TPS Business Plan

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The Peoples Supermarket Oxford Business Plan

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The Peoples Supermarket OxfordBusiness Plan


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CONTENTS

Executive summary ............................................................................................................3

Background .........................................................................................................................4

Putting Oxford first .........................................................................................................5Working with The Peoples Supermarket London ........................................................6

Our mission, vision and values .......................................................................................6

Company summary .............................................................................................................7

Company ownership .......................................................................................................7

Start-up summary ...........................................................................................................7

Products ..........................................................................................................................9

External research ...............................................................................................................10

The UK grocery market ................................................................................................10

Researching if there is a demand in Oxford for TPS ...................................................10

SWOT analysis .............................................................................................................13

Learning from the market research ..............................................................................14Strategy and implementation ............................................................................................14

Competitive edge ..........................................................................................................15

Sales strategy ................................................................................................................15

Sales forecast ................................................................................................................15

Management Summary .................................................................................................17

Personnel plan ...............................................................................................................17

Financial Plan ...................................................................................................................18

Break even analysis ......................................................................................................18

Projected profit and loss ...............................................................................................19

Pro forma profit and loss ..............................................................................................21

Projected cash flow .......................................................................................................21

Appendices ........................................................................................................................23

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Executive summary

The Peoples Supermarket Oxford is about providing a real alternative to chain

supermarkets that currently dominate food retail in Oxford. Its a supermarket run bythe community, for the benefit of the community.

Closely modelled on the original Peoples Supermarket in Lambs Conduit Street,

London, we aim to create a vibrant and sustainable co-operative social enterprise that

brings the best quality, ethically sourced and affordable food to Oxford. We will offer a

one stop shop, with convenient opening hours for those working long hours.

We aim to act as a connection to local farmers so consumers can discover more about

the provenance of their food. We want to act as a community hub, providing training

and life skills to our members and the Oxford at large. Our aim is to take control of our

food supply out of the hands of the few, and give people real ownership and pride intheir supermarket.

The Peoples Supermarket Oxford Ltd.Registered in England and Wales 8021626

Registered office: Laurel Cottage, High Street, Long Wittenham, OX14 4QQ

Planned shop: 124, Cowley Road, Oxford, OX4 1JE

T: 01865 407721

E: [email protected]

W: www.tpsoxford.org

Members of:Co-operatives UK

Supported by:

Co-operative Futures

Price & Myers Consulting Engineers

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BackgroundAt the end of 2011 the four largest supermarkets (Tesco, Asda, Sainsburys and

Morrisons) controlled over three quarters of the global grocery market1. Never before in

history has control over what we eat been decided by so few people.

Although such large supermarkets have some benefits, they also have many drawbacks:

-

Quality of the food

Supermarket food is produced to maximise profit rather than nutrition or taste.

o We eat mechanically recovered meat which is

has been injected with proteins from old animals

or parts of animals which are no use for food,

such as skin, feathers, hide, bone and ligaments,to make it swell up and retain more cheap water

(as much as 43% in some Trading Standards

testing)2.

o We drink fresh orange juice thats lost its

flavour whilst being stored for up to a year so

has to have the taste of orange juice added

back before packing3.

o We eat food thats been bulked out with indigestible, cheap wood or, as the food

industry prefers, cellulose, because using flour with nutritional value is too

expensive4.

Environmental damage

In the quest to bring us a global summer

products are now shipped or more commonly,

air freighted from all over the world, even

when we can grow then in the UK. During

British apple season, only 28% of the apples

that Tesco sell are from the UK5. Supermarket

supply chains are inherently reliant on massive

amounts of oil-sourced energy and thus

carbon emissions to function.

Supermarket decisions whether its to reject

any fruit and vegetables that arent cosmetically perfect; stock huge ranges of

perishable products resulting in massive in-store wastage; or offering buy one, get one

free on products to consumers contribute greatly to the 26,000,000,000 lbs of food

thrown away in the UK every year6.

1 TNS Global, November 20112 You wont feel like chicken tonight, Evening Standard, 10th July 20023 Squeezed: What You Dont Know About Orange Juice, Alissa Hamilton, Yale Agarian Studies series4

Weiner, Myra L.; Lois A. Kotkoskie (2000). Excipient Toxicity and Safety. New York; Dekker5Not on the label, Felicity Lawrence6 UK Government WRAP figures

4

Chicken being mechanicallyrecovered

Edible food recovered from Tescos bins


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Health

Adult obesity rates in the UK have quadrupled in the past 25 years7, with chronic heart

disease and obesity costing us 12.5bn to treat annually with the poor

disproportionally affected. This is at a time when a basket of healthy, non-processed

food in the supermarket is estimated to cost 51% more than an equivalent basket of

processed food. This is perhaps no surprise when two thirds of supermarket promotionsare for foods high in fat and sugar, with Britains biggest retailer, Tesco, having just

14% of promotions focussed on fruit and vegetables8.

Food provenance and security

Currently, the UK produces less than 60% of the food it consumes, a figure which

continues to decline as capital costs increase and agriculture profits decline. This

decline has been accelerated by the massive buying power supermarkets have the

proportion of the retail spend farmers receive has been cut over five-fold to just 9p for

every pound that goes through the supermarket tills9.

The average age of a farmer in the UK is now 59, with most UK farmers relying onvolatile contracts with supermarkets, often receiving orders with less than 24 hours

notice to prepare. Its perhaps unsurprising that at least 31% of farmers earn the

equivalent of less than minimum wage10.

Ensuring we are able to access affordable, good quality, locally sourced and sustainable

food requires a new model of retail one where everyone, from farmer to consumer,

gets a fair deal, and no-one makes a killing.

Putting Oxford firstOxford is at an exciting point in changing its foodnetwork. From producers, like Cultivate Oxford and

Sandy Lane Farm; retail, such as East Oxford Farmers

& Community Market and West Oxford Farmers

Market; right through to consumers, like Turl Street

Kitchen and Oxfork the desire for good quality, locally

sourced and ethical food has never been greater.

Yet, speaking to customers of all these businesses and

social enterprises, the result was overwhelming

although they had increased spending with localbusinesses and producers, almost everyone still carried

out a big shop at a supermarket, which accounted for

the bulk of their spending.

The feedback we received from producers was that, although they loved meeting

consumers, selling direct to the public or restaurants was very time consuming and in

the case of very small restaurants and businesses economically unviable. It was

7 BBC (February 1, 2006). BBC "UK's fattest cities are revealed"8 Healthy Competition: How Supermarkets Can Affect Your Chances of a Healthy Diet, National

Consumer Council9Not on the label, Felicity Lawrence10 2012 DEFRA government figures

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East Oxford Farmers Market


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almost impossible for small producers to get shelf space in large retailers. There was no

provision for a collective of small producers to deliver or have a distribution hub for

their produce in the city. In the words of one jam producer a lot of our customers just

want a dozen items, and we simply cant deliver those sorts of orders without making a

loss.

Working with The Peoples Supermarket LondonOne of the key aims of starting TPS Oxford was that it was the supermarkets share of

the market that we wanted to target not farmers markets or small producers. Luckily

for us, a relatively newly formed social enterprise, The Peoples Supermarket in Lambs

Conduit Street, London had the same idea. In keeping with the co-operative aim of

helping similar businesses, they provide a free social franchise model, enabling

people to open Peoples Supermarkets in other towns and cities across the UK.

Oxford will be the second Peoples Supermarket to open, and so will be at the forefront

of a real revolution in grocery retail.

Our mission, vision and valuesWe share the same aims of The Peoples Supermarket

London. Our vision is to create a commercially

sustainable, social enterprise that achieves its growth

and profitability targets whilst operating within values

based on community development and cohesion.

Our intent is to offer an alternative food buying

network, by connecting an urban community with thelocal farming community. We want to work with other

Peoples Supermarkets and similar co-operative

ventures to develop, promote and achieve these aims.

Vision and Values

We aim to create a sustainable food co-operative that responds to the needs of the local

community and provides healthy, local food at reasonable prices. To this end, we

believe in a series of key values, which guide our philosophy and management

approach. We seek: -

o To create a supermarket that meets the needs of its members and the local

community by offering high quality, healthy food at reasonable prices.

o To buy from trusted suppliers with whom we develop mutually sustaining

relationships.

o To buy British produce where possible, and produce local to Oxford.

o Provide choice and information to our members to help them make healthy

decisions.

o To create a community supermarket that highlights the possibilities of consumer

power and challenges the status quo.

o To minimise wastage, by creating prepared dishes from food coming up to its

sell-by date, and by composting all other waste material.

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The Peoples Supermarket London


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o To provide inspirational training and life skill opportunities to the local

community.

o To create a working environment that values every ones contribution, is

welcoming, safe and non-judgmental.

o To be a training and development resource for our community.

o To buy sustainable energy and other inputs, and to promote alternative, forward-thinking ideas and solutions.

Company summary

Company ownershipTPS Oxford is a limited company registered in England and Wales number 8021626.

This limited company is registered as a co-operative with Co-operatives UK, the trade

body for co-operative business in the UK. As part of our registration, we have agreed

articles which mean that any profits made by the business can only either be reinvested

into the business itself, or into projects that help our community.

A key part of any co-operative is the principle that every member has one vote, and thus

an equal voice in how the business is run. For TPS Oxford, anyone can become a

member provided they commit to volunteering four hours of their time every four

weeks to help the business. Members who complete their four hours of voluntary work

are given a 20% discount on shopping in-store, as well as other discounts negotiated

with local businesses.

Start-up summaryThe primary costs of starting the business will be purchasing stock for the shop, some

equipment and materials for the shop (although we aim to minimise this by sourcing as

much equipment as possible via donations or the second hand market), and legal and

rent deposit costs.

We expect to spend 50,000 on start-up costs, which will primarily be spent on assets

for the business. It is anticipated that approximately 10,000 of the required start up

capital will come from small loans from the community. The rest is anticipated to be

sourced via commercial loans.

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ProductsThe Peoples Supermarket Oxford aims to provide a comparable product range to a

convenience-sized supermarket (e.g. a Tesco Express). This means stocking everything

from fresh fruit and vegetables to canned food and cleaning products.

For each product line we stock we aim to provide three alternatives: -

Value quality products at a

comparable or cheaper price

than a supermarket own-

brand item.

e.g. Happy Shopper Ketchup

Euroshopper tea

Daz washing powder

Branded a best-selling

brand for the product type.

e.g. Heinz Ketchup

PG Tips tea

Ariel washing powder

Ethical produced

locally where possible, or

produced to high ethical

standards.

e.g. BVP Oxford Sauce

Just Change fair-trade tea

Ecover washing powder

This range is, of course flexible where possible we will aim to get a product that is

both ethical AND a comparable price to the supermarket own brand. It is expected, for

example, that almost all our fresh fruit and vegetables will fall into this category.

By providing a sufficient range but still less than a standard supermarket we can

provide the convenience of a normal supermarket whilst minimising food wastage.

Our buying preferences will be: -

1. Oxfordshire sourced

2. British sourced small producer

3. British sourced large producer

4. European sourced non-air freighted

5. Worldwide sourced non-air freighted

6. Air freighted items

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External research

The UK grocery market

In 2011 the UK grocery market was worth 143billion, and is expected to have acompound annual growth rate of 3.2% per year, reaching 162bn by 2015 becoming

the eighth largest grocery market in the world11.

The convenience supermarket share of this is forecast to increase from 29.1bn in

2009 to 39.7bn by 2014 providing far greater growth than larger supermarket and

hypermarket-sized stores.

In the UK, we expect the online sector to perform well, with Internet sales boosted by

the increasing use of smart phones and tablet computers, Institute of Grocery

Distribution Chief Executive Officer Joanne Denney-Finch said. Convenience stores,

with their increased focus on fresh food and tailoring of outlets to local demand, willalso be a key performer.

The convenience supermarket share of the market held by chain supermarkets like

Tesco Express and Sainsburys Local stores is growing, but independent and symbol

groups such as Premier and Spar still hold 79.7% of the market12.

Growth is expected to be greater than in Italy, France and Germany although the

current financial situation means there is some uncertainty over the exact figures,

depending on migration during the Eurozone crisis. However, most grocery spending is

not discretionary, and so demand tends to hold up well even in uncertain economic

times.

Supermarket price competition is fierce, especially around Known Value Items (KVI)

(items that consumers compare prices on, e.g. the cost of a pint of milk). Its estimated

that in a normal supermarket 200 lines are sold as loss leaders, at below the cost of

production. A further 600 lines are sold at around 5% margin or effective break

even for the retailer. Outside of these KVI lines margins can be high estimated at an

average of 150%, as consumers dont readily compare prices on non-KVI lines.

Researching if there is a demand in Oxford for TPS

Oxfood survey

At the end of 2011 Oxford City Council carried out a survey called Oxfood,

investigating local food provision in Oxford.

11 Institute of Grocery Distribution figures 201112 Institute of Grocery Distribution figures 2009

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Visual representation of the common words associated with local food in the Oxfood survey

Some of the key findings representing demand for a Peoples Supermarket in Oxford

were: -

o 96% of respondents said they would buy more local food if they could.o 41% of respondents said that improved knowledge of where their food came

from would encourage them to buy more local food.

o 38% of respondents went as far as to say that they would be prepared to invest

money in community local food projects.

o 22% of people said that the major factor when buying food was price.

o 86% of people agreed that local food production is an important part of our local

economy.

o 82% of people thought that local was at least or more important than other

factors such as organic and fairtrade.

Despite this enthusiasm for local food, the survey highlighted that at the moment access

to local food is lacking. Two responses to the survey included: -

"[Local food] is also seen as being very middle class as a Blackbird Leys resident I

have to go really out of my way to get local food and it should be normalised in each

area."

"I think it's a shame there isn't more of it available in and around Oxford, particularly in

the City Centre."

Further researchThis enthusiasm, however, could have been due to the fact that those most enthusiastic

about local food are also more likely to be completing a survey about local food.

To check this we carried out informal interviews with three groups of people.

Farmers market organisers

Farmers markets are a really important link between local food producers especially

niche producers and the community at large. The feedback we got from farmers

market organisers was split. On the one hand, many were worried that a TPS would end

up competing with a farmers market.

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However, there was also recognition that farmers markets barely scratch the surface of

demand for locally produced food. There was also recognition that, due to the

perishable nature of a lot of the food sold, there was an inevitable need for most of their

customers to top up on items such as bread, fruit, vegetables and milk during the

week. There is also little to no provision at farmers markets for staples, such as

cornflakes or tinned tomatoes.

Overall, the feedback was positive but clearly we need to be careful to support and

promote, rather than directly compete, with those already doing excellent work running

farmers markets.

Farmers market users

Speaking to those who are using farmers markets at the moment, there was a lot of

enthusiasm for the idea of a Peoples Supermarket. Most customers at farmers markets

said that the majority of their food spending was at the large supermarkets, although

many were trying to reduce their supermarket spending and a small number had

deliberately cut supermarket spending from their shop altogether.

Many pointed out that there is alternative grocery provision on the Cowley Road,

mainly provided by grocery stores with a strong emphasis on Asian, Oriental and other

ethnic products. However, there was definite enthusiasm for a new model for running a

supermarket, away from the current choices dominated by big chains.

We also spoke to some producers at the farmers market. The overwhelming impression

was that, although they supported the idea of selling direct to the public at farmers

markets, it was very time consuming for them. Many also mentioned the difficulty in

selling to independent local businesses and restaurants as it was uneconomical to

deliver small orders.

Current supermarket users

To ensure we had a complete picture we also spoke to customers who had completed

their shopping at both the existing Tesco Metro and Sainsburys Local supermarket

nearby the proposed TPS site. Both supermarkets were very busy when we conducted

our research (early Saturday evening).

We asked how much and why they used chain supermarkets, and why they didnt use

the alternative food provision on the Cowley Road.

The overwhelming majority of people chose the supermarkets because it was

convenient to be able to do all their shopping in one go, and supermarkets offered a

superior range of goods to other grocery provision on the Cowley Road. Many people

also thought that the supermarkets offered good value for money on most items,

although there were also contrary opinions that the supermarkets were expensive on

some items especially fruit and vegetables.

The primary complaint was that the quality of the food was often poor, and that

especially with fruit and vegetables a lot of the produce didnt taste fresh or exciting.

Some people also commented that they disliked the power the supermarkets had. A few

people commented that the supermarket experience was very homogenised, with littlelocally sourced food available.

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Finally, many people disliked the lack of human contact especially the self service

tills, which in Tesco outnumber the manned checkouts by some number. There was a

mix between praise that a weekly shop took a short time, along with complaints about

the stores being too busy and the queues too long.

SWOT analysis

Strengths

o Strong branding, well known due to

Channel 4 documentary.

o Direct relationship with suppliers

allows competitive purchasing.

o Store format is expected to have stronggrowth in next few years.

o Strong customer loyalty many

customers will own shares in store.

o Low wage costs due to most staff

volunteering their time.

o Excellent, low cost PR due to

innovative, appealing vision.

o Strong retail position on high footfall

Cowley Road.

o USP of fresh local food cannot be

matched by large supermarkets.

o Excellent corporate social

responsibility & community good will.

Weaknesses

o Impossible to compete with

supermarket loss leaders.

o TPS model mean potentially the most

loyal customers (members) are low-

margin sales.o Large number of small suppliers

means more work, and less volume-

related discounts.

o Volunteer workforce less productive

than paid staff.

o Possible higher level of

insubordination, theft and other

employee-related trouble.

o With large student population, possible

problems covering shifts in holidays &

large volunteer turnover.

Opportunities

o Expand into online delivery (in-house

experience of web development &

running vehicles on vegetable oil).

o Interest from local restaurants for

wholesale delivery.o Act as a wholesale hub to connect

local producers and retailers.

o Possibility to use strong branding for

other businesses (The Peoples),

subject to agreement with London.

Threats

o Supermarket chains already form an

oligopoly and have used predatory

tactics in the past (e.g. Tesco vs.

Proudfoot supermarkets).

o Local suppliers may not be able tomeet demand if store grows quickly

we would lose our USP.

o Reliance on social franchising for our

branding no contract so could be

withdrawn in future.

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Learning from the market researchTo be a successful supermarket TPS Oxford needs to: -

o Support local independent farmers markets and retailers by providing

information and look to help small producers distribute their goods by acting as

a community hub.

o Capitalise on enthusiasm for independent food provision on the Cowley Road,

where many consumers are actively trying to switch spending away from chain

supermarkets.

o Offer an acceptable range at an affordable price, so that people can easily

complete their shop, which will allow us to compete with Tesco and

Sainsburys. We need to have convenient opening hours for those working long

days.

o Offer fresh, local produce especially fruit and vegetables which can be a

lucrative unique selling point for us, and which the supermarkets withcentralised distribution hubs will be unable to compete with.

o Balance the desire and need for people to be at the heart of food shopping,

rather than self-scan tills, with the fact that the service needs to be quick as well

as friendly.

Growth in the UK market is focused on small stores like TPS, and retailers offering

high-quality, affordable food. TPS should be ideally placed to capitalise on the faster

growth expected in grocery retail compared to other sectors over the coming years

.

Strategy and implementation

To date TPS Oxford has already enjoyed significant, free media coverage in local

newspapers and radio and TV broadcasts, as well as utilising email and social media to

reach Oxfords tech-savvy consumers. As one of the most high-profile social

enterprises in the UK, we expect this media coverage to extend to national newspapers

at the launch of the supermarket.

Because of the unique structure of TPS, with members owning a share in the company,

word of mouth has spread virally at an exceptional rate. Open rates for our emails are

over double the normal figures for email marketing. Because of this, we do notanticipate having to spend money on advertising our launch. However, we do intend to

promote media interest by: -

o Having a local celebrity possibly either the Lord Mayor of Oxford or a local

band attend the launch.

o Extending our internet presence using free sites such as Daily Info to publicise

the launch.

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Competitive edgeo Community ownership the main edge we have over chain supermarkets is

that, as a democratically owned co-operative, the community has a stake in the

supermarket, and benefits from our profits, which will be redistributed back into

community projects. At a time when concern over the power of thesupermarkets is growing, we believe our unique business model puts us in a

strong position to compete with the economies of scale that chain supermarkets

enjoy.

o Price by dealing directly with local producers where possible, and by keeping

distribution costs low by sourcing products close to the store where possible, we

aim to have comparable prices on the core Known Value Item (KVI) ranges

with the supermarkets, and even beat them on price on non-KVI items.

o Location our high-visibility position on the Cowley Road provides an

excellent balance between footfall and rental cost. Excellent transport links and

close proximity to the city centre would make fulfilling online orders easier in

future. As one of the most densely populated parts of Oxford, we haveapproximately 40,000 potential customers within a 15 minute walk of the

supermarket.

o Strong branding TPS London is a high profile social enterprise which has

had significant media coverage. By using the TPS branding under a social

franchise agreement we benefit from their expertise and well-known name at no

financial cost to ourselves.

Sales strategy

Key to The Peoples Supermarket is creating a community hub a desirable,aspirational supermarket which builds stronger links between people. As well as

providing an attractive store, we believe that by using primarily a workforce that owns

shares in the supermarket, we will be able to provide unparalleled customer service.

We plan to hold events, such as cookery demonstrations and meet the producer

events, to build excitement around the supermarket, as well as educating members and

the wider community. We also want to provide community facilities such as a

noticeboard and resource sharing to help and assist local artists and independent

businesses to thrive.

It is our firm belief that by having the best interests of the community at the heart ofeverything we do, we can foster goodwill towards the supermarket, and help counter the

considerable power and competition wielded by the chain supermarkets.

Sales forecastThe following is The Peoples Supermarket Oxfords expected sales for the first three

years. We have primarily based this on the experience of TPS London, as well as

similar sized branded convenience stores.

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Sales forecast year 1

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

August

September

October

November

December

January

Febu

aryMarch

April

May

June July

Month

Sales

()

Sales forecast

0

200

400

600

800

1000

1200

1400

Year 1 Year 2 Year 3

Sales

(,

000)

Sales forecast


Sales 720,000 1,020,000 1,200,000

Others 0 0 0

Total sales 720,000 1,020,000 1,200,000

Direct cost of sales

Sales 525,600 749,700 882,000

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Management SummaryFounder member Chris Waites is responsible for setting up the Community Grocer, a

social enterprise that runs mobile shops delivering groceries to rural communities and

housebound people in Oxfordshire.

In addition to paid shop management to be appointed, we have a volunteer steering

committee comprised of: -

Pete Stimpson

Ex Head of Finance at Plunkett Foundation, now Financial Controller of Earthwatch

Institute.

Colm Massey

Head of Oxford Co-ops Network, has set up two digital co-operatives.

Marie CacaceSenior Internal Communications Adviser at Oxfam.

Daniel ODriscoll

Head of Volunteering at Oxfam.

Katherine Darling

Works within the co-operative and community enterprise world with particular

expertise in PR and communications.

Jasminder Love

Organisational Consultant, experience dealing with national media.

Chris Mason

Over twenty years experience on F&B and hospitality. Local business manager.

Personnel planAlthough most staffing will be covered by volunteers, experience at TPS London has

taught us that there is a strong advantage to having a core, paid management team who

are responsible for the cash, stock and assets of the supermarket as well as paid,

expert kitchen staff to run the kitchen.

As such, we plan to hire the following staff: -

o One full time General Manager, responsible for daily operations and product

ordering.

o Two full time Assistant Managers, or equivalent part time positions. These will

be responsible for staffing and HR; and stocking and bookkeeping respectively.

o One full time chef to lead the kitchen.

o One part time sous chef (24 hours per week) to cover the chef on days off, and

to assist on busy days.


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General Manager 35,000 35,875 36,770

Assistant Managers 34,000 34,850 35,720

Chef 22,000 22,550 23,115

Sous chef 10,200 10,455 10,715

Total staff 5 5 5

Total payroll 101,200 103,730 106,320

Financial Plan

Break even analysisThe monthly break even point is 46,500

Break even an a ly

0

20000

40000

60000

80000

100000

120000

(12,5

55)

(9,855)

(7,155)

(4,455)

(1,755) 94

5

3,64

56,34

59,04

5

11,745

14,445

Profit (

Revenue() Revenue

F ixed cos t

Total cost

Assumptions: -

Average percentage variable cost: 73%

Estimated monthly fixed cost: 12,555

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Projected profit and lossThe following tables show the projected profits and losses for the first three years.

(2,000)

0

2,000

4,000

6,000

8,000

10,000

Augu

st

Septembe

r

Octobe

r

Novembe

r

Decembe

r

January

Febr

uary

March

April

May

June Ju

ly

Net Profit Monthly Year 1

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000


Net profit

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0

5,000

10,000

15,000

20,000

25,000

August

Septembe

r

Octobe

r

Novembe

r

Decembe

r

January

Febr

uary

March

April

May

June Ju

ly

Gross Profit Monthly Year 1

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000


Gross profit

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Pro forma profit and loss


Sales 720,000 1,020,000 1,200,000

Direct cost of sales 525,600 749,700 882,000

Other production expenses 0 0 0

Gross margin 194,400 270,300 318,000

Gross margin % 27.00% 26.50% 26.5%

Total payroll 101,200 103,730 106,320

Sales, marketing and other

expenses

5,000 6,000 7,000

Depreciation 400 400 400

Leased equipment 0 0 0

Utilities 3,600 3,780 3,970

Insurance 587 601 616

Rent 30,000 30,000 30,000Rates 1,102 1,129 1,158

Employers NI contribution 8,779 8,999 9,223

Profit before interest and taxes 46,732 121,061 159,313

EBITDA 47,132 121,461 159,713

Interest expense 2,750 2,145 1,275

Taxes incurred 8,796 23,783 31,607

Net profit 35,186 95,533 126,431

Net profit % 4.89% 9.37% 10.54%

Projected cash flowThe following table and chart highlight the projected cash flow for the first three years.

(10,000)

0

10,000

20,000

30,000

40,000

50,000

60,000

August

Septem

ber

October

Novembe

r

Decembe

r

January

Februa

ry

Mar

chAp

rilMay

June

July

Net cash flow

Cash balance

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Cash Received

Cash sales 720,000 1,020,000 1,200,000

Cash from receivables 0 0 0

Subtotal cash from operations 720,000 1,020,000 1,200,000

Additional Cash ReceivedVAT received 0 0 0

New current borrowing 0 0 0

New other liabilities (interest free) 0 0 0

New long-term liabilities 0 0 0

Sales of other current assets 0 0 0

Sales of long-term assets 0 0 0

New investment received (membership

fees)

6,000 6,000 6,000

Subtotal cash received 726,000 1,026,000 1,206,000

Expenditures Year 1 Year 2 Year 3

Cash spending 525,600 749,700 882,000Bill payments 150,668 154,639 158,687

Subtotal spend on operations 676,268 904,339 1,040,687

VAT paid out 0 0 0

Principal repayment - current borrowing 0 0 0

Other liabilities principal repayments 0 0 0

Long term liabilities principal repayment 17,000 17,000 16,000

Purchase other current assets 0 0 0

Dividends 0 0 0

Subtotal cash spend 693,268 921,339 1,056,687

Net cash flow (14,814) 80,719 221,964

Cash balance 35,957 114,490 224,921

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Appendices

Sales forecast year 1

Aug Sept Oct Nov Dec JanSales 40,000 45,000 50,000 55,000 77,500 50,000

Others 0 0 0 0 0 0

Total sales 40,000 45,000 50,000 55,000 80,000 50,000

Feb Mar Apr May Jun Jul

Sales 55,000 60,000 65,000 70,000 75,000 77,500

Others 0 0 0 0 0 0

Total sales 55,000 60,000 65,000 70,000 75,000 77,500

Aug Sept Oct Nov Dec Jan

Direct costof sales

29,200 32,850 36,500 40,150 56,575 36,500

Others 0 0 0 0 0 0

Subtotal

direct cost

of sales

29,200 32,850 36,500 40,150 56,575 36,500


Direct cost

of sales

40,150 43,800 47,450 51,100 54,750 56,575

Others 0 0 0 0 0 0

Subtotaldirect cost

of sales

40,150 43,800 47,450 51,100 54,750 56,575

Personnel Plan

Aug Sept Oct Nov Dec Jan

Gen Mgr 2,973 2,877 2,973 2,877 2,973 2,973

Asst Mgrs 2,888 2,795 2,888 2,795 2,888 2,888

Chef 1,868 1,808 1,868 1,808 1,868 1,868

Sous chef 1,444 1,398 1,444 1,398 1,444 1,444

Total staff 5 5 5 5 5 5

Total payroll 9,173 8,878 9,173 8,878 9,173 9,173


Gen Mgr 2,685 2,973 2,877 2,973 2,877 2,973

Asst Mgrs 2,608 2,888 2,795 2,888 2,795 2,888

Chef 1,687 1,868 1,808 1,868 1,808 1,868

Sous chef 1,444 1,444 1,398 1,444 1,398 1,444

Total staff 5 5 5 5 5 5

Total payroll 8,424 9,173 8,878 9,173 8,878 9,173

Pay rises are estimated to be 2.5% annually, added at the end of each year.

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General assumptions


Current interest rate 5.5% 6.5% 7.5%

Long term interest rate 5.5% 6.5% 7.5%

Corporation tax rate 20% 20% 20%

TPS Business Plan

Documents

Transcript of TPS Business Plan