Business Plan Template
CASE BACKGROUND
The Andrews Corporation company was formed when a former monopoly was broken up into identical competitors. Although last year’s financial results were decent, your product is getting old, your marketing efforts are falling short, your production line needs revamping and your financial management is almost nonexistent. You and your management team must correct these problems.
What are sensors? Cameras, biometric devices, and labs-on-a-chip are all sensors. New sensor businesses are being created today in arenas as diverse as genetics, power generation, and satellites. The most relevant point from your perspective is that your sensors are incorporated into your customer’s products. You are in a business-to-business market, not a direct-to-consumer market.
The Foundation FastTrack is an industry report that has key information about your company and your competitors. The FastTrack will help you find opportunities and identify your competitors’ strengths and weaknesses.
CASE SCENARIO
Your customers fall into two groups which are called market segments. A market segment is a group of customers who have similar needs. The segments are named for the customer’s primary requirements, and are called:
• Low Tech
• High Tech
At the beginning of the simulation, Low Tech makes up more than two thirds of the unit sales.
However, the Low Tech growth rate - 10% trails the High Tech growth rate – 20%. Over time, the High Tech will command a greater percentage of the overall market as shown in the following example:
Based upon your 2015 FastTrack report, Andrews Corporation has a 16.67% market share and sales of $40,799,953. Your team has been asked to develop a Business Plan for the Andrews Executive Team to review. They have specifically asked you to provide them with a Sales Forecast using your last year sales as the base year and then forecasting each products sales in both the Low Tech and High Tech markets for the following three (3) years. Accurate sales forecasting is a key element to company success. Manufacturing too many units results in higher inventory carrying costs. Manufacturing too few units results in stock outs and lost sales opportunities, which can cost even more.
After completing the Sales Forecast, you have been asked to take the Sales Forecast and use it to project your P&L for the three (3) years.
Design Specifications:
Products / Market / Base Year2015 Actual / 2016 / 2017 / 2018
Units / Price / Units / Price / Units / Price / Units / Price
Able / Low Tech
Able / High Tech
Product 2 / Low Tech
Product 2 / High Tech
Product 3 / Low Tech
Product 3 / High Tech
Sales Forecast
Market / 2015 Actual / 2016 / 2017 / 2018
Low Tech / Able / $ / $ / $ / $
High Tech / Able / $ / $ / $ / $
Total / Able / $ / $ / $ / $
Low Tech / Product 2 / $ / $ / $ / $
High Tech / Product 2 / $ / $ / $ / $
Total / Product 2 / $ / $ / $ / $
Low Tech / Product 3 / $ / $ / $ / $
High Tech / Product 3 / $ / $ / $ / $
Total / Product 3 / $ / $ / $ / $
Total Sales / $ / $ / $ / $
Sales Forecast Worksheet Formulas
Sales / Units * Price
Product Total Sales / Sum Sales in both markets
Total Sales / Sum Sales of all products
Projected Profit and Loss
2016 / 2017 / 2018
Sales / $ / $ / $
Variable Costs / $ / $ / $
Contribution Margin / $ / $ / $
Total Period Costs / $ / $ / $
EBIT / $ / $ / $
Interest / $ / $ / $
Taxes / $ / $ / $
Profit / $ / $ / $
Example: / 20151 Actual / 20162 / 20172 / 20182
Contribution Margin / 26.3% / 27.5% / 32.5% / 37.5%
Total Period Costs / 15.8% / 20.0% / 20.0% / 20.0%
Interest / 1.4% / 1.0% / 1.0% / 1.0%
Taxes 3 / 35.0% / 35.0% / 35.0% / 35.0%
1 Actual data from your 2015 FastTrack report & Annual Reports Income Statement
2 2016 - 2018 are your estimates
3 Fixed Corporate Rate
Sales Forecast Worksheet FormulasSales / Your Sales Forecast
Variable Cost / Sales – Contribution Margin ($)
Contribution Margin / Contribution Margin (%) * Sales
Total Period Costs / Total Period Costs (%) * Sales
EBIT / Contribution Margin ($) - Total Period Costs ($)
Interest / Interest Rate (%) * Sales
Taxes / (EBIT – Interest)*35%
Profit / EBIT – (Interest ($) + Taxes ($))
Information Specifications:
· Forecast the number of units sold for each product within both the Low Tech and High Tech markets
o Determine your pricing strategy for each product
o Calculate the total sales for each product
· Projected Profit & Loss for next 3 years
o Utilize your Sales forecast for annual Sales $$
o Contribution Margin = Sales – Variable cost; therefore if you know or can estimate your contribution margin, you can calculate variable costs
o Estimate your Total Period Costs - how aggressive are your R&D, Promotion and Sales budgets
o Estimate your interest based upon your financial plans
o Taxes are 35%
Dec. 31, 2015 /·
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Andrews / Baldwin / Chester / Digby / Erie / FerrisROS / 5.2% / 4.6% / 5.4% / 6.5% / 3.8% / 7.3%
Turnover / 2.08 / 1.61 / 1.42 / 1.63 / 1.41 / 1.77
ROA / 10.9% / 7.4% / 7.6% / 10.6% / 5.4% / 13.0%
Leverage / 1.5 / 1.9 / 1.9 / 1.9 / 1.9 / 1.9
ROE / 16.9% / 14.1% / 14.2% / 19.8% / 10.2% / 25.0%
Emergency Loan / $0 / $0 / $0 / $0 / $0 / $0
Sales / $50,008,525 / $48,980,365 / $41,363,253 / $50,297,693 / $39,833,623 / $44,110,449
EBIT / $4,799,499 / $4,737,100 / $4,672,970 / $6,316,310 / $3,574,131 / $6,062,078
Profits / $2,623,271 / $2,249,123 / $2,216,443 / $3,268,006 / $1,516,483 / $3,224,967
Cumulative Profit / $5,108,458 / $4,734,310 / $4,701,629 / $5,753,193 / $4,001,669 / $5,710,154
SG&A / Sales / 11.9% / 9.4% / 7.4% / 9.8% / 7.4% / 9.8%
Contrib. Margin % / 24.1% / 21.6% / 22.5% / 24.6% / 20.3% / 26.1%
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Top Products in Low Tech Segment·
Name / Market Share / Units Sold to Seg / RevisionDate / Stock Out / Pfmn Coord / Size Coord / List
Price / MTBF / Age Dec.31 / Promo
Budget / Sales Budget / Customer Aware-
ness / December Customer Survey
Able / 20% / 1,084 / 8/21/2015 / YES / 5.9 / 14.6 / $33.49 / 19000 / 2.2 / $1,750 / $1,750 / 78% / 22
Top Products in High Tech Segment
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Able / 16% / 409 / 8/21/2015 / YES / 5.9 / 14.6 / $33.49 / 19000 / 2.2 / $1,750 / $1,750 / 78% / 10Fall 2014