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CONFIDENTIAL

[Dave and Jacky Delicious Incorporation]

Business Plan

Prepared May 19th, 2020

Table of Contents

Executive Summary 1

Opportunity 1

Expectations 1

Opportunity 3

Problem & Solution 3

Target Market 3

Competition 3

Execution 4

Marketing & Sales 4

Operations 4

Milestones And Metrics 5

Company 6

Overview 6

Team 6

Financial Plan 7

Forecast 7

Financing 9

Statements 10

Appendix 13

Profit and Loss Statement 13

Balance Sheet 15

Cash Flow Statement 17

Target Market

McDaniel, Lamb, and Hair (2013)define a target market as a group of potential customers that an organization wants to sell its goods and services. The group consists of specific customers to who a firm directs its marketing strategies and efforts. Consumers who are in the same target market share the same features such as buying power, incomes, geography, and demography. Successful selling is partially associated with knowing to whom an organization will appeal and ultimately buy its goods or services. This is the reason businesses spend a significant amount of money and time to determine and monitor their target markets.

Dave and Jacky Delicious Incorporation will focus on corporate and working class individuals who appreciate high quality hamburger. The working class individuals will range from administrative personnel who will constitute a big percentage of the market, to education personnel who appreciate good quality burgers made from grass fed beef. The corporate segment will consist of individuals who want to replenish lost energy during a hard day’s work. The company’s most significant group of potential clients is those in urban areas who normally prefer healthy tasty burgers made of natural beef. These are potential clients who want convenience and availability.

The target customers do not want to waste their time sitting in restaurants waiting for burgers, but appreciate quality products at reasonable price.Dave and Jacky Delicious Incorporation will also appeal to local corporations looking for catering services. This target market exists in Cambridge city, Massachusetts. Data from the United States Census Bureau indicates that 69.6 percent of individuals aged 16 years and above are in civilian labor force (U.S. Census Bureau, 2020).The biggest industries in Cambridge City, Massachusetts are educational services, professional, scientific, and technical services, healthcare and social assistance, mining, quarrying, and oil and gas extractions. Others include utilities, and finance and insurance (Data USA, 2020).

Figure 1: Proportion of Dave and Jacky Delicious Target Market

The company’s target marketing strategy will be focused on ensuring that the right products are made available to the right target customers. To do so, the entity will ensure that its product prices take into account customer’s budgets, and that they appreciate the product and aware that it exists. The marketing will focus on quality in every aspect, every promotion, and publication. Dave and Jacky Delicious calls for development of good relationships with suppliers, retailers, as well as distributors to support its business. Most importantly, the company will make regular visits to these areas in order to ensure that it is meeting their expectations.

Execution

It will take approximately 7 months to execute this business plan. During this period, Jacky and Dave will play significant roles including market research, preparation of business plan, application of legal documents and insurance, identification of suitable business location, and renovation of facilities for business success. Other activities include buying of equipment, materials, and inventory, application of loan, and promotional activities.

Strategy and Implementation Summary

Dave and Jacky Delicious’ strategy is anchored on providing a strong customer value proposition in the market. The company seeks to offer the Cambridge City area with new choices in hamburgers options. The company is building an effective marketing structure that will be used to eventually reach a wide target market in the same hamburger offering. It focuses on meeting the needs of middle class residents as well as local companies in the area. In addition, the company intends to use different types of marketing communications to reach its target market as well as raise their awareness of Dave and Jacky Delicious Company, and its hamburger service offerings. Moreover, the company will use bootstrap marketing strategy to promote its brand, products, and services. Email marketing, use of chatbots, use of social media, use of samples and coupons, and going to the grassroots can be helpful throughout the Cambridge City area. Adequate funding is already projected to cover for promotion expenses.

Strategy Pyramids

Dave and Jacky Delicious Company’s strategy is to show the market that it produces excellent hamburger and convenient accessibility. In order to execute this strategy, the company will be located in an easily accessible area with high human traffic. Moreover, the company will also deliver its products through various food catering service outlets in the region. The company is not offering cheap products but uses competitive pricing strategy and high quality products for competitive advantage. Through sidewalk advertising signs and coupons, the company will involve the community in understanding that the company will donate part of its proceeds through annual contest games.

Value Propositions

Dave and Jacky Delicious Company’s facility offers value proposition in the sense that customers do not have to look for packing space, queue to order for products, pay for premium price, or look for a place to sit. The company’s concept is that a customer places an order and drives away with high quality products at an affordable price, without wasting time in the process.

Competitive Edge

Dave and Jacky Delicious Company competitive edge include: location, reasonable pricing, and high quality products. The company is located in a commercial hub in Cambridge City, which is the busiest location in the town. The nearest hamburger restaurant is nearly a 25 minute drive. There are at least 500 corporations in the neighborhood. Regarding product quality, the company produces high quality products in a take-out environment that saves customers much time. In particular, the company will produce its hamburgers from locally produced natural Angus beef. Concerning competitive pricing, Dave and Jacky’s policy is to buy the latest state of the art equipment for production purposes that reduces cost of production.

Marketing Strategy

Dave and Jacky Delicious Company’s marketing strategy centers on developing an identity that defines the organization’s target market in terms that benefit its retail as well as corporate customers. Since the company’s target market comprises middle class residents in Cambridge City and local corporations located in the area, their vital needs are quality, price, service, and delivery. One of the main points of Dave and Jacky Delicious marketing strategy is to focus on a target market that does not only understand these needs, but is also willing to pay a reasonable price for their fulfillment.

Factors such as industry and market trends of similar businesses in the United States show that high demand for hamburger will continue in the foreseeable future. Specifically, quick service restaurants have reported better performances in the past 5 years between 2015 and 2020 because of low prices plus convenience they offer (IBIS World, 2020). The owner’s experiences in running similar businesses indicate that advertising expenses can overwhelm start up businesses. Thus, the company will adopt a bootstrap marketing strategy for simple, creative, as well as cost effective marketing. Cost effective utilization of marketing funds is a major source for the company’s success. Pistol, Epure, and Bucea-Manea-Ţoniş (2016) indicate that bootstrap marketing strategy is inexpensive and a business can use the strategy to target a wide market, engage customers, enhance customer experience, increase profitability, and enhance growth.

Promotion and Distribution Strategies

Dave and Jacky Delicious’ long term promotion goal is to have enough visibility in the market in order to generate interest from potential investors and leverage its product line outside Cambridge City. It will use various marketing tools such as email marketing, use of chatbots, use of social media, use of samples and coupons, and going to the grassroots to reach its potential customers. Regarding distribution strategy, Dave and Jacky Delicious is a quick service restaurant that will be located in a high traffic area in the city. The company will also distribute its products via fast food chains in the area.

Marketing Programs

To reach out its potential customers, the firm will use a combination of techniques such as social media marketing, direct mail marketing, distinctive building, and distinctive logo. The company will use various social media platforms such as Facebook, Twitter, and Instagram to promote its offerings, share significant information, and to interact with its customers. Patrutiu-Baltes (2016) indicates that e-mail marketing is less expensive means to promote products, boosting brands, as well as staying in touch with clients. Dave and Jacky Delicious will sign up for an email marketing service to collect email addresses, send targeted messages, and track customer responses. Regarding distinctive logos, the business will have a sideway sign with its logo that promotes its products and services. The company will also use a dinner style building for its take-out facility and distributors. The distinctive building will be easy to recognize.

Pricing Strategy

Dave and Jacky Delicious’ target customers are particularly sensitive to service delivery and value. Thus, the company will ensure that its customers perceive its prices and services as of good value. It will offer high quality products at reasonable prices and not the lowest price in the region. The company is aware of the fact that some businesses use pricing strategies for competitive advantage. Therefore, it will have a competitive pricing strategy but not rely on price to overshadow other key advantages of doing business with the organization such as quality, on time delivery, and convenience. The company also recognizes the impact of price flexibility for business success. In this regard, it will offer discounts to reduce prices during slow-sale periods in order to reduce idle capacity and increase capacity usage.

Sales Strategy

Since Dave and Jacky Delicious is a start up, it is vital to prove its worth to local customers for it to earn respect as well as business. Most importantly, owners must enhance the business brand image apart from its products and services. The business must also enhance its delivery and service abilities. Dave and Jacky Delicious’ sales strategy is anchored on the belief that the company will experience regular flow of customers because of its convenient location. The initiative is to convert first timers into long term customers through formidable customer relationships. The long term customers will recommend the business products to others. It will cost the company less money in order to attract and convert first time customers into loyal ones. Thus, the company’s sales activities will focus on ensuring that existing customers are happy. Customer centric service will be a key requirement for the company’s employees. All employees will be empowered to ensure that they can effectively address customer requests and problems.

Sales Forecasts

Table 1 shows the company’s sales forecast for the first three years. Being a new entity, sales for the first six months will be slow. However, a steady growth will happen as the months go by. Profitability is expected to happen during the second half of the first year of operation. The company expects to sell 110,000 units during the year 2020-2021 and earn more than $1.33 million dollars in sales. The sales units are expected to increase by 30 percent each year while unit price per unit for each product is expected to increase by 10 percent per annum. This will increase total revenue to approximately $1.39 million and $1.44 million, respectively. Direct cost is expected to account for 42 percent of total sales.

Table 1: Sales Forecast

• Utensils such as cooking utensils, cutting guide, and rocker knives as well as wheel cutters
• Food preparation attire and equipment such as aprons, gloves, blender, trays, mixers, and storage containers, condiment bottles, tableware, glassware, pans, and cleaning equipment and supplies.
• Burger tools such as hamburger press burger maker, meat tenderizer pounder, meat grinder, burger cookbook, salt and pepper mill duo, pocket thermometer, burger seasoning, BBQ spatula, and griddle pan.

Milestones

Table 2 indicates vital start-up program milestones, with starting dates and ending dates, personnel in charge, as well as budget for each milestone. The schedule indicates Dave and Jacky Delicious emphasis on effective planning for implementation.

Table 2: Milestone

1. Jacky Simpson

1. Dave Simpson

1. Investor

It is pertinent to ensure that before incorporation the company must raise adequate capital. Thus, an investor is essentially an important aspect for the company. The investor has a significant role to play as he or she will generate capital for the company. Specifically, the investor will provide $20,000 needed to build and grow the business. These funds will cover various expenses including marketing, overhead costs, product development, as well as other resources needed to increase revenue.

1. Legal Advisor

The legal advisor will help the owners establish a clear relationship with one another. It is important to make clear deals with co-owners, contractually, in order to avoid future conflicts. A legal advisor can help establish roles and responsibilities of owners and investors, remuneration, percentage of ownership in a company, and cash contributed by owners. A legal advisor will also play a major role in establishing the business structure or model. Getting legal advice can help owners understand the benefits and shortcomings of a private limited liability company and align their goals with the company. In Addition, the legal advisor will offer advice about intellectual property protection, developing a standard contract document, and tax issues.

1. Accountant

For organizations, finances are complex and confusing. In this regard, Dave and Jacky Delicious Incorporation will seek the services of an accountant to manage the company’s financial records, transactions, and accounts. Taxes present significant pain for start-ups, especially due to ever changing taxation laws. There are many variables from business registration to the type of deductions that an organization makes. As the company’s financial strategy becomes more complicated, it will be important to employ an accountant to align the organization’s taxation process. An accountant will also prepare payroll, ensure accuracy of financial documents, prepare and maintain financial reports, provide guidance on cost reduction, offer guidance on revenue growth and profit maximization. The accountant will also conduct forecasts and risk analysis assessments.

It is estimated that the company will require $135,000 in start-up cost, out of which owners and investors will contribute $100,000. Jacky and I will provide more than 50 percent of total start up cost. In particular, we will contribute $80,000, each contributing $40,000. An investor is welcome to take part in the organization’s capital by contributing $20,000 and would be offered 20 percent ownership of the company capital. The investor’s fund will be used to purchase equipment and cater for part of start up costs. For the remaining $35,000 additional funding required to cover the start-up cost, Dave and Jacky plan to apply for a five year loan to meet cash flow requirements. The company will use the borrowed money to purchase equipment based on a list that the company will supply to the lending organization. The loan will be repaid in equal monthly installments for a five year period. For conservative reasons, the company estimates its annual interest to be 12 percent. Nonetheless, it will negotiate actual interest rate and borrowing terms with the lending institution.

Start-Up Funding

Start-Up Cost

Break Even Analysis

For the company’s break even analysis, it is assumed that the organization will incur a running cost of $29,900 per month consisting of fixed costs such as wages, supplies, repairs, advertising, travel, legal, rent, telephone, utilities, and insurance. The entity needs to sell about 4,672 units for $11 per month in order to break even in the first month. This is based on the assumption that the average variable cost per unit is $4.60.

Given that this is a three year plan financial projections for more than three years are considered irrelevant at this time. Financial indicators, especially ratio analysis, show that the business will be profitable, will meet both its short term and long term financial obligations, and utilize its resources efficiently.

The organization’s financial performance is based on conservative assumptions because of current economic uncertainties. Through judgment and estimations, owners have chosen options that are less likely to overstate the company’s income and assets.

The key assumptions include:

• It is assumed that the economy will recover slowly in the next three years and that there will be no economic depression

• It is assumed that banks will issue loans at 5 percent per annum

• It is assumed that the company will sell 15 percent of its products on credit

• It is assumed that inventories will take between 15 and 20 days in store

• Corporate tax rate will remain at 30 percent per annum

The company is expected to earn monthly revenue of $111,042 out of which cash sales will be $94,385 and credit sales will be $16,656.

The company is expected to incur $86,199 in the first month of operation, with the monthly expense increasing to $95,699 in the second month of operation and hitting $96,949 in each month of the second half of the year.

The company expects to earn net profit of $87,689 in the first year of operation, $112,488 in the second year of operation, and $138,388 in the third year of operation.

Dave and Jacky Delicious is expected to make profits in the first year of its operation, with profits rising over the next two years as it establishes and increases its customer base.

Dave and Jacky Delicious Company expects to have a healthy financial position and a healthy net worth. The organization does not expect to have any problems meeting its financial obligation as long as it manages to achieve its objectives.

Some profitable organizations end up filing for bankruptcy due to cash flow deficiencies. Hence, Dave and Jacky Delicious Company will strive to have enough cash on hand in order to meet its payment obligations as well as be prepared for unexpected emergencies. Cash flow projections indicate that the business can generate positive cash flows in the first 12 months of operations and adequate cash reserves. In addition to cash inflows and cash outflows, the organization will focus on having enough cash reserves for contingencies. Moreover, management will invest idle funds in government securities, and other suitable trading securities.

Exit Strategy

No matter how good an organization is, it must have an exit strategy. Dave and Jacky Delicious primary aim is to provide the most appropriate option that protects investor’s interest while at the same time maintaining the organization’s potential growth, liquidity, as well as profitability. Typically, an investor fears being locked into an organization that does not indicate any sign of going public or filing for bankruptcy. In this regard, the organization is open to discuss with investors about various exit strategies at the time of incorporation. The options include: initial public offering, acquisition terms, liquidation terms, selling to friendly buyers, preferred stocks that are redeemable at the holder’s option, and convertible preferred stock. Others include anti-dilution measures and buyback after the first 3 years.

Bhasin, H. (2018, September 3). Top 13 McDonald’s competitors. Marketing91. Retrieved from https://www.marketing91.com/mcdonalds-competitors/

Data USA.(2020). Cambridge, MA. Retrieved from https://datausa.io/profile/geo/cambridge-ma/

IBISWorld.(2020, April).Fast food restaurants industry in the US-market research report. Retrieved from https://www.ibisworld.com/united-states/market-research-reports/fast- food-restaurants-industry/

Khandelwal, R. (2019, September 26). The restaurant industry: An overview. Market Realist. Retrieved from https://marketrealist.com/2019/09/the-restaurant-industry-an-overview/

Kotler, P., & Armstrong, G. (2017).Principles of marketing (17thed.). Upper Saddle River, NJ: Pearson education.

McDaniel, C. D., Lamb, C. W., & Hair, J. F. (2013). Marketing (12thed.). Mason, OH: South- Western Cengage Learning.

National Restaurant Association. (2019). Growth in higher-income households bolsters restaurant sales. Washington, D.C.: Author. Retrieved from https://restaurant.org/Articles/News/Growth-in-higher-income-households

Patrutiu-Baltes, L. (2016). Inbound Marketing-the most important digital marketing strategy. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 9(2), 61-68

Pistol, L., Epure, M., & Bucea-Manea-Ţoniş, R. (2016). Web-marketing strategy for SMEs. Procedia of Economics and Business Administration, 1, 128-137.

United States Census Bureau. (2020). Quick facts: Cambridge city, Massachusetts. Retrieved from https://www.census.gov/quickfacts/cambridgecitymassachusetts

Profit and Loss Statement (Annual Detail)

Balance Sheet (With Monthly Detail)

Balance Sheet (Annual Detail)

Cash Flow Statement (With Monthly Detail)

Cash Flow Statement (Annual Detail)