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Food - Vending Services
Business Plan

Chef Vending

1.0 Executive Summary

Highlights

2.0 Company Summary

3.0 Products

4.0 Market Analysis Summary

5.0 Strategy and Implementation Summary

6.0 Management Summary

7.0 Financial Plan

7.1 Important Assumptions

General Assumptions

7.2 Key Financial Indicators

Benchmarks

7.3 Break-even Analysis

Break-even Analysis

Break-even Analysis

7.4 Projected Profit and Loss

Gross Margin Monthly

Profit Monthly

Profit and Loss

7.5 Projected Cash Flow

Cash

Cash Flow

7.6 Projected Balance Sheet

Balance Sheet

7.7 Business Ratios

Ratios

7. Financial Plan

Chef Vending will meet its future needs for capital through the free cash flow generated from its operations. This will require us to be disciplined, tempered, and prudent in our operations and our growth.

The financial plan depends on important financial assumptions outlined in the following table. Key underlying assumptions are as follows:

1. Industry growth trends will continue as they have for the past five years.
2. Inflation will be at 3% for the next two years.
3. We will access the capital we need to meet our cash needs for the first six months.

General Assumptions
	FY 2001	FY 2002	FY 2003
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	11.50%	11.50%	11.50%
Tax Rate	25.42%	25.00%	25.42%
Sales on Credit %	50.00%	50.00%	50.00%
Other	0	0	0

1. Free cash flow to finance our growth.
2. Gross margins will be an important gauge on our profitability.
3. The exchange rates between the U.S. dollar and the Euro, which is tied to the Spanish Peseta.

Benchmarks

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The following table indicates our break-even unit volume measure. An important element will be the product mix that went into the unit sales. We believe that we have outlined a conservative sales forecast that we should be able to achieve by year-end. The start-up months will be the most difficult as we attempt to break into the market, but after a three to four month successful product testing period, we should see tremendous sales, easily reaching our year-end targets.

Break-even Analysis

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Break-even Analysis:
Monthly Units Break-even	27
Monthly Revenue Break-even	$93,166
Assumptions:
Average Per-Unit Revenue	$3,481.62
Average Per-Unit Variable Cost	$1,962.44
Estimated Monthly Fixed Cost	$40,652

Chef Vending is projected to make over $500,000 profit on $2.8 million of sales. The following table indicates how we will achieve this performance.

Gross Margin Monthly

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Profit Monthly

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Pro Forma Profit and Loss
	FY 2001	FY 2002	FY 2003
Sales	$2,851,450	$3,524,392	$4,356,149
Direct Costs of Goods	$1,607,240	$1,986,549	$2,455,374
Other	$0	$0	$0
	------------	------------	------------
Cost of Goods Sold	$1,607,240	$1,986,549	$2,455,374
Gross Margin	$1,244,210	$1,537,844	$1,900,775
Gross Margin %	43.63%	43.63%	43.63%
Expenses:
Payroll	$153,060	$250,944	$323,298
Sales and Marketing and Other Expenses	$51,600	$59,174	$68,279
Depreciation	$25,905	$37,980	$49,980
Repairs & Maintanence	$6,000	$6,180	$6,365
Commissions	$99,801	$119,761	$143,713
Loan Repayments	$29,136	$29,136	$29,136
Raw Materials	$7,736	$9,670	$12,088
Freight	$64,290	$77,148	$92,577
Office Supplies	$2,400	$2,472	$2,546
Postage	$1,020	$1,051	$1,082
Telephone	$9,000	$9,270	$9,548
Utilities	$3,000	$3,090	$3,183
Insurance	$3,600	$3,708	$3,819
Rent	$15,972	$25,000	$35,000
Payroll Taxes	$15,306	$25,094	$32,330
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$487,825	$659,677	$812,944
Profit Before Interest and Taxes	$756,385	$878,166	$1,087,830
Interest Expense	$15,655	$17,446	$17,726
Taxes Incurred	$185,759	$215,180	$271,985
Net Profit	$554,971	$645,540	$798,120
Net Profit/Sales	19.46%	18.32%	18.32%

We expect to manage cash flow from an initial Small Business Administration (SBA) loan of $125,000, and then through our free cash flow generated from operations.

Cash

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Pro Forma Cash Flow
	FY 2001	FY 2002	FY 2003
Cash Received
Cash from Operations:
Cash Sales	$1,425,725	$1,762,196	$2,178,074
Cash from Receivables	$1,142,750	$1,695,414	$2,095,532
Subtotal Cash from Operations	$2,568,475	$3,457,610	$4,273,606
Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$24,280	$4,856	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$125,000	$0	$0
Subtotal Cash Received	$2,717,755	$3,462,466	$4,273,606
Expenditures	FY 2001	FY 2002	FY 2003
Expenditures from Operations:
Cash Spending	$223,490	$259,098	$318,028
Payment of Accounts Payable	$1,874,116	$2,568,287	$3,156,747
Subtotal Spent on Operations	$2,097,606	$2,827,385	$3,474,775
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$0	$0
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$60,000	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$2,157,606	$2,827,385	$3,474,775
Net Cash Flow	$560,149	$635,081	$798,831
Cash Balance	$585,149	$1,220,230	$2,019,061

Our Balance Sheet projections are presented in the table below.

Pro Forma Balance Sheet
Assets
Current Assets	FY 2001	FY 2002	FY 2003
Cash	$585,149	$1,220,230	$2,019,061
Accounts Receivable	$282,975	$349,757	$432,300
Inventory	$110,775	$136,918	$169,231
Other Current Assets	$0	$0	$0
Total Current Assets	$978,899	$1,706,905	$2,620,592
Long-term Assets
Long-term Assets	$60,000	$60,000	$60,000
Accumulated Depreciation	$25,905	$63,885	$113,865
Total Long-term Assets	$34,095	($3,885)	($53,865)
Total Assets	$1,012,994	$1,703,020	$2,566,726
Liabilities and Capital
Current Liabilities	FY 2001	FY 2002	FY 2003
Accounts Payable	$248,736	$288,366	$353,952
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$248,736	$288,366	$353,952
Long-term Liabilities	$149,280	$154,136	$154,136
Total Liabilities	$398,016	$442,502	$508,088
Paid-in Capital	$154,500	$154,500	$154,500
Retained Earnings	($94,492)	$460,479	$1,106,018
Earnings	$554,971	$645,540	$798,120
Total Capital	$614,979	$1,260,518	$2,058,638
Total Liabilities and Capital	$1,012,994	$1,703,020	$2,566,726
Net Worth	$614,979	$1,260,518	$2,058,638

The computed standard Business Ratios are presented in the table below. Industry Profile ratios are based on Standard Industry Classification (SIC) code, 5962. 

Ratio Analysis
	FY 2001	FY 2002	FY 2003	Industry Profile
Sales Growth	0.00%	23.60%	23.60%	-1.30%
Percent of Total Assets
Accounts Receivable	27.93%	20.54%	16.84%	19.20%
Inventory	10.94%	8.04%	6.59%	36.00%
Other Current Assets	0.00%	0.00%	0.00%	24.80%
Total Current Assets	96.63%	100.23%	102.10%	80.00%
Long-term Assets	3.37%	-0.23%	-2.10%	20.00%
Total Assets	100.00%	100.00%	100.00%	100.00%
Current Liabilities	24.55%	16.93%	13.79%	36.40%
Long-term Liabilities	14.74%	9.05%	6.01%	11.70%
Total Liabilities	39.29%	25.98%	19.80%	48.10%
Net Worth	60.71%	74.02%	80.20%	51.90%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	43.63%	43.63%	43.63%	38.00%
Selling, General & Administrative Expenses	24.15%	25.32%	25.21%	22.60%
Advertising Expenses	0.83%	0.81%	0.79%	3.00%
Profit Before Interest and Taxes	26.53%	24.92%	24.97%	1.90%
Main Ratios
Current	3.94	5.92	7.40	2.18
Quick	3.49	5.44	6.93	0.89
Total Debt to Total Assets	39.29%	25.98%	19.80%	48.10%
Pre-tax Return on Net Worth	120.45%	68.28%	51.98%	4.30%
Pre-tax Return on Assets	73.12%	50.54%	41.69%	8.20%
Additional Ratios	FY 2001	FY 2002	FY 2003
Net Profit Margin	19.46%	18.32%	18.32%	n.a
Return on Equity	90.24%	51.21%	38.77%	n.a
Activity Ratios
Accounts Receivable Turnover	5.04	5.04	5.04	n.a
Collection Days	43	66	66	n.a
Inventory Turnover	24.00	16.04	16.04	n.a
Accounts Payable Turnover	8.52	9.04	9.10	n.a
Payment Days	26	38	36	n.a
Total Asset Turnover	2.81	2.07	1.70	n.a
Debt Ratios
Debt to Net Worth	0.65	0.35	0.25	n.a
Current Liab. to Liab.	0.62	0.65	0.70	n.a
Liquidity Ratios
Net Working Capital	$730,164	$1,418,539	$2,266,639	n.a
Interest Coverage	48.32	50.34	61.37	n.a
Additional Ratios
Assets to Sales	0.36	0.48	0.59	n.a
Current Debt/Total Assets	25%	17%	14%	n.a
Acid Test	2.35	4.23	5.70	n.a
Sales/Net Worth	4.64	2.80	2.12	n.a
Dividend Payout	0.00	0.00	0.00	n.a

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