1

G R OW I T !

Next Generation SPIN Farming…

Presented: July 14th, 2011

Dana Batarseh

Errol Osecki

Dai Quance

Ania Chornousenko

Kamila Strzelecka

2

TABLE OF CONTENTS

Executive Summary ………………………………………………………………… Page 1

Marketing ………………………………………………………..………. Page 2

Human Resources ………………………………………………………………... Page 8

Operations ………………………………………………………………... Page 15

Financial Plan ……………………………………………………………….... Page 23

3

EX EC U T I V E S U M M A RY

The SPIN farming model has been proven to produce highly innovative and successful businesses. Over

the past five years these micro businesses have begun popping up across Western Canada. We propose

a new concept to take a micro business to the next level providing the structure and capital needed to

grow out of its infancy.

Currently most SPIN farming organizations can only support three to four people at any given time. This

is a function of one of the tenants of the SPIN farming model, zero capital costs. Our belief is that

current GrowIt! is currently under-serving it market and that its current business model will not allow it

to meet these needs. In order to tackle this issue we reaching out to potential creditors that would be

willing to provide capital through debt to a successful organization in order to take its next step.

GrowIt! is asking for a $240,000 loan to fund capital renovations in the form of a small office and a larger

cooler, a flat bed truck to aid transportation, and funds to cover the expansion of 6 new half acres to

meet perceived demand. Proposed loan terms are 20% interest paid annually, principle due on the 4 th

anniversary of lending date.

Increased production combined with new space will allow us to implement a new twist on current

accepted operational expectations. The implementation of a cooler and company specific

transportation allows the organization to handle much larger volumes of produce than the typical SPIN

farming organization for very small capital investments. The move to get bigger but retain much of the

scaling advantages is with the intent to fill the local markets variable needs preventing future

competition and capturing a much higher percentage of available profits in the market place. Based off

our expectations we perceive room for only one large scale SPIN farming operation in a given market,

and GrowIt! intends to fill that role.

4

M A R K E T I N G

COMPETITION

Identifying and understanding the competition is part of the marketing plan. Analysis of the competition

is necessary for the business to be successful. Competition exists in North America, particularly in some

provinces in Canada, British Columbia, Quebec and Saskatchewan.

Local Competition: The business will operate in Saskatoon where there are no major competitors in the

market. There are small sole proprietorships that are usually operated by two spouses who employ

similar concept to ours. However, they are operating on a very small scale and do not have the desire to

increase their market share. The business needs to closely monitor the number of the new start-ups as

no specialization and low start-up costs create small barriers to entry. To mitigate threats of the new

start-ups, the business sets contracts with the restaurants and signs up other clients for the annual

share of vegetables under the CSA Program – Community Supported Agriculture Program. This helps

promote higher switching costs, leading to solidifying the business’s portion of the market share

The competition can also come from outside of Saskatoon. For example, the Green Ranch that is located

in Osage, Saskatchewan employs the CSA program. The Green Ranch has been in the market for few

years and was able to establish a solid client base on the south of Saskatchewan and in Regina. They do

not operate in Saskatoon; however, there is always a threat that the Green Ranch will tap into the

Saskatoon market. The business will have to continue to closely monitor this possibility and ensure it

does not become a bigger threat in the near future.

External Competition: External competition includes competitors outside of Saskatchewan. The biggest

similar spin farming operations in Canada current reside in Vancouver, My Urban Farm and The City

Farm Boy. Similar operations also reside in Calgary such as the Leaf and Lyre Urban Farm. There is

always a remote possibility that these competitors will bring their expertise to Saskatoon.

Substitute product creates another form of the competition for the business. The clients can grow

vegetables themselves or purchase premium imported produce. The restaurants can decide to purchase

supply of vegetables from other suppliers. Therefore, it is important for the business to pay attention to

the prices as it will affect the demand.

5

CUSTOMER AND THE TARGET MARKET

Customers are the driving force of the revenues and hence the success of the business. Customers’

demand is essential for the success of the business. Customers have been identified in three different

segments, in order of importance: upscale restaurants, plot shares, and farmers market consumers.

Based on current sales to our existing customers, we know that upscale restaurants will pay a premium

for our best produce, and as such will be offered first pick of what is available. Currently, Grow It! is

operating at capacity with sales to the following Saskatoon restaurants: Delta Bessborough, Sous Chef,

St. Tropez Bistro, & Tusq. Since we are operating at capacity, we have not been able to take on

additional offers from interested businesses but their interest gives us a good indicator of demand from

potential businesses. Examples of these potential businesses include Calories, The Ivy, Truffles Bistro,

Carver’s Steakhouse, Il Secondo, the Station Place, the Victorian, and others. The business will rely on its

full time marketing manager to contacting restaurant and hotel managers and setting up delivery

agreements with them in the beginning of the first year. The business will meet the needs of the

restaurants and hotels by delivering them a fixed amount of the fresh produce yield that totals to 11,000

lbs per year. The restaurants and hotels will obtain a supply of locally grown, fresh vegetables

throughout the production period. This business arrangement will also help to support the growth of the

local economy and will grow demand for local products and services.

Plot shares are the second most important segment as they are the only opportunity for the business to

assure itself of cash flows at the beginning of the growing season. Plot share holders will receive the

right to approximately 100 pounds of a variety of produce throughout the growing season from mid-

June until mid-September. One share will entitle the share owner to 10 pickups of 10lbs of mixed

produce. They will be able to pick-up their arranged and pre-named basket from the warehouse.

The farmer’s market is the business’s last opportunity to sell our produce at a premium price.

Consumers who attend the farmer’s market are the customers who value locally grown, premium

vegetables. Surplus produce will be sold at the farmer’s market customers throughout the growing

season on Wednesdays and Saturdays providing an easy way to promote the business and sell a few

pounds of produce. The remaining vegetables will be sold during the weekly yard sales that will be held

at the warehouse, located only two blocks from the farmer’s market. These sales will be unpredictable

as they are dependent on variations in production. To ensure that Grow It! has made a production

6

based on average production and not included Farmer’s Market revenues coming from positive

variations in production.

Total Projected Revenues for the First Year (Generated from the Target Markets):

PRODUCT AND SERVICE FEATURES

The business provides both the products and services to all three market segments.

The general advantages provided to all the customers:

Food Security: the business is not using any chemical sprays on the vegetables, so clients can

have a peace of mind.

Nutrition: fresh vegetables from the garden that have not been travelling in the truck for many

kilometers have a high nutrition value

Premium Flavour

Specific benefits provided to the owners of the yards:

Planting and growing of vegetables

Weekly maintenance of the planters

10 pick-ups of a 10-pound basket of fresh, mixed produce

Design of the planters as indicated by the owners

The target market segments are also supporting the local economy by purchasing the produce grown by

the business. They will support the local farms as it is difficult for the small farmers to compete with the

7

supermarkets. Finally, they will help to reduce product ‘food miles’, such as greenhouse gas emissions;

therefore, helping to maintain the environment.

SALES OBJECTIVES

The growth in the restaurant and hotel segment is not projected to increase beyond the first year.

Instead the business hopes to hold onto a significant portion of the upscale restaurants that purchase

from local producers. With regards to the sale of Plot Shares we hope to find an additional 5-10% of

current shareholders for the first five years. In the following years, we anticipate this growth dropping to

2-5% on an annual basis. Inflation of 2.5% was incorporated in the cash flow projections

PRICING POLICY

The business will be able to maintain the average price of $6.25 per pound. The prices in the table are

obtained from the marketing researching of similar farming businesses in British Columbia, Alberta, and

Quebec. These prices are in line with what competitors in other provinces charge for the produce.

Sales forecast for 3-year production cycle:

SELLING AND ADVERTISING

As previously noted, the Marketing manager will be responsible all the selling and advertising. The

objectives of the advertising are to obtain an increased awareness of the business from the community

and create demand. Therefore, it is important for the business that, within the next five years, 2% of the

total population of Saskatoon (4,600 people) sign up to have their yards converted for farming. During

8

the first year the marketing manager will go door-to-door to advertise the program and sign up the

owners for the shares. Other means of advertising in the first and future years will be the word of

mouth, flyers distributed at the farmer’s market and advertising in Star Phoenix and in The Gardener for

the Prairies Magazine. The business will also develop a website that will start running in the first year.

Website will advertise the services we provide and will list the contact information for the business.

Marketing Budget:

SWOT ANALYSIS

It is necessary to perform a SWOT analysis in order to understand internal strengths and weaknesses

that business posses and analyze external opportunities and threats that are drawn from the

environment and industry in which the business operates.

The strengths the business currently posses are a great location of the warehouse that is located only

two blocks away from the farmer’s market. The business will employ young gardeners who are energetic

and skillful in planting, growing and maintaining our gardens. The gardeners are knowledgeable and can

meet client’s specification about the design of the vegetables grown. The produce is of a premium

quality and is grown only locally. The business also has a cooler in order to ensure taste and nutritional

value of the produce before it is being purchased.

Although the business has many strengths, there are still some weaknesses that exist in the business.

Due to the limited availability of delivery trucks, the owners will have to pick-up their baskets from the

warehouse. Another weakness is a limited space in the cooler that will not be able to store all the

produce in case the sales are slower than projected.

Based on the results obtained from the survey that was performed in Saskatoon in April and May, out of

3,000 people interviewed 70% of them stated that they would be interested in enrolling in a CSA

9

program and provide their yard for the planters. It shows that there is large demand for the services that

the business provides.

Estimated Potential Market:

With the opportunities there also come threats. One of the threats that the business has is the threat of

the new competitors tapping into the Saskatoon market. However, based on the research, there are not

a high possibility that new major competitor will appear in Saskatoon market in the short-term. We plan

to establish a solid client base in the next two to three years, which will help us to have an advantage

over any new competition. Another threat is a threat of the bad weather conditions that can decrease

the produce yield. This is an environment risk that cannot be controlled by the business and it will

always be an uncontrolled and unpredictable external threat for the business.

10

H U M A N R ES O U RC ES

HUMAN RESOURCE STRATEGY

Grow It!’s business is driven by the people who run it therefore having good employees is a key success

factor. Recruiting and retaining experienced, knowledgeable, and motivated individuals will allow the

business to flourish. The company will strive to maintain a healthy, supportive and enjoyable work

environment. The goal is to create a work atmosphere that encourages people to work as a team, to

take pride in what they do, to promote the business, and have fun.

Managers will be given a great deal of autonomy which should inspire and motivate them. The personal

investment they put into the company will give them a sense of ownership and attachment, thus aiding

in employee retention. Skilled individuals with past experience in agriculture, marketing, and

management will be recruited for these positions.

Labour employees will enjoy the benefits of a healthy work lifestyle, as well the growth opportunity to

return in a subsequent year, possibly advancing to a position as warehouse manager. Grow It! should

have no problems finding enthusiastic young students excited at the opportunity of a rewarding summer

job.

ORGANIZATIONAL STRUCTURE

Grow It! will be a private corporation which is owned and led by the by the same individual. The

owner/manager will manage the business, determine and monitor its strategy. Any excess profits

generated from the business will flow to that person.

To ensure that all employees have a good understand of their responsibilities and specific duties, there

will be specific job descriptions in place, which are outlined below. Further, to ensure accountability

Grow It! will establish clear lines of authority. Figure 4.1 illustrates the organization structure that will

exist within Grow It!.

11

Figure 4.1 Organization Structure

JOB DESCRIPTIONS

Owner / Manager

The owner will serve as the face of company, general manager and leader. As stated above, they will be

responsible for determining and evaluating the direction of the company. This will include responsibility

such as approving budgets, work plans and various initiatives / projects, and evaluating their outcomes.

They will also be responsible for hiring and firing management, and evaluating management’s

performance. As the owner of the organization, they will also have the ability to step in and act in any

other functions as they see fit.

Marketing Manger

They will be responsible for marketing both on the residential and commercial wholesale side of the

business.

Residential side: The marketing manager will be responsible for promotional campaigns to recruit

individuals interested in giving up their lawns to produce crops. As available land is unlikely to be a

constraint, this aspect of their job should not involve a great deal of efforts. They will process new

customer intakes, and deal with customer satisfaction including any customer complaints.

Owner/Manager

Marketing Manager

Operations Manager

Labourers Labourers Labourers Warehouse Manager

Labourer

Labourers Labourers Labourers

12

Commercial wholesale side: The most critical aspect of their job will be to serve as a selling agent on the

commercial wholesale side. Since finding a market for produce is the key restraint in the business, this

will be the most time consuming and challenging aspect of their job. They will be responsible for finding

and establishing new customers to sell crop yields to. They will need to negotiate and formulate selling

contracts/agreements which will include establishing terms of sales. Terms of sale will include setting a

price, quantity, type of product, time and location. As the marketing manager is responsible for

customer satisfaction on the commercial side, they will also need to ensure deliveries are made on time

and meet agreement terms. They will follow up on any complaints. Due to the importance of this

function, it’s likely that the owner will also step in here to facilitate in this area to ensure positive sales

and customer satisfaction.

Operations Manager

The operations manager should be someone with a great deal of experience and knowledge in

agriculture. As this person will be responsible for planning and determining which type of crops to

produce, what work needs to be done and how allocate staff to those tasks. Thus they will need to

prepare a production schedule before the start of the growing season. Throughout the growing season

they will monitor production and perform quality control.

Based on production plans they will determine coordinate and supervise labour employees. They will be

responsible for recruiting and hiring the labourers – which will take place before the growing season.

They will fire staff as necessary. They will also be responsible for selecting the best experienced labourer

from a prior year who will serve as the warehouse manager.

Warehouse Manager

This individual will operate and manage the warehouse. They will be responsible for overseeing the

processing, storing and distribution of crops. They will have one subordinate to aid in the warehouse

duties which they will direct and manage– this person will be performing the pickup and deliveries.

Labourers

Labourers will perform all the physical duties of building, planting, maintaining, and collecting crops.

Essentially they are the “gardeners”.

13

They will be hired prior to the start of the growing season to prepare the planters at residential sites.

Then they will seed, fertilizer and germinate the soil. Once growing begins they will be responsible for

maintaining the gardens, collecting, transporting and performing other functions as the operation’s

managers sees fit.

One sole labourer will be designated specifically to assist in the warehouse. This labourer will be hired

each season and will be paid a set salary of $15 an hour –which will be added to the fixed labour cost of

the warehouse.

All the “gardeners” will be paid a wage of $15 an hour. This is a competitive rate, which is similar to

what students could expect to get paid performing similar summer jobs in Saskatoon. Based on the

estimated hours required perform all the necessary tasks there is a need of 40 hrs of labour per each ½

acre of production. Figure 1.2 shows a breakdown of utilization of labour hours.

Breakdown of utilization of labour hours:

Figure 1.2 Variable Labour Requirements Breakdown

Variable Costs:

Figure 1.3 Variable Labour Requirements Breakdown

14

Since labour is variable based on the number of ½ acres of production these variable labour costs will

change year from year as the amount of growing space increases. Based on the expectation there will be

six ½ acres in production in the first year, 8 labourer employees will be required during the growing

season -which begins in mid-April and ends in mid-September. The number of employees will need to

increase as the acres of production increase, therefore with each additional ½ acre of land added Grow

It! will need to hire one new employee.

Projected Labour Costs:

Figure 1.3 Variable Labour Requirements Breakdown

Employee Requirements :

Figure 1.4 Five Year Projected Variable Labour Employee Requirements

Fixed Labour Costs

There are five employees who will be paid a fixed annual salary. The salaries are based on agriculture

industry standards, and are reflective of the job market in Saskatoon. Annual salary will increase by 2.5%

each year to allow for inflation and adjustments in living costs. During the first 5 years of operations,

there will not be any bonuses. However the owner will be entitled to any residual profits which are not

required for re-investment into the business.

Fixed Labour Costs:

15

Figure 1.5 Fixed Labour Costs

Employee Benefits:

Figure 1.6 Employee Benefits

EMPLOYEE BENEFITS

Employee contracts will be established for all salaried employees. They will contain a job description and

detailed compensation information, including any benefits. For example, the number of vacation days

will be outlined in the contract. Employees will be able to negotiate reasonable terms with the owner

16

when drafting the agreement. It is up to the owner to determine what is fair and equitable amongst all

the employees. For example the owner may decide that 2 weeks starting vacation for all managers is

fair, however they will need to ensure that this satisfies all the employees. This degree of available

flexibility will ensure that the company is able to obtain and retrain experienced, knowledgeable and

motivated individuals.

17

OP E R A T I O N S

LOCATION

Grow It!’s head office will be located at a freestanding office space on 201- Avenue C South. This

location was chosen due to the cheap price point as it’s located in a lower end of town, yet close enough

to the major restaurants and hotels we are catering to as well as the farmers market. The location is

illustrated below as “Point A”, “Point B” is the farmers market, and the 7 km radius houses the majority

of the Restaurants and Hotels that we will be delivering to.

A total of 1,100 square feet will be leased. The cost to lease the space has been determined to be

$12/square foot; however, this is a conservative estimate as a lease in the area for 1,100 square feet is

18

usually leased for about $10/square foot. The facility will house an 800 square foot cooler that will be

used to store the harvest. The remainder of the facility will consistent of a 200 square foot area that will

be used for washing, sorting, and packaging of the harvest. The remainder of the space will be used as

an office in for performance of administrative tasks and a customer pick up zone.

Site Plan: Figure 2.0 - Site Plan

PRODUCTION

For each ½ acre of production space, Grow It! will produce 4,086 lbs of fresh herbs and vegetables in the

first year, 6,552 lbs in the second year and 9,000lbs in the third year. The steady increase is due to the

fact that many plants reach full production capacity after 3 years of initial planting. More than 40

different varieties produce can be grown in this geographical area, for example: lettuce, tomatoes,

potatoes, peppers, cucumbers, peas, onions, carrots, mint, squash, and others.

19

PRODUCTION PROCESS SUMMARY

A Brief Explanation:

1.) Demand is determined once contracts are signed by the restaurants (our main focus group)

2.) Planters, fertilizer, seeds and seedlings, are purchased to satisfy the demand determined above

3.) The planters are delivered on a flat bed truck to the customer’s yards where the seeds are

planted, the soil fertilized, initiating the production process

4.) The planters are watered, harvested, and maintained (or re-planted when needed). This process

is repeated until the end of the growing season. Planting is staggered to ensure weekly

harvesting.

5.) Harvesting will take place every Wednesday of the growing season to ensure that the vegetables

are ready for the distribution process by Thursday. This will ensure that the restaurants and

hotels have a fresh supply of vegetables to satisfy the demand of their busy weekends. Once

harvested, the items are trucked back to the office where they are washed in a large sink, hand

20

sorted and packaged. During the washing, sorting and packaging cycle, quality control

procedures are in place in the facility to ensure appropriate hand sanitization and that defective

items are discarded.

6.) Items that are packaged are stored in a cooler and ready for the distribution process. They will

either be picked up the Share Owners or delivered to the restaurants and hotels.

7.) Any excess items will be marketed to the farmers market, or salvaged through any channel

available (Refer to the Marketing Plan for more information).

Packaging Process:

All items will be packaged in medium & large rubber bin containers depending on quantity per

customer. These containers are recyclable and reusable.

The share owners are asked to return the containers when they pick up a new share. When items are

delivered, the employee who is delivering the items will send out a rubber maid container full of

vegetables and pick up the empty one which would have been delivered the week before.

The packaging process is an environmentally conscience process and the underlying assumption is that

our customers will comply with this recycling process.

Staggering of Production:

Staggered cropping and plant placement are essential for getting the most out of our limited planter

space and ensuring that the yield is appropriate to suit demand, instead of all crops being harvested at

once. Staggering allows each crop to mature at separate times, maintaining a weekly harvest

accompanied by a constant cash flow. This will be performed by planting a different yield each week so

that in week 1, yield A will be planted, and during its growing, yield B will be planted allowing us to

harvest yield A during yield B’s growing cycle. The maturity rates of the plants and the staggering

process will be looked into by the operations manager who will ensure that the proper yields are

planted according to their maturity life cycle. An illustrative example more clearly explains this cycle:

21

In addition to ensuring that a harvesting process happens each week, we need to ensure that the same

plant is harvested on a constant basis in order to suit the demand of our customers. An illustrative

example is provided below:

Production Capacity:

22

As available land is unlikely to be a constraint, Grow It! is able to produce supply up to demand.

Therefore, we are not constraint by any capacity bottlenecks.

Costing: In order to sustain operations the following costs have been estimated. All costs were derived

through research (retail phone calls) and discussions with experts within in the city of Saskatoon.

Capital Expenditures:

Cooler $25,000

Trucks – Transportation $20,000

Other Fixed Costs (Sinks, Tables, Computers,

Software, Rubbermaid Tupperware’s, Minor

Renovations)

$15,000

Total Capital Costs: $60,000

23

Variable Expenditures: Variable expenditures have been determined by the underlying assumption that

a total of 18 yards of production will be harvested in the first year of operations:

Variable Expenditures per half acre

Land Costs $625 x 18 yards = $11,250

Seedlings $1500

Small Tools $200

Transport Fuel $1,000

Yearly Costs $14,450

24

Fixed Costs:

Fixed Costs

Cooler Utilities $5,000

Other Utilities (including phone) $3,600

Rent ($12/SQ FOOT) $13,200

Marketing Salary Manager $50,000

Operations Salary Manager $50,000

Warehouse Manager $18,000

Helper Monkey $14,400

Owner Salary (HR) $30,000

Marketing Materials $15,000

Trucks $8,000 (THINK THESE HIGHLIGHTED ARE

TECHNICALLY VAR COSTS, SINCE THEY CAN BE

DISCONTINUED)

Total Fixed Costs $213,200

QUALITY CONTROL

Grow It! will ensure high quality and safe products through the implantation of a sanitization and quality

control process.

25

The sanitization process will ensure that all employees wash their hands before and after washing,

sorting, and packaging the vegetables. Signs will be posted in the washrooms, coffee rooms and around

the facility to constantly remind the employees of the importance of hand washing.

During the washing process, any items that are deemed to be defective will be discarded prior to

packaging the products.

26

F I N A N C I A L P L A N

RATES AND ASSUMPTIONS

An urban farming operation is limited by a number of key variables. Counter-intuitively the biggest

limitation on the operation is in the ability to sell produce developed. For this reason, the maximum size

of the business depends on the number of available customers.

As discussed in the marketing plan, there are three different sets of anticipated customers, upscale

restaurants, plot share holders, and farmer’s market. Demand upscale restaurants demand for produce

is estimated based on enquiry to be approximately 40lbs per week per restaurant for the 16 growing

weeks. Based off the number of upscale restaurants in Saskatoon (35 by our count), we estimated that

about 60% of them would be willing to purchase our produce at a premium price, this leaves us with

about 17-20 restaurant customers producing a demand of about 11,000lbs of produce. Any growth

beyond the first year might include another 1 or 2 restaurants deciding to pick up our option for fresh

produce. This will be offset by 1 or 2 restaurants deciding to do without our service annually. As such

there is no adjustment to our expected demand on a year to year basis for produce from restaurants.

We used some very basic assumptions to plan out the number of crop shares to sell. Based off

Saskatoon’s estimated population of 230,000 people, we estimated that at most 2% of the population

given the opportunity to purchase a crop share would do so. This leaves a maximum potential market of

4,600 crop shares, each of whom would consume about 100lbs of produce over the growing season. For

the first year we’ve assumed that the marketer would be capable of signing up at least 5% of these

people. With increased exposure the following 5 years we don’t anticipate having any problems

expanding the number of crop shares by 5-10%.

These are our base drivers for produce on an annual basis. We don’t anticipate having a significant

amount of produce to sell at the farmer’s market until the garden’s become mature and reach their full

potential (3rd year). Additionally, we haven’t budgeted at all for any cost recovery activities such as

salvage values (selling direct, to local grocers at heavily discounted prices). These activities will be very

dependent on the success of the businesses crops and can’t be counted on as a reliable source of

income.

27

Some of the other estimates we’ve used in our calculations need to be disclosed as follows. We have

determined from the Bank of Canada’s published materials that inflation should be 2% on an annual

basis and prime interest rates are estimated to be 3% with no expectation for that to shrink in the near

term. Risk free rate based off Canadian T-Bills 1.21 for one year. We also anticipate that the business

will be incorporated in the near term, once annual profits are assured and will receive a 15.5% small

business rate.

The only other assumption for growth or shrinkage relates to the productivity of the gardens. First year

of planting will only result in 43% of eventual max production, second year results will increase to 70%

of maximum production, and maximum production will be 12,600 pounds per half acre of planted space.

These numbers were developed through our researching of similar business models in other urban

spaces.

CAPITAL REQUIREMENTS

Our working capital requirements will be kept to a bare minimum and need to cover a small inputs

charge and hopefully our capital requirements as well. We also anticipate that after the first year of

operations the organization will be able to provide its own working capital requirements, and that

external financing will be reserved only for other possible expansions (to other urban centres). Our

working capital requirements are based off the understanding that we will need approximately $50,000

at the start of any given year to purchase new tools, wages, inputs, and other things.

For the business to operate at peak efficiency it will also need a space, with a cooler, as well as a flat bed

truck. We anticipate that the cooler space we wish for will be easiest to obtain by renovating a rented

space. We’ve conservatively estimated that $25,000 will be sufficient to put in a cooler of sufficient size.

We also anticipate that we will need another $15,000 to purchase the related office equipment required

(computers, desks, chairs, office supplies etc.). Finally we anticipate that $20,000 will be sufficient to

purchase a flat bed truck to serve the organizations transportation needs.

Given our plans to take the urban farming business plan to the next level, this year will be critical for the

business. We’ve determined based off our cash flow projections for the next couple years that we will

require a one-time loan of approximately $240,000 repayable on the fourth anniversary of the lending

date. Interest of 20% will be payable on an annual basis.

28

PRODUCTION RESULTS AND INTERPRETATION

The management decision making information required by the business is pretty minimal as there is not

a lot of information required. However, we anticipate that the owner manager will need to keep track

of the production budget and expectations, since the amount of produce produced has to be a minimum

of the amounts already sold and expected restaurant sales. Furthermore, it will be really important to

understand which types of produce are being grown, are expected to be arrive at the facility among

other things. The business will also need to monitor actively all cash receipts and disbursements. Cash

is the lifeblood of small businesses and needs to be monitored at all times to ensure there is enough

coming in to pay the bills.