Seeds Ltd.Business Plan For A

New and Improved Seed Cleaning Plant

Nav Khinda, Sean McAlpine and Noor Syed

April 05, 2007

Introduction Background Current Situation Goals Key Questions Operational Plan Marketing Plan Financial Plan

Contents of the Plan

Introduction Seeds is an on-farm cleaning and packaging

plant in Sask.

size and color comparison of beans

•Cereals, pulses and oil seeds are cleaned and quality tested to broker’s specification

•Four machines clean and sort the seeds according to color, size, shape and density.

•Six employees

Color, Weight and Size Variations in Seeds

Assorted beanswheat grainfenugreek

black mustardhemp

green lentils dried peasgreen split peassoya beans wheat germ

oatsGolden flax

Pinto beanscoriander

Variety of pulses

Background began seed cleaning

operation in 1985

Seeds Ltd. became incorporated in 1997

Authorized for pedigree and certified for organic seed cleaning

Current Situation

Flax Unable to meet 99.99% purity

Chickpeas, Lentils, Peas and Beans

Not able to process fragile crops

Mustard Unable to meet 99.9% purity

Coriander Unable to remove splits and wheat

Wheat is an allergen

Small Lentils Not able to remove cereals

Gluten is allergen, 100% wheat free

Seed variety Unmet Requirements Comments

Current Situation

Seeds Ltd. Business Plan

New equipment will further improve capability to clean seeds to customer specifications

Increase the plant capacity

Goals of New Plant

Reach sales of $1 M Continue superior quality service

ORGANIZATIONAL CHART

President

Administrative Asst. Plant AssistantsPlant Operator

Warehouse Technologist

3rd technologist

Warehouse Technologist

Plan View of Operations

Warehouse

Shipping Processing

Future Development

Area

Screenings

Raw Material Storage

Screenings Burning

AreaReceiving

Long Term Storage

Bulk Shipping

WORK FLOW PLAN

CLEANING

PACKAGING

RECEIVING

1.

3.

2.

Packaging

HACCP and ISO

Canadian Food Inspection Agency

•Seeds Ltd. meets HACCP inspection regulations•Currently no certification for seed cleaning plants exists•Voluntary compliance and free inspection is available•New plant is designed with improvements in critical control points•According to customers specifications lab tests are outsourced

Marketing Questions

•Who are the current competitors?

•Unique services?

•Supply a niche market successfully?

•Buying and selling direct

•Will HACCP be a factor in the future?

•Should a quality control lab be part of the QC system? In-house?

•Organic industry expanding?

The Four P’s

1. Products and Services- cleaning, storage and packaging of various seeds- high quality of service

2. Pricing- cost plus; time required for processing- below or in par with others

3. Promotion - develop relations with existing and new brokers

STP Segmentation

Geographical location Broker specifications

Targeting Continue to focus on organic market

Positioning Consistent high quality std. Approachable, professional and dependable

SWOT Analysis•Strengths

•knowledge & experience•solid reputation•economy of scope

•Weaknesses•location (rail)•company size

•Opportunities•emerging trend of higher quality standards•growth in organic industry

•Threats•power of buyers•environment•large competitors•demand

Marketing Strategies

Sales and Profit Objectives $1 million in sales

Channels of Distribution Customers arrange for delivery and pickup

Pricing Policy Cost plus We recommend a market value approach

Select Markets/Products/Service Mix Organic, Export, High purity demands

Selling and Advertising Minimal effort $10,000 per year in trade shows

Debt and Equity

Breakdown of funding for BirdSeeds Ltd.

Finance Source Cdn $

Owner Equity $ 598,300

Venture Capital $ 1,015,872

Long Term Debt $ 356,928

Total Financing $ 1,971,100

Financial Analysis and Overall Financial

Performance Summary of the Financial Situation (Base case scenario)

Year 2008 2009 2013 2017

Sales $1,030,857 $1,149,312 $1,253,838 $1,367,870

COGS $809,634 $913,426 $727,290 $709,740

Gross Profit $221,223 $235,885 $526,548 $658,131

Expenses $72,685 $72,554 $71,326 $68,607

Net Income Before Taxes $148,538 $163,331 $455,221 $589,524

Income Tax $14,854 $16,333 $59,327 $106,333

Net Income $133,684 $146,998 $395,894 $483,190

Net Cash Flow to Equity $369,912 $483,930 $497,037 $504,836

Net Present Value (NPV) $287,909

IRR 25.11%

Risk Analysis

VariableLevel of Importance (1, 2, 3)

Capacity 1

Cleaning Price 1

Grade Changes 2

Number of Employees

2

Wage rates 2

Seed Price 2

Interest rate 2

Inflation rate 2

Tax rate 3

Key for the table.

1. Critical for success and feasibility

2. Important for financial performance

3. Minor importance, but has damaging effect on financial

performance.

Scenario Analyses

VariableBase Case

Worst Case Best Case

Capacity % 100% 80% 100%

Capacity 27.8 24.2 27.8Grade

Changes 1 3 0

Packaging Price $ 38.86 $ 36.91 $ 40.80

NPV $ 287,909 $(1,027,617) $ 855,391

IRR 25% -6% 35%

Break even Analysis

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15000

20000

25000

Year

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IRRCash FlowNet Income

Break even Analysis

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$5.00

$10.00

$15.00

$20.00

$25.00

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Summary

Volume is key Marketing will play an important role Viable Business Plan

Interactive Session

Thank You