Business Plan for: Vitality DrinksLimitedPleaseName:Business Plan for:Vitality Drinks Limited(Please use this template in conjunction with the guidePrepare a business plan, where you will find information about how to use your business plan as well asinstructions on how to use this template)Document Version:

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Business plan contentsExecutive summary. 41 Executive summary. 42 Business details. 53 Key personnel 6Vision. 84 The business idea. 85 Business goals. 96 What the business does. 107 What makes the business different 118 Legal requirements. 12Sales and marketing. 139 Market research. 1310 Profiling customers. 1411 Profiling competitors. 1512 Managing market risks. 1613 Pricing. 1714 Promotion and advertising. 18Running the business. 1915 Staff 1916 Premises. 2017 Suppliers. 2118 Equipment 2219 Managing operational risks. 23Finance. 2420 Start-up costs. 2421 Profit and loss forecast 2522 Sourcing finance. 2623 Managing financial risks. 2724 Cashflow forecast 28Executive summary

1 Executive summaryThis business plan is for vitality drinks company Limited, a proposed energy drinks company. The company will venture into the drinks market and specialize on the production of soft drinks, energy drinks and packaged water.The business will be a limited liability company with perpetual succession. This structure was chosen because the owner of the business does not want to bear any more liability than the capital which was contributed to the company as share capital. However, it is appreciated that operating a limited liability company has more legal requirements to be followed, than operating other forms of businesses. This is because a limited liability company is regarded as a legal person.The owner will first employ a limited number of employees, so as to cut on costs. However, these will be increased as the business grows. The owner will be the manager of the entity, and will also oversee some extra functions such as human resources.The finance to start and operate the company will be sourced from the owners personal savings. However, this is not enough and the company will have to seek external financing from banks and other financial institutions. This will, however, have an interest which acts as the cost of the finance.From the forecasts which were undertaken, the company is viable. The company will make minimal profits in the first year of operations, and this is expected to increase as the brand name of the business continues to grow.

2 Business detailsCompany name:Vitality Soft Drink Company LimitedAddress:New South WalesTelephone number:The company is yet to be set up.Legal status:The business is a limited liability company, with the ability to own property, sue and be sued in its own name. It also has a perpetual succession. This business structure was chosen because the liability of the owner to the creditors and other third parties who are owed by the company is limited to the amount of capital which has been injected by the owner to the company. It is good for businesses which are starting up because it is not clear how the same will be.The business will:The business will be in the manufacture of soft drinks. The soft drinks will be manufactured in New South Wales, and then transported to various consumers. As the business grows, other manufacturing and bottling plants will be opened. The company will also start with less than 10 employees, but the same will be increased as the time goes by. This is in a bid to save on costs. The costs of starting up the business will be sourced from the owners savings, and the deficit will be filled by a bank loan to be obtained. However, it is appreciated that the financing to be sought has a cost which has to be footed by the company in the form of interests. This is very delicate for businesses which are staring up because the interest has to be paid regardless of whether the company makes profits or losses. This puts the company at risk.

3 Key personnelDetails of owner(s):Name: ArthurPosition/main responsibilities: As the owner of the business, the same will be in charge of general operations of the company. He will also be in charge of human resources and production management.Experience and knowledge of our industry: The owner has had a wide experience in the soft drink industry, after working with the coca cola company first as a promoter, and later as a supervisor in one of the bottling plants. The owner also has interests in the manufacture and bottling of soft drinks, and he is optimistic that the introduction of another soft drink in the market will be met with enthusiasm by the consumers. Apart from the above knowledge and experience on soft drink, the owner is also a management student, and he is eager to apply what he has learnt in school to his business.Previous employment: He has worked with Coca Cola company on previous occasions, as a supervisor and as a promoter. He also has managerial experience from a company he has previously worked with.Key skills brought to the business: Managerial skills.Business experience and any training undertaken: The owner has a managerial as well as marketing experience.Academic/professional qualifications: The owner has various managerial as well as marketing experiences.Most recent salary : 6,000 p.a

Other key personnel (including shareholders):Name(s): MargaretPosition/main responsibilities: Margaret will be in charge of accounting and Finance in the company.Experience and knowledge of our industry: Margaret does not have much experience in the production sector, and in particular the beverage industry. However, she has a wide experience in the management of companies which are starting up. She has taken a number of decisions on whether to borrow loans or raise share capital, or employ any other capital available.Previous employment: She has worked in the accounting department of many companies, especially companies which are being started. She has also worked as a consultant as a part time activity, something she still does to date.Key skills brought to the business: Financial planning and management. Auditing will also fall under her docket.Business experience and any training undertaken: She has not done any business on her own, but she has been the head of various accounts departments of companies. She has done small courses on business financing, and she has also been able to attend many business conferences dealing with business financing and management. She is very crucial on the success of the business, noting that many businesses which are started do not finish the first two years of their operations. Finances also play a critical role as well as the survival of any business entity, and it is paramount that we get a person we can be able to trust.Academic/professional qualifications: She has a degree in accounting, as well a masters degree in business administration. In her studies, she has had a bias in accounting and finance.Most recent salary/salaries : 9,000 p.a

Vision

4 The business ideaThe idea is to bring into the market a drink which has the combinations of a soft drink and an energy drink. The nutritional value of the drink will also be considered. This is because there is no particular drink in the market which serves the two purposes in the market. The drinks available are either purely soft drinks or purely energetic.Another reasoning is that there is an increasing number of persons who are continuously getting concerned about their weights. These persons prefer low calorie drinks which are limited in the market. It is also appreciated that the drink should be able to provide the needed energy despite the fact that it has low calorie content.The company will be started small, and left to grow gradually until it is able to compete on a level footing with the majority of the competitors who are present in the market today. The company should also be able to curve its own niche by manufacturing specialised products.Company mission: To incorporate hard work and integrity into becoming the leading manufacturer of energetic soft drink.Company Vision: The mission of the company is to be the world manufacturer of the soft drink of choice.

5 Business goalsWhat do you want to achieve in your first year of business?For example business goals could include turnover of 100,000 or trading at breakeven. To achieve profit and increase the stakeholders wealth To achieve competitive edge over its competitors To achieve a very low staff turnover To open an additional bottling plant within two years of operations. To increase employees by 50% within the first year of operations To repay any additional financing the company may seek To achieve considerable goodwill and brand image To achieve break-even point and at least 20,000 profit To have no accruements in terms of salaries and wagesWhere do you see your business in 3-5 years time?In 3-5 years the owner of the company hopes that the business will have stabilised. It is hoped that all the finances which will have taken from banks and financial institutions will have been paid in completion, and the company will not owe any money. Another issue which should have occurred in the next five years is that the company should have gone outside its jurisdiction to have branches and distributors in other districts outside New South Wales. In fact in five years time the company should have branches all over Europe, and there should be strategic plans to globalise the operations of the company. The company should be considering offers from overseas bottlers on the bottling and packaging of the soft drink.The company should also have considerable number of qualified employees, and the management staff should have also increased.

6 What the business doesProduct/serviceFeaturesBenefits

Soft drinks Energy drinks Combined benefits Water Mineral water Highly purified and packaged. Soft drinks Diet drinks No calorie drinks for those watching their calorie intake

7 What makes the business differentYour product/service is unique or different compared with the competition because: (Use as many fields as is applicable and add more if you need to.) It combines the properties of soft drinks with energy drinks It is suitable for consumption for all categories of persons, and it is clinically tested. This is because some categories of persons such as diabetics have very restricted diets, and no company has looked into their interests. The drink will also be cost effective. The company will undertake a cost leadership strategy in the first years of operations before it develops a strong goodwill. It will be packaged in environmentally friendly packages It will take into consideration corporate social responsibility Corporate governance best practices will be observed diligently by the management for the company The company will also maintain an open door policy to its employees for greater efficiency

8 Legal requirements (including regulations and licences particular to your business)The legal and insurance requirements that apply in your business are: (Use as many fields as is applicable and add more if you need to.)1. Name search2. Business registration/ Incorporations of the company3. Employee insurance4. Safety and quality certification5. Tax registrationYou will meet your legal and insurance requirements by: (Use as many fields as is applicable and add more if you need to.)1. Applying for a name search and preparation of articles necessary for the registration of the company2. Taking out insurance policies for the benefit of the workers3. Filling out tax registration forms and obtaining ABNS4. Seeking quality standard certification

Sales and marketing

9 Market researchTrends in your chosen market are:1. Most soft drinks companies are going global2. Most of them are also adopting digital technology and e- selling3. There is rising competition in the soft drunks market.How you know this: (Use as many fields as is applicable and add more if you need to.)1. Market research2. From business news3. Information from the competitors websites4. Horizontal analysis of competitors5. Stock exchange news

10 Profiling customersThe customer groups you will be selling to are:1. Students2. People involved in manual work3. Travellers and those who are in outings and hikesYour customer research has shown what your customers want is: (Use as many fields as is applicable and add more if you need to.)1. Cost effective drink- They want drinks which will give them value for their money.2. Quality assurance The drink should also be of high quality.3. Healthy drinksHow you know this: (Use as many fields as is applicable and add more if you need to.)1. Through customer survey- A survey was conducted on the prospective customers of the company.2. Through experience from existing energy drinks3. Through a pilot studyNumber of customers you expect to win in each group and what they might pay: (Use as many fields as is applicable and add more rows if you need to.)GroupNumber of customersPrice they might pay per unit

Students100001.5

Sick and those who are recovering8700 2.0

Long distance drivers20001.5

Other consumers80001.5

11 Profiling competitorsUse as many fields as is applicable in the table below and add more rows if you need to.Competitor nameStrengthsWeaknesses

Coca-cola Established brand name No reliable bottlers around the world Pepsi-Co Cost leadership strategies High employee turnover BertShell Pty Co. Local acceptance No publicity in other places other than Sydney Yuvenay Pty Co. The company is gaining considerable goodwill Limited number of employees Redbull Australia This company has international acceptance Products sold at high prices

How you can improve on their offer and/or price(s): (Use as many fields as is applicable and add more if you need to.)1. Manufacture of high quality drinks2. Maintain high customer satisfaction and follow up3. Establish employee appraisals and motivation to prevent employee turnovers4. Implement cost cutting strategies to enable the company to reduce on the prices of the soft drinks5. Employ aggressive advertising strategies.6. Seek for low profit margins to enable the company to sell the drinks at lower prices7. Employ members from the New South Wales community, so as to achieve community acceptance of the soft drink.

12 Managing market risksWrite down the risks you have identified: (Use as many fields as is applicable and add more if you need to.)1. Market risks2. Financial risks3. Management risks4. Operations risks5. Competition risksHow will you manage these risks so that they become less of a threat: (Use as many fields as is applicable and add more if you need to.)1. Doing a proper market survey before the launch of the soft drink. The market survey will enable the company to come up with strategies which will aid it in cost reduction.2. Employment of competent employees who can make rational decisions. This is important because a limited liability company is just but a legal person. All the decisions of the company are to be made by employees who are physical persons working for the company.3. Proper monitoring of the operational activities of the firm4. Implementing proper competitive strategies such as differentiation strategy. However, a SWOT analysis will have to be conducted before the correct strategy can be arrived at.5. Training the management on corporate governance and on contemporary issues in management so as to be able to face contemporary challenges.

13 PricingHow you can calculate your prices: (Use as many fields as is applicable and add more if you need to.) Adding a small mark up on the overall cost of manufacturing the drink including the overheads Considering comparable products in the market Determining the overall profit anticipated dividing this among all the products which will be produced by the company. This is very complicated, and may not be practicable in this case.How your prices compare with the competition: (Use as many fields as is applicable in the table below and add more rows if you need to.)Product/serviceYour price(s)Range of competitor prices (per unit)

Soft Drink1.51.5- 2.0

Energy Drinks 2.02.5- 3.0

Water1.01.2-1.5

Reasons for the difference between your price(s) and your competitors price(s): Our company is starting up, while the competing companies have been in the market for a considerable period of time, and have goodwill to sell. My company is still building up a goodwill My company is also seeking low contribution margins in a bid to attract more customers The competitors use different production techniques, which may lead to different cost of production in the end.

14 Promotion and advertisingHow and where will you promote your product/service? (Use as many fields as is applicable and add more if you need to.) With the advent of technological advancement, internet tools such as the social media are gradually becoming a very important advertising tool, especially for upcoming companies, due to the cost saving involved. The company will, therefore, use the social media by opening up facebook pages and twitter trends for the purpose of the company. The company will also have a well structured website where consumers and suppliers can get in touch with it to negotiate on business tools. This will also save the company of employee costs because a person will also only come to the company premises when they have sufficient knowledge of the products, and the visit will be to conclude businesses. Print and media broadcasts will also be undertaken. The broadcast which will be employed will be on the local media, because that will be the focus of the company upon the inception of operations. This will however, be evaluated with time to ensure that the company is benefiting from it because it is known to be very expensive compared to other advertising methods. The employees of the company will also act as goodwill ambassadors of the company. What this means, is that they will wear the company t-shirts and have their cars branded at their requests. This will enable a wider knowledge of the company to third parties. Another way in which the company can advertise its services is through the use of billboards. These expire after a certain period of time, and their cost effectiveness should be considered before the company resorts to the same. These billboards will be placed at strategic locations where the companys potential customers can be found. This requires a prior market analysis.

Running the business

15 StaffUse as many fields as is applicable in the table below and add more rows if you need to.RoleTotal costNecessary experienceSpecialist skills and/or qualifications

General Manager12000pa Wide experience in managerial and supervisory work Degree in business Finance manager

12000pa Extensive financial work. Master of Business administration Production Manager

8000pa Wide experience in beverage production. Master of Business Administration Supervisor

2000pa Wide experience in supervisory work Degree in Human resources management

16 PremisesCost

Premises required at start-up: Production Plant50,000

Premises required in the future (if different): Sales outlets, and SQs20,000

17 SuppliersYour key suppliers and their credit terms: (Use as many fields as is applicable and add more rows if you need to.)SupplierWhat youll buy from themNumber of days credit

Chemical Suppliers The chemicals needed to manufacture the drinks 30 Water suppliers They will be responsible for the supply of the water to be used in the manufacturing plant 30 Bottle manufacturer It will manufacture the bottles which are required to package the drinks. 30 Designers These will design the bottles and the outward appearance on the same. 30

18 EquipmentUse as many fields as is applicable and add more rows if you need to.ResourceWhenHow fundedCost per unit

Manufacturing equipmentAt the inception of businessDebt finance 10,000

Bottling equipmentAt the inception of businessDebt finance5,000

Computers and other office accessoriesAt the inception of businessPersonal savings1,000

Packaging equipment/ machineAt the inception of businessPersonal savings2000

Bottles and other packaging equipmentAt the inception of businessDebt finance2000

19 Managing operational risksRiskSolution

Staff Turnover Breach of confidentiality and divulging the company secrets De-motivation Ghost workers Fraud Enter into confidentiality agreements at the inception of employment contracts. There should be restriction of trade clauses in the contacts of employment. perform a constant employee appraisal Investigate into the possible causes of turnover and rectify the same. Undertake employee fidelity insurance covers Perform audit procedures on the payroll frequently to ensure that ghost workers are not paid by the company.

Suppliers Poor quality supplies Late supplies Market risks Contracts should be enforced strictly to protect the company. The company should implement supply techniques which save the company from detrimental effects of late suppliers. JIT techniques may not work for new suppliers

FinanceThe finance section of this template is intended for business planning purposes only. If financial tables are to be used for any purpose other than internal financial management, we strongly recommend you consult an accountant or tax advisor.Click on the links below to access a range of Microsoft Excel work sheets to input your figures, Microsoft Excel will automatically update the totals for you.(If you do not have access to Microsoft Excel you can save the files on to your PC. You can then use Open Source Software such asGoogle DocsorOpenOfficeto access the information by uploading the files into this software. We have provided Open Document Format versions of the tables in this section as well.)Please notethat all tables can be customised and additional rows and categories can be added.If you need to print out this business plan and the associated tables (once you have completed them) eg to show your accountant or your bank, place the tables behind the next pages in this template.You can findinformation about Microsoft Excel and accessibility on the Microsoft website.

20 Start-up costsCalculate how much money you need before you start trading (This helps you to calculate the costs of starting your new business.)equipment requiredEstimated cost

Manufacturing equipmentBottling equipmentMotor vehicleBottlesComputers and other accessoriesChemicals neededRentDistribution costsSalaries and wagesTotal10,0005,00010,0001,0002,0005,00010,0002,00030,00078,000

Personal survival budget:Estimated annual personal expenditure (This helps you work out the minimum amount you need to earn from your business in the first year and how much money you might need to borrow to start the business.)Personal survival itemsCost

RentTransportFoodEntertainmentClothingMiscellaneousTotal2,4002,0003,0001,5002,0003,00011,900

21 Profit and loss forecast (Use the tabs within the Microsoft Excel work sheet to view the second year and third year forecast templates. The profit and loss forecast is more detailed at the start because you should have a clearer idea of your profit and loss expectations.)Please note: Where the business holds and sells stock this cost should be included in direct costs. It is calculated as: opening stock + purchases closing stock. If you are VAT registered all sales and costs records should be entered excluding VAT. If you arenotVAT registered then you will need to include VAT in your costs where it is charged. For information about VAT, VAT threshold, VAT schemes and turnover threshold, please visit the HMRC website:VAT rates, thresholds, fuel scale charges, exchange rates.

22 Sourcing financeTotal borrowing requirement for the business (This helps you to understand how much money you will need to find in order to close the gap between your start-up costs as well as the costs of operating before your business will make a profit, and the money that you have available to put into the business yourself.)This is in a separate excel worksheet which has been provided.

23 Managing financial risksThe risks that you have identified for your financial forecast are:1. Interest rates risks2. Inflation which will lead to changes in the cost of sales3. Inability to achieve the intended sales4. Poor estimation of the costs of goods5. Poor repayment by the creditors, compromising the liquidity of the company6. Happening of events which will make the company unable to repay the bank loan it borrowed, and thereby threatening foreclosure.How you will minimise their impact:1. The risk of the loan which was taken by the company can be reduced through the use of hedging financial instruments such as derivatives.2. The finance department to do an evaluation of the market from time to time so as to know whether there is any change which is expected in the market. It is only then that the company can take corrective action.3. The company should restrict the credits it offers, at least during the first year of operations, or until it can determine the creditworthiness of the person who is seeking the credits.4. When estimating the costs of goods and other capital equipment, regard should be had on the upper margin. It is better to be overstated that being understated because this is a new business.5. However, it is unfortunate that most of the factors which give rise to financial risks are external to the firm, and the firm has no control over them. Factors such as inflation and the fluctuation of money markets cannot be controlled by the company.

24 Cashflow forecast (Use the tabs within the Microsoft Excel work sheet to view the second 6 months and summary)You only need to complete the VAT line in the cashflow forecast if you are VAT registered. For information about VAT, VAT threshold, VAT schemes and turnover threshold, please visit the HMRC website:VAT rates, thresholds, fuel scale charges, exchange ratesPlease notethat if you are VAT registered all sales and costs records should be entered excluding VAT. If you arenotVAT registered then you will need to include VAT in your costs where it is charged.This has been done on the Microsoft Excel worksheet which has been uploaded differently.