April 10, 2007 Prepared by: Pauline Bolay Jamie Freedman Kurtis Kramer Andrew O'Reilly

April 10, 2007 Mission Statement  Harvest Sun is a family owned and operated business, created from a genuine desire to make a difference in our world. The guiding principle behind Harvest Sun Organic Seeds Ltd. is the provision of nutritious healthy seeds for healthy birds.

April 10, 2007 Goals & Objectives  To market organic birdseed and maintain a positive cash balance  To improve the knowledge of organic birdseed and it’s benefits  To start out as a small company, but increase it’s customer base over time, and eventually become a large player in the birdseed market

Operations Plan

Organizational Structure President Board of Directors Operations Manager Casual Laborer Casual Laborer Casual Laborer Marketing Manager

Site Plan  Near Estevan, Sk (President’s own organic farm)  NW W2

Building and Floor Plans N Stairs To Upstairs Cold Storage Work Table Shelving Tack Room/Isolation Barrier Room Horse Stall Mini Bulk Storage Product Mixer Counter Receiving Spout Cold Storage (600 sq.ft) Bin #1 Bin #2 Bin #3 Bin #4 Sliding Door (400 sq.ft) (600 sq.ft) Door/Opening Legend: Bait Station Location (Downstairs) Bait Station Location (Loft) Upstairs Loft Roll Up Door (1000 sq.ft)

Work Plan and Flow of Work  Organic farms provide the grain for the birdseed  The seed is purchased pre-cleaned to provide no contamination  The canary seed, millet and flax are stored in bins  The oat groats are stored in the bags they come in  Seed quantity are carefully measured using a digital scale  Product is placed in a mixer  Product is then placed in a tub to ensure an even mixture  Labels are put on jars to make sure that no dust gets on the sticky side  The jars that hold 1.5 lbs are filled by hand  The handler uses gloves to prevent irritation of the skin  The lids are screwed on with tamper proof caps  The cap label is placed after cap is placed on jar for a nice looking product  The finish product is stored until shipped and sold

Quality Control  Certified by Pro-Cert Organic Systems, the western affiliate of OCPP/Pro-Cert (OC/PRO), Canada’s foremost organic certification body  To ensure compliance will all organic regulations and standards, “Certified Organic” producers and processors are regularly inspected by an independent third party  Every package of birdseed has a unique lot number. This number enables the consumer to track the birdseed in the package back to the field on which it was grown and to the former who grew the seed

Business Cycle  Raw inventory comes in the fall  Processing and packaging of the birdseed takes place during the winter months (3 months)  There is finished goods available for sale all year round.

Capital Budget  Rents all land, equipment, buildings (monthly rent)  Will incur working capital (1 st yr = $25 584)  At full production, Harvest Sun can produce approximately jars (1.5 lbs each) of birdseed in its current rented facility  Expects to produce a third of full capacity in its first year of operations and two thirds in its second year of operations. In its third year and subsequent years it plans to operate at full production.

Cost of Goods Manufactured Cost of Goods Sold The cost of goods sold for 2008 are as follows: Beginning Finished Good Inventory ($0) + Cost of Goods Manufactured ($45 077) = Cost of Goods Available for Sale ($45 077) - Ending Finished Goods Inventory ($22 477) = Costs of Goods Sold ($22 600)

Operating Expenses

Inventories, A/R, A/P  Raw inventories received in fall = 45 days  Inventory in progress = 1 day  Finished goods inventory avail. throughout year = 182 days  A/R for internet = 0 days  A/R for pet stores = 30 days  A/P = 15 days

Cash Conversion Cycle  CCC = Average Days Inventory + Average Collection Period - Average Days Payables   CCC = ( ) + 30 – 15 = 243 days

Human Resources Plan

Organizational Structure President Board of Directors Operations Manager Casual Laborer Casual Laborer Casual Laborer Marketing Manager

Board of Directors  5 individuals –3 internals, 2 externals  Meet a few times a year  Make the decisions about the overall management of the business, also the direction it will head in the future  Update the shareholders

President  Already hired  Same individual as operations manager (25%:75%)  Report all aspects of the business operations to the board of directors  Needs to be dedicated and possess leadership skills

Operations Manager  Already hired  Same individual as president  Organize, train, direct and coordinate the activities of the casual labor  Very involved in the physical aspect of producing organic birdseed  Shipping and receiving of products

Marketing Manager  Well-rounded office personnel – run the day to day activities of the company that include the marketing selling, customer contact/interaction, advertising, invoicing, inventory control and shipping logistics.

Casual Production Staff  Will be hired when there is a need –Blackburn children, friends, neighbors, school kids  Duties would include blending seed, putting the seed in jars, applying labeling, transferring finished products to storage, cleaning the facilities  Approx. 520 hrs of labour needed per year at full production

Cost of Employees

Marketing Plan

Products  Certified organic birdseed –Blended for canaries, budgies, and finches –Ingredients: mixture of organic canary seed, millet, flax and oat groats  The guiding principle behind Harvest Sun is the provision of nutritious healthy seeds for healthy birds –No fertilizers, insecticides, pesticides, G.M.O –No preservatives or additives –No preservatives or additives  Harvest Sun is providing products that allow bird owners the choice to make a difference in the well being of our planet.

Pricing  Will charge a premium price  No competitors

Promotion  Promoting the healthy choice of certified organic birdseed  Harvest Sun will be marketing the alternative of organic birdseed compared to a chemically altered, chemically enhanced or chemically treated birdseed  Harvest Sun will also promote support for farms using traditional and sustainable farming practices that are safe for humans and the environment

Place  Increase its consumer base in Western Canada (expand to eastern CDN, USA)  Large urban centres –Independently owned pet stores  Internet sales = all over the world  Member of STEP (Saskatchewan Trade and Export Partnership) –list of about 700 independent pet stores in Ontario, Manitoba, Saskatchewan and British Columbia.  Registered with FDA (FDA (U.S. Food and Drug Administration) so they can ship their product into the USA.

Segmentation/Targeting  Will be targeting people who live in large centers whose birds and/or the environment is very important to them  sell to people who will settle for nothing less than the best for their pet bird(s)

Positioning  To promote Harvest Sun organic birdseed as a safe, healthy alternative to regular birdseed which will benefit the health and well being of the consumer pets.

Internal Strengths & Weaknesses Human Resources Strengths Human Resources Weaknesses  Family owned and operated business Lots of labor available Few Employees to manage  Lack of training, education, experience Physical Resources Strengths Physical Resources Weaknesses  Established processing and packaging facility Low rental fee Low input costs Local raw ingredients  Location (distant from market) Financial Resources Strengths Financial Resources Weaknesses  Debt-free company  Long cash conversion cycle Lots of working capital required

External Opportunities & Threats External Opportunities External Threats  Relatively new market Opportunities to enter new markets Sole producer Low ‘organic’ competition  Raw materials are weather dependent Competition may easily enter High non-organic competition Products advertised as “natural” or “organic”

The Market  There is a large customer base that is available to be reached because there is currently no one active in the organic birdseed market  The best market is probably going to be found in urban centers where people are more likely own a bird because it is difficult to own a large pet in a city

Competition  No other producers of organic birdseed  The only competition that Harvest Sun will face will be the competitors who produce regular non-organic birdseed

Customers  People who really love their birds.  People of all ages –Young children to seniors  Higher disposable income  Care about the protection of the environment and they care about what foods their pets consume  Pay what ever it takes to ensure that their bird is healthy and thriving

Product/Service Features  SK grown and produced  Certified organic  Buy and receive the product in the comfort of their on home  Provide customers with a natural, safe, and environmentally friendly product to feed to their pet birds

Sales and Profit Objectives  Sell 20% of its product over the internet and the remaining 80% to independently owned pet stores  The main profit objective is to sell all products produced at a price in order to cover all costs and achieve a 20% return.

Channels of Distribution  Products will be sold as FOB from Estevan  This means that the shipping and handling costs are the buyers from the place of origination  Harvest Sun will work with the buyers to determine the best/cheapest shipping costs and distribution methods

Selling and Advertising  Marketing manager will do a lot of advertising work  Mail out introductory packages  Web page:  Appropriate magazines

Marketing Plan Budget

Financial Plan

Debt and Equity Mix  To meet initial capital requirements and cover expenses for the first few years of operations, the company will need to raise $51,000 in owner’s equity

Dividend Policy  When profits and cash flow reach a level that ensures there will be enough cash for operating in the next year the excess profits will be paid out in dividends

Economic Forecast  Financial Projections have been made for a ten year period using an inflation rate of 2.0%  This rate has been used to derive all wages, supplies and expenses.

Ratio Analysis

Unit Cost of Production

Financial Analysis and Overall Financial Performance

Risk Analysis  There are three main critical variables:  packaging expense  selling price (to stores = most critical)  quantity of sales

Break Even Analysis

Scenario Analysis  Changed 5 most critical variables by 20% in each direction

Conclusion  Business plan shows that the business is a feasible enterprise –sensitive to the quantity of units sold and selling price  The required rate of the return (20%) is achieved  Harvest Sun Organics has the potential to be a very profitable company if it is able to properly market its product and sell the amount of product indicated in this business plan