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Business plan

Holy Doughnuts 423 Route 59 Monsey, NY 10952 845-825-4226 Joseph Faerber jfaerbers@gmail.com

I. Table of Contents I. Table of Contents II. Executive Summary III. Company Background IV. Products V. Marketing Plan VI. Operational Plan VII. Management and Organization VIII. Personal Financial Statement IX. Startup Expenses and Capitalization X. Financial Plan 2 3-4 5 6-13 14 15 16 17 18

II. Executive Summary

Holy Doughnuts is a start-up coffee and bakery retail establishment located in Monsey, New York. Holy Doughnuts expects to catch the interest of a regular loyal customer base with its broad variety of coffee and pastry products. The company plans to build a strong market position in the town, due to the guaranteed freshness of all of their products. Additionally, Holy Doughnuts aims to offer its products at a competitive price to meet the demand of the middle-to higherincome local market area residents and tourists.

III. General Company Description

Mission Statement The Doughnut Shops mission is to become the recognized leader in its targeted market for quality donuts and beverages. Company Background Holy Doughnuts is a new business venture. The need for a neighborhood cholov yisroel doughnut shop that specializes in producing fresh products a couple of times a day was identified in this location and after further research a decision was made to pursue this venture. In the next nine months the company intends to open for business and to implement a targeted advertising. The company anticipates 10 percent annual sales growth, and at the end of five years the company anticipates gross sales of $250,000. The goal of this business venture is to deliver a quality product to customers in a friendly and efficient manner. Holy Doughnuts will market their products to the orthodox community ranging in age from eighteen - forty five. The doughnut industry appears to be on the rise, because consumers find comfort in doughnuts. Some of the reasons consumers are seeking their comfort in

doughnuts is new products have been developed without trans fats, in smaller portion sizes and new flavors. Holy doughnuts will succeed as a business venture for several reasons. The location will be along the business sector of the town which will help generate a substantial amount of business from the towns residents. Additionally, our keen ability to assist our customers in a quick and efficient manner will help insure that our customers are in and out without bother. The stores major competitive strength without a doubt would have to be the freshness of our products. The products will be made several times throughout the day. There are many competitors in this type of business including bakeries, bagel stores, and supermarkets. However, in terms of freshness, there products are mediocre. I bring to the business some form of experience in being a part time cashier for a bakery for a single summer. Holy Doughnuts will be a sole proprietorship based on the decision to be my own boss and the capability to make decisions that I feel will benefit the company based on past experiences and judgments.

IV. The Product At Holy Doughnuts our products will consist of a variety of doughnuts, regular and low fat muffins, and coffee. Upon it's inception, Holy Doughnuts will set it's pricing to be competitive within the market to cover startup costs. However, over time, with increased sales, Holy doughnut will lower it's prices a bit under the standard market price. The reasoning for this will be based on the philosophy that a quality product offered at a discounted price will produce more sales based on the increases of demand. V. Marketing Plan Economics - Within the United States, there are more than seven thousand businesses that operate one or more retail locations that specialize in the sale of donuts and pastries. Each year, these businesses aggregately generate more than three billion of revenues and provide jobs to more than seventy thousand

people. Currently, the economic market condition in the United States is mediocre. However, donut shops operate with great economic stability as people continue to purchase donuts/coffee, because they are inexpensive and there are many different flavors to choose from. The growth potential for the business is substantial, because the city of Monsey, New York lacks a doughnut shop that delivers fresh products to the public. A major challenge that the business will face is consumer acceptance and brand recognition. The owner will have to experiment with many different ingredients in order to develop the perfect recipe to satisfy the customers, and receive positive feedback from the customers. A major focus in the business will be the quality of the staff. This will include bakers, kitchen staff, and cashiers. Every member of our staff will be interviewed thoroughly and will have to be prepared to give one hundred percent to their fellow co-workers and customers. A major obstacle for the doughnut industry is the unhealthiness of the product. Many people are health conscious and very careful about

the foods that they consume on a daily basis. Therefore, the business will offer low fat products on their menu to accommodate this type of customer in the marketplace. Product - Holy Doughnuts will offer a variety of doughnuts, (including mini doughnut holes), regular and low fat muffins, and brewed coffee. All of our products will be made with superior ingredients and quality. Customers - Our target audience will specifically be made up of males and females ranging in age from eighteen - forty five. The middle class will account for up to forty five percent of all Holy Doughnuts purchases. Our target audience will earn in between forty thousand and a hundred thousand dollars annually, and a large part of this demographic will come from family units. A typical customer in our doughnut shop will be a working individual who desires to start their day with a fresh doughnut/muffin, and a hot coffee, to give him/her energy to get through the morning. Competition - The competitors of the business will include bakeries, bagel stores, and supermarkets. Competition with other

businesses will relate to the sales of doughnuts, muffins, and coffee. Competitive Analysis - The business will offer a limited of products, relative to its competitors. This will serve as a disadvantage, because the customer will not have the option of choosing from a variety of different products. The price of our products will be competitive at the start of the business, but will be decreased over time. This will serve as a major advantage for the business, because it will boost demand and help generate the necessary funds needed to keep our business striving. The business will pride itself on treating every customer with the utmost respect and quality of service. The reasoning for this will be based on the premise that a product can be undeniably superior, but if the customer is not treated properly the business will not be a success. Upon its inception, the companys reputation will serve as a major disadvantage, because the business will not be familiar to the general public. However, over time, with the success of the

product, and development of a customer base, the business hopes to earn a positive name for itself. The location of the business will be along a major busy street that connects several towns together. This will serve as a major advantage for the business, because it will insure easy access to all those who wish to visit the store. The business will be kept clean and organized at all times. This will be based on the premise that a customers first impression is of prime importance, and must be satisfied in order to insure any type of success in business.

Promotion - A large sign will be posted outside the business displaying the grand opening of the new store. Upon its inception, the business will advertise weekly in local jewish publications, post flyers, hand out business cards, and use word of mouth, to develop a customer base in the city of Monsey. The business will offer discounts for their products, such as coupon vouchers to their regular customers, and special pricing to schools or businesses that order in bulk. Holy Doughnuts will be

popular among the general public, because it will stress the importance of the customers needs and preferences.

Pricing - Upon it's inception, Holy Doughnuts will set it's pricing to be competitive within the market to cover startup costs. Over time, however, with increased sales, the business would like to lower it's prices a bit under the standard market price. The business believes in the philosophy that a customer is willing to go elsewhere if the price is not appealing. Therefore, the future plan of the business is to decrease the prices of their products, and make up the earnings in demand. The business will pride itself on quality customer service and professionalism. This will help insure that the customer visit the business often and spread the word to his/her friends. Proposed Location - The location of the business will be important, because the majority of the customers will be working people going to the store to purchase a quick breakfast in route to their job location. The business will be located along a busy street connecting several towns to insure easy access to all of its

customers. Parking on site will be limited, but the business will contain a drive-thru pickup option to accommodate extra traffic. Distribution Channels - Holy doughnuts will strive to become a major competitor in the retail business of selling various baked goods and beverages. Sales Forecast -

Year 1 Unit Sales Espresso Drinks Pastry Items 86,000 135,000

Year 2

Year 3

94,600 148,500

104,060 163,250

Total Unit Sales Unit Prices Espresso Drinks Pastry Items

221,000 Year 1 $3.00 $1.10

243,100 Year 2 $3.00 $1.10

267,310 Year 3 $2.95 $1.05

Sales Espresso Drinks Pastry Items $100,000 $300,000 $115,000 $360,000 $135,000 $425,000

Total Sales Direct Unit Costs Espresso Drinks Pastry Items

$400,000 Year 1 $0.25 $0.50

$475,000 Year 2 $0.26 $0.53

$560,000 Year 3 $0.28 $0.55

Direct Cost of Sales Espresso Drinks Pastry Items $33,750 $43,000 $38,981 $49,665 $45,023 $57,363

Subtotal Direct Cost of Sales

$76,750

$88,646

$102,386

Personnel plan Year 1 Owner- Manager Pastry Bakers Staff Members Year 2 Year 3 $89,250 $60,920 $35,700

$80,000 $84,750 $55,800 $57,840 $30,000 $32,500

Total People Total Payroll

$165,80 $175,09 0 0 $185,870

VI. Operational plan Production All of the stores products will be made on site. The companys production costs will vary with demand of the product. If the product sells, the company will invest in machinery and supplies that can produce more baked goods at a faster rate. Additionally, the company will encourage customer suggestions about possible new flavors and variations of the products. Location The business has selected a facility that contains five thousand square feet. Power and other utilities will be necessary to run this business efficiently. The business will operate Sunday Thursday between the hours of 6 a.m. and 7 p.m. and Friday between the hours of 6 a.m. and 2 p.m. Personnel - The business will employ two full time bakers, two full time kitchen staff members, three counter/drive-thru window staff members, one mashgiach, and one owner. The bakers will be required to have a minimum of two years experience in the bakery/restaurant business. The kitchen and drive-thru staff will be hired without any experience necessary, provided that they will be committed to their fellow staff members and customers.

The pay structure will vary from earnings of thirty thousand a year to eighty thousand a year. Inventory - The business will order bakery equipment that will help produce the finished product. Suppliers - Belshaw Adametic Bakery group is headquarted in a 120,000 square foot facility located in Seattle, Washington. The group has supplied world class bakery equipment to an international customer base for more than eighty years. Credit Policies The business will not sell their products on credit, because the products will be relatively inexpensive to purchase.

VII. Management and Organization The owner of the company will manage the store on a daily basis. Professional and Advisory Support - The business will employ an accountant to record all the daily transactions, and an attorney to assess the legal fees that will be necessary to incorporate the company.

VIII. Personal Financial Statement Assumptions - Holy Doughnuts will have an annual revenue growth rate of 10% per year. The Owner will acquire $100,000 of debt funds to develop the business. The loan will have a 10 year term with a 9% interest rate. Financing Equity contributions Management investment - $25,000 Total equity Financing Banks and Lenders Banks and Lenders Total Debt Financing Total Financing $75,000 $75,000 $100,000 Year1 Year 2 Year 3 $25,000

Short-Term Interest Rate 9% 9%

9%

Long - Term Interest Rate 10% 10%

10%

IX. Startup Expenses and Capitalization Equipment - $6,000 Rent $5,000

Advertising - $5,000 Renovation - $25,000 Other $38,000

Unforeseen Costs - $7,500 Total $86,500

The Company will not go public until they have successfully found a niche in their market. If this occurs, stockholders will be guaranteed a 4% return for every share that they purchase.

X. Financial Plan 12 Month Profit and Loss projection Sales Gross Margin Net Profit $400,000 $300,000 $135,000

Projected Cash Flow Total Cash Inflow - $340,000 Total Cash Outflow - $250,000 Net Cash Flow Balance Sheet Total Assets Total Liabilities Net worth Break- Even Analysis $190,000 $130,000 $60,000 $90,000

Monthly Revenue Yearly Revenue -

$40,000 $480,000