Juicy Fruit Beverage Business Plan

JuicyFruit Beverage Business Plan

Executivesummary

Thereport presents the business plan for Juicy Fruit Beverage, whichwill offer non-alcoholic beverages as an alternative the commonrefreshment products with sweeteners additives that are facing manyhealth concerns from the public. The company non-alcoholic productsare natural, have no sweeteners additives, and are enriched withvitamins and other minerals. The products are the only alternative tothe current health conscious customers seeking healthy and wellnessproducts with no negative health impacts. The business plays animportant role in the community by offering a unique product thatwill deliver unique experience and refreshment while at the same timefocusing on the health and wellness of the consumers.

Thebusiness shall run a production facility to process the products anddeliver directly to customers. A director and a team of four managersincluding an operations manager, production manager, human resourcemanager, financial manager and an ICT technician will run thebusiness. The business will use product differentiations a marketentry strategy to penetrate an already saturated market with superiorcompetitors. Focusing on health and the wellness of the customers,the company will be able to create a new market and win new customersseeking healthy products with no negative impacts to their health.

Thebusiness strengths are based on the company brand health orientationby providing health products to satisfy the emerging global trendsand awareness of health and fitness. This will offer the company astronger position in the market with a unique brand associated withnon-carbonated products. The business offers a profitable investmentthat intends to invest capital worth $73,950 and staring annualpertain costs of $5,184. With a ready market that has not beenexploited in any way, the business is expected to maintain a 25%growth rate for the first 6months before settling at 15% growth rateper year. The nonalcoholic beverage industry offers a low risk entryand exit platforms for businesses.

JuicyFruit Beverage Business Plan

CompanyDescription

Thename of the business is Juicy Fruit Beverages. The industry of thebusiness is non-alcoholic beverages and the types of products to beprocessed are non-alcoholic beverages. The company was established on4 January 2009. The company provide alternative refreshment softdrinks to the community it operates in giving nonalcoholic fans analternative drink that has no sugar additives. The products to beproduced will factor in the society health and wellness. The businessplays an important role in the community by offering products thatprovide consumers a unique experience and refreshment with fun. Thenonalcoholic beverages are suitable for both adults and children. Thesignature drink for the company will be the “Purple Madness”

Thecompany mission statement is to “produce all natural juice drinkthat is healthy with a great taste”. The rationale of the missionstatement is to increase consumer awareness about the concerns of thecompany from their happiness, health and wellness. The companymission statement enables consumers to be aware of the natural andtasteful nature of the business products and the value they add totheir lives in terms of fun, refreshment and health. The mission alsolets consumers lean about the company commitment to producing qualityand healthy products.

IndustryAnalysis and Trends

Someof the largest beverage companies in the world dominate non-alcoholicbeverage industry. Nonalcoholic industry comprises of companies thatprocess soft drinks and hot drinks. Soft drinks include carbonated ornon-carbonated water, sweeteners and flavors. Hot drinks on the otherhand include beverages such as coffee and tea. The largest softdrinks companies in the world are Coca Cola Company and Pepsi Inc.the two hold up to 70 percent of the global soft drinks market share.The two companies are also the largest manufacturers of carbonates,juice, bottled water and ready to drink tea and coffee. Otherspecialties in their brands expand to sports and energy drinks(Bailey, 2014).

Carbonateddrinks have the largest number of brands, which dominate thenon-alcoholic industry. Other brands include fruits, vegetablejuices, and bottled water. The non-alcoholic industry has continuedto grow over the last 50 years with tremendous development takingplace in terms of innovative production and distributiontechnologies. This has rendered the industry more competitive andhighly dynamic. Increased innovation and new technology forms thebasis of the growth in the industry. Increased customer concerns ontheir health and wellness has transformed how products are designedand packaged in the industry. Companies that have portrayed theirimage as leaders who put customers’ health and wellness concerns aspart of their strategy and mission have continued to enjoy continuousgrowth over the years. The demand for healthier foods especiallybeverages has continued to grow with time (Biarley, 2014 Solomon,2014).

Thecompany remains relevant in the industry and to the current trend inthe sector due to various reasons. Factoring in consumers health andwellness to the company mission by eliminating sweeteners andreplacing with natural options places the company on the forefront interms of providing healthy nonalcoholic beverage solution to themarket. This aligns the company with consumer shifting interests tonatural and healthy drinks. The company products will also attract asignificant number of “smart consumers” who associate themselveswith diverse standards and health related products. The company willalso tap into the millennium generation market whose needs aredifferent from previous generation needs.

Competition

Theplan notes that Coca cola and Pepsi Co. Inc, which have wellestablished brands both locally and internationally are the maincompetitors of the company in the beverage sector . The two companieshowever have dominated in carbonated beverage products in theindustry. The companies have strong marketing strategies and strongfinancial backing to undertake effective marketing and distributionplans. The companies commit large funds to support outdoor marketingand events and activities to create continuous awareness of theirproducts to consumers. The companies use continuous marketingstrategies through social media, television advertisement, posters,billboards other print media to relay their message out to themasses. The company have effectively differentiated and diversifiedtheir products to ensure success in reaching out to target markets(Gomes et al., 2015). The main competitors to Juicy Fruit Beveragecompany products are the emerging companies with unique flavors andproducts and which have roots or connections to Coca cola and Pepsi.

Thecompany will greatly benefit by its products being in the localmarket. This will enable the business to own significant market sharein local community market by effectively marketing the productsthrough the niche market. With the existing knowledge of the area,the company will use the new products to create a new market insteadof competing head on with its competitors. This will enable thecompany workers to engage face to face with the customers. Improvedconsumer service and building strong consumer relationship shall bethe basis of creating and winning a wider customer base in theregion. This will be possible due to the ease of access to the targetcustomers and market and the availability of enough time to undertakedirect marketing. Providing high quality products will enable thecompany to tap into unexploited market in the community, which willcreate strong base for the pursuit of national clients (Solomon,2014).

StrategicPosition &amp Risk Assessment

Strategicposition

Strategicpositioning of a brand depends on how consumers understand the brandof the company. This meaning is based on the impression created bythe brand and the feelings that customers have towards the brand.(Newlands, 2015).the strategy to be adopted by Juicy Fruit BeveragesCompany will position the company in a competitive position in thelocal community market. The current market trends and businessenvironment in the beverage industry indicate possibilities ofsuccess for the company. The beverage industry being dynamic innature monopolistic in nature, entry and exist risks are low.Competition remains high making it important for companies todifferentiate their products and services. This ensures positivereception of products to the market. Dominating products in theindustry are sugar and sweeteners added products, which have mademajority of consumers in the market to have negative attitude tononalcoholic beverages. The concerns about health related challengesin the society such as hypertension and obesity have continued topressure the nonalcoholic beverages businesses blaming them for thecontribution they make to the scourge.

JuicyFruit Beverages company distribution strategy will includebusiness-to-business and business to consumer distribution channels.This strategy will ensure that the product reach many customers inthe area. The company will also introduce the products torestaurants, chain stores, grocery stores, supermarkets and sportsevents. This will require direct distribution to the stores. Anonline platform to support sells will be set up on the companywebsite where customers can order and delivery made to theirdoorsteps.

Risks

Despitethe steady growth in the industry, and company robust market entrystrategy, there are a number of risks and threats to the success ofthe company. The competition in the industry remain high and wellestablished competitors such as Coca Cola and Pepsi hold the largestmarket share (Coca Cola Company, 2009).However, Solomon (2014) suggest that in such situations there is alikeliness that attracting similar market size may take long. Newproducts are also emerging being introduced by smaller companies thatcan compete directly with Juicy Fruit Beverage Company products inthe same market. The sector has a direct impact on the health andwellness of the society. The government regulations directly affectthe company advertisement strategies. Supply partnership alsoinfluences the company effectiveness in distribution and marketpenetration. The strategy being adapted by the company also facescapitalization risks especially when costs of operations are notproperly estimated (Carpenter &amp Moore, 2006).

MarketingPlan &amp Sales Strategy

SWOTAnalysis

Strengths

BrandHealth Orientation:The company products are health oriented. This meets the emergingglobal trends and awareness of health and wellness and the productsprovide a healthy alternative to other nonalcoholic beverages. Thispromises the company a wider fan base and higher sales.

BrandUniqueness:Juicy Fruit Beverage brand is unique. The products the companyprocesses are unique as they are healthy and corporate neutralconsidering they are non-carbonate in nature.

Shiftin consumer preference:The general shift in consumer interest to healthier lifestyles makesJuicy Fruits Beverages to be in an advantageous position in theemerging market.

Weaknesses

Brandweakness: Well-establishedcompanies dominate the industry since they have stable brands and alarge customer base both locally and globally. New companies andbrands including Juicy Fruit Beverages are still not well known inthe same markets hence may not have the same popularity for sometime.

LimitedQuantities.The company manufacturing capacity is small compared to itscompetitors. This limits the company products capability to reach toa large consumer base as supply and distribution will be limited toproduction capacity. This makes the company to lack economies ofscale.

Threats

EstablishedCompetitors.The competing brands are owned by companies that have been in themarket for over a century and have managed to develop strong brandidentity and acquired large market share compared to Juicy FruitBeverage.

NewEntrants.The beverage industry is monopolistic in nature and the risks ofentry and exit are low. New entrants with similar products can easilyenter the market and take over already gained markets consideringtheir superiors products than Juicy Fruit Beverage.

Opportunities.

Diversification.Juicy Fruits Beverages can introduce new flavors that have not beentried by competitors. This will enable the company to create a newmarket and win over new customers.

Partnership.There is an opportunity for the company to collaborate withdistributors and suppliers. This will shorten the delivery cycle andenable to cost of operation to go down. Partnering with retailerswill also enable the company products to reach to a wider customerbase.

BrandRecognition.The company brand is easy to recognize especially for customersinterested in healthy beverages. The brand can easily increase thecompany customer base and penetration in the market.

Strengths

  • Brand Health Orientation

  • Brand Uniqueness

  • Shift in consumer preference

Threats

  • Established Competitors

  • New Entrants

Weaknesses

  • Brand weakness

  • Limited Quantities

  • Established Competitors

  • New Entrants

  • Diversification

  • Partnership

  • Brand Recognition

Opportunities

  • Diversification

  • Partnership.

  • Brand Recognition

Table1.0 SWOT Analysis Table

MarketingObjectives

JuicyFruit Beverages company marketing objective will be to increase thecompany sales by 50% in the first six months of operation in 2016.The business will also achieve a market share of up to 5% in thelocal area for the nonalcoholic beverage products in the local areaby end of the first financial year. The business will also target toincrease the percentage of customer satisfaction from current 40% toabove 80% in 18 months. The business will focus on introducing newproducts every quota to ensure customers satisfaction through productdiversification. Through advertising and marketing campaigns throughsocial media, advertising and taking part in social events around thecommunity, the company intends to increase its brand awareness in themarket and reduce the prices of existing products by 10% to make themmore price competitive. Improvements in packaging and branding willbe the basis of starting us a new trend in marketing for the companyto make the products more appealing to customers.

TargetMarket

Inthe first six months in business, the company will focus on localcommunity market. This will provide the company management teamenough time to analyze the market and consumer behaviors on theproducts. The company target customers from different demographicbackground and include different age groups with the focus given toteenagers and middle-aged adults. The big age gap is driven by thefact that the products are healthy in nature and have no impact onany consumer regardless of their age. Families are also a pacifictarget market for the company. The concept of binging family togetherby taking healthy and nutritious beverage at home is to be used. Theproduct shall be portrayed as an important way to bring fun to thefamily and ideal for family consumption for refreshment.

Thecompany is to attract customers from diverse education backgroundswho like to associate themselves with sweet nutritious and healthybeverages. The pricing strategy will allow the product to be affordedby everyone in the community regardless of their financial status.The company will not discriminate consumers according tosocioeconomic level (Newlands, 2015). The company will also notdistinguish between gender and ethnic background. Information on theproduct will be relayed in the country national language with aneutral message. The basis of making the product neutral is toattract diverse members of the community during the six months oflaunching (Carpenter &amp Moore, 2006).

Competitiveedge

Positioning

Thelocation of the production facility and the distribution warehouseare critical to the business competitiveness. The current locationenable the company to access all its customers in the nearest townsand makes delivery simple. Turnaround time of orders is cut into ahalf ensuring that customers are able to receive their deliverieswithin 4 hours from time of ordering. The company shall be positionedas a health oriented business taping into the health needs ofcustomers. This will be achieved through providing alternativehealthy and nutritious nonalcoholic beverages different from therefreshments being offered in the market. The business shall win anew wave of customers using healthy nonalcoholic beverage as thestrategy to access unexploited market. The company will also useprice differentiation by offering cheaper nutritious and healthydrinks that can be afforded by everyone. The company will operate anonline self-service retail store to enable customers make ordersthrough he company website and a mobile app that can be installed inmobile devices. This will increase access to customers round theclock. The business positioning statement will be “Your OnlyNatural and Healthy Non Alcoholic Soft Drink”

Lowercosts and excellent products

Reasonableprices and lower operating costs will shape the company’scompetitive edge. The company will operate with a team of skilledemployees as well as utilize efficient and innovative equipment,which will ensure reduced operating costs. In addition, the use ofinnovative equipment and skilled employees will allow the business tooffer quality products at reasonable prices. However, lower pricesonly will not allow the company to be competitive thus, it willcomplement quality products and cheap prices with convenience andtimely delivery.

Clarityof the company message to the market

Usingthe five F’s aimed at consumer motivation Juicy Fruit Beverage caneasily convince its customers to understand the importance of thecompany’s products.

Functions:The Juicy Fruits Beverage products will meet the customer’sspecific needs. The products are focused on satisfying the currentneeds of the customers regarding health. This is in line with thecurrent shift of customers to healthy lifestyles. The companyproducts not having added sweeteners meet this need making thecompany products an ideal preference for most consumers.

Finances:The products made by Juicy Fruit Beverages are fairly priced andaffordable to all social classes. Purchase of the company productwill not in any way negatively influence the financial wellbeing ofthe customers.

Freedom:The distribution strategy used by Juicy Fruit Beverage makes it easyand straightforward for customers to access the products.Face-to-face interaction with the company staff and onlinetransactions and direct purchase from stores give customers apersonal touch to the company and confidence. The products have clearand unbiased instructions on their packaging.

Feelings:The products will make customers to feel active and comfortable withthemselves considering the healthy and refreshing aspect included inthe products. Customers will develop positive image of themselves, asthey will have no fear of health problems from consuming theproducts. The level of respect and trust from customers willtherefore increase.

Future:The customers are likely to continue using the company products afterthe first time the use. Continued demand for healthy foods will makethe customers loyalty increase to the brand.

MarketMix

Usingthe 4Ps matrix, the product, Place, Price and Promotion will guideJuicy Fruit Beverages company marketing mix.

Products

Thebusiness will start with a four flagship products as the main brandsof the company. This will be made of four flavor that will also beimproved on in the future. Mango, Lemon, Passion and Cola will be themain brans and flavors of the products. The product will be packagedin small tetra pack boxes and small plastic bottles carrying 150ml,200ml, 500ml, 1 liter and 1.5 liters. The products will have nosweeteners added, as they will be concentrates of natural flavorsfrom natural fruits naturally preserved using industrialpreservatives. The branding of the four products will be according tothe specific name and fruit flavor they contain.

Price

Thesmall 150ml will be sold at $0.5cents, 200ml at $75.00 cents, 500mlat $1.00 and the large 1.5 liter will be sold at $1.15 cents. Theprices are 25% lower than that of competitors to enable customereasily afford all the brands easily.

Place

Thebusiness will be located within reach of the nearest towns to make iteasy to deliver to customers and access raw materials. The road tothe nearest towns is all tarmacked and there is a railway alternativefrom the manufacturing plant to the business district. Customers arealso able to access the company products online from the companywebsite and online shop. They can also order directly from thecompany social media platform or from the company mobile app. Thebusiness is within reach to the largest distributors and suppliers ofchain stores, fast foods, hotels, super markets, grocery stores andmii shops in the region. The delivery drivers will also act as thecompany sales men as they do the deliveries. The company will alsoadapt the competitors models of distribution such as Coca Cola whereagents are appointed to specific regions to minimize delivery timeand costs.

Product

Thebest way to penetrate the already overcrowded beverage industry isthrough product differentiation (Dirisu, Iyiola &amp Ibidunni,2013). Through product differentiation, the company will be able tocreate value in the market through focusing on health, wellbeing andnaturalness. This will allow Juicy Fruit Beverage to compete in adifferent scale rather than on product pricing. Through productdifferentiation, the company brand loyalty will also be uplifted inthe market. Successful product differentiation will improveconsumers’ positivity and perception of the products (Dirisu etal., 2013). Through continuously improving on quality and enhancingconsumer loyalty, the company will continue to grow steadily. Throughproduct differentiation, the company will create a perception toconsumers that there is no alternative to the healthy productsprovided by the company. Customers will also be able to compare thecompany products in terms of quality with those of competitors. Thiswill enable the company to gain an advantage position compared toother companies in the market (Carpenter &amp Moore, 2006).

Promotion

JuicyFruit Beverage will use different marketing approaches to reach outto its customers. Face-to-face interaction will be given priorityafter operations start. The company will use its website and socialmedia profiles in face book, Instagram and twitter to communicatedirectly to its customers. Through social media, the company will beable to reach out to a large number of customers instantly inadvertising its new products such as new flavors and also collectcustomers’ feedback and experiences. The company will also uselocal print media such as magazines, billboards, posters and thedaily newspapers to advertise it products and promotions in themarket. The company will be involved in community events andfunctions and support different social functions as a way to increaserevenue through marketing (Porter,2008).

OperationsPlan

Facilities

Thefactory, which will be the main operation area of the company, willbe financed by funds received from relatives and friends amounting to$20,000 to be repaid after one year with a 5% interest. Theproduction unit shall consist of one NAB mixer machine, a bottlingmachine to automate the production process. The equipment will bepurchased and installed in the factory. The factory structure andlayout will ensure smooth flow of production process in a continuousprocess. The company also owns two vans to be used for deliveringorders and sometimes to bring raw material to the factory.

ProductionProcess

Thefactory will contract suppliers to bring in raw materials fromproduction from nearby towns to prevent delays. Procuring officerswill be responsible for confirming purchase orders from productionsection to the suppliers. The suppliers will be required to deliverwithin 12 hours. Production will take 12 hours or more depending onthe quantity of the order given. Orders should be delivered within 24hours from time of order. The two delivery vans shall be used todeliver directly to customers within one hour after every dispatch.

Equipment

Thecompany owns two NAB Mixer machines valued at $28,000, two bottlingmachinery valued at $9,600 each, four vehicles each valued at$10,000, three computers each worth $1,200 and a graphic and designsoftware that initially cost the company $750. The company inventoryinclude glass bottles worth $3,000, metal caps worth $300, CardboardCartons worth $500 and NAB ingredients valued at $600. The companyalso owns a lifting forklift and a branding machine.

Laborforce Utilization

Thecompany executive personnel will comprise of the founder who shall bethe Director, two colleagues with different professional backgrounds.One shall be a computer expert responsible for maintaining thecompany systems. NAM creator and mixer shall be responsible forproduct development and quality management. Five labors shall beemployed to undertake manual jobs and act as machine operators. Thelabors shall undertake cleaning and wash-down services. Legalservices, online marketing, and branding will be outsourced to localcompanies. The production department will be run by two shifts toensure continuous production during peak time.

Costand Time Efficiencies

Theproduction material will be procured through competitive tenderingprocess that will give priority to local suppliers. Material willonly be purchased once orders are confirmed from buyers. The facilitywill use Just in Time (JIT) production approach. This eliminates theneed for large storage space and dead stock that may constrain thebusiness financially. Shifts shall be arranged according toproduction needs to ensure maximum utilization of the machines andlabor time.

Problemsaddressed. The business will have to shift from batch production tocontinuous production to maximize throughput. This will minimize timewastage during production. Employees will be involved in multiplejobs to ensure they are fully utilized during their shifts. Thecompany shall use different information seems to manage data andprocess information to be used in decision-making. Once goods aremanufactured, they will immediately be delivered to customers toprevent stockpiles in the warehouse. Raw materials purchase will bedetermined by the size of orders being received on a daily basis.

Researchand development

Productdesign is part of the company growth strategies. Through research anddevelopment, the company will improve on existing product quality andintroduce new products. The business will eventually venture intoother products such as ice tea and ice coffee and part of productline expansion. The research and development unit will analyze thecurrent market and find out emerging opportunities. The NAB will beundertaken to establish new market opportunities.

TechnologyPlan

Thefactory will be fully automated and the functions in the productionarea will be supported by the company-computerized system that helpsmanager to monitor production process. Automated card readers willplaced in the entry of the factory to ensure employees signing in andout are correctly documented. The company shall put in place an ERPsystem with human resource module to manage employees’ salaries,leave schedules and track their performance. The system shall also beused to process orders and manage inventory. An accounting modulewithin the system shall be used to manage the company finances and acustomer relationship module to keep track of suppliers and customersinformation. The company POS system linked to the ERP shall supportall transactions in the company. Social media platforms shall also beused to gather customers’ feedback to be used in marketing. Acustomer reception desk shall be set up in the office to helpcustomers with their inquiries and to receive new orders.

Management&amp Organization

TheCompany Director will head the operations of the company. The companyshall have different departments including the production department,operations department, finance department and the Human resourcedepartment all headed by respective managers. The operations andadministration department led by an operations manager shall beresponsible for handling all customer needs. An ICT technician willmanage the company communications and information systemsinfrastructure. Machine operators in the production section will beresponsible in the production process, feeding material to themachines and also packing and dispatching of the finished goods.Other labors will be involved in general works within the facility.The drivers will be responsible for deliveries and taking new orders.Juicy Fruit Beverage Company will use a top down management strategy.All managers will be directly answerable to the Director. Employeemotivation strategy will involve attractive salaries, and throughperformance appraisals (Khan &amp Khalique, 2014).

Ethics&amp Social Responsibility

GoodCorporate Citizen

Corporateresponsibility involves the company engagement in good practices byensuring its operations impacts on the society surrounding them arenot negative. This includes considerations on the impact the companyhas on the environment, ethical issues and the members of the society(WBI, 2011).Good corporate responsibility enables business organizations tobenefit from the support they provide to the community surroundingthem especially through alleviating their economic growth (Porter,2008).Juicy Fruit Beverages has set up corporate citizen strategies in itsCSR strategy that are focused in ensuring the company remains a godcitizen to the community it operates in.

Responsibilityto employees

Theability of the company to create jobs and support the communityeconomically is one of its moral responsibility. The company willbenefit the community by providing job opportunities to the communitymembers. The company will employ both skilled and unskilled laborfrom the community and train them on various skills that to enablethem become competent. The company employment and recruitment policywill be in line with the employment Act and other government legalrequirements. Fairness and honesty will be upheld in the company andemployee issues will be addressed promptly at all times. Compensationand reward to employees will be used as a tool to motivate them andencourage their good work.

Effectson the environment

Thecompany manufacturing process contributes to environmentaldegradation especially pollution through emitting wastewater, garbageand carbon gasses. The company intends to put measures to reduce landdegradation, air pollution and proper waste management throughintroducing recycling strategies. The company packing materials willbe environmental friendly. Heat used in the manufacturing processwill also be recycled within the manufacturing plant.

Effecton Health

Thecompany products will have positive impact on the users’ health.The product will increase the health and the physical wellbeing ofthe consumers. The consumers will receive important nutrition,vitamins, and minerals necessary to the body. The products will alsohelp in improving the body metabolism and energy provision. Too muchintake of the products will however lead to liver and brain damage.The product may also cause digestive upsets if over consumed. Theproducts however have many health advantages than the possibledisadvantages that only arise if over consumed.

Personalplan

Themost important assets of the business will be the people working inthe organization with capabilities matching their job requirements.Juicy Fruit Beverages will hire 3 managers, 4 machine operators, 15general laborers, a security guard, office assistant, IT technicianand the CEO who also is the owner of the business. Employee will beprovided with job specifications and contracts legally binding theircommitment to the company. They shall be compensated adequatelyaccording to the basic pay provided in the contracts and theallowances provided. Employees shall be awarded according to theirperformance, which shall be determined by regular performanceappraisal. The company shall operate from Monday to Saturday withwork starting from 8.00 am, a 30 munities mid-morning break from10.00 am to 10.30 am, one hour lunch break from 12.45 pm to 1.15 pm.Employee shall leave their place of work once their day work iscomplete at 5.00 pm.

Table1:

Personalplan

FY2016

FY2017

FY2018

FY2019

FY2020

Manager

23,000

25,760

28,851

32,313

36,191

Production Assistant

15,000

16,800

18,816

21,074

23,603

Accountant

12,000

13,440

15,053

16,859

18,882

HR Clerk

11,000

12,320

13,798

15,454

17,309

ICT Technician

15,000

16,800

18,816

21,074

23,603

Machine Operators

8,500

9,520

10,662

11,942

13,375

Drivers (2)

9,200

10,304

11,540

12,925

14,476

Watchman

6,400

7,168

8,028

8,992

10,071

Office assistant

8,500

9,520

10,662

11,942

13,375

Clerks (2)

8,400

9,408

10,537

11,801

13,218

TheFinancials

Thecompany’s financials form the most significant part of the plan, asthey evaluate the sales, profitability, returns, and equities of thefirm.

FinancialPlan

JuicyFruit Beverages will maintain a proper financial position for fiveyears. The following outlines the company financial developmentforecasted for five years starting 2016 to 2020. The business initialfinance include a $20,000 one year loan from family and capitalinvestment worth $73,950 all provided by the owner. The loan will berepaid within 6 months and the amount to repay shall be sourced fromthe cash flow generated from operations. The cash flow attained willalso be used grow the company finances. The company is expected tobreak even at the fifth year when it will also be able to expand. Theexpansion will be financed by a loan facility from a local bank. Thecompany financial books are prepares as per the general accountingprinciples with some amounts provided acting as general estimated toprovide guidance. Long term assets are expressed in a straight linedepreciation method while the company inventory is based on the firstin first out (FIFO) principle. The following section outlines thecompany five year’s important financial details.

Breakeven Analysis

Assumingthat the company running costs are $14,540 per month, which includessalaries, insurance rent and other fixed costs, the company shouldsell at least $50,400 to break even based on the given assumption.This will require sales of at least 45.818 pieces of the productscombined. The company shall sell 1,938 items daily which is 51% ofnormal daily operating capacity. The company should be able to breakeven on the third month of operation.

Breakeven analysis table.

Breakeven analysis

MonthlyUnit Break Even 45,818

MonthlyRevenue Break Even $50,400

Assumptions

Averageper Unit Revenue $1.15

Averageper Unit Variable Cost $0.60

EstimatedMonthly Fixed Cost $27,490

Thefirst year of operation shall start profitably and the profits willincrease at the rate of 12% per year for the next four years. Thefollowing table demonstrates how the projected cash flow will be forthe first five years of business.

Table2:

JuicyFruit Beverage Projected Profit and Loss 2016 to 2020

&nbsp

FY2016

FY2017

FY2018

FY2019

FY2020

Sales

604,800

671,328

751,887

804,519

925,197

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Direct Cost of Goods

335,388

372,280

416,954

466,989

537,037

Other Production Expenses

17,520

20,148

30,222

35,058

40,316

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Cost of goods sold

352,908

391,728

438,735

491,383

565,091

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Gross Margin

251,892

279,600

313,152

350,731

403,340

&nbsp

42%

42%

42%

44%

44%

Expenses

Payroll

117000

126,360

141,523

155,676

168,130

Sales and Marketing and other Expenses

7525

6585

7564

2587

3845

Depreciation

4824

4824

4824

4824

4824

Office Supplies

1605

1605

1605

1605

1605

Utilities

5420

5420

5420

5420

5420

Rent

1850

1850

1850

1850

1850

Payroll Taxes and Benefits

24605

24865

24925

25105

25425

Others

2500

2850

3105

3250

3640

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Total Operating Expenses

165,329

174,359

190,816

200,317

214,739

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Profit Before Interest and Taxes

86,563

105,241

122,336

150,414

188,602

Interest Expenses

5250

5342

5626

5710

5855

Taxes Incurred

13,850.12

16,838.62

19,573.80

24,066.27

30,176.28

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net Profit

67,463

83,061

97,136

120,638

152,570

ProjectedCash Flow

Thecompany also operates sufficient cash flow to run daily operations.The projected cash flow table indicates the estimate cash inflow andoutflows for the five years. This provides a guide on how cash isused in the business on a daily basis. Idle cash is invested in timedeposits or interest deposit bank accounts to create additionalrevenue. The following table demonstrates the projected five yearscash flows for Juicy Fruit Beverages LLC

Table3:

CashFlow

ProForma Cash Flow

&nbsp

FY2016

FY2017

FY2018

FY2019

FY2020

Cash from Operations

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Cash Sales

508,032

584,237

671,872

779,372

896,278

Cash from Receivables

90,720

104,328

119,977

139,174

160,050

Subtotal Cash from Operations

598,752

688,565

791,850

918,545

1,056,327

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Additional Cash Received

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Sales Tax VAT Received

28,486

32,759

37,673

43,700

50,255

New Current Borrowing

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Liabilities (Interest Free)

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

New Long Term Liabilities

1,245

1,432

1,647

1,910

2,196

Sales of Other current Assets

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

New Investment Received

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Subtotal Cash Received

29,731

34,191

39,319

45,610

52,452

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Expenditures

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Expenditure from Operations

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Cash Spending

102,540

117,921

135,609

157,307

180,903

Bill Payments

362,154

416,477

478,949

555,580

638,918

Subtotal Spent on Operations

464,694

534,398

614,558

712,887

819,820

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Additional Cash Spent

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Sales Tax Paid Out

48,921

56,259

64,698

75,050

86,307

Principal Repayment of current Borrowing

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Other Liabilities

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Long Term Liabilities Principle Repayment

1,425

1,639

1,885

2,186

2,514

Purchase of other current Assets

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Purchase of Long term assets

64,254

73,892

84,976

98,572

113,358

Dividends

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Subtotal Cash Spent

114,600

131,790

151,559

175,808

202,179

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net Cash Flow

49,189

56,567

65,052

75,461

86,780

Cash Balance

58,264

73,540

102,520

115,240

124,560

JuicyFruit Beverage Projected Cash Flow starting 2016 to 2020

Marketing Budget

2016

2017

2018

2019

2020

Sales

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Passion

$10,500.00

$12,075.00

$13,886.25

$15,969.19

$18,364.57

Cola

$12,450.00

$14,317.50

$16,465.13

$18,934.89

$21,775.13

Lemon

$13,200.00

$15,180.00

$17,457.00

$20,075.55

$23,086.88

Mango

$14,250.00

$16,387.50

$18,845.63

$21,672.47

$24,923.34

TOTAL SALES

$50,400

$57,960

$66,654

$76,652

$88,150

Cost of Sales

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Passion

$3,360

$3,864.00

$4,443.60

$5,110.14

$5,876.66

Cola

$3,984

$4,581.60

$5,268.84

$6,059.17

$6,968.04

Lemon

$4,224

$4,857.60

$5,586.24

$6,424.18

$7,387.80

Mango

$4,560

$5,244.00

$6,030.60

$6,935.19

$7,975.47

TOTAL COST OF SALES

$16,128.00

$18,547.20

$21,329.28

$24,528.67

$28,207.97

GROSS PROFIT

$34,272.00

$39,412.80

$45,324.72

$52,123.43

$59,941.94

Professional Assistance

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Marketing/PR Consultants

$240

$276

$317.40

$365.01

$419.76

Advertising Agencies

$120

$138

$158.70

$182.51

$209.88

Social Media Specialists

$180

$207

$238.05

$273.76

$314.82

SEO Specialist

$192

$221

$253.92

$292.01

$335.81

Graphic/Web Design

$35

$40

$46.29

$53.23

$61.22

Brochures/Leaflets/Flyers

$0

$0

$0.00

$0.00

$0.00

Signs/Billboards

$144

$166

$190.44

$219.01

$251.86

Merchandising Displays

$180

$207

$238.05

$273.76

$314.82

Sampling/Premiums

$0

$0

$0.00

$0.00

$0.00

Media Advertising

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Print (newspaper, etc.)

$300

$345

$253.92

$292.01

$335.81

Television and Radio

$0

$0

-$207.63

-$238.78

-$274.59

Online

$312

$359

$207.63

$238.78

$274.59

Other Media

$216

$248

-$17.19

-$19.77

-$22.74

Phone Directories

$60

$69

$255.24

$293.53

$337.56

Advertising Specialties

$540

$621

-$255.24

-$293.53

-$337.56

Direct Mail

$0

$0

$255.24

$293.53

$337.56

Website

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Development/Programming

$540

$621

$6,480

$6,480

$6,480

Maintenance and Hosting

$360

$414

$4,320

$4,320

$4,320

Trade Shows

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Fees and Setup

$384

$442

$4,608

$4,608

$4,608

Travel/Shipping

$288

$331

$3,456

$3,456

$3,456

Exhibits/Signs

$144

$166

$1,728

$1,728

$1,728

Public Relations/Materials

$312

$359

$3,744

$3,744

$3,744

Informal Marketing / Networking

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Memberships/Meetings

$30

$35

$360

$360

$360

Entertainment

$144

$166

$1,728

$1,728

$1,728

Other

$108

$124

$1,296

$1,296

$1,296

GRAND TOTAL COSTS

$4,829

$5,553

$29,655

$27,720

$27,720

NET INCOME BEFORE TAXES

$45,571.00

$52,406.65

$36,999.18

$48,932.10

$ 60,429.92

ADD BACK

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Depreciation and Amortization

$ 1,500.00

$ 1,500.00

$ 1,500.00

$ 1,500.00

$1,500.00

DEDUCT

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Loan Principle Payment

$ (4,250.00)

$ (4,675.00)

$ (5,142.50)

$5,656.75

$6,222.43

CASH FLOW BEFORE INCOME TAX

$42,821.00

$ 49,231.65

$33,356.68

$56,088.85

$68,152.34

ProjectedBalance sheet

Thebusiness is expected to maintain a steady growth for the first fiveyears. The debts will be settled effectively as long as the salestargets are attained. The following is the projected balance sheetfor five years

Table4:

Balancesheet

Current Assets

FY2016

FY2017

FY2018

FY2019

FY2020

Cash

20000

23,000

26,450

30,682

35,284

Accounts Receivables

7452

8,570

9,855

11,432

13,147

Inventory

14865

17,095

19,659

22,804

26,225

Other Current Assets

7465

8,585

9,872

11,452

13,170

Total Current Assets

49782

57,249

65,837

76,371

87,826

&nbsp

&nbsp

Long Term Assets

&nbsp

Long term Assets

73950

85,043

97,799

113,447

130,464

Accumulated Depreciation

8750

10,063

11,572

13,423

15,437

Total Long term assets

82700

95,105

109,371

126,870

145,901

&nbsp

&nbsp

Total Assets

132482

152,354

175,207

203,241

233,727

&nbsp

&nbsp

Liabilities

&nbsp

Current Liabilities

&nbsp

Accounts Payables

13875

15,956

18,350

21,286

24,478

Current Borrowing

&nbsp

Other Borrowing

&nbsp

Subtotal Current Liabilities

13875

15,956

18,350

21,286

24,478

&nbsp

&nbsp

Long term Liabilities

58792

67,611

77,752

90,193

103,722

Total Liabilities

72667

83,567

96,102

111,478

128,200

&nbsp

&nbsp

Paid in Capital

92451

106,319

122,266

141,829

163,103

Retained Earnings

-91992

(105,791)

(121,659)

(141,125)

(162,294)

Earnings

59821

68,794

79,113

91,771

105,537

Total Capital

59815

68,787

79,105

91,762

105,527

Total Liabilities and Capital

132482

152,354

175,207

203,241

233,727

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

Net Worth

59,815.00

68,787.25

79,105.34

91,762.19

105,526.52

ProjectedInvestment Returns

2016

2017

2018

2019

2020

Distributable Cash flow Percent

70%

70%

70%

70%

70%

Distributable Cash flow

$29,974

$34,462

$23,349

$39,262

$47,706

Net Investment After Cash Distribution end of Year

$20,648

Pay Back Period

2.5years

Annual Return on Investment (Before Tax)

31%

39%

39%

33%

37%

Average Annual Return on Investment

36%

BusinessRatios

Thecompany rations for the first five years are shown below. Themanagement team is expected to carry out the presented plan in orderto achieve the desired goals and performance objectives. The managerswill monitor key financial performance measures to determine thedirection of the business at any particular time. The calculationsindicating the ratios are based on the projections indicated in termsof liquidity, profitability and long-term cash flow adequacy andmarket specs.

Liquidityratio

Theratio indicates the bad or good debt paying ability of the business.The ration indicate how effective the business strategy has worked interms of collecting payables, managing customer credits and whetherthe business has maintained the required standards within theindustry. The business net profit margin shall be 11.115 in the firstyear and shall grow at 12.11% annually for the next five years. Thebusiness return on Equity will be 58.07% and shall increase at 5%yearly. The business Net working Capital amounts to $73,950 and isexpected to increase at 8% per annum.

ImportantAssumptions

Thegiven figures are assumptions that are subject to changing economicuncertainties, which may overstate the indicated assets and income.It is assumed that the economic recovery process will maintain to bepositive for the next five years with no major setbacks. It is alsoassumed that popularity of the natural nonalcoholic beverages beingproduced will increase and create a stable market share.

Risks

Thecompany leadership shall be responsible for ensuring continuousevaluation of the business position financially and taking correctiveactions to improve performance and prevent negative performances. Thebusiness external risks include economic uncertainties such as theglobal financial depressions, changing prices of fossil fuel,competition and changing buying patterns of buyers. Suppliers play amajor part in the business effectiveness especially in supplying raymaterial for production. Technology changes also determine the levelof success the business can attain in both operations and production.Inflation and currency instability also affects the businessperformance. Taxation and government regulations have direct impactto the business performance as well. The main internal risks thebusiness face include cash flow deficiency, business community andmanagement failures resulting from incompetency.

References

Bailey,S. (2014). Aguide to the non-alcoholic beverage industry – Market Realist.Retrieved 10 March 2016, fromhttp://marketrealist.com/2014/11/guide-non-alcoholic-beverage-industry/

Carpenter,J. M., &amp Moore, M. (2006). Consumer demographics, storeattributes, and retail format choice in the US grocery market.InternationalJournal of Retail &amp Distribution Management,34(6),434-452.

CocaCola Company. (2009). Codeof Business. Acting with Integrity around the Globe.

Dirisu,J., Iyiola, O. &amp Ibidunni, O. S. (2013). Product Differentiation:A Tool of Competitive Advantage and Optimal OrganizationalPerformance (A Study of Unilever Nigeria Plc). EuropeanScientific Journal,9 (34).

Gomes,C. F., Yasin, M. M., Lisboa, J. V. &amp Small, M. H. (2015).Discerning Competitive Strategy through an Assessment of CompetitiveMethods. TheService Industries Journal,34(12).

Khan,J. W. M., &amp Khalique, M. (2014). Strategic planning and realityof external environment of organizations in contemporary businessenvironments. BusinessManagement and strategy,5(2), 165-184

Newlands,M. (2015). 15Marketing Strategies That Inspire Strategic Thinkers.Retrieved 10 March 2016, fromhttp://www.inc.com/murray-newlands/15-marketing-strategies-that-inspire-strategic-thinkers.html

Porter,M. E. (2008). Oncompetition.New York: Harvard Business Press.

Solomon,M. R. (2014). Consumerbehavior: buying, having, and being.Engelwood Cliffs, NJ: Prentice Hall.

WorldBank Institute. (WBI).(2011). ManagingEnvironmental and Social Impact of Local Companies. A Response Guideand Toolkit.Retrieved on 10 March 2016 from:http://siteresources.worldbank.org/CGCSRLP/Resources/EnvironmentalandSocialManual.pdf