Business Planning for Peony Farmers

Report
Business Planning for Peony
Farmers
What a bank wants to know
• Will it make money?
– Profit and Loss statement
(Will income exceed expenses)
– Market survey
(Who will buy and how much)
• How will you pay them back ?
– Balance sheet
(How much do you have invested)
– Cash flow
(When will you need money)
Business Plans for Peony Pack House
January 27, 2012
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What you want to know
How much money will I make?
(Price/stem * Stems sold) – Costs = Profit
Business Plans for Peony Pack House
January 27, 2012
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Income
Be realistic – know your market.
Everyone thinks their product is super and
deserves a premium that’s great but you need
to plan for the market average.
Business Plans for Peony Pack House
January 27, 2012
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How much money will I need?
What size operation can I afford?
When will I need money?
A break even analysis can tell you this.
Business Plans for Peony Pack House
January 27, 2012
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Variable Costs – increase and decrease
with the amount of stems sold.
• Stems
• Hourly wages
• Boxes and packaging materials
Business Plans for Peony Pack House
January 27, 2012
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How much are you making per stem?
Cost per stem
Variable cost
Stem
$
1.00
Boxes
Rubber Bands
Wooden Cleats
Gel Packs (case)
Shreaded paper
Labor/Benefits (hr)
$
0.0100
$
0.0010
$
0.0200
$
0.0100
$
0.0100
$
0.1000
$
1.15
Subtotal Variable Costs
This example is for a packing house that will buy stems
from grower.
Business Plans for Peony Pack House
January 27, 2012
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Marginal income
If the price for a stem is $2, then you have $0.85
per stem to pay other (fixed) costs.
$2 - $1.15 = $0.85
Business Plans for Peony Pack House
January 27, 2012
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Fixed Costs – remain the same
regardless of how many stems you sell.
•
•
•
•
Buildings,
Utilities,
Land,
Salaries.
Business Plans for Peony Pack House
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Per year
Fixed Cost
Management
Professional Services
Building
Utilities
Cooler
Tables
Buckets
Shears
Total Fixed Costs
$
12,000
$
1,000
$
3,000
$
400
$
500
$
100
$
100
$
100
$
17,200
Business Plans for Peony Pack House
January 27, 2012
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Break Even Point
Fixed Costs
= Break Even Point
(Price - Variable Costs )
Business Plans for Peony Pack House
January 27, 2012
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How many stems do you need to sell?
$17,200
($2 - $1.15)
= 20,259
Business Plans for Peony Pack House
January 27, 2012
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Income
Processing fee (per stem)
Variable cost
Boxes
Rubber Bands ($2.99/0.45 kg)
Wooden Cleats
Gel Packs (case)
Shreaded paper
Labor/Benefits (hr)
$
0.10
Unit Price
$
1.45
$
Cost per stem
0.0145
$
$
0.08
12.15
$
$
0.0008
0.0049
$
12.00
$
0.0120
$
0.0322
Subtotal Variable Costs
Fixed Cost
Management
Professional Services
Building
Land rent (1/10 acer)
Utilities
electricity (kw)
water (month)
sewer (month)
Cooler
Tables
Buckets
Shears
Break Even
$
$
$
$
1,000
100
123
300
12
3
12
12
$
$
$
$
Per year
12,000
300
1,481
3,600
$
$
$
$
$
$
$
24.00
50
50
1,420
100
3
20
3 $
3 $
3 $
12 $
4 $
1,000 $
10 $
72
150
150
17,034
400
2,860
200
$
38,247
$
$
$
$
Per year
1,481
18,234
924
20,639
$
58,886
Fixed costs before Amortization
Amortization
Building
Equipment
Tools
Subtotal amortization
Subtotal fixed costs
Monthly
payment
$
123
$
1,520
$
77
Months
12.00
12.00
12.00
Business Plans for Peony Pack House
January 27, 2012
Stems
588,860
Plants
14,721
Acres
5.89
13
When do you need money?
January
Fixed Costs
Annual
$ 12,000 $
Management
1,000
Professional Services $ 1,000 $ 1,000
$
3,000 $
Building
250
$
400 $
Utilities
$
500 $
Cooler
$
100 $
Tables
$
100 $
Buckets
$
100 $
Shears
Total Fixed Costs
$
February
$
$
$
$
$
$
$
$
2,250 $
1,000
250
-
March
$
$
$
$
$
$
$
$
1,250 $
April
1,000
250
-
$
$
$
$
$
$
$
$
1,250 $
1,000
250
-
May
$
$
$
$
$
$
$
$
1,250 $
1,000
250
500
100
100
100
June
$
$
$
$
$
$
$
$
2,050 $
1,000
250
100
-
July
$
$
$
$
$
$
$
$
1,350 $
1,000
250
100
-
August
$
$
$
$
$
$
$
$
1,350 $
1,000
250
100
-
September
$
$
$
$
$
$
$
$
1,350 $
1,000
250
100
-
October
November December
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,350 $
1,000
250
-
1,250 $
1,000
250
-
$
$
$
$
$
$
$
$
1,000
250
-
1,250 $
1,250
2500
2000
1500
1000
500
0
Business Plans for Peony Pack House
January 27, 2012
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January
Stems sold
Variable Costs
Stem
Boxes
Rubber Bands
Wooden Cleats
Gel Packs (case)
Shreaded paper
Labor/Benefits (hr)
Total Variable Costs
February
0
March
0
April
0
May
0
June
0
July
0
5000
August
20000
September
October
15000
November December
0
0
0
(per stem)
1.00 $
$
0.0100 $
0.0010 $
$
$
0.0200 $
0.0100 $
$
$
0.0100 $
0.1000 $
$
$
$
-
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
50
5
100
50
50
255
$
$
$
$
$
$
$
$
5,000
200
20
400
200
200
500
6,520
$ 20,000 $ 15,000
$
150 $
$
15 $
$
300 $
$
150 $
$
150 $
$ 2,000 $ 1,500
$ 22,765 $ 16,500
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
-
$
$
$
$
$
$
$
$
-
$25,000
$20,000
$15,000
$10,000
$5,000
$-
Business Plans for Peony Pack House
January 27, 2012
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Total Costs
Fixed
January
March
April
May
June
July
August
September
October
November
December
2250
1250
1250
1250
2050
1350
1350
1350
1350
1250
1250
1250
0
0
0
0
0
255
6520
22765
16500
0
0
0
Variable
Total Costs
February
$ 2,250
$ 1,250
$ 1,250
$ 1,250
$ 2,050
$ 1,605
$ 7,870
$ 24,115
$ 17,850
$ 1,250
$ 1,250
$ 1,250
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$-
Business Plans for Peony Pack House
January 27, 2012
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Income
January
Stems sold
Income
Wholesale
Retail
Total Income
0
February
0
March
0
April
0
May
0
June
0
July
0
August
5000
20000
September
October
15000
November December
0
0
0
per stem
$
2.00
$
5.00
$
$
-
$
$
-
$
$
-
$
$
-
$
$
-
$
$
-
$
$
7,000 $ 37,000 $ 27,000 $
7,500 $ 7,500 $ 7,500 $
-
$
$
-
$
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$ 14,500 $ 44,500 $ 34,500 $
-
$
-
$
-
50000
45000
40000
35000
30000
25000
20000
Total Income
15000
10000
5000
0
Business Plans for Peony Pack House
January 27, 2012
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January
February
March
April
May
June
July
August
September
October
November
December
Income
Expenses
$
$
$
2,250 $
$
1,250 $
$
1,250 $
$
1,250 $
$
2,050 $
$
1,605 $
14,500 $
7,870 $
44,500 $
24,115 $
34,500 $
17,850 $
$
1,250 $
$
1,250 $
1,250
Profit/Loss
$
(2,250) $
(1,250) $
(1,250) $
(1,250) $
(2,050) $
(1,605) $
6,630 $
20,385 $
16,650 $
(1,250) $
(1,250) $
(1,250)
Cumulative
$
(2,250) $
(3,500) $
(4,750) $
(6,000) $
(8,050) $
(9,655) $
(3,025) $
17,360 $
34,010 $
32,760 $
31,510 $
30,260
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$$(5,000)
$(10,000)
$(15,000)
Business Plans for Peony Pack House January 27, 2012
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January
February
March
April
May
June
July
August
September
October
November
December
Income
Expenses
$
$
$
2,250 $
$
1,250 $
$
1,250 $
$
1,250 $
$
2,050 $
$
1,605 $
14,500 $
7,870 $
44,500 $
24,115 $
34,500 $
17,850 $
$
1,250 $
$
1,250 $
1,250
Profit/Loss
$
(2,250) $
(1,250) $
(1,250) $
(1,250) $
(2,050) $
(1,605) $
6,630 $
20,385 $
16,650 $
(1,250) $
(1,250) $
(1,250)
Cumulative
$
(2,250) $
(3,500) $
(4,750) $
(6,000) $
(8,050) $
(9,655) $
(3,025) $
17,360 $
34,010 $
32,760 $
31,510 $
30,260
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$$(5,000)
$(10,000)
$(15,000)
Business Plans for Peony Pack House
January 27, 2012
19
Andrew Crow
Alaska Cooperative Development Program
Tel: 907-786-5447
email: anacc@uaa.alaska.edu
http://ced.uaa.alaska.edu/acdp/index.html
Business Plans for Peony Pack House
January 27, 2012
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