Business & Start-Up Plan Mark's Taco Shack Inc. Prepared By: Mark Test Business Plan for Mark's Taco Shack Inc.| 2014 Confidentiality Agreement The undersigned reader acknowledges that the information provided in this document is confidential in nature and contains proprietary information. This business plan is in all respects confidential in nature (other than information that is publicly available) and that any disclosure or use by the reader may cause serious harm or damage to the operations of the company. The reader also agrees not to disclose the details of this plan without the express written permission of the business owners. Upon request, this document is to be immediately returned to the business owners. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date Business Plan for Mark's Taco Shack Inc.| 2014 Executive Summary This Business Plan is intended to provide an overview of the proposed start-up and operation of Mark's Taco Shack Inc., a new venture proposed by Mark Test, operating in the Mexican Restaurant industry, specializing in the creation of Gourmet Tacos and Traditional Mexican Cuisine, located in London, Ontario. Mark's Taco Shack Inc., also known as Mark's Taco Shack, is seeking funding in the amount of $300,000. As part of this business plan, Mark's Taco Shack has identified its target market, detailed a market segmentation strategy, and conducted an environmental scan (SWOT) to understand the business environment it operates in. We can conclude that this business opportunity is a feasible one, which offers long term stability and growth opportunities. In addition, operational costs have been estimated for Years 1-3 of operation and have demonstrated that with proper business planning and implementing careful cost controls, Mark's Taco Shack can enjoy a financially rewarding and sustainable business model. Mark's Taco Shack will not be without its challenges. The Mexican Restaurant industry continues to change and competition is always a concern. Despite this, we believe that that with careful research and proper management training these challenges can be successfully overcome. The proposed management team brings many strengths to this business, including a deep desire to provide outstanding service to our customers, and build strong relationships within the industry. The Implementation plan detailed herein will outline the short and long-term action items that must be completed to ensure the company’s success. This list includes the designated individual to complete the task, as well as a risk and cost assessment of each implementation step. Overall, this business model appears viable and one that with hard work and prudent financial management, will lead to long-term prosperity for its owners, shareholders and investors. Mark's Taco Shack will be a successful business for years to come. Sincerely, Mark Test Business Plan for Mark's Taco Shack Inc.| 2014 Table of Contents 1. Business Plan Overview 2. Company Summary 3. Operations Overview 4. Market Overview 5. Environmental Scan (SWOT) and Strategy Summary 6. Sales and Profitability Forecast 7. Organizational and Management Team Structure 8. Technology and Tools 9. Implementation Plan 10. Conclusion Appendices A: Sample Marketing Plan for Year 2 B: Detailed Cash Flow Analysis by month C: Owners Resume D: Owners Net Worth Business Plan for Mark's Taco Shack Inc.| 2014 1.0 Business Plan Overview 1.1 Introduction This business plan is intended to provide the reader with background information to evaluate the proposed strategic and operational structure of Mark's Taco Shack Inc., a new company owned by Mark Test. This plan will outline the mission, key success factors, provide a SWOT analysis, discuss operational and functional roles and provide an implementation plan, as well as a financial forecast for Mark's Taco Shack. This plan will provide the reader with insight regarding the proposed operations of Mark's Taco Shack to better understand its potential for future success. 1.2 Objectives Mark's Taco Shack Inc., (from hereon in referred to as Mark's Taco Shack) is a new operation started and owned by Mark Test. Mark's Taco Shack operates in the Mexican Restaurant industry and specializes in the creation of: Gourmet Tacos Traditional Mexican Cuisine The company is located in the London, Ontario region and operates in the London market. 1.3 Use of Funds Mark's Taco Shack is seeking funding in the amount of $300,000 to use as follows: Item Cost Buy equipment $25,000 Get an operating loan $25,000 Purchase of building $250,000 1 Business Plan for Mark's Taco Shack Inc.| 2014 Use of Funds Buy equipment Get an operating loan 9% Purchase of building 8% 83% 1.4 Mission Our Mission is: To provide customers of Mark\'s Taco Shack Inc. in the London market with the best possible value and customer experience, maintaining operational efficiency and providing a reasonable return for our shareholders and owners. 1.5 Vision Our Vision is: To become the company of choice in the Mexican Restaurant industry for consumers in the London market. 1.6 Keys to Success Our keys to success and competitive advantages are: a. b. Excellent customer service Unique or niche product c. Great Location 2 Business Plan for Mark's Taco Shack Inc.| 2014 2.0 Company Summary 2.1 Ownership Structure Mark's Taco Shack will be structured as an incorporated entity. The share distribution for Mark's Taco Shack is as follows: Shareholder % of Shares Mark Test 100% 2.2 Location and Facilities Mark's Taco Shack will have its main operations located at 124 Elm St., in the London, Ontario region. This location has good exposure and is in a high traffic area. 2.3 Licenses, Permits and Registrations The following licenses and permits are required for Mark's Taco Shack to be fully functional: Licenses, Permits and Registrations Process to Obtain Percentage Complete Incorporate Business Register with Government 100% 3 Business Plan for Mark's Taco Shack Inc.| 2014 3.0 Operations Overview 3.1 Product and Service Description Mark's Taco Shack will focus on the provision of the following products: Name Description Gourmet Tacos Gourmet, traditional Mexican tacos. Traditional Mexican Cuisine Authentic Mexican food for those that appreciate the real thing. Mark's Gourmet Tacos 4 Business Plan for Mark's Taco Shack Inc.| 2014 3.2 Competitive Comparison The Mexican Restaurant industry is very competitive, and while Mark's Taco Shack will provide unique products, it is important to conduct a competitive analysis of the main competitors in the industry, their strengths and how we will compete against them. Competitor Proximity Core Strength Competitive Strategy Taco Bell 5-10 km Long history in industry Focus on diverse product Qdoba 5-10 km Strong management team Niche target market 3.3 Suppliers The Mexican Restaurant industry has moderate amount of suppliers. The main suppliers for our company, their proximity, what they supply and the strength of their relationship to Mark's Taco Shack are detailed below. Supplier ABC Food Proximity 25+ km Item Supplied Food Payment Relationship Terms Strength Cash and Carry Weak The greatest supplier constraint facing Mark's Taco Shack is suppliers are located far away. Mark's Taco Shack will overcome this constraint by establishing relationships with other suppliers. 3.4 Distribution Strategy Mark's Taco Shack will be distributing to its customers directly through retail sales. The main distribution challenge facing Mark's Taco Shack is ensuring customers are aware of location. This challenge will be overcome by establishing a strong marketing presence. 5 Business Plan for Mark's Taco Shack Inc.| 2014 4.0 Market Overview 4.1 Market Opportunity Currently, the Mexican Restaurant industry focuses on producing the cheapest product possible. However, a market opportunity that is not currently being met exists for a company producing a more expensive, niche product. No competitor in the target market area currently offers great food and a good ambience. This creates an opportunity for Mark's Taco Shack to meet this market need and develop a competitive advantage. Mark's Taco Shack 6 Business Plan for Mark's Taco Shack Inc.| 2014 4.2 Target Market Description and Size The target market for our products will be Males and Females Aged 30-39 who are parents of teenagers, in the London market. The total population for this target market is 400,000 members. In conducting our market research, we believe that we will be able to capture 1% of this target market in Year 1, providing a total prospective customer base of 4,000 members. This population is increasing, year over year, with a rate of change of 5% per year. 4.3 Unique Value Proposition There is growing demand for unique alternatives in our target market. Mark's Taco Shack will fulfill this need. Our proposed products are specifically designed to meet this market opportunity through providing a great experience for the customer and providing a product not available locally. This will be our unique value proposition. 4.4 Market Position Strategy Mark's Taco Shack is a market nicher, and we must focus on the unique needs of our customers and provide superior customer service. Our competitive advantage is the specialized product we provide. As a Nicher, our focus must be on customer quality and excellent service. Our marketing and advertising style must mirror the unique product we offer. Our unique value must be communicated in all organizational activities. This strategy will lie at the core of our marketing and growth strategy. 7 Business Plan for Mark's Taco Shack Inc.| 2014 4.5 Marketing Budget and Breakdown The total marketing budget available in Year 1 will be $8,500. This budget will be broken down amongst the various media and implemented as follows: Media to be Implemented a. Facebook b. Twitter c. Newspapers d. Foursquare e. Radio Impact This media will allow for effective two-way communication This media will allow for constant news and updates This is the media of choice for this target group This group uses this media on a regular basis This is an effective/cost efficient means to reach the widest audience Total Budget $500 $500 $2,000 $500 $5,000 8 Business Plan for Mark's Taco Shack Inc.| 2014 4.6 Company Website The website for Mark's Taco Shack will be located at: www.facebook.com/markstacoshack/. This will function as the main website for the company and its operations. This site will help Mark's Taco Shack to have a strong Internet presence and will form a central component of our marketing strategy and communication with customers. 4.7 Marketing Budget and Breakdown In Year 2, Mark's Taco Shack will develop a more customized marketing plan that will reflect the results obtained from the first year of operations. This plan will calculate marketing return on investment (ROI) as well as cost per customer obtained, and will influence future marketing strategies to provide the best value for Mark's Taco Shack. A blank sample chart for Year 2 is attached as Appendix A. 9 Business Plan for Mark's Taco Shack Inc.| 2014 5.0 Environmental Scan and Strategy Summary 5.1 Environmental Scan and Strategy Summary This environmental scan will identify the strengths and weaknesses of Mark's Taco Shack, as well as the opportunities and threats that face the broader industry the company operates within. This scan will be an essential component in the development of our growth and competitive strategies. 5.2 Strength–Internal Mark's Taco Shack possesses the following strengths which it will use to build its competitive advantage: The company has a strong and experienced Management Team The business owner or key employees have formal business training We have a management team that is well connected to local community and industry Our Management Team has indepth expertise and knowledge of the industry Our Management Team has strong contacts in the in the industry 5.3 Weaknesses-Internal The following are the weaknesses identified in the Environmental Scan for Mark's Taco Shack and the proposed resolutions for these weaknesses. Weakness Resolution Strategy We have no experience in Marketing or Sales Will attend sales/marketing training We have limited financial resources for Will obtain operating line of credit operating or capital Our Management Team has limited Will attend leadership training seminars Leadership training We have limited partnerships to help with business growth We have limited knowledge of social media/social media marketing Will develop aggressive networking or referral system Will take course to learn new social network marketing and technologies strategies 10 Business Plan for Mark's Taco Shack Inc.| 2014 5.4 Opportunities in Industry-External The opportunities for Mark's Taco Shack, the attributes external to the company that provide the greatest areas for growth and financial opportunity are: A reputation for excellence is important to the industry People are going out to eat more People have become increasingly busy creating a need for our products Our target customer is not price sensitive The economic situation is improving creating growth in demand for our products 5.5 Threats in Industry-External There are many threats that exist in the Mexican Restaurant industry as a whole. While these are not under the control of Mark's Taco Shack, it is possible to mitigate these threats by preparing the company to confront the broader challenges that the industry faces. The following are the main threats and the proposed resolutions identified in the Environmental Scan. Threat Mitigation Strategy The economy is still fragile and We will offer value added to our consumer spending has not returned to pre-recession levels There are many competitors in this industry Customers are increasingly not loyal to specific brands This industry is dominated by many large competitors Firms in this industry are prone to a high rate of failure customers/clients so that we are first in their minds as the go-to company of choice in this industry Differentiate ourselves through our unique product offering Focus on developing exceptional customer service Focus on fulfilling a small niche Develop strong relationships with customers 11 Business Plan for Mark's Taco Shack Inc.| 2014 5.6 Growth and Competitive Strategy Mark's Taco Shack has identified the following items as key components of its growth strategy moving forward: We will provide excellent customer service We will maintain strong profit margins We will develop and maintain a scalable business model In addition, Mark's Taco Shack will focus on the following competitive strategies to distinguish itself from its competitors We will maintain a close eye on the competitive landscape We will be aware of the price charged by our competitors We will be aware of competitors in the landscape These growth and competitive strategies will form the basis of the company’s strategic platform moving forward and will ensure that Mark's Taco Shack remains a competitive industry player. 5.7 Pricing Strategy The proposed price strategy for Mark's Taco Shack is to price our product above market pricing since we are providing a superior product and will ensure that this is communicated in our marketing message. 12 Business Plan for Mark's Taco Shack Inc.| 2014 6.0 Sales and Profitability Forecast 6.1 Cost and Profitability Breakdown The following is a forecasted breakdown of proposed revenue, expenses and profitability for the first three years of operation. Item Revenue # of Expected Customers Average Sales Per Customer Additional Non-Sale Revenue Total Revenue Expenses Direct Materials Direct Labour Direct Overhead Total Cost of Goods Sold Gross Profit Selling & Admin. Expenses Rent/Mortgage Payment Insurance Admin Support Book-keeping costs Licenses and Permits Advertising and Marketing Sales Costs (Commissions) Interest and Bank Charges Loan Repayments Management Salaries Fuel/Transportation Telephone/Internet Freight/Distribution Costs Software Computers/Office Equipment Utilities Office Supplies Professional Fees Miscellaneous Other Total Selling/ Admin Costs Net Profit Net Profit - % of Revenue Contribution Margin/unit Breakeven (#Units) Breakeven - % of Revenue Year 1 Year 2 Year 3 4,000 $35 $0 $140,000 4,200 $35 $0 $147,000 4,410 $35 $0 $154,350 $10,000 $30,000 $10,000 $50,000 $90,000 $11,000 $33,000 $11,000 $55,000 $92,000 $12,100 $36,300 $12,100 $60,500 $93,850 $6,000 $2,000 $0 $2,000 $1,000 $5,000 $0 $0 $0 $50,000 $0 $1,000 $0 $1,000 $1,000 $6,000 $0 $0 $0 $0 $75,000 $15,000 11% $23 3,333 83% $6,600 $2,200 $0 $2,200 $1,100 $5,500 $0 $0 $0 $55,000 $0 $1,100 $0 $1,100 $1,100 $6,600 $0 $0 $0 $0 $82,500 $9,500 6% $22 3,766 90% $7,260 $2,420 $0 $2,420 $1,210 $6,050 $0 $0 $0 $60,500 $0 $1,210 $0 $1,210 $1,210 $7,260 $0 $0 $0 $0 $90,750 $3,100 2% $21 4,264 97% 13 Business Plan for Mark's Taco Shack Inc.| 2014 These costs are higher than the industry average and all attempts will be made to ensure that costs are controlled and profitability forecasts achieved. Having strong financial performance is pivotal to ensuring the continued future success of Mark's Taco Shack and meeting both short-term and long-term financial goals will provide the best security and risk mitigation to our owners, lenders, and shareholders. 6.2 Sensitivity Analysis The following table summarizes the changes to Net Profit under a Low Sales Scenario (representing a 25% decrease) and a High Sales Scenario (representing a 25% increase) in Sales. Year Forecasted Net Profit Low Sales Scenario High Sales Scenario before taxes (25% Decrease in sales) (25% Increase in sales) Net Profit Net Profit Y1 $15,000 $11,250 $18,750 Y2 $9,500 $7,125 $11,875 Y3 $3,100 $2,325 $3,875 Sales $155,000 Sales in $ $150,000 $145,000 $140,000 $135,000 $130,000 Sales Year 1 $140,000 Year 2 $147,000 Year 3 $154,350 14 Business Plan for Mark's Taco Shack Inc.| 2014 6.3 Sources of Funds In addition to this funding, the following sources of funds have been or will be utilized to help finance this venture: Source of Funds Amount Personal savings of Owner $5,000 6.4 Cash Flow Projection A cash flow projection statement (Appendix B) shows a net cash balance in year one of $15,000 and a net cash balance in year two of $24,500. Any months that have negative cash flow will be offset by Positive cashflow from previous months. A cash flow from operations statement for Years 1-2 is available in Appendix B. Our notes and assumptions for these cash flow projections are as follows: All supplies are cash and carry 15 Business Plan for Mark's Taco Shack Inc.| 2014 7.0 Organizational and Management Team Structure 7.1 Organizational Structure and Management Team The organizational structure of Mark's Taco Shack has been designed to provide efficient operations while ensuring sufficient management and shareholder representation in organizational decision-making. The table below details the proposed management team, their role in the organization and area of expertise. Name Proposed Role in Organization Expertise Mark Test President Administration 7.2 Advisors and Board Members The following individuals will serve as advisors and/or mentors to the management team: Individual Company Role John Jones Jones Inc. Advisor 7.3 Management Team Strengths The management team of Mark's Taco Shack has many strengths that will contribute to the success of the company. These are as follows: Good communication skills Excellent team work capacity In touch with industry 16 Business Plan for Mark's Taco Shack Inc.| 2014 7.4 Management Team Weakness Resolution Mark's Taco Shack recognizes that despite having a strong management team, some gaps do exist in the company. These gaps and their proposed resolutions are detailed below. Management Team Gap Resolutions Inexperienced Leadership Find industry mentor Inexperienced financial manager Hire good book keeper Inexperienced with Marketing/Social Media Sign-up for courses to learn these tools 17 Business Plan for Mark's Taco Shack Inc.| 2014 8.0 Technology and Tools The following are the main technologies and tools to be implemented, a description of each, the expected benefit/outcome and the cost of the technology. Technology/ Tool Description Cost $ Social Media $500 Name Facebook.com 18 Business Plan for Mark's Taco Shack Inc.| 2014 9.0 Implementation 9.1 Implementation Plan We have identified several items as “Milestones” in the successful implementation of this business plan. The table below details these milestone items, their risk rating, the individual responsible, the due date, cost of completion and percentage complete. This plan will serve as a roadmap to implementation, ensuring that the company is well positioned with regard to its operational and strategic direction. Milestone Risk Rating Individual Responsible Due Date $ Cost of Completion % Complete Securing start-up funding High Mark Test Immediate $1000 or less 40% Hiring staff High Mark Test 3 months $2500 or less 10% Purchasing Medium Mark Test 6 months $10000 or less 10% High Mark Test 3 months $10000+ 10% Low Mark Test 6 months $10000+ 20% inventory Seeking a location for operations Purchasing equipment and technology for operations 19 Business Plan for Mark's Taco Shack Inc.| 2014 10.0 Conclusion This business plan has provided the reader with background information to evaluate the proposed strategic and operational structure of Mark's Taco Shack Inc., a new venture by Mark Test. This plan has outlined the mission, key success factors, provided a SWOT analysis, discussed operational roles and detailed an implementation plan. Through following the principles and strategies identified in this plan, we are confident that Mark's Taco Shack will achieve sustainability and long-term success. Control Costs Maximize Returns Mitigate Risks 20 Business Plan for Mark's Taco Shack Inc.| 2014 Appendix A: Sample Marketing Plan for Year 2 These are the metrics that will be used to track marketing activities in year 2. Total program Cost Response Rate Conversion Rate Average Customer Purchase Response per Product Line # Sold--Product 1 Response per Product Line # Sold--Product 2 Response per Product Line # Sold--Product 3 Revenue Generated Cost per Response Cost per Sale/Customer Total Campaign Profit Marketing ROI Pamphlets Flyers/ Walk-in Traffic Sandwich Board/ Phone Directories Twitter Campaign Details Facebook Sample Marketing ROI (Return on Investment) Business Plan for Mark's Taco Shack Inc.| 2014 Appendix B: Detailed Cashflow Analysis by Months 1-12 Year 1 Cash flow Projection Year 1 M1 M2 Revenue Sales 11,667 11,667 Other Income 0 0 Total Revenue 11,667 11,667 Cost of Goods Sold 4,167 4,167 Gross Margin 7,500 7,500 Selling and Administrative Expenses Insurance 167 167 Rent/Mortgage 500 500 Admin Support 0 0 Payment Book Keeping 167 167 Advertising/Marketing 417 417 Sales Costs 0 0 (Commission) Licenses/Permits 83 83 Loan Repayment 0 0 Interest, Bank 0 0 Management 4,167 4,167 Charges Fuel/Transportation 0 0 Salaries Telephone/Internet 83 83 Freight/Distribution 0 0 Software 83 83 Computers/Equip. 83 83 Utilities 500 500 Office Supplies 0 0 Professional Fees 0 0 Miscellaneous Fees 0 0 Other 0 0 Total Admin 10,417 10,417 1,250 1,250 Net Cash Expenses Position M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 11,667 0 11,667 4,167 7,500 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 167 500 0 167 417 0 83 0 0 4,167 0 83 0 83 83 500 0 0 0 0 10,417 1,250 Business Plan for Mark's Taco Shack Inc.| 2014 Detailed Cashflow Analysis by Months 1-12 Year 2 Cash flow Projection Year 2 M1 M2 Revenue Sales 12,250 12,250 Other Income 0 0 Total Revenue 12,250 12,250 Cost of Goods Sold 4,583 4,583 Gross Margin 7,667 7,667 Selling and Administrative Expenses Insurance 183 183 Rent/Mortgage 550 550 Admin Support 0 0 Payment Book Keeping 183 183 Advertising/Marketing 458 458 Sales Costs 0 0 (Commission) Licenses/Permits 92 92 Loan Repayment 0 0 Interest, Bank 0 0 Management 4,583 4,583 Charges Fuel/Transportation 0 0 Salaries Telephone/Internet 92 92 Freight/Distribution 0 0 Software 92 92 Computers/Equip. 92 92 Utilities 550 550 Office Supplies 0 0 Professional Fees 0 0 Miscellaneous Fees 0 0 Other 0 0 Total Admin 11,458 11,458 792 792 Net Cash Expenses Position M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 12,250 0 12,250 4,583 7,667 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792 183 550 0 183 458 0 92 0 0 4,583 0 92 0 92 92 550 0 0 0 0 11,458 792
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