January 2003

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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................2
1.3 Keys to Success ........................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................3
2.2 Company History........................................................................................................................3
3.0 Products ...............................................................................................................................................6
4.0 Market Analysis Summary..................................................................................................................7
4.1 Market Segmentation ................................................................................................................7
4.2 Industry Analysis .........................................................................................................................9
4.2.1 Competition and Buying Patterns .......................................................................................10
4.3 Target Market Segment Strategy...........................................................................................10
5.0 Strategy and Implementation Summary..........................................................................................11
5.1 Competitive Edge....................................................................................................................11
5.2 Marketing Strategy ..................................................................................................................11
5.3 Sales Strategy..........................................................................................................................12
5.3.1 Sales Forecast .....................................................................................................................12
5.4 Milestones ................................................................................................................................13
6.0 Management Summary ....................................................................................................................15
6.1 Personnel Plan.........................................................................................................................15
7.0 Financial Plan ....................................................................................................................................16
7.1 Important Assumptions............................................................................................................16
7.2 Break-even Analysis................................................................................................................17
7.3 Projected Profit and Loss .......................................................................................................18
7.4 Projected Cash Flow ...............................................................................................................21
7.5 Projected Balance Sheet ........................................................................................................23
7.6 Business Ratios .......................................................................................................................24

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Botanical Bounty
1.0 Executive Summary
Botanical Bounty is an existing farm dedicated to the production of botanical perennials.
Botanical Bounty has been formed as an Oregon-based Limited Liability Corp. (L.L.C.) loc ated
outside of Albany, Oregon. Botanical Bounty is working hard to bec ome a leading producer of
botanical plants for the natural supplement industry as well as plant nurseries. By leveraging a
well thought out business plan exec uted by a skilled management team, Botanical Bounty will
generate over $216,000 in year three sales.
Keys to Success
Botanical Bounty has identified three keys that will be instrumental in their success. The first is
the implementation of strict financial controls. By having the proper controls, production
efficiency will be maximized. The second key will be the never ending pursuit for the industry's
highest concentration levels of botanical ingredients in eac h plant. The third key is the
rec ognition and implementation of the philosophy that 100% customer satisfac tion is required to
ensure a profitable business. Profits are a by product of satisfying customers, not the other way
around.
Products
Botanical Bounty is a 10 ac re farm that concentrates on the growing of botanical medicinals.
Botanical Bounty has chosen five plant species that have significant market demand as well
being well suited for growth in the Willamette River Valley. Botanical Bounty will feature:
Echinacea - an immune system booster; Ginseng - a source of energy; St John's Wort - for mild
depression; Skullcap- for inflammation; and Ginger - a stomac h soother.
Market
Botanical Bounty has three distinct customers: supplement companies, proc essors of botanicals
for supplement companies, and nurseries that resell the plants. The first two customers purchase
the plants for use in their products which they ultimately sell to the end consumer. The market
for natural supplements is quite exciting. Surveys show that over 158 million consumers (over
55% of U.S. population) use dietary supplements. An estimated 115.3 million consumers buy
vitamins and minerals for themselves, and 55.8 million purchase them for other members of their
family, including children. Consumer surveys consistently find that nearly half of all Americans
now use herbs - a statistic that is particularly remarkable when we realize that today's herbal
products industry is just over a quarter century old.
Management Team
Botanical Bounty will be lead by the husband and wife team of David and Sue Nealon. David
brings a wealth of business and projec t management skills to the company. While working at
Yahoo!, David was responsible for the successful launch and market lead capture of Yahoo!s
driving direc tions section. Utilizing these skills, David will be responsible for the business
operations of the farm. Sue, with a bac kground of plant biology will be the driving force of the
operation, growing the highest ac tive ingredient content plants in the country. Additionally,
bec ause of her wealth of knowledge, she will be the leader of the sales department.
Financial Plan
Botanical Bounty began as a hobby for David and Sue two years ago. Over the last two years
they have worked out all of the bugs related to production. Additionally, they are now quite
hungry to succeed, creating one of the premier botanical perennial farms in the country. To
finance our growth and full-time production, we need to purchase $35,000 worth of new
equipment as long-term assets. To that end, we are seeking a $100,000 10-year loan. Sales
forec asts conservatively indicate that $190,000 revenue will be generated in year two, rising to
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Botanical Bounty
$216,000 the following year.

1.1 Objectives
The Botanical Bounty has identified several objec tives for the business:
1. Bec ome a leading supplier of botanical perennials for the health/vitamin industry.
2. Reach the point of sustainable profitability.
3. Enjoy work while making a good living.

1.2 Mission
It is Botanical Bounty's mission to bec ome the leading provider of botanical perennials to the
health/vitamin industry. This will be ac complished by providing quality plants at fair prices while
exceeding customer's expec tations.

1.3 Keys to Success

Botanical Bounty will adhere to three keys that will be instrumental in its success:
1. Strict financial controls.
2. The never ending pursuit of the highest concentration of botanicals in every plant.
3. Ensuring that all customer's needs are met and they are satisfied with the purchased
products.

2.0 Company Summary

Botanical Bounty is an Oregon based perennial farm that grows a variety of botanical medicinal
perennials. The company has been formed as an Oregon L.L.C. The farm has been in existence
for two years now, initially operating as a hobby as rather than a profit producing business.
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Botanical Bounty
2.1 Company Ownership
Botanical Bounty is an Oregon L.L.C. owned by David and Susan Nealon. The L.L.C. business
formation has been c hosen as a strategic way to shield the Nealons from personal liability.

2.2 Company History

Botanical Bounty has been in operation for two years. Initially it was started as a hobby where
Susan c ould use her plant biology skills while covering some of the costs. The Nealon's were able
to ac hieve this lifestyle due to a windfall that David rec eived as a result of exercised stoc k
options. After the second year, the Nealon's dec ided that although they had the money to live
on for many years, it would be irresponsible to needlessly spend it so they got serious about the
business and made a concerted effort to bec ome profitable.
Botanical Bounty has chosen the Willamette River Valley as an ideal plac e to grow perennials.
Botanical Bounty has 10 ac res of land which they use for production. During several of the
winter months, production is moved into their green house for propagation. Botanical Bounty
employs a drip irrigation system for all of the plants.

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Botanical Bounty
Table: Past Performance
Past Performance
2000
$0
$0
0.00%
$0
0

2001
$45,000
$36,000
80.00%
$75,000
0

2002
$46,500
$36,590
78.69%
$74,000
0

2000

2001

2002

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

$0
$0
$0
$0

$50,000
$9,000
$3,000
$62,000

$35,000
$8,000
$4,000
$47,000

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets

$0
$0
$0

$35,000
$7,000
$28,000

$35,000
$7,000
$28,000

Total Assets

$0

$90,000

$75,000

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities (interest free)
Total Current Liabilities

$0
$0
$0
$0

$12,000
$0
$0
$12,000

$13,090
$0
$0
$13,090

Long-term Liabilities

$0

$0

$0

Total Liabilities

$0

$12,000

$13,090

Paid-in Capital
Retained Earnings
Earnings
Total Capital

$0
$0
$0
$0

$0
$78,000
$0
$78,000

$0
$61,910
$0
$61,910

Total Capital and Liabilities

$0

$90,000

$75,000

0
$0
0.00

0
$0
0.00

0
$0
0.00

Sales
Gross Margin
Gross Margin %
Operating Expenses
Collection Period (days)
Balance Sheet

Other Inputs
Payment Days
Sales on Credit
Receivables Turnover

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Botanical Bounty

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Botanical Bounty
3.0 Products
Botanical Bounty offers a range of botanical perennials (plants where the root structure remains,
allowing the plant to regrow every year). Botanical perennials were chosen for two main reasons.
The first is the medicinal value that they offer, therefore the plants have a positive contribution
to society by improving people's health. The second reason is that the market for medicinal
herbs is a very strong industry with excellent growth, ensuring demand for their plants. Botanical
Bounty will offer the following excellent:
Echinacea
Echinacea was used extensively by Native Americans and the early settlers also adopted its use.
It has been used for years in alternative medicine to support the immune system, and to purify
the blood, espec ially during season changes and during the cold and flu season. Sc ientific
studies have confirmed the presence of natural chemicals, echinacosides, which increase white
blood cell ac tivity.
Ginseng
Ginseng stimulates and increases endocrine ac tivity in the body. Promotes a mild increase in
metabolic ac tivity and relaxes heart and artery movements. Stimulates the medulla centers and
relaxes the central nervous system.
St. John's Wort
St. John's Wort has been used as a medicinal for thousands of years, but has only rec ently been
studied for its medicinal value. Now proven to have many highly ac tive compounds including
rutin, pec tin, choline, sitosterol, hypericin and pseudohypericin. The flowers and leaves are
medicinal as analgesic, antiseptic, antispasmodic, aromatic, astringent, cholagogue, digestive,
diuretic, expec torant, nervine, resolvent, stimulant, vermifuge and vulnerary. Some compounds
of the plant have been shown to have potent anti-retroviral ac tivity without serious side effects
and they are being researched in the treatment of AIDS.
Skullcap
Skullcap is a powerful medicinal herb, it is used in alternative medicine as an anti-inflammatory,
abortifac ient, antispasmodic, slightly astringent, emmenagogue, febrifuge, nervine, sedative and
strongly tonic. Some valuable constituents found in the plant are sc utellarin, catalpol, other
volatile oils, bitter iridoids and tannins. Sc ientific studies are proving this to be a valuable plant in
many areas for mental disorders. Skullcap is used in the treatment of a wide range of nervous
conditions including epilepsy, insomnia, hysteria, anxiety, delirium tremens, withdrawal from
barbiturates and tranquilizers.
Ginger
Ginger roots and dried herb are medicinal and edible, it has a spicy, hot, crispy, taste and can be
eaten fresh in small quantities in salads, used as a relish, a condiment, or made into a sauce for
meat, especially good on chicken, or used to make ginger candy. Widely used as an alternative
medicine ginger contains the valuable constituent aristoloc hic ac id, sc ientific study shows it to
have anti-inflammatory, antiviral, antitumor ac tivity, cures warts in some cases and is a broadspectrum antibac terial and antifungal.
Botanical Bounty sells these excellent perennials in plant form for the botanicals to be extrac ted
by their customers. Botanical Bounty concentrates on producing the healthiest plants which
have the highest concentration of ac tive botanicals.

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Botanical Bounty
4.0 Market Analysis Summary
Botanical Bounty has identified three main c ustomer groups: supplement companies; botanical
proc essors; and other nurseries. The customer segments are distinct enough to be able to
target each one differently. The industry that Botanical Bounty produces for has been
undergoing consolidation for several years now. Botanical Bounty will be able to serve the
industry by leveraging their competitive edge of healthy, potent plants.

4.1 Market Segmentation

Botanical Bounty has identified three different target market segments which they will sell to:
Supplement Companies
This customer group manufac tures botanical supplements for their own label products. The
companies purchase the plants and extrac t the ac tive ingredients and transform them into
sellable products for their own brand. There are a handful of large companies that operate in this
market space. Ten years ago there were many different ones but through consolidation the
industry has grown in size but dec reased in the number of different players.
Processors
These customers purchase the the plants, extrac t the botanicals and either sell the
concentrated botanicals to the end producers or they themselves produce the supplement and
sell the final product to other companies for their private label products. In essence they are the
subcontrac tor for the supplement companies. These companies therefore are one layer within
the manufac turing system and do not sell to the end consumer. They ac t as a supplier/proc essor
for the retail brands.
Other Nurseries/Garden Centers
This customer group purchases the plants which they in turn sell at retail to the individual end
consumer. The typical consumer is a health c onsc ious individual who is interested in either
extrac ting the botanical from the plant immediately or growing the plant in their own garden for
future use.

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Botanical Bounty

Table: Market Analysis

Market Analysis
2003
Potential Customers
Supplement Companies
Processors
Nurseries/Garden Centers
Total

Growth
5%
4%
5%
4.58%

2004
21
9
123
153

2005
22
9
129
160

2006
23
9
135
167

2007
24
9
142
175

25
9
149
183

CAGR
4.46%
0.00%
4.91%
4.58%

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Botanical Bounty
4.2 Industry Analysis
The botanical perennial growing market is typically concentrated in several regions around the
U.S. which have optimum growing conditions. While there are a couple mega farms, on the
whole, 78% of the U.S. production comes from growers with 5-20 ac res of land. Approximately
23% of botanical extrac ts are grown abroad and imported into the United States. Reasons for
botanical growth to oc cur overseas is typically based on the type of herb and its ability to grow
better in the respec tive region.
The market for supplements is huge and growing:
U.S. Supplement Market
Surveys show that over 158 million consumers (over 55% of the U.S. population) use dietary
supplements. An estimated 115.3 million consumers buy vitamins and minerals for themselves,
and 55.8 million purchase them for other members of their family, including children. Consumer
surveys consistently find that nearly half of all Americans now use herbs - a statistic that is
particularly remarkable when we realize that today's herbal products industry is just over a
quarter century old.
The basic reason c ited for dietary supplement growth is the desire for self-care. Consumers use
dietary supplement products to help them ac hieve their self-care goals that arise out of a sense
of alienation from the established health c are system. Results from a national survey conducted
in 1999 by Men's Health magazine show that consumers use dietary supplements as a means of
ensuring good health. They also use supplements for very specific medicinal purposes such as
treating and preventing serious illnesses, colds, and the flu; increasing mental sharpness; and
alleviating depression.
The consumer's desire for self-care and the widespread use of dietary supplements may cause
problems for public health. An estimated 22.8 million consumers use herbal remedies instead of
prescription medicine, and an estimated 19.6 million use them with a prescription product.
In the past, except for vitamin and mineral products, dietary supplements, particularly botanical
products, were sold mainly to adults in health food stores. In c ontrast, now such products are
available in supermarkets, other retail stores, and on the Internet, making these products readily
ac cessible to children and other vulnerable populations. The Nutrition Business Journal estimated
that in 1999, U.S. consumer sales of supplements over the Internet amounted to $142 million,
almost three times the previous year's total of $48 million.
The five main c hannels of distribution are: consumer-direc t (includes direc t mail/c atalog, direc t
from sales representatives, multi-level marketing, Internet & infomercial/direc t from television);
food, drug, mass-market stores, health and natural food stores, healthcare professionals and
prac titioners, others.
Channel of Distribution % of $ Sales
Consumer-direc t

42%

Food, drug, mass-market stores

Health natural food stores
Healthcare professionals /
prac titioners
Other

30%
20%
4%
4%
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Botanical Bounty
The 10 largest companies in the botanical and dietary supplement market ac count for 83% of
the total U.S. annual market.
Company 2001 Sales
General Nutrition Companies

$1.4 billion*

Nu Skin Enterprises
Herbalife International
Perrigo
NBTY
Rexall Sundown

$921.60
$899.70
$877.60
$610.10
$590.20

Weider Nutrition International

Twinlab
Nature's Sunshine
Chattem

$335.50
$321.00
$287.40
$272.80

4.2.1 Competition and Buying Patterns

As mentioned previously, competition takes two forms, farms similar in size and production
capacity to Botanical Bounty and megafarms. The similarly sized farms range in size from 5-30
ac res. The number of different herbs grown varies from a handful to upwards of 50. The choice
of plants grown is based on owner preference as well as loc ation and the ability of the loc al
growing conditions to support the different plants.
On the other end of spectrum is the megafarm. These farms have a similar range of species
cultivated, however they differ greatly in production capacity. These farms are huge, typically
not less than 100 ac res, peaking at 300 ac res. These growers however are few number.
The buying patterns of the different customers are typically based on these variables:

Price
Availability
Ability to deliver consistently on long-term contrac ts
Significant % of ac tive ingredients
Consistency.

4.3 Target Market Segment Strategy

Botanical Bounty has chosen the three market segments based on the consistent demand for
botanical extrac ts. While there are other potential customers, they are smaller, less consistent in
terms of demand, and more difficult to reach. The supplement companies, proc essors, and to a
smaller degree the nurseries are attrac tive customers due to the their consistent demand and
typical long-term contrac t needs. There is significant value to these customers for a grower to
consistently offer the same high level of ac tive botanicals in eac h plant and to be able to meet
the needs of large volume, long duration contrac ts.

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Botanical Bounty
5.0 Strategy and Implementation Summary
Botanical Bounty will leverage their competitive edge in order to gain significant market share.
Their competitive edge is their ability to consistently produce plants with high ac tive botanical
percentages as well as a high ratio of healthy plants (sellable).
The marketing strategy will have the objec tive of raising awareness and visibility of their
industry-leading percentages of ac tive botanicals. The strategy will communicate the fac t that
Botanical Bounty's plants will yield a significantly higher amount of botanicals measured per plant.
The sales strategy, in addition to reinforcing the competitive edge, will seek to qualify leads by
concentrating on Botanical Bounty's ability to perform reliably on long-term contrac ts, bec oming
a stable supplier to the larger companies that need a steady supply stream.

5.1 Competitive Edge

Botanical Bounty has a dual competitive edge:
Healthy Plants
The healthier the plant, the faster it will grow, the more botanicals that can be extrac ted from
it. This means an increase in production efficiency due to a larger percentage of plants that are
sellable. Other charac teristics of healthy plants which are important on the production side is:
lower pest counts, more established root structures, and high biomass.
High Concentration of Active Botanicals
This is beneficial to the purchaser bec ause they are buying the plants prec isely for the ac tive
botanicals. High concentration levels are valuable to Botanical Bounty bec ause they increase the
amount of botanicals produced per plant or per ac re, increasing the production capacity of a
given amount of land, thereby increasing their return on investment and increasing the
attrac tiveness of Botanical Bounty's plants relative to the competition.

5.2 Marketing Strategy

The marketing strategy will be based on generating awareness and visibility of Botanical Bounty
and their ability to produce the highest percentages of botanicals. The strategy will rely on
several different forms of communication. The main form is participation in the numerous trade
shows for the industry. The trade shows are where everyone from the industry gathers to meet
and transact business. t is a wonderful plac e to network as well as learn about new
developments in the industry. The second form of communication will be the use of
advertisements. The main venues for advertisements will be industry trade magazines. The trade
magazines are a well read source of information that buyers and sellers refer to for many
different transactions.

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Botanical Bounty
5.3 Sales Strategy
Botanical Bounty's sales strategy efforts will foc us on identifying qualified leads and turning them
into paying customers. The main sales effort that Botanical Bounty will undertake is the
reinforcement of the fac t that Botanical Bounty's plants have the industry's highest percentage
of botanicals. This will be quite appealing to the buyers as this is exac tly what they want, more
botanicals per plant. In addition to selling the buyers on Botanical Bounty's competitive edge of
potent plants, there will be an emphasis on Botanical Bounty's ability to perform on long-term
contrac ts.
Botanical Bounty rec ognizes that the transactions should not be thought of as individual sales,
but as long-term relationships. This is a reasonable assumption based on the fac t that the
customers are in the business of utilizing botanicals, that they will continually have the need for
the botanicals, and that it is far less expensive to establish a relationship with one vendor than
to continually have to find new vendors that can meet their needs.

5.3.1 Sales Forecast

The sales forec ast indicates that growth will be slow but steady. Growth will be slow bec ause of
the time and effort needed to develop the customers. Production is not the slowing element as
Botanical Bounty has been in production for a couple of years. Granted they were not producing
at the same level, or for that matter with the same goal of business efficiency, but nonetheless
they will be able to reasonably raise production to meet the sales needs. During the wet months
of the year, the forec ast reflec ts a tapering of sales as production will fall during these months.
There will however be some sales and production which will be moved inside to the greenhouses.
There are a few risks that could have a negative impact on sales. The first is weather. Plants
are dependant on the weather. A poor growing season will have a serious effec t on production.
This risk is spread amongst all of the producers of the specific region meaning the weather risk is
imposed on everyone, generally not a specific farmer. Another risk that could effect sales is
some sort of pest that could unexpec tedly negatively effect the crops. By planting multiple
botanicals and choosing them based on their heartiness relative to the growing climate, Botanical
Bounty is able to minimize these risks as much as possible.

Table: Sales Forecast

Sales Forecast
Sales
Supplement Companies
Processors
Nurseries
Total Sales
Direct Cost of Sales
Supplement companies
Processors
Nurseries
Subtotal Direct Cost of Sales

2003

2004

2005

$41,385
$35,591
$7,863
$84,839

$93,090
$80,057
$17,687
$190,835

$105,665
$90,872
$20,076
$216,613

2003
$3,104
$2,669
$590
$6,363

2004
$6,982
$6,004
$1,327
$14,313

2005
$7,925
$6,815
$1,506
$16,246

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Botanical Bounty

5.4 Milestones
The value of Botanical Bounty's milestones is in c reating a set of measurable ac tivities that will
be ac hievable goals. The ac hievement of the milestones will be closely monitored and the
assigned person will be held ac countable for hitting the milestones.

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Botanical Bounty
Table: Milestones
Milestones
Milestone
Business plan completion
First large contract
$100K in revenue
Profitability
Totals

Start Date
1/1/2003

End Date
2/1/2003

Budget
$0

Manager
David

1/1/2003
1/1/2003
1/1/2003

4/30/2003
4/4/2004
7/30/2004

$0
$0
$0
$0

Sue
Sue
David

Department
Strategic
planning
Sales
Sales
Operations

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Botanical Bounty
6.0 Management Summary
The Botanical Bounty management team is made up of the husband and wife team of David and
Sue Nealon. David studied at Pomona College, a small liberal arts sc hool in c entral California.
David graduated with a dual major of Business and Philosophy. David worked at a bicycle shop
for a year before joining Yahoo! as employee number 34. David was a Projec t Manager and was
in c harge some business development ac tivities. His first "home run" was the development,
launching, and management of Yahoo!'s driving direc tions service. David rec ognized the value of
providing people with prec ise, custom driving direc tions.
Initially is was a daunting task to develop revenue for this service which the individual users did
not pay for, but David was able to generate sufficient advertising dollars specifically for his
service. David was ultimately responsible for the entire projec t, providing him with a wealth of
projec t management and operations skills. After this direc tion service bec ame the market leader
for this niche, David moved on to other projec ts at Yahoo! David spent a total of four years at
Yahoo! providing him with a wealth of experience.
Sue Derent Nealon is the biology/horticulture manager for Botanical Bounty. Sue studied at the
University of Oregon, first rec eiving her undergraduate degree in biology and later her Master's in
Plant Biology. Sue's Master's thesis was a dual thesis in plant fertility and herbal concentrations.
The plant fertility topic was a study of different types of compost and the effec ts on fertility.
The second topic explored the interrelationships of nutrients and temperature and the effec t
that they have on the plants' production of the respec tive botanicals. The topics of her thesis
were chosen based on her desire to continue with her education professionally as a grower.
After sc hool Sue moved down to California to work at one of the largest indoor growing
operations in California. Wanting to be closer to her parents, the Sue and David moved to the
Willamette River Valley in Oregon in pursuit of Sue's dream of running her own farm. For the first
two years she ran the farm as a hobby, just figuring things out without a concern for profits.
After several serious conversations, they dec ided to really make the farm a business.
Playing to their strengths Sue will manage the farming operations and sales, while David handles
the business operations.

6.1 Personnel Plan

David: Operations including vendor relations, ac counting, and some growing responsibility.
Sue: Head grower and sales. As head grower she is responsible for supervising, sc heduling
plant production, the cutting sc hedules, crop selec tion, growing sc hedules, fertilizer selec tion
and application sc hedules, irrigation system development, and pest control. Bec ause Sue has
the technical knowledge regarding the plants and their industry leading botanical
concentrations, she will be in c harge of sales which will include qualifying leads as well as
participating in the final negotiations and ac count management.
Grower: Sue will have the assistance of a full-time grower in order to allow her to meet her
sales responsibilities.
Laborers: The laborer positions will be seasonal as there is more work required in the summer
months, however, there will always be some laborers on staff throughout the year. Some of
the responsibilities of the laborers are soil tilling, compost distribution, plant collec tions and
trimming.

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Botanical Bounty
Table: Personnel
Personnel Plan
David
Sue
Grower
Laborers
Total People

2003
$18,000
$18,000
$24,000
$27,000
4

2004
$18,000
$18,000
$27,000
$29,000
6

2005
$18,000
$18,000
$29,000
$32,000
6

Total Payroll

$87,000

$92,000

$97,000

7.0 Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions
2003
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

2004
2

10.00%
10.00%
30.00%
0

2005
3

10.00%
10.00%
30.00%
0

10.00%
10.00%
30.00%
0

Page 16

Botanical Bounty
7.2 Break-even Analysis
The Break-even Analysis is shown below.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$13,770

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

8%
$12,737

Page 17

Botanical Bounty
7.3 Projected Profit and Loss
The following table and charts show the Projec ted Profit and Loss.

Page 18

Botanical Bounty

Page 19

Botanical Bounty
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales

2003
$84,839
$6,363
$0
$6,363

2004
$190,835
$14,313
$0
$14,313

2005
$216,613
$16,246
$0
$16,246

Gross Margin
Gross Margin %

$78,476
92.50%

$176,522
92.50%

$200,367
92.50%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Mortgage

$87,000
$10,000
$6,996
$24,000

$92,000
$12,000
$6,996
$24,000

$97,000
$14,000
$6,996
$24,000

Utilities
Insurance
Payroll Taxes
Other

$7,000
$2,400
$13,050
$2,400

$7,000
$2,400
$13,800
$2,400

$7,000
$2,400
$14,550
$2,400

Total Operating Expenses

$152,846

$160,596

$168,346

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($74,370)
($67,374)
$0
$0

$15,926
$22,922
($150)
$4,823

$32,021
$39,017
($800)
$9,846

Net Profit
Net Profit/Sales

($74,370)
-87.66%

$11,253
5.90%

$22,975
10.61%

Page 20

Botanical Bounty
7.4 Projected Cash Flow
The following table and chart display the Projec ted Cash Flow, including our purchase of new
equipment, and the loan (and principal repayment) related to the farm's expansion.

Table: Cash Flow

Pro Forma Cash Flow
2003

2004

2005

$21,210
$58,575
$79,785

$47,709
$126,816
$174,525

$54,153
$158,493
$212,647

$0
$0
$0
$0
$0
$0
$0
$79,785

$0
$0
$0
$0
$0
$0
$0
$174,525

$0
$0
$0
$0
$0
$0
$0
$212,647

2003

2004

2005

$87,000
$73,733
$160,733

$92,000
$78,532
$170,532

$97,000
$88,898
$185,898

$0
$0
$0
$0
$0
$35,000
$0

$0
$3,000
$0
$0
$0
$0
$0

$0
$10,000
$0
$0
$0
$0
$0

$195,733

$173,532

$195,898

($115,948)
($80,948)

$993
($79,955)

$16,749
($63,206)

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 21

Botanical Bounty

Page 22

Botanical Bounty
7.5 Projected Balance Sheet
The Projec ted Balance Sheet table appears below.

Table: Balance Sheet

Pro Forma Balance Sheet
2003

2004

2005

($80,948)
$13,054
$4,000
($63,893)

($79,955)
$29,364
$4,000
($46,591)

($63,206)
$33,330
$4,000
($25,876)

$70,000
$13,996
$56,004
($7,889)

$70,000
$20,992
$49,008
$2,417

$70,000
$27,988
$42,012
$16,136

2003

2004

2005

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities

$4,570
$0
$0

$6,623
($3,000)
$0

$7,368
($13,000)
$0

Subtotal Current Liabilities

$4,570

$3,623

($5,632)

Long-term Liabilities
Total Liabilities

$0
$4,570

$0
$3,623

$0
($5,632)

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$0
$61,910
($74,370)
($12,460)
($7,889)

$0
($12,460)
$11,253
($1,207)
$2,417

$0
($1,207)
$22,975
$21,768
$16,136

Net Worth

($12,460)

($1,207)

$21,768

Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Page 23

Botanical Bounty
7.6 Business Ratios
Business ratios for Botanical Bounty. SIC industry class: Herb or spice farm, code 0139.9905.

Page 24

Botanical Bounty
Table: Ratios
Ratio Analysis
2003
82.45%

2004
124.94%

2005
13.51%

Industry Profile
10.17%

Percent of Total Assets

Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

-165.46%
-50.70%
809.86%
-709.86%
100.00%

1214.94%
165.50%
-1927.72%
2027.72%
100.00%

206.56%
24.79%
-160.36%
260.36%
100.00%

7.31%
27.46%
44.97%
55.03%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

-57.93%
0.00%
-57.93%
157.93%

149.92%
0.00%
149.92%
-49.92%

-34.90%
0.00%
-34.90%
134.90%

24.14%
28.08%
52.22%
47.78%

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

100.00%
92.50%
191.95%
0.00%
-87.66%

100.00%
92.50%
90.33%
0.00%
8.35%

100.00%
92.50%
85.38%
0.00%
14.78%

100.00%
47.84%
33.12%
0.26%
0.82%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

-13.98
-13.98
-57.93%
596.88%
942.65%

-12.86
-12.86
149.92%
-1332.38%
665.15%

4.59
4.59
-34.90%
150.78%
203.40%

1.16
0.55
0.86%
61.86%
2.24%

2003
-87.66%
0.00%

2004
5.90%
0.00%

2005
10.61%
105.54%

n.a
n.a

4.87
59
14.27
33
0.00

4.87
54
12.17
25
78.96

4.87
70
12.17
28
13.42

n.a
n.a
n.a
n.a
n.a

0.00
1.00

0.00
1.00

-0.26
0.00

n.a
n.a

($68,464)
0.00

($50,215)
0.00

($20,244)
0.00

n.a
n.a

-0.09
0%

0.01
150%

0.07
-35%

n.a
n.a

-16.84
0.00
0.00

-20.96
0.00
0.00

0.00
9.95
0.00

n.a
n.a
n.a

Sales Growth

Additional Ratios
Net Profit Margin
Return on Equity
Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 25

Appendix
Table: Sales Forecast
Sales Forecast
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

0%

$300

$432

$565

$2,002

$3,222

$4,323

$4,655

$5,232

$5,989

$6,000

$5,232

$3,433

0%
0%

$258
$57
$615

$372
$82
$886

$486
$107
$1,158

$1,722
$380
$4,104

$2,771
$612
$6,605

$3,718
$821
$8,862

$4,003
$884
$9,543

$4,500
$994
$10,726

$5,151
$1,138
$12,277

$5,160
$1,140
$12,300

$4,500
$994
$10,726

$2,952
$652
$7,038

Direct Cost of Sales

Supplement companies

Jan
$23

Feb
$32

Mar
$42

Apr
$150

May
$242

Jun
$324

Jul
$349

Aug
$392

Sep
$449

Oct
$450

Nov
$392

Dec
$257

Processors

$19

$28

$36

$129

$208

$279

$300

$337

$386

$387

$337

$221

Nurseries
Subtotal Direct Cost of Sales

$4
$46

$6
$66

$8
$87

$29
$308

$46
$495

$62
$665

$66
$716

$75
$804

$85
$921

$86
$923

$75
$804

$49
$528

Sales
Supplement Companies
Processors
Nurseries
Total Sales

Page 1

Appendix
Table: Personnel
Personnel Plan
David
Sue
Grower

0%
0%
0%

Laborers
Total People

0%

Total Payroll

Jan
$1,500
$1,500
$2,000

Feb
$1,500
$1,500
$2,000

Mar
$1,500
$1,500
$2,000

Apr
$1,500
$1,500
$2,000

May
$1,500
$1,500
$2,000

Jun
$1,500
$1,500
$2,000

Jul
$1,500
$1,500
$2,000

Aug
$1,500
$1,500
$2,000

Sep
$1,500
$1,500
$2,000

Oct
$1,500
$1,500
$2,000

Nov
$1,500
$1,500
$2,000

Dec
$1,500
$1,500
$2,000

$1,000
4

$1,000
4

$2,000
5

$2,000
5

$3,000
6

$4,000
7

$4,000
7

$4,000
7

$2,000
5

$2,000
5

$1,000
4

$1,000
4

$6,000

$6,000

$7,000

$7,000

$8,000

$9,000

$9,000

$9,000

$7,000

$7,000

$6,000

$6,000

Page 2

Appendix
Table: General Assumptions
General Assumptions
Jan
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Feb
2

Mar
3

Apr
4

May
5

Jun
6

Jul
7

Aug
8

Sep
9

Oct
10

Nov
11

Dec
12

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

10.00%
30.00%
0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Jan
$615
$46

Feb
$886
$66

Mar
$1,158
$87

Apr
$4,104
$308

May
$6,605
$495

Jun
$8,862
$665

Jul
$9,543
$716

Aug
$10,726
$804

Sep
$12,277
$921

Oct
$12,300
$923

Nov
$10,726
$804

Dec
$7,038
$528

$0
$46

$0
$66

$0
$87

$0
$308

$0
$495

$0
$665

$0
$716

$0
$804

$0
$921

$0
$923

$0
$804

$0
$528

Gross Margin
Gross Margin %

$569
92.50%

$819
92.50%

$1,071
92.50%

$3,796
92.50%

$6,110
92.50%

$8,197
92.50%

$8,827
92.50%

$9,921
92.50%

$11,357
92.50%

$11,378
92.50%

$9,921
92.50%

$6,510
92.50%

Expenses
Payroll

$6,000

$6,000

$7,000

$7,000

$8,000

$9,000

$9,000

$9,000

$7,000

$7,000

$6,000

$6,000

$400

$3,000

$400

$400

$400

$400

$400

$3,000

$400

$400

$400

$400

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$583
$2,000

$500
$200
$900

$500
$200
$900

$500
$200
$1,050

$600
$200
$1,050

$700
$200
$1,200

$700
$200
$1,350

$700
$200
$1,350

$700
$200
$1,350

$600
$200
$1,050

$500
$200
$1,050

$500
$200
$900

$500
$200
$900

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$10,783

$13,383

$11,933

$12,033

$13,283

$14,433

$14,433

$17,033

$12,033

$11,933

$10,783

$10,783

($10,214)
($9,631)

($12,564)
($11,981)

($10,862)
($10,279)

($8,237)
($7,654)

($7,173)
($6,590)

($6,236)
($5,653)

($5,606)
($5,023)

($7,112)
($6,529)

($676)
($93)

($556)
$28

($862)
($279)

($4,273)
($3,690)

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

($10,214)
-1660.83%

($12,564)
-1418.68%

($10,862)
-937.76%

($8,237)
-200.69%

($7,173)
-108.60%

($6,236)
-70.36%

($5,606)
-58.75%

($7,112)
-66.31%

($676)
-5.51%

($556)
-4.52%

($862)
-8.04%

($4,273)
-60.72%

Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales

Sales and Marketing and Other

Expenses
Depreciation
Mortgage
Utilities
Insurance
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

15%

Page 4

Appendix
Table: Cash Flow
Pro Forma Cash Flow
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cash from Operations

Cash Sales
Cash from Receivables

$154
$4,000

$221
$4,015

$290
$468

$1,026
$671

$1,651
$942

$2,216
$3,141

$2,386
$5,010

$2,681
$6,664

$3,069
$7,187

$3,075
$8,083

$2,681
$9,209

$1,759
$9,186

Subtotal Cash from Operations

$4,154

$4,237

$758

$1,697

$2,594

$5,356

$7,396

$9,345

$10,256

$11,158

$11,890

$10,945

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$4,154

$0
$4,237

$0
$758

$0
$1,697

$0
$2,594

$0
$5,356

$0
$7,396

$0
$9,345

$0
$10,256

$0
$11,158

$0
$11,890

$0
$10,945

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$6,000
$13,232
$19,232

$6,000
$4,333
$10,333

$7,000
$6,785
$13,785

$7,000
$4,448
$11,448

$8,000
$4,772
$12,772

$9,000
$5,206
$14,206

$9,000
$5,516
$14,516

$9,000
$5,655
$14,655

$7,000
$8,158
$15,158

$7,000
$5,368
$12,368

$6,000
$5,264
$11,264

$6,000
$4,995
$10,995

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Long-term Liabilities Principal Repayment

Cash Received

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures

0.00%

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

Purchase Long-term Assets
Dividends

$0
$35,000
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

Subtotal Cash Spent

$54,232

$10,333

$13,785

$11,448

$12,772

$14,206

$14,516

$14,655

$15,158

$12,368

$11,264

$10,995

($50,078)
($15,078)

($6,097)
($21,174)

($13,028)
($34,202)

($9,751)
($43,953)

($10,179)
($54,132)

($8,850)
($62,982)

($7,120)
($70,102)

($5,310)
($75,412)

($4,902)
($80,315)

($1,210)
($81,524)

$626
($80,898)

($50)
($80,948)

Net Cash Flow

Cash Balance

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Starting Balances

Current Assets
Cash
Accounts Receivable

$35,000
$8,000

($15,078)
$4,461

($21,174)
$1,110

($34,202)
$1,511

($43,953)
$3,918

($54,132)
$7,929

($62,982)
$11,435

($70,102)
$13,582

($75,412)
$14,963

($80,315)
$16,984

($81,524)
$18,126

($80,898)
$16,962

($80,948)
$13,054

Other Current Assets

Total Current Assets

$4,000
$47,000

$4,000
($6,617)

$4,000
($16,064)

$4,000
($28,692)

$4,000
($36,035)

$4,000
($42,202)

$4,000
($47,546)

$4,000
($52,520)

$4,000
($56,450)

$4,000
($59,330)

$4,000
($59,398)

$4,000
($59,936)

$4,000
($63,893)

Long-term Assets
Accumulated Depreciation

$35,000
$7,000

$70,000
$7,583

$70,000
$8,166

$70,000
$8,749

$70,000
$9,332

$70,000
$9,915

$70,000
$10,498

$70,000
$11,081

$70,000
$11,664

$70,000
$12,247

$70,000
$12,830

$70,000
$13,413

$70,000
$13,996

Total Long-term Assets

Total Assets

$28,000
$75,000

$62,417
$55,800

$61,834
$45,770

$61,251
$32,559

$60,668
$24,633

$60,085
$17,883

$59,502
$11,956

$58,919
$6,399

$58,336
$1,886

$57,753
($1,577)

$57,170
($2,228)

$56,587
($3,349)

$56,004
($7,889)

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Long-term Assets

Liabilities and Capital

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities

$13,090
$0
$0

$4,105
$0
$0

$6,638
$0
$0

$4,289
$0
$0

$4,599
$0
$0

$5,022
$0
$0

$5,331
$0
$0

$5,380
$0
$0

$7,979
$0
$0

$5,192
$0
$0

$5,097
$0
$0

$4,838
$0
$0

$4,570
$0
$0

Subtotal Current Liabilities

$13,090

$4,105

$6,638

$4,289

$4,599

$5,022

$5,331

$5,380

$7,979

$5,192

$5,097

$4,838

$4,570

Long-term Liabilities
Total Liabilities
Paid-in Capital

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$13,090

$4,105

$6,638

$4,289

$4,599

$5,022

$5,331

$5,380

$7,979

$5,192

$5,097

$4,838

$4,570

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Retained Earnings
Earnings
Total Capital

$61,910
$0
$61,910

$61,910
($10,214)
$51,696

$61,910
($22,778)
$39,132

$61,910
($33,640)
$28,270

$61,910
($41,876)
$20,034

$61,910
($49,050)
$12,860

$61,910
($55,285)
$6,625

$61,910
($60,891)
$1,019

$61,910
($68,003)
($6,093)

$61,910
($68,679)
($6,769)

$61,910
($69,235)
($7,325)

$61,910
($70,097)
($8,187)

$61,910
($74,370)
($12,460)

Total Liabilities and Capital

$75,000

$55,800

$45,770

$32,559

$24,633

$17,883

$11,956

$6,399

$1,886

($1,577)

($2,228)

($3,349)

($7,889)

Net Worth

$61,910

$51,696

$39,132

$28,270

$20,034

$12,860

$6,625

$1,019

($6,093)

($6,769)

($7,325)

($8,187)

($12,460)

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