Snack Food Store
Table of Contents
List of Figures
List of Tables
1.0 Business Overview
1.1 Business Profile
1.2 Mission Statement
1.3 Organizational Goals and Objectives
2.0 Project Overview
2.1 Project Description
2.2 Methodology
2.2.1 Industry Analysis
2.2.2 Operations Plan
2.2.3 Human Resources Plan
2.2.4 Marketing Plan
2.2.5 Financial Plan
2.3 Goals and Objectives
2.4 Project Benefits
3.0 Industry Overview
4.0 Operations Plan
4.1 Organizational Structure
4.2 Site Plan, Building and Floor Plans
4. 3 Work Plan and Flow of Work
4.4 Capital Budget
4.5 Working Capital Planning and Management
4.5.1 Cost of Goods Sold
4.5.2 Administration, Marketing and General Expenses
4.5.3 Working Capital Planning and Management
5.0 Human Resources Plan
5.1 Human Resources Strategy
6.1 Overview of the 4 P’s of Marketing
6.2 Segmentation, Targeting and Positioning
6.2.1 Segmentation
6.2.2 Targeting
6.2.3 Positioning
6.3 SWOT
6.3.1 Internal Strengths
6.3.2 Internal Weaknesses
6.3.3 Opportunities
6.3.4 Threats
6.4 Market Analysis
6.4.1 Past Performance
6.5 Marketing Strategy
6.5.1 Sales and Profit Objectives
6.5.2 Channels of Distribution
6.5.3 Pricing Policy
6.5.4 Select Markets/ Products/ Service Mix
6.5.5 Selling and Advertising
7.0 Financial Plan
7.1 Financial Plan Summary
7.2 Economic forecast
7.3 Dividend policy
7.4 Revenues
7.5 Costs of Goods Manufactured
7.6 Administrative, Marketing and General Expenses
7.8 Working Capital
7.9 Debt Financing
7.11 Income Taxes
7.12 Financial Ratios and Other Key Information
7 .14 Risk Analysis
7.14.1 Critical Variables
7.14.3 Scenario Analysis
7.14.4 Contingency Plan
7. 15 Financial Feasibility and Overall Financial Performance
8.0 Summary of the Business Plan
9.0 Future Conciderations4
10.0 References
List of Figures
Figure 1 Snack Food Store Organizational Structure
Figure 2 Snack Food Store
Figure 3 Snack Food Store Facility Floor Plan
Figure 4 Flow of Work
Figure 5 Common Distribution Methods
Figure 6 Break Even Analysis
List of Tables
Table 1 Snack Food Store Capital Budget
Table 2 Cost of Finished Product and Gross Profit
Table 3 Administration, Marketing and General Expenses 2007
Table 4Snack Food Store Competitors
Table 5 Comparison of Features for Snack Food Store and the Competitors
Table 6 Consumer needs and solutions
Table 7 Market Share Goals
Table 8 Marketing Plan Budget
Table 9 Key Outcomes of the Financial Plan
Table 10 Selling Price of Snack Food Store Products
Table 11 Increase in Sales of Snack Food Store products
Table 12Snack Food Store Cost of Goods Manufactured
Table 13 Administrative, Marketing and General Expenses
Table 14 Working Capital
Table 15 Cash Flows with Increased Financing
Table 16 Financial Ratios For the Next 5 Years
Table 17 Critical Variables
Table 18 Average revenues per unit
Table 19 Scenario Analysis
1.0 Business Overview
1.1 Business Profile
Business Name: Snack Food Store
Snack Food Store has been in existence since 1988. The company was federally incorporated in November 1990. There are four current shareholders. The COMPANY has 20 shares, with the other shareholders holding 33.3 shares each. Snack Food Store is classified as a small company, with four employees. The owners hold management positions, while two seasonal employees are hired to help with high demand periods.
Snack Food Store came into existence to provide products that were not widely available at the time. The market was open to and interested in the product line of eleven products that include popcorn, Kactus chips, seasonings, stove top poppers, and coconut and canola oil that Snack Food Store had to offer. The original target focus was in Saskatoon and Saskatchewan, following a trend for popcorn and at home snack foods that the owners observed in Alberta. The product has since expanded into Western Canada and the company has seen numerous business planning shifts over the years. Initially, products were sold through Snack Food Store retail outlets in Saskatoon. From there, sales expanded to a direct, at home sales. A decision was made in 1991 to further expand the at home marketing, ceasing retail sales. This avenue was pursued successfully until 1994, when the company began to develop franchise relationships. Since then, owners have also developed a relationship for consignment sales with Hudson’s Bay Company in The Bay and Zellers. Soon after, Snack Food Store’s products were being wholesaled to other retail stores, such as drugs stores, flower shops, hardware stores and gift shops. Currently, Snack Food Store sells products through wholesale to franchises and gourmet retail stores, on consignment to Hudson’s Bay Company, and direct to customers through walk-in traffic at the Saskatoon location and through online sales.
Snack Food Store’s leases an office and production warehouse. The company does not own any buildings or land, but they have furnished the lease space. Snack Food Store owns some office, warehouse and production equipment, formerly used for packaging in the warehouse. Snack Food Store now receives raw good shipments and transports the shipments to be packaged on a contract basis, so the warehouse storage equipment and office equipment are still in use. Production equipment is occasionally used to meet large orders. It is important to note that Snack Food Store’s equipment is not being used to full capacity. This will be a factor in the business planning objectives and implementation.
1.2 Mission Statement
Snack Food Store is committed to providing unique, high quality, premium snack food and popcorn products that round out the at home entertainment experience for the end consumer, available through intermediaries on a wholesale basis.
1.3 Organizational Goals and Objectives
Snack Food Store has taken many different approaches to provide its products to customers. Methods have ranged from providing a personal selling, at home experience to bulk product sales, acting as a supply source for other snack food providers. Direct customer service is something that Snack Food Store has been evolving away from over the past several years. Due to the other commitments and the choice of business approach of Snack Food Store’s owners, an intermediary approach has become more appropriate for the company. This will mean that Snack Food Store will move away from direct customer sales and service and begin to act more as a supplier for snack food companies who are involved in direct customer sales. In order to evaluate and eventually achieve this long term objective, the following goals must be met:
- Evaluate the wholesale market and possibilities for expansion
- Increase retail wholesale of Snack Food Store’s product line
- Evaluate the snack food market and potential business to business customers that would be interested in providing products to end consumers
- Expand into new avenues to provide bulk supplies to for direct-to-consumer snack food companies.
2.0 Project Overview
2.1 Project Description
For the purpose of this business plan, Snack Food Store’s goal to expand into retail wholesaling of the entire product line will be considered. An analysis of the wholesale market will be conducted and an expansion of retail wholesaling will be introduced into Snack Food Store’s current market over a period of three years from 2007 to 2010. The focus of this market is HBC, as there is significant expansion possible with this company and Snack Food Store has had success with this organization for many years. The possibility for expansion into Canadian HBC stores is a perfect fit for the current market for Snack Food Store’s products. In order to eventually achieve the objective of bulk supplying, it is necessary to make the customer more aware of Snack Food Store’s products. While retail expansion is an important part of Snack Food Store’s long term goals, for this purpose, it is also important to restrict expansion so that it will be easier to change directions when awareness is raised and the time comes for Snack Food Store to act as a bulk supplier. The business planning project for Snack Food Store will consist of an Operations Plan, Human Resources Plan, Marketing Plan, and Finance Plan.
2.2 Methodology
2.2.1 Industry Analysis
The industry analysis for Snack Food Store will focus on wholesale trade, the snack food industry, and the seasoning and dressing industry. A background defining each industry and Snack Food Store’s role in each industry will be completed. This will provide the grounds to further address the trends and challenges that Snack Food Store will face as a part of each of these industries.
2.2.2 Operations Plan
In the Operation Plan, the organizational structure of the business will be prepared on a flow chart. A floor plan of the building will be created; the building is used for an office and distribution of products. Spices are custom blended and brought in, the popcorn, poppers and Kactus chips are also brought in, and packaging is contracted out to Sask Abilities.
Also included in the Operations Plan is the working capital and management, the cost of goods sold and the cost of sales. Other expenses are: marketing, administration, accounting, taxes, insurance, utilities, maintenance, repairs, and supplies will be in the Operations Plan. Cash Flow for the company varies from quarter to quarter; there is an increase in sales in the last quarter of the year. Therefore, monthly cash flow statements will be made. Snack Food Store also currently has no debt to affect cash flow. Snack Food Store inventory is very fresh, due to short storage times and a high turnover. Accounts receivable will include Internet sales and some consignment. Accounts payable will include the cost of goods and expenses, but the company has no debts to pay off.
2.2.3 Human Resources Plan
The Human Resources Plan will include job descriptions, total wages and salaries, and total benefits for the next 10 years. Snack Food Storewill have few employees and requirements for the Human Resources Plan, as the company is family run and operations are primarily conducted through contract.
2.2.4 Marketing Plan
A Marketing Plan will be created for the Snack Food Store’s retail product line, which includes seasoning, popcorn seed, stovetop poppers, Kactus chips, coconut and canola oil, and the Theatre II Gift Pack. The marketing plan will use a pricing strategy, distribution strategy, and promotional strategy to sell the Snack Food Store product line to HBC retail locations and raise awareness in end consumers.
2.2.5 Financial Plan
An Economic forecast for Snack Food Store will be estimated for the next 10 years. Revenues derived from the Marketing Plan as well as cost of goods sold, expenses, cost of sale and working capital from the Operating Plan will be used along with income taxes to work out the financial summaries in this plan. Financial ratios including: Liquidity, leverage, activity and operation, and profitability ratios will be assessed. An assessment of the feasibility for this updated plan as well as financial performance and risk analysis will be completed.
2.3 Goals and Objectives
The objective of this business plan is to provide Snack Food Store with a current assessment of the external business environment and the internal business structure, as well as a framework for expanding into retail wholesale trade in the HBC. This is a partial analysis and plan for the long term objectives of Snack Food Store. Future considerations will be developed to address expansion into bulk sales. Once the goals and objectives are met for expansion into retail wholesale, a business plan for bulk wholesaling will have to be developed.
2.4 Project Benefits
As a small, retail company, Snack Food Store does not have large economic or social effects. As a part of the expanding retail trade sector, Snack Food Store has been a leader in supply chain management, and entrepreneurial endeavors. The benefits of Snack Food Store’s expansion will be a small social triumph for entrepreneurs and Saskatchewan based businesses. The benefits that this project will have for Snack Food Store include:
- Expansion of Snack Food Store’s existing market share
- Significant growth of products
- Increase in public awareness of Snack Food Store’s product line and alternative snack food varieties
- Positioning of Snack Food Store’s products for expansion into bulk wholesaling
3.0 Industry Overview
Snack Food Store spans the wholesale trade industry, the snack food industry, and the seasoning and dressing industry. By definition, Snack Food Store is a constituent of the wholesale trade industry. As part of the wholesale trade industry, Snack Food Store serves as a wholesale merchant, taking title to the goods and distributing those goods further along the supply chain, and in some cases to end consumers. (Industry Canada, Wholesaling, 2006, para. 1-3) Snack Food Store is not a manufacturer, and therefore does not fall directly into the snack food and seasoning and dressing industries, but issues in this industry encompass all levels of the supply chain from suppliers to end consumers. (Industry Canada, Snack Food Manufacturing, 2006, para. 1) As a wholesaler of these products, Snack Food Store is clearly affected by the consumption trends of end consumers and the decisions of manufacturers.
Canada’s snack food industry, seasoning and dressing industry, and the wholesale trade industry have all experiencing growth over the past several years. This provides an excellent opportunity for the expansion of Snack Food Store.(Agriculture and Agrifood Canada, 2003, para. 2, Hodgen, D., 2003, pg. 1, Lebreux, J., 2006, pgs. 3, 14) Within this opportunity for expansion, there are a number of important factors of which to be aware. Consumption trends are the primary issue in the snack food and seasoning and dressing industries. Health and convenience are currently consumers’ primary concern and are important to address. A challenge in these industries is the expansiveness of products available, making it difficult to secure consumers. In the wholesaling industry, the strength of the Canadian dollar has a significant impact on the industries growth. (Lebreux, J., 2006, pg. 3) In favour of Snack Food Store, a tendency toward low inventory-to-sales ratios is a current trend. In the wholesale industry, there are also challenges that Snack Food Store will have to face. Recently, organizations within the wholesale industry have had high capital investment and are quick to adopt new technology, while globalization and product importing has also begun to have a major influence. (Hays, A., 2006, pgs. 6 – 9) While these issues are all essential to address through the business planning process, Snack Food Store is well aware of these challenges in its industry, giving it a good foundation to face the issues at hand.
4.0 Operations Plan
4.1 Organizational Structure
Figure 1 Snack Food Store Organizational Structure
Snack Food Store is a family owned and operated business. XXXX is the President and Mr. XXXX is the Operations Manager. Mr. XXXX contributes to the duties of Operations Manager as a financial coordinator of the business activities. Though the family has always run the business and has an in depth knowledge of its operations and the industry the organizational structure may need to be re-evaluated if there is a major production increase. Currently The Operation Manager currently runs all of the day to day operations, is in touch with Sask Abilities, sending products to be packaged to Sask Abilities and ordering the packaged products from them for distribution. The Operation Manager is also in charge of human resources and all staff.
4.2 Site Plan, Building and Floor Plans
Figure 2 Snack Food Store
Figure 3 Snack Food Store Facility Floor Plan
* Figure is a scale of approximately1:190
The building itself is a 6459 square feet with an additional 2000 square feet on mezzanine. The building has two high level loading docks in the rear of the building. Located in the light industrial area, there is additional space available at minimal costs.
4. 3Work Plan and Flow of Work
Technical Process
Figure 4 Flow of Work
Physical Flow of Product
Snack Food Store does not actually produce any of their own products; bulk product is purchased and brought into Saskatoon for packaging. Packaging is done on a contract basis with Sask. Abilities. Bulk raw product is delivered to Sask. Abilities and packaged, in the Snack Food Store packages. The products are then boxed and shipped to the Snack Food Store facility for distribution or storage. Snack Food Store has a very short product turn over rate. Product is not in stored long before shipping, this ensures a fresh consistent product.
Quality Control
Snack Food Store prides itself on quality and it is one of their major competitive advantages along with their guarantee on products, the Snack Maker there is a 25 year full warrantee. With promises like this the company must have a very selective nature and trust in their suppliers. All companies involved with Snack Food Store are registered due to the needs for crossing boarders and exporting. The snack makers as well as the spices are imported from the United States and the Kaktus chips are imported from Mexico. Not only is product quality monitored at the individual manufacturer level but also during packaging and again before shipping. Damaged products are taken off the line and discarded.
Snack Food Store packaging is done by Sask. Abilities. The abilities facility is HACCP certified and has a large capacity for production. Although this facility has a very large capacity for production they are currently undergoing restructuring and having problems managing the facility for the optimum utilization. Snack Food Store has the challenge of having to manage their contract with Sask. Abilities in advance of when they actually need to make an order, to ensure that a supply will be packaged in time for shipment.