SusBiz Garden Business Plan

SUSBIZ GARDENS BUSINESS PLAN 2021
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1 Business Overview
1 Product
SusBiz Garden is an agricultural start-up that will use hydroponic technology to produce heirloom tomatoes for the UK market. The business will market its products as socially conscious tomatoes produced in a responsible manner (Chen et al. 2022). Hydroponic technology will allow the company to produce tomatoes all year round without compromising on the quality and nutritional values of the products (Khan, Purohit, and Vadsaria 2020).
Notably, the company will offer three main types of heirloom tomatoes that will be grown in a controlled environment; Big Rainbow, Cherokee Purple, and Pink Brandywine. The tomatoes will be picked with hands and vine-ripened to make sure that they are premium (Brekke et al. 2019). A focus on three varieties will simplify the overall business model.
2 Target Market
The company will enter into pre-purchasing agreements with distributors, wholesalers, and retailers that will be negotiated before the production process begins. The approach will make sure that the company maintains a specified margin. To this end, the company is heavily invested in the implementation of an economically viable and sustainable business model that is considered beneficial to UK consumers. The customers shall be segmented into four main groups:
First, national distributors with existing customers shall be the main target customers. Research indicates that the UK tomato growers do not produce the tomatoes required to meet the domestic demand and are forced to import from other EU countries. National distributors are in a unique position where they can be able to handle the quantities that will be produced by the company.
Second, produce wholesalers will provide an alternative target market with established distribution channels. The wholesalers shall be considered as a safety valve for the business.
Third, grocery stores will be considered as target customers. The tomatoes sold through the grocery store will be branded with the company’s logo and will play an essential role in establishing the brand identity of the company.
Fourth, high-end hotels will be a key target market as the company grows its reputation and undertake to aggressively corner the market they provide. Eventually, the company hopes to minimize the number of tomatoes it sells through wholesalers.
3 Market Analysis
The British Tomato Grower Association (BTGA) put the UK’s tomato consumption at approximately 500,000 tonnes annually. Of the fresh tomatoes consumed in the country, only one-fifth are produced in the country (British Tomato Growers Association 2022b). Overall, the British population spends roughly £921M on tomatoes, with the local growers only taking about £190M (British Tomato Growers Association 2022b).
Notably, the annual market size for tomatoes in the United Kingdom is expected to continue growing, with the beneficiaries expected to be local growers. The growth in demand for locally grown tomatoes will be driven by the increasing demand for premium tomatoes in the market.
4 Competition Analysis
The main competitors will be other tomato farmers as well as imported tomatoes from Spain and Netherlands. Notably, 80 percent of the tomatoes consumed in the UK markets are sourced from Span and Netherlands making imported tomatoes the largest competitors. Some of the major tomato farmers in the United Kingdom include APS Group, Flavourfresh, Glinwell PLC, La Serra, Red Roofs, R&L Holt, Thanet Earth, The Green House Growers, and many others (British Tomato Growers Association 2022a).
5 Competitive Advantage
The customer will select SusBiz produce over others as the company shall seek to achieve economies of scale that will minimize the per-unit costs. Thus, the company will offer its products at competitive prices. The company will also focus on the production of premium quality tomatoes that will inspire brand loyalty and allow the retailers to earn huge margins from the produce (ten Kate 2019). The tomatoes will also be available all year round with guaranteed high nutritional value.
6 Location
The production will be based in Worcestershire County, which is located in West Midlands.
7 Financing
The funds required to start the operation will be sourced from several different sources. First, the owner will invest cash and labour for the operation to start. Second, the owner will source seed cash from interested investors and family members. Based on the calculation, the owner has to raise £107,500 at a maximum interest of 15 percent per year. Third, the rest of the funding will be secured from financial institutions in form of loans.
8 Use of Start-up Fund
Notably, setting up hydroponic greenhouses is considered a significantly asset-heavy operation that requires heavy investment. The initial funds will be used to cover legal costs and in setting up a website. The assets that will be funded by the initial money will include the acquisition of the land, the construction of the greenhouse structure, the acquisition of the environmental control equipment that is required for a greenhouse, and obtaining the equipment that shall be used in the growing and delivery of the tomatoes.
9 Business Risks
It will be essential to take into account several business risks that the company will face. First, it is essential to consider that the market is largely open and larger agricultural companies can aggressively increase their production to dominate the market. Second, it is essential to note that climate change and changing weather patterns may increase the cost of production. Third, there is a risk that the heirloom tomatoes may lose market support as other varieties gain increased popularity.
Fourth, there is a risk that the company’s products may spread a foodborne pathogen that may dent the company’s reputation and lead to depressed demand for the products. Such a risk may arise due to potential errors in the production process. Fifth, the product has high levels of product spoilage and creates a limited distribution window. Sixth, the minimal likelihood that crop disease or pest damage may ruin the season has to be taken into account.
2 Income and costs
2.1 Income
The company expects to sell the produced tomatoes at an average price of £4 per kilogram. To this end, the price is based on a mark-up of 50 percent after taking into account the unit cost of production per unit, which translates to £ 2.67
Sales Volumes
We expect/forecast to sell 114 tonnes of tomatoes as follows:
January9.5 May9.5Sept9.5
February9.5June9.5Oct9.5
March9.5 July9.5Nov9.5
April9.5Aug9.5Dec9.5
Costs
Initial set-up costs
The initial expenses include legal expenses at £1,500 and website expenses at £1,000.
The total initial assets required to start the business is £430,000. Of these, the cash required to cater for direct costs is £15,000 and £415,000 will be directed towards the acquisition of long-term assets. Therefore, the total initial investment will be £ 432,500.
Staff costs.
In the first year, the owner shall provide most of the labour with the assistance of one grower. A consultant will also be hired for the first six months of the business operation to provide expertise to the business. The owners will be remunerated at £3,000 per month, with the assistant grower receiving remuneration at £1,090 per month. The consultant will be paid £4,000 per month for half a year.
Raw material
The total direct costs of producing one tomato have been calculated at £ for every kilogram, totalling £38,000 per month. The cost covers utility costs.
Administrative Costs.
The business will incur administrative costs of £200 every month.
Interest
The interest expense per month will be £1,750.
Advertising and marketing
The marketing and promotion costs for the first month shall be £1,000.
Business insurance.
The insurance costs for the business will be £150 per month.
Total Cost Analysis Summary
Cost type

£

Fixed / variable

Notes

Initial set up

432,500

Fixed


Staff costs – manufacturing

49,080

Fixed Costs

Managers (Fixed)
Assistant Grower (Monthly, fixed)

Consultation

24,000

Variable