Seeds Ltd. Business Plan For A New and Improved Seed Cleaning Plant Nav Khinda, Sean McAlpine and Noor Syed April 05, 2007

Introduction Background Current Situation Goals Key Questions Operational Plan Marketing Plan Financial Plan Contents of the Plan

Introduction Seeds is an on-farm cleaning and packaging plant in Sask. size and color comparison of beans Cereals, pulses and oil seeds are cleaned and quality tested to broker’s specification Four machines clean and sort the seeds according to color, size, shape and density. Six employees

Color, Weight and Size Variations in Seeds Assorted beans wheat grainfenugreek black mustard hemp green lentils dried peasgreen split peassoya beans wheat germ oats Golden flax Pinto beanscoriander Variety of pulses

Background began seed cleaning operation in 1985 Seeds Ltd. became incorporated in 1997 Authorized for pedigree and certified for organic seed cleaning

Current Situation FlaxUnable to meet 99.99% purity Chickpeas, Lentils, Peas and Beans Not able to process fragile crops MustardUnable to meet 99.9% purity CorianderUnable to remove splits and wheat Wheat is an allergen Small LentilsNot able to remove cereals Gluten is allergen, 100% wheat free Seed varietyUnmet RequirementsComments

Current Situation Seeds Ltd. Business Plan New equipment will further improve capability to clean seeds to customer specifications Increase the plant capacity

Goals of New Plant Reach sales of $1 M Continue superior quality service

ORGANIZATIONAL CHART President Administrative Asst.Plant Operator Warehouse Technologist 3 rd technologist Plant Assistants

Plan View of Operations Warehouse ShippingProcessing Future Development Area Screenings Raw Material Storage Screenings Burning Area Receiving Long Term Storage Bulk Shipping

WORK FLOW PLAN CLEANING PACKAGING RECEIVING

Packaging

HACCP and ISO Canadian Food Inspection Agency Seeds Ltd. meets HACCP inspection regulations Currently no certification for seed cleaning plants exists Voluntary compliance and free inspection is available New plant is designed with improvements in critical control points According to customers specifications lab tests are outsourced

Marketing Questions Who are the current competitors? Unique services? Supply a niche market successfully? Buying and selling direct Will HACCP be a factor in the future? Should a quality control lab be part of the QC system? In-house? Organic industry expanding?

The Four P’s 1. Products and Services - cleaning, storage and packaging of various seeds - high quality of service 2. Pricing - cost plus; time required for processing - below or in par with others 3. Promotion - develop relations with existing and new brokers

STP Segmentation Geographical location Broker specifications Targeting Continue to focus on organic market Positioning Consistent high quality std. Approachable, professional and dependable

SWOT Analysis Strengths knowledge & experience solid reputation economy of scope Weaknesses location (rail) company size Opportunities emerging trend of higher quality standards growth in organic industry Threats power of buyers environment large competitors demand

Marketing Strategies Sales and Profit Objectives $1 million in sales Channels of Distribution Customers arrange for delivery and pickup Pricing Policy Cost plus We recommend a market value approach Select Markets/Products/Service Mix Organic, Export, High purity demands Selling and Advertising Minimal effort $10,000 per year in trade shows

Debt and Equity Breakdown of funding for BirdSeeds Ltd. Finance Source Cdn $ Owner Equity $ 598,300 Venture Capital $ 1,015,872 Long Term Debt $ 356,928 Total Financing $ 1,971,100

Financial Analysis and Overall Financial Performance Summary of the Financial Situation (Base case scenario) Year Sales$1,030,857$1,149,312$1,253,838$1,367,870 COGS$809,634$913,426$727,290$709,740 Gross Profit$221,223$235,885$526,548$658,131 Expenses$72,685$72,554$71,326$68,607 Net Income Before Taxes$148,538$163,331$455,221$589,524 Income Tax$14,854$16,333$59,327$106,333 Net Income$133,684$146,998$395,894$483,190 Net Cash Flow to Equity$369,912$483,930$497,037$504,836 Net Present Value (NPV)$287,909 IRR25.11%

Risk Analysis Variable Level of Importance (1, 2, 3) Capacity1 Cleaning Price1 Grade Changes2 Number of Employees 2 Wage rates2 Seed Price2 Interest rate2 Inflation rate2 Tax rate3 Key for the table. 1.Critical for success and feasibility 2. Important for financial performance 3. Minor importance, but has damaging effect on financial performance.

Scenario Analyses Variable Base Case Worst CaseBest Case Capacity %100%80%100% Capacity Grade Changes130 Packaging Price$ 38.86$ 36.91$ NPV$ 287,909$(1,027,617)$ 855,391 IRR25%-6%35%

Break even Analysis

Summary Volume is key Marketing will play an important role Viable Business Plan

Interactive Session

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