%

21.74%

21.43%

4.60%

4.30%

-4.60%

Accounts Receivable

0.00%

0.00%

0.00%

0.00%

0.00%

12.90%

Inventory

5.33%

7.11%

8.40%

8.79%

9.15%

14.40%

Other Current Assets

23.91%

26.09%

25.44%

25.44%

27.42%

28.90%

Total Current Assets

52.19%

47.83%

49.12%

49.11%

49.23%

56.20%

Long-term Assets

47.81%

52.17%

50.88%

50.89%

50.77%

43.80%

Total Assets

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Current Liabilities

33.75%

30.64%

20.63%

18.15%

14.78%

31.10%

Long-term Liabilities

38.25%

39.13%

35.61%

30.53%

25.39%

20.50%

Total Liabilities

72.00%

69.77%

56.24%

48.68%

40.17%

51.60%

Net Worth

28.00%

30.23%

43.76%

51.32%

59.83%

48.40%

Sales

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Gross Margin

30.26%

30.27%

30.72%

31.28%

31.22%

32.00%

Selling, General & Administrative

37.26%
Expenses

29.04%

24.76%

23.31%

22.31%

20.70%

Advertising Expenses

0.83%

0.71%

1.23%

1.20%

1.23%

0.20%

Profit Before Interest and Taxes

5.57%

10.76%

14.01%

15.44%

15.80%

1.70%

Current

1.55

1.56

2.38

2.71

3.33

1.65

Quick

1.39

1.33

1.97

2.22

2.71

0.88

Total Debt to Total Assets

72.00%

69.77%

56.24%

48.68%

40.17%

51.60%

Pre-tax Return on Net Worth

-7.73%

9.48%

18.60%

20.86%

20.36%

2.20%

Pre-tax Return on Assets

-2.17%

2.86%

8.14%

10.70%

12.18%

4.50%

Sales Growth

Percent of Total Assets

Percent of Sales

Main Ratios

Additional Ratios

2000

2001

2002

2003

2004

Net Profit Margin

-3.94%

3.14%

7.45%

9.46%

10.24%

n.a

Return on Equity

-7.73%

7.58%

14.73%

16.69%

16.12%

n.a

Accounts Receivable Turnover

0.00

0.00

0.00

0.00

0.00

n.a

Collection Days

60

n.a

Inventory Turnover

3.93

7.71

7.68

7.12

7.12

n.a

Accounts Payable Turnover

55.25

12.17

12.17

12.17

12.17

n.a

Payment Days

29

17

28

30

29

n.a

Total Asset Turnover

0.55

0.73

0.86

0.90

0.94

n.a

Debt to Net Worth

2.57

2.31

1.29

0.95

0.67

n.a

Current Liab. to Liab.

0.47

0.44

0.37

0.37

0.37

n.a

Net Working Capital

$192,756

$164,720

$280,057

$304,196

$339,182

n.a

Interest Coverage

0.59

1.57

3.05

4.28

5.53

n.a

Assets to Sales

1.82

1.37

1.16

1.11

1.06

n.a

Current Debt/Total Assets

34%

31%

21%

18%

15%

n.a

Acid Test

1.39

1.33

1.97

2.22

2.71

n.a

Sales/Net Worth

1.96

2.42

1.98

1.76

1.57

n.a

Dividend Payout

0.00

1.14

0.32

0.12

0.11

n.a

Activity Ratios

Debt Ratios

Liquidity Ratios

Additional Ratios

Appendix
Sales Forecast
Jan Feb Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov Dec

Sales
Sales

0% $0

$0

$10,00 $25,00 $40,00 $55,00 $100,00 $175,00 $120,00 $50,00

$0
0
0
0
0
0
0
0
0

$0

Other

0% $0

$0

$0

$0

$0

$0

$0

$10,00 $25,00 $40,00 $55,00 $100,00 $175,00 $120,00 $50,00

$0
0
0
0
0
0
0
0
0

$0

Total Sales

Direct
Sales

Cost

of

$0

$0

May

$0

$0

Aug

$0

Apr

Sales

$0

$0

$6,800

$17,00 $27,20 $37,40

$119,00
$34,00
$68,000
$81,600
$0
0
0
0
0
0

$0

Other

$0

$0

$0

$0

$0

$0

Subtotal Direct
Cost of Sales

$0

$0

$6,800

$17,00 $27,20 $37,40

$119,00
$34,00
$68,000
$81,600
$0
0
0
0
0
0

$0

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Plan Month

10

11

12

Current
Interest
Rate

7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

Long-term
Interest
Rate

7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

Tax Rate

30.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00
%
%
%
%
%
%
%
%
%
%
%
%

Other

$0

Jul

$0

Jan Feb Mar

$0

Jun

$0

$0

Sep

$0

Oct

$0

$0

Nov Dec

General Assumptions

Jun

Jul

Aug

Sep

Jan

Feb

Mar

Apr

Oct

Nov

Dec

Cash
Sales

$0

$0

$2,500 $6,250

$10,00 $13,75 $25,00 $43,75 $30,00 $12,50

$0
0
0
0
0
0
0

Cash
from
Receivabl
es

$0

$0

$0

$7,875

$0

$0

$2,500 $6,500 $17,87 $32,87 $55,37 $86,12 $106,8 $142,3 $88,25 $36,25
5
5
5
5
75
75
0
0

Pro Forma Cash Flow

May

Cash
Received

Cash
from
Operation
s

Subtotal
Cash
from

$250

$0

$19,12 $30,37 $42,37 $76,87 $129,8 $88,25 $36,25

5
5
5
5
75
0
0

Operation
s

Additiona
l
Cash
Received
Sales Tax,
VAT,
0.00
$0
HST/GST %
Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New
Current
Borrowin
g

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New
Other
Liabilities
(interestfree)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New
Longterm
Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of
Other
Current
Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of
Longterm
Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New
Investme
nt
Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal
Cash
Received

$0

$0

$2,500 $6,500

$17,87 $32,87 $55,37 $86,12 $106,8 $142,3 $88,25 $36,25

5
5
5
5
75
75
0
0

Expendit
ures

Jan

Feb

Mar

May

Apr

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Expendit
ures from
Operation
s
Cash
Spending

$11,50 $11,50 $11,00

$10,00 $10,50 $10,00 $10,50
$7,500 $7,000 $9,500 $9,000 $9,500
0
0
0
0
0
0
0

Bill
Payments

$30,25
$10,12 $91,73 $178,0 $46,51
$7,507 $7,509 $7,573 $7,571 $7,508
$7,394 $7,225
0
9
0
12
1

Subtotal
Spent on
Operation
s

$41,75 $19,00 $18,50 $15,07 $14,57 $17,00 $19,12 $101,2 $188,0 $57,01 $17,39 $17,72
0
7
9
3
1
8
9
30
12
1
4
5

Additiona
l
Cash
Spent
Sales Tax,
VAT,
HST/GST
Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal
Repayme
nt
of
Current
Borrowin
g

$0

$0

$0

$0

$5,000

$15,00
$4,000 $0
0

$0

$0

$30,00
$0
0

Other
Liabilities
Principal
Repayme
nt

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Longterm
Liabilities
Principal
Repayme
nt

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase
Other
Current
Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase
Longterm
Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal
Cash
Spent

$41,75 $19,00 $18,50 $15,07 $19,57 $32,00 $23,12 $101,2 $188,0 $57,01 $47,39 $17,72
0
7
9
3
1
8
9
30
12
1
4
5

Net Cash
Flow

($41,7 ($19,0 ($16,0 ($8,57 ($1,69

$867
50)
07)
09)
3)
6)

Cash
Balance

$203,6 $184,6 $168,6 $160,0 $158,3 $159,2 $191,4 $176,3 $95,23 $180,5 $221,4 $239,9
50
43
34
61
65
32
78
73
6
99
55
80

$0

$0

$32,24 ($15,1 ($81,1 $85,36 $40,85 $18,52

6
05)
37)
4
6
5

Pro Forma Balance Sheet

Jan
Assets

Current
Assets

Startin
g
Balanc
es

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash

$245,4 $203,6 $184,6 $168,6 $160,0 $158,3 $159,2 $191,4 $176,3 $95,23 $180,5 $221,4 $239,9
00
50
43
34
61
65
32
78
73
6
99
55
80

Account
s
$0
Receiva
ble

$0

$0

$7,500

$26,00 $48,12 $70,25 $114,8 $203,7 $216,8 $124,5 $36,25

$0
0
5
0
75
50
75
00
0

Inventor $150,0 $150,0 $150,0 $143,2 $126,2 $99,00 $61,60 $74,80 $130,9 $89,76 $55,76 $55,76 $55,76
y
00
00
00
00
00
0
0
0
00
0
0
0
0
Other
$250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0 $250,0
Current
00
00
00
00
00
00
00
00
00
00
00
00
00
Assets
Total
$645,4 $603,6 $584,6 $569,3 $562,2 $555,4 $541,0 $631,1 $761,0 $651,8 $610,8 $563,4 $545,7
Current
00
50
43
34
61
90
82
53
23
71
59
65
40
Assets

Longterm
Assets
Longterm
Assets

$500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0
00
00
00
00
00
00
00
00
00
00
00
00
00

Accumu
lated
$0
Depreci
ation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total
Longterm
Assets

$500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0 $500,0
00
00
00
00
00
00
00
00
00
00
00
00
00

Total
Assets

$1,145 $1,103 $1,084 $1,069 $1,062 $1,055 $1,041 $1,131 $1,261 $1,151 $1,110 $1,063 $1,045
,400 ,650 ,643 ,334 ,261 ,490 ,082 ,153 ,023 ,871 ,859 ,465 ,740

Liabilitie
s
and
Capital

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Current
Liabilitie
s
Account
$30,00
$85,64 $176,4 $46,26
s
$7,256 $7,256 $7,321 $7,321 $7,260 $7,176
$7,153 $6,984 $6,984
0
7
17
5
Payable
Current
$400,0 $400,0 $400,0 $400,0 $400,0 $395,0 $380,0 $376,0 $376,0 $376,0 $376,0 $346,0 $346,0
Borrowi
00
00
00
00
00
00
00
00
00
00
00
00
00
ng
Other
Current
$0
Liabilitie
s

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal
Current $430,0 $407,2 $407,2 $407,3 $407,3 $402,2 $387,1 $461,6 $552,4 $422,2 $383,1 $352,9 $352,9
Liabilitie 00
56
56
21
21
60
76
47
17
65
53
84
84
s

Longterm
$400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0 $400,0
Liabilitie 00
00
00
00
00
00
00
00
00
00
00
00
00
s
Total
$830,0 $807,2 $807,2 $807,3 $807,3 $802,2 $787,1 $861,6 $952,4 $822,2 $783,1 $752,9 $752,9
Liabilitie
00
56
56
21
21
60
76
47
17
65
53
84
84
s

Paid-in $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Capital ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000
Retaine
d
($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684, ($684,
Earning 600) 600) 600) 600) 600) 600) 600) 600) 600) 600) 600) 600) 600)
s
Earning
$0
s

($19,0 ($38,0 ($53,3 ($60,4 ($62,1 ($61,4 ($45,8 ($6,79 $14,20 $12,30 ($4,91 ($22,6
07)
13)
87)
60)
71)
94)
94)
4)
6
6
9)
44)

Total
$315,4 $296,3 $277,3 $262,0 $254,9 $253,2 $253,9 $269,5 $308,6 $329,6 $327,7 $310,4 $292,7
Capital 00
93
87
13
40
29
06
06
06
06
06
81
56
Total
Liabilitie $1,145 $1,103 $1,084 $1,069 $1,062 $1,055 $1,041 $1,131 $1,261 $1,151 $1,110 $1,063 $1,045
s
and ,400 ,650 ,643 ,334 ,261 ,490 ,082 ,153 ,023 ,871 ,859 ,465 ,740
Capital

Net
Worth

$315,4 $296,3 $277,3 $262,0 $254,9 $253,2 $253,9 $269,5 $308,6 $329,6 $327,7 $310,4 $292,7
00
93
87
13
40
29
06
06
06
06
06
81
56

Pro Forma Profit and Loss

Jan

Feb

Mar

$0

$0

$10,00 $25,0 $40,0 $55,0 $100,0 $175,0 $120,0 $50,0

$0
0
00
00
00
00
00
00
00

$0

$0

$0

$6,800

$17,0 $27,2 $37,4 $68,00 $119,0 $81,60 $34,0

$0
00
00
00
0
00
0
00

$0

Other

$800

$800

$867

$867 $833 $833 $833

$833 $833

$833

Total Cost
of Sales

$800

$800

$7,667

$17,8 $28,0 $38,2 $68,83 $119,8 $82,43 $34,8

$833
67
33
33
3
33
3
33

$833

Gross
Margin

($800) ($800) $2,333

$7,13 $11,9 $16,7 $31,16 $55,16 $37,56 $15,1

($833) ($833)
3
67
67
7
7
7
67

Gross
Margin %

0.00% 0.00% 23.33%

28.53 29.92 30.48 31.17 31.52 31.31 30.33

0.00% 0.00%
%
%
%
%
%
%
%

Sales
Direct
Cost
Sales

of

Apr

May

Jun

Jul

Aug

$833

Sep

$833

Oct

Nov

Dec

Expenses
Payroll

$11,50 $11,50 $11,00 $7,50 $7,00 $9,50

$10,00 $10,5 $10,00 $10,50
$9,000 $9,500
0
0
0
0
0
0
0
00
0
0

Sales and
Marketing
and Other
Expenses

$950

$950

$950

$950 $950 $950 $950

$950

$950

$950 $950

$950

Depreciat

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

ion
Gas
Oil

and

$170

$170

$170

$170 $170 $170 $170

$170

$170

$170 $170

$170

Utilities

$500

$500

$500

$500 $500 $500 $500

$500

$500

$500 $500

$500

Insurance

$420

$420

$420

$420 $420 $420 $420

$420

$420

$420 $420

$420

15
$0
%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total
Operating
Expenses

$13,54 $13,54 $13,04 $9,54 $9,04 $11,5 $11,04 $11,54 $12,04 $12,5 $12,04 $12,54
0
0
0
0
0
40
0
0
0
40
0
0

Profit
Before
Interest
and Taxes

($14,3 ($14,3 ($10,7 ($2,40 $2,92 $5,22 $20,12 $43,62 $25,52 $2,62 ($12,8 ($13,37
40)
40)
07)
7)
7
7
7
7
7
7
73)
3)

EBITDA

($14,3 ($14,3 ($10,7 ($2,40 $2,92 $5,22 $20,12 $43,62 $25,52 $2,62 ($12,8 ($13,37
40)
40)
07)
7)
7
7
7
7
7
7
73)
3)

Interest
Expense

$4,667 $4,667 $4,667

$4,66 $4,63 $4,55

$4,52
$4,527 $4,527 $4,527
$4,352 $4,352
7
8
0
7

Taxes
Incurred

$0

$0

Net Profit

($19,0 ($19,0 ($15,3 ($7,07 ($1,71

$15,60 $39,10 $21,00 ($1,90 ($17,2 ($17,72
$677
07)
07)
73)
3)
1)
0
0
0
0)
25)
5)

Net
Profit/Sal
es

15.60 22.34 17.50 0.00% 0.00% 153.73 28.29

1.23%
0.00% 0.00%
4.28%
%
%
%
3.80%
%
%

Payroll
Taxes

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Personnel Plan
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Business
Manager

0% $1,500 $1,500 $1,500

$1,50 $1,50 $2,50 $2,50 $2,50

$2,500 $2,500 $2,500 $2,500
0
0
0
0
0

Executive
Director

0% $1,500 $1,500 $1,500

$1,50 $1,50 $2,50 $2,50 $2,50

$2,500 $2,500 $2,500 $2,500
0
0
0
0
0

Manager
Trainee

0% $0

$0

$0

$1,00 $1,00 $1,00 $1,00 $1,00

$1,000 $1,000 $1,000 $1,000
0
0
0
0
0

Manager
Trainee

0% $0

$0

$0

$0

Logistic
engineer

0% $1,500 $1,500 $1,500

$1,50 $1,50 $1,50 $1,50 $1,50

$1,500 $1,500 $1,500 $1,500
0
0
0
0
0

Heavy
equipment

0% $1,500 $1,500 $1,500

$1,50 $1,50 $1,50 $1,50 $1,50

$1,500 $1,500 $1,500 $1,500
0
0
0
0
0

Welder

0% $500

$500 $0

Contract
workers

0% $5,000 $5,000 $5,000 $0

$500

$0

$0

$0

$0

$0

$0

$1,000 $1,000 $1,000 $1,000

$500 $0

$500 $0

$500

$0

$500

$0

$0

$0

$0

$0

$0

$0

Total People

12

12

12

Total Payroll

$11,50 $11,50 $11,00 $7,50 $7,00 $9,50 $9,00 $9,50 $10,00 $10,50 $10,00 $10,50
0
0
0
0
0
0
0
0
0
0
0
0