Beverage Machine Retail Business Plan

1.0 Executive Summary

Margarita Momma is a frozen drink machine rental service. We will specialize in church functions, children and adult birthday parties, weddings, and barbecues. We plan to set up concession services at local and fund-raising events within the Copperas Cove, Ft. Hood, and Killeen areas. The frozen beverage can have alcohol, but is enjoyable without as well. However, if the customers choose to have alcohol in the drinks, they must purchase it, and add it, themselves. This is a unique service for the area; however, frozen drink machine rentals have been growing throughout the nation.

The chosen beverage concentrate has natural flavorings, and few preservatives. This makes the concentrate far superior, both in quality and in taste, to the other brands on the market. We provide a quality far beyond that found at convenience stores which offer frozen drinks.

Margarita Momma will deliver the machine with everything necessary for making the gathering a success. The cart delivery includes: 50 nine-ounce cups, straws, and salt (if needed for margaritas). The only thing the customer must provide is fun! Delivery also includes the mix, and the mixing of the first batch. This is where the customer would provide and add any alcohol to the drinks. The cart is provided by Margarita Momma so there will be easy delivery, as well as to minimize the chance of any furniture damage. The cart has a deep tray which will help contain spills, and to further reduce furniture/carpet damage. Next morning's pick-up is provided for in the rental cost, and will be performed at a time convenient for the customer.

In order to begin renting, Margarita Momma requires $11,960 to purchase three Frosty Factory machines, ten cases of concentrate, two cases of cups, and two cases of straws.

Highlights

1.1 Objectives

The objectives for this business plan are specific goals which are achievable by Margarita Momma in the first few years of operation. These objectives are outlined below:

Sales of $2,000 for each of the last two months of 2000, and steady growth continuing for all of FY 2001.
To increase from three to six machines in 2001.
To go full time within nine months (July, 20001).

1.2 Mission

Margarita Momma will provide the community with an alternative beverage to be served at any event for any age group. We will provide delivery, and complete setup, making the first batch of mix for the customer. Machines will be delivered well in advance of party time so that the mix will be ready. The cost of the rental includes: cups, one mix, salt, straws, and written instructions. Extra mixes can be purchased for an additional charge, at the time of rental; but one mix is sufficient for most events. Pick up the day after will also be provided for the convenience of the customers.

1.3 Keys to Success

The following facets of Margarita Momma ensure its financial success:

Unique services, unmatched in both quality and presentation.
Low operating overhead.
Beneficial word-of-mouth advertising.
A healthy, versatile drink which is suitable for all ages.

2.0 Company Summary

Margarita Momma is a new company to this area that provides frozen beverage machine rentals to the individual, whether it's a nonprofit organization or a child's birthday party. The frozen beverage is versatile; it can be either a slurpee or a frozen cocktail.

2.1 Company Ownership

Margarita Momma will be created as a Sole Proprietorship, owned by its founder, Greta Guidry. The company will be operated from the owner's home.

2.2 Start-up Summary

Our start-up costs come to $11,960. This number includes three machines, three carts, mix, cups, straws, magnetic sign for delivery vehicle, business cards, and flyers. The details are included in the following table and chart.

Start-up

Requirements

Start-up Expenses
Legal	$11
Business Cards	$10
Brochures, Flyers, etc.	$20
Software	$90
Magnetic Sign	$30
Total Start-up Expenses	$161

Start-up Assets
Cash Required	$839
Start-up Inventory	$700
Other Current Assets	$1,260
Long-term Assets	$9,000
Total Assets	$11,799

Total Requirements	$11,960

Start-up Funding
Start-up Expenses to Fund	$161
Start-up Assets to Fund	$11,799
Total Funding Required	$11,960

Assets
Non-cash Assets from Start-up	$10,960
Cash Requirements from Start-up	$839
Additional Cash Raised	$0
Cash Balance on Starting Date	$839
Total Assets	$11,799


Liabilities and Capital

Liabilities
Current Borrowing	$0
Long-term Liabilities	$10,960
Accounts Payable (Outstanding Bills)	$0
Other Current Liabilities (interest-free)	$0
Total Liabilities	$10,960

Capital

Planned Investment
Greta Guidry	$1,000
Other	$0
Additional Investment Requirement	$0
Total Planned Investment	$1,000

Loss at Start-up (Start-up Expenses)	($161)
Total Capital	$839


Total Capital and Liabilities	$11,799

Total Funding	$11,960

Start-up

2.3 Company Locations and Facilities

This business will be operated out of my residence at (address withheld for sample plan purposes).

3.0 Services

Margarita Momma offers frozen drink machine rentals with complete delivery, setup, and pickup. We will be the first business of its kind in the area.

Product quality will include a large variety of tropical- and regular-flavored syrups. Margarita Momma has pledged to use only the healthiest, freshest ingredients for our frozen drinks. The brand Margarita Man margarita mix has been chosen because it has natural lemon and lime flavors and real lime juice. Extra natural flavoring can be used by adding Triple Sec Liqueur. Very few preservatives are added to enhance the freshness of our product. The result is a unique citrus-fruit-flavored margarita mix that can also be used as an excellent sweet 'n sour. No other bar mix out there is fruitier. We will grow to include the full line of 11 flavors, mixed to the same standards of quality.

Current concentrate flavors available are:

Strawberry Daiquiri
Margarita
Louisiana Hurricane
Peach Bellini
Bordermilk (Lemon Freeze)
Razzmatazzberry
Pina Colada
Go Mango
Go Banana
Goombay Smash (Rum Punch)
Tropical Punch
Neutral Base

4.0 Market Analysis Summary

Although the name is Margarita Momma, we want to stress that this service is for everyone who plans a gathering. Every household, business, church, or event is a potential customer. From weddings to barbecues, from Lampasas to Harker Heights, the fun and convenience catches on like wildfire as everyone at the event enjoys a delicious frozen drink.

Some examples of excellent rental/concession opportunities are:

Rabbit Fest
4th of July
Hood Howdy
Taste of Cove
Weddings
Club Fundraisers
National Night Out
Downtown Party
St. Patrick's Day
New Years Eve
Family Reunions

Currently, at these types of events, customers have a choice of purchasing soda or snow cones. And, while delicious in their own right, there is something missing from these two choices. We have an excellent alternative; Margarita Momma will provide a quality beverage, with real fruit flavoring and few preservatives. These drinks are far superior to the taste of a snowcone or a slurpee, and more nutritious than a soda.

4.1 Market Segmentation

Margarita Momma will target all segments of the population--children, teenagers, and adults--through rentals and concession stands at local events. This is truly a beverage people of all ages can enjoy. It is a fun, affordable alternative to the familiar party beverages that are available. Our market segmentation will focus more on areas of service than on potential customers. The only limitation would be how far the company is willing to travel and how much area can be covered through our advertising plans.

Market Analysis
		2000	2001	2002	2003	2004
Potential Customers	Growth						CAGR
Copperas Cove	500%	10	60	360	2,160	12,960	500.00%
Killeen	600%	20	140	980	6,860	48,020	600.00%
Ft. Hood	700%	15	120	960	7,680	61,440	700.00%
Total	622.20%	45	320	2,300	16,700	122,420	622.20%

Market Analysis (Pie)

4.2 Market Analysis

Although this is a lucrative business, there are no competitors for Margarita Momma. This is due to the fact that there are no other companies in the targeted area which provide similar services. Margarita Momma has the advantage of being the first to market these services.

4.3 Target Market Segment Strategy

The margarita machine rental business has been EXPLODING in Texas for the last 15 years. Now this fun, profitable business is sweeping the country. In order for Margarita Momma to get a hold of this lucrative service, we must focus on a specific market segment whose needs match our offerings.

The target customer is anyone planning an event and wishing to provide an original beverage alternative for their guests. When the happy guests serve themselves, they think, "What a great idea, I'll have Margarita Momma bring a machine to my next party." Each guest is your next potential customer.

4.4 Market Needs

The party products market is popular, and demands quality services. Margarita Momma is able to provide this segment with the products and services it is seeking. The unique nature of a frozen drink machine service demands it be an indispensable part of any celebration or gathering.

The market for party products is growing throughout Texas--as well as the rest of the country. Margarita Momma has the advantage of being an originator in South Central Texas.

4.5 Service Business Analysis

As mentioned in the previous sections, there is no relevant competition for Margarita Momma at this time. This is a novel business in an exciting, expanding new industry; we are set up to reap the benefits of being pioneers within this area of Texas. That is not to say we would be unable to compete with a business offering the same services. We intend to entrench ourselves so fully in the segment, that our customers would never dream of using anyone else for their party needs. We will be the company that a new business will be wary of.

4.5.1 Business Participants

This topic was not included in the original business plan, but is included here as a placeholder for others using this plan as a guide. Please remember that the default outline is flexible on purpose, because every business plan is unique, so many excellent plans omit topics included in the standard outline and many add additional topics. The outline is a suggestion, not a checklist. You can add and delete topics easily. Make it your plan, not the software's plan.

4.5.2 Competition and Buying Patterns

4.5.3 Distribution Patterns

4.5.4 Main Competitors

5.0 Strategy and Implementation Summary

The beginning operation of Margarita Momma will be basic, with three machines, and three flavors of mix. It is imperative to the success of the company that smart financial decisions are made, and that the business does not expand too quickly; this could result in not having the funds necessary to operate. Flavors, machines, and an expanded service area will be added as they become necessary. This is a process we see as taking place over the first two years of operation. We plan to expand the flavor choice from the basic three to the full eleven that are available. Additional machines will be purchased in order to better serve an ever-expanding customer base. Within two years, we hope to be serving the Kempner, Lampasas, and Belton areas; this will expand our range to almost a fifty-mile service area.

5.1 Strategy Pyramids

5.2 Competitive Edge

We start with a critical edge--there is no direct competition at this point, closer than Austin, which is almost one hundred miles away. Available options for this area include: the snow cone trolley, purchasing the separate ingredients and using a blender to make frozen drinks, or canned drinks purchased at retail stores. Fundraising options would be provided by Pepsi and Coca-Cola distributors from the nearby Temple area. These options all pale when compared with the lively taste and nutritious quality of Margarita Momma's frozen beverages.

Customers will be reached through advertisements such as business cards, flyers, newspaper ads, a website, and through word-of-mouth from satisfied customers. It is our goal to make each occasion the best it can be. By doing our utmost to ensure this, we expect positive feedback from our customers. It is our hope, then, that these satisfied customers will not be stingy with their praise for the company, and spread the word about us.

5.3 Sales Strategy

We will provide first-rate service during each aspect of rental: from time of booking, to setup, and all the way through to pickup. Each member of the Margarita Momma team will be adept at both sales and social skills. It is our goal to be the most friendly, knowledgeable business in the area. This will help Margarita Momma become number one in sales, and it will contribute to remaining number one.

5.3.1 Sales Programs

5.3.2 Sales Forecast

The following table and chart give a run-down on forecasted sales. We expect sales to increase dramatically as name recognition and word-of-mouth advertising grows.

Sales Forecast
	FY 2001	FY 2002	FY 2003
Unit Sales
Machine Rental	572	650	750
Extra Mix	245	300	350
Other	0	0	0
Total Unit Sales	817	950	1,100

Unit Prices	FY 2001	FY 2002	FY 2003
Machine Rental	$100.00	$100.00	$100.00
Extra Mix	$15.00	$15.00	$15.00
Other	$0.00	$0.00	$0.00

Sales
Machine Rental	$57,200	$65,000	$75,000
Extra Mix	$3,675	$4,500	$5,250
Other	$0	$0	$0
Total Sales	$60,875	$69,500	$80,250

Direct Unit Costs	FY 2001	FY 2002	FY 2003
Machine Rental	$7.60	$7.60	$7.60
Extra Mix	$4.80	$4.80	$4.80
Other	$0.00	$0.00	$0.00

Direct Cost of Sales
Machine Rental	$4,347	$4,940	$5,700
Extra Mix	$1,176	$1,440	$1,680
Other	$0	$0	$0
Subtotal Direct Cost of Sales	$5,523	$6,380	$7,380

Sales Monthly

Sales by Year

5.4 Value Proposition

5.5 Milestones

The accompanying table lists important program milestones, with dates and persons in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Milestones

Milestone	Start Date	End Date	Budget	Manager	Department
Business plan	10/1/2000	10/31/2000	$90	Greta Guidry	Owner
Logo design	10/1/2000	1/1/2001	$0	Kelley Guidry	Department
Business cards	10/15/2000	11/1/2000	$40	Rachel Guidry	Department
Flyers	10/12/2000	11/1/2000	$20	Kelley Guidry	Department
Magnetic sign for vehicle	10/15/2000	11/1/2000	$30	Greta Guidry	Owner
Website	11/15/2000	3/30/2001	$100	Greta Guidry	Owner
New phone number	10/25/2000	11/1/2000	$100	Greta Guidry	Owner
Totals			$380

Milestones

5.6 Marketing Strategy

5.6.1 Positioning Statement

5.6.2 Pricing Strategy

5.6.3 Promotion Strategy

5.6.4 Distribution Strategy

5.6.5 Marketing Programs

6.0 Management Summary

Margarita Momma will be a family-based business. Greta Guidry has worked for the Army Air Force Exchange (AAFES) over the past 18 years in several different positions, from cashier to manager. Through these positions, Greta has gained great knowledge of the service industry, of being an efficient manager, and a feel for stocking and maintaining inventory.

The other members of her team (and family) are experienced sales professionals, and have intimate knowledge of the frozen drink machines being utilized. All family members are committed to the success of Margarita Momma, and have been trained in customer service and sales in order to make this goal a reality.

6.1 Personnel Plan

Greta Guidry, the owner, will conduct daily operations of the business. Steven, Kelley, and Michael Guidry will assist with deliveries and pickups. Because this is a family business, each member of the family has been given responsibilities, and is more than capable of assisting in all parts of the rental process.

Personnel Plan
	FY 2001	FY 2002	FY 2003
Payroll	$11,050	$11,800	$12,500
Other	$0	$0	$0
Total People	0	0	0

Total Payroll	$11,050	$11,800	$12,500

6.2 Organizational Structure

6.3 Management Team

6.4 Management Team Gaps

7.0 Financial Plan

We want to finance growth mainly through cash flow. We recognize that this means we will have to grow slowly, adding machines one at a time, not in bulk. The most important indicator in our case is that minimal inventory will have to be stored for these rentals; this translates into very low overhead.

There are some seasonal variations, with the months of March through September being the hottest months in Texas. This will, as expected, mean a high rate of rentals for events such as pool parties, Fourth of July celebrations, and barbecues. However, we expect the winter months to be just as lucrative due to the number of holiday parties, football gatherings, and fundraising events. We expect a light seasonal variation, with sales increasing slightly during the cooler months. For the most part, Margarita Momma will experience a high rate of sales, regardless of weather variations.

7.1 Important Assumptions

The financial assumptions for Margarita Momma are included in the following table.

General Assumptions
	FY 2001	FY 2002	FY 2003
Plan Month	1	2	3
Current Interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rate	10.00%	10.00%	10.00%
Tax Rate	25.42%	25.00%	25.42%
Other	0	0	0

7.2 Key Financial Indicators

Benchmarks

7.3 Break-even Analysis

The following table and chart summarize our break-even analysis. With estimated fixed costs as shown in the following table, we need to have 16 rentals by the end of the year to cover our costs.

Break-even Analysis

Monthly Units Break-even	16
Monthly Revenue Break-even	$1,204

Assumptions:
Average Per-Unit Revenue	$74.51
Average Per-Unit Variable Cost	$6.76
Estimated Monthly Fixed Cost	$1,095

Break-even Analysis

7.4 Projected Profit and Loss

We expect net profits, and gross margins for FY 2001 through FY2003 as shown in the following table.

Pro Forma Profit and Loss
	FY 2001	FY 2002	FY 2003
Sales	$60,875	$69,500	$80,250
Direct Cost of Sales	$5,523	$6,380	$7,380
Other	$0	$0	$0
	------------	------------	------------
Total Cost of Sales	$5,523	$6,380	$7,380

Gross Margin	$55,352	$63,120	$72,870
Gross Margin %	90.93%	90.82%	90.80%


Expenses
Payroll	$11,050	$11,800	$12,500
Sales and Marketing and Other Expenses	$280	$300	$250
Depreciation	$150	$150	$150
Leased Equipment	$0	$0	$0
Utilities	$0	$0	$0
Insurance	$0	$0	$0
Rent	$0	$0	$0
Payroll Taxes	$1,658	$1,770	$1,875
Other	$0	$0	$0
	------------	------------	------------
Total Operating Expenses	$13,137	$14,020	$14,775

Profit Before Interest and Taxes	$42,215	$49,100	$58,095
EBITDA	$42,364	$49,250	$58,245
Interest Expense	$1,031	$916	$796
Taxes Incurred	$10,382	$12,046	$14,563

Net Profit	$30,802	$36,138	$42,736
Net Profit/Sales	50.60%	52.00%	53.25%

Profit Monthly

Profit Yearly

Gross Margin Monthly

Gross Margin Yearly

7.5 Projected Cash Flow

The following cash flow projections show the annual amounts only. For a monthly breakdown, please see the appendix at the end of the business plan.

Pro Forma Cash Flow
	FY 2001	FY 2002	FY 2003
Cash Received

Cash from Operations
Cash Sales	$60,875	$69,500	$80,250
Subtotal Cash from Operations	$60,875	$69,500	$80,250

Additional Cash Received
Sales Tax, VAT, HST/GST Received	$0	$0	$0
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$60,875	$69,500	$80,250

Expenditures	FY 2001	FY 2002	FY 2003

Expenditures from Operations
Cash Spending	$11,050	$11,800	$12,500
Bill Payments	$17,254	$21,916	$24,791
Subtotal Spent on Operations	$28,304	$33,716	$37,291

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$0	$0	$0
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$1,200	$1,200	$1,200
Purchase Other Current Assets	$0	$0	$0
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$29,504	$34,916	$38,491

Net Cash Flow	$31,371	$34,584	$41,759
Cash Balance	$32,210	$66,794	$108,553

Cash

7.6 Projected Balance Sheet

The following table represents our financial position at the end of each of the three upcoming fiscal years.

Pro Forma Balance Sheet
	FY 2001	FY 2002	FY 2003
Assets

Current Assets
Cash	$32,210	$66,794	$108,553
Inventory	$1,177	$1,359	$1,572
Other Current Assets	$1,260	$1,260	$1,260
Total Current Assets	$34,647	$69,413	$111,385

Long-term Assets
Long-term Assets	$9,000	$9,000	$9,000
Accumulated Depreciation	$150	$300	$450
Total Long-term Assets	$8,851	$8,701	$8,551
Total Assets	$43,498	$78,114	$119,936

Liabilities and Capital	FY 2001	FY 2002	FY 2003

Current Liabilities
Accounts Payable	$2,097	$1,775	$2,061
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$2,097	$1,775	$2,061

Long-term Liabilities	$9,760	$8,560	$7,360
Total Liabilities	$11,857	$10,335	$9,421

Paid-in Capital	$1,000	$1,000	$1,000
Retained Earnings	($161)	$30,641	$66,779
Earnings	$30,802	$36,138	$42,736
Total Capital	$31,641	$67,779	$110,515
Total Liabilities and Capital	$43,498	$78,114	$119,936

Net Worth	$31,641	$67,779	$110,515

7.7 Business Ratios

The following table shows standard ratios and industry comparison for SIC code 7359, rental businesses.

Ratio Analysis
	FY 2001	FY 2002	FY 2003	Industry Profile
Sales Growth	0.00%	14.17%	15.47%	7.90%

Percent of Total Assets
Inventory	2.71%	1.74%	1.31%	3.40%
Other Current Assets	2.90%	1.61%	1.05%	45.10%
Total Current Assets	79.65%	88.86%	92.87%	74.30%
Long-term Assets	20.35%	11.14%	7.13%	25.70%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	4.82%	2.27%	1.72%	42.00%
Long-term Liabilities	22.44%	10.96%	6.14%	15.70%
Total Liabilities	27.26%	13.23%	7.86%	57.70%
Net Worth	72.74%	86.77%	92.14%	42.30%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	90.93%	90.82%	90.80%	0.00%
Selling, General &Administrative Expenses	38.15%	36.91%	35.50%	82.90%
Advertising Expenses	0.46%	0.43%	0.31%	1.00%
Profit Before Interest and Taxes	69.35%	70.65%	72.39%	2.60%

Main Ratios
Current	16.53	39.11	54.04	1.68
Quick	15.96	38.34	53.28	1.33
Total Debt to Total Assets	27.26%	13.23%	7.86%	57.70%
Pre-tax Return on Net Worth	130.16%	71.09%	51.85%	4.80%
Pre-tax Return on Assets	94.68%	61.68%	47.77%	11.40%

Additional Ratios	FY 2001	FY 2002	FY 2003
Net Profit Margin	50.60%	52.00%	53.25%	n.a
Return on Equity	97.35%	53.32%	38.67%	n.a

Activity Ratios
Inventory Turnover	5.89	5.03	5.03	n.a
Accounts Payable Turnover	9.23	12.17	12.17	n.a
Payment Days	27	33	28	n.a
Total Asset Turnover	1.40	0.89	0.67	n.a

Debt Ratios
Debt to Net Worth	0.37	0.15	0.09	n.a
Current Liab. to Liab.	0.18	0.17	0.22	n.a

Liquidity Ratios
Net Working Capital	$32,551	$67,639	$109,324	n.a
Interest Coverage	40.95	53.60	72.98	n.a

Additional Ratios
Assets to Sales	0.71	1.12	1.49	n.a
Current Debt/Total Assets	5%	2%	2%	n.a
Acid Test	15.96	38.34	53.28	n.a
Sales/Net Worth	1.92	1.03	0.73	n.a
Dividend Payout	0.00	0.00	0.00	n.a