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101 Wet Stone Hill Road Anytown, RI 12345 Telephone (401) 555-8888 Contact: Nolan Wentworth
EverGreen Lawn Care
EverGreen Lawn Care Business Plan
. . . . . . . . . .
Professional Lawn Care
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EverGreen Lawn Care Business Plan
Table of Contents
Executive Summary .................................................................................................................................... 1 Company Background ................................................................................................................................ 3 Identification of Market Opportunity ............................................................................................................... 3 Business History............................................................................................................................................ 4 Growth and Financial Objectives ................................................................................................................... 4 Legal Structure and Ownership...................................................................................................................... 5 Company Location and Facilities................................................................................................................... 5 Plans for Financing the Business................................................................................................................... 5 Owner’s Background .................................................................................................................................. 6 Background on Mr. Wentworth ...................................................................................................................... 6 Other Employees........................................................................................................................................... 6 Market Analysis ........................................................................................................................................... 6 Summary ...................................................................................................................................................... 6 Industry Analysis ........................................................................................................................................... 7 Target Market................................................................................................................................................ 7 Customer Profile ........................................................................................................................................... 7 Major Competitors and Participants............................................................................................................... 7 Projected Market Growth and Market Share Objectives................................................................................. 7 Product/Service Offering ............................................................................................................................ 8 Product/Service Summary............................................................................................................................. 8 Product/Service Uniqueness.......................................................................................................................... 8 Product/Service Descriptions......................................................................................................................... 8 Competitive Comparisons ............................................................................................................................. 8 Competition Comparison ............................................................................................................................... 9 Research and Development ........................................................................................................................ 10 Patents and Trademarks ............................................................................................................................. 10 Marketing Plan........................................................................................................................................... 10 Creating and Maintaining Customers........................................................................................................... 10 Product Pricing Strategy.............................................................................................................................. 10 Product Positioning ..................................................................................................................................... 11 Sales and Service Delivery ......................................................................................................................... 11 Promotional Strategy................................................................................................................................... 12 Financial Plan and Analysis ..................................................................................................................... 13
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Contents
EverGreen Lawn Care Business Plan
Professional Lawn Care
Executive Summary
EverGreen Lawn Care is a start-up company that will provide fertilizing, weed and insect control. The sole proprietor of the company is Mr. Nolan Wentworth who is contributing his own capital, significant lawn care experience, knowledge, and business skill. Mr. Wentworth is an area expert on lawn care with a very good reputation. His expertise and reputation give EverGreen a competitive service advantage. In addition to Mr. Wentworth’s contributed capital, EverGreen will need another $75,000 for start-up capital. The business will operate in Anytown, Rhode Island. EverGreen’s marketing plan is designed to initially attempt to convert a large portion of the more than 2000 customers that Mr. Wentworth helped to service when he was employed by Competitor 1, an area lawn care company. Additional marketing and advertising strategies are designed to target the business executive/professional who doesn’t have the time nor expertise to maintain a beautiful lawn but understands the value a nicely-landscaped lawn adds to property values. EverGreen’s particular niche and positioning will be to appeal to the environmentally conscious homeowner who is concerned about their kids, the long lasting health of their lawn and making a small contribution to Mother Earth. Currently, the lawn care business in Anytown is dominated by one company—Mr. Wentworth’s former employer, Competitor 1. Some landscapers and grass cutting companies also offer fertilizing services, but these providers hold an insignificant portion of the market. From all indicators, the Anytown lawn care market has experienced very little competition. Therefore, EverGreen has an excellent opportunity to create a large customer base if it can persuade people that it can offer greater expertise and value-added services over the current supplier, Competitor 1. While EverGreen will directly compete with Competitor 1, it is offering a service that is differentiated from that of Competitor 1’s. Here are some of the ways that EverGreen’s service will be different: The 14-point lawn care evaluation. EverGreen will offer every prospective customer a free lawn evaluation that can be used to develop a custom-designed six-step lawn care program. Competitor 1 does not offer a comparable analysis. EverGreen’s organic alternative. EverGreen will offer customers an organic alternative that is safer for the environment than the fertilizer used by Competitor 1. The facts will easily show how EverGreen’s services will cost far less in the long run while customers will appreciate the added safety it affords their children and pets.
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EverGreen Lawn Care Business Plan EverGreen’s experience and expertise. EverGreen is the only area company to have Nolan Wentworth; a lawn care professional who is highly respected in Anytown.
Type of Business
EverGreen Lawn Care is a service business specializing in fertilizing, weed and insect control.
Company/Business Summary
This is a start-up business that will be organized as a sole proprietorship, owned and operated by Nolan Wentworth. The firm will provide services for the care and maintenance of lawns, trees, and shrubs. The company will concentrate services on preventing plant disease and promoting plant growth, using natural alternatives.
Financial Objectives
The financial plan and analysis section of this business plan details the projected operating results, financial position, cash budgets, and break-even point. Below is a chart that summarizes the financial objectives for the five year planning period beginning in 1997.
Operating Performance Highlights
(all numbers in $000)
Net Income 2004 Gross Profit Net Sales
2003
2002
2001
2000 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450
Above chart assumes 20% annual growth in sales
Operating Performance Highlights
2000 Net Sales Gross Profit Net Income $216 $195 $136 2001 $259 $234 $168 2002 $311 $282 $209 2003 $373 $338 $253 2004 $448 $406 $309
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EverGreen Lawn Care Business Plan
Management Overview
Nolan Wentworth is a graduate of the University of Rhode Island’s Turf Sciences program. Mr. Wentworth also worked for five years as a greenskeeper at a large public golf course in Massachusetts and worked for another five years as a landscape architect for a nursery in Rhode Island. For the last two years, Mr. Wentworth worked for Competitor 1 as a lawn specialist, a position that required him to become company certified. Mr. Wentworth worked under the direction of an agronomist for over 6 months while he was with Competitor 1.
Product/Service and Competition
EverGreen Lawn Care will offer a six-application lawn care program. These applications will be custom designed for the particular grass type and location. EverGreen will be offering the homeowner safe, all-natural fertilizers and weed controllers.
Funds Requested
EverGreen is requesting a five-year $75,000 loan to finance the start-up. Collateral of approximately $65,000 is available to secure the loan.
Use of Proceeds
The $75,000 loan proceeds will be used to purchase a truck and equipment that will cost approximately $65,000. The remaining loan proceeds will be used to purchase supplies (fertilizer and other related chemicals).
Company Background
Identification of Market Opportunity
EverGreen Lawn Care plans on providing fertilizing, weed and insect control services to the south county of Rhode Island. According to the statistics provided by the Small Business Development Center of Rhode Island, the lawn care business is a $750,000 market in Anytown. There are no Rhode Island statistics on the rate of growth in revenues for the lawn care industry, but according to a trade association publication, the national growth rate for lawn care services has been 20% for the last 5 years and is forecasted to grow at that rate into the near future. Anytown Rhode Island is an excellent market opportunity for this service with only one competitor, Competitor 1, a national company that has a franchise in Anytown. A professional association estimates that the homeowner's return at resale can be between $800 and $1200 over the cost of lawn care improvements. However, there is no debate that the value of a home is enhanced through the use of lawn care services. The use of lawn care services tends to be common in areas where home values are relatively high and where home sales are vigorous. While Mr. Wentworth was with Competitor 1, he observed several things that convinced him that his start-up company had excellent chances for success:
•
There was an overwhelming desire on most customers’ parts for a safer alternative to the toxic chemicals that required flag notification at the end of a treatment
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EverGreen Lawn Care Business Plan
•
Traditional lawn treatment companies are wed to the past and have little opportunity to change methods because of equipment investment and reliance on old ways Finally, Mr. Wentworth studied the organic trend very closely and experimented with it extensively. He became convinced that his expertise, drive, and customer knowledge would be key to his success.
•
Business History
EverGreen is a start-up company. Mr. Wentworth has recently resigned from his position with Competitor 1 to start his venture. To date, he has invested approximately $5,000 of his own capital.
Growth and Financial Objectives
The first-year goal of EverGreen is to have 275 customers by the end of the first 12 months with subsequent annual growth in revenues equal to the national projected rate of 20% per year.
5 Year Sales Forecast
(all numbers in 000) 2000 $156 48 12 $216 2001 $187 58 14 $259 2002 $224 70 17 $311 2003 $269 84 20 $373 2004 $323 101 24 $448 Lawn Feed and Weed Tree and Shrub Care Other Total Sales
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EverGreen Lawn Care Business Plan
$450
5 Year Sales Forecast
(all numbers in $000)
$400
$350
$300
$250
$200
$150
$100
$50
$0 2000 2001 2002 2003 2004
Sales forecast based on 275 customers the first year, followed by 20% growth
Legal Structure and Ownership
The company is organized as a sole proprietorship. Mr. Wentworth has filed all the necessary paperwork to gain a DBA certificate and all appropriate permits.
Company Location and Facilities
Mr. Wentworth will conduct the business from his home office at 101 Wet Stone Hill Road, Anytown, RI. The home office is equipped with a personal computer, laser printer, and fax machine. Mr. Wentworth has erected a 2,500 square foot barn on this residential property that will be used to store supplies and equipment, including the company truck.
Plans for Financing the Business
Mr. Wentworth has contributed $5,000 of his personal funds to the business venture. He plans to contribute an additional $20,000 from a maturing CD and another $10,000 from a loan from his fatherin law. He will need an additional $75,000, in the form of a five-year business loan, to purchase supplies, equipment, and a truck. The loan can be collateralized, at least to some extent, with the title to the truck and the equipment. The truck and equipment will have a combined cost of $65,000.
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EverGreen Lawn Care Business Plan
Owner’s Background
Since the business is organized as a sole proprietorship, there is no management team. Mr. Wentworth will be the sole manager.
Background on Mr. Wentworth
Nolan Wentworth, who will run the business, is a graduate of the University of Rhode Island’s Turf Sciences program. He has also had excellent practical experience, much of it related to lawn care. Mr. Wentworth worked for five years as a greenskeeper at a large public golf course in Massachusetts and worked for another five years as a landscape architect for a nursery in Rhode Island. For the last two years, Mr. Wentworth worked for Competitor 1 as a lawn specialist, a position for which he became company certified. While he was with them, Mr. Wentworth worked under the direction of an agronomist for over 6 months. Mr. Wentworth also keeps up with developments in the industry. He is very much aware of the April 1990 public hearings held by the U.S. Senate to acquire information on the environmental impact of the use of chemical insecticides and fertilizers. He is keenly aware that the government may impose increased government regulation on this business, and is constantly reevaluating any impact this might have on the industry. He has researched new fertilizers/insecticides that are not harmful to the environment and is very much interested in organically-based fertilizers. Mr. Wentworth plans to stay informed and up-to-date on the effects of new products on the environment through books, magazines, conferences and workshops. His business knowledge will become a public relations tool.
Other Employees
The company will have two part time employees. EverGreen will utilize the skills of two other family members:
•
In the summer, Mr. Wentworth will employ his son Jimmy (age 20), who is attending the University of Massachusetts Amherst. Jimmy is studying Architectural Landscape Design. Mr. Wentworth’s wife, Jane, will manage the books for the company and manage the customer renewal process.
•
Market Analysis
Summary
From all indications, the Anytown lawn care market is large enough to support several companies. At this time, only one major player is in the market. The lack of competition in the market combined with EverGreen’s unique expertise and approach make success highly probable. The overall market seems large enough and is growing fast enough to provide plenty of business to a company that can successfully service its target market. EverGreen’s target market should have three characteristics that will also contribute to success:
• • •
They recognize that a beautiful lawn and fine looking shrubs and trees add significant value to a property. They lack the time needed to conduct their own lawn care program. They have the economic resources to afford a six-step application program.
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EverGreen Lawn Care Business Plan Mr. Wentworth believes that the large majority of customers will select the EverGreen alternative because of its organic approach.
Industry Analysis
It is estimated that more than 15 million homes nationwide, use lawn care services. The size of the Anytown Rhode Island market for lawn care is estimated to be potentially $750,000 per year. This estimate is based on the industry statistics that disclose the number of suburban households per thousand that contract for lawn care. EverGreen’s projected share of the market is modest, at approximately 14% of the market by the end of year one.
Target Market
The market that EverGreen will be targeting is the suburban upper-middle to upper-class market with household annual incomes that range from $60,000 to $100,000 and higher. In Anytown, Rhode Island, there are approximately 22,000 households with annual incomes in the range defined above. The six-application per year lawn care maintenance program, which costs on average $360 (for a 7,000 square foot area), is affordable for this market. The defined market can be easily convinced of or already sees the merit of the six-application process as a way of ensuring a beautiful lawn. Statistics show that in neighborhoods where the average household income is $60,000 or above, 1 out of every 3 homes has a lawn care provider. However, market penetration in the Anytown area has not been great up till now with only one local vendor providing service. Estimates show that only 1 out of 10 homes in this demographic segment currently contract lawn care services.
Customer Profile
The demographics of the homeowner market that EverGreen will serve are as follows:
• • • • •
Income Level: $60,000+ annual household income Occupation: Executive and professional Median property values: $130,000+ Neighborhoods: Suburban, upper-middle class More likely to have at least one child
Major Competitors and Participants
The only major competitor at this time is Competitor 1. Other competitors are lawn maintenance (grass cutting) and landscapers who offer lawn care as secondary to their primary business. Competitor 1 is a national company that has had an Anytown franchise for the past 4 years and has had the market virtually to itself. EverGreen will be in direct competition with Competitor 1. Mr. Wentworth was employed by them for the last two years and will attempt to persuade their customers to convert to EverGreen at 5% below Competitor 1’s cost. They currently have over 2000 customers.
Projected Market Growth and Market Share Objectives
Mr. Wentworth’s sales goals are very modest with a target of 275 customers by the end of year one. It is estimated that EverGreen’s market share will be approximately 14% of the existing market but under 5% of the potential market. Mr. Wentworth is predicting that half of these customers will come from the existing Competitor 1 base and half will be new customers. Annual growth is assumed to be at least at the national projection of 20% for each of the next five years.
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EverGreen Lawn Care Business Plan These goals seem to be modest and achievable when compared with the customer list of over 2000 customers from Competitor 1.
Product/Service Offering
Product/Service Summary
The service that EverGreen will offer is a six-step lawn care program that involves fertilizing for growth and color, and applications that will control weeds and insects. Each program will be custom designed based on a free 14-point evaluation.
Product/Service Uniqueness
EverGreen’s service is also unique because of the skill and knowledge that Mr. Wentworth brings to the business. In addition, Mr. Wentworth’s customer relation skills help to make this venture unique and give a definite competitive advantage to the firm. Mr. Wentworth knows that being courteous to the clients and his expert qualifications are the most critical issues for this business. If a lawn care firm is unable to maintain a friendly, courteous relationship with its customers, it will not be successful.
Product/Service Descriptions
EverGreen will be in the business of selling a six-part application process that will give the homeowner a beautiful lawn. The service consists of a six specifically-designed and seasonally-scheduled service visits (applications).
1.
Early Season. The first visit of the year involves an application that will promote spring green-up and lawn recovery from winter stress. The application will also help control weeds and crabgrass. Spring. This application is designed to give your lawn extra nutrients which will result in a greener and thicker lawn. Weed and crabgrass control will be applied only if necessary. Early Summer. This fertilizer application gets your lawn ready for the possible stressful summer (heat and draught) ahead. The lawn will be checked for isolated weed and insect problems and treated accordingly. Late Summer. Like application 3, this is a fertilizer that will help promote color without pushing growth. Again, the lawn will be checked for isolated weed and insect problems and treated accordingly. Early Fall. This application is designed to help thicken the lawn and to promote new root growth. Since weeds and insects can be present in fall lawns, the technician will check for those problems and treat the lawn accordingly. Late Fall. This application consists of a special fertilizer that will promote root growth and food storage for the winter ahead. This application is critical for winter survival and will help bring about a healthier lawn for the following spring.
2.
3.
4.
5.
6.
Competitive Comparisons
Many of the services offered by EverGreen are comparable in price and value to that of Competitor 1. However, there are significant differences.
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EverGreen Lawn Care Business Plan EverGreen will offer a free 14 point evaluation that will help the technician design an appropriate program and will give the homeowner a better understanding of his or her lawn’s needs. The 14point evaluation is in writing (in a checklist format) and examines the following:
1. 2. 3. 4. 5. 6. 7. 8. 9.
Grass type Turf density Color Thatch Diseases Soil type Weeds Mowing Insects
10. Shade 11. Watering 12. Problem grasses 13. Potential 14. Present conditions
Another distinct difference between Competitor 1 and EverGreen is that EverGreen will give the homeowner the option of using organic and environmentally-safe fertilizers. The homeowner will be told, in writing, the pros and cons of organic versus non-organic fertilizers and the difference in cost between the two will be clearly disclosed. The third competitive difference is that EverGreen will not charge an additional amount for grub control as is the case with Competitor 1. Finally, another competitive advantage is Mr. Wentworth who is well known in the community and has already developed rapport with many of Competitor 1’s customers. In addition to working with many homeowners in Anytown, Mr. Wentworth is a frequent guest on a local talk radio home and garden show. EverGreen can sell many intangible benefits, such as confidence, reliability, and answers to questions about lawn care, because of Mr. Wentworth’s background, reputation, and experience.
Competition Comparison
The following chart summarizes the key differences between Competitor 1 and EverGreen Lawn Care:
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EverGreen Lawn Care Business Plan Feature Seasonal Cost Customer Satisfaction Treatment Child and pet safe Grub control Effective Long Term Treatment EverGreen $10.00 per 1000 sq. ft Money Back Guarantee Organic Yes Included Yes Competitor 1 $9.75 per 1000 sq. ft Money Back Guarantee Toxic chemicals No Extra charge No (requires more and more chemicals)
Research and Development
EverGreen has access to a regional agronomist that is employed by Company X, EverGreen’s fertilizer supplier. Company X spends in excess of $500,000 annually on research and development, and freely shares its findings with its customers. Company X also conducts quarterly seminars on lawn care at its Anytown, New Jersey headquarters. In his study of the organic treatments, Mr. Wentworth spent a lot of time with Company X, Inc., and has a strong working relationship with their research team.
Patents and Trademarks
EverGreen does not own any patents or trademarks. It has secured the Truste trustmark, a privacy seal of approval for commercial Web sites. The trustmark is explained in a subsequent section.
Marketing Plan
Creating and Maintaining Customers
EverGreen will attract and maintain its customer base by competitively pricing the service and demonstrating, through hard work and a customer-driven approach, that the company can take the time and inconvenience out of lawn care. EverGreen will position itself as the busy person’s safe and natural way to a beautiful lawn. Customers will quickly recognize that the company’s main “asset” is its founder, Mr. Nolan Wentworth. And as is often the case with service-oriented businesses, new customers will be created as current customers begin to appreciate the skill, expertise, and knowledge of Mr. Wentworth. Those customers will recommend EverGreen to their family and friends and will help to broaden the customer base. The company has already set up a Web site to “connect” to its customer base in a variety of ways. The Web site will not only offer lawn care tips, advice, and other consumer educational resources but will help promote the business in a variety of ways which are explained in more detail in the Sales and Service Delivery and Promotional Strategy sections of this plan.
Product Pricing Strategy
EverGreen’s service will be priced to be competitive with the marketplace. Mr. Wentworth understands the pricing strategy of the competitor and he will monitor their pricing to stay
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EverGreen Lawn Care Business Plan competitive. Competitor 1’s basic price is $9.75 per 1,000 square feet (with discounts given, because of economies of scale, when total square footage is greater than 12,000 feet). EverGreen’s sale literature tells customers that EverGreen will meet the price or promotional appeals of any competitor, as long as the customer has documented proof—such as a competitor’s bid sheet, program estimate, or coupon. Existing Competitor 1 customers will be given a one-year 10% discount enticement to convert their lawn care service to EverGreen. Mr. Wentworth is happy to give these discounts for the first year in order to establish the business base. He is confident that he will be able to retain the customer over a several year period.
Product Positioning
While Mr. Wentworth brings some clear skills to the business, the most important positioning of the business is its safe, natural, and longer lasting approach. There have been many negative reports on the use of lawn chemicals. EverGreen has contracted with a local artist to design a truck that will communicate this message load and clear to the customer. The company has also secured a local telephone number that spells NATURAL. “Call NATURAL to find out more” will be one of the messages on the truck. The EverGreen service will be positioned as the professional’s or executive’s solution to expert lawn care. Advertising will discuss how most homeowners could perform their own lawn care program but the time and inconveniences of the task are a deterrent. Emphasis will also be place on the value of expert service. Mr. Wentworth’s background/reputation and the 14-point evaluation will help substantiate the expert claim.
Sales and Service Delivery
The sales cycle in this service business is very seasonal. Seventy-five per cent of all purchase th th decisions are made between February 15 and April 15 . The service delivery begins on May st 1 . There are three main ways to get a new client and their chances of success are in this order:
• • • • • •
Friend referral Article or other public relations opportunity Direct mail Newspaper advertisement Prospect notices truck in neighborhood Prospect visits Web site
The promotional plan below is designed to complement this sales cycle and customer mindsets. Mr. Wentworth will perform much of the direct calling on sales prospects and follow-up. He will also use the services of freelancers in the area to perform telemarketing. Mr. Wentworth’s wife, Jane, will handle the books, manage the billing, and sign up customers from one year to the next. The service will be delivered to the customer using a variety of equipment and tools. EverGreen will initially purchase a 1996 small flatbed truck that will be retrofitted with a tank and pump system used to apply the fertilizer and weed control. The truck, tank, and pump system is the key equipment of the business. The estimated cost of the system is $65,000.
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EverGreen Lawn Care Business Plan The company Web site, in addition to offering a variety of useful lawn care tips, advice, and resources, will allow customers to schedule an appointment for an estimate, lawn analysis or routine application. Customers will have their appointment confirmed via email. In addition, current customers can refer a friend to EverGreen as potential customers via the Web site. If a Web site referral becomes an EverGreen customer, the customer who made the referral will save 20% on all of next year’s applications.
Promotional Strategy
The promotional strategy will consist of telemarketing calls to existing Competitor 1 customers who will be told about Mr. Wentworth’s service and who will be offered the one year 10% discount. In addition, any customer who refers two customers to EverGreen will receive one of the applications free. On average, the free application represents a $60 value. A telemarketing service will also be used to set up appointments for the 14 Point Lawn Evaluation. Homeowners will be contacted and informed that an EverGreen technician will be in the area conducting free, no obligation, lawn analysis. The calls will clearly differentiate EverGreen’s service from their chemically-unfriendly competitor. EverGreen will also use a local bulk mail coupon service that will mail monthly coupon savers and offers for the free 14 Point Lawn Evaluation, to households with median incomes $60,000 or more. The mailing will include a special offer for 1000 frequent flier miles on the two most frequently-held affinity programs. Mr. Wentworth recently attended a convention that discussed the value of these programs when services of over $500 are offered to high income purchasers. Newspaper advertising campaigns, both in traditional home town papers and in the free “shopper papers,” will be executed in late winter/early spring and in early fall. The service truck for the company will bear the company logo, Web site address and a brief listing of services offered, along with the NATURAL business-telephone number. A brochure will be given to each potential customer when the written estimate is completed. The brochure will describe Mr. Wentworth’s skills and experience, and the type of service the customer will receive. In addition, after a service is rendered, a brochure will be given describing what the customer needs to do to maintain the grass. Special prices in the spring will be offered and discounts to regular customers who contract for year-long services. Mr. Wentworth plans to spend a reasonable part of his time working with local newspapers and radio shows to place articles about the advantages of natural lawn care. He has enlisted the services of some local college journalism students to write some example articles that will be distributed to the media. The company’s Web site will not only educate consumers on lawn care but will help enhance the reputation of EverGreen. In addition to expert tips and advice and promotional information, the Web site content will optimize credibility. For example, the Web site will explain the various certifications (such as CTP - Certified Turfgrass Professional) that Mr. Wentworth and staff have achieved. This will increase customer confidence. The Web site will also add value by describing the purpose of each lawn care application and includes suggestions for post-application actions to be taken by the homeowner (i.e., mow or not mow, remove clippings or leave clippings, water immediately or wait to water, etc.) Since the EverGreen Web site will collect consumer information (to schedule appointments, sell products from the virtual store, and to implement the referral program), Mr. Wentworth has had the Web site reviewed by the TRUSTe program and has been found to be in compliance with TRUSTe privacy principles.
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EverGreen Lawn Care Business Plan The company Web site will also offer some interesting and innovative promotional features. In addition to the referral program noted in the previous section, Web content such as Ask the Expert, Famous Lawns in the Area, Earth Friendly Yard Care Tips, Grass Planting Guides, and Lawn Care Checklists will help to grow EverGreen’s reputation as the most qualified experts in natural lawn care. The Web site will also offer cross-promotinal/co-branded services and partnerships with local companies. Mr. Wentworth plans to negotiate several marketing partnerships with the following local service companies: • • • • • • • • Acme Tree Service Number 1 Driveway Maintenance Revival External House Painters Kings Fencing Rite Way Irrigation Systems Colonial Landscaping, Inc. Excellent Lawn and Garden Centers, Inc. Kaplan Mower Repair and Service
Links to a Web page for each “partner” will be provided on the EverGreen Web site and in turn, each partner will link back to EverGreen’s Web site. At the heart of these virtual connections will be a customer referral service. Web site and email coupons allow consumers multiple-service discounts. The EverGreen Web site will also offer a virtual storefront via affiliate programs with the Weather Channel Store, Amazon.com, Old Farmer’s Almanac, and LawnSeed.com, Wildflower.com, and Lawn&Gardentool.com.
Financial Plan and Analysis
Initial Capital Requirements
The initial start-up capital requirements of the business are expected to be about $110,000. A large portion of the initial capital (76%) is for the up front costs for equipment and supplies. The remaining amount (24%) is for the monthly expenses needed to launch the business.
Financial Highlights
Key financial ratios have been calculated for the five-year planning period and are shown below. Although the Debt/Equity ratio is a bit high at the end of year one, it improves significantly during years 2 through 5. Please note that since this is a service business, the gross margin is 100% because there is no cost of sales, just operating expenses.
5-Year Income Statement
The projected operating results for the five year planning period are shown below in the proforma income statements. Net profits range from $8,000 for the first full year of operation to $36,000 by the fifth year.
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EverGreen Lawn Care Business Plan
5-Year Balance Sheet
The projected financial position as of the end of each fiscal year in the planning period are shown below.
Cash Budgets
Cash budgets have been prepared using two formats: a 12-month cash budget for year one and annual budgets for each of the five planning periods. Both reports are shown below.
Break-Even Analysis
The monthly break-even point of about $5,200 in sales translates to about $62,400 annually. According to income statement projections, the business will operate above the break-even point for all five years in the planning period.
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EverGreen Lawn Care Business Plan
Estimated Start-Up Capital
Monthly Expenses MONTHLY COSTS Salary of owner-manager All other salaries and wages Rent Advertising Delivery expense Supplies Telephone Other utilities Insurance Taxes, including social security Interest Maintenance Legal and other professional fees Miscellaneous Subtotal $1,000 833 250 1,250 Cash Needed to Start $3,000 2,499 0 3,000 0 15,000 0 0 3,000 0 0 0 0 0 $26,499 % of Total 2.7% 2.3% 0.0% 2.7% 0.0% 13.6% 0.0% 0.0% 2.7% 0.0% 0.0% 0.0% 0.0% 0.0% 24%
250
ONE-TIME COSTS Fixtures and Equipment Decorating and remodeling Installation charges Starting inventory Deposits with public utilities Legal and other professional fees Licenses and permits Advertising and promotion for opening Cash Other Subtotal
$65,000
10,000 1,000 500 2,000 5,000 $83,500
59.1% 0.0% 0.0% 9.1% 0.0% 0.9% 0.5% 1.8% 4.5% 0.0% 76%
TOTAL ESTIMATED START-UP CAPITAL
$109,999
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EverGreen Lawn Care Business Plan
Financial Highlights
2000 Liquidity Current Ratio Acid-Test Ratio Leverage Debt Ratio Debt/Equity Ratio Times Interest Earned Efficiency Inventory Turnover Average Collection Period Total Asset Turnover Profitability Gross Margin Return on Assets Return on Equity 8.62 6.31 2001 11.00 8.31 2002 18.69 14.85 2003 23.15 19.31 2004 29.00 24.38
27.86% 38.62% 20.43
14.10% 16.41% 25.00
8.07% 8.78% 30.86
4.55% 4.77% 37.14
2.39% 2.45% 45.14
0.70 16.90 0.82
0.71 28.19 0.69
0.58 23.47 0.58
0.70 29.36 0.51
0.70 32.59 0.47
90.28% 51.91% 71.96%
90.35% 44.68% 52.01%
90.68% 39.21% 42.65%
90.62% 34.90% 36.56%
90.63% 32.12% 32.91%
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EverGreen Lawn Care Business Plan
Income Statement
For the Years 2000 through 2004 (all numbers in $000) REVENUE Gross sales Less returns and allowances Net Sales COST OF SALES Total Cost of Goods Sold Gross Profit (Loss) OPERATING EXPENSES Selling Salaries and wages Commissions Advertising Depreciation Other Total Selling Expenses General & Administrative Salaries and wages Employee benefits Payroll taxes Insurance Rent Utilities Depreciation & amortization Office supplies Travel & entertainment Postage Interest Furniture & equipment Total G&A Expenses Total Operating Expenses Net Income Before Taxes Taxes on income Net Income After Taxes Extraordinary gain or loss Income tax on extraordinary gain NET INCOME (LOSS) $136 $168 $209 $253 $309 2000 $216 0 $216 $21 $195 2001 $259 0 $259 $25 $234 2002 $311 0 $311 $29 $282 2003 $373 0 $373 $35 $338 2004 $448 0 $448 $42 $406
$3 $5 $3 $1 $12 $20 $3 $3 $4 . $2 $5 $1 $1 $1 $7 . $47 $59 $136 0 $136 .
$3 $5 $3 $1 $12 $25 $4 $4 $4 . $2 $5 $1 $1 $1 $7 $54 $66 $168 0 $168
$3 $5 $3 $1 $12 $30 $5 $5 $4 . $2 $5 $1 $1 $1 $7 $61 $73 $209 0 $209
$3 $5 $3 $1 $12 $40 $6 $6 $4 . $2 $5 $1 $1 $1 $7 $73 $85 $253 0 $253
$3 $5 $3 $1 $12 $50 $7 $7 $4 $2 $5 $1 $1 $1 $7 $85 $97 $309 0 $309
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EverGreen Lawn Care Business Plan
Balance Sheet
For the Year End 2000 through 2004 (all numbers in $000) ASSETS Current Assets Cash Net accounts receivable Inventory Temporary investment Prepaid expenses Total Current Assets Fixed Assets Long-term investments Land Buildings (net of depreciation) Plant & equipment (net) Furniture & fixtures (net) Total Net Fixed Assets TOTAL ASSETS LIABILITIES Current Liabilities Accounts payable Short-term notes Current portion of long-term notes Accruals & other payables Total Current Liabilities Long-term Liabilities Mortgage Other long-term liabilities Total Long-term Liabilities Shareholders' Equity Capital stock Retained earnings Total Shareholders' Equity TOTAL LIABILITIES & EQUITY 2000 $53 10 30 9 10 $112 2001 $68 20 35 10 10 $143 2002 $148 20 50 10 15 $243 2003 $191 30 50 10 20 $301 2004 $237 40 60 20 20 $377
$30
$45
$80
$54 150 200 20 $424 $725
110 10 $150 $262
178 10 $233 $376
200 10 $290 $533
$65 130 170 200 20 $585 $962
$10
$10
$10
$10
$10
3 $13
3 $13
3 $13
3 $13
3 $13
60 $60
40 $40
30 $30
20 $20
10 $10
$80 109 $189 $262
$80 243 $323 $376
$80 410 $490 $533
$80 612 $692 $725
$80 859 $939 $962
PROPRIETARY INFORMATION: Do Not Distribute
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EverGreen Lawn Care Business Plan
Cash Budget
For the Year 2000
(all numbers in $000) Jan Beginning cash balance Cash from operations Total Available Cash Less: Capital expenditures Operating expenses Interest Dividends Debt retirement Other Total Disbursements Cash Surplus (Deficit) Add: Short-term loans Long-term loans Capital stock issues Total Additions Ending Cash Balance 1 $100 ($88) 1 $7 $25 $2 10 $12 $84 $15 Feb $22 10 $32 Mar $25 10 $35 Apr $26 10 $36 May $30 10 $40 Jun $34 10 $44 Jul $35 10 $45 Aug $39 10 $49 Sep $42 10 $52 Oct $45 10 $55 Nov $47 10 $57 Dec $51 10 $61
$6
$6 2 1 $9 $26
$5
$5
$6 2
$5
$6
$6
$5 2
$5
$5 2
1 $6 $30
1 $6 $34
1 $9 $35
1 $6 $39
1 $7 $42
1 $7 $45
1 $8 $47
1 $6 $51
1 $8 $53
75 35 $110 $22 $0 $25 $0 $26 $0 $30 $0 $34 $0 $35 $0 $39 $0 $42 $0 $45 $0 $47 $0 $51 $0 $53
Cash Budget Activity -- First 12 Months
(all numbers in $000)
$60 $40 $20 $0 ($20) ($40) ($60) ($80) ($100) 1 2 3 4 5 6 7 8
Cash Surplus (Deficit)
10 11 12 Ending Cash Balance
9
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EverGreen Lawn Care Business Plan
Cash Budget
For the Years 2000 through 2004 (all numbers in $000) 2000 $2 120 $122 $84 75 8 0 12 0 $179 ($57) $0 75 35 $110 $53 2001 $53 112 $165 2002 $68 185 $253 2003 $148 190 $338 2004 $191 190 $381 Beginning cash balance Cash from operations Total Available Cash Less: Capital expenditures Operating expenses Interest Dividends Debt retirement Other Total Disbursements Cash Surplus (Deficit) Add: Short-term loans Long-term loans Capital stock issues Total Additions Ending Cash Balance
79 5 13 $97 $68
90 4 11 $105 $148
131 3 13 $147 $191
130 2 12 $144 $237
$0 $68
$0 $148
$0 $191
$0 $237
Cash Budget Activity -- 5 Years
(all numbers in $000)
$250 $200 $150 $100 $50 $0 ($50) ($100) 1 2 3 Cash Surplus (Deficit) 4 Ending Cash Balance 5
PROPRIETARY INFORMATION: Do Not Distribute
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EverGreen Lawn Care Business Plan
Break-Even Analysis
Fixed Costs Product costs: Average Cost of Product Monthly Selling expenses: Sales salaries & commissions Advertising Miscellaneous selling expense Monthly General expenses: Office salaries Supplies Miscellaneous general expense Totals Average selling price per unit Results: Contribution margin per unit Monthly unit sales at break-even point Monthly Sales Dollars at break-even point Variable Costs $15.00
$1,000 $500 $400 $0 $1,000 $1,000 $3,900
$15.00 $60.00
$45.00 87 $5,200
Break-Even Analysis (all numbers in ($000)
500 0 -500 Monthly Profits -1,000 -1,500 -2,000 -2,500 -3,000 -3,500 -4,000 0 1,000 2,000 3,000 Monthly Sales 4,000 5,000
Profits
6,000
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