cosmetic_herbal_sundries_business_plan

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Table of Contents 1.0 Executive Summary ...................................................................................................................... 1 Chart: Highlights ............................................................................................................................ 1 1.1 Mission ........................................................................................................................................... 1 1.2 Objectives ..................................................................................................................................... 2 2.0 Company Summary ...................................................................................................................... 2 2.1 Company Ownership ................................................................................................................ 2 2.2 Start-up Summary ..................................................................................................................... 2 Table: Start-up ............................................................................................................................... 2 Table: Start-up Funding .............................................................................................................. 3 Chart: Start-up ............................................................................................................................... 4 2.3 Company Locations and Facilities ....................................................................................... 4 3.0 Products ............................................................................................................................................ 4 4.0 Market Analysis Summary ......................................................................................................... 5 4.1 Market Segmentation .............................................................................................................. 5 Table: Market Analysis ................................................................................................................ 5 Chart: Market Analysis (Pie) ...................................................................................................... 6 4.2 Target Market Segment Strategy ........................................................................................ 6 4.3 Service Business Analysis ...................................................................................................... 6 4.3.1 Competition and Buying Patterns ................................................................................ 7 5.0 Strategy and Implementation Summary .............................................................................. 7 5.1 Competitive Edge ...................................................................................................................... 7 5.2 Sales Strategy ............................................................................................................................. 7 5.2.1 Sales Forecast ..................................................................................................................... 7 Table: Sales Forecast ............................................................................................................... 8 Chart: Sales Monthly ................................................................................................................ 8 Chart: Sales by Year ................................................................................................................. 9 5.3 Marketing Strategy ................................................................................................................... 9 5.4 Milestones .................................................................................................................................... 9 Table: Milestones ........................................................................................................................ 10 Chart: Milestones ........................................................................................................................ 10 6.0 Personnel Plan .............................................................................................................................. 11 Table: Personnel .......................................................................................................................... 11 7.0 Financial Plan ................................................................................................................................ 11 7.1 Break-even Analysis ............................................................................................................... 11 Table: Break-even Analysis ..................................................................................................... 11 Chart: Break-even Analysis ..................................................................................................... 12 7.2 Projected Profit and Loss ...................................................................................................... 13 Table: Profit and Loss ................................................................................................................ 13 Chart: Profit Monthly .................................................................................................................. 14 Chart: Profit Yearly ..................................................................................................................... 14 7.3 Projected Cash Flow ............................................................................................................... 15 Table: Cash Flow ......................................................................................................................... 15 Chart: Cash .................................................................................................................................... 16 7.4 Projected Balance Sheet ....................................................................................................... 17 Table: Balance Sheet ................................................................................................................. 17 7.5 Business Ratios ........................................................................................................................ 17 Page

Table of Contents Table: Ratios ................................................................................................................................. 18 Table: Sales Forecast ........................................................................................................................... 1 Table: Personnel .................................................................................................................................... 2 Table: Personnel .................................................................................................................................... 2 Table: General Assumptions ............................................................................................................. 3 Table: General Assumptions ............................................................................................................. 3 Table: Profit and Loss .......................................................................................................................... 4 Table: Profit and Loss .......................................................................................................................... 4 Table: Cash Flow ................................................................................................................................... 5 Table: Cash Flow ................................................................................................................................... 5 Table: Balance Sheet ........................................................................................................................... 7 Table: Balance Sheet ........................................................................................................................... 7 Page

Gentle Touch Creations 1.2 Objectives The objectives for Gentle Touch Creations are as follows:  Achieve sales goal of $120,000 during first year of operation.  Achieve a regular customer base of 10 companies.  Increase sales by 15% during the second year of operation. 2.0 Company Summary Gentle Touch Creations is a provider of herbal products including herbal therapy packs, soaps, Saint-John's-wort oil, balsam eye packs, salves, moisturizers, herbal bath bags, and bath powder. Gentle Touch Creations sells its product line to herbal product companies that sell baskets with specific herbal themes. The company will be organized as a Sole Proprietorship. 2.1 Company Ownership Gentle Touch Creations is owned by Joanne Lovejoy. 2.2 Start-up Summary The start-up expense for the Gentle Touch Creations is focused primarily on production and extraction equipment. Joanne Lovejoy will invest $50,000. In addition, she will secure a $50,000 SBA loan. Table: Start-up Start-up Requirements Start-up Expenses Legal $600 Stationery etc. $100 Insurance $300 Rent $600 Expensed Equipment $40,000 Total Start-up Expenses $41,600 Start-up Assets Cash Required $33,400 Start-up Inventory $5,000 Other Current Assets $5,000 Long-term Assets $15,000 Total Assets $58,400 Total Requirements $100,000 Page 2

Gentle Touch Creations Table: Start-up Funding Start-up Funding Start-up Expenses to Fund $41,600 Start-up Assets to Fund $58,400 Total Funding Required $100,000 Assets Non-cash Assets from Start-up $25,000 Cash Requirements from Start-up $33,400 Additional Cash Raised $0 Cash Balance on Starting Date $33,400 Total Assets $58,400 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $50,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $50,000 Capital Planned Investment Joanne Lovejoy $50,000 Other $0 Additional Investment Requirement $0 Total Planned Investment $50,000 Loss at Start-up (Start-up Expenses) ($41,600) Total Capital $8,400 Total Capital and Liabilities $58,400 Total Funding $100,000 Page 3

Gentle Touch Creations 4.0 Market Analysis Summary Herbal products have grown in popularity with consumers over the past ten years. The herbal products industry exceeded $4.3 billion in sales last year. Where once a customer would have to go to a speciality shop to purchase herbal products, now those same products are available at the local supermarket. The demand has created a cottage industry of supplying herbal products to companies who then market these products under their own brand name. Currently, the industry can be divided into two segments:  Herbal Health Products  Herbal Beauty Products. 4.1 Market Segmentation Gentle Touch Creations will focus on two target companies:  Herbal Heath Products: The Northeast is home to a number of small-to-medium size herbal heath product companies such as Comfort Zone and HealthSmart in Burlington, GHK Natural Products and Wise Herb in Madison, and Sliver Dream and Simple LIfe in Montgomery. All of these companies buy raw or finished product from third-party vendors. These companies generated sales in excess of $40 million last year. Their products are sold in health and natural food stores on the East Coast and Midwest.  Herbal Beauty Products: The Northeast is also home to a number of small-to-medium size herbal beauty product companies such as Glow and Nature's Way in Tracy, Garden Dream and Rising Sun Products in Madison, and Carpe Diem Natural Products and Simple LIfe in Montgomery. All of these companies buy raw or finished product from third-party vendors. These companies generated sales in excess of $60 million last year. Most of their product are sold in health and natural food stores only on the East Coast. Table: Market Analysis Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR Herbal Heath Products 1% 20,000 20,200 20,402 20,606 20,812 1.00% Herbal Beauty Products 2% 4,000 4,080 4,162 4,245 4,330 2.00% Total 1.17% 24,000 24,280 24,564 24,851 25,142 1.17% Page 5

Gentle Touch Creations Chart: Market Analysis (Pie) Herbal Heath Products Herbal Beauty Products Market Analysis (Pie) 4.2 Target Market Segment Strategy Herbal health products dominate sales but herbal beauty products have been growing in popularity each year. There are 10,000 herbal health product companies that are competing for market share among consumers. Most of these companies are regionally focused but 15% of these companies distribute their products nationally. This is compared to only 2,000 herbal beauty product companies. Most of these companies also only compete regionally though there are a handful (4%) that dominate the national market. As sales grow in herbal beauty product, more new companies will enter the marketplace. Gentle Touch Products will focus on the small companies serving the East Coast regional market. Many of these smaller companies aggressively seek out new products that they can add to their product line. The cost of manufacturing all these items themselves is prohibitive so they contract with third party vendors to supply product. 4.3 Service Business Analysis As the herbal market has grown into a multi-billion dollar industry, so has the opportunity for small firms and farms to supply product to larger herbal companies that then repackage and market the product under their own brand. The size of these suppliers can range to a one- person operation to a small farm that can have 20 or more employees. As the larger and second tier companies face off to win greater market share, they are constantly looking for additional product items that will improve their advantage in the marketplace. Routinely, a product like an herbal therapy pack, is an attractive cost efficient addition to a product line. Page 6

Gentle Touch Creations Table: Sales Forecast Sales Forecast Year 1 Year 2 Year 3 Sales Herbal Products $282,000 $340,000 $420,000 Other $0 $0 $0 Total Sales $282,000 $340,000 $420,000 Direct Cost of Sales Year 1 Year 2 Year 3 Herbal Products $141,000 $170,000 $200,000 Other $0 $0 $0 Subtotal Direct Cost of Sales $141,000 $170,000 $200,000 Chart: Sales Monthly Herbal Products Other $0 $4,000 $8,000 $12,000 $16,000 $20,000 $24,000 $28,000 $32,000 $36,000 $40,000 Sales Monthly Page 8

Gentle Touch Creations Chart: Sales by Year Herbal Products Other $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Year 1 Year 2 Year 3 Sales by Year 5.3 Marketing Strategy Joanne Lovejoy will market the company's product line at regional craft fairs. She will coordinate her fair participation with presentation meetings with herbal company representatives. In addition she will regularly send free samples to her potential clients so that they can experience the quality of her products first hand. The key to her marketing though will be face-to-face sales. Joanne will also launch the Gentle Touch Creations website. The site will be designed to promote her products, list a calendar of her craft fair appearances, and, initially, offer a selection or her most popular products for direct web-sales. She will rely on the experts at 1st-at-the-Top.com Internet and E-commerce consultants for the design, hosting, and search engine placement of the website. 5.4 Milestones The accompanying table shows specific milestones, with responsibilities assigned, dates, and (in most cases) budgets. Joanne is focusing, in this plan, on a few key milestones that should be accomplished. Page 9

Gentle Touch Creations 6.0 Personnel Plan Joanne Lovejoy has seven years of experience in the herbal product industry. She has worked as a Product Manager for both Jerry's Herbal Products and Safe Soap. She has experience managing a staff and getting their best performance. Over the past three years, Joanne has built her business from a part-time craft activity to its current production level. Her current staff should be sufficient for the first two years of operation. It is possible that there will be additional hiring during the third year of operation. Table: Personnel Personnel Plan Year 1 Year 2 Year 3 Joanne Lovejoy $30,000 $32,000 $34,000 2 Production Staff $40,800 $44,000 $48,000 P/T Production Staff $0 $0 $23,000 Total People 3 3 3 Total Payroll $70,800 $76,000 $105,000 7.0 Financial Plan The following topics cover the financial plan for Gentle Touch Products. The tables show annual figures. Monthly numbers for the first year are in the appendix. 7.1 Break-even Analysis The monthly break-even point is approximately $17,000. Table: Break-even Analysis Break-even Analysis Monthly Revenue Break-even $17,188 Assumptions: Average Percent Variable Cost 50% Estimated Monthly Fixed Cost $8,594 Page 11

Gentle Touch Creations Chart: Break-even Analysis $0 $2,000 $4,000 $6,000 $8,000 $2,000) $4,000) $6,000) $8,000) $0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000 $24,000 $27,000 $30,000 $33,000 Break-even Analysis Page 12

Gentle Touch Creations Chart: Profit Monthly $0 $2,000 $4,000 $6,000 $8,000 $2,000) $4,000) $6,000) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Profit Monthly Chart: Profit Yearly $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 Year 1 Year 2 Year 3 Profit Yearly Page 14

Gentle Touch Creations 7.3 Projected Cash Flow The following table and chart highlights the projected cash flow for three years. Table: Cash Flow Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales $70,500 $85,000 $105,000 Cash from Receivables $161,300 $244,675 $300,759 Subtotal Cash from Operations $231,800 $329,675 $405,759 Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $12,000 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $243,800 $329,675 $405,759 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $70,800 $76,000 $105,000 Bill Payments $173,564 $228,609 $262,229 Subtotal Spent on Operations $244,364 $304,609 $367,229 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $3,000 $6,000 $3,000 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $8,400 $8,400 $8,400 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $255,764 $319,009 $378,629 Net Cash Flow ($11,964) $10,667 $27,130 Cash Balance $21,436 $32,103 $59,233 Page 15