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Hemp CBD Vertically Integrated Business Plan Template
1. This document contains
Confidential & Proprietary Information
belonging exclusively to BUSINESS NAME
Address Line,
Address Line
Phone: Number
E-mail: info@businessname.com
Web: www.businessname.com
BUSINESS PLAN
2019
HEMP CULTIVATION
EXTRACTION / MANUFACTURING
DISTRIBUTION / RETAIL
2. BUSINESS NAME / BUSINESS PLAN2
Content
Executive Summary................................................... 3
Company Summary.................................................. 4
Market Opportunities.............................................. 5
Start-up Summary..................................................... 6
Financial Summary................................................... 7
Market Overview......................................................... 8
Global Market ............................................................. 9
The U.S. Market........................................................11
Oregon Hemp/CBD Industry..............................13
SWOT Analyses........................................................14
Sales Strategy..............................................................15
Positioning.................................................................16
Marketing Plan.........................................................16
Sales Channels..........................................................17
Industry Leaders.....................................................17
Target Customers....................................................18
Sales Forecast...........................................................19
Operating Plan............................................................20
Cultivation Plan........................................................21
Extraction & Refining.............................................23
CBD Concentrates and Infused Products.......26
Store Location and Facilities...............................28
Physical Security Plan ...........................................29
Packaging and Labeling........................................30
Tracking Solution....................................................30
Organizational Structure......................................31
Personnel Plan..........................................................32
Executive Team........................................................33
Financial Plan..............................................................34
Funding analysis......................................................35
Direct and Operating Expense Breakdown ..37
Profit & Loss Forecast ...........................................39
Cash Flow Statement .............................................40
Balance Sheet............................................................41
Main Ratios ................................................................42
Appendix........................................................................44
4. BUSINESS NAME / BUSINESS PLAN4
Company Summary
BUSINESS NAME (website.com) is a new vertically integrated CBD products supplier and retailer in …,
Oregon. Company will grow hemp, then extract and refine the crude oil into a highly purified
concentrate using a short path distillation process with 75% yields of impute material. BUSINESS NAME
is dedicated to produce and sell premium oil, vape cartridges and pens, tinctures and capsules, edibles
and topicals to service the exploding CBD infused products industry.
BUSINESS NAME is to be organized/formed as a Limited Liability Company (LLC)/Corporation and will
be led by …, who will serve as CEO / Owner.
Main Goals
Own and operate 0,000 sq. ft cultivation facilities in ….
To produce high-grade CBD products and build a recognizable brand in a rapidly growing
industry.
To be fully compliant with all state and local municipalities and be primed and ready for
expansion.
To become an industry-leader in the blossoming extraction industry.
Mission
To grow one of the best hemp plants and produce high-quality infused products to provide
customers with a products and service they trust.
Main Objectives
Net annual income to support operational expenses.
Monthly sales and capacity increasing steadily throughout the first year.
Products & Services
Company will have the ability to vegetate up to 0,000 plants, will grow up to 0 different strains, and will
have the ability to produce from seedling to finished product.
Extraction and manufacturing operations:
1. Processing of biomass in a clean and compliant laboratory.
2. Ensuring all extracts and infused products that will be distributed meets all regulatory
requirements and has passed any and all required laboratory testing.
3. Serve as an informational resource about CBD products.
5. www.businessname.com 5
Market Opportunities
These days, at least 47 countries cultivate hemp for commercial or research purposes. In June 2018, the
U.S. Senate passed its 2018 Farm Bill and in December 2018, President Trump signed the bill into law to
make hemp legal for the first time since the 1930s. The bill removes hemp from the Controlled
Substances Act, effectively legalizing the plant federally and allowing it to be grown, processed, and sold
as an agricultural commodity. Individual states will be authorized to draft their own regulations
governing hemp cultivation.
As outlined in a new report “Global State of Hemp: 2019 Industry Outlook” from New Frontier Data, the
global hemp industry reached $3.7 billion in 2018 and is projected to exceed $5.7 billion in 2020 with
the U.S. hemp market representing 32%.
The U.S. market for CBD products hit $291 million in 2017 – including both hemp and marijuana-
derived sources – while the hemp CBD market has reached an estimated retail value of $145 million. In
2018, hemp-derived CBD products sales accounted for about $390 million. Hemp legalization and new
methods of CBD oil extraction with a growing number of various CBD infused products available in
mainstream markets will lead to an increase in consumer spending on CBD products.
Overall hemp acreage reached 78,176 in 2018 recording a tripling of land under hemp from 25,713 in
2017, with the total number of hemp growing states up to 23 from 19 states, according to the American
hemp advocacy group Vote Hemp. The number of acres of hemp licensed in 2019 totaled over 500,000
in 34 states. The total number of hemp licenses increased from 3,546 in 2018 to 16,877 in 2019.
According to the report from New Frontier Data, U.S. sales of hemp products estimated at about $1
billion in 2018, are projected to grow 27% annually to reach $2.6 billion by 2022 and about half of this
($1.3 billion) are expected to come from hemp-derived CBD products.
108
173
262
291
590
813
1153
1650
1812
2014 2015 2016 2017 2018 2019 2020 2021 2022
U.S. Total CBD Sales, 2014-2022 (in $ millions)
6. BUSINESS NAME / BUSINESS PLAN6
Start-up Summary
The business will be fully funded with $0.0 million. This will include total capital cost of over $0.0
million, leaving nearly $0.0 million as working capital.
Table 1. Start-up expenses, $
$ Quarter 1 Quarter 2 Quarter 3 Quarter 4
CAPEX
Cultivation 1,428,000 0 0 0
Extraction/manufacturing 0 1,275,000 0 0
Retail 0 273,000 0 0
Total 1,428,000 1,548,000 0 0
OPEX
COGS - Cost of Goods Sold 52,162 142,462 266,948 323,364
G&A Expenses - Initial & General
Costs
104,438 29,438 29,438 29,438
G&A Expenses - Cultivation 13,600 20,400 20,400 20,400
G&A Expenses -
Extraction/Manufacturing
0 42,703 42,703 42,703
G&A Expenses - Retail 0 25,877 39,665 40,004
SG&A Expenses -
Marketing & Sales Expenses
26,029 52,290 52,290 52,290
Salaries & Benefits 20,064 20,064 20,064 20,064
SG&A Expenses - Misc. 3,806 3,571 3,571 3,571
Total 220,099 336,804 475,078 531,834
Total, CAPEX and OPEX 1,648,099 1,884,804 475,078 531,834
7. www.businessname.com 7
Financial Summary
BUSINESS NAME will fund its startup costs largely through personal savings/private investments.
From a total investment of $0.0 million, BUSINESS NAME is expected to generate nearly $0.0 million in
gross revenues with net income of nearly $0.0 million in Year 2, its first full year of operations.
Revenues are expected to grow to nearly $0.0 million in Year 3 and $0.0 million in Year 5, with net
income of nearly $0.0 million and over $0.0 million respectively.
After the first year of operations, it is expected that BUSINESS NAME will be able to trim expenses
through realizing business efficiencies, gaining operational experience and industry knowledge.
Direct and Indirect Social Impacts
Company will create more than … new jobs in county with over $... million salaries, $... Social Security
taxes, … Medicare taxes and $... for Insurance each year. Company also intends 0.5% of sales will be
allocated to the schools and different community programs.
Table 2. Taxes flow, $
Year 1 Year 2 Year 3 Year 4 Year 5
Federal Tax 0 126,389 258,121 305,176 332,519
State Tax 0 53,204 108,657 128,464 139,975
Community programs 4,056 11,710 14,534 15,745 16,351
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Year 1 Year 2 Year 3 Year 4 Year 5
Thousands
Revenue & Profit Forecast
Revenue Gross Profit Net Income
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Year 1 Year 2 Year 3 Year 4 Year 5
Thousands
Cash Flow Forecast
Operational Cash Flow Ending Period Cash Flow
8. BUSINESS NAME / BUSINESS PLAN8
Market
Overview
Global Hemp/CBD Market
The U.S. Hemp/CBD Industry
Oregon Hemp/CBD Industry
SWOT Analyses
02
9. www.businessname.com 9
Global Market
These days, at least 47 countries cultivate hemp for commercial or research purposes. The largest
producers of hemp are currently China, USA, Canada, Chile and France.
Figure 1. Hemp Global Acreage (2000-2018) Figure 2. Hemp Global Production (2000-2018)
Hemp acreage in North America and the European Union countries reached record levels in 2018,
nearly 160,000 acres and about 100,000 acres respectively, which could put global acreage at more
than 400,000 acres.
The EU has an active 100,000-acrege hemp market, with production in most member nations.
Production is centered in France, the Netherlands, Lithuania, and Romania. Many EU countries lifted
their bans on hemp production in the 1990s and, until recently, also subsidized the production of “flax
and hemp” under the EU’s Common Agricultural Policy. Most EU production is of hurds, seeds, fibers,
and pharmaceuticals.
China is another major producer, mostly of hemp textiles and related products, as well as a major
supplier to the United States. In 2017, China’s hemp was grown on about 114,000 acres. FAO data also
report hemp production in Chile, China, Iran, Japan, South and North Korea, Pakistan, Russia, Syria, and
Turkey. Other countries with active hemp grower and/or consumer markets are New Zealand, India,
Egypt, South Africa, Thailand, Malawi, and Uruguay1.
According to a new report “Global State of Hemp: 2019 Industry Outlook” from New Frontier Data, the
global hemp industry reached $3.7 billion in 2018.
A “Global Forecast to 2025” report projects the global industrial hemp market to grow at a compound
annual growth rate of 34% from $4.6 billion in 2019 to $26.6 billion by 20252.
1 https://fas.org/sgp/crs/misc/RL32725.pdf
2 https://www.prnewswire.com/news-releases/global-industrial-hemp-market-overview--forecast-2019-to-
2025-focus-on-hemp-seed-hemp-seed-oil-hemp-fiber-and-cbd-hemp-oil-300879995.html
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015 2016 2017 2018
Acres (1,000)
0
100
200
300
400
500
600
700
800
900
2010 2011 2012 2013 2014 2015 2016 2017 2018
Million pounds
10. BUSINESS NAME / BUSINESS PLAN10
Figure 3. Hemp-based products sales, 2018 Figure 4. Hemp cultivation leaders, %
Cannabidiol (CBD) is one of the numerous compounds found in the cannabis plant. CBD oil can be
obtained from two different species of cannabinoids: marijuana and hemp, which come from the same
plant species called Cannabis sativa. Hemp-based CBD oil products have a lower delta-9
tetrahydrocannabinol (THC) concentration, while marijuana-derived CBD oil products have a relatively
high concentration of THC. Therefor, marijuana-based CBD products can be used only when they are
prescribed by doctors while hemp-based CBD oils do not normally require a prescription.
Over the years, the demand for CBD oil has increased in different parts of the world because of the
growing awareness about the health benefits of CBD oil.
The latest trend in the CBD market is growing influence of online retailing. The increasing popularity of
e-commerce businesses worldwide has granted vendors with an opportunity to enhance their profit
margins and revenues. Online and e-commerce channels support both business-to-consumer (B2C) and
business-to-business (B2B) operations.
The global legal market for CBD is forecasted to be worth more than $20 billion by 2022, according to
research firm Brightfield Group3. Technavio’s market analysts estimate that the market will grow to
$2.7 billion by 2022 with an estimated CAGR of more than 31 % (2018-2022)4. The North American
market dominates the global CBD oil market followed by EMEA and APAC.
3 https://www.brightfieldgroup.com/products
4 https://www.technavio.com/report/global-cbd-oil-market-analysis-share-2018
USA
28%
China
33%
Canada
3%
Europe
27%
Australia
1%
South &
Central
America
6%
Africa &
Asia
2%
USA
20%
China
29%
Canada
19%
Europe
25%
Other
7%
11. www.businessname.com 11
The U.S. Market
Hemp’s multitude of uses include building materials, foods, personal hygiene, textiles, and
pharmaceutical drugs that use CBD, a cannabinoid that can be extracted from cannabis in both its
marijuana and hemp forms.
The Hemp Industries Association
(HIA) reported total U.S. retail sales
of hemp products of nearly $700
million in 2016. HIA claims that U.S.
hemp retail sales have grown by
about 10% to more than 20%
annually since 2011. Mostly, this
growth is attributable to sales of
hemp-based care products,
supplements, and foods. Together,
these categories accounted for more
than two-thirds of the value of U.S.
retail sales in 2016.
Hemp Business Journal has also reviewed sales of clothing, auto parts, building materials and various
other products, and estimates the total retail value of hemp products sold in the U.S. in 2017 to be at
least $820 million, including hemp foods (17%); personal care products (22%); textiles (13%);
supplements (5%); hemp derived cannabidiol or CBD products (23%), consumer textiles (13%);
industrial applications (18%); and other products such as paper and building materials accounted for
the remaining 2% of the market.
Hemp imports to the United States – consisting of hemp seeds and fibers often used as inputs for use in
further manufacturing – totaled $67.3 million in 2017, 57% decrease in seed imports from 2017, and
the first half of 2018 puts the import market on pace for a 20% decrease. This descending trend is
expected to continue as the U.S. hemp market continues to mature.
In June 2018, the U.S. Senate passed its 2018 Farm Bill and in December 2018, President Trump signed
the bill into law to make hemp legal for the first time since the 1930s. The bill removes hemp from the
Controlled Substances Act, effectively legalizing the plant federally and allowing it to be grown,
processed, and sold as an agricultural commodity. Individual states will be authorized to draft their own
regulations governing hemp cultivation.
The 2018 Farm Bill defines hemp as the plant Cannabis sativa L. and any part of the plant with a
THC concentration of not more than 0.3 percent by dry weight.
The 2018 Farm Bill removes hemp from the Controlled Substances Act.
The 2018 Farm Bill delegates to states and Indian tribes the broad authority to regulate and limit
the production and sale of hemp and hemp products within their borders. States and Indian tribes
cannot, however, limit the transportation or shipment of hemp and hemp products through their
respective jurisdictions
CBD products produced from industrial hemp are no longer considered Schedule I substances,
CBD products that come from marijuana plants with more than 0.3 percent THC are still federally
illegal.
0
200
400
600
800
1000
1200
2012 2013 2014 2015 2016 2017 2018
Figure 5. U.S. hemp-based products sales, $ million
12. BUSINESS NAME / BUSINESS PLAN12
Overall hemp acreage reached 78,176 in 2018 recording a tripling of land under hemp from 25,713 in
2017, with the total number of hemp growing states up to 23 from 19 states, according to the American
hemp advocacy group Vote Hemp.
In 2019, new hemp growing programs have started in Alabama, Arizona, Arkansas, California,
Delaware, Florida, Illinois, Kansas, Maryland, Massachusetts, New Mexico, Oklahoma and Rhode Island.
The number of acres of hemp licensed in 2019 totaled over 500,000 in 34 states. The total number of
hemp licenses increased from 3,546 in 2018 to 16,877 in 20195.
According to the Global State of Hemp Report, U.S. sales of hemp products estimated at about $1 billion
in 2018, are projected to grow with a combined annual growth rate (CAGR) of 27% from 2018-2022 to
become a $2.6-billion industry.
After the adoption of the 2018 Farm Bill, CBD producers, in particular, will have much greater incentive
to use hemp as their main source for CBD.
The U.S. market for CBD
products hit $367
million in 2017 –
including both hemp
and marijuana-derived
sources – while the
hemp CBD market has
reached an estimated
retail value of $190
million. In 2018, hemp-derived CBD products sales accounted for about $390 million.
5 https://www.votehemp.com/update/vote-hemp-releases-2019-u-s-hemp-grower-license-report-documenting-
planned-hemp-cultivation-in-the-u-s/
Figure 6. Number of licensed hemp producers Figure 7. Acres licensed for hemp cultivation
Figure 8. CBD products sales, millions
609 1,211
3,546
16,877
2016 2017 2018 2019
177190
2017
marijuana
hemp
200
390
2018
13. www.businessname.com 13
Hemp legalization and new methods of CBD oil extraction with a growing number of various CBD
infused products available in mainstream markets will lead to an increase in consumer spending on
CBD products.
New Frontier Data estimates hemp-derived CBD market to reach $1.3 billion in 2022, representing a
27.2% 5-year CAGR.
Oregon Hemp/CBD Industry
Oregon authorized hemp cultivation in 2009, however the first hemp grower was licensed by the state’s
Department of Agriculture only in 2015, after Congress expressly authorized states to allow hemp
cultivation. The state requires separate licenses for cultivation and processing hemp. Each license costs
$1,300 a year.
Regarding to Oregon’s new testing requirements that took effect in October 2017, hemp producers are
subject to the testing requirements, with
100% of registered hemp fields tested for
THC content. ORELAP (Oregon
Environmental Laboratory Accreditation
Program) has already accredited
laboratories who are licensed with the
Oregon Liquor Control Commission (OLCC)
can conduct pre-harvest testing of industrial
hemp.
Even though Oregon allows seed and fiber
production, almost all the hemp growers are
growing plants for CBD extraction.
390
527
712
962
1300
2018 2019 2020 2021 2022
Figure 9. U.S. CBD sales forecasts, $ million
3,469
7,808
2017 acres 2018 acres
14. BUSINESS NAME / BUSINESS PLAN14
According to a search of the Oregon Department of Agriculture database, there are currently 782
licensed growers and 360 licensed seed producers. Oregon has 264 licensed hemp processors, and most
are for the extraction of CBD.
Oregon hemp market growers report that the market is promising6:
$100 or more per pound of dried hemp flowers or buds for use in CBD oil extraction. As in other
states, the material prices vary widely based on CBD content.
About $0.50 per pound for hemp seeds intended to be pressed for seed oil.
The Vote Hemp reported that 7,808 acres of hemp were grown in Oregon in 2018 comparing to 3,469
acres in 20177 and according to the Portland Business Journal8 it is expected over 25,000 acres in
production for the 2019 season.
SWOT Analyses
6 https://hempindustrydaily.com/hemp-state-highlight-tennessee-fights-humidity-lack-processing-bid-gain-
market-share/
7 https://www.votehemp.com/wp-content/uploads/2019/01/Vote-Hemp-Crop-Report-2018-nobleed.pdf
8 https://www.bizjournals.com/portland/news/2019/03/15/oregons-hemp-crop-is-going-to-be-huge-in-
2019.html?iana=hpmvp_ptl_news_headline
S
• Diversification of
business -
cultivation,
manufacturing
and retail
• Diversified,
Strategic
Partnerships
• Extensive
industry
knowledge
W
• Enhanced risk of
banking /
financial / IRS
scrutiny
• Crop loss
possibility due to
pests, heat,
human error, etc.
• High energy
consumption
O
• High growth
industry
• Growing interest
and demand for
natural,
alternative
medicine
• Hemp and hemp-
derived products
legalization
• Global Market
T
• Enforcement of
new DEA rules
• Possible law
changing
• Indicators of a
slowed global
economy
16. BUSINESS NAME / BUSINESS PLAN16
Positioning
The company will have four differentiation strategies:
1. Product Quality – BUSINESS NAME will produce high-quality CBD oil and CBD oil infused
products to establish its brand and provide the most effective treatment for its clients by utilizing
small amount production to always ensure that our consistently high-quality products are in
fresh supply. We will solicit feedback from our customers to continuously improve product
offerings.
2. Referral Networks – We will establish a referral network that supports product consistency,
brand recognition, and reliable delivery.
3. Pricing – BUSINESS NAME will set its price very competitively.
4. Personalized Service – The management team will always be available to talk with customers
and potential customers, providing them with years of experience and expertise.
Marketing Plan
The most effective strategies for CBD companies are direct marketing at industry conferences and other
events, building communities around CBD-related concerns such as health and wellness. The marketing
and sales strategy of BUSINESS NAME will be based on generating long-term personalized
relationships.
Marketing and advertising campaign includes:
A. Information kits for clients: Information kits will include registration forms, brochures, and
general information on the use of CBD products. They will also provide information on how to
process orders.
B. Brochures: We will produce high-quality brochures that will be distributed to clients.
C. Website: We will have a professionally designed website integrated with a payment system. We
will post product photos with detailed information and special promotions to encourage new
visitors to try and returning customers to repeat purchases.
D. While use of paid advertising is limited due to restrictions on terms like cannabis and lack of
distinction between hemp-derived CBD and marijuana-based products because of federal laws,
we intend to build a strong organic following of customers. Some keywords: hemp oil, CBD for
sale, CBD isolate, CBD wholesale, CBD infused products.
E. Social Media: We will have a significant social media presence. Appropriate forums will be
monitored daily, with dedicated staff resources to be active and knowledgeable participants. We
will develop a social media content strategy which will include Twitter, Facebook, Instagram,
LinkedIn and YouTube. Our staff will be trained in the legalities of promoting CBD products.
F. Merchandise: BUSINESS NAME -branded products such as shirts, hats, grinders,
cases/containers, etc. will be offered through our store.
G. Event Sponsorships: Sponsor health, or related industry events to gain brand exposure and
bring the BUSINESS NAME name to the forefront of the community.
17. www.businessname.com 17
Sales Channels
Last year, internet sales remained the
leading sales channel for hemp-
derived retailers with about 60% of
the market, however, it is expected
that natural, specialty and
conventional retailers will increase
market share and internet sales will
drop to less than 40% in 2022 as the
market matures with better
consumer education, product
awareness and more traditional
options become available to
consumers across the United State.
BUSINESS NAME intends to combine retail sales in store and online.
Industry Leaders
In every business there is competition, however, we believe we possess several strengths that will allow
us to remain visible on BUSINESS
NAME radar at all times. CBD
industry is known to be highly
competitive in the most parts of
the world. The industry is
growing and there are
alternative ways through which
clients can obtain their CBD
products.
In this industry, most of the
competitive dynamics center
around the quality of products,
the service offered, the store
location. The branding of
BUSINESS NAME plays a significant role.
-
10
20
30
40
50
60
70
CW Holdings Medical
Marijuana, Inc
CV Science Elixinol Global Isodiol
Figure 11. Hemp-derived CBD leaders, sales 2018 $ million
Internet
41%
Natural &
Speciality Shops
28%
Practioners
20%
Mass-market
& Other
11%
Figure 10. Hemp CBD sales by channel, 2022 forecast
18. BUSINESS NAME / BUSINESS PLAN18
Target Customers
According to a new analysis by Cowen & Co, about 7% of Americans are already using CBD products,
placing the potential market capacity at $16 billion by 2025. The survey also found that CBD products
use is highest among consumers aged 18 to 34. Liquid form (tinctures) accounted for the biggest share
of the market at 44%, followed by topical forms at 26%, edible forms (capsules) at 22% and drinks at
19%.
Given that CBD users consistently ranked CBD’s lack of psychoactive effects as its best feature, it makes
sense that for CBD consumers quality and CBD:THC concentration have more priority comparing to the
price and other factors.
The absence of competition from the black market also gives CBD product manufacturers an edge,
because lower-cost alternatives do not yet exist, however, as the market matures and economies of
scale lead to lower unit costs and prices, it is likely that CBD consumers will become more price
sensitive as well.
Figure 12. CBD products sales, millions
87%
12%
1%
2017
Supplements
Topicals
Food&Other
Products
79%
16%
5%
2022
19. www.businessname.com 19
Sales Forecast
During the first year, Company expects to generate about $0,000,000 in revenue.
From the second year Company will generate income from $3,500-$7,000 a day for the first few months
with increasing to about $20,000 a day within 1-2 years for a retail business and over $0,000,000 from
the bulk sales.
Figure 13. Sales forecast, $
From a total investment of $000,000, BUSINESS NAME is expected to generate nearly $0.0 million in
gross revenues with net income of nearly $0.0 million in Year 2, its first full year of operations.
Revenues are expected to grow to nearly $0.0 million in Year 3 and $0.0 million in Year 5, with net
income of nearly $0.0 million and over $0.0 million respectively.
Table 3. Sales Forecast for first three years, $
$ 1m 2m 3m 4m 5m 6m
Year 1 0 0 0 0 0 253,415
7m 8m 9m 10m 11m 12m
Year 1 276,452 299,490 322,528 345,565 368,603 391,641
1m 2m 3m 4m 5m 6m
Year 2 414,678 437,716 460,754 483,791 506,829 506,829
7m 8m 9m 10m 11m 12m
Year 2 506,829 506,829 506,829 506,829 506,829 506,829
1m 2m 3m 4m 5m 6m
Year 3 608,195 608,195 608,195 608,195 608,195 608,195
7m 8m 9m 10m 11m 12m
Year 3 608,195 608,195 608,195 608,195 608,195 608,195
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Retail
CONCENTRATES BEVERAGES EDIBLES TOPICALS
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Bulk
CONCENTRATES BEVERAGES EDIBLES TOPICALS
20. BUSINESS NAME / BUSINESS PLAN20
Operating
Plan
Cultivation Plan
Extraction Technologies
Products Manufacturing
Store Location & Facilities
Packaging & Labeling
Tracking Solution
04
21. www.businessname.com 21
Location and floor plans
Our cultivation & extraction/manufacturing facilities will include:
• Growing Area
• Extraction Area
• Refining Area
• Compounding Area
• CBD Infused Production Area
• Commercial Kitchen & Dish Wash Area
• Packaging Area
• Storage & Shipping Area
Cultivation Plan
Outdoor Hemp Farming
BUSINESS NAME plans outdoor hemp farming in 000 acres of agricultural land in …. Hemp will be
planted through mid-to-late Month and Company expects to harvest 0,000 plants per acre.
Indoor Hemp Farming
BUSINESS NAME plans indoor hemp farming in 00,000 sq. ft industrial facility in …. The cultivation
premises will be adequate to house and grow up to 0,000 plants.
Greenhouses combine the latest technology in HVAC, light deprivation, environmental controls,
irrigation, insect exclusion, benching systems, hybrid techniques, and much more to create a systematic
and efficient growing approach:
A. The biggest advantage Greenhouse Hemp Growers have is the abundance of natural light coming into
the greenhouse.
B. While hemp likes long daylight during the vegetative stage, a good blackout system is required for
the best flowering production.
C. Heating and Cooling Systems are an important component of the hemp greenhouse.
D. Ventilation is essential as with all greenhouse crops. Our integrated growing solutions will include
air filtration systems where required.
E. A nutrient management system is essential for maximizing the production yield of the hemp plants
and ensuring consistent and reliable quality.
F. The computer control systems control and monitor all the nutrients, lights, blackout, air circulation,
CO2 and irrigation needs of the plants and can handle different environments for propagation, cloning
and flowering.
Our company will grow from seeds/clones of the following strains:
…
22. BUSINESS NAME / BUSINESS PLAN22
Phases of Production
• Emergence of seedlings: Day 5-7
• First true leaves: Day 7-10
• Second true leaves: Day 10-12
• Third true leaves: Day 12-15
• Fourth true leaves: Day 15-25
• Beginning of flowering: Day 25-30
• Beginning of pollination: Day 30-35
• Peak time of pollination: Day 40-45
• Apparent seed formation: Day 55
• End of pollination: Day 55-65
• Small smell from females beginning:
Day 50-60
• 30-70% mature seed: Day 70-80
• 60-80% mature seed: Day 90-100
• Male flowers Normally dead by day 100
• Harvest time: Day 100-120 after sowing
Product Timeline and Production Schedule
As growing stage will start from …, sales are projected to be started from the … and they will
significantly increase from the second year.
Company will have the ability to vegetate up to 6,000 plants and flowers concurrently, will grow up to
11 different strains, and will have the ability to grow from seedling/cloning to finished product.
Company intends to grow 5-7 exclusive strains that other growers do not have.
Table 4. Growing Assumptions, first six months
M1 M2 M3 M4 M5 M6
Sq. ft. available for growing
Number of plants
Yields, pounds
Figure 15. Yields forecast, pounds
Seedlings Plant Vegetation Plant Flowering
Plant Pollination Harvesting
Lab Testing &
Quality
Assurance
Extraction Vault Storage Inventory
Shipping
Figure 14. Phases of production
0 2,000 4,000 6,000 8,000 10,000
Year 1
Year 2
Year 3
Year 4
Year 5
Fiber
Seeds
Bio-mass
23. www.businessname.com 23
Extraction & Refining
Supercritical CO2 Extraction Method
We intend to use a High Production CO2 Extraction Equipment to get a CBD primary extract containing
a full spectrum of cannabinoids and terpenes of which the THC level is below 0.3%. The equipment
utilizes Dual-Phase Pumping System – a liquid pump that allows for high CO2 flows at higher pressures
and the Diaphragm Compressor Technology gas pump for energy efficiency and cold separation, these
systems will provide high production with a wide range of processing options for supercritical and
subcritical extractions.
The system can process up to 00 pounds of dried
material per day and uses 3-phase 208v, 230v,
460v. Equipped with CO2 storage tank.
Hemp is ground up and added to the extraction
vessel. CO2 is pressurized and passed over the
plant material. The pressurized CO2 can either be
processed subcritically (low pressure, low
temperature) or supercritically (high pressure,
high temperature), depending on the desired
outcome. Subcritical extracts will require less
post processing, while supercritical extracts will
need post processing work to remove undesired
plant compounds like fats and waxes.
We have identified the most prominent manufacturer of CO2 extraction systems and intend to use the
following equipment:
…
Main Features:
Fully automated
Highest yield per hour
Ideal for high-volume production
Most versatile – runs subcritical and supercritical
Dual-Phase Pumping System (liquid and gas)
Multiple 3-phase power options
Valveless Expansion Technology
Widest supercritical range
24. BUSINESS NAME / BUSINESS PLAN24
Ethanol & Hydrocarbon Extraction Methods
Ethanol Advantages:
The FDA classifies ethanol as “Generally Regarded as Safe,” or GRAS, meaning that it is safe for
human consumption.
Ethanol is safer than butane and more effective than supercritical CO2.
The ethanol removed from the finished concentrate can be reused in multiple extractions, which
effectively eliminates the production of chemical waste.
Ethanol extraction method is great for creating a full spectrum hemp extracts and tinctures.
Hydrocarbon Advantages:
Butane/Propane extraction technique is the most
cost-efficient extraction method available.
With an average extraction cycle of less than one
hour, BHO is the fastest commercial extraction
method. That is 9 times faster than the average 9
hours comparable CO2 supercritical extraction
cycle.
Certified BHO extraction is safe and if correctly
installed, pose no safety risk or risk to the
environment. BHO extraction is also US FDA-
approved and this method of extraction is
currently also widely used for the extraction of
vegetable oils from seeds such as soybeans, canola, sunflower and flax.
Can resolve some ethanol extraction disadvantages, including the limitation in the products can
be produced and high post processing labor intensive, involving the use of several different
methods of refinement and filtration.
That is why we intend to use a High Production Extraction system, which is equipped for both ethanol-
and hydrocarbon- based solvents, to get a CBD primary extract containing a full spectrum of
cannabinoids and terpenes of which the THC level has tested below 0.3%. We have identified the most
prominent manufacturer and plan to use the following equipment:
….
The process begins with the double-jacketed reactor, walk-in freezer, or chest freezer, which allows to
keep a constant negative temperature on the solvent while the extraction process takes place. To
achieve this, the cryogenic chiller takes the coolant down to -20˚C and this is pumped between the glass
layers in the reactor. The solvent will be kept in the inner container and the frozen material will be
soaked for a period of time.
Once the soak is complete, the plant material will be removed, and the extract will be filtered into the
rotary evaporator (or large-scale reactor), through a series of filters. The rotary evaporator stays under
vacuum, which allows distillation and reclaim of the alcohol at low temperature, thus keeping the more
volatile molecules intact. The reclaimed alcohol will then be reused for another extraction.
25. www.businessname.com 25
Cold Press Method
In procedures for oil production where it is essential to yield maximum nutritional value, mechanical
extraction by a screw press is the technology of choice.
The most common method is single-stage cold pressing, which is a natural means of obtaining a high-
quality ‘virgin’ oil. This process takes place inside the screw press, where changes in the shape of the
screw flight or also narrowing at the outlet of the press cause a gradual compaction of the material. The
associated friction leads to an increase in temperature, which, however, must not exceed 50 C during
cold pressing.
The pressing machinery contains holes through which the expelled oil can flow out. Thus, there is no
need for chemical solvents at any stage of the process. As the oil obtained in this way contains solid
particles that came in the seeds (the so-called solids), subsequent filtration is necessary. For oil
filtration, plate filters are commonly employed. In this setup, the solids are used as a filtration medium
for the process.
We intend to use high-capacity presses …, which allows processing of … to … lbs. of seeds per hour and
are specially developed for CBD oil. The equipment works with a wide range of seeds and allows an
easy transfer between the crops. It has a two-stage pressing configuration, whereby the oilseed is pre-
pressed first and the remaining material is pressed again in the final press. This configuration is still
very careful and natural (it is still cold-pressed); its advantage is a higher oil yield.
Post-Processing Short Path Wiped Film Distillation
We will also use a High Production WFE system to get a pure oil.
The rotating wiper system distributes the … CBD oil onto the
inner wall of the short path evaporator, the evaporation process
is sped up by the rotating wipers spreading the oil into a thin
film layer so that the heat transfer and molecule transfer are
optimized. The residence time is less than 10 seconds and the
vapors are condensed onto the internal condenser. The short
path distillation process is split into two passes - the first pass in
the evaporator isolates the Terpenes from the cannabinoids and
the second pass removes the lipids, impurities and solvents leaving product with an odorless high value
clear distillate. The distillation process creates a distillate that can produce a fine oil used for cartridges,
tinctures or edibles. Utilizing this WFE system offers high-capacity, high-production operations with
fast, efficient molecule of botanical oils without thermal degradation. We have identified the most
prominent WFE manufacturer and have purchased model number … from … manufacture ….
Main Features:
• Continuous feed
• Low processing temperatures
• Ideal for high-volume production
26. BUSINESS NAME / BUSINESS PLAN26
Production Forecast
For the purposes of this plan, we will assume that a 10 lbs. of dried materials will yield about 0.35 lbs. of
high-quality pure extractions.
We intend to start with 0.0 pounds of material per day for first month and increase on 0.0 pound more
during next months until reaching 0.0 pounds per day.
CBD Concentrates and Infused Products
Manufacturing Equipment
Table 5. Processing & manufacturing equipment
Lab+ Manufacturing+ Packing + Storage $
Decarb Ovens 5,000
Blenders / Mixers 1,500
Mixing Stations X3 5,000
Gel Cap Machines 25,000
Patch and Thin Film Machine 100,000
Fill Station Tinctures 10,000
Fill Station 510 Vape 5,000
Packaging / Labeling 20,885
Commercial Kitchen + Dish Wash Area
Top Induction Stations 7,000
Tray Bake Oven Turbo 8,000
Bake Prep Area 2,500
Walk in Freezer 5,000
Walk in Cooler 5,000
Venti Hoods 5,000
Mixers 2,500
Bake Equipment 5,000
Candy Equipment 5,000
Chocolate Equipment 5,000
Stainless Tables and Cabinets 6,925
Dish Washer 4,500
Figure 16. Pure CBD Oil production forecast, gram
36,198
93,820
117,017
126,768
131,644
YE A R 1 YE A R 2 YE A R 3 YE A R 4 YE A R 5
27. www.businessname.com 27
Production
BUSINESS NAME will produce 1000 mg CO2
CBD oil Vape Pens/ Cartridges, 1000mg
capsules and suppositories packs, 1000mg
pure oils and 450mg tinctures jars.
BUSINESS NAME also intends to offer CBD-
infused beverages and a wide range of
topicals, including patches, creams and
ointments.
All BUSINESS NAME products will include
Laboratory Test Results in their packaging.
Our edibles and topicals product
manufacturing facilities will be located within processing room.
Production Facilities:
- Manufacturing rooms are entirely enclosed (i.e. walls, ceiling, and doors).
- Walls, ceiling, and floor surfaces are smooth, durable, and easily cleanable.
- Fiberglass reinforced plastic or similar durable surfaces above the sinks and/or edible product
prep table/counters.
- Toilet room will be isolated from the manufacturing rooms and has hand sinks equipped with
water control valves to prevent recontamination of clean, sanitized hands. There will be soap
dispensers and paper towel dispensers or mechanical hand drying devices, mechanical
ventilation and a door closer.
- Edibles and topicals products processing will also include packaging of exposed edible items into
consumer sealed packages. Bottling operations will be conducted inside of the processing room.
- Lighting will be protected for breakage, and adequate ventilation will be provided to maintain a
suitable environment for edible product manufacture.
Figure 17. Concentrates, edibles and topicals production forecast, units
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
YE A R 1 YE A R 2 YE A R 3 YE A R 4 YE A R 5
CREAMS AND OINTMENTS (250mg)
PATCHES SINGLE BOX (100mg)
DAYTIME FORMULA, SUPPOSITARIES
(1000mg)
SOFT GEL PILLS 30 COUNT BOTTLE
(1000mg)
TINCTURES (450mg)
CBD-INFUSED BEVERAGES (12-b pack,
120mg)
VAPE, PENS, CARTIDGES (1000mg)
OIL (1000mg)
28. BUSINESS NAME / BUSINESS PLAN28
Store Location and Facilities
The physical address of our retail shop will be:
Address
A site plan showing the entire structure of the retail center, including the street(s), parking lot(s), other
tenants within the facility, and any other entities that physically border the store is shown the
attachment.
Floor Plan
A floor plan of the retail store detailing the location of the following:
A. All entrances and exits
B. The location of any windows, skylights, and roof hatches;
C. The location of all cameras, and their field of view;
D. The location of all alarm inputs (door contacts, motion detectors, duress/hold up devices) and
alarm sirens;
E. The location of the digital video recorder and alarm control panel.
Insert Floor Plan
29. www.businessname.com 29
Physical Security Plan
Premises Access
All external doors and gates will be secured by commercial locks.
During not operating hours, all materials and finished product will be stored in a secure area.
When not operating, all exterior doors, windows, or other points of ingress/egress will be locked.
Premises Alarm & Monitoring
The premises will have an alarm system programmed to activate upon unauthorized breach of
any door, window, or other point of entry.
The alarm system will be capable of detecting unauthorized access to any portion of the premises,
including any unenclosed portion of an outdoor production operation.
The alarm system will provide notification to an authorized representative in the event of any
unauthorized entry to any portion of the premises.
The alarm system will provide a mechanism to contact law enforce by one or more of the
following methods:
o At least two “panic buttons” are installed on the premises that can trigger the alarm
system and immediately notify a security company or law enforcement.
o An operational landline telephone is present at all times within the limited access area
that is capable of contacting security or law enforcement.
Video Surveillance
1. The premises will be equipped with a video surveillance system.
2. Cameras will cover all areas within 15 feet of all points of entry/exit from the premises in all
directions.
3. All cameras will record continuously 24 hours a day at resolution of 1280 x 720 pixels or better
in all lighting conditions.
4. The surveillance room will contain a list of personnel authorized to access the surveillance
system.
5. We will keep a log of all maintenance activity for the surveillance equipment including name of
the individual, date and time of access, and reason for access.
6. The surveillance system will include a monitor capable of viewing video from any camera, a
digital archiving device, and a printer.
7. The surveillance system will have a backup battery that will provide at least one hour of
continuous recording in event of any power failure.
30. BUSINESS NAME / BUSINESS PLAN30
Packaging and Labeling
Company will conduct the following regulations for packaging and labeling:
1. Products packages and labels shall not be made to be attractive to children.
2. All products labels shall include the following information, prominently displayed and in a clear
and legible font:
a. Manufacture date and source.
b. The statement “KEEP OUT OF REACH OF CHILDREN AND ANIMALS” in bold print.
c. A warning if nuts or other known allergens are used.
d. List of pharmacologically active ingredients, including, but not limited to, cannabidiol
(CBD), and other cannabinoid content, CBD amount in milligrams per serving, servings
per package, and CBD amount in milligrams for the package total.
e. Clear indication, in bold type, that the product contains CBD.
f. Identification of the source and date of cultivation and manufacture.
g. Any other requirements by the Department of Food and Agriculture.
h. Only generic food names may be used to describe edible products.
Tracking Solution
Company intends to use special seed-to sales tracking solution including following modules:
Yield Forecasting – Monitoring and analyzing the harvest data to optimize for larger yields.
Grower-Centric – Customizing workflows to support the weighing of multiple plant by-products, plus
multiple data collection points and ability to grade product quality upon curing.
Analyze Efforts – Monitoring Pesticides and Nutrients applied, log Strain Notes detailing light and
watering cycles, plus review Past Harvest Data to optimize future yields.
Conversion Tracking – Converting products into single or multiple by-products, while maintaining a
complete chain of custody, logging cost per gram calculations and product notifications/recalls.
Product Details – Product details for the inventory items, printing key information directly on the
labels including ingredients, potency results, plus a reactive expiration date that can lock a product if
it’s past expiration.
Inventory Management – System will document all plants received, extracted concentrates distributed
and sold, destroyed or in-process with independent testing laboratories.
32. BUSINESS NAME / BUSINESS PLAN32
Personnel Plan
BUSINESS NAME is a business that will be built on a solid foundation. From the outset, we have decided
to recruit only qualified people to man various job positions in our company. We hope to leverage on
their expertise to build our business brand to be well accepted in the United States.
These are the positions that will be available at BUSINESS NAME:
Table 6. Personnel Plan, $
Position Year 1 Year 2 Year 3 Salary per
position
Operating Director
Master Grower
Assistant to master grower
Trimming
Plant maintenance and general labor
Manager, Extraction Services
Extraction Tech Specialists
Manufacturing Specialists
Admin and Logistics Personnel
Sales & Marketing Personnel
Director
Extraction
Department
Manager,
Extraction
Services
Extraction Tech
Manufacturing
Department
Sales
Department
Admin and
Logistics
Personnel
Sales & Marketing
Personnel
Master Grower
Assistant
Trimmers/
Packagers
Figure 18. Organizational structure
34. BUSINESS NAME / BUSINESS PLAN34
Financial
Plan
Funding Analyses
Direct and Operating Expenses
Profit & Loss Forecast
Cash Flow Statement
Balance Sheet
Main Ratios
06
37. www.businessname.com 37
Direct and Operating Expense Breakdown
Direct Costs
Table 8. Direct costs, $
Cultivation, $ Year 1 Year 2 Year 3 Year 4 Year 5
Utilities 7,344 19,682 24,793 27,202 28,407
Fertilizer 4,406 11,809 14,876 16,321 17,044
Cultivation Labor 137,800 374,400 449,280 486,720 505,440
Seeds/Clones 22,032 52,877 63,452 68,740 71,384
Other costs 0 0 0 0 0
Trimming & Packaging & Transport 1,570 4,316 5,494 6,043 6,318
Storage & Other 2,018 5,550 7,063 7,770 8,123
Lab testing 3,360 8,890 11,060 12,390 12,950
Other Direct Cultivation Costs
Other Supplies 13,317 6,659 7,990 8,656 8,989
Other costs 0 0 0 0 0
Other costs 0 0 0 0 0
Cultivation Taxes 0 0 0 0 0
Total 191,847 484,183 584,009 633,842 658,654
Extraction/Processing, $ Year 1 Year 2 Year 3 Year 4 Year 5
Materials for Concentrates (vendors),
costs
0 0 0 0 0
Processing Costs 25,339 65,674 81,912 88,738 92,150
Processing Labor 57,909 150,091 187,200 202,800 210,600
Other costs 0 0 0 0 0
Other costs 0 0 0 0 0
Lab Testing costs 9,600 12,800 12,800 12,800 12,800
Other costs 0 0 0 0 0
Total 92,848 228,565 281,912 304,338 315,550
Manufacturing, $ Year 1 Year 2 Year 3 Year 4 Year 5
Manufacturing Costs 42,684 110,629 137,982 149,480 155,230
Direct Labor Salaries 196,891 510,309 636,480 689,520 716,040
Packaging Material 19,819 51,366 64,067 69,405 72,075
Other costs 0 0 0 0 0
Total 259,393 672,305 838,528 908,406 943,345
Transport costs 0 0 0 0 0
Other costs 0 0 0 0 0
Other costs 0 0 0 0 0
CBD Business Tax (% of gross
receipts)
0 0 0 0 0
Other Direct Salaries & Benefits 204,650 312,108 346,999 362,539 370,310
38. BUSINESS NAME / BUSINESS PLAN38
Operating Expenses
Table 9. Operating expenses, $
$ Year 1 Year 2 Year 3 Year 4 Year 5
SG&A Expenses
G&A Expenses - Initial & General Costs
Legal Fees & Licensing for setting up 75,000 0 0 0 0
Website/Ecommerce platform
development
0 0 0 0 0
General Expenses (from the second year) 0 0 0 0 0
Licensing and other legal fees 0 25,000 25,000 25,000 25,000
Professional Services, Commercial
Insurance
117,750 235,500 235,500 235,500 235,500
G&A Expenses - Cultivation
Building Renting 0 0 0 0 0
Building Maintenance, including utilities
(non-production)
5,236 11,424 11,424 11,424 11,424
Equipment Maintenance 9,724 21,216 21,216 21,216 21,216
Administrative expenses, including
phone and internet
11,220 24,480 24,480 24,480 24,480
Security, Inventory Control Systems,
Software Services
48,620 106,080 106,080 106,080 106,080
Other G&A Expenses 0 0 0 0 0
G&A Expenses -
Extraction/Manufacturing
Building Renting 72,563 193,500 193,500 193,500 193,500
Building Maintenance, including utilities
(non-production)
11,250 30,000 30,000 30,000 30,000
Equipment Maintenance 7,734 20,625 20,625 20,625 20,625
Administrative expenses, including
phone and internet
8,438 22,500 22,500 22,500 22,500
Security, Inventory Control Systems,
Software Services
28,125 75,000 75,000 75,000 75,000
Other G&A Expenses 0 0 0 0 0
G&A Expenses - Retail
Building Renting 63,000 189,000 189,000 189,000 189,000
Building Maintenance, including utilities 10,500 31,500 31,500 31,500 31,500
Equipment Maintenance 4,200 12,600 12,600 12,600 12,600
Administrative expenses, including
phone and internet
8,400 25,200 25,200 25,200 25,200
Security, Inventory Control Systems &
Other Services
15,750 47,250 47,250 47,250 47,250
Other G&A Expenses 0 19,625 19,625 19,625 19,625
Community Service (% of gross receipts) 3,696 9,580 11,948 12,944 13,442
SG&A Expenses -
Marketing & Sales Expenses
Marketing Expenses, including PR,
Branding, Online and Offline advertising
88,313 211,950 158,963 105,975 70,650
Other Marketing & Sales Expenses 0 0 0 0 0
Brokers and Sellers Fees 0 0 0 0 0
SG&A Expenses - Misc. 14,519 29,318 27,729 26,139 25,079
Salaries & Benefits 174,841 229,300 229,300 229,300 229,300
Total 778,878 1,570,648 1,518,439 1,464,858 1,428,971
39. www.businessname.com 39
Profit & Loss Forecast
Business’s revenue is projected to grow significantly for the first two years’ timeframe. The yearly
projections are in the table below:
Table 10. Income Statement, $
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Revenue 2,257,693 5,851,572 7,298,338 7,906,533 8,210,631
COGS - Cost of Goods Sold 784,937 1,790,981 2,168,464 2,335,893 2,419,502
Gross Profit 1,472,756 4,060,591 5,129,875 5,570,641 5,791,129
% of revenue 65% 69% 70% 70% 71%
SG&A Expenses
G&A Expenses - Initial & General
Costs
192,750 260,500 260,500 260,500 260,500
G&A Expenses - Cultivation 74,800 163,200 163,200 163,200 163,200
G&A Expenses -
Extraction/Manufacturing
128,109 341,625 341,625 341,625 341,625
G&A Expenses - Retail 105,546 334,755 337,123 338,119 338,617
SG&A Expenses -
Marketing & Sales Expenses
182,899 360,995 308,008 255,020 219,695
Senior Management Salaries &
Benefits
80,255 80,255 80,255 80,255 80,255
IT Salaries & Benefits 0 0 0 0 0
Other Salaries & Benefits 0 0 0 0 0
SG&A Expenses - Misc. 14,519 29,318 27,729 26,139 25,079
Total SG&A Expenses 778,878 1,570,648 1,518,439 1,464,858 1,428,971
Operating Income (EBITDA) 693,878 2,489,943 3,611,435 4,105,783 4,362,158
% of revenue 31% 43% 49% 52% 53%
Depreciation and Amortization 113,085 133,545 133,545 133,545 133,545
Earnings Before Interest & Taxes
(EBIT)
580,793 2,356,398 3,477,890 3,972,237 4,228,612
Interest Expense -464,792 -482,739 -417,137 -343,216 -222,816
Earnings Before Taxes (EBT) 116,001 1,873,659 3,060,753 3,629,022 4,005,796
Income Tax 34,615 559,100 913,329 1,082,900 1,195,330
Net Income 81,387 1,314,559 2,147,424 2,546,122 2,810,467
% of revenue 4% 22% 29% 32% 34%
40. BUSINESS NAME / BUSINESS PLAN40
Cash Flow Statement
The cash flow projections show that business will have sufficient cash to support the activity. The
following table presents a view of projected cash flow of the business.
Table 11. Cash Flow Statement, $
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Net Income 81,387 1,314,559 2,147,424 2,546,122 2,810,467
Cash Flow from Operations
Depreciation 113,085 133,545 133,545 133,545 133,545
Change in Receivables -195,820 -57,594 -50,683 -25,341 -12,671
Change in Inventory -27,864 -9,960 -6,883 -3,511 -1,721
Change in Accounts Payable 60,117 26,592 15,663 7,867 3,916
Total Cash Flow from
Operations
30,904 1,407,141 2,239,067 2,658,681 2,933,536
Cash Flow from Investing
Capital Expenditures (CAPX) -2,976,000 0 0 0 0
Other 0 0 0 0 0
Total Cash Flow from Investing -2,976,000 0 0 0 0
Cash Flow from Financing
Revolver Issuance /
(Repayment)
4,000,000 0 0 0 0
Long-Term Debt Issuance /
(Repayment)
-166,667 -1,000,000 -1,000,000 -1,000,000 -833,333
Paid in Capital 0 0 0 0 0
Drawings (profit share) 0 0 0 0 0
Total Cash Flow from Financing 3,833,333 -1,000,000 -1,000,000 -1,000,000 -833,333
Total Change in Cash 888,237 407,141 1,239,067 1,658,681 2,100,203
Beginning Period Cash 0 888,237 1,295,379 2,534,445 4,193,126
Ending Period Cash 888,237 1,295,379 2,534,445 4,193,126 6,293,329
41. www.businessname.com 41
Balance Sheet
The balance sheet shows healthy growth of net worth and strong financial position.
Table 12. Balance Sheet, $
$ YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Assets
Current Assets
Cash 888,237 1,295,379 2,534,445 4,193,126 6,293,329
Receivables 195,820 253,415 304,097 329,439 342,110
Inventory 27,864 37,824 44,707 48,219 49,939
Total Current Assets 1,111,922 1,586,618 2,883,250 4,570,784 6,685,378
Long Term Assets
Property Plant & Equipment (PPE),
gross
2,976,000 2,976,000 2,976,000 2,976,000 2,976,000
Accumulated Depreciation of PPE -113,085 -246,630 -380,175 -513,720 -647,266
PP&E, net 2,862,915 2,729,370 2,595,825 2,462,280 2,328,734
Total Assets 3,974,837 4,315,988 5,479,075 7,033,063 9,014,112
Liabilities
Current Liabilities
Accounts Payable 60,117 86,709 102,372 110,238 114,154
Total Current Liabilities 60,117 86,709 102,372 110,238 114,154
Long Term Liabilities 3,833,333 2,833,333 1,833,333 833,333 0
Total Liabilities 3,893,450 2,920,042 1,935,705 943,572 114,154
Equity
Paid-in Capital/Drawings 0 0 0 0 0
Retained Earnings 81,387 1,395,946 3,543,370 6,089,492 8,899,958
Current Period Retained Earnings 81,387 1,395,946 3,543,370 6,089,492 8,899,958
Total Equity 81,387 1,395,946 3,543,370 6,089,492 8,899,958
Total Liabilities and Equity 3,974,837 4,315,988 5,479,075 7,033,063 9,014,112
42. BUSINESS NAME / BUSINESS PLAN42
Main Ratios
The return on equity ratio (ROE) measures how much the owner and investors earn for their
investment in the company. The higher the ratio percentage, the better return is. In general, financial
analysts consider return on equity ratios in the 15-20% range as representing attractive levels of
investment quality. As we can see ROE (DuPont) for our project is higher and draw up 32%.
Return on assets (ROA) gives an idea as to how efficient management is at using its assets to generate
earnings.
Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate
earnings as compared to its expenses and other relevant costs incurred during a specific period of time.
Table 13. Main Ratios for five years
Ratio Analysis Year 2 Year 3 Year 4 Year 5 Avg. (2-5
years)
Return on Equity 178.0% 87.0% 52.9% 37.5% 88.8%
Return on Assets 23.5% 37.9% 36.8% 33.1% 32.8%
Financial Leverage 5.61 1.98 1.30 1.07 2.49
Correction Factor 1.35 1.16 1.10 1.06 1.17
Return on Assets
Return on Sales 16.7% 25.4% 29.2% 32.3% 25.9%
Asset turnover 1.41 1.49 1.26 1.02 1.30
Profitability
Gross margin 69.4% 70.3% 70.5% 70.5% 70.2%
SG&A as % of Sales 26.8% 20.8% 18.5% 17.4% 20.9%
Operating Margin 40.3% 47.7% 50.2% 51.5% 47.4%
Interest Expense as % of Sales 8.2% 5.7% 4.3% 2.7% 5.3%
Effective Tax Rate 29.8% 29.8% 29.8% 29.8% 29.8%
Asset Turnover Ratios
Accounts Receivable Turnover 26.1 26.2 25.0 24.5 25.4
Inventory Turnover 54.5 52.5 50.3 49.3 51.7
Accounts Payable Turnover 24.5 23.0 22.0 21.6 22.8
Fixed Asset Turnover 2.1 2.7 3.1 3.4 2.8
Days Turnover Ratios
Days Receivables 14.0 13.9 14.6 14.9 14.4
Days Inventory 6.7 6.9 7.3 7.4 7.1
Days Payables 14.9 15.9 16.6 16.9 16.1
Net Trade Cycle 5.8 5.0 5.3 5.4 5.4