Theresa MaximnukTheresa MaximnukKirby PoirierKirby PoirierSara WielgoszSara WielgoszTyler WilsonTyler Wilson

IntroductionIntroduction

Proposing a Pasta Processing Plant to Proposing a Pasta Processing Plant to produce Whole Wheat Pastaproduce Whole Wheat Pasta

Plant will be established in Swift Plant will be established in Swift Current, SaskatchewanCurrent, Saskatchewan

Funded by private Saskatchewan Funded by private Saskatchewan Investors and a Bank Operating LoanInvestors and a Bank Operating Loan

Using Home-Grown Prairie Durum Using Home-Grown Prairie Durum wheat to make a value-added productwheat to make a value-added product

Operations PlanOperations Plan

Organizational StructureOrganizational Structure

Board of Directors - 5

Investors

Manager

Sales Manager

Secretary

Production Staff

Lot LocationLot Location

#4

#1

Site PlanSite Plan

Prairie Pride Pasta’s Floor Prairie Pride Pasta’s Floor PlanPlan

Process FlowProcess Flow

Finished product Storage Room

Business CycleBusiness Cycle

Business Hours – 8:00 to 4:30 DailyBusiness Hours – 8:00 to 4:30 Daily Plant workers stay extra hour Plant workers stay extra hour Optimum – 7 hours a day productionOptimum – 7 hours a day production

Durum delivered to plant every 2 weeksDurum delivered to plant every 2 weeks Potential of plantPotential of plant

21,000 kg/week 21,000 kg/week Total Production - 1,209,600 kg per Total Production - 1,209,600 kg per

yearyear

Standards & RegulationsStandards & Regulations

Set out by Canadian Food Inspection Set out by Canadian Food Inspection AgencyAgency Prairie Pride Pasta must follow food Prairie Pride Pasta must follow food

processing regulationsprocessing regulations HACCP program presentHACCP program present ISO 9001:2000 ISO 9001:2000

recognized businessrecognized business

Investment Investment RequirementsRequirements

Capital Budget SummaryCapital Budget Summary         Land $43,240  Land $43,240     Building Costs $267,650Building Costs $267,650 Equipment $846,500  Equipment $846,500     Working Capital $85,197  Working Capital $85,197      

Total Capital Required $1,242,587 Total Capital Required $1,242,587     

Human Resource Human Resource StructureStructure

Prairie Pride Pasta’s Prairie Pride Pasta’s EmployeesEmployees

Operations Manager – $70,000Operations Manager – $70,000 Sales Manager – Base $45,000 plus Sales Manager – Base $45,000 plus

1% commission – potential of 1% commission – potential of $60,000$60,000

Secretary - $35,000Secretary - $35,000 Plant Labourers – $12.00 per hourPlant Labourers – $12.00 per hour

Marketing PlanMarketing Plan

The 4 P’sThe 4 P’s ProductProduct

Whole Wheat Pasta (Long and Short)Whole Wheat Pasta (Long and Short) PricingPricing

Market based competitive priceMarket based competitive price Promotion Promotion

Health Food Product, Low Carbohydrates, Health Food Product, Low Carbohydrates, Highly NutritiousHighly Nutritious

Place Place Independent, Locally owned, corner storesIndependent, Locally owned, corner stores

Segmentation, Targeting & Segmentation, Targeting & PositioningPositioning

Potential TargetsPotential Targets Large Scale Grocery Chain, Independent Large Scale Grocery Chain, Independent

Grocery stores, Specialty StoresGrocery stores, Specialty Stores SegmentationSegmentation

Variety of Customers that shop at different Variety of Customers that shop at different locations and store typeslocations and store types

PositioningPositioning Convince customer to pay premium price for Convince customer to pay premium price for

quality productquality product

SWOT AnalysisSWOT Analysis

Human Resource Human Resource Sales Manager is key!Sales Manager is key!

Physical Resources Physical Resources Location, Modern Equipment, and FacilityLocation, Modern Equipment, and Facility

Financial resources Financial resources Bank loan and private investorsBank loan and private investors

External Opportunities & Threats External Opportunities & Threats Market trendsMarket trends Grain prices Grain prices New products New products

Market AnalysisMarket Analysis

Whole wheat market increasingly Whole wheat market increasingly growinggrowing Conventional market gong down due to Conventional market gong down due to

trendstrends Target markets – Health food Target markets – Health food

conscious peopleconscious people Customers willing to pay premiumCustomers willing to pay premium Product features – high nutrient, Product features – high nutrient,

mineral, fibre, low-carbmineral, fibre, low-carb

Marketing StrategyMarketing Strategy

Sales and Profit ObjectiveSales and Profit Objective ““25% pre-tax profit by selling 75% of the 25% pre-tax profit by selling 75% of the

plant’s production capacity”plant’s production capacity” Channels of DistributionChannels of Distribution

Using Wholesaler/Distributor to Using Wholesaler/Distributor to distribute product to storesdistribute product to stores

RBR Food Brokerage Ltd in CalgaryRBR Food Brokerage Ltd in Calgary

Marketing BudgetMarketing Budget

Packaging - Design and Costs $5,000Packaging - Design and Costs $5,000 Sponsorship & Donations $5,000Sponsorship & Donations $5,000 Office Supplies – Marketing Office Supplies – Marketing

purposes $3,000purposes $3,000 Product Brochures $2,000Product Brochures $2,000 Sales & Marketing Manager Sales & Marketing Manager

Expenses- $51,800Expenses- $51,800 Total Marketing Budget $66,800Total Marketing Budget $66,800

Financial PlanFinancial Plan

FinancingFinancing

Long Term Debt $500,000Long Term Debt $500,000

Owner's Equity $744,411Owner's Equity $744,411

Total Financing Total Financing $1,244,411$1,244,411

Dividend PolicyDividend Policy

Dividend paid if:Dividend paid if: Cash flow – (working capital + 15%)Cash flow – (working capital + 15%)

Dividend Policy ScheduleDividend Policy Schedule

2008 2009 2010 2011 2012 2013 2014 2015

12,924

144,870 230,908 284,389 340,736 361,952 368,658 372,944

Production CostsProduction Costs

Year 2006 - Breakdown of $1.64 production Cost

Durum, 0.21,

13%

Boxes, 0.03,

2%

Packaging

Materials,

0.2, 13%

Operating

and

Marketing

Costs, 0.61,

38%

Overhead,

0.43, 24%

Direct

Labour, 0.15,

10%

Year 2014 - Breakdown of $1.19 Production Cost

Durum,

0.25, 20%

Boxes, 0.05,

4%

Packaging

Materials,

0.23, 18%

Direct

Labour, 0.10,

8%

Operating

and

Marketing

Costs, 0.35,

28%

Overhead,

0.21, 22%

Sensitivity AnalysisSensitivity Analysis

Best and Worse Case Scenario

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

Sel

ling

Pric

e

Qua

ntity

of S

ales

-S

pagh

etti

Qua

ntity

of S

ales

-P

enne

Dire

ctLa

bour

Critical Variables

IRR

Worst Case

Base Case

Best Case

Prairie Pride Pasta ???Prairie Pride Pasta ???

Feasible under current financial modelFeasible under current financial model Internal Rate of Return – 24.6%Internal Rate of Return – 24.6%

Main obstacle: achieving sales quantity Main obstacle: achieving sales quantity Hiring bold and exciting sales managerHiring bold and exciting sales manager

Sales figures reflect growth that Prairie Sales figures reflect growth that Prairie Pride Pasta will take into the futurePride Pasta will take into the future

““Prairie Pride Pasta is looking to become a Prairie Pride Pasta is looking to become a recognizable, reputable, as well as profitable recognizable, reputable, as well as profitable business in the value-added sector of business in the value-added sector of Saskatchewan’s economy”Saskatchewan’s economy”