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SAMPLE COMPLETED BUSINESS PLANABC Packaging LimitedBusiness Proposal“An Assessment of the Business Potential of high qualitypresentation/packaging boxes in the Irish Market”Promotors/Directors’ DetailsNamesThomas Murphy and John SwiftAddress10 Street Road, WaterfordTelephone051 000000Fax051 000000Mobile086 [email protected] 2007“This business plan is confidential and is intended only for the person or entity towhich it is addressed. It shall not be divulged to a third party, without the authors’consent in writing”.

Table of Contents1.0 Executive Summary . . 32.0 Business Background of Promoters . 42.1 Business Description & Purpose . 43.0 Legal Status & Licence . 54.0 Management & Organisational Structure . . 55.0 Market Analysis . . 65.1 Market Demand . 65.2 Rigid Box Supply . . 65.3 Target Market . 65.4 Competitive Environment . 76.0 Product Proposition . 86.1 Pricing Strategy . 86.2 Channels of Distribution . . 86.3 Summary SWOT Analysis . 97.0 Sales & Marketing Strategy . . 107.1 Sales Management . . 107.2 Sales Forecasts . 107.3 Advertising . . 117.4 Personal Selling . 118.0 Operational Plan . . 128.1 Manufacturing Process . 129.0 Financial Plan . 139.1 Comments on Financial Plan 139.2 Discussion on Cash Flow Projections . 1310.0 Financing Plan . . 1410.1 Comments on the Financing Plan . . 1410.2 Profit & Loss Statements . . 14Appendices . 162

Business Plan1.0 Executive SummaryABC Packaging Limited is jointly owned by Thomas Murphy and John Swift. The locationof the business will be the Industrial Park, on the Cork Road, Waterford, which isstrategically located near the ring road, thus facilitating quick access to the main Cork,Dublin, Limerick and Wexford roads.Total working capital requirements required is 435,100 which will be funded as follows: 86,000 will be invested in to the business by the promoters (Equal Partners) 45,200 will be secured via successful grant aid applications 393,400 of lease finance will be sought during the first two years of businessThe projected profit and loss statements indicate that the business will break-even inyear one and achieve profits of 55,000 in year two and 122,000 in year three.Sensitivity analysis indicates that if the sales level fell to 75% of that forecasted in yearone, the net loss for the year would be 48,000 with the cash flow remaining at apositive 44,000 at year end.3

2.0 Business Background of PromotersThomas Murphy (confirm) has recently returned to Ireland having lived in the UnitedStates for fifteen years. He was employed in various functions for ten years with aleading manufacturer of rigid boxes. His most recent position was that of Plant Manager.His company were suppliers to the software, CD-ROM etc. sectors. This has given himconsiderable experience in the manufacturing of these products. Mr. Murphy (confirm)re-located to Ireland due to family and personal reasons, and having considered anumber of employment options, decided to start up the business. Research undertakenhas demonstrated that there is no source of rigid box manufacturing in Ireland; currently,users import their rigid box requirements from suppliers in the UK and mainland Europe.John Swift (confirm) was made redundant during the restructuring of a multi-national,and has over fifteen years experience in Sales Management, coupled with a very goodunderstanding of finance. He qualifies under the Seed Capital Scheme, which, alongwith his redundancy payment, will provide his equity in the company.The key business goal of the Promoters/directors is to become the preferred supplier ofrigid boxes in Ireland. Once this goal is realised, the promoters plan to assess thepotential of exporting initially to the U.K., and then into mainland Europe.2.1 Business Description and PurposeThe product range will comprise of high quality rigid boxes; over the last number ofyears, rigid boxes have been replacing folding or softer type boxes for packagingpurposes. The product will be marketed primarily to the board games, software, CDROM, greeting card, table mats and prestige drinks markets. These markets rely heavilyon strong packaging to create awareness, enhancing customer interest and ultimatelysales. This points to a real opportunity for ABC Packaging Limited’s products.Improved technology and production methods have made the rigid box a viablealternative to a folded box; this will serve to enhance the marketing process of severalpotential customers. The scope for the provision of a ‘pack-off facility’ further improvesthe range of services which ABC Packaging Limited can offer its potential customers.4

3.0 Legal Status & LicenceIt is proposed to operate the business through the legal entity of a limited liabilitycompany called ABC Packaging Limited. The amount of shares to be issued will bedetermined by the requirements relating to state support, borrowing facility andinvestment.There are no specific licences required to operate the business. A Health and SafetyStatement will be prepared prior to commencement of operations; the promoters willseek the assistance of a consultant in this area.Since quality assurance will be paramount to ensure customer confidence, the costs ofachieving accreditation to ISO9002 are included in the estimates. It is intended to obtainaccreditation as early as possible.Preliminary discussions with the Planning Office have indicated that there is no need toapply for planning approval. This is due to the fact that the proposed premises arelocated in an Industrial Park.4.0 Management & Organisational StructureAll aspects of the operations will be managed by the promoters for the initial three years.There will be a requirement for two production staff, increasing to five within the first twoyears. These employees will be primarily in production. The administration, marketingand finance functions will be managed by the key managers i.e. the promoters.The accountancy function will be outsourced initially. Books will be kept manually duringyear one, but it is intended to invest in a computerised software accountancy package(e.g. Sage) during year two.5

5.0 Market AnalysisThe market analysis conducted indicates that there are no other high volume suppliersof rigid boxes in Ireland. At present, companies source their requirements in the U.K.and Germany.The rigid box supply base in Ireland is geared towards the manufacturing of low volume,hand-crafted, expensive products to service a niche market; this market requires thesupply of a quality, volume fulfilment and pack-off service.5.1 Market DemandAs indicated in the previous section, a niche market has been identified.Marketresearch indicates the Irish market for rigid boxes is estimated to be 3.75 millionannually.ABC Packaging Limited has set its sales target at 374k in year one, increasing to 850k in year three. Year one target equates to a 10% share of the market (Refer totable 1 for full breakdown of projected sales).There is the possibility of extending the business into the area of order fulfilment, whichmeans on-line packing of products for customers. This will lead to efficiency, costssavings and shortened lead-time for potential customers. However, it is the director’sintention not to enter this sector in the initial three years of operation.5.2 Rigid Box SupplyAs there is no supplier of such boxes in Ireland, the primary business focus will be thesupply of rigid boxes; this gives the Irish business a real competitive advantage overimporters. As previously stated, potential customers are purchasing mainly from theU.K. and German, resulting in excessive lead times, high “minimum order quantities” andsignificant transportation costs.5.3 Target MarketThe Irish Purchasing Institute Database was used to identify the key potential customersin each market segment. The intention is to target the materials/purchasing departmentsin no more than four companies in each segment. The six main categories to be targetedare as follows:1.Crystal Manufacturers2.Multimedia Suppliers6

3.Greeting Card Companies4.Table Mat Producers5.Costume Jewellery Manufacturers6.Linen ManufacturersThe initial approach with each market will focus on the provision of rigid boxes. Once thecustomer relationship develops, and credibility is assured, the offer will be extended toinclude pack-off.5.4 Competitive EnvironmentABC Packaging Limited aim to offer a similar range of products as those offered byUK/European competitors.However, with its proximity to its customer base, ABCTechnology Ltd. will be in a position to offer lower “minimum order quantities”, quickerlead times and reduced transport costs. The company will invest in the most up to dateequipment, which will minimise labour costs, drive production yields and minimise unitproduction cost.7

6.0 Product PropositionThe business will produce and supply a range of quality, low cost rigid boxes, in realtime to customers in its market segments, using ‘Just in Time’ manufacturing andlogistics principles. Furthermore, the company will emphasise its product quality bybecoming accredited to ISO 9002 as quickly as possible (ISO 9002 is an internationallyrecognised quality assurance system and will engender customer confidence in thequality of our products).6.1 Pricing StrategyThe market research completed has indicated the purchase price of the various rigidboxes in the market segments. The pricing strategy to be adopted will be to undercutthese prices by 10%. The pricing strategy, coupled with the proximity to supplier andreduced order size, will present an attractive proposition to potential customers.The manufacturing equipment to be purchased is highly automated and at leastequivalent, if not better, than that used by the competition. This, along with the loweroverhead base, will lead to high productivity, and low production costs. These willcontribute to a very attractive selling price to the market.6.2 Channels of DistributionThe geographic market area will be the island of Ireland. Potential customers will besourced across all market segments, totalling twelve for the first three years.As the product is quite technical, going direct to customers is the most effective route tomarket strategy. To ensure customer specification / design is fully understood, face toface sales and service is required. By offering expert advice it will be possible to identifycustomer needs and find solutions to offer quality product at as low a price as possible.A summary of the internal strengths and weaknesses, coupled with the externalweaknesses and threats are summarised overleaf in table 2.8

6.3 SWOT AnalysisThe SWOT Analysis succinctly captures the strengths and weaknesses of ABCPackaging Limited, and points to the opportunities and threats that the market presents.Strengths Experienced employees withspecialist skills Proximity to Customer Locations Reduced Order Size Reduced Lead Time High Quality Service & Products Low Fixed CostsWeaknesses Brand Name not Established One-product focusedOpportunities Growing Market Offer an in-line packaging serviceto customers Advance Production of main useItems of customers to provide aquick turnaroundThreats New Entrant into MarketLarge CompetitorsEstablished CustomerRelationships and LoyaltyEconomic Turndown will ReduceSales of Crystal and SoftwareProductsTable 2: SWOT Analysis9

7.0 Sales and Marketing Strategy7.1 Sales ManagementIn the early stages, the directors will be solely responsibility for sales, due to thetechnical nature of the product. From an operational perspective, this is feasible, due tothe low number of potential customers to target in the first three years (target maximumof 12 customers).It is the intention to recruit a sales person when the finances of the business permit. Thisperson will be trained in the product specifications, management philosophy and themanufacturing processes to ensure full product knowledge is acquired. This will ensurethat the sales person will be in a position to fully understand customer needs and makeintelligent recommendations.7.2 Sales ForecastsThe forecasted sales are indicated in Table 1. Demand and monthly projections for thecoming 3 years are contained in Appendices 2(a) and 2 (b).RIGID BOX SALES POTENTIAL V TOTAL POTENTIAL M ARKETSECTORYR1 (‘000)Crystal 206 290 385 2110Multimedia 70 140 160 680Greeting Cards 16 30 55 160Table Mats 12 20 40 120Costume Jewellery 55 100 160 520Linen 15 30 50 150TOTAL 374K 610K 850K 3740K10%16.3%22.7%% OF POTENTIALMKTYR2 (‘000)YR3 (‘000)TOTAL POTENTIALM ARKET (‘000)Table 1: Forecasted Sales (Rigid Box Sales Potential V Total Potential Market)*The demand for the product is continuous and linked to the fluctuations in sales of the customer base.However as previously stated due to proximity of the customer locations it is anticipated that orders will berepetitive and frequent.10

7.3 AdvertisingAn overall marketing budget has been agreed to ensure the target market are madeaware of the product and its unique selling points. In terms of advertising, there will belimited, but focused ads and editorial placed in a selection of relevant trade journals.7.4 Personal SellingThe principle marketing tool that will be employed by ABC Packaging Limited will bedirect and personal selling. Cold calling, comprising of telesales and customer visits, willbe the main thrust of the sales effort. Sales calls will emphasise the advantages of usingan Irish based supplier (including low cost production and unparalleled lead times).11

8.0 Operational PlanABC Technology Limited will supply a range of rigid boxes to the sectors as indicated inSection 5.2.8.1 Manufacturing ProcessABC Packaging Limited will supply a range of rigid boxes to meet the specifications andrequirements of the targeted customer sectors.The manufacturing process will beguided by the philosophy of (JIT) Just in Time Manufacturing, thus ensuring theminimum amount of working capital is tied up in stock.The machinery sourced has the capability of finishing the product to the standardrequirements of each of the targeted sectors. The products will be designed to matchcustomer requirements with the company offering attractive, functional and uniquesolutions. The manufacturing strategy ensures that ABC Packaging Limited act as atechnical design function to its customer base, thus ensuring customer satisfaction andprofitable growth.The manufacturing equipment chosen is fully automated and requires limited labourinvolvement, thus ensuring a competitive unit production cost.The bulk of the raw materials required can be sourced in Ireland from a number ofdifferent suppliers.12

9.0 Financial PlanTable 3 outlines the total funding required for the Business Venture.FieldPremisesFixtures/FittingOffice EquipmentToolingTransportConsultancyPrinted MaterialsAuditors/AccountantsProduction EquipmentTotal Funding RequiredProjected Cost - e 3: Areas that will Require Financial Assistance9.1 Comments on Financial PlanThe source, type and specification of the fully automated production equipment havebeen identified. It is anticipated that the cost of equipment purchased in year one will be 48,700; this will provide sufficient capacity to meet the forecasted sales in year one. Itwill be necessary to invest in further machinery during year two.This additionalinvestment will cost 290,000. The equipment to be purchased is as follows: Rigid Box Wrapper Baler for Waste Reduction Pallet Wrapper Heat Sealers Die Cutting Pattern Fork Lift TruckOther purchases include the tools necessary to die cut and fold the rigid boxes. There isno intention to invest in transport, as delivery of finished product will be outsourced. Aquality brochure will be produced to assist the sales efforts.9.2 Cash Flow ProjectionsThe cash flow projections for year one (Refer to Appendix 1A), indicate a cashdeficiency of 24,998, which is needed until such a time as lease finance is received. Tocounteract this, a bank overdraft facility of 30,000 will be sought, and improved creditterms will be negotiated with the main machinery supplier. During the second year ofoperation, a negative cash flow of 5,185 will be countered by seeking improved creditterms from the machinery suppliers (Refer to Appendix 1B).13

10.0 Financing the PlanWorking CapitalAmount Financed by:Investments 410,100Lease Finance393,400Working Capital 25,000Equity68,000Grants45,200Term Loan10,000Seed Capital Scheme18,000Total Capital Required: 435,100Amount Total Finance Available: 626,600Table 4: Financing Plan10.1 Comments on the Financing PlanThe investment shown is the total required during the first two years of operation. Thepromoters have opened discussions with lease finance companies, as it is their intentionto raise lease finance for equipment and machinery. A grant application in the amount of 45,200 will be submitted to the local County and City Enterprise Board. One of thepromoters meets with criteria under the Seed Capital Scheme, and an estimated 18,000 may be available from this fund.The promoters are making an equity investment of 68,000, and as a fall-back position,a five year term loan of 10,000 will be sought from the bank.In the event that the full capital amount required for the expansion during the secondyear is not realised, the promoters will defer same until adequate finance becomesavailable from the internal cash flow of the business.10.2 Profit and Loss StatementsThe Profit and Loss statements for 2007 and 2008/2009 are contained in Appendices 2Aand 2B respectively. ABC Packaging Limited anticipates a loss of 5,206 in the first yearof operation. This is, in effect, a break-even situation. The sales forecast for the firstyear is based on achieving a 10% share of the Irish Market.Considering that ourcompetitors are based outside of Ireland, this is a conservative target.14

The second and third year of operation show net profits of 55,092 and 122,602respectively. Year three sales target equals 22.7% of the available Irish Market. Thebusiness has set a target of realising a 50% share of the Irish Market by the end of thefifth year of operation. This will result in a strong business and market leadership inIreland.As indicated in Table 2, ABC Packaging Limited intends to expand into order fulfilmentby operating an “in-line” packaging service to its customers. This will be pursued duringthe third year of operation, with the intention of commencing this service during yearfour.Potential customers showed a high level of interest in this service. Market Researchestimates that an additional sales level of 500,000 can be added by the end of the firstyear by offering this service.In the event of not realising forecasts during year 2, this service can be introducedearlier than what is currently planned.15

Appendices16

Appendix 1ACash Flow Projections 200717

Appendix 1BCash Flow Forecast – 2008 & 200918

Appendix 2AProfit and Loss Statement 200719

Appendix 2BProfit and Loss Statement 2008/200920

Business Plan 1.0 Executive Summary ABC Packaging Limited is jointly owned by Thomas Murphy and John Swift. The location of the business will be the Industrial Park, on the Cork Road, Waterford, which is strategically located near the ring road, thus facilitating quick access to the main Cork, Dublin, Limerick and Wexford roads.