Business Plan Three Year Financial Plan

Business Plan Three Year Financial Plan This Assessment Task will address the following Learning Outcomes:
O2: Analyse small business management decision making and strategies for success
LO3: Create a three-year financial plan given a business scenario
LO5: Create a proposal for strategies to improve business performance

Business Plan Three Year Financial Plan
Business Plan Three Year Financial Plan

Assessment Description
You are required to read the following strategic planning transcript and prepare a Business Plan based on the information
A template business plan is provided on the portal to you to use if you wish. You are not required to use the template business
plan. Academic referencing is not required for this assessment.
Transcript from the Strategic Planning Meeting
Tasmanian Gourmet Venison Pty Ltd Date: 4 August 2018
Attendees: David Connery (Director)
Alecia Prior (Director)
Andrew Hewitt (Director) __________________________________________________
David: Welcome, Alecia and Andrew, and thank you both for coming. The topic for discussion today is the consideration and
determination of how Tasmanian Gourmet Venison Pty Ltd will fund its proposed $500,000 business expansion to establish
wholesale/retail butcheries in Hobart and Launceston specializing in organic venison. Is there anything that either of you
wish to say at the outset before we begin our discussion?
Alecia: Thanks, David. I just want to say that I think this is an excellent opportunity to position this company to enjoy the lucrative
market for quality venison products in Tasmania. As a former partner for KPMG where I advised agricultural businesses
for seven years, I cannot recall seeing an opportunity as promising as this.
Andrew: Thanks, David. I’d like to note this company now owns and operates the largest organically certified grazing property in
the Tasmanian highlands. We are the only operator that breeds and processes deer in an on-farm certified abattoir. The size of our deer herd has been expanding for more than ten years and now there is sufficient breeding stock to offer a consistent supply of organic venison products to Tasmanian customers. We’re more than ready to take the next step by vertically integrating the operation into wholesale and retail distribution.
David: Excellent points. Can I ask you, Alecia, why you believe this opportunity has so much promise?
Alecia: Sure. Three new developments strongly suggest that the increase in consumption of organic venison in Tasmania will continue
. First, higher prices for organic meat products now make venison more price competitive than it has been previously.
Second, there is an increasing demand for meat that is free from hormones and antibiotics. Third, our company’s supply of organic venison is now of sufficient volume to assure a consistent supply of product to consumers.
David: Andrew, you worked for ten years in specialist butcher shops in the UK before joining the meat products division of a large food company in Australia. And you have direct experience with hiring, training and directing operations in meat packaging and marketing. Do you agree with Alecia?
Andrew: Yes, I do. And I’d add that our company is committed to providing premium quality organic venison at competitive prices to customers within Tasmania. We’re expanding our current line of organic venison products to include venison rump
steak and venison topside.
David: I have to say I agree with both of you and I’m also excited about this opportunity. I’ve spent all of life on the land in Tasmania, managing the breeding and grazing operation here at TGV for twelve years, and I can honestly say that since incorporating venison into my own diet, I’ve never been healthier. Venison is certainly gaining popularity in today’s
health-conscious consumer market. It is an extremely lean meat and it is the perfect addition to a well-balanced diet.
Venison has far lower fat and cholesterol content than beef, lamb, pork or chicken. It is high in polyunsaturates which are
important in building a healthy body and lowering harmful cholesterol. Venison is excellent for low-fat diets with only 207
calories per 100 grams. Venison is also high in protein and iron. I personally love eating venison and I think Tasmanian
consumers will too.
Alecia: Can you tell us more about your vision for the business expansion please David?
David: No problem. We’ve developed an image and reputation for quality, fresh organic venison at competitive prices. Our
business will continue to convey this image to its two market segments—retail and wholesale. To the retail trade, we will
promote our convenient locations, the health benefits in the diet and the unique taste of organic venison. It will complement
our quality image with clean, attractive facilities and excellent service. Specifically, we’re going to expand our customer
base to include specialty food markets and restaurants. The only direct competitors for organic venison products are two
butchers in Hobart and one butcher in Launceston. All three have previously bought their organic venison from us and are
likely to remain as wholesale customers.
Alecia: Excellent. Andrew, how do we intend to promote these sales?
Andrew: Primarily with newspaper advertising, lifestyle magazine advertising and retail display. The business will make
direct approaches to the wholesale trade. There are 47 restaurants, 21 food markets and 18 specialist butchers constituting
most of the wholesale market. Emphasis will be on the consistency of supply, convenient location, daily delivery service,
impeccable quality, and volume discounts, plus a comprehensive internet site to service both market segments.
David: Very good. Let’s talk about the proposed outlets.
Andrew: We have identified a property in Hobart available for lease for five years with options to renew the lease for a
further two five-year terms. It will require major leasehold improvements, including interior decoration and installation of
a walk-in cold store. The building includes a 135 m2 sales area, a 12 m2 cutting room and a further 80 m2 of space that is
currently unused and available for expansion. We can then establish a second outlet in Launceston once the Hobart outlet is
operational and cash positive.
Alecia: How about staff?
Andrew: We will initially employ two specialist game butchers for the Hobart outlet. The duties of these positions will be to
prepare organic meat products for both the retail and wholesale trade. Four part-time sales assistants will be engaged at
award casual rates and their duties will be selling organic venison products over the counter to retail customers. The
Launceston outlet will be staffed with one specialist game butcher and two sales assistants.
David: Sounds great. Alecia, how about the numbers. Firstly, how are we planning to spend the $500,000 loan?
Alecia: We’ve budgeted $165,000 for new equipment, $245,000 for the leasehold improvements and the remaining $90,000 for
working capital.
David: Right. Have you prepared a balance sheet and income statement?
Alecia: Not yet but the figures look solid thanks to our conservative cash management policy. For current assets we have
$5,000 in cash, $100,000 in accounts receivable, $150,000 in inventory, and $10,000 in prepaid expenses.
David: How about non-current assets?
Alecia: $100,000 in plant and equipment, $50,000 in accumulated depreciation, $150,000 for buildings, and $300,000 in land.
David: And liabilities?
Alecia: Current or non-current? David: Both, please.
Alecia: Sure. For current liabilities we have a $20,000 overdraft, $70,000 in accounts payable, a $60,000 provision for
taxes, and $15,000 in accrued expenses. For non-current liabilities, we have a term loan of $50,000 and a mortgage of
Andrew: I know that as the company’s only shareholders all three of us contributed $100,000 in capital so what do these
figures put our retained earnings at?
Alecia: $100,000.
David: Wonderful. That’s a great position. And how well did we perform this year?
Alecia: We’ve done well. We achieved $1,700,000 in sales revenue. Our beginning inventory was $150,000, with $700,000 in
purchases, and an ending inventory of $120,000.
David: What were our operating expenses?
Alecia: We spent $200,000 on salaries, $70,000 on wages, $100,000 on marketing, $80,000 on occupancy, $50,000 on
administration, and $15,000 in interest.
David: How much have we provided for income tax? Alecia: $80,000.
Andrew: Do we have a plan to repay the $500,000 loan? Alecia: Yes. We plan to pay the loan off in three years. David: And how
do we expect to achieve that?
Alecia: We estimate the business expansion will increase our gross profit by 35%.
David: Well that is all very impressive. Let’s take this to the team for them to develop and deliver the business plan.
Thanks all for your input today.
Alecia: Thank you, David. Andrew:

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