Business Plan

Fancy’s Foods, LLC.

2409 Oak Hollow Drive

Antlers, OK 74523

(580) 298-223

Keith Bean

Marianne Bean

December 1, 1998
Executive Summary

Marianne and Keith Bean have been involved with the food industry for several years. They opened their first restaurant in Antlers, Oklahoma in
1981, and their second in Hugo in 1988. Although praised for the quality of many of the items on their menu, they have attained a special
notoriety for their desserts. After years of requests for their flavored whipped cream toppings, they have decided to pursue marketing these
products separately from the restaurants.

Marianne and Keith Bean have developed several recipes for flavored whipped cream topping. They include chocolate, raspberry, cinnamon
almond, and strawberry.

These flavored dessert toppings have been used in the setting of their two restaurants over the past 18 years, and have been produced in large
quantities. The estimated shelf life of the product is 21 days at refrigeration temperatures and up to six months when frozen.

The Beans intend to market this product in its frozen state in 8 and 12-ounce plastic tubs.

They also intend to have the products available in six ounce pressurized cans. Special

attention has been given to developing an attractive label that will stress the gourmet/specialty nature of the products.

Distribution of Fancy’s Foods Whipped Dream product will begin in the local southeastern Oklahoma area. The Beans have an established name
and reputation in this area, and product introduction should encounter little resistance.

Financial analyses show that the company will have both a positive cash flow and profit in the first year. The expected return on equity in the
first year is 10.88%.
 Table of Contents

Executive Summary-------------------------------------------------------------------------- 2

Background and History----------------------------------------------------------------------4

Description of Products . -------------------------------------------------------------------- 4

Market Description . ------------------------------------------------------------------------- 4

Competition------------------------------------------------------------------------------------ 5

Marketing Strategies----------------------------------------------------------------------------5

Manufacturing Plans ---------------------------------------------------------------------------6

Financial Projections-------------------------------------------------------------------------- 6

Income Statement-------------------------------------------------------------------------------7

Cash Flow Analysis -------------------------------------------------------------------------- 11

Balance Sheet--------------------------------------------------------------------------------- 12

Financial Ratios------------------------------------------------------------------------------ 13

Contingency Plans------------------------------------------------------------------------------14

Appendices------------------------------------------------------------------------------------- 15
Letters of Endorsement------------------------------------------------------------------------15

Resumes of Management----------------------------------------------------------------------15

Product Labels-----------------------------------------------------------------------------------15
Background and History

Marianne and Keith Bean have been involved with the food industry for several years. They opened their first restaurant in Antlers, Oklahoma in
1981, and their second in Hugo in 1988. Although praised for the quality of many of the items on their menu, they have attained a special
notoriety for their desserts. After years of requests for their flavored whipped cream toppings, they have decided to pursue marketing these
products separately from the restaurants.

Description of Products

Marianne and Keith Bean have developed several recipes for flavored whipped cream topping. They include chocolate, raspberry, cinnamon
almond, and strawberry.

These flavored dessert toppings have been used in the setting of their two restaurants over the past 18 years, and have been produced in large
quantities. The estimated shelf life of the product is 21 days at refrigeration temperatures and up to six months when frozen.

The Beans intend to market this product in its frozen state in 8 and 12-ounce plastic tubs. They also intend to have the products available in six
ounce pressurized cans.

Market Description

The flavored whipped toppings that Fancy’s Foods will market will fall into two distinct categories: Dairy products and gourmet/specialty foods.
This business plan will look at these two markets separately.

Dairy Products: While the overall consumption of dairy products in the United States declined from 1972 to 1994, the market has seen a slight
increase in the past four years (Census of Agricultural Products, 1998, USDA). Dr. John Moore of the University of Florida expects the
consumption of dairy product in the United States to continue a modest increase of 1.5-2% per year, which is significant in this $268 billion
annual market. This is attributed in part to more sophisticated processing techniques which have increased the variety of dairy products
available, as well as the increased awareness of the benefits of a calcium rich diet (Moore et al, 1998).

Gourmet/Specialty Products: Kalorama Information LLC, a market research firm based in New York, indicates that the gourmet/specialty
foods market will continue a fast paced growth well into the next decade. This $39-billion domestic industry has doubled since 1992, and is
expected to continue double-digit growth through 2002.

While demographic information indicates that this sector of the industry is strongest in metropolitan areas, there are also growth opportunities in
smaller communities.

Packaging and point of purchase marketing efforts are especially important in this market, and special attention will be given to these aspects of
Whipped Dream.

Competition
There are several brands of whipped topping available in mainstream retail outlets. In the grocery stores in the Antlers and Hugo area, all of the
ready-to-eat Varieties are Produce by large players, specifically Kraft and Sara Lee. There are also dry mixes available, but these are not direct
competition for Whipped Dream.
According to sales figures at grocery outlets in Antlers and Hugo, approximately 65% of the national brand prepared whipped topping is sold in
frozen tub form, while the remaining 35% is in pressurized can form. The strengths of these products are their market shares and distribution
channels.
They are available in virtually any retail grocery outlet, and have gained strong market acceptance. They are also distributed with other
refrigerated and frozen dairy products.
Finally, they are priced at $1.29-1.89 per 8-ounce tub or 6-ounce pressurized can, an advantage when compared to the suggested retail price of
Whipped Dream. The weakness of these products is in the lack of variety. None of these companies produce or market a flavored topping.
Several of the products are also classified as ‘whipped topping’, but are actually not dairy based.

Marketing Strategies

Distribution of Fancy’s Foods Whipped Dream product will begin in the local southeastern Oklahoma area.
The Beans have an established name and reputation in this area, and product introduction should encounter little resistance. The managers of
Pruett’s IGA and Gardiner’s Grocery in Antlers, as well as Pruett’s in Hugo, have indicated that they are willing to carry the products. Their
letters of intent and endorsement are included in the Appendix section. It is also important to note that Gardiner’s Grocery puts an emphasis on
specialty food products in addition to standard grocery items.

After Whipped Dream’s debut in Antlers, Hugo, and surrounding towns, Fancy’s Foods intends to participate in the “Made in Oklahoma”
Demonstration Program administered by the Oklahoma Department of Agriculture and Pratt’s Foods in Oklahoma City. This program will
enable the Beans to introduce Whipped Dream into the Oklahoma City metropolitan area under more favorable market conditions. Fancy’s
Foods also intends to enter the grocery and specialty markets in the Tulsa area in 2000.
The Beans will rely heavily on in-store displays and demonstrations in southeastern Oklahoma stores, as well as those in Tulsa and Oklahoma
City.
They will demonstrate the flavored topping in conjunction with fresh fruit during warmer months, and as a
topping on gourmet coffee and hot chocolate in the cooler months.
Special attention has been given to developing an attractive label that will stress the gourmet/specialty nature of the products. A copy of the label
is attached in the appendices. Linda Byford, a business planning and marketing specialist at the Oklahoma
Food and Agricultural Products Research and Technology Center at Oklahoma State University assisted with developing the label, and
conducted a focus group study to evaluate the image projected by the label as well as the packaging.
Manufacturing Plans
Because Fancy’s Foods owns and operates two restaurants, they have facilities available to them for a certain amount of the production. Robert
Battles, the Pushmataha County inspector for the Oklahoma Health Department, indicates that The Beans can use these facilities to manufacture
food available for retail sale provided that the production occurs while the restaurant is not open to the public.
Fancy’s Foods has a 50-gallon high speed mixer, a pressurized tank in which the product can be gassed with nitrous oxide, and a 10-foot by 10-
foot walk-in freezer, enabling them to both produce and store frozen tubs of Whipped Dream. This process is already established on a
commercial scale. They are in fact already making Whipped
Dream for use in their restaurant, and storing it in the freezer.
Keith and Marianne feel that the specialty nature of the product will lend itself well to the pressurized can, and this was confirmed by the focus
group conducted at Oklahoma State University. To pursue that opportunity, Fancy’s Foods has contracted production of the pressurized 6-ounce
cans with Farm Fresh, an Oklahoma dairy processing firm. A non-competition/non-disclosure agreement is in place, and a copy of this document
is included in the appendices.
Financial Projections
The following pages include multi year projections for income, cash flow, balance statement, as well as estimated financial ratios. These
projections are for the Whipped
Dream division of Fancy’s Foods LLC only. Historical financial information on Fancy’s Foods restaurants is available upon request.
 Fancy's Foods LLC
Pro Forma Income Statement
January 1999 - December 1999
Net Sales -------------------------------------------------------------$240,450.00
Less: Cost of Goods Sold ------------------------------------------$182,000.00
Gross Income ----------------------------------------------------------------------$58,450.00
Operating Expenses
Labour -----------------------------------------------------------------$12,000.00
Utilities ----------------------------------------------------------------$3,000.00
Insurance --------------------------------------------------------------$2,400.00
Sales Promotion ------------------------------------------------------$12,000.00
Delivery and Transportation-------------------------------------- $6,000.00
Miscellaneous -------------------------------------------------------$1,500.00
Total Expenses --------------------------------------------------------------------$36,900.00
Net Income before Taxes $21,550.00
Less: Income Taxes ----------------------------------------------------------------$6,465.00
Net Income after Taxes ----------------------------------------------------------------------$15,085.00
Assumptions:
1 Net sales based on price of $2.29 per unit,
24,000 units sold in Antlers 2,000 units per month
36,000 units sold in Hugo 3,000 units per month
45,000 units sold in Oklahoma City 9,000 units per month for 5 months
Sales estimates based on 5% market share for prepared whipped topping in each market.
2 Cost of goods sold includes ingredients, packaging materials, labels, and co-packing expenses for canned product.
3 No salary will be drawn by the owners/managers in the first year. All profits will be re invested for new market entry and increased production.
 Fancy's Foods LLC
Pro Forma Income Statement
January 2000 - December 2000
Net Sales -------------------------------------------------------------$425,940.00
Less: Cost of Goods Sold ------------------------------------------$318,060.00
Gross Income -----------------------------------------------------------------------$107,880.00
Operating Expenses
Labour -----------------------------------------------------------------$18,000.00
Utilities ----------------------------------------------------------------$5,000.00
Insurance --------------------------------------------------------------$2,400.00
Sales Promotion ------------------------------------------------------$18,000.00
Delivery and Transportation ----------------------------------------$12,000.00
Miscellaneous --------------------------------------------------------$1,500.00
Total Expenses -----------------------------------------------------------------$56,900.00
Net Income before Taxes -----------------------------------------------------$50,980.00
Less: Income Taxes ------------------------------------------------------------$15,294.00
Net Income after Taxes ---------------------------------------------------------------$35,686.00
Assumptions:
1 Net sales based on price of $2.29 per unit,
26,400 units sold in Antlers 2,200 units per month
39,600 units sold in Hugo 3,300 units per month
120,000 units sold in Oklahoma City 10,000 units per month
Sales estimates based on 10%sales increase from previous year.
2 Cost of goods sold includes ingredients, packaging materials, labels, and copacking expenses for canned product.
3 No salary will be drawn by the owners/managers in the second year. All profits will be re-invested for new market entry and increased
production.
 Fancy's Foods LLC
Pro Forma Income Statement
January 2001 - December 2001
Net Sales ------------------------------------------------------------------$592,194.00
Less: Cost of Goods Sold ----------------------------------------------$442,206.00
Gross Income ---------------------------------------------------------------------$149,988.00
Operating Expenses
Salary -----------------------------------------------------------------------$20,000.00
Labor -----------------------------------------------------------------------$30,000.00
Utilities --------------------------------------------------------------------$6,500.00
Insurance ------------------------------------------------------------------$3,600.00
Sales Promotion ---------------------------------------------------------$25,000.00
Delivery and Transportation -------------------------------------------$16,500.00
Miscellaneous -----------------------------------------------------------$1,500.00
Total Expenses ---------------------------------------------------------------------$83,100.00
Net Income Before Taxes----------------------------------------------------------$66,888.00
Less: Income Taxes-----------------------------------------------------------------$20,066.40
Net Income After Taxes ---------------------------------------------------------------$46,821.60
Assumptions:
1 Net sales based on price of $2.29 per unit,
29,040 units sold in Antlers 2,420 units per month
43,560 units sold in Hugo 3,630 units per month
132,000 units sold in Oklahoma City 11,000 units per month
54,000 units sold in Tulsa 9,000 units per month for 6 months
Sales estimates based on 10%sales increase from previous year.
2 Cost of goods sold includes ingredients, packaging materials, labels, and co-packing expenses for canned product.
3 Salary will be drawn by the owners/managers in the third year.
 Fancy's Foods LLC
Pro Forma Cash Flow Statement
January 1999 - December 199

Months

January Februar March April May June July August Septem October November Decembe TOTAL
y ber r
Revenues/ግብር $11,45 $11,45 $11,45 $11,45 $11,450 $11,45 $11,45 $11,450 $32,06 $32,060 $32,060 $32,060 $240,450
0 0 0 0 0 0 0
Ex Cost of Goods $8,550 $8,550 $8,550 $8,550 $8,550 $8,550 $8,550 $23,940 $23,94 $23,940 $23,940 $23,940 $182,000
pen Sold/የተሸጡ 0
ses ዕቃዎች ዋጋ
Labor/የጉልበት $0 $0 $0 $0 $0 $0 $0 $2,400 $2,400 $2,400 $2,400 2,400 $12,000
/ወ
ሥራ ዋጋ
ጭ
Utilities/የመገል $100 $100 $100 $100 $100 $100 $100 $460 $460 $460 $460 $460 $3,000
ዎ
ገያዎች ዋጋ
ች Insurance/ኢንሹራ $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400
 ንስ

Sales $500 $500 $500 $500 $500 $500 $500 $1,700 $1,700 $1,700 $1,700 $1,700 $12,000
Promotion/የሽ
ያጭ
ማስተዋወቂያ
Delivery and $200 $200 $200 $200 $200 $200 $200 $ 920 $ 920 $ 920 $ 920 $ 920 $ 6,000
Transportation/
ማጓጓዝና
መድረስ
Miscellaneous/ $50 $50 $50 $50 $50 $50 $50 $225 $225 $225 $225 $225 1,500
ልዩ ልዩ
Total Cash $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $1,850 $2,215 $2,215 $2,215 $2,215 $2,215 $21,550
Flow/ጠቅላላ የገንዘብ
ፍሰት
Fancy's Foods LLC
Pro Forma Balance Sheet
December 31, 1999
Current Assets/ የአሁኑ ንብረቶች
Cash/ጥሬ ገንዘብ -----------------------------------------------------------------------------------------$7,054.00
Accounts Receivable/ለመቀበል የሚቻሉ አካዉንቶች ----------------------------------------------------$60,484.00
Inventory/ንብረቶች ----------------------------------------------------------------------------------------$80,042.00
Pre-Paid Expenses/አስቀድመዉ የተከፈሉ ወጪዎች ------------------------------------------------------------$1,046.00
Total Current Assets/አጠቃላይ የአሁኑ ንብረቶች ------------------------------------------------------------------------$148,626.00
Fixed Assets/ቋሚ ንብረቶች
Building/ ሕንጻ-----------------------------------------------------------------------------------$100,500.00
Equipment/መሳሪያዎች-------------------------------------------------------------------------------- $40,950.00
Gross Fixed Assets/ጠቅላላ ቋሚ ንብረቶች -----------------------------------------------------------------$141,450.00
Less Accumulated Depreciation/ያነሰ የተከማቸ ዋጋ መቀነስ ------------------------------------------------$16,900.00
Net Fixed Assets/የተጣራ ቋሚ ንብረቶች-----------------------------------------------------------------------------------------$124,550.00
Total Assets/ጠቅላላንብረቶች-----------------------------------------------------------------------------------------------------$273,176.00
LIABILITIES AND OWNERS EQUITY/ግዴታዎች እና የባለቤቶች እኩልነት
Liabilities/ግዴታዎች
Current Liabilities/የአሁኑ ግዴታዎች
Accounts Payable/የሚከፈሉ መለያዎች-----------------------------------------------------------$51,343.00
Accrued Payables/የተከፈለ ------------------------------------------------------------------------$3,060.00
Total Current Liabilities/ጠቅላላ የአሁኑ ግዴታዎች --------------------------------------------------------------$54,408.00
Long Term Liabilities/የረጅም ጊዜ ግዴታዎች
Mortgage Payable/የቤት መግዣ ብድር --------------------------------------------------------------------------------------$20,708.00
Total Liabilities/ጠቅላላ ግዴታዎች ---------------------------------------------------------------------------------------------------$75,116.00
Owner's Equity/የባለቤቱ እኩልነት------------------------------------------------------------------------------------------------------$198,060.00
Total Liabilities and Owner's Equity/ጠቅላላ ግዴታዎች እና የባለቤቶች እኩልነት ----------------------------------------------------$273,176.00
[Note: A typical business plan would have 3-5 years of pro forma balance sheets, not just one year as shown here. The pro forma balance sheets
for following years will be impacted by how profits are handled (retained in the business or paid out to the owner(s)), how assets are depreciated
over time, the reinvestment of cash, the pay-down of debts, etc. The first year pro forma balance sheet shown here is used to calculate financial
ratios.]
 Fancy's Foods LLC
Financial Ratios
December 31, 1999

Net Profit before Taxes $ 21,550.00

Return on Equity= = =10.88 %
Net Equity $ 198,060.00

ከታክስ በፊት የተጣራ ትርፍ $ 21,550.00

በፍትሃዊነትይመለሱ= = =10.88 %
የተጣራ እኩልነት $ 198,060.00

Current Assets $ 148,626.00

Current Ratio= = =2.73
Current Liabilities $ 54,408.00

ጠቅላላንብረት $ 148,626.00
የአሁኑ ጥምርታ= = =2.73
የአሁኑ ግዴታዎች $ 54,408.00

Curr . Assets−Inventory $ 68,584.00

Quick Ratio= = =1.26
Current Liabilities $ 54,408.00
 የአሁኑ ንብረቶች−ንብረቶች $ 68,584.00
ፈጣን ምጣኔ= = =1.26
የአሁኑ ግዴታዎች $ 54,408.00

Total Liabilities $ 75,116.00

Debt ¿ Equity= = =0.38
Net Equity $ 198,060.00

ጠቅላላንብረቶች $ 75,116.00
ዕዳ ለፍትሃዊነት= = =0.38
የተጣራ እኩልነት $ 198,060.00

Contingency Plans
While careful planning was involved in setting the strategic goals for Whipped
Dream, it may be that these goals are not met. The Beans have decided to set a zone of acceptability for meeting sales and financial objectives.
For both sales and financial objectives, a 10% negative deviation from expected sales and projected returns on assets
will be accepted. However, if sales objectives and returns on investment are less than 90% of projections, certain actions will be taken. These
actions include:
1. For unacceptable sales levels during the first year: Fancy’s Foods will combat this problem by doubling in-store promotions of Whipped
Dream in Antlers and Hugo. The Beans will personally arrange and carry out these promotions on weekends at peak shopping times. If sales do
not increase within one month of the in-store promotions, Fancy’s Foods will advertise in the weekly shopping circulars of the stores for one
month.
2. For unacceptable sales levels in Oklahoma City and Tulsa: After 6 months of marketing products in these two metropolitan areas, sales will be
evaluated. If not meeting acceptable sales levels, Fancy’s Foods will consider contracting with local marketing specialists in Oklahoma City and
Tulsa to carry out the in-store promotions and push the products to the stores. This contractual relationship will be based upon sales commissions
(to be determined by the specialists and Fancy’s Foods), thereby providing incentive for the specialists to generate sales of Whipped Dream.
3. For unacceptable business liquidity: In the event that the business lacks liquidity,
Fancy’s Foods will examine their accounts receivable procedures to ensure that payment periods are just and that payments are being received in
a timely manner.
Also, cash flow projections will be reviewed to determine if unforeseen cash layouts/expenses are undermining the financial health of the
enterprise.
4. For unacceptable returns on equity: If returns on assets and owners’ equity fall below acceptable levels, Fancy’s Foods will first examine and
compare the per-unit costs of production and marketing with sales prices. If the margins are too thin, a price increase for products sold in
specialty/gourmet shops will be considered.
However, because established non-flavored substitutes already exist at lower prices, the lost sales resulting from a price increase may make this
option unsuitable for products sold in general food stores. Fancy’s Foods will therefore assess opportunities for minimizing production costs and
examine different marketing/distribution alternatives.