Business plan for Our Farm
Location of Institution
TABLE OF CONTENTS
3.1 Daily Operations and Production 8
5.0 Marketing Strategy and Implementation 14
5.2 Unique Selling Proposition (USP) 16
6.0 Organization and Management 19
6.1 Organizational Structure 19
7.3 Source and Use of Funds 22
7.5.1 Projected Profit and Loss 24
7.5.3 Project balance sheet 26
LIST OF TABLES
Table 1: working days and hours. 7
Table 2: Annual Sales Forecast 18
Table 3: Personnel Plan 20
Table 4: Start-Up Costs 22
Table 5: Source and Use of Funds 24
Table 6: Pro Forma Profit and Loss 25
Table 7: Pro Forma Cash Flow 26
Table 8: Project Balance Sheet 28
1.0 Executive summary
Our Farm is the moderate priced farm providing the families with a different variety of food substances like fruits, vegetables, chicken, meat, eggs and other products which may be fresh or organic. Further, the farm will provide specialty choices and also deliver these products to the homes of the clients. Also, the company will allow its clients to either pay for these services before the deliveries are made or after the delivery using the convenient mode of payment through visa or cash. The inventory of the company is formulated in that when the customers pick the products that they want from the farm; they are given the opportunity to state their location of residence and the exact time that they need the products to be delivered. This service is only available for the clients who require it and especially to those that are ready to pay a certain amount set depending on how far the location is from the farm. Concerning the area that the office will be located, the association is planning to lease a piece of land closer to the farm, which will make it easier for the operations. Therefore, the location will require renovation to fit the requirement for the office. Further, other equipment like telephones and call centers that will aid customer relation management. On the other hand, the sales projections assume the total of 1700 customers per week which results in sales of 7,614 OMR monthly and 395,775 OMR yearly. This is equivalent to approximately, 302 per square foot within the sales yearly, thus, positioning Our Farm as the highly desirable farm within the Sultanate of Oman. Overall, the total startup cost is stipulated at 139,753 OMR, in which, 66,989 OMAR is supposed to be contributed by the company owner while the remaining amount will be secured as a bank loan.
1.1 Business objectives
The main objectives of the business plan for Our Farm are:
- To offer quality services and products at reasonable prices.
- To be the leading farm producing the best products across the country.
- To realize the prime cost ratio that is lower than 65%
- To achieve a cover ratio of 1.00X at the end of the daily sales.
1.2 Mission statement
The mission of the company is to offer the unique and quality farm products that are above the average products in the market. Our Farm will strive to realize the set goals through:
- Through providing the list of farm products sold in the farm and incorporating these quality products at reasonable prices.
- The company will also be mindful of all the customers’ wellbeing as well as ensuring that the staffs are trained on how to treat the clients without preferences and with respect, to maintain the clients.
1.3 Guiding Principles
One of the most principles that the company should sustain is being mindful of the customers and the employees on the farm. By the societal values, the company is expected to treat both the workers and the clients in a manner that ensures customer loyalty and employees satisfaction. Further, the company will constantly show the feeling of gratitude for the employees and the customers because of their dedicated input, time and labor they put in place for the success of the farm. Overall, the farm will ensure that they offer the warm as well as friendly services which are expected from the farm, good customer and management relationship that will make the clients be satisfied with the services and make them loyal to the farm.
1.4 Keys to Success
The primary success factor that the farm promotes is the repeat business. The farm ensures that all the customers who come in to purchase the products are satisfied with the all the services. As a result, the clients will find it easier to return and buy from the farm. Moreover, when the customers are satisfied with the services, they will use word of mouth to recommend the company to other people who will make the farm famous and is the vital strategy of marketing the services and products provided in the farm. The hiring of the right people with the right skills and experiences in dealing with the farm and managing the company as a whole is essential. Hence, with the right people in the management sector, customer relationship with the farm will be enhanced. Moreover, employing the right individuals who know how to deal with the far products. This is because the farm deals with food substances that should be handled with great care to ensure the health of both the customers as well as the employees.
The location of the farm is another key factor in success. Before setting the farm and the management company, the management should identify the main market, since, for the company to succeed, being closer to the market is the primary factor. It is common knowledge that people who travel a long distance tend to lose interest in the company. Therefore, recognizing who the company’s customers are. Finally, the variety of products offered on the farm. People believe that it is easier to purchase all they require at a whole and not in small pieces. Thus, the farm with all the products that the customers require will naturally have a range of customers. Further, reasonable prices should be provided, not just the company concentrating on making a profit but also ensuring that the customers have the products at a reasonable price. Besides understanding the customers and analyzing their income strategy will help in formulating the prices for the products else, the farm will not have the number of clients as expected.
2.0 Company Description
The farm will be solely owned and managed by a group of students from Sohar Collage. Also, the farm will serve different classic home-style favorites for meat, chicken, and poultry to various fruits naturally grown. The far will have its working days and hours stipulated as shown in the table below;
|Monday||8.00 am – 9.00pm|
|Tuesday||8:00 am – 9:00 pm|
|Wednesday||8:00 am – 9:00 pm|
|Thursday||8:00 am – 9:00 pm|
|Friday||8:00 am – 9:00 pm|
|Saturday||9:00 am – 7:00 pm|
|Sunday||9:00 pm– 5:00 pm|
Table 1: working days and hours.
The ownership of the farm is mainly by a section of the students. They will manage the farm and offer all the necessary equipment and skills required.
2.2 Legal Form
Our farm is anticipated to be organized as the sole proprietorship, solely owned by the group of students from Sohar Collage, the farm that satisfies the needs of the clients at all the times. The farm is registered as the Oman property, a profit organization.
2.3 Start-Up Summary
The company calculated the cost of startup business that is both the farm and head office at 24,255 OMR. The main expenditure of setting up the office that will be used for booking and operating the farm, and equipment that will be used in the farm, is at 42,349 OMR. Further, the location of the office and farm needs several builds out as well as renovation which is approximated at 19,249 OMR and will need roughly 30 to 40 days to complete. Significantly, the owners of the business will pay 67,374 OMR of the startup cost, from their primary source of income which is the combination of the liquid assets as well as the marketable securities, mainly from the existing management and farming businesses.
3.1 Daily Operations and Production
Our Farm will be operational seven days a week from the stipulate time in table one. Due to the fact that some students are specialized in agricultural engineering, they will be responsible for all the activities on the farm including the management of the farm. The schedules of the farm generated by the students will be written in the form that it will permit the ability to decrease or increase the input labor following the volume of sales in order to sustain a consistent labor cost control in both farm and company. Further, the proper labelling as well as rotation tactics accompanied by the ample storage facilities in the farm will make sure that the high-quality products will be adequately available in order to meet all the demands of the customers during the peak of the business hours. The remaining replenishment and ongoing preparation that is not completed within the 30 to 40 days set for the preparation will continue during the off-peak period of the business hours to ensure that the business runs concurrently with the remaining repairs.
On the other hand, other students will be responsible for all the dealings with the clients. That is, receiving, ordering, booking and maintain the stuffiest inventory in the farm to need all the production demand of the customers. Further, ordering schedules will be staggered with the perishable products being booked multiple times per week with the aim of preserving the freshness of these products. Also, the standard supply orders and grocery will be ordered less frequent, under the predetermined schedule and the capacity of storage in the farm. Moreover, the far owners will depend on the operational checklist to validate every shift of work in the farm has been adequately prepared to make sure that all the operational standards were followed before, during and after all the work shifts. The farm and company layout includes the farm with all the products, an office that is responsible for all the booking and delivery of the products to the customers. The farm is structured to have different sectors as it produces a variety of products. Therefore, it is structured in a way that allows the customers to walk around the farm and check all the products that are available and pick the preferred product.
Upon the arrival of the clients in the farm, they are greeted by either the assistant manager or the manager of the company. Then he/she is taken over the services offered in the farm and is allowed to go to the farm and check the products if they so, please. If the clients do not wish to check the products from the farm, they are allowed to pick from the list with the prices and purchase it.
The other customers who do not have the time to travel to the company and farm, they call the company through the caller center in the company which is operated by the very skilled employee. The client is able to call the company and order the actual product and the location of residence. The customers are permitted to either pay before the delivery or at the point of delivery plus the price accorded for the delivery. The inventory, after the booking will automatically be printed and kept in the inventory to keep all the track of the orders and always track the orders placed in until the orders are completed.
3.2 Competitive Comparison
The Oman agricultural farm includes approximately 400,000 farms with the combined yearly revenue of roughly 154 OMR billion. Many agricultural companies in the market are already developed compared to Our Farm. These companies holds the 20% of the current market. The main local competitors in the market is the Sun Farm Company. While the Company is in the process of developing, farms such as Sun Farm has already developed and are operational in the Country. Therefore, this offers the company stiff competition push the Company to always on its toes in terms of growth.
Due to the company owner’s years of experiences combined and their existing agricultural and management career, the group have established and maintained the relationships with the qualified supplies. These suppliers provide the farm with reasonably priced farm products, delivered according to the farm and company schedule.
3.4 Management Controls
The company owners will practice effective management process in order to control the cost, make sure that the company have quality of products as well as offer friendly clients service. The system will use several systems by the management sector. One of these management system is order guide. The farm will ensure to use an item particular order guide to track all the history of the orders and sustain the designated levels of all the products within the inventory of the company. Also, the inventory system should be weekly maintained. The management will conduct the weekly inventory in order to determine valuation for the use within the preparation of the weekly loss and profit reports. Finally, the company should conduct daily inventory tracking. The daily inventory must be taken on particular items in the farm. Furthermore, the movement of the sales data will be compared to make sure that the designated products have all been appropriately accounted for in the farm.
3.5 Administrative Systems
With all the limited employees in the farm, it is essential that the owners of the company remain current with all the daily outlay. Moreover, the purchase of the POS system (point of sales system) will entirely help the farm in the daily administrative reports;
Daily cash control. The receipts and sales documented by the POS system should be compared to the definite cash as well as the credit card deposits per day at the end of the business. Further, the acceptable short amounts of the farm will be restricted to 1.54 OMR per day. Therefore, all the discrepancies that are higher than 1.54 OMR will inform the management to conduct immediate audit to account for the presented differences. The monthly totals will then be compared to the actual P&L statements for the accuracy. Overall, the credit cards, cash and debit card receipts will then be deposited in the deposit account of the farm.
Weekly Prime Cost Report. The management of the farm will prepare the report weekly which will show the gross profit margin after the cost of the products sold as well as the cost of labor has been subtracted from the revenue of the sales. Further, the prime cost for the category of the farm and company is anticipated to range from 50% to 55%. Overall, the suitable control of the prime cost is the most efficient factor of the ability of management to operate the farm.
Purchasing Records and Payables. The farm will require a part-time bookkeeper to record and process the invoices as well as credits on the daily basis. The report describing the account payable transaction, cash expenses and payment by check will be readily available. The bookkeeper is also responsible for preparation of all the check disbursement. However, singing of checks is authorized for the general operation in the farm is only conducted by the general manager in the company.
Payroll Processing. The payroll checks in the farm are issued twice a month. The general manager of the farm will then run the reports from the attendance and time system, prepare for the transfer to the company’s payroll system as well as make the essential adjustments. All the payroll will be managed by the services of the payroll processing.
3.6 Future Services
The farm plans that in future to offer these farm services for other unions and expand the market of agricultural products to international countries who at the moment do not have these products. This can open up other potential and a large portion of the gross sales for the company. Further, the farm has a target of year 2, to hire a sales agent to directly market all the products to other parts of the country that is not yet aware of the existence of the farm.
4.0 Market Analysis
The farm industry is one of the largest and advanced business in Oman. The industry sales are estimated to reach 223.3 OMR billion in 2010, which is an increase of 2.5% compared to that of 2009. Further, the agricultural industry sales are projected to the sum of 233 OMR billion in the year 2011 which is equivalent to 4% increase to that of 2009. Thus, the entire economic influence of the agricultural industry is anticipated to exceed 0.65 OMR trillion in the year 2011.
4.1 Industry Analysis
The industry includes the establishments mainly involved in the provision of food services to customers who order and the others who come to buy the products without ordering or requiring the products to be delivered to their homes, and either pay after the delivery or before using the mode they see fit and convenient. Moreover, these establishments can offer food services to the clients in combination with selling the fruits of the client’s choice, and offer carry out services for the clients purchasing the farm products. In the farm, the tastes of the customers, demographics as well as the individual income drive the market demands. The large companies in this industry have the advantage in the purchasing, marketing and finance, while the small companies like Our Farm can only provide superior farm products and services. Therefore, the industry is a labor intensive.
The wages from the significant ratio of the cost of operation in the farm. The existence of the legal minimum wage in the most parts in Oman enhances the requirement for the players to maintain another cost that in turn increases the significance of the suppliers on the farm. However, the slight complication is in some parts of the country, the farms offering the food services the employers are in a position to provide tips to their workers hence contributing the high wage they are paid at the end of every month. Therefore, in those parts, the policy increases the minimum salary from the perspective of the employers. Thus, putting the annual revenue per employee on the farm is less than 19,250 OMR. Further, the farm carefully manages the inventory of all the perishable food products especially fruits in order to reduce the amount of this food stuff that spoils and hence makes the farm to incur losses.
In addition, the computerized data systems can enhance as well as connect the foodstuff and the ordering operations. The farm can enhance the use of touch screen ordering techniques which make sure that there is accuracy in the communication of the orders of the clients. Further, the timing system monitoring the order procedures can alert the farm workers if the client’s order is running late than the scheduled period. This will ensure that the customers get the ordered good at the right time without delays. The early reservation of the products ensures that the farm makes available in time the products that the customers need. Moreover, the system of inventory in the farm tracks the supply level, hence help the company in reducing the waste that the company might incur due to the spoilage of the products. Additionally, the cost accounting programs will assist the farm in determining the profitability of a specific product on the farm.
4.2 Target Market
The segment strategy that the company owners selected the subject region for the location of both the office and the farm mainly due to its area near to the main and busy countryside of Oman. This location was primarily selected because many people are able to assess it and it is along the roadside which makes it visible for all the road user within the area. Moreover, the road is connected to the busy interstate near to the shopping Centre. This is an added advantage, that is, all individuals coming to the center to shop, they can easily see the farm.
4.2.1 Market Needs
The region selected is an ideal for the farm. The section where the farm is located in a common joint where various people come to shop, and it’s known for the collection of businesses done there. Therefore, with all the other business there, what the joint lacks are a farm to buy the fresh agricultural products. The added benefit of the location is that there is no farm stipulated within the area which makes it easier for the farm to develop and get the intended customers. Moreover, the setup of the farm in this location will see that the people do not travel a long distance to get the services that Our Farm can offer. The farm will also be a source of employment for the residents and promote growth as well as development in the community.
4.2.2 Market Growth
It has been observed that the Oman clients spending on the services in buying the farm products from the farm and no other outlets have increased by 1.8% compared to the previous years. Thus, making the average Oman retail price food services specifically that influences the spending of the customers has also risen to 13.1% compared to last month. Moreover, the Oman tourism spending for the food services directly from the farm, compared from the last year’s sales have also increased by 6.1%. This is the indicator that the individuals in Oman now trust the food products that they purchase directly from the farm other than other food outlets. Hence, Oman is opening up to new business such as farm business evaluating the growth of the market over the years.
People always believe that buying the foodstuff from the supermarket is easier compared to any other outlet in the market. Therefore, at the farm will position itself at the premier quality and ensure that the farm products reaching the customers are fresh and of a reasonable price to equally compete with the other outlets in the market. Moreover, Our Farm will make sure that the customers are happy and contented with the services to make them loyal to the company. Other than that, the company will constantly inspect the stores and warehouses on the farm to ensure that the products the farm sells are healthy and fresh all through. Overall, the farm will continuously, review the prices and discounts to modify them as per other farms and the recommendations of the clients, since the farm values the customers and listen to them in case of any concern.
5.0 Marketing Strategy and Implementation
The farm is striving to be the best in the farm industry in Oman and has the inspiration to be known not only in Oman but also in the international countries. The farm is planning to do this by providing the quality and fresh farm products that are superior to the ones sold in other outlets. The farm believes that the clients will enjoy doing business with the farm due to the products offered at an affordable price to the residents. The farm has well-trained employees on the customer relationship and is always at their best when it comes to their services.
Other farms have tried in offering bulletproof products. However, they have failed in the sector of the personal aspect of the business. The farms do not concentrate on the feedback of the clients after purchasing their products and no effective customer relationship with the management of the company. Our Farm has taken a step ahead and identified all the loopholes in the market and ensured that we are customer centered. The product and prices are formulated as per the client’s request. In the farm, the customers are placed first before the profit since the company was not only established to make a profit but also to ensure that the local residences have the quality products at affordable prices and are contented with the services. Moreover, the farm trains the employees on how to deal with the customers who either call to order the products or are instantly purchasing the foodstuff.
The farm values the feedback offered by the customers. This is the main ways of knowing what the clients want, how the market has transformed and what the farm should be adjusting to meet all the demands of the clients. Moreover, the farm has developed a website with the list of the products in the farm, a map showing the exact location of the farm as well as driving directions for the people who are not the residents of the area. The farm also uses other social media platforms like twitter and Facebook to market the products. On the farm website, all the possible questions that can be asked by the customers are answered, and a telephone number is given in case a person wants to order the services.
Besides, the farm has ensured to identify the products that people within the location love but are very difficult to get. As a result, the people will have their heart desired food closer to them, handled by the top class employees and delivered to them at any moment they order it, so long as it is within the company’s working hours. This will help the farm remain relevant in the market.
Other than the products and the clients, the farm ensures that the employees are satisfied with their work and are developing as well. Employees are very important assets in the company, hence, for the success of the farm, the workers should be satisfied with their work on the farm. Further, at the Farm, there are no preferences while employing the workers. All the applicants are subjected to the same criteria of application and employment. All the applicants are treated equally. The farm has flexible working hours which address the needs of the workers, and also allow the employees to develop in their personal lives. The farm pays the workers a competitive wage. Constant training and rewards like promotions for the hard working employees is something that is common on the farm. Nevertheless, the workers that do not get their work done as expected are not reprimanded nut are encouraged and given another chance to do the right thing.
One of the strengths of the farm is its location. The farm is located in an easy access area. Also, the farm has generated billboards that points to the direction where the farm is located in case a client did not get the direction guide on the website. Moreover, the farm has come up with the exceptional employees with the right attitude for business. The farm always retains its workers through the best salary compared to other farms, work satisfaction and the best flexible working hours on the farm. As a result, the workers are at their best all the time and in doing their jobs. Due to the fact that the owners are agricultural and management expats and with their experiences, the farm enjoys the already established a client market as well as approved vendors for the farm. The other strength that the farm has is the size of the farm. Because of the size of the farm, it is easy to manage and to ensure that it produces the exceptional quality through the hand selection of the market specials compared to the large farm competitors. Finally, the farm has the best employees since at the employment; the applicants are hand selected and not computer programs. This makes sure that the farm has the best employees who strive to provide unsurpassed services.
The main challenging the farm faces is recruiting as well as training the quality employees required in the industry. It is costly to support the constant training of employees on the farm. This somehow pulls the farm to the ground however much it tries. Since the farm is still at the stage of developing, it is hard though necessary for the farm to constantly train the employees on the new market trend in order for the farm to remain relevant in the market.
The first opportunity that the farm has is the little barriers. It is important to note that, the little barriers to the entry, permits for the instant business opportunities. Further, the farm has the opportunity to offer, apart from the main products, fruits to the customers.
The main threat the company faces is the Oman government mandates. These mandates include the farm operations, the protection of employees, safety as well as sanitation. Therefore, these will make the company spend more in ensuring that all the facilities required in the farm and are operational. Further, if the farm does not run as the owners anticipate, they risk losing the capital funds they had put in to start up the business. Moreover, after the startup, there might be a problem of increased operational cost within turn will paralyze the effective running of the company.
5.2 Unique Selling Proposition (USP)
Our Farm will provide quality farm products at a flexible price for the clients. Further, the average price for these products is calculated at the rate between 3.1 OMR and 5.8 OMR that appears to be in line with the industry standards. Due to the fact that the current expertise with the hired vendors, as well as the farm excellent credits. The farm can also negotiate the better credit terms compared to starting the farm business at the moment. Moreover, the farm can maintain the list of the items which are the advantage of the seasonal farm products that in turn reduces the prices set. Overall, the farm will keep in check all the prices by the meticulous monitoring of the controlling the expenditures, keeping the close eye on the farms prime cost report as well as inventory. Thus, in the start, the company will recruit close family members in the farm to work at a lower rate of salary, as the farm develops. This will help in reducing the cost used for the expenses especially in the salary.
5.3 Competitive Edge
The farm’s competitive advantage is in the individual involved in the company. The success of the company is solely dependent on the employees within the company. Their satisfaction in the work they do on the farm is directly connected to the success of the farm. The long term objectives and goals of the farm are to recruit the team members who are hand selected and not using the computer software to recruit the employees. This will ensure that the company have employees who are honest and truly dedicated to the farm projects. Compared to the large farm competitors to the farm, due to the fact of the farm’s lean size, the company can turn on a dime at the point when economically pushed as well as quickly and effectively make changes allowing the farm to be proactive.
5.4 Positioning Statement
Our Farm will be the premier farm products company in Sultanate of Oman. The farm will offer a reasonable priced agricultural product either delivered to the customer’s place of residence as the client’s desires. Moreover, the company has a broad list of the items that the customers can choose from the poultry, meat, chicken, eggs to fruits according to the desire of the clients. The farm office is opened seven days a week, and the products are always available on the farm with the best employees.
5.5 Sales Strategy
In the farm, the client’s services are the most significant. The survey done on the customer participation shows that only one in twenty clients will feel free to tell the management in case of any problem in the farm or the farm products. Therefore, it is the goal of the farm to ensure that the employees provide the wonderful and quality products with the superior client services. Moreover, the training program for the workers will be towards trimming the workers on the service attitude, ways to handle the customer’s complaints as well as client perception about the farm. All the complaints of the customer are acknowledged through the workers and referred to the management of the farm. Further, programs will be placed on the farm for all the category of complaints of the customers. The more serious complaints will be documented in the company files and dealt with effectively.
5.5.1 Sales Forecast
The farm is expecting a conservative 5% rise in the sales avenues yearly over a period of three years. The growth of the business will be then adjusted to the inflation, with the addition of fruit revenue, the sales will be increased by the 12.93% in the second year and 6.02% in the third year of establishments. The table below shows the anticipated sales forecast for the next three years in the farm.
|Yearly Sales Forecast||Year 1||Year 2||Year 3|
|The farm products||395,937||515,734||436,521|
|Total Prime Cost||254,755||283,831||295,148|
Table 2: Annual Sales Forecast
5.5.2 Sales Programs
The farm will encourage the workers to grow the client base as well as offer enticements and regular bonuses to the customers for the recommendations and the repeat customers on the farm. However, these initiatives are not available on the farm because they are in the planning stages and have not been implemented on the farm. There is a need to hire other employees who will be responsible for such activities on the farm. Thus, this will form the role of the employee’s culture on the farm. Also, it is expected at as the farm develops, along with the new products offered in the farm like fruits which was initially not in the list, there will be the need of hiring a sales director in order to facilitate this portion of the farm business. The farm will pay the sales director similar to how they are paid in other governmental institutions.
6.0 Organization and Management
6.1 Organizational Structure
Our Farm expects to recruit 19 workers. Together, the students will in person select every candidate who is aspiring for working with the farm. They will use the efficient interview procedures planned to staff the farm with the highly skilled individuals for every position in the farm and office. Further, every applicant will be evaluated as well as rated in accordance with the predefined set of the standard planned for every position in the farm. The background checks on the applicants will be used for the designated positions. Overall, the hiring of the employees will also depend on the credible referrals listed by the applicant.
6.2 Management Team Gaps
At the start of any business, it is common for any business to face a lot of challenges. The management gaps are inclusive. Over the period, the farm owners have planned to recruit the sales director, a general manager as well as the farm manager. In order to meet all the gaps connect to the payroll, cost accounting and inventory management, the farm owners will be expected to buy the POS which will simplify the process of communication between the farm and the office of ordering. Therefore, with all these in place, when the client orders a product from the farm, the order goes to the computer in the office, directly to the farm printer. Other than that, the POS system is vital in tracking everything that goes in and out of the farm and the office. Moreover, due to the fact that the POS system works as a time clock, it can also be significant in preparing the payroll, which in turn will serve some cash that is used in the department of bookkeeping. Overall, along with the daily operations in the farm, the POS system can help in the organizing the losses and profit statement as well as sales tax.
7.0 Financial Plan
The sections below outline the farm’s financial management plan.
- The needed startup cost
- Losses and profits
- The cash flow in the farm
- The farm’s balance sheet
7.1 Important Assumptions
- The farm products range from 3.08 to 5.77 OMR
- The average foodstuff price is 3.38 OMR
- The average fruit price is 55.72 OMR
- The farm will have 19 workers on the farm and the managing offices
- The target revenue of 331,053 to 461,934 OMR.
- Yearly 3% increment for the information as well as 5% yearly revenue increase.
7.2 Start-Up Costs
The sum of the total cost of starting up the farm is stipulated at 139,735 OMR where the sum of 66,980 OMR will be contributed by the farm owners while the remaining amount is secured from the bank.
|Graphics Logo and Name Creation of the farm||385 OMR|
|Permits for the business||462 OMR|
|Outdoor Sign||1,155 OMR|
|Working Capital||66,403 OMR|
|Pre-Opening Expenditures||5,697 OMR|
|Sum of Start-Up Expenditures||97,198 OMR|
|Three delivery vehicles||25,406 OMR|
|Four motorbikes for delivery||12,703 OMR|
|Track lighting||847 OMR|
|Cash register + POS System||1,5400 OMR|
|Sum of Start-Up Assets||42,536 OMR|
|Sum of Required Start-Up Costs||139,735 OMR|
7.3 Source and Use of Funds
The sum of the startup cost is approximated at 139,735 OMR. The main cost for starting up the business is linked to the equipment needed to set up both the farm and office. The sum of the total cost of the items is estimated at 42,536 OMR. Further, the cost is related with the renovation of the office and the farms in order to offer the updated creating additional space in the farm for inspection and for the clients to select whatever agricultural products that they may require, which is approximated at 19,247 OMR. In addition, the startup expenditures are in the category of working capital as well as a contingency which is 70,252 OMR. The farm owner will be responsible for putting up a capital of 66,980 OMR, while the 72,754 OMR will be informed of bank loan. The secured loan will be anticipated to be entirely paid within five years of the farm operation.
|Source and Use of Funds in the farm|
|Sources of Funds|
|The Owners’ and other investments||66,980 OMR|
|Bank loans||72,754 OMR|
|Total Source of Funds||139,735 OMR|
|Use of Funds|
|Payment of the loan||19,247 OMR|
|Capital equipment||42,536 OMR|
|Location/administration expenses||5,697 OMR|
|Advertising and promotional expenses||1,540 OMR|
|Other expenses||462 OMR|
|Eventuality fund||3,849 OMR|
|Working capital||66,403 OMR|
|Total Use of Funds||139,735 OMR|
Table 5: Source and Use of Funds
7.5.1 Projected Profit and Loss
The losses and profits demonstrate the modest increment in the revenues over a period of three anticipated years with the adjustments for the inflation.
|Pro Forma Profit and Loss||Year 1||Year 2||Year 3|
|Sales||395,886 OMR||447,092 OMR||475,729 OMR|
|Cost of Goods Sold||(154,791 OMR)||(159,435 OMR)||(164,218 OMR)|
|Gross Profit||241,095 OMR||287,657 OMR||311,511 OMR|
|Accounting and Legal||4,619 OMR||4,758 OMR||4,901 OMR|
|Bad Debts||9,897 OMR||10,194 OMR||10,5OO OMR|
|Reduction||34,645 OMR||35,684 OMR||36,755 OMR|
|Credit Card Fees||7,918 OMR||8,155 OMR||8,400 OMR|
|Insurance||28,871 OMR||29,737 OMR||30,629 OMR|
|Miscellaneous||16,981 OMR||17,490 OMR||18,015 OMR|
|Permits and Licenses||2,832 OMR||2,917 OMR||3,004 OMR|
|Rent||26,176 OMR||26,962 OMR||27,770 OMR|
|Salaries||4,750 OMR||4,893 OMR||5,040 OMR|
|Wages||103,930 OMR||124,360 OMR||130,892 OMR|
|Total Expenses||240,620 OMR||265,149 OMR||275,905 OMR|
|Net Profit||475 OMR||22,507 OMR||35,605 OMR|
Table 6: Pro Forma Profit and Loss
7.5.2 Projected Cash Flow
The table below shows the cash flow depicting the incoming as well as outgoing cash of the farm business.
|Pro Forma Cash Flow||Year 1||Year 2||Year 3|
|Cash from Operations||57,011 OMR||11,931 OMR||4,389 OMR|
|Cash Sales||395,886 OMR||447,092 OMR||475,729 OMR|
|Cash from Receivables||0||0|
|Subtotal Cash from Operations||452,897 OMR||459,024 OMR||459,023 OMR|
|Additional Cash Received||72,755 OMR|
|Owners Investment||66,980 OMR|
|Subtotal Cash Received||592,632 OMR||459,023 OMR||480,118 OMR|
|Expenditures from Operations||294,526 OMR||159,435 OMR||164,218 OMR|
|Cash Spent||273,379 OMR||281,580 OMR||290,028 OMR|
|Subtotal Spent on Operations||567,905 OMR||441,015 OMR||454,246 OMR|
|Additional Cash Spent|
|Loan Payment||12,796 OMR||13,619 OMR||14,495 OMR|
|Subtotal Additional Cash Spent||12,796 OMR||13,619 OMR||14,495 OMR|
|Subtotal Expenditures||580,701 OMR||454,634 OMR||468,740 OMR|
|Net Cash Flow||11,931 OMR||4,389 OMR||11,377 OMR|
|Cash Balance||11,931 OMR||16,321 OMR||27,698 OMR|
7.5.3 Project balance sheet
|Pro Forma Balance Sheet||Year 1||Year 2||Year 3|
|Cash||24,252 OMR||25,464 OMR||27,374 OMR|
|Accounts Receivable||9,624 OMR||10,105 OMR||10,863 OMR|
|Inventory||5,389 OMR||5,659 OMR||6,083 OMR|
|Other Current Assets||49,850 OMR||52,343 OMR||56,269 OMR|
|Total Current Assets||89,115 OMR||93,571 OMR||100,588 OMR|
|Long Term Assets|
|Long Term Assets||55,625 OMR||58,406 OMR||62,786 OMR|
|Total Long Term Assets||103,358 OMR||108,526 OMR||116,665 OMR|
|Total Assets||192,473 OMR||202,096 OMR||217,253 OMR|
|Liabilities and Capital|
|Accounts Payable||11,163 OMR||11,722 OMR||12,601 OMR|
|Current Borrowing||577 OMR||606 OMR||652 OMR|
|Other Current Liabilities||10,971 OMR||11,519 OMR||12,383 OMR|
|Subtotal Current Liabilities||22,712 OMR||25,636 OMR||0|
|Long Term Liabilities||72,755 OMR||76,392 OMR||82,122 OMR|
|Total Liabilities||106,630 OMR||111,991 OMR||120,358 OMR|
|Paid In / Invested Capital||85,843 OMR||90,135 OMR||96,895 OMR|
|Total Capital||85,843 OMR||90,135 OMR||96,895 OMR|
|Total Liabilities and Capital||192,473 OMR||202,096 OMR||217,253 OMR|
|Net Worth||85,843 OMR||90,135 OMR||96,895 OMR|
Table 8: Project Balance Sheet