Business Plan on "Promera Inc. - Business Expansion Plan"

Business Plan 22 pages (5753 words) Sources: 10 Style: MLA

[EXCERPT] . . . .

Promera Inc. - Business Expansion Plan

Recent trends in America focus on the importance of a healthy diet and exercise. Americans are becoming more conscious about what they eat and where it comes from. I was fortunate enough to be the sole heir of a farm that my grandfather started more than 50 years ago. The farm's primary area of production was fresh produce for the retail market centered around the Los Angeles and Bay areas. Long ago, my grandfather planted an orchard of fruit and nut trees, but he never developed that end of the business. Recent marketing trends focus on the value of fruit and nuts in the maintenance of a healthy diet.

A plan to continue operations of the produce portion of the business. However, in response to recent trends and recognition of the asset that mature fruit and nut trees represent, I wish to build a small processing facility to introduce high-end gourmet products to the local market. This processing facility would allow the business to tap into new marketing avenues and realize profit from what is currently an untapped and underutilized asset. Due to rising overhead costs of production, including fuel and utilities, the produce operation is not producing enough capital to accomplish this expansion. Profit margins are shrinking due to rising costs of production.

This new expansion would allow the business to not only realize an increase in profit, but would help it to grow in new direction in the future. This new direction has higher profit potential than current operations. The company already has enough established fruit and nut trees to being production on a small scale. Funds would be used to build a small packaging facility in an unused building, and to plant new trees for future expansion. The market potential is significant, especially as Americans continue to focus on a healthy lifestyle.

The company will transition from a sole proprietorship, owned and managed by my father, Charles Smith, to an S-Corporation managed by a board of directors. He four managers will also be board members. Each board member/manager will have their own division and will be responsible for that portion of the crop production and valued added packaging and marketing of the product. This transition from family-owned sole proprietorship to corporation will allow the business to operate more efficiently.

The company is already in existence as a sole proprietorship. A majority of the capital needed will fund the construction and inspection of a licensed packaging facility to turn standard crops into value-added products that will increase the profits per unit and will help to expand the market potential. These products will be able to be shipped to locations across the United States and across the globe in the future. This addition is expected to quadruple revenues from the current level and secure potentially larger markets in the future.

In order to succeed, the company needs to borrow $10,000 for refurbishing an existing building property on the site. The existing building must be upgraded with stainless steel equipment and packaging equipment in order meet the needs of the business expansion. This meager sum will mean increased profits and realize greater returns. Production will occur in a stepped progression until final production is realized. This amount of money will mean the beginning of future expansion and the potential to become a major producer of value-added fruit and nut products.

Introduction

Promera Inc. will represent a new structural change for the business started by my grandfather, Smith Family Farms. The addition of a production facility to produce value-added fruit and nut products represents a step that is in keeping with good sustainable practices and recent marketing trends. The reason for this expansion is in response to changes in the marketplace that represent preferences for locally grown produce. Transportation and other overhead costs are the primary reason for the needed business change. These costs have become detrimental to many businesses, and many must make similar changes in order to continue thrive.

Recent market trends that favor healthier choices for food is a primary reason for this change. This change will allow the company to keep up with trends in the marketplace, as well as to keep operating costs as low as possible by supplying a high-end product to a local clientele. Many businesses are in the position of needing to make changes so that they can operate more efficiently. Food is a basic commodity and the family farm must now think like a large corporation in order to continue to grow and remain profitable. The addition of the processing plant will allow Promera Inc., to make these changes, while continuing to branch out into new avenues.

Organizational Structure

Promera Inc. is an offshoot of the old family farm, which was a sole proprietorship. The new company will focus on value-added food products and will be an S-Corporation with my father, brother and I as primary shareholders. In addition, we will also add a production and packaging manager, who will also be a shareholder. These four entities will constitute the board of directors, and all decisions will have to meet the approval of these three persons. As a result, the company will divide into four major divisions. The company has plans in the future to expand into new product lines and this structure will allow the addition of these new branches of the company easily into the corporate structure.

The following chart represents the proposed structure of the new corporate entity.

Promera Inc. Organizational Chart

This corporate structure was chosen largely due to the experience and managerial capabilities of the key personnel. These entities will be paid a base salary, plus production and profit incentives. Charles Smith is a second generation farm manager with over 50 years of production experience in produce and marketing. He successfully inherited and managed the produce business for over 30 years and kept the legacy alive for future generations. He has seen many market changes over his career. His greatest asset to the team is his experience and extended years of success.

Mark Smith grew up working beside Charles on the family farm and gained much valuable insight over the years. Mark obtained a Bachelor's in Business Management from Los Angeles University and spent 10 years as the manager of an insurance company. He combines knowledge of the farm from a very early age and knowledge of management issues and risk. His insight into these issues will be valuable in these regards.

I am Brian Smith and grew up working on the family farm. I graduated from Berkley with a Bachelor's degree in Business Finance. For the past ten years, I worked my way up the ladder in a financial institution to become director of finance at Wachovia Bank. I will be primarily responsible for accounting and financial management areas of the business, in addition to fruit crop production.

The new business will entail a food processing plant. None of the three original family business members felt that they had sufficient expertise in the rules and regulations needed to run the production and packaging facility. Therefore, it was decided to hire in an outside specialist. We chose to hire John Bower as production manager of the food processing and packaging facility. Mr. Bower has a degree in production management and has over 15 years experience in this type of setting.

The above four entities will constitute key shareholders of the company. They have diverse experience in different areas that will be needed for management of the new entity. The company will also hire various laborers and an administrative assistant to run the daily operations. Marketing will be outsourced to a local marketing firm. The chosen entity will be chosen by competitive bid. The person chosen will have to have a demonstrated track record in new market development, as well as to be reasonably priced.

History of Business

Smith Family Farms has been in business for more than sixty years, with a brand and logo that are familiar on local grocery shelves. Although Promera Inc. will be a new business in a new business format, it will still keep many of the elements with which customers identify the brand. Promera Inc. recognizes the value of customer recognition and brand equity. It is essential that customers recognize the brand and the quality that has been associated with it in the past. Although, Promera Inc. is a new business from a technical standpoint, it will not be new to the customers. The advertising campaign will reflect this philosophy.

Formal Business Structure

The business expects to experience seasonal shifts in demand. During spring planting and harvest periods, the demand for labor will be high. The hours of operation will be 7AM to 4PM PDT all year round, but may increase with need during various times of the production year. The business will not have a retail division and will rely on internet sales, distribution to local retailers that are already familiar with the brand, and… READ MORE

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