GREEN THUMB

MUSHROOM FARM

Fancy’s Foods, LLC.

2409 Oak Hollow Drive
Antlers, OK 74523
(580) 298-2234

Captain Theofilo G. Nieto

OIC-NW John Mark Manuel Magalona
(Researchers and Proprietors)

January 05, 2018

Executive Summary
Green Thumb Mushroom farm aims to support the local economy by contributing
to subsistence food security, nutrition, and medicine; generating additional employment
and income through local, regional and national trade; and offering opportunities for
processing enterprises (such as pickling and drying). Mushroom farming and cultivation
is a reliable and effective way to generate a high income in a short span of time.
Mushroom cultivation can provide a sustainable livelihoods for both rural and
urban poor, requiring minimal physical and financial inputs and resources, to be
undertaken successfully.

Mushroom farm is now a growing business here in the Philippines,

Mushroom is one of the most nutritious and healthy food rich in vitamins and
minerals, captain and I are health enthusiast.
Captain and I are environmental activist we learned from our maritime training

Mushroom farm does not require large space

Mushroom farm is inexpensive
Mushroom farm is simple and easy to cultivate and manage
Mushroom industry in the Ph is growing
Mushroom does not only produce great product but also mushroom recycles and
breaks down agricultural wastes like banana leaves, etc.

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 Green Thumb Mushroom farm 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

The history of mushrooms goes far back. Mushrooms have probably been eaten for as
long as there are people on this planet. For centuries, our ancestors had to make due with
mushrooms that could be found in fields and forests. Even the Romans had mushrooms
on the menu, and the more ancient Aztecs and Egyptians considered the edible fungus to
be the food of the gods. However, these records all concern wild mushrooms. This
changed in the middle of the seventeenth century. A melon grower near Paris accidentally
stumbled upon an important discovery. He poured water, used to wash wild mushrooms,
over some melon leftovers. A little while later, many mushrooms sprouted in this spot. It
was the start of the era of the cultivated mushroom. The change in profession from melon
grower to mushroom grower was such a profitable one that others followed suit and Paris
became the mushroom centre of the world.

Mushrooms have been part of our human diet since time immemorial. They were
used as food even before man understood the use of other organisms. Undoubtedly,
mushrooms were one of man’s earliest foods, and they were often considered an exotic
and luxurious food reserved for the rich. Today mushrooms are food for both the rich and
the poor. They can be grown anywhere as long as the conditions for their growth and
cultivation are provided. Available mushroom technologies range in complexity from
very high to amazingly low.

Nutrition of the mushrooms The popularity of mushrooms is still based not on the
nutrients that they contain but mostly on their exotic taste and their culinary properties,
whether eaten alone or in combination with other foods. It is not well known that
mushrooms are full of nutrients and can therefore make a very important contribution to
human nutrition. Table 1 shows the food value obtained from cultivated mushrooms
compared with other common foods.

Table 1. Food value of the different cultivated mushrooms (%

fresh weight)
Mushroom/Food Item Protein CHO Fat Calcium Thiamine Riboflavin Iron Niacin
(Ca) (Vit. B1) (Vit. B2) (Fe) (Vit. B3)
Oyster Mushroom 2.9 (26-
5.66 1.76 3.14 0.20 .22 3.40 7.72
35)*
Straw Mushroom 3.88
(25- 6.00 .60 3.00 .10 .17 1.7 8.30
29)*
Button Mushroom 3.5 11.4 0.40 2.40 0.10 - - 5.85
Shiitake Mushroom 7.5
(13- 6.50 .93 3.00 - - 1.90 7.60
17)*
Cload Ear Mushroom 4.8 (4-
7.16 .50 3.15 0.08 0.19 3.60 4.00
8)*
Carrot 1.2 9.3 0.3 3.9 0.06 0.06 0.8 0.06
Milk 3.5 4.90 3.9 118 0.04 0.17 0.10 0.17
Fish 14-20 2-3 1-2 15 60 1.20 1.50 1.20
Meat 21 - 3.6 8.3 0.10 0.29 2.52 29.00
Egg 13 2.0 13.3 68 18 0.27 1-15 0.27
Compiled from various sources. *Numbers in parenthesis are dry weight data.
(Source: Tropical Mushroom Cultivation by T.H.Quimio, 2002)

As a dietary source of protein, mushrooms are superior to most fruits and vegetables with
the exception of beans and peas. Mushrooms also contain all the essential amino acids as
well as the commonly occurring non-essential amino acids and amides. Lysine, which is
low in most cereals, is the most important amino acid in mushrooms. Mushroom protein
is indeed a valuable addition to the human diet. Mushrooms also rank quite high in their
vitamin content, which includes significant amounts of Vitamin C. Although devoid of
Vitamin A, mushrooms make up for that with their high riboflavin, thiamin and
cyanocobalamin (Vit. B12) content, the latter usually being found only in animal
products.

Their content of the anti-pellagra vitamin–niacin–is nearly equivalent to the levels found
in pork or beef, which are considered to be the richest sources of this vitamin.
Mushrooms are also good sources of minerals such as calcium, potassium, sodium and
phosphorous in addition to folic acid, an ingredient known for enriching the bloodstream
and preventing deficiencies. Iron is also present in an appreciable amount in mushrooms
and together with phosphorous, can provide a good proportion of the recommended daily
dietary needs. Mushrooms are low in sodium, making them ideal for persons with certain
types of heart and kidney ailments.

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

The Green Thumb mushroom farm will cultivate and produce not just the
common gourmet mushrooms but also medicinal mushrooms.

Health Food/Medicinal Mushrooms

For the past 30 years, interest in the medicinal aspects of mushrooms has greatly
been stimulated by the large number of scientific studies conducted on mushrooms.
Folklores have provided clues for potential sources of medicine from mushrooms as well
as from herbal plants. Using modern approaches, scientists have isolated and identified

specific components that can either destroy or at least debilitate three of mankinds’ killer
diseases: cancer, heart disease and AIDS. As a result, a vast body of scientific literature
concerning mushrooms has been published since the 1970s, mostly in hospitals and
research institutions in Europe, Japan, China and the United States.
s

Figure 1. Fruiting bodies of Ganoderma lucidum (Reishi Mushroom)

The most recent introduction of a medicinal mushroom is Ganoderma spp. The

fruiting bodies (Fig. 1) have traditionally been used for medicinal purposes and for
thousands of years, have been regarded by the Chinese to be a high quality herbal
medicine. It has been used clinically since ancient times in China for the treatment of
fatigue, coughing, asthma, indigestion, neurosis and a variety of other diseases. Early
reports indicated the ability of Ganoderma to improve body functions, increasing its
healing ability while maintaining a healthy and long life. It is now well established from
in vitro and in vivo studies that Ganoderma can help fight viral diseases, and modern
research has proven its anti-tumor and interferon-inducing actions.

Pleurotus spp., oyster mushrooms, are also good sources of beta-1,3/1,6-glucan.

These molecules (called pleuran) stimulate the immune system of the body to help fight
abnormal cells as well as boost the system against the damaging effects of chemo and
radiation therapies used to kill tumor cells. Pleurotus also contains mevinolin and related
compounds which inhibit reductase, an enzyme used in cholesterol biosynthesis. The
consumption of oyster mushrooms can lower the cholesterol levels in the body. Vita-
Glucan tablets and elixirs, formulated from purified glucan extracted from P. ostreatus,
are now available for strengthening the immune system and lowering serum cholesterol
levels to prevent heart disease.

Market Description

The mushrooms that Green Thumb will market will fall into two distinct
categories: Medicinal mushrooms and gourmet mushrooms. This business plan will look
at these two markets separately.
Gourmet Mushroom:

Mushroom is a vegetarian delicacy and a suitable substitute for meat and eggs. It
is very popular in most neighboring countries like Japan, Malaysia, and other Asian
countries. Wild edible mushrooms here in the Philippines is a delicacy and often forage
under the banana trees after tropical storms had passed.

The Market for mushrooms is growing rapidly because of their nice aroma, subtle
flavor, nutritious values and special taste. Millennials have proven themselves to be more
health-conscious than previous generations. Millennials, in particular, emphasize
proactively managing health and long-term quality of life more than any age group before
them. This trend is creating a ripple effect that spans across multiple industries and
companies not just here in the Philippines but across the globe.
(https://www.huffingtonpost.com/entry/health-conscious-millennials-may-be-
responsible-for_us_599796c8e4b03b5e472cefae)

Many exotic preparations are made from them like soup, pickles, vegetables etc.
It is also used for stuffing several food preparations and for garnishing. But its
consumption is still confined to urban and semi-urban population. Mushrooms have very
short life after harvesting and hence they are sold in fresh form. Their shelf life can be
enhanced by processing them. Processed mushrooms are packed in special quality
polythene bags or canned. This variety can be sold and exported to far off places.

Medicinal Mushrooms: Since Medicinal mushrooms is not y will be cultivated

and marketed to highly stressed people which is concentrated in chemicals that is seeking
organic ways to strengthen themselves. (Call Center Agents, Seafarers, Salesmen)

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 medicinal mushrooms available

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 produced 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 for Green Thumb Mushroom farm. These
projections are for the Gourmet Mushroom production of Green Thumb Mushroom farm
only.
Capital Input

Environment and Area

One of the most important factor for mushroom growing is providing an

appropriate environment both for vegetative and reproductive growth. Not being
protected by a skin layer, fungi are easily affected by their growing conditions. So it can
be said that the success or failure of mushroom cultivation depends on the control of
growing conditions. Environmental factors affecting mushroom cultivation include
temperature, humidity, light and ventilation.

An agricultural area of 1,000 m2 at Silang, Cavite just 3 km away from Tagaytay

owned by Capt. Teofilo G. Nieto will be used for Green Thumb Mushroom farm. The
area has the perfect combination of humidity and temperature all throughout the year.

SILANG, CAVITE CLIMATE TABLE AND HISTORICAL WEATHER DATA

  January February March April May June July August September October November December
Avg. Temperature (°C) 24.1 24.5 25.6 26.9 26.8 25.9 25.1 25.2 25.4 25.4 25 24.3
Min. Temperature (°C) 20.1 20 20.8 22 22.3 22 21.6 21.9 21.9 21.6 21.2 20.7
Max. Temperature (°C) 28.2 29.1 30.5 31.8 31.3 29.8 28.7 28.6 28.9 29.2 28.8 28
Avg. Temperature (°F) 75.4 76.1 78.1 80.4 80.2 78.6 77.2 77.4 77.7 77.7 77.0 75.7
Min. Temperature (°F) 68.2 68.0 69.4 71.6 72.1 71.6 70.9 71.4 71.4 70.9 70.2 69.3
Max. Temperature (°F) 82.8 84.4 86.9 89.2 88.3 85.6 83.7 83.5 84.0 84.6 83.8 82.4
Precipitation / Rainfall 41 21 29 40 197 276 446 425 334 203 192 115
(mm)
The variation in the precipitation between the driest and wettest months is 425 mm.
During the year, the average temperatures vary by 2.8 °C.
(https://en.climate-data.org/location/20691/)

Table 2. Financial aspect of the Green Thumb Farm.

1. TOTAL COST
EQUIPMENT AND SUPPLIES

Mushroom cultivation requires equipment, including many specialized tools.

Pressure Cooker
Petri Dishes
Sterilized used empty
Bottles, instead of Mason
Jars and Media Flasks
Filter Disks
Spawn Bags
Alcohol Lamp
Cutter, instead of scalpel
Inoculation Wire,
Permanent Markers
Small Scale
Funnels (narrow neck and 2
wide neck)
Measuring Pipette &
Rubber Bulb (1-15mL)
Syringes
Graduated Cylinders
Isopropyl [Rubbing)
Alcohol
Bleach
Parafilm
Surgical Gloves
It is advisable to undertake thorough market survey before finalizing actual capacity.
Assuming capacity of 600 kgs per day, the annual capacity would be 180 tonnes
considering 300 working days. Following machines shall be required. ITEM
DESCRIPTION Qty. Price (Rs.) Tray-type Dehydrator 1 70,000 Steam-jacketed Kettle 1
65,000 Can Steamer 1 20,000 Blanching Equipments 1 25,000 Straight-line Exhaust Box
with electric motor, gear box etc. 1 45,000 Canning Retort with attachment 1 35,000
Stacking Trays 200 80,000 Baby Boiler 1 60,000 Laboratory Equipments -- 35,000 Total
4,35,000 o Miscellaneous Assets Some other assets like furniture & fixtures, working
tables, storage racks, SS utensils, plastic tubs, etc. shall be required for which a provision
of Rs. 60,000/- is made.
 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
Labor $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
Labor $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 co-
packing 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.

 Green Thumb Mushroom Farm
Cash Flow Statement
January 2019 – December 2019

January February March April May June July August September October November December TOTAL
Revenues ₱30,000 ₱60,500 ₱91,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱240,450
Expenses
Cost of Goods Sold $8,550 $8,550 $8,550 $8,550 $8,550 $8,550 $8,550 $23,940 $23,940 $23,940 $23,940 $23,940 $182,000
Labor $0 $0 $0 $0 $0 $0 $0 $2,400 $2,400 $2,400 $2,400 $2,400 $12,000
Utilities $100 $100 $100 $100 $100 $100 $100 $460 $460 $460 $460 $460 $3,000
Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400
Sales Promotion $500 $500 $500 $500 $500 $500 $500 $1,700 $1,700 $1,700 $1,700 $1,700 $12,000
Delivery and Transportation $200 $200 $200 $200 $200 $200 $200 $920 $920 $920 $920 $920 $6,000
Miscellaneous $50 $50 $50 $50 $50 $50 $50 $225 $225 $225 $225 $225 $1,500

Total Cash Flow $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
 Fancy's Foods LLC
Pro Forma Balance Sheet
December 31, 1999
Current Assets
Cash $7,054.00
Accounts Receivable $60,484.00
Inventory $80,042.00
Pre-Paid Expenses $1,046.00
Total Current Assets $148,626.00

Fixed Assets
Building $100,500.00
Equipment $40,950.00
Gross Fixed Assets $141,450.00
Less Accumulated Depreciation $16,900.00
Net Fixed Assets $124,550.00

Total Assets $273,176.00

LIABILITIES AND OWNERS EQUITY

Liabilities
Current Liabiliities
Accounts Payable $51,343.00
Accrued Payables $3,060.00
Total Current Liabilities $54,408.00

Long Term Liabilities

Mortgage Payable $20,708.00
Total Liabilities $75,116.00

Owner's Equity $198,060.00

Total Liabilities and Owner's Equity $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

Return on Equity = Net Profit before Taxes = $21,550.00 = 10.88%

Net Equity $198,060.00

Current Ratio = Current Assets = $148,626.00 = 2.73

Current Liabilities $54,408.00

Quick Ratio = Curr. Assets - Inventory = $68,584.00 = 1.26

Current Liabilities $54,408.00

Debt to Equity = Total Liabilities = $75,116.00 = 0.38

Net Equity $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.
 APPENDIX

[This is where the appendix would start if there was one. Appropriate material for
appendixes include owner(s) resume, a processing flowchart, a management hierarchy
diagram (if the business has multiple employees, sales staff, etc.), letters of intent to
purchase from buyers, advertisement materials, copies of training completion certificates,
etc.]