Refresh Company will be based in Singapore and they will sell energy booster and health drink. They are going to introduce their product in the market during FIFA World Cup 2018, which is going to be held in Russia. This business will be owned by the two partners Andy and Sam who have invested $20,000 and $15,000 respectively.
This company will be offering one of the most energetic health drinks for the sportsperson. The key mission of the company is that it will provide the sportsperson with the best experience during their match with a reviving bottle of cool drink. The company wants to top the list among all other sellers of health drink and energy boosters.
The major objectives of the company for the first three years of operation will be:
The company will adopt certain start- up strategies in order to experience success in the competitive market:
|
Summary Statement |
|
|
Sources of Capital |
|
|
Owners’ and Other Investments |
$ 35,000 |
|
Bank Loans |
150,000 |
|
Other Loans |
– |
|
Total Source of Funds |
$ 185,000 |
|
Startup Expenses |
|
|
Bldgs / Real Estate |
$ 60,000 |
|
Leasehold Improvements |
5,000 |
|
Capital Equipment |
80,000 |
|
Location / Admin Expenses |
20,000 |
|
Opening Inventory |
– |
|
Advertising / Promo Expenses |
15,000 |
|
Other Expenses |
– |
|
Total Startup Expenses |
$ 180,000 |
The expected gross margin per product in one year is expected to be 25% each for energy booster and health drink. It is expected that the annual cost of goods sold per product will be $25000 for energy booster and $21000 for health drink. Moreover, it is expected that 2% factor is required on annual maintenance, overhaul and repair at 30% annual tax rate. The prices will be set according to the competitive manner so that the product can gain a competitive advantage over the existing rival companies in the market. The pricing will be arranged in such a way that the company will be able to reach the break- even point at the end of 2.75 years. In addition to the investment of the two partners, Deutsche Bank will provide a loan of $150,000.
The company will try to attract a wide range of customers by offering a healthy bottle of energy booster. The sportsperson will be relaxed and comfortable by gulping this energy drink while playing the tiresome game. The product will not only target the footballers but all the sportsperson of any game. In the initial period, the products will be targeted only towards the local customers but later on, it is expecting to target the customers worldwide.
Refresh health drink and energy booster will help in attracting the sportsperson irrespective of their gender and age. As the pricing is done in a reasonable way therefore, everyone will be able to afford this product of Andy and Sam. The company should try to grab the international market after becoming successful in the local market in order to gain profit.
The company will keep their strategies simple in order to appeal to a wider glocal (global + local) population. The natural content of the health drink and the energy booster will be healthy and help in regaining their lost energy. The USP of the product is their natural healthy ingredient, which will be most important factor for the sportsperson.
The company will provide the best quality drink at a very reasonable price, which will provide opportunity for easy selling in relation to the rival companies. In addition to that, the product will be available in all the local stores, which will make easy availability for the local players. The competitive edge of the Refresh Company is that it will target the local as well as the established players with its health drink and energy booster.
The primary competitors will be the local companies who are selling health drinks in the market. Extra Joss and Hemaviton are the popular local health drinks that will give tough competition to the company, Refresh energy booster and health drink. Singapore area will be the major competitor as it contains other established brands of similar products. The competitors will change with the expansion of the company at the international level. Monster, Rock star and NOS are the top brands in the market of health drinks. Therefore, they will become the immediate competitors of Refresh once they step into the international market. These are the top selling health and energy drink companies, which have established their business from a long time. Refresh Company will have to struggle against these giants in order to make its position in the global market. The rival companies have built up their reputation and image so Refresh will have to win over the competitive advantage to gain profit in the business.
The company will be implementing different marketing styles in order to provide a unique edge to their new business. They will modify their marketing plan so that customer awareness can be increased. The owners have decided to capitalize on their in- store marketing and word- of- mouth policy because it is cost- effective and efficient in nature. The company will conduct attractive events and invite the VIPs for promoting the products. FIFA World Cup 2018 will be the foundation of their promotion. The products will be showcased in the press conferences of the matches and a replica of the product will be kept as display in all the small and big sports events.
The company will display their product in the form of banners and digital ad in all the prominent corners of the town. They will also use the strategy of covert advertising to display the product of health drink and energy booster through other media. The local sports club will also be used in the promotional activities of the product. The local players will be sponsored with the energy booster and health drink products in order to spread the name of the new company among the entire population of Singapore. It will help in increasing the awareness among customers through verbal communication. The company will acclaim international recognition starting from the local sports club and expanding to other sports club all over the world.
The key sales strategy will be to stick to the position and establish the product effectively in front of the local customers. The focus will be given on the increasing revenue of the company by attracting the customers towards Refresh, which will keep the rival companies behind. Being a start- up company, it will help Refresh to satisfy the customers by offering them excellent quality products at a very reasonable price.
The average sale per unit of energy booster will be $10 and for health drink, it will be $12. Thus, it is expected to come to an average of $100,000 annual revenue per product. It will lead to annual revenue of $184,000 for one year. The expected profit and loss assumption will focus on the increase of annual cumulative price at the rate of 2% in second year and 4% at the third year. Again, the annual cumulative inflation is expected to increase at the rate of 2% in the 2nd year and 4% in the third year.
Moreover, the gross margin is expected to be $138,000 in the 1st year, $140,760 in the 2nd year and $146,390 in the 3rd year. Thus, the total revenue expected to be at the same amount as there will not be any other revenue source as per the sales forecast. The total operating expense is expected to become $41,500 in the 1st year, $42,330 in the 2nd year and $43,472 in the third year. Additionally, the operating income is expected to be $96,500 in the 1st year, $98,430 in the second year and $102,918 in the third year. Considering all these amounts for the three year, it is expected that the cumulative income for the 1st year will be $63,772, $129,670 in the second year and $199,516 in the third year.
The Refresh health drink and energy booster company under the ownership of Andy and Sam will advertise in a website by attaching the business card. It will be helpful in spreading the portfolio of the start- up company all over the world. this is the advantage of using the online media where the global population gets aware about a new product just by a single click of the mouse. The business card of the company will be kept simple and clear and the design will be effective in explaining the relevant information to the potential customers. The efficiency of the business card is that it has the ability to reach a larger population in the global market without much investment. The website of the company will contain the relevant information pertaining to the product along with the ingredients and the different price range for different sizes. The company will also print newsletters on a monthly basis to attract the additional probable customers apart from the target customers. The owners have planned to display the product in the form of pop- up ads in the pages of social media. This is because new media is the most effective contemporary form of increasing awareness among the public.
Refresh health drink and energy booster will manage their operations effectively and take the charge of outdoor promotion of the products. The financial and marketing department of the company will be taken care of by the respective personnel who have good knowledge about finance and marketing. The managerial activities will be done by both Andy and Sam as they are expert in the specific subject. Both of them are experienced in the field of management for 5 years and that is why it will be easy for them to handle the management activities. An effective combination of marketing, finance and management by the experts will help Refresh to establish their business in the local as well as international market.
The personnel plan will be a sizeable amount within the company and it will be conducted as per the revenue that is project ted for the future of the company. The employees of the company will work for 8 hours daily and 56 hours every week to provide a prestif]gous position to the company.
Expected Profit and Loss statement
|
Year 1 |
Year 2 |
Year 3 |
||
|
Revenue |
||||
|
Gross revenue |
$184,000 |
$187,680 |
$195,187 |
|
|
Cost of goods sold |
$46,000 |
$46,920 |
$48,797 |
|
|
Gross margin |
$138,000 |
$140,760 |
$146,390 |
|
|
Other revenue [source] |
$0 |
$0 |
$0 |
|
|
Interest income |
$0 |
$0 |
$0 |
|
|
Total revenue |
$138,000 |
$140,760 |
$146,390 |
|
|
Operating expenses |
||||
|
Sales and marketing |
$15,000 |
$15,300 |
$15,912 |
|
|
Payroll and payroll taxes |
$0 |
$0 |
$0 |
|
|
Depreciation |
$25,300 |
$25,806 |
$26,312 |
|
|
Maintenance, repair, and overhaul |
$1,200 |
$1,224 |
$1,248 |
|
|
Total operating expenses |
$41,500 |
$42,330 |
$43,472 |
|
|
Operating income |
$96,500 |
$98,430 |
$102,918 |
|
|
Interest expense on long-term debt |
$5,398 |
$4,290 |
$3,138 |
|
|
Operating income before other items |
$91,102 |
$94,140 |
$99,781 |
|
|
Loss (gain) on sale of assets |
$0 |
$0 |
$0 |
|
|
Other unusual expenses (income) |
$0 |
$0 |
$0 |
|
|
Earnings before taxes |
$91,102 |
$94,140 |
$99,781 |
|
|
Taxes on income |
$27,331 |
$28,242 |
$29,934 |
|
|
Net income (loss) |
$63,772 |
$65,898 |
$69,846 |
|
|
Cumulative income |
$63,772 |
$129,670 |
$199,516 |
|
Assets |
Initial balance |
Year 1 |
Year 2 |
Year 3 |
|
Cash and short-term investments |
$5,000 |
$38,053 |
$70,687 |
$103,795 |
|
Accounts receivable |
$0 |
$0 |
$0 |
$0 |
|
Total inventory |
$49,680.00 |
$50,673.60 |
$52,700.54 |
$55,862.58 |
|
Prepaid expenses |
0 |
0 |
0 |
0 |
|
Deferred income tax |
0 |
0 |
0 |
0 |
|
Other current assets |
0 |
0 |
0 |
0 |
|
Total current assets |
$54,680 |
$88,727 |
$123,387 |
$159,657 |
|
Buildings |
$41,500 |
$41,500 |
$41,500 |
$41,500 |
|
Land |
0 |
0 |
0 |
0 |
|
Capital improvements |
$ 5,000 |
5,000 |
5,000 |
5,000 |
|
Machinery and equipment |
$ 80,000 |
80,000 |
80,000 |
80,000 |
|
Less: Accumulated depreciation expense |
0 |
25,300 |
51,106 |
77,418 |
|
Net property/equipment |
$126,500 |
$101,200 |
$75,394 |
$49,082 |
|
Goodwill |
$3,820 |
$0 |
$0 |
$0 |
|
Deferred income tax |
0 |
0 |
0 |
0 |
|
Long-term investments |
0 |
0 |
0 |
0 |
|
Deposits |
0 |
0 |
0 |
0 |
|
Other long-term assets |
0 |
0 |
0 |
0 |
|
Total assets |
$185,000 |
$189,927 |
$198,781 |
$208,739 |
|
Liabilities |
Initial balance |
Year 1 |
Year 2 |
Year 3 |
|
Accounts payable |
$0 |
$0 |
$0 |
|
|
Accrued expenses |
0 |
0 |
0 |
0 |
|
Notes payable/short-term debt |
0 |
0 |
0 |
0 |
|
Capital leases |
0 |
0 |
0 |
0 |
|
Other current liabilities |
32,621 |
70,277 |
110,189 |
|
|
Total current liabilities |
$0 |
$32,621 |
$70,277 |
$110,189 |
|
Long-term debt from loan payment calculator |
150,000 |
$122,306 |
$93,504 |
$63,550 |
|
Other long-term debt |
$0 |
$0 |
$0 |
$0 |
|
Total debt |
$150,000 |
$154,927 |
$163,781 |
$173,739 |
|
Other liabilities |
0 |
0 |
0 |
0 |
|
Total liabilities |
$150,000 |
$154,927 |
$163,781 |
$173,739 |
|
Initial balance |
Year 1 |
Year 2 |
Year 3 |
|
|
Owner’s equity (common) |
$ 35,000 |
$35,000 |
$35,000 |
$35,000 |
|
Paid-in capital |
0 |
0 |
0 |
0 |
|
Preferred equity |
0 |
0 |
0 |
0 |
|
Retained earnings |
0 |
0 |
0 |
0 |
|
Total equity |
$35,000 |
$35,000 |
$35,000 |
$35,000 |
|
Total liabilities and equity |
$185,000 |
$189,927 |
$198,781 |
$208,739 |
|
Year 1 |
Year 2 |
Year 3 |
|
|
Operating activities |
|||
|
Net income |
$63,772 |
$65,898 |
$69,846 |
|
Depreciation |
$25,300 |
$25,806 |
$26,312 |
|
Accounts receivable |
$0 |
$0 |
$0 |
|
Inventories |
($994) |
($2,027) |
($3,162) |
|
Accounts payable |
$0 |
$0 |
$0 |
|
Amortization |
0 |
0 |
$0 |
|
Other liabilities |
0 |
0 |
$0 |
|
Other operating cash flow items |
0 |
0 |
$0 |
|
Total operating activities |
$88,078 |
$89,677 |
$92,996 |
|
Investing activities |
|||
|
Capital expenditures |
$0 |
$0 |
$0 |
|
Acquisition of business |
0 |
0 |
0 |
|
Sale of fixed assets |
($27,331) |
($28,242) |
($29,934) |
|
Other investing cash flow items |
0 |
0 |
0 |
|
Total investing activities |
($27,331) |
($28,242) |
($29,934) |
|
Financing activities |
|||
|
Long-term debt/financing |
($27,694) |
($28,802) |
($29,954) |
|
Preferred stock |
0 |
0 |
0 |
|
Total cash dividends paid |
0 |
0 |
0 |
|
Common stock |
0 |
0 |
0 |
|
Other financing cash flow items |
0 |
0 |
0 |
|
Total financing activities |
($27,694) |
($28,802) |
($29,954) |
|
Cumulative cash flow |
$33,053 |
$32,633 |
$33,108 |
|
Beginning cash balance |
$5,000 |
$38,053 |
$70,687 |
|
Ending cash balance |
$38,053 |
$70,687 |
$103,795 |
|
Year 1 |
Year 2 |
Year 3 |
|||
|
Net income (loss) |
-$181,744.75 |
$63,771.67 |
$65,898.10 |
$69,846.43 |
|
|
Cumulative income |
-$117,973.08 |
-$52,074.98 |
$17,771.46 |
||
|
Positive Cash Flow? |
FALSE |
FALSE |
TRUE |
||
|
Undiscounted breakeven year |
3 |
years |
|||
|
Actual break even period |
2.75 |
years |
The break- even sales for the Refresh company will be in the third year and specifically after 2 years and 7 months
References
Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.
Baker, W. E., & Sinkula, J. M. (2015). Maintaining Competitive Advantage Through Organizational Unlearning. In Proceedings of the 1999 Academy of Marketing Science (AMS) Annual Conference (pp. 206-209). Springer, Cham.
Chambers, I., & Humble, J. (2017). Plan for the planet: a business plan for a sustainable world. Routledge.
da Silva, E. C., & Las Casas, A. L. (2017). Sports Marketing Plan: An Alternative Framework for Sports Club. International Journal of Marketing Studies, 9(4), 15.
Finch, B. (2016). How to write a business plan. Kogan Page Publishers.
Lu, H. (2016). Inspiration of Successful Experience of US and European Enterprises Leveraging Sports Marketing on “Going Global” of Chinese Enterprises. Journal of Sports Science, 4, 250-255.
Shank, M. D., & Lyberger, M. R. (2014). Sports marketing: A strategic perspective. Routledge.
Sirgy, M. J. (2015). Self-image/product-image congruity and advertising strategy. In Proceedings of the 1982 Academy of Marketing Science (AMS) annual conference (pp. 129-133). Springer, Cham.
Van Den Berg, L., & Braun, E. (2017). Sports and city marketing in European cities. Routledge.
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