College of Agriculture and Bioresouces AgEc 495 Chad Bohachewski Neil MacDougall Leah Welter Blake Weatherald

College of Agriculture and Bioresouces AgEc 495 Operations plan

College of Agriculture and Bioresouces AgEc 495 Organizational Structure Corporation Corporation 5 Board of Directors 5 Board of Directors President/Plant manager President/Plant manager Vice President/Secretary treasurer Vice President/Secretary treasurer Sales Manager Sales Manager Plant Labourers Plant Labourers Run processing equipment Run processing equipment

College of Agriculture and Bioresouces AgEc 495 Organizational Chart Board of Directors-5 3 external, 2 internal President/Plant Manager Vice-President/SecretarySales Manager Plant Workers (6)

College of Agriculture and Bioresouces AgEc 495 Product Cooked lentils + spices + tomato paste Cooked lentils + spices + tomato paste =Lentil based pasta sauce

College of Agriculture and Bioresouces AgEc 495 Sauce Production

College of Agriculture and Bioresouces AgEc 495 Business Cycle Business hours- 9:00am to 5:00pm Business hours- 9:00am to 5:00pm eight hour work day eight hour work day First year projection 70,000 units/year First year projection 70,000 units/year Full capacity plant produces 130,000 units/year Full capacity plant produces 130,000 units/year

College of Agriculture and Bioresouces AgEc 495 Site Plan Building located on highway #37 in Shaunavon, Saskatchewan Building located on highway #37 in Shaunavon, Saskatchewan Two entrances into the lot Two entrances into the lot Loading dock area at back of building for shipping/receiving Loading dock area at back of building for shipping/receiving

College of Agriculture and Bioresouces AgEc 495

Building and Floor Plans 3500 ft 2 insulated building 3500 ft 2 insulated building 2500ft 2 for production line and storage 2500ft 2 for production line and storage 1000ft 2 for two offices, two change/bathrooms for employees and customers 1000ft 2 for two offices, two change/bathrooms for employees and customers

College of Agriculture and Bioresouces AgEc 495

Capital Budget 2007 Land $ 1.00 Building 305,000 Processing equipment 22,375 Office equipment 2,000 Total Capital Costs $ 329,376 Working Capital Total Working Capital $ 23,702 Total Capital Required $ 305,674

College of Agriculture and Bioresouces AgEc 495 Cash Conversion Cycle

College of Agriculture and Bioresouces AgEc 495 Human Resources

College of Agriculture and Bioresouces AgEc 495 Direct Labour Employees Plant Manager-$50, ,400 in benefits Plant Manager-$50, ,400 in benefits = $56,400 (6) Plant Labourers-based on a wage bases of $12.50/hour (6) Plant Labourers-based on a wage bases of $12.50/hour Total annual wages and benefits Total annual wages and benefits 172, ,036 benefits = $204, , ,036 benefits = $204,273 *Salaries/wage exclude benefits

College of Agriculture and Bioresouces AgEc 495 Administration and Marketing Employees Secretary-$35,000 +3,166benefits =$38,166 Secretary-$35,000 +3,166benefits =$38,166 Sales Manager-$50, ,522benefits = $54,522 Sales Manager-$50, ,522benefits = $54,522

College of Agriculture and Bioresouces AgEc 495 MarketingMarketing

Introduction Sobeys Sobeys Federated Co-op Limited Federated Co-op Limited Calgary Alberta Calgary Alberta Health conscious / vegetarian Health conscious / vegetarian

College of Agriculture and Bioresouces AgEc 495 MARKET SIZE 4% of Canadian population is vegetarian/roughly 1.2 milliion in Canada 4% of Canadian population is vegetarian/roughly 1.2 milliion in Canada 25% are vegetarian inclined 25% are vegetarian inclined $172 million spent on pasta sauce annually $172 million spent on pasta sauce annually 4.7% of total grocery shelf space devoted to pasta sauce- co-op 4.7% of total grocery shelf space devoted to pasta sauce- co-op Stats Canada:

College of Agriculture and Bioresouces AgEc 495 TARGET MARKET Vegetarian Vegetarian Active / healthy Active / healthy Young Young Female Female Urban & Trendy Urban & Trendy

College of Agriculture and Bioresouces AgEc 495 MARKET POTENTIAL Consumers becoming more health conscious Consumers becoming more health conscious Few ready made pasta sauces containing lentils Few ready made pasta sauces containing lentils Daily legume recommendation Daily legume recommendation

College of Agriculture and Bioresouces AgEc 495 SWOT Strengths New product of pasta market New product of pasta market Few direct competitors in pulse based sauces Few direct competitors in pulse based sauces Health benefits of the lentil as a supplement Health benefits of the lentil as a supplementWeaknesses Relatively new firm Relatively new firm No brand loyalty No brand loyalty Large initial capital investments Large initial capital investments

College of Agriculture and Bioresouces AgEc 495 SWOT Opportunities Increase in vegetarian popularity Increase in vegetarian popularity Increasing health awareness Increasing health awareness Protein based pasta sauce Protein based pasta sauceThreats Established competition Established competition Market dominated by few large firms Market dominated by few large firms Pulse consumption low Pulse consumption low

College of Agriculture and Bioresouces AgEc 495 OBJECTIVES & GOALS Supply Sobeys and FCL Calgary in Year 1 Supply Sobeys and FCL Calgary in Year 1 To receive an “endcap” or eye catching shelf position To receive an “endcap” or eye catching shelf position Target the major urban areas Calgary in Year 2 and 3 and eventually Saskatchewan Target the major urban areas Calgary in Year 2 and 3 and eventually Saskatchewan Establish a firm stand in the growing health food industry Establish a firm stand in the growing health food industry

College of Agriculture and Bioresouces AgEc 495 PRICE 25% Markup Over Main Stream Sauce. 25% Markup Over Main Stream Sauce. $5.88 – Retail (30 % mark-up) $5.88 – Retail (30 % mark-up) $4.12 – Wholesale $4.12 – Wholesale

College of Agriculture and Bioresouces AgEc 495 COMPETITOR PRICING

College of Agriculture and Bioresouces AgEc 495 PROMOTION Free Press- Calgary Vegetarian Resource Free Press- Calgary Vegetarian Resource Magazine Ads Magazine Ads Ex: Flare, Country Women In-Store In-Store –Taste Tests – Co-op Store Flyers/Coupons.

College of Agriculture and Bioresouces AgEc 495 DISTRIBUTION

Financial Plan

College of Agriculture and Bioresouces AgEc 495 Finance Budget Long Term Debt$115,000 Owners Equity 385,000 Total$500,000 *This will only cover construction and first year operations

College of Agriculture and Bioresouces AgEc 495 Balance Sheet

College of Agriculture and Bioresouces AgEc 495 Unit Cost of Production

College of Agriculture and Bioresouces AgEc 495 Breakeven Analysis Using Change in Wholesale Price

College of Agriculture and Bioresouces AgEc 495 Breakeven Analysis Using Change in Yearly Production

College of Agriculture and Bioresouces AgEc 495 Scenarios

College of Agriculture and Bioresouces AgEc 495 Financial Summary Very high equity investment required Very high equity investment required Negative ending cash = unfeasible plan Negative ending cash = unfeasible plan Need to investigate alternatives to provide a viable plan Need to investigate alternatives to provide a viable plan

College of Agriculture and Bioresouces AgEc 495 Questions