Parkdale Meats

Business Plan

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Table of Contents
1.0 Executive Summary .................................................................................................................................1
Chart: Highlights.........................................................................................................................2
1.1 Objectives......................................................................................................................................2
1.2 Mission ..........................................................................................................................................2
1.3 Keys to Success ............................................................................................................................2
2.0 Company Summary .................................................................................................................................3
2.1 Company Ownership .....................................................................................................................3
2.2 Start-up Summary..........................................................................................................................3
Table: Start-up ...........................................................................................................................4
Chart: Start-up ...........................................................................................................................4
3.0 Products..................................................................................................................................................4
4.0 Market Analysis Summary .......................................................................................................................5
4.1 Market Segmentation.....................................................................................................................6
Table: Market Analysis ...............................................................................................................6
Chart: Market Analysis (Pie).......................................................................................................7
4.2 Target Market Segment Strategy...................................................................................................7
4.3 Industry Analysis............................................................................................................................7
4.3.1 Competition and Buying Patterns ......................................................................................8
5.0 Strategy and Implementation Summary ...................................................................................................8
5.1 Competitive Edge ..........................................................................................................................9
5.2 Marketing Strategy ........................................................................................................................9
5.3 Sales Strategy ...............................................................................................................................9
5.3.1 Sales Forecast ................................................................................................................10
Table: Sales Forecast.....................................................................................................10
Chart: Sales Monthly.......................................................................................................11
Chart: Sales by Year.......................................................................................................11
5.4 Milestones ...................................................................................................................................11
Table: Milestones .....................................................................................................................12
Chart: Milestones .....................................................................................................................12
6.0 Management Summary .........................................................................................................................12
6.1 Personnel Plan ............................................................................................................................12
Table: Personnel......................................................................................................................13
7.0 Financial Plan .......................................................................................................................................13
7.1 Start-up Funding .........................................................................................................................13
Table: Start-up Funding ...........................................................................................................14
7.2 Important Assumptions ................................................................................................................14
7.3 Break-even Analysis ....................................................................................................................14
Table: Break-even Analysis .....................................................................................................15
Chart: Break-even Analysis......................................................................................................15
7.4 Projected Profit and Loss ............................................................................................................15
Table: Profit and Loss ..............................................................................................................16
Chart: Profit Monthly ................................................................................................................16
Chart: Profit Yearly...................................................................................................................17
Chart: Gross Margin Monthly ...................................................................................................17
Chart: Gross Margin Yearly......................................................................................................18
7.5 Projected Cash Flow....................................................................................................................18
Table: Cash Flow .....................................................................................................................19
Chart: Cash..............................................................................................................................20
7.6 Projected Balance Sheet .............................................................................................................20
Table: Balance Sheet...............................................................................................................21
7.7 Business Ratios ...........................................................................................................................21
Table: Ratios............................................................................................................................22
Table: Sales Forecast ...................................................................................................................................1
Table: Personnel...........................................................................................................................................2
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Table: Profit and Loss ...................................................................................................................................3
Table: Cash Flow ..........................................................................................................................................4
Table: Balance Sheet....................................................................................................................................5

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1.0 Executive Summary
Overview
Parkdale Meats, is a startup specialty butcher shop to be launched in the coming year. It will
sell a wide menu of meats to customers including medium- and high-income residents of
Parkdale, as well as high-income residents of neighboring towns, and high-end caterers.
The Company
Parkdale Meats is established as a limited liability company owned by its two co-founders.
The store will be managed and direc ted by Robert Suidae, a veteran butcher with fifteen
years experience in butcher shops and Eryka Auroc h, an experienced retail food-service
manager. Auroc h will serve as the company's CEO and Suidae as the company's COO.
Products and Service
Parkdale Meats will sell aged beef, free-range poultry, fresh pork and domestic lamb. Upon
request, the store will sell wild game such as buffalo, alligator, kangaroo, quail, and other
specially requested items. The products will be purchased from suppliers within a 100-mile radius
of the store to have minimal impac t on the environment and to maintain product freshness.
Products will be purchased as whole animals and butchered in the store by trained butchers.
The sales staff will offer suggestions of substitutions or help customers fulfill their orders through
special orders in order to make sure all customers leave satisfied.
The Market
The meat and poultry industry is the largest segment of U.S. agriculture. Total meat and poultry
production in 2007 reached more than 91 billion pounds. U.S. meat consumption was 55% red
meat (beef, veal, lamb, pork, and mutton), 8.2% fish, and 36.8% poultry in 2007. Meat is sold
through retail establishments including restaurants, groc ery stores, and butcher shops.
Independent butcher shops have dec reased in number over the last ten years, as sales of
meet have fallen slightly and moved increasingly to groc ery stores and big box retailers.
However, this has created an opportunity for specialty butcher shops in markets which provide
only basic options through these larger retailers.
Competition
Competitors for Parkdale Meats fall into the following categories:

Groc ery Stores - 7 stores in greater Parkdale area

Big box retailers (Wal-Mart and Costco)
Butcher shops (Red's Meats and Bay Avenue Butchers)

Parkdale Meats will establish its competitive edge through the expertise of its founders.
Robert Suidae brings with him existing relationships with the best suppliers of meat as well as
an understanding of the craft of butchering. Coupled with Eryka Auroc h's understanding of
food service management, sales rec ord in business to business sales, and financial ac umen,
the pair will have an edge over the town's other butcher shops and groc ery stores within its
niche market.
Financial Considerations
Funding for the launch of the business will be provided primarily by equity from the two
partners. Each will contribute in equal share from their savings to launch the business. The
remainder of financing will be made up in temporary credit card debt taken on by the two
founders and ac counts payable from delayed payments on start-up costs. The business seeks a
business loan to finance the purchase of the equipment needed.
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The business will reach positive cash flow in its 8th month of operation, allowing for expedited
repayment of its loan obligations, as well as for dividends to be paid to the owners. Revenue will
top $XXXXX and profit will reach about $XXXX in the third year of operation.

1.1 Objectives
Parkdale Meats will measure its success by its ability to ac hieve the following objec tives:
1.
2.
3.
4.

Build sales to $XXXXX annually within three years.

Rec eive 60% of sales through advance orders, either by phone or Internet, with 40% of
sales through walk-up traffic.
Ac hieve cash flow break-even within six months.
Bec ome profitable by the second year of operation.

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

1.3 Keys to Success

Parkdale Meats must follow these principles in order to ac hieve success in its market:
1.
2.
3.
4.

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

2.0 Company Summary

Parkdale Meats is a startup specialty butcher shop to be launched in the coming year. It will sell
aged beef, free-range poultry, fresh pork and domestic lamb. Upon request, the store will sell
wild game such as buffalo, alligator, kangaroo, quail, and other specially requested items.
Customers will include medium- and high-income residents of Parkdale, as well as high-income
residents of neighboring towns, and high-end caterers and restaurants.
The store will be managed and direc ted by Robert Suidae, a veteran butcher with fifteen
years experience in butcher shops and Eryka Auroc h, an experienced retail food-service
manager. Auroc h will serve as the company's CEO and Suidae as the company's COO.

2.1 Company Ownership

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

2.2 Start-up Summary

The following summary table shows the projec ted start-up costs over the three months prior to
the store's opening.
Start-up expenses for Parkdale Meats include initial insurance premiums covering both general
liability and product liability, as well as business renter's insurance, rent for 1 month's security
and 2 months to allow for build-out of the retail space, pre- launch marketing to cover flyers, a
direc t mail campaign, and advertisements in loc al papers, the development of a website with ecommerce capabilities to take orders and sell meats direc tly, and the normal legal expenses for
consultation and permitting.
Inventory on-hand at any given time must be low as all meats must be kept extremely fresh
and so will be ordered on a weekly basis or even more often. Other current assets include office
and store furniture, shelving, a computer, phone system, and tools. Long-term assets include
the refrigerator unit for the shop, refrigerated display cases, window displays, store fixtures, a
refrigerated delivery van and additional investments in improvements to the retail loc ation.
A significant amount of cash is required to fund the first year of operations until the business
reaches break-even.

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Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Insurance
Rent
Pre-Launch Marketing
Website Development
Total Start-up Expenses

$10,000
$1,000
$2,000
$4,800
$5,000
$10,000
$32,800

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$80,000
$2,000
$20,000
$80,000
$182,000

Total Requirements

$214,800

3.0 Products
Parkdale Meats will provide the following products on a regular basis:
Aged Beef:

Filet Mignon
Kebab
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London Broil
Porterhouse Steak
Rib-Eye Steak
Roast Beef
Shell Steak
Sirloin Burger
Sirloin Steak
Skirt Steak
Strip Steak
T-Bone Steak

Domestic Lamb:

Chop
Flank
Leg

Fresh Pork:

Boiling Bac on
Chop
Rasher
Sausage

Free-Range Poultry:

Chicken Kiev
Chicken Cordon Bleu
Cutlet
Kebab

Upon request, the store will sell wild game such as buffalo, alligator, kangaroo, quail and more.
All products can be cut to the customer's specifications.
The products will be purchased from suppliers within a 100-mile radius of the store to have
minimal impact on the environment through trucking costs and to maintain product freshness.
Products will be purchased as whole animals and butchered in the store by trained butchers.
They will be sold while fresh. While products may be replenished within a few days, there is
the possibility of certain items running out bec ause of high sales and going out of stoc k until new
shipments may arise. The sales staff will offer suggestions of substitutions or help customers
fulfill their orders through special orders in order to make sure all customers leave satisfied.

4.0 Market Analysis Summary

The American Meat Institute provides the following statistics about the American meat industry:
The meat and poultry industry is the largest segment of U.S. agriculture. Total meat and poultry
production in 2007 reached more than 91 billion pounds.
In 2007, the meat and poultry industry processed
9 billion chickens
34.2 million cattle
271 million turkeys
2.7 million sheep
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109 million hogs and lambs
In 2007, American meat companies produced
36.6 billion pounds of chicken
26.5 billion pounds of beef
21.9 billion pounds of pork
6 billion pounds of turkey
334 million pounds of veal, lamb and mutton
Top Livestock Producing States 2007
Cattle - Colorado, Texas and Nebraska
Hog - Iowa, North Carolina and Illinois
Chicken - Georgia, Arkansas and Alabama
Turkey - Minnesota, North Carolina and Arkansas
There are 6,032 federally inspec ted meat and poultry slaughtering and proc essing plants in the
United States.
U.S. meat consumption was 55% red meat (beef, veal, lamb, pork, and mutton), 8.2% fish,
and 36.8% poultry in 2007. Americans spend 6.4% of disposable income on food at home.
Meat is sold through retail establishments including restaurants, groc ery stores, and butcher
shops. Independent butcher shops have dec reased in number over the last ten years, as sales
of meet have fallen slightly and moved increasingly to groc ery stores and big box retailers.
However, this has created an opportunity for specialty butcher shops in markets which provide
only basic options through these larger retailers.

4.1 Market Segmentation

Parkdale potential customers are divided into the following groups as shown in the market
analysis table:
Parkdale High-Income Households: Annual household income of over $100,000 in Parkdale
(80% of which c onsist of two adults).
Parkdale Medium-Income Households: Annual household income of $50,000 to $100,000 in
Parkdale (50% of which c onsist of two adults and 50% of which c onsist of one adult).
Neighboring Town High-Income Households: Annual household income of over $100,000
in the five towns bordering Parkdale (80% of which c onsist of two adults).
Caterers: Upsc ale catering businesses in a 15 mile radius of Parkdale.
Restaurants: Upsc ale restaurants in a 15 mile radius of Parkdale.

Table: Market Analysis

Market Analysis
Potential Customers
Parkdale High-Income
Households
Parkdale Medium-Income
Households
Neighboring Town High-Income
Households
Caterers
Restaurants
Total

Year 1

Year 2

Year 3

Year 4

Year 5

Growth
3%

9,000

9,225

9,456

9,692

9,934

CAGR
2.50%

3%

25,000

25,625

26,266

26,923

27,596

2.50%

3%

25,000

25,625

26,266

26,923

27,596

2.50%

4%
5%
2.50%

25
60
59,085

26
63
60,564

27
66
62,081

28
69
63,635

29
72
65,227

3.78%
4.66%
2.50%

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4.2 Target Market Segment Strategy

Market segmentation for Parkdale Meats is based on the specific market opportunity in the
Parkdale area. While low-income households are perfec tly content with purchasing the meat
options at loc al groc ery stores and big box retailers, households with a greater level of
disposable income are interested in expanding their options for home cooked meats.
Furthermore, these customers entertain in their homes to a greater extent than low-income
households and prefer to offer high-quality or rarer meat options at these events.
It is expec ted that customers from neighboring towns will be more likely to travel to Parkdale if
they have higher levels of disposable income to allow for the time and gas expense of this
travel. For this reason, high-income households will be targeted at first in neighboring towns.
Caterers, espec ially those serving high-end corporate and private events, and upsc ale
restaurants seek high-quality specialty meats at wholesale prices. Parkdale Meats will sell in bulk
to catering businesses and restaurants at a substantial disc ount from retail prices, while still
allowing for margin. Caterers and restaurants will be required to order in advance to allow for
specialty orders of meats and not deplete the products available at the retail loc ation for
immediate purchase.

4.3 Industry Analysis

The American Meat Institute provides the following analysis:
"The meat industry is unique bec ause it relies on live animals as its raw materials. Within
livestoc k production, there is a classic, livestoc k price cycle. Prices rise and fall as producers
raise more animals in response to high prices or low supply, and then c ease producing when
livestoc k inventories bec ome high and prices fall. At the low points in the livestoc k price
cycle, some livestoc k producers have called for reviews of meat pac king industry structure to
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determine if the structure may be causing a price dec line. Each review has found that industry
structure is not to blame for livestoc k prices. Rather, the basic laws of supply and demand most
often are the cause."
Elsewhere, researchers find a wave of consolidation oc curring in the meat industry since the
1990s, spurred by the growth of several major groc ery chains such as Wal-Mart.
In general, "consumers are eagerly buying more conveniently prepared food products of
consistent quality, despite the sluggish growth of overall food spending" write researchers
Barkema, Drabenstott and Novac k, "...and nearly 40 percent of the consumer's food dollar is
spent in restaurants and other eating establishments".
Despite, and in fac t bec ause, of these changes, there is a growing need for sales of specialty
meats to the niche market who can afford and desire them, as they are no longer served well
by groc ery stores and large retailers.

4.3.1 Competition and Buying Patterns

Competitors for Parkdale Meats fall into the following categories:

Groc ery Stores (Stop & Shop, A & P, Gorman's Market, etc.) - 7 stores in greater
Parkdale area
Big box retailers (Wal-Mart and Costco)
Butcher shops (Red's Meats and Bay Avenue Butchers)

Groc ery stores provide basic meat options at relatively low prices. They are chosen by
customers interested in buying meat along with all of their groc ery and food needs, and not
traveling far from their home. These customers will sacrifice some quality and options for price
and convenience.
Big box retailers serve clients interested in the lowest price and able to sacrifice some
convenience (longer waits and longer travel times) for the lowest price. They offer meats of the
same range of options and quality as groc ery stores.
Red's Meats has been in existence for 25 years and primarily serves customers who value the
store's history. These customers have typically been buying meats at Red's for at least five
years and live within five miles of the store in Parkdale. The customers are aging, on average.
Bec ause its meats are only slightly higher quality than groc ery stores, Red's does not serve
caterers and restaurants, but sells products primarily to medium income households.
Bay Avenue Butchers was established ten years ago and foc uses only on high-quality red meat
and not poultry. They sell meats to caterers and restaurants, but these businesses would
likely consider using a different vendor which c ould provide a wider range of options. Bay
Avenue Butchers has high prices for its retail meats and serves only high-income households.
Indirec t competitors (and also potential competitors) include restaurants, as consumers
interested in spec ialty meats may choose to eat out instead of cook the meal themselves.

5.0 Strategy and Implementation Summary

To implement its plan, Parkdale Meats will attempt to:

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1.
2.

3.

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

5.1 Competitive Edge

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

5.2 Marketing Strategy

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

Direc t mail of flyers to a selec t list of 5,000 high income households.

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

To market to businesses, Parkdale Meats will join the loc al Chamber of Commerce and Food
Provider organizations to network and market to other members.
After opening, the following tac tics will be used going forward:

Direc t mail to additional households with higher incomes.

Search engine marketing via loc al Google ads.
Email newsletter describing developments in meat offerings to business customers and
certain households.

5.3 Sales Strategy

The sales strategy for the business includes both retail sales and business sales strategies.
Retail sales will be based on the marketing of the store and its loc ation, explained in the
marketing plan section. At an operational level, orders will be taken in person by clerks working
the floor of the store (two on duty at any given time), or by the office clerk over the phone or
Internet. Orders for specific cuts will be transmitted from these clerks to the butchers on
duty who will prepare the cuts. They will be pac kaged, priced, and prepared for sale by the floor
clerks.
Customers will be greeted with a standard greeting and served to meet their satisfac tion with
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the greatest care taken to provide quick service to walk-in c ustomers. A mac hine will give
numbers to waiting customers so they can be served in an orderly fashion. Waiting customers
will have a few seats in the store to sit in while waiting.
The business sales strategy relies on prospec ting by Eryka Auroc h to establish sales to
caterers and restaurants. She will research, contac t, and present to these businesses,
drawing on her past sales experience. As a partner of the business, she will work to maximize
this revenue stream to increase profits, rather than bec ause of commissions on sales.

5.3.1 Sales Forecast

The sales forec ast table represents the business sc aling up sales quickly in the first year as
the community rec ognizes the high quality of its products and as in-roads are made with the
dozens of area caterers and restaurants.
Retail sales will be the greatest driver of sales growth and represents the best margins for the
business, with a 100% markup over cost. Spec ial orders are more expensive to provide, but
will provide a vital line of business that will encourage high-income customers to use the
store. Their cost of sales will be 60% of sales.
Products sold to businesses will be sold at lower rates, but costs will also be reduced through
bulk ordering and the ease of working with businesses in an ongoing way. The cost of sales to
businesses will be 60% as well. This category, including both c atering and restaurant sales,
will represent a larger portion of sales than retail sales. The presence of the store and the brand
name it establishes will allow caterers and restaurants to advertise the fac t that they purchase
their meats from Parkdale Meats without any fear, as customers will see it as a mark of quality.

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Sales
Retail Regular Sales
Retail Special Orders
Catering Business Sales
Restaurant Sales
Total Sales

$197,904
$79,151
$71,840
$129,816
$478,711

$300,000
$150,000
$150,000
$225,000
$825,000

$375,000
$185,000
$200,000
$325,000
$1,085,000

Direct Cost of Sales

Retail Meats
Special Order Meats
Business Meats
Subtotal Direct Cost of Sales

Year 1
$98,952
$47,491
$120,994
$267,436

Year 2
$150,000
$90,000
$225,000
$465,000

Year 3
$187,500
$111,000
$315,000
$613,500

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5.4 Milestones
Eryka Auroc h will manage all marketing and sales ac tivities. As disc ussed earlier, the
business's website must be completed month's before opening to provide information for those
who see flyers and ads prior to the launch. Search engine marketing will be an ongoing
expense after the launch, and business prospec ting by Eryka Auroc h will be continued as needed
to establish a foundation of restaurants and caterers to sell to.
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Table: Milestones
Milestones
Milestone
Website Development
Design Flyers and Ads
Direct Mail Campaign
Newspaper Ad Campaign
Search Engine Marketing
Business Sales Prospecting
Totals

Start Date
8/1/2009
8/1/2009
9/1/2009
9/1/2009
10/1/2009
9/15/2009

End Date
10/1/2009
9/1/2009
10/1/2009
10/1/2009
9/30/2010
12/1/2009

Budget
$10,000
$1,000
$2,000
$2,000
$10,000
$500
$25,500

Manager
EA
EA
EA
EA
EA
EA

Department
Sales
Sales
Sales
Sales
Sales
Sales

6.0 Management Summary

The management of Parkdale Meats will consist of Eryka Auroc h and Robert Suidae.
Eryka Auroc h, CEO, will manage sales, marketing, and finances for the business. This will include
training sales staff, managing all marketing programs, and being the liaise to the website
developer and ac countant for the business.
Robert Suidae, COO, will design the store's floor plan, plan, order and install all equipment
purchases, establish operations proc edures, train butchering staff and operations staff, and
establish relationships with all suppliers.
Two employees will initially include a full-time sales/operations clerk and one assistant butcher.

6.1 Personnel Plan

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

Table: Personnel
Personnel Plan
CEO
COO
Assistant Butcher
Sales & Operations Staff
Total People
Total Payroll

Year 1
$36,000
$36,000
$38,400
$36,000
4

Year 2
$36,000
$36,000
$40,000
$38,000
4

Year 3
$36,000
$36,000
$42,000
$40,000
4

$146,400

$150,000

$154,000

7.0 Financial Plan

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

7.1 Start-up Funding

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

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Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$32,800
$182,000
$214,800

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$102,000
$80,000
$0
$80,000
$182,000

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$40,000
$40,000
$4,800
$0
$84,800

Capital
Planned Investment
Robert Suidae
Eryka Auroch
Additional Investment Requirement

$65,000
$0
$65,000

Total Planned Investment

$130,000

Loss at Start-up (Start-up Expenses)

Total Capital

($32,800)
$97,200

Total Capital and Liabilities

$182,000

Total Funding

$214,800

7.2 Important Assumptions

Interest rates and the tax rate reflec t the current ec onomic environment that Parkdale Meats
will operate within.

7.3 Break-even Analysis

Due to the monthly break even in sales, overall company break even is expec ted in the tenth
month of operation.

Page 14

Parkdale Meats
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even

$42,371

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

56%
$18,700

7.4 Projected Profit and Loss

Additional direc t cost of sales reflec ts the costs of pac kaging, gas for deliveries, credit card
transaction fees, and other direc t costs of the meat preparation and order fulfillment proc esses.
Gross margins are based on the industry markup for butchered meats.
Marketing expenses will be higher in the first year to announce the opening of the firm and will
drop after that. Most expenses will show small increases each year as the business will remain in
the same loc ation over the first three years. Profit will rise sharply over the first three years
as sales are spread over these relatively stable expenses.

Page 15

Parkdale Meats
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Sales
Total Cost of Sales

Year 1
$478,711
$267,436
$23,936
$291,372

Year 2
$825,000
$465,000
$41,250
$506,250

Year 3
$1,085,000
$613,500
$54,250
$667,750

Gross Margin
Gross Margin %

$187,339
39.13%

$318,750
38.64%

$417,250
38.46%

Expenses
Payroll
Marketing/Promotion
Depreciation
Rent
Utilities
Insurance
Payroll Taxes
Other

$146,400
$18,000
$8,040
$19,200
$2,400
$2,400
$21,960
$6,000

$150,000
$13,000
$8,040
$20,160
$2,520
$2,520
$22,500
$6,300

$154,000
$14,000
$8,040
$21,168
$2,646
$2,646
$23,100
$6,615

Total Operating Expenses

$224,400

$225,040

$232,215

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($37,061)
($29,021)
$7,725
$0

$93,710
$101,750
$3,933
$26,933

$185,035
$193,075
$1,400
$55,090

Net Profit
Net Profit/Sales

($44,786)
-9.36%

$62,844
7.62%

$128,544
11.85%

Page 16

Parkdale Meats

Page 17

Parkdale Meats

7.5 Projected Cash Flow

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

Page 18

Parkdale Meats
Table: Cash Flow
Pro Forma Cash Flow
Year 1

Year 2

Year 3

Cash from Operations

Cash Sales
Subtotal Cash from Operations

$478,711
$478,711

$825,000
$825,000

$1,085,000
$1,085,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

$33,510
$0
$0
$0
$0
$0
$0
$512,221

$57,750
$0
$0
$0
$0
$0
$0
$882,750

$75,950
$0
$0
$0
$0
$0
$0
$1,160,950

Year 1

Year 2

Year 3

$146,400
$321,065
$467,465

$150,000
$621,800
$771,800

$154,000
$779,090
$933,090

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing

$33,510
$24,000

$57,750
$16,000

$75,950
$0

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$0
$6,000
$0
$0
$0
$530,975

$0
$13,332
$0
$0
$50,000
$908,882

$0
$13,332
$0
$0
$100,000
$1,122,372

Net Cash Flow

Cash Balance

($18,754)
$61,246

($26,132)
$35,113

$38,578
$73,691

Cash Received

Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations

Page 19

Parkdale Meats

7.6 Projected Balance Sheet

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

Page 20

Parkdale Meats
Table: Balance Sheet
Pro Forma Balance Sheet
Year 1

Year 2

Year 3

$61,246
$13,219
$20,000
$94,465

$35,113
$16,844
$20,000
$71,957

$73,691
$16,863
$20,000
$110,554

$80,000
$8,040
$71,960
$166,425

$80,000
$16,080
$63,920
$135,877

$80,000
$24,120
$55,880
$166,434

Year 1

Year 2

Year 3

$64,010
$16,000
$0
$80,010

$49,951
$0
$0
$49,951

$65,296
$0
$0
$65,296

Long-term Liabilities
Total Liabilities

$34,000
$114,010

$20,668
$70,619

$7,336
$72,632

Paid-in Capital

$130,000

$130,000

$130,000

Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

($32,800)
($44,786)
$52,414
$166,425

($127,586)
$62,844
$65,258
$135,877

($164,742)
$128,544
$93,802
$166,434

$52,414

$65,258

$93,802

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

Net Worth

7.7 Business Ratios

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

Page 21

Parkdale Meats
Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
72.34%

Year 3
31.52%

Industry Profile
-0.06%

7.94%
12.02%
56.76%
43.24%
100.00%

12.40%
14.72%
52.96%
47.04%
100.00%

10.13%
12.02%
66.43%
33.57%
100.00%

23.32%
33.42%
82.61%
17.39%
100.00%

48.08%
20.43%
68.51%
31.49%

36.76%
15.21%
51.97%
48.03%

39.23%
4.41%
43.64%
56.36%

37.13%
30.43%
67.55%
32.45%

100.00%
39.13%
48.49%
3.76%
-7.74%

100.00%
38.64%
31.02%
1.58%
11.36%

100.00%
38.46%
26.61%
1.29%
17.05%

100.00%
19.29%
8.62%
0.29%
1.72%

1.18
1.02
68.51%
-85.45%
-26.91%

1.44
1.10
51.97%
137.57%
66.07%

1.69
1.43
43.64%
195.77%
110.33%

1.90
1.28
67.55%
26.22%
8.51%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-9.36%
-85.45%

7.62%
96.30%

11.85%
137.04%

n.a
n.a

48.00
5.94
27
2.88

30.94
12.17
34
6.07

36.40
12.17
26
6.52

n.a
n.a
n.a
n.a

2.18
0.70

1.08
0.71

0.77
0.90

n.a
n.a

$14,454
-4.80

$22,006
23.82

$45,258
132.15

n.a
n.a

0.35
48%
1.02
9.13
0.00

0.16
37%
1.10
12.64
0.80

0.15
39%
1.43
11.57
0.78

n.a
n.a
n.a
n.a
n.a

Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 22

Appendix
Table: Sales Forecast
Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales
Retail Regular Sales

$5,000

$6,000

$7,200

$8,640

$10,368

$12,442

$14,930

$17,916

$21,499

$25,799

$30,959

$37,151

Retail Special Orders

Catering Business Sales
Restaurant Sales

$2,000
$0
$0

$2,400
$1,000
$2,000

$2,880
$1,675
$3,291

$3,456
$2,252
$4,446

$4,147
$2,887
$6,063

$4,976
$3,911
$7,769

$5,971
$5,601
$10,289

$7,165
$6,756
$13,333

$8,598
$8,546
$15,853

$10,318
$9,932
$19,213

$12,382
$12,588
$21,942

$14,858
$16,693
$25,617

Total Sales

$7,000

$11,400

$15,046

$18,794

$23,465

$29,098

$36,790

$45,170

$54,496

$65,261

$77,871

$94,319

Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Retail Meats
Special Order Meats
Business Meats
Subtotal Direct Cost of Sales

$2,500
$1,200
$0
$3,700

$3,000
$1,440
$1,800
$6,240

$3,600
$1,728
$2,980
$8,308

$4,320
$2,074
$4,019
$10,413

$5,184
$2,488
$5,370
$13,042

$6,221
$2,986
$7,008
$16,214

$7,465
$3,583
$9,534
$20,581

$8,958
$4,299
$12,053
$25,310

$10,750
$5,159
$14,639
$30,548

$12,900
$6,191
$17,487
$36,577

$15,480
$7,429
$20,718
$43,627

$18,576
$8,915
$25,386
$52,876

Page 1

Appendix
Table: Personnel
Personnel Plan
CEO
COO
Assistant Butcher

Month 1
$3,000
$3,000
$3,200

Month 2
$3,000
$3,000
$3,200

Month 3
$3,000
$3,000
$3,200

Month 4
$3,000
$3,000
$3,200

Month 5
$3,000
$3,000
$3,200

Month 6
$3,000
$3,000
$3,200

Month 7
$3,000
$3,000
$3,200

Month 8
$3,000
$3,000
$3,200

Month 9
$3,000
$3,000
$3,200

Month 10
$3,000
$3,000
$3,200

Month 11
$3,000
$3,000
$3,200

Month 12
$3,000
$3,000
$3,200

Sales & Operations Staff

Total People

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$3,000
4

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

Total Payroll

Page 2

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales

Month 1
$7,000
$3,700

Month 2
$11,400
$6,240

Month 3
$15,046
$8,308

Month 4
$18,794
$10,413

Month 5
$23,465
$13,042

Month 6
$29,098
$16,214

Month 7
$36,790
$20,581

Month 8
$45,170
$25,310

Month 9
$54,496
$30,548

Month 10
$65,261
$36,577

Month 11
$77,871
$43,627

Month 12
$94,319
$52,876

Other Costs of Sales

Total Cost of Sales

$350
$4,050

$570
$6,810

$752
$9,060

$940
$11,352

$1,173
$14,216

$1,455
$17,669

$1,840
$22,421

$2,259
$27,569

$2,725
$33,272

$3,263
$39,840

$3,894
$47,520

$4,716
$57,592

Gross Margin
Gross Margin %

$2,950
42.14%

$4,590
40.26%

$5,986
39.79%

$7,442
39.60%

$9,250
39.42%

$11,428
39.28%

$14,370
39.06%

$17,601
38.97%

$21,223
38.95%

$25,421
38.95%

$30,351
38.98%

$36,727
38.94%

Expenses
Payroll

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

Marketing/Promotion
Depreciation
Rent

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

$1,500
$670
$1,600

Utilities
Insurance
Payroll Taxes

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$200
$200
$1,830

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

$18,700

($15,750)
($15,080)

($14,110)
($13,440)

($12,714)
($12,044)

($11,258)
($10,588)

($9,450)
($8,780)

($7,272)
($6,602)

($4,330)
($3,660)

($1,099)
($429)

$2,523
$3,193

$6,721
$7,391

$11,651
$12,321

$18,027
$18,697

$804
$0

$775
$0

$746
$0

$717
$0

$688
$0

$658
$0

$629
$0

$600
$0

$571
$0

$542
$0

$513
$0

$483
$0

($16,554)
-236.49%

($14,885)
-130.57%

($13,460)
-89.46%

($11,975)
-63.71%

($10,138)
-43.20%

($7,930)
-27.25%

($4,960)
-13.48%

($1,699)
-3.76%

$1,953
3.58%

$6,180
9.47%

$11,138
14.30%

$17,543
18.60%

Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

15%

Page 3

Appendix
Table: Cash Flow
Pro Forma Cash Flow
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$7,000
$7,000

$11,400
$11,400

$15,046
$15,046

$18,794
$18,794

$23,465
$23,465

$29,098
$29,098

$36,790
$36,790

$45,170
$45,170

$54,496
$54,496

$65,261
$65,261

$77,871
$77,871

$94,319
$94,319

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received

$490

$798

$1,053

$1,316

$1,643

$2,037

$2,575

$3,162

$3,815

$4,568

$5,451

$6,602

New Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Other Liabilities (interest-free)

New Long-term Liabilities

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Sales of Other Current Assets

Sales of Long-term Assets
New Investment Received

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

Subtotal Cash Received

$7,490

$12,198

$16,099

$20,110

$25,108

$31,135

$39,366

$48,332

$58,311

$69,830

$83,322

$100,921

Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations

Cash Spending

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$12,200

$5,120

$9,757

$14,120

$16,228

$18,524

$21,509

$25,118

$30,145

$35,375

$41,207

$47,983

$55,978

$17,320

$21,957

$26,320

$28,428

$30,724

$33,709

$37,318

$42,345

$47,575

$53,407

$60,183

$68,178

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing

$490
$2,000

$798
$2,000

$1,053
$2,000

$1,316
$2,000

$1,643
$2,000

$2,037
$2,000

$2,575
$2,000

$3,162
$2,000

$3,815
$2,000

$4,568
$2,000

$5,451
$2,000

$6,602
$2,000

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment
Purchase Other Current Assets

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$500
$0

$0
$0
$20,310

$0
$0
$25,255

$0
$0
$29,873

$0
$0
$32,244

$0
$0
$34,867

$0
$0
$38,246

$0
$0
$42,393

$0
$0
$48,007

$0
$0
$53,889

$0
$0
$60,475

$0
$0
$68,133

$0
$0
$77,281

($12,820)
$67,180

($13,057)
$54,122

($13,774)
$40,348

($12,134)
$28,214

($9,759)
$18,455

($7,111)
$11,344

($3,028)
$8,316

$325
$8,641

$4,421
$13,062

$9,354
$22,417

$15,189
$37,605

$23,640
$61,246

Bill Payments
Subtotal Spent on Operations

Purchase Long-term Assets

Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

7.00%

Page 4

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$80,000
$2,000

$67,180
$925

$54,122
$1,560

$40,348
$2,077

$28,214
$2,603

$18,455
$3,261

$11,344
$4,054

$8,316
$5,145

$8,641
$6,328

$13,062
$7,637

$22,417
$9,144

$37,605
$10,907

$61,246
$13,219

$20,000
$102,000

$20,000
$88,105

$20,000
$75,683

$20,000
$62,425

$20,000
$50,818

$20,000
$41,716

$20,000
$35,398

$20,000
$33,462

$20,000
$34,969

$20,000
$40,699

$20,000
$51,561

$20,000
$68,512

$20,000
$94,465

$80,000
$0

$80,000
$670

$80,000
$1,340

$80,000
$2,010

$80,000
$2,680

$80,000
$3,350

$80,000
$4,020

$80,000
$4,690

$80,000
$5,360

$80,000
$6,030

$80,000
$6,700

$80,000
$7,370

$80,000
$8,040

$80,000
$182,000

$79,330
$167,435

$78,660
$154,343

$77,990
$140,415

$77,320
$128,138

$76,650
$118,366

$75,980
$111,378

$75,310
$108,772

$74,640
$109,609

$73,970
$114,669

$73,300
$124,861

$72,630
$141,142

$71,960
$166,425

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities

$4,800
$40,000
$0

$9,289
$38,000
$0

$13,582
$36,000
$0

$15,614
$34,000
$0

$17,811
$32,000
$0

$20,677
$30,000
$0

$24,119
$28,000
$0

$28,973
$26,000
$0

$34,009
$24,000
$0

$39,617
$22,000
$0

$46,128
$20,000
$0

$53,771
$18,000
$0

$64,010
$16,000
$0

Subtotal Current Liabilities

$44,800

$47,289

$49,582

$49,614

$49,811

$50,677

$52,119

$54,973

$58,009

$61,617

$66,128

$71,771

$80,010

Long-term Liabilities

$40,000

$39,500

$39,000

$38,500

$38,000

$37,500

$37,000

$36,500

$36,000

$35,500

$35,000

$34,500

$34,000

Total Liabilities

$84,800

$86,789

$88,582

$88,114

$87,811

$88,177

$89,119

$91,473

$94,009

$97,117

$101,128

$106,271

$114,010

Paid-in Capital

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

$130,000

Retained Earnings
Earnings
Total Capital

($32,800)
$0
$97,200

($32,800)
($16,554)
$80,646

($32,800)
($31,439)
$65,761

($32,800)
($44,899)
$52,301

($32,800)
($56,874)
$40,326

($32,800)
($67,011)
$30,189

($32,800)
($74,941)
$22,259

($32,800)
($79,901)
$17,299

($32,800)
($81,600)
$15,600

($32,800)
($79,647)
$17,553

($32,800)
($73,467)
$23,733

($32,800)
($62,329)
$34,871

($32,800)
($44,786)
$52,414

Total Liabilities and Capital

$182,000

$167,435

$154,343

$140,415

$128,138

$118,366

$111,378

$108,772

$109,609

$114,669

$124,861

$141,142

$166,425

$97,200

$80,646

$65,761

$52,301

$40,326

$30,189

$22,259

$17,299

$15,600

$17,553

$23,733

$34,871

$52,414

Net Worth

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