PLASTICS INC.
2011 BUSINESS PLAN

EXECUTIVE SUMMARY

Plastics Inc. Mission:
To provide a solution to the cutlery dispensing issues that our food service industry that will allow for efficiencies in day to day operations across the industry in all food service venues.
Plastics Inc. Vision:
To build a legacy of superior customer service, with the focus being our clients and their need for more efficiency in their day to day operations in the food service industry.
Overview:
Plastics Inc. is a start up company looking to take advantage of a market that has not been tapped into yet. What market might that be you may ask? We have identified a rapid growing need that many food service venues are faced with daily. The need to reduce the amount of germs in our food service environment while providing plastic cutlery to the customer. To do this, Plastics Inc. has created a plastic cutlery device that will dispense cutlery to the customer while eliminating contact with large number of utensils. The traditional methods for providing utensils to customers is to either have them open to the public in stand-alone containers or to utilize silverware. This product will also attract new vendors as it will solve many of the issues operators are facing. The attached document will explain how our product will provide our vendors with the opportunity to reduce employee hours, eliminate additional waste while at the same time minimizing contamination of cutlery to the customer. Plastics Inc. believes there is a significant growth opportunity in the cutlery markets. By developing the new dispensing system on cutlery, we will provide illustrations documenting how we intend to increase revenue within the first two years by expanding vendor participation into several new marketplaces. The product will have a strong consumer appeal, free up counter space and allow for one utensil at a time dispensing, thus eliminating unnecessary germs and bacteria for customers in a fast paced environment. Our overall objective is to bring to the marketplace a solution for cutlery and deliver better than average returns. It’s all about being quick and easy and this unit will meet both of those requirements. With more and more convenient stores moving into the fast food business that are faced with being sanitary issues, having this dispenser will meet the needs of the consumers requests. This dispenser will eliminate the problem of having cutlery open on the counters at all of our targeted markets.

Operations Plan

Operating Strategy and Execution:
Plastic Inc will combine with other industry leaders to create relationships with our prospective vendors. These leaders such as Sysco will help us better identify those companies that can utilize our product to become more efficient in their missions while cutting cost. The Sysco sales Plastics Inc. long with our business development team will work together to solidify our key accounts. Our engineers and marketing group will work with both groups to ensure they are well versed in the product so that when these individuals can completely explain what is necessary. We are focusing on many different venues for this product. Cruise lines, Hospitals, convenient stores and universities are just several of the main industries our company will target. These types of establishments we have identified have a need for our product.

The marketing group is creating materials that will show these companies how are product will better assist them with reducing employee hours, efficiency in providing utensils to their patrons while at the same time reduce waste of cutlery materials.
Facilities and Equipment Plan
Our facility is conveniently located in Horsham, Pennsylvania. Horsham is a quick drive from the Philadelphia International Airport and can therefore be reached easy for visit to the warehouse by our clients. We are currently leasing the warehouse unit to reduce cost and liability. There is also room for expansion which will be determined if needed, after our first two years of operations.
Human Resources and Management Plan:
Plastics Inc management group is comprised of a talented and supportive group of managers that has to date resolved a variety of issues, identified and mitigated diverse risks and has provided a detailed plan regarding scope, schedule, budget and quality initiatives. Our factory resources will be comprised of a combination internal engineers and equipment operators that will help us to fine tune our standard operating procedures and process to create the most productive and efficient operation available to assist in minimizing costs. We will also utilize other food service companies as contractors to assist in the delivery and trainings of our product.

Operating Strategy and Execution
Location and Facilities
Plastics Inc. will be located in eastern Pennsylvania where negotiations are already taking place for a new site. Plastics Inc. will be leasing the facility and it will be a small warehouse where the company will be setting up internal space for offices and space for racks to stock the product. However, to accommodate expected growth, the company plans to move to a new larger facility. The new, modern facility will provide room for the Plastics Inc.’s anticipated growth. With the move, Plastics Inc. is planning to introduce lean manufacturing practices as one of its approaches to improving gross margins and reducing inventory.

With the move, Plastics Inc. will also be able to add significantly to its materials processing capabilities through the addition of new equipment suitable for the production of targets being demanded by the expanding foodservice industry market.
The starting building comes with; Heat: Gas – Ceiling Mounted; Sprinkler: Dry System; Loading: 2 Off Street Tailgate Docks; Parking Lot: 20 Cars; Signage: Roof (Faces I-95) Street & Wall;
Facilities Cost
The base cost of leasing the office suite is $4 sq/ft/yr. The warehouse is 16,400 square feet space therefore; the monthly leasing cost would be $5,470 per month. However, some additional cost such as real estate taxes, utilities (electricity and telephone service). One-time expenses will also be added for offices set up and racks installation and these costs are estimated at $6,500.
Permitting
The state of Pennsylvania has some specific rules for business starters. In fact, if you are engaged in business in this State, you will need the following:
A business license,
All retailers and wholesalers need a seller's permit,
All employers need a federal and state employer tax id number, &
All businesses need a trade name business name certificate, also called a dba doing businesses as.
Make or Buy Decision
A different company in which Plastics Inc. is in negotiation will be manufacturing the dispensing system for plastic cutlery. Therefore, Plastics Inc. will be buying the dispensers directly from the manufacturer at a minimum price and then selling to our customers in the marketplace
Key Suppliers
Plastics Inc. key supplier would be the company that would build the dispensers. The company would be under contract with Plastics Inc. and the contract would acknowledge that only Plastics Inc. would have access to the dispensers built by the manufacturer.
Service “Flow”

Typical Engagement
Our clients will experience first class customer service. Our Business Development group is currently making contacts with key leaders at our potential client locations. These leaders will experience a 60 minute presentation that will provide them of a better understanding of why their company can benefit from our product. This presentation was created by our Marketing group and illustrates the need for dispensers. If the company is interested they will attend a tour of facilities in Pennsylvania and the contract procedures will begin within the two legal groups. We will also complete inventory to ensure we are manufacturing the accurate number of devices for our client. Our engineers will also complete trainings for our client staff to ensure they are familiar with properly servicing, restocking the dispenser. Our engineers can also be useful in assisting the client on the best location for our dispenser.

Each Business Development representative at Plastics Inc. will be responsible for key accounts. It will be imperative for them to follow up with our clients to be sure the upmost in customer service and quality is being upheld.
Product Development
Product development consists of several key processes: Business Development, Legal, Manufacturing, Training and Servicing.
Risk Management
Plastics Inc. will identify and process risk utilizing risk identification. Step 1 will be to identify, Step 2 will be analyze, Step 3 will be to plan and Step 4 will be to implement the plan, step 5 to track and control and step
Risk Identified:
An economy slow down could limit accounts willingness to pay more for this item over what they currently use.
External factor that the parts outsourced maker could experience issues
Imports drive down the costs on regular cutlery making their spread in costs even larger
Competitor following the innovation with more buying power
Resin used to make dispensers will increase

Future Opportunities
Plastics Inc. is the first to introduce and sell a dispensing system. With no direct competitors, the company will definitely gain more brand recognition and expects to grow very fast and gain more of the cutlery market share. It will also use this item to get into operators and then leverage for more items.

Facilities and Equipment Plan
For small and medium businesses, Dell is the most recognized place to purchase your hardware and software need and they offer better service in the small business. Therefore, Plastics Inc. will be purchasing its computers, printers, RF scanner guns, and other electronics and accessories need from Dell. Plastics Inc. is now in negotiations with Basic Industrial Supply, Inc. for pallet racking, pallet racking accessories, a couple of forklifts and reach trucks and as well as other equipment. Office supplies will be purchased thru various stores. EQUIPMENT | QTY | UNIT PRICE | TOTAL PRICE | Computer Hardware & Software | | | | Dell Desktops | 7 | $1,100 | $7,700 | Dell Laptops | 4 | $1,245 | $4,980 | Dell Laser Printers/Fax | 2 | $940 | $1,880 | PowerEdge T610 | 1 | $1,504 | $1,504 | MS Office Pro Edition | 11 | $280 | $3,080 | Windows XP Pro | 11 | $240 | $2,640 | SQL Server | 1 | $1,050 | $1,050 | | | | | | | Sub Total: | $22,834 | | | | | Warehouse Equipment | | | | Pallet racking & Pallet racking accessories | NA | $3,440 | $3,440 | forklifts and reach trucks | 4 | NA | $13,000 | Other Equipment | NA | NA | $3,500 | | | | | | | Sub Total: | $19,940 | | | | | Office Equipment | | | | Desks | 7 | $480 | $3,360 | Chairs | 15 | $150 | $2,250 | Tables | 4 | $200 | $800 | Cabinets | 10 | $350 | $3,500 | Other equipment | NA | NA | $1,700 | | | | | | | Sub Total: | $11,610 | | | | | | | TOTAL: | $54,384 | | | | | | | | | Labor cost for installations, Website design, utilities expenses, licenses, | permits and other cost are estimated at $24,240 | | |

Human Resources Plan
Introduction
Plastics Inc. has a dynamic group of leaders that make up our executive management group. As you will see below, our leaders have diverse backgrounds which bring crucial industry knowledge to our company base.
Chief Executive Officer (CEO) Sherman Peay – founder of Plastics Inc.. Has 20 years of direct experience with cutlery products working for such companies as Georgia Pacific, Solo and Sweetheart Cup. His responsibility involves providing leadership for all of the companies operations, with special emphasis on long term goals, growth, revenue and return on investment.
Chief Operations Officer (COO) – Andrew Spady – Plastics Inc. co-founder. Has 17 years experience in the restaurant industry working for several key franchises as well in the healthcare arena. Andrew also has extensive experience with working the Center for Disease Control specifically outlining the need to reduce contamination issues in the public healthcare arena. The COO will lead operational and administrative aspects of organization and will report directly to the CEO.
Chief Finance Officer (CFO) –Director of Product Development Director of Marketing – Elaine Jackson – Key responsibility will be to coordinate the organizations overall marketing and strategic planning programs and corporate communications. She will also facilitate client development through marketing and client services programs.
Director of Human Resources – Cejay Sparrow – Ms. Sparrow will play a key role in ensuring the company has knowledge of all employment laws as we continue to expand. She will also orchestrate all interviews, new hire trainings and orientations and required background checks for new employees. The Human Resource Director will also manage benefit implementation, human resource services, policies and programs for the entire company.
Chief Information and Securities Officer – Eric Zimmerman – This role will provide vision and leadership for developing and implementing our information technology initiatives. The CIO directs the planning and implementation of IT systems in support of business operations in order to improve cost effectiveness, service quality and business development.

Senior level management has provided total commitment to the growth of this organization into what we hope will become a global arena. This group with the assistance of our staff members will monitor the organizational structure during the start up phase and the beginning of the operations phase to note if any modifications will be needed to ensure successful operations of our company.
Individuals within the Plastics Inc. management group will have salaried position versus an hourly standard rate of pay. Benefit packages will be the same as for hourly employees. Benefit packages will include medical, dental, vision and a 401K retirement program. The management group will also be eligible for an annual bonus however this will be discussed and approved by our Board of Directors annually. Bonuses will be based on profit for the previous year. Please see below for key management salary projections: Role | Year 1 Salary | annual 4% increase | Year 2 Salary | 1st year potential bonus | Total 1st year salary | CEO | $ 80,000.00 | $ 3,200.00 | $ 83,200.00 | $ 6,400.00 | $ 86,400.00 | CFO | $ 78,000.00 | $ 3,120.00 | $ 81,120.00 | $ 6,240.00 | $ 84,240.00 | COO | $ 78,000.00 | $ 3,120.00 | $ 81,120.00 | $ 6,240.00 | $ 84,240.00 | Marketing, VP | $ 65,000.00 | $ 2,600.00 | $ 67,600.00 | $ 5,200.00 | $ 70,200.00 |

Staffing Requirements
Staffing requirements will differ based on the role and responsibility of each position at Plastics Inc. Position profiles will be created in a collaborative effort between the manager of the departmental area and the Human Resources representative. Candidates for employment will be required to apply for their position of interest via Plastics Inc. corporate website and complete an interview.
Staffing Strategy
Our current staff consists of a total of 25 individuals across the company with different roles and responsibilities ranging from senior level management to engineers to executive assistants. In order for our staffing numbers to increase our client base will need to increase. Our human resource along with our departmental managers will continue to review production algorithms monthly to identify the need for expansion in our employee base. A frequent analysis of supply and demand will need to be completed to evaluate resourcing concerns.
Plastics Inc. corporate staffing strategy will contain the following attributes:
Identify the talents required to complete the tasks
Recruit qualified staff based on the needs of the organization
Provide training programs for staff
To promote from within when applicable allowing for opportunities for growth for staff
Measurements for performance that are documented via annual reviews
Rewards and Bonus
Educational Reimbursement
Career recognition program
Organization Chart

Team Development
Staff will be required to attend New Employee Orientation. This week of training will be intense and inclusive of our computer systems, key performance indicators and standard operating procedures. Staff will also have the opportunity to gain hands on experience through activities throughout their first week.
Departmental managers will also be allotted a budget to utilize exclusively for team development projects. The exact amount of funding will be determined as annual budgets are finalized and based on the approval of the Board of Directors. It is our expectations that managers have 1:1 meetings monthly with staff and encourage participation of process modifications to ensure our organization is performing as efficiently as possible. The overall goal should be for each manager to optimize performing by molding working relationships of their team members, continual improvements of team processes, and ensuring the team’s effectiveness in working on its objectives are synching to bring about a successfully functioning team.
The following meetings have been budgeted to occur to assist the company with overall team development and communication that will assist in the cohesiveness of department structures as one business unit:

Periodic Face-To-Face Meetings
Periodic face-to-face team meetings will be held to continue to address the communication needs of the global team, timelines, upcoming milestones, assure data consistency, deal with ongoing operation aspects of the franchise, to discuss priorities, significant project issues, questions or obstacles, and to foster cohesiveness among team members.

Quarterly Operational Meetings (Optional)
Objectives: To provide an opportunity for Plastic Inc. functional leads and colleagues to interface routinely and develop as a team. Meeting objectives include, but are not limited, to review of: metrics, financial status of key accounts (to also include a review of the budgets (actual vs. projected) and work scope (breakout meeting) relative to the service proposals as necessary), potential growth in other venues.

Annual Full-Team Meetings (Scheduled as needed)

Objectives: The Quarterly Operational Meeting will be conducted during this meeting. Quarterly Operational attendees will arrive one-half day prior to the schedule Full-Team. This group will cover the topics covered during a normal Quarterly Operational Meeting but in abridged form.
The Full-Team Meeting will take place the following day. Objectives for Full Team Meetings include general review of project status, timeline, upcoming milestones, discussion of priorities and significant project issues, questions, or obstacles. Review of status for Plastics Inc. and any recurring issues. Discussions will be organized regarding issues and procedures related to start up and operation of upcoming facilities. Questions and answer opportunities

Key Staff Management Issues
Plastics Inc. has identified key staff management issues. Managers must increase levels of innovation within the organization. Staff development and training will be crucial to the success of our company. To do this our departments will need to identify areas that staff lacks in performance to ensure that proper training and development needs are being provided. Evaluating job profiles and design should also be reviewed to ensure redesign is not necessary.

The organization should also set key performance indicators for each role as a means to measure the level of performance with each department. Assessments of employee knowledge should also be assessed annually.

Managers are also expected to have open communication with staff. Performance discussions and career development should be continuously completed. Staff should quickly be notified when performance issues exists. Warning letters and Corrective Action Plans are two options for managers to document performance issues that may arise. Staff should be given the opportunity to retrain in areas of delinquency if the need presents itself.

Key Outside Advisors
Plastics Inc. Board of Directors is responsible for the complete oversight of the organization. The Board consists of the following five members:

Board of Directors Chair/President – The role accepts responsibility for the success or failure of the organization. Also assumes the responsibility for the association’s consistent achievement of its mission and financial objectives.
Vice President of the Board – Supports the President in fulfilling the goals and objectives of the Board of Directors by providing continuity to established programs and formulating future programs for his or her own presidency.
Treasurer – Responsible for oversight and reporting of company financials at each board meeting. Role requires advisement to the Board in regards to financial decision making that could effects the overall company status.
Secretary – Responsible for attending board meetings, taking notes, action items and approvals. Also distributes meeting minutes accordingly within two weeks of each concluded meeting. Ensures all documentation of minutes is approved by Board of Directors and is posted to the organizations website with accurate authorizations.
Past President – Supports the goals and activities of the President. She also provides advice, guidance and assistance to the current President. Will utilize history and current stance to help make key decision regarding the future of the establishment.

Operations Budget
Capacity
The company objective is to grow market share at above average returns on cutlery. With no competition on this product, Georgia Pacific is looking for revenue of $12,926,000 and profits to hit the $2,000,000 on this project for year one. Placing 75,000 dispensers with a profit of $6.10 per unit will deliver $457,000 in profits. On the cutlery side selling 375,175 units with a profit of $4.32 per unit will deliver $1,543,000 in profits. Net revenues from these sales will hit the $12,000,000 level. We are expecting to see a 5% increase in the cutlery product category given the focus will be on cutlery, and grow our market share by 2%.

IT Plan

Technical Requirements

Plastics Inc. will be purchasing different software and install it on their computers. Some software will provide direct communication and consistent dialogue between management and employees, as well as with external business relations. Other software such as Microsoft SQL client server technology will enable the company to share some information with customers and suppliers and ensure customer service quality. It will also be helping on planning and tracking company’s orders across multiple areas of processing.
Microsoft SQL client server technology is designed to be a client/server system. Client/server systems are constructed so that the database can reside on a central computer, known as a server, and be shared among several users. When users want to access the data in SQL Server, they run an application on their local computer, known as a client that connects over a network to the server running SQL Server.

It is very important to have data stored and managed in a central location. First each data item is stored in a central location where all users can work with it. Separate copies of the item are not stored on each client, which eliminates problems with users having to ensure they are all working with the same information. Business and security rules can be defined one time on the server and enforced equally among all users. Plastics Inc. will also be having a web site built by a professional organization.
Technology changes quickly and often requirements based on technology change just as quickly. However, Plastics Inc. information system would not necessarily require the latest technologies but to have a system that will be available 99.99% of the time for any 24-hour period. The company that is responsible of building and maintaining the website will also be taking care of Plastics Inc. information technologies.
Each container of dispensers will have a scanning label that will enable RF guns to scan them and keep track of shipping, receiving, inventory and any other tracking activity. The RF guns will be programmed and connected directly to the server so that responsible employees of each department can keep track on dispenser containers and other information.

Marketing Plan:

Product and Service Concept:
We will be the first in the market introducing a new and innovative dispensing system for plastic cutlery that will allow operates to touch a lever and have a utensil dispense. They will have the ability to earn a premium on the product and dispenser given all other cutlery operational styles do not use a dispenser. This unit will be ideal for operations that use plastic cutlery and want to control waste. By using this unit operators will be able to stop waste, reduce employee man hours and keep a clean and sanitary enclosure. Cutlery in the foodservice industry has become a staple item for operators to help their customer enjoy the food without using washable and full service utensil. This dispenser will solve many of the issues operators are facing. The product will have a strong consumer appeal, free up counter space and allow for one utensil at a time dispensing. It will allow the operators to keep the self serve station clean, reduce employee hours to restock and stop the waste operators see in a standard dump set up on a counter.
This will creating a positive impression with a sleek design and help to control the grab and go. This dispenser keeps everything in order and provides a completely enclosed area making the cutlery more sanitary for the end users. Hygiene is a common issue in eating establishments; this will help eliminate that problem. The best application for this unit will be in high volume locations that want a sanitary and user friendly set up for its customers. The primary market will be into the C-Store channel where space is at a premium and their up selling approach to sell more food items requires disposable cutlery. Using the three units to cover the needs of the customer, the C-Store is only required to have 34” of counter space. In that space they will be able to set up the station for forks, knifes and spoons. It’s all about being quick and easy and this unit will meet both of those requirements. Today the C-Store industry is being faced with being sanitary, having this dispenser will meet the needs of the consumers requests. This dispenser will eliminate the problem of having cutlery open on the counters
Target Market Analysis:
When looking into the foodservice industry we see that it is broken into 4 markets. These 4 categories would be: Quick Service Restaurants QSR, Full Service Restaurants, Convenience Stores and Healthcare.

A quick service restaurant takes on the image of what most of know as fast food. The food is often made in large quantity on more of an assembly line process. It usually offers little health benefits and is known as being something you eat on the run or dine inside for a short time. These are usually franchised operations with controlled buying done from a corporate office making sure all the units get the same products weekly. Most of their items are private label items made to the specifications of the company. As more people are starting to think about eating healthy foods this market is looking for ways to improve their menu offering toward healthy foods, for that reason this market is growing at a slow pace. Players playing in this market are Burger King and Taco Bell. The cutlery dispenser will not be targeted toward this group given most of its menu items are grab and go and do not have a use for a utensil.

Full service restaurants offer the customers the ability to sit down and enjoy a meal. They offer a waiter staff with clean facilities and are usually provide service with a full sit down concept. Names like Texas Roadhouse, Chili’s and Applebee’s fall into this group. The food is usually made to order and cooked after the order is processed. However, we are starting to see this market move into the “To Go” group more by offering curb side pick up and allowing customers to get that home cooked quality with the convenience of the QSR offers. This is a fast growing market but one that uses little disposable cutlery. In house food is being served using washable plates and china over plastic and paper meal service.

Convenience stores are diving into the food service arena with a wide selection of take home and eat in upscale food items. This group usually gets the customer who stops for gas, and then wants to pick up something to eat. In the past the selection has been cold sandwiches but today this segment is expanding as one of the fastest group. Operations like Sheetz and Wawa in the northeast are just a few of the expanding units that now offer sit down tables inside and offer a full ready to made sandwich menu. Customers now stop in these units to eat instead of the QSR. Customers usually find a full mix of foods, and the Convenience stores today are focused on quality and foods to meet the needs of the day. We see high end selections and ready to make now with the convenience of speed. Given the food lines have increased from the grab and go, this market will is one of the areas Georgia Pacific will target the cutlery dispenser. In a C-Store operation space is at a premium, and this unit helps keep the area clean and neat without taking up much space.

The healthcare market offers the best use for this product. They are focused on selling meals to visitors and staff with a huge effort to keeping things hygiene. Their food is usually precooked and sitting under flame for service during the peak hours of breakfast, lunch and dinner. They are prone to high usage during the peak hours and must remain efficient and sanity in providing foodservice. Most hospitals and large medical centers today will outsource the foodservice to other companies to operate. This market is the perfect fit for our cutlery dispenser, given all the utensils are enclosed and that everything is disposable, stopping the spread of germs. The unit will also require very little space and allow for supply during peak periods without interruptions. The healthcare industry is growing as well with more upscale meals being offered. They also use disposable items to help control the spread of germs.
After reviewing these markets, our cutlery dispenser will be targeted into the Convenience Stores and Healthcare groups first. After we work these two markets we will open the unit up to full service and QSR establishments.
Evidence of Market Need:
The following SWOT analysis will capture key strengths and weaknesses the company will have along with the opportunities and threats they will face. It will allow the company to pin point the factors that could effect moving forward. As well our Survey results will help us in providing data to show market needs.
Strengths
Strong at selling value added items
Well know brands
Experienced and committed management team
Innovative approach in looking at new items
Integrated manufacturing for reduce costs
Strong relationship with large national accounts
Industry experience
Operate on a national and international level
Weaknesses
National accounts make up a large mix (55%) , not C-Stores
Limited in price movement in smaller accounts without affecting the big accounts.
Have a very small new sales team
External factors influence the making of the product, resin costs
Small market share on plastic cutlery (14%)
Slow in processing and planning supply given all the departments involved.
Opportunities
Ability to gain more of the cutlery market share.
Ability to increase profit margin with this innovation.
First to sell a dispensing system.
Use this item to get into operators and then leverage for more items.
Gain more brand recognition
No direct Competitors
Threats
An Economy slow down could limit accounts willingness to pay more for this item over what they currently use.
External factor that the parts outsourced maker could experience issues.
Imports drive down the costs on regular cutlery making their spread in costs even larger.
Competitor following the innovation with more buying power.
Resin used to make dispensers will increase

Competitive Analysis:
Two large foodservice competitors could potentially be a threat to this product. Both Solo and Pactiv are players in the foodservice industry but given the fact that no one today currently has a system like this the chances are highly unlikely that we will see reaction from these two players. Solo operates as a family run business unit that just purchased (Sweetheart Cup) and is working thru a merger. Pactiv is a publicly traded company that just entered into the cutlery market with little knowledge or brand on cutlery. With Solo recently acquiring Sweetheart Cup their net sales are reported at $534 MM with a gross profit of $63 MM. Solo is very active in the retail side of the business more than they are in the commercial foodservice business. They have proven to the industry that they can deliver good items at a fair price, however they are not considered to be innovators. While they are attempting to make a shift toward higher sales prices and more value added items they have yet to offer anything to the marketplace. It appears they are making steps in the gross margin and have reported an increase from 11.7% vs. 9.7% in the prior year. They are more focused on smaller distributors in the marketplace but do offer a very broad product offering. They offer so many items that it is hard to see them as leading in one or two main foodservice groups. As well, they are big in the paper cup industry which has been on the decline due to the growing market of bottled water and other drinks. I do not see Solo as being a threat on this item, given the dispenser will be more suited for C-Stores and other higher volume applications. Solo is not a big player in these markets and tends to focus more on smaller accounts with smaller distributors.
Pactiv is another large competitor in the channel. They operate with sales reported at $882MM with expected growth of 10 to14 percent in the coming years. They have a very high cash flow and are focused on the To Go market containers. They are a company that offers new products and remains one of the lowest cost providers. They continue to operate as a leader in the foodservice sector and cutlery is a product line they just entered into. Given this advance, a threat they will need to watch will be the Resin costs that go into making a lot of their line items. Keeping costs under control has been a strong point for Pactiv however they will need to manager costs better as they move more into commodity items. Pactiv has a long term approach of growing their business thru acquisition instead of innovation. This approach has benefited the company in keeping costs low.

Currently today both Solo and Pactiv are not very big in the cutlery markets. While Solo has the added benefits of producing 90 plus percent of their items in house, Pactiv still uses the channel of outsourcing for their manufacturing needs. Outsourcing is prone to increases as their manufactures see larger jumps in raw material costs as smaller manufactures. Georgia Pacific on the other hand has taken the approach to manufacture the dispenser in house and to use its purchasing power with other line items to get the best costs for materials. While some parts are produced on the outside, most of the work is done in house. This will allow Georgia Pacific to first see a savings in material costs, and second allow them to take pricing actions if a competitor should enter the market with a similar product.
Given the outlook on both companies, it is highly unlikely either company will introduce a similar product for dispensing cutlery. However, if that were to happen Georgia Pacific would be positioned to react to the threats. Georgia Pacific will offer this as a differentiated item with only their cutlery working in the dispensing system. Other competitors will not have the ability to stuff the unit.
We find very few other players in the cutlery market that can service our target markets. Some cutlery is not imported but it tends to service county bids and lower costs avenues than where we are targeting with our upscale dispenser.
Pricing Strategy:
Being that this item is differentiated from all other cutlery, we will price the items to return an above average profit margin. The dispenser will be priced at $40.00 per unit and each of the 3 cutlery items will be priced at $25.00 per case. The cutlery will be packed 960 per case vs. a regular 1000 pack case in the commodity markets. The case cost on the cutlery will breakout to (,0260) per piece and a flat $40.00 for one dispenser. Being that the product is manufactured in house all costs for distribution and shipping to the main distribution centers will be rolled in as a fixed cost for the first year.
We operate using a selling and admin cost of 14% and the average customer program operates at 12%. Under the companies S&A costs you will find marketing costs along with transportation and delivery costs. Also a big part of this is the sales expenses in selling the products. The business will target a return on investment of 25% on this differentiated item and will monitor the selling costs vs. actual costs on a monthly basis to start. This 25% return is above the normal 4-8% returns it finds in the commodity items its sells but inline with all the differentiate lines they currently offer.
Discounts will be offered to hospital in the healthcare market to get the product placed into the market. The discounts will apply to the users of the product and not the distributors who supply the users. The discount will be a 5% rebate on order over 1000 cases.
Pricing on commodity cutlery without dispensing options traditionally costs about $22.00 for a case of 1000 pieces and no dispenser costs. The pricing for using the new system will run $25.00 per case of 960 for an increase of 18% over regular cutlery. Also the user will see a one time charge of $40.00 per dispenser.
The prices will be set at a premium vs. commodity cutlery. It is not the company’s objective to try a loss-leader pricing style, but instead to price the items at a premium so that they maximize the return on the investment. If needed after the opening kickoff, a full review will be done and we will look at offering customer-segment pricing depending on the opening sales success. The unit and cutlery will be priced above its expense levels. The sell prices will be $25.00 per case for the cutlery, giving us a Net Gross Profit of 25%. The following process breakout will outline our pricing on the cutlery.
Sell Price: $25.00 Minus (S/A costs (14%) Customer Programs (12%) $6.50 and Discounts of $1.25) = $17.25
Gross Cost: $17.25 at a 25% return makes our true production cost $12.93
The dispenser will sell for $40.00 each with only S@A costs of 14% being added in. It will offer no customer rebates or discounts, but will take into account promotion dollars to place units for free.
Sell Price: $40.00 minus (S/A Costs 14% ($5.60) - Promotion Allowance 10.00= $24.40
Gross Cost: $24.40 at a 25% return makes our true production cost $18.30 per dispenser.
The company can handle production at these 2 levels and make the profit margin they need to make the items a success.

Market Communications Plans:
The company will communicate and promote the product by using a sales promotion, direct marketing and a personal selling approach. It will also use the recognized name of our company to help promote brand awareness. We are known for other strong brand names in the industry, this will help in our communication strategy.
Georgia Pacific will run a variety of sales promotion to get the items moving. The first promotion will be done using coupons. Each of the reps will be given 100 coupons for a free dispenser. We will utilize 4000 coupons for this promotion and budget $40,000 for this promotion. The concept will be that each of the reps will be working with the distributors reps and leveraging these coupons at users to get them on the program. The coupons will be mailed in by the users along with a copy of the invoice to get the rebate for the dispenser. The product will be purchased thru the distribution channel with all invoicing to the user being done by the distributor. The average coupon redemption rate today for this business is about 15%, so given the funds we allocated we will have enough funds to cover the costs of the free goods and the costs to print the coupons. This promotion will help us gain installs of dispenser into key target locations.
Another sales promotion will involve the use of allowances. The food industry in know for conducting trade shows where a wide range of supplies all get together to display their goods for the distributors user base. An adjustment has been built into the price of the item the ability to pass on a trade show allowance of $2.00 per case for every dispenser purchased. This allowance will be an added benefit to the users up and above anything the distributor is running on purchases at the show. These shows are usually conducted for a 2 day period and on average get about 200-400 users in attendance. The budget will be $6.00 per account so that they can buy one of each on the dispensing units and plan on a 20% closure rate in sales. Given these facts we hope to sell thru the allowance 80 users using an allowance of $6.00 for buying 3 dispensers. We will budget $480 per trade show on an allowance. The target for this allowance will be with 125 distributors in the Sysco, U.S. foodservice and independent distributor channels. The budget for show allowance will be $60,000. This should generate placements of over 30,000 dispensers. Also we will fund the annual ISSA Foodservice show that pull in all manufactures annually to show new items, we will budget $8500 for this event with banners and printing of POS (point of sales) materials.
The final communication channel will be personal selling approach. This channel will involve our sales team personally selling the dispenser to end users. Each representative will be required to personally present the dispenser to the buyer at their key distribution accounts. Along with this the will be required to make 5 end user calls per day for the first 30 day kickoff period. The sales team will receive 3 dispensers and a case of each product for their demo needs at the end users. As well, they will need these samples to train the distributor’s sales force.
The business will evaluate the effectiveness of these channels after the first 90 days to see if extra effort needs to be guided toward another channel. Feedback collected from both the end users, distributors and the sales teams will be important in making the item a success. Marketing Budget:
Coupons (PMI Printing, Eldersburg MD) $750.00 4000 one color printed free dispenser coupons Free Dispensers to End Users $39250.00 With the coupons, we will give out 4000 free dispensers. Distributor Sales Promotion $60,000.00 $480 per tradeshow, doing 125 shows per year Demo/Samples $ 7,800.00 120 Dispensers x $40.00 120 Cases of product x $25.00

Trade Show Kickoff (ISSA Show) $8500.00 Booth graphics & banners ($1500) Promotional material design ($1000) Promotional material printing ($6000) Total Year 1 Promotional Budget $116,300

The company total 1 year promotion budget of $116,300 dollars will be in line toward hitting the 75000 dispensers and over 375,000 cases of cutlery sold in year one. These tools will help the company hit the target market they are going after by offering them free dispensers and coupons toward the use of the items.
Sales and Marketing Plan:
We will partners up with distributors as part of our marketing plan. They do not offer internet sales and offer no direct selling to the users. Their primary focus for distribution is with the 2 largest players in the foodservice industry Sysco Foodservice and US Foodservice. These distributors with a combined 250 distribution point in the United States will be the focus for 80% of the distribution. The other 20 % will come from independent distributors in local markets.
Sysco Foodservice operates in the fast paced business of supplying food and restaurant supplies into a wide range of locations like hospitals, national account, C-stores and everyday full service restaurants. The distributor is very successful with sales of 35 Billion and is able to leverage their relationship with users by offering a one stop shop for everything. Selling innovation is something they do well with a very talented sales team to service accounts. Georgia Pacific will utilize Sysco and their talent to become the selling agent for this new item. Georgia Pacific will combine with Sysco using their sales team to both train and work with the Sysco sales force to help sell the item. The Georgia Pacific staff will conduct training meeting for Sysco and work to make sure the Sysco team can sell the differentiated items by putting focus on these 3 areas.
Feature: How does it operate?
Function: What does it do?
Benefits: How does it help you in your business?
Sysco will be paid a local rebate on all sales and the sale of the product will flow thru one of the Sysco distribution centers. Sysco will both sell the product thru their sales team and also accept order from the Georgia Pacific sales team for distribution. Working together as one big team both sales staffs will demo and sell this item into the target markets that Sysco sells and that this unit is targeted for.
U.S Foodservice is another leader in the foodservice distribution industry with over 80 locations of service covering the full United States. They operate using the same model that Sysco does and in most cases targets the same markets. US Foodservice will obtain the same rebates and training support that Sysco will get, along with the ability to work with the Georgia Pacific sales team direct. While they are smaller in size at about 18 Billion they are still have a customer base that is loyal to them. They are larger into selling the national account chains where Sysco tends to focus more on the full service restaurants. U.S Foodservice is known for providing excellent fill rates in the industry.
Independent distributors make up the last 20% and they really get involved in personal selling. Their primary focus would be to sell smaller users in a local area that is close to their distribution center. These distributors are usually family run operations that focus on a few select product groups like candy and tobacco or janitorial chemical items that they sell into foodservice accounts. In this channel it will be the job of our sales team to work with their staff and users to help pull thru the sale and drive the product onto the distributor’s floor for stocking. This channel will see smaller rebates and in most cases tend to be distributors with revenues of 10-70 million annually. They offer one on one service in a local market that national larger distributors fail to not do well with. They offer users personal service and the relationship becomes more important then a low price at times.

Financial Plan
Sector/ Industry Analysis

Sales Forecast

Balance Sheet Projected Balance Sheet 2012 | | | | | ASSETS | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Current Assets | | | | | Cash | $200,002 | $207,789 | $233,625 | $278,463 | Accounts Receivable | $34,111 | $35,651 | $37,268 | $38,968 | Inventory | -$249,820 | -$511,681 | -$786,222 | -$1,074,118 | Other Current Assets | $0 | $0 | $0 | $0 | Total Current Assets | -$15,708 | -$268,241 | -$515,329 | -$756,687 | Fixed Assets | | | | | Land | $0 | $0 | $0 | $0 | Facilities | $11,970 | $11,970 | $11,970 | $11,970 | Equipment | $19,940 | $19,940 | $19,940 | $19,940 | Computers & Telecommunications | $23,304 | $23,304 | $23,304 | $23,304 | (Less Accumulated Depreciation) | $0 | $0 | $0 | $0 | Total Fixed Assets | $55,214 | $55,214 | $55,214 | $55,214 | Other Assets | $0 | $0 | $0 | $0 | TOTAL ASSETS | $39,506 | -$213,027 | -$460,115 | -$701,473 | | | | | | LIABILITIES | | | | | Current Liabilities | | | | | Short-Term Notes Payable | $48,102 | $48,524 | $48,950 | $49,379 | Income Taxes Due | $0 | $0 | $0 | $0 | Other Current Liabilities | $0 | $0 | $0 | $0 | Total Current Liabilities | $48,102 | $48,524 | $48,950 | $49,379 | | | | | | Long-Term Liabilities | | | | | Long-Term Notes Payable | $37,196 | $24,905 | $12,507 | $0 | Other Long-Term Liabilities | $0 | $0 | $0 | $0 | Total Long-Term Liabilities | $37,196 | $24,905 | $12,507 | $0 | | | | | | NET WORTH | | | | | Paid-In Capital | $200,000 | $200,000 | $200,000 | $200,000 | Retained Earnings | -$245,791 | -$486,457 | -$721,572 | -$950,852 | Total Net Worth | -$45,791 | -$286,457 | -$521,572 | -$750,852 | TOTAL LIABILITIES AND NET WORTH | $39,506 | -$213,027 | -$460,115 | -$701,473 |

2012 - 2016 Projected Balance Sheet | | | | | ASSETS | | | | | Current Assets | 20013 | 2014 | 2015 | 2016 | Cash | $1,775,091 | $3,946,730 | $6,621,421 | $9,932,680 | Accounts Receivable | $47,471 | $56,138 | $67,626 | $76,220 | Inventory | -$2,383,163 | -$3,982,014 | -$5,927,825 | -$8,303,267 | Other Current Assets | $0 | $0 | $0 | $0 | Total Current Assets | -$560,601 | $20,855 | $761,222 | $1,705,633 | | | | | | Fixed Assets | | | | | Land | $0 | $0 | $0 | $0 | Facilities | $11,970 | $11,970 | $11,970 | $11,970 | Equipment | $19,940 | $19,940 | $19,940 | $19,940 | Computers & Telecommunications | $23,304 | $23,304 | $23,304 | $23,304 | (Less Accumulated Depreciation) | $0 | $0 | $0 | $0 | Total Fixed Assets | $55,214 | $55,214 | $55,214 | $55,214 | Other Assets | $0 | $0 | $0 | $0 | TOTAL ASSETS | -$505,387 | $76,069 | $816,436 | $1,760,847 | | | | | | LIABILITIES | | | | | Current Liabilities | | | | | Short-Term Notes Payable | $0 | $0 | $0 | $0 | Income Taxes Due | $58,730 | $196,371 | $367,561 | $579,078 | Other Current Liabilities | $0 | $0 | $0 | $0 | Total Current Liabilities | $58,730 | $196,371 | $367,561 | $579,078 | | | | | | Long-Term Liabilities | | | | | Long-Term Notes Payable | $0 | $0 | $0 | $0 | Other Long-Term Liabilities | $0 | $0 | $0 | $0 | Total Long-Term Liabilities | $0 | $0 | $0 | $0 | | | | | | NET WORTH | | | | | Paid-In Capital | $200,000 | $200,000 | $200,000 | $200,000 | Retained Earnings | -$764,118 | -$320,302 | $248,875 | $981,769 | Total Net Worth | -$564,118 | -$120,302 | $448,875 | $1,181,769 | TOTAL LIABILITIES AND NET WORTH | -$505,387 | $76,069 | $816,436 | $1,760,847 |

Income Statement

Cash Flow

Required Total / Outside Investment

Valuation after 5 years

Exit Strategy