1.0 Executive Summary
The purpose of this business plan is to raise $100,000 for the development of a vending machine company while showcasing the expected financials and operations over the next three years. The Vending Machine Company, Inc. (“the Company”) is a New York based corporation that will manage several vending machines throughout hotels, schools, and offices throughout the state. The Company was founded by John Doe.
1.1 Operations
As stated above, the Company’s state of the art vending machines will provide customers with chips, sodas, and other commonly found in vending machines. The Company’s vending machines will also feature a number of healthy choices to the aforementioned foods. The Founder, prior to the onset of operations, will develop relationships with schools, office buildings, and property manages for the distribution of the Company’s vending machines. The third section of the business plan will further describe the services offered by the Vending Machine Company.
1.2 The Financing
Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate.
1.3 Mission Statement
Mr. Doe’s mission is to provide vended items that are enjoyable while concurrently ensuring that business’ and organizations’ that allow the Company’s machines on site are compensated for their rental of space.
1.4 Management Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the vending machine industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
Over the next three years, Mr. Doe intends to reinvest the after tax cash flow of the business into the purchase of new vending machines which will substantially increase the revenues of the business. The Company will continually source new high traffic locations where the Vending Machine Company can place new machines.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Vending Machine Company, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Vending Machine Company requires $100,000 of debt funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
Mr. Doe is not seeking an investment from a third party at this time.
2.4 Management Equity
John Doe owns 100% of the Vending Machine Company, Inc.
2.5 Exit Strategy
If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Vending Machine Company. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings.
3.0 Vending Machine Operations
As discussed in the executive summary, the Vending Machine Company will provide a variety of snacks and beverages to residential complexes, office buildings, and schools within the State of New York. In each machine pairing (beverage and food), there will be a number of choices, including sodas, juices, crackers, chips, and cookies, as well as a number of healthy products. Currently, Management has sourced a number of wholesalers that will provide the Company’s with its inventories. The Company will earn margins of 70% on the food/beverages sold within the Company’s network of machines.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
The business of vending machine management is a relatively simply business. This section of analysis will detail the overall economic climate, and the interest rate environment, and the vending industry.
Currently, the economic climate is moderate. The economy is undergoing a transition period due to changes in global trade policy. At this time, interest rates have remained steady due to appropriate and measured policies by central banks. While there has been volatility, this is expected to subside as the economy adapts to these changes.
As the Company expands, Management may require the use of large lines of credit to assist in financing the ongoing cash needs of the Company in addition to leases and purchases of vending machine equipment.
The demand for low cost vended products remains strong in any economic climate.
4.2 Industry Analysis
In the United States, there are 6,000 companies that maintain vending machines and routes. Each year, these businesses aggregately generate more than $7.1 billion dollars of revenue. There one vending machine per 97 people in the country. This is a mature industry, and future growth is expected to be on par with that of the general economy.
4.3 Customer Profile
Vending machines are used by people from all socioeconomic levels. From doctors to hospitals to people that live in lower income housing, vending machines are used as a quick way of getting a snack or a drink. As such, it is difficult to determine the profiles of people that will purchase snacks from the Company’s machines.
4.4 Competitive Analysis
At this time it is difficult to determine the competition that the Company will face as it progresses through its operations. There are a number of vending machine companies that maintain machines throughout gyms, schools, offices, and hospitals throughout the State of New York.
5.0 Marketing Plan
Below is a description of the marketing plan that the Vending Machine Company will use to establish its locations throughout the State of New York
5.1 Marketing Objectives
- Establish relationships with apartment complex owners, property management firms, schools, hospitals, and other businesses/organizations that have a need for vending machines.
- Maintain strong relationships with vended product wholesalers throughout the State of New York.
5.2 Marketing Strategies
Marketing for the business’ vending machines will be very limited. The Company’s marketing campaigns will be limited to developing relationships with local office buildings, school districts, and property management firms. Prior to the onset of operations, Mr. Doe will approach these businesses for placing food/beverage product vending machines on their properties. The Company intends to also develop a website that will showcase the operations of the business, how a potential location can work with the Vending Machine Company, and relevant contact information. As the economy is currently sluggish, many property management firms and related organizations are looking for ways to establish secondary lines of revenue; namely through the rental of space to vending machine companies. Management will also directly approach newly developed apartment complex owners and motels that are looking to expand their secondary revenue streams as well.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
7.0 Financial Plan
7.1 Underlying Assumptions
- The Vending Machine Company will have an annual revenue growth rate of 16% per year.
- The Owner will acquire $100,000 of debt funds to develop the business.
- The loan will have a 10 year term with a 9% interest rate.
7.2 Sensitivity Analysis
The Company’s revenues are not sensitive to changes in the general economy. As the pricing for the products are minimal, a decline in economic productivity will have a diminutive effect on the Company’s ability to generate revenue. As such, Management will be able to continually grow the business despite the external business climate.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statement
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 Breakeven Analysis
7.9 Business Ratios
