1.0 Executive Summary
The purpose of this business plan is to secure a revolving credit facility for the development of a beverage distribution business based in Coos County, New Hampshire. Beverage Distributor LLC (“the Company”) was found with the intention of providing wholesale distribution of soft drinks on a cost-effective basis. The Company intends to commence operation in the fourth quarter of this year.
Operations
The primary revenue driver for the Company will come from the ongoing distribution of bottled beverages. The Company will specialize in sodas, bottled juices, bottled waters, and related nonalcoholic beverages. The Company intends to conduct operations through several routes throughout Coos County.
The Company will directly employee its drivers while maintaining its own vehicles. It will allow the business to more cost-effectively manage its operations on a day-to-day basis.
The third section of this beverage distributor business plan will further discuss the operations of the business.
The Financing
At this time, the Company is seeking a $100,000 revolving credit facility in order to establish the businesses operations. These funds will be principally use for acquiring wholesale inventories of beverages while also securing two delivery vehicles. This document assumes that the Company will occur in 8% interest rate on the drawn down principal balance.
The Future
As the Company grows, it may seek expansions to its credit line in order to facilitate a greater amount of inventory. This business plan assumes that the Company will use its retained earnings over the next five years to further its growth objectives.
Once the business establishes a significant foothold in Coos County, the Company may develop additional distribution locations throughout New Hampshire. Given that this market has long distances between any two cities, management sees a significant opportunity to establish and expand its operations in this state.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The beverage distributor startup capital will be allocated as follows:
2.2 Management and Investor Equity
The Founder is the 100% owner of Beverage Distributor LLC.
2.3 Exit Strategies
There would be a significant demand for this type of enterprise giving the highly predictable streams of revenue generated from the sale of beverages on an ongoing basis. Given that these products are a necessity, this beverage distributor will enjoy a significant degree of economic stability. In the event that the business is to be sold, Management will coordinate these efforts with a qualified business brokerage that specializes in wholesale distribution businesses.
3.0 Operations
The Company will initially maintain two vehicles that will have refrigeration capabilities. This will allow the business to properly distribute its wide range of beverages, which will span sodas, juices, water, and specialty drinks among a number of noted manufacturers.
Management has already begun to establish relationships with major distribution companies, so the business can cost-effectively acquire beverages on a from these entities. The Company will generate contribution margins of 30% on all distributed beverages.
The Company will directly employed staff of drivers and loading specialists in order to ensure that the business has ongoing coverage on a day-to-day basis. The Company intends to expand its vehicle fleet in the coming years as the beverage distributor acquires additional clients.
4.0 Overview of the Organization
4.1 Registered Name
Beverage Distributor LLC. The Company is registered as a limited liability company in the state of New Hampshire.
4.2 Commencement of Operations
The Company will commence operations in the third to fourth quarter of this year.
4.3 Mission Statement
Provide a wide range of beverages on a cost-effective basis to retailing partners throughout New Hampshire.
4.4 Vision Statement
To operate as a well noted and respected distributor of a broad range of beverages.
4.5 Organizational Objectives
• To continue to develop ongoing relationships within a number of major beverage manufacturers of United States.
• Develop relationships with trade brokers and importers so that international products can be offered.
• Adhere to all regular framework regarding the wholesale distribution of beverages.
• Established ongoing relationships with numerous retailers in New Hampshire.
• Provide gainful and upwardly mobile job opportunities to the Company staff.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the beverage distributor business plan will discuss the current economic climate, the industry, competitive issues, as well as the client profile.
At this time, the economic climate with the United States is moderate. As a result of continually changing trade policies as well as domestic economic policy, there has been a significant increase the rate of inflation. Government agencies are taking appropriate measures to reduce the issues related to increasing prices.
However, these matters will only have a moderate impact on the beverage distributor’s ability to generate revenue. As these products are essentials, the Company will be able to provide these products on an ongoing basis. Additionally, the beverage distributor will have highly control operating costs a function of revenue that will allow the business to maintain profitability while servicing its underlying financial obligations.
5.2 Industry Analysis
The distribution of beverages within the United States is a $361 billion industry. The growth rate of this industry is expected to remain relatively stable over the next five years with revenue increases occurring as a result of inflation as well as population growth.
5.3 Customer Profile
Any retailer that is based within the target market radius, is a potential customer of the beverage distributor. Management expects that these retailers will typically have an annual revenue ranging from $250,000 to $1 million. They will typically spend $500 to $2,000 per purchase order with the business.
5.4 Competitive Analysis
The ongoing competition that Beverage Distributor will face as it establishes operations is moderate. There are a number of established beverage distributors in this market. However, the Company will maintain a differentiating factor by being able to more cost-effectively price its wholesale inventory to its retailing partners.
6.0 Key Strategic Issues
6.1 Sustainable Operations
The Beverage Distributor will have sustainable operations as a result of the following:
• The business will enjoy a significant degree of economic stability.
• The Company will be able to provide product spanning a number of noted beverage manufacturers.
• These operations are highly scalable through the acquisition of additional vehicles.
• The Company will be able to offer products that are internationally sourced.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued expansion of the retailers at work with the business.
• Expansion of satellite locations to benefit from economies of scale.
• Continued expansion of the Company’s beverage inventories.
7.0 Marketing Plan
7.1 Marketing Objectives
• Conduct extensive direct outreach with retailers in Coos County.
• Maintain a moderate scale online presence.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $1.2 million.
• Gross profits will reach $363,000.
Year 2
• Revenue will reach $1.29 million.
• Gross profits will reach $389,000.
Years 3-5
• By the fifth year of operation, total revenue will reach $1.78 million.
• Gross profits will reach $535,000.
7.4 Marketing Strategies
The ongoing marketing that is required by this business is relatively straightforward. As this is not a consumer facing business, the Company will primarily focus on establishing ongoing relationships with retailers throughout the target market through direct outreach initiatives. This will include the distribution of brochures and mailed advertisements that showcase the beverage inventories that are carried by the business and how they can be cost-effectively sourced. In time, the Company intends to hire independent sales staff that will approach retailers on behalf of the Company to establish ongoing purchase order relationships.
The business will also maintain a moderate scale online presence. This website will showcase the beverage inventories that are offered, contact information, as well as information regarding how to become an ongoing client of the business. This website will undergo a degree of regional search engine optimization so he can be quickly found among retailers.
The Company will also join a number of retail focused trade associations and chambers of commerce order further increase brand visibility within Coos County. The Company may also take out advertisements among publications that are sponsored by these organizations to further increase wholesale beverage distribution.
For social media, the Company we use LinkedIn in order to establish brand visibility among individuals a list of profession as a purchasing manager for a retail food based enterprise.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• Management will contribute $20,000 for the launch of the Beverage Distributor.
• The Company will secure $100,000 revolving credit facility.
9.2 Financial Highlights
• Company will achieve contribution margin of 30% on all beverage sales.
• The business will have very controllable of operating costs.
9.3 Sensitivity Analysis
As noted earlier, major economic issues will not have a significant impact on the beverage distributor’s abilities of generate revenue. These products will remain in demand among the general public at all times, which will necessitate their wholesale distribution through retailers.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• The business will generate highly predictable streams of revenue from its purchase order agreements.
• Significant demand for cost-effective sourcing of beverages among retailers.
• The Company will be able to scale operations through ongoing reinvestment.
Weaknesses
• Ongoing competition from established beverage distributors in the market.
• Moderately high cost related to fuel.
Opportunities
• Expansion of the types of beverage inventories that are offered.
• Potential acquisition of companies that operate in an identical capacity.
• Development of satellite locations in other economically viable markets.
Threats
• Continually increasing inflation could cause the gross margins of the business to decline.
Appendix B – Risk Analysis
Development Risk – Low
Management has already sourced the initial inventories that be distributed on a wholesale basis. The primary matter that needs to be addressed as securing the revolving credit facility discussed in this document.
Financing Risk – Low/Moderate
The funding will be principally used for the acquisition of delivery vehicles as well as wholesale beverage inventories. The risks are related to this investment are reduced by the fact that the products are a necessity.
Marketing Risk – Low
Direct outreach will continue remain as the key focus of the Company’s operations. The business will establish an independent sales network that will foster ongoing purchase order agreements.
Management Risk – Low
The Founder is a highly experienced wholesale distribution expert. He will be able to bring the operations of this business to profitability quickly.
Valuation Risk – Low
The valuation risk is offset by:
• A significant portion of the capital we used for tangible asset purchases.
• The Company will be able to have a rapid growth rate over the next five years.
Exit Risk – Low
This business could be easily sold to a third-party given its predictable income. As noted earlier, this would be accomplished intended with a number of professionals that would assist with managing the transaction.