CUTO Enterprises Business Plan C. Baillargeon, K. Ivey, C. Mardell & K.Templeton Comm 492.3

Mission Statement “The aim of CUTO Enterprises is to establish a profitable agri-business venture while facilitating the establishment of an infrastructure to expand the greenhouse vegetable industry in Saskatchewan.”

Location Selection Factors –Market Accessibility –Supply of Fresh Produce –Services and Utilities

Saskatoon Western Grocers and Federated Co-op South Saskatchewan River Central Saskatchewan Natural Gas, Power, Telephone, Infrastructure

1323 Fletcher Road Par k- ing FletcherRoad FletcherRoad CUCUTO BUILDING CUTO CUTO U L P Site Plan Expansion Area N

Floor Plan 100’ 25’ 175’ 70’ C T FC FT PP R M W M F/I A F GM WRWR 20’ FL Unload/Load Docks

Site and Building Costs Land $134,000 Building $750,000 Tomato Grading Line$678,000 Cucumber Grading Line$ 77,405 Office Supplies & Furnishings$ 15,825 Fork Lift, Pallet Jacks & Pallets $ 11,229 TOTAL $1,666,459

Setup Service Charges Power (service entrance fee)$ 30,000 Natural Gas Hookup$ 30,000 Telephone Hookup$ 350 Building Permit$ 3,905 TOTAL$ 64,255

Average Business Year Operate March through till October –Due to: higher energy costs decreased production Busy Season –End of May till Beginning of August

Average Business Year Full-Time Staff Remains on in Off-Season –Grower Seminars –Prospective Grower Contacts –Market Exploration Industry Seminars –Product Diversification Studies –Season Reviews

The Marketing Mix Products and Services Pricing Promotion Place

Products & Services Product: –Greenhouse grown cucumbers and tomatoes Service: –A central marketing arm for the greenhouse growers of Saskatchewan

Pricing Product price based on contract with wholesaler –calculated using a weighted average price index Distributor fee –producer paid fee for service

Promotion Product promotion –promote an above standard premium quality product Service promotion –provide grower information seminars –provide ease of production

Place Wholesale market in Saskatchewan Produce is sold FOB Saskatoon

STP Segmentation –Provide a premium quality product that is higher than regulation standards –Provide a niche product vine-ripened tomatoes Targeting –Main target is the wholesale distributors Positioning –competitive advantage over local market

Competitive Analysis Main competition exists outside of Saskatchewan –Alberta, British Columbia, USA, Mexico, etc. Competitive advantage over local market Competition exists with substitute products

Marketing Strategy Product Strategy –present an above standard premium quality product to the wholesalers Service Strategy –combine grower production to capture benefits of accessing wholesale market –provide ease of production –provide an excellent information source

Marketing Strategy Investment Strategy –profitable business that allows future expansion in the greenhouse industry

Revenues and Expenses Projected Revenues –gross margin $680,112 Marketing Expenses –budget of $20,000 per year

Strategy CUTO is a corporation owned by growers and local investors. Goal: to maintain a healthy and enjoyable work environment. Employees will clearly understand their specific roles and duties in CUTO.

Job Descriptions Board of Directors –elected by shareholders –responsible for hiring general manager Duties: Profits Profit Distribution Economic Development Community Development

General Manager –Ensures business earns a profit and generates sufficient cash flow. –Responsible for the hiring of personnel, managing workloads, performance evaluation, and worker safety. –Liaison to BOD, shareholders, and employees. –Annual salary: $60,000

Administrative Manager –Responsible for managing the accounting system of CUTO. –Duties include: reorganizing accounts, inputting financial data, generating annual reports. –Responsible for payroll increases and deductions –Annual salary: $45,000

Marketing Manager –Responsible for establishing and setting the price producer receives for their product. –Price determined from pricing policy criteria, and wholesale market. –In charge of customer relations and promoting the presence of CUTO within Saskatchewan. –Annual salary: $40,000

Quality Control Inspector –Determine the quality and grading standards CUTO will follow. –Grading of cucumbers and tomatoes will follow the guidelines of the Canadian Food Inspection Agency. –Visit each grower on a monthly basis. –Annual salary: $40,000

Maintenance –Continual uptake and care of the facility –Duties will include: repairs to cucumber and tomatoe grading lines, electrical and plumbing services and other general repairs. –Annual salary: $36,000

Plant Workers –CUTO will require between 5 and 25 seasonal plant workers. –Responsible for sorting, grading, and packing cucumbers and tomatoes. –Expected to be flexible in job duties –Wage: contract signed with Kelly Services for 8-hour, 5-day work $11.50/hr.

Expansion of Personnel No expansion in first 5 years. However, if production and number of growers increase, CUTO will adapt to ensure sufficient service. Re-evaluation of market and CUTO’s position will occur in 5 years. Possibility of new full-time employee after year 5.

Assumptions FINANCING BUDGET $1,000,000 Long Term Debt $1,000,000 Common Shares WEIGHTED AVERAGE PRICE (FOB) PRODUCTION 20 acres cucumbers; 20 acres tomatoes DIVIDEND POLICY Retained Earnings > 500,000

Sensitivity Analysis Distributor $0.35/kg tomatoes & $0.08/cucumber SK. Production > 15 acres to remain sustainable.

Producer Perspective Average SK acres –2 acres cucumber production –0.75 acres tomatoe production Returns to operator (over and above opportunity costs). –$60,

Acknowledgments Glen Sweetman - Sask. Ag & Food Bill Brown & Marv Painter - U. of S. B.C. Hot House Growers Association Supplier Contacts