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CONFIDENTIALE&JH Enterprises LLCBusiness planPrepared January 2018Contact InformationEric Hamiltoncoloradohealthvending@720-583-492111646 Josephine Circe Thornton, CO 80233, USATable of Contents PagesExecutive Summary:…………………………………………. …………..3Market :……………………….………………………………..... ……….3,4Products/Service:………………………………………………………….4,5Marketing:…………………………………………………………………5Pricing:……………………………………………………………………..6Risk Factor:………………………………………………………………...6Competition:………………………………………………………………..6Competitive Advantage:…………………………………………………..6,7Requested Capital:………………………………………………………...7Revenue/Expense Pro-Forma:…………………………………………….8,9,10Executive SummaryCompany Overview IntroductionE&JH Enterprises LLC is a veteran owned business that specializes in healthy vending machine products and services. We have?entered?the vending industry with innovative, first to market, high quality vending machines located in high traffic locations. We will establish our own vending routes in the Denver Metro Area. We plan to participate in the $7?billion vending?industry by supplying high-quality vending products and innovative equipment to the workplace and schools. With the establishment of a?strategic alliance with a national brand name in our vending route, we expect to easily exceed our financial forecasts this year.The CompanyE&JH Enterprises, LLC?mission is to provide healthy vending options to the workplace and schools where adults and children alike spend a third of their day at. At work and on the go is when people make the worse food decisions so our mission is to bring healthy choices within reach of everyone that desires to turn their health around. Healthy vending can aid in this process! To help us, in that process we are working with an industry leader (Kick start 360) in vending location services o provide our company with high traffic locations. Through close customer contact and excellent relationships, we will meet the needs of our customers wherever we can.E&JH Enterprises, LLC , is a privately-held?Colorado company, we currently operating out of our private residence and plan to expand to leased space in the future.The two owners Eric and Julie Hamilton (husband and wife) have full operational responsibility of the company together. Eric being a combat veteran of Iraq and Afghanistan, knows how to handle tough situations and has the entrepreneurial drive to push when things get tough and brings with him vending industry experience. Julie is also no stranger to demanding situations. She is a registered Respitory Therapist?working in the Intensive Care Unit and knows how to make things happen under the worst conditions, also having experience in the vending industry.The MarketIn 2015, per capita disposable income growth accelerated and encouraged people to purchase more discretionary items, such as vending machine products. Additionally, some food vending companies have changed their product mixes to meet Americans’ increased health concerns, as reflected by the rising healthy eating index. According to the 2017 State of the Vending Industry report, 84.7% of industry operators in 2016 reported having customers request healthier products to be placed in their machines. Offering products such as baked chips, nuts, unsweetened beverages, juices with no added sugar and organic and all-natural items have helped vending machine operators meet changing preferences.According to U.S. statistics from?:Vending machines average over?$7 billion a year in sales.The vending machine business is mostly cash-based — three out of every four vending machine transactions are in cash.56 percent of vending machine sales were for cold drinks, including soft drinks, juices, water, etc.And if you are thinking of vending machines as merely dispensers of chocolate bars and soda pop, think again:Healthier snacks outsell traditional snack foods by 300 percent. In fact, some locales have legislation in place to mandate healthier choices in food/drink vending machines.The ProductsE&JH Enterprises, LLC will have two product lines merged together unless there is a specific request for either just healthy or just traditional vending, for the various markets it serves. Our healthy vending products line will include all of our kettle and baked chips, freeze dried fruits, energy bars, flavored waters, juices, and kid’s snacks, Our traditional vending comes with all of the common foods associated with those in limited quantities such as sodas, chips, candies and pastries.By offering a mostly healthy option to workplaces and healthy options to schools we allow ourselves to be the most profitable. Because not all customers will want healthy and will get food elsewhere if not available we believe it is important to offer some traditional vending products. This gives us the competitive advantage that most healthy and traditional vendors do not offer.Our machines (KVM-G654, picture below) also offer us another competitive advantage in their ability to track inventory and sense a failed vend if a product does not vend or gets stuck, which gives us the ability to offer a better solution to customers who shy away from vending machines for that reason. By tracking inventory through our software, accepting credit cards, accepting smart pay through phone apps, tracking sales and the ability to sense a failed vend we offer the best possible solution to the market.Our plan is to aggressively expand our existing route in the future. By getting more high traffic locations, our immediate plans are to include purchasing more machines from a supplier overseas to reduce our overall equipment cost. A bigger vending route than our current will allow us to expand at a rate that is beyond our market research and feasibility that we are doing currently.We are also pursuing a large acquisition with the new Amazon warehouse being built in Thornton and government contract and procurement relationships that would allow us to operate in high traffic government employee locations. Such as military bases, local state, county and city offices, VA clinics and hospitals.Marketing PlanE&JH Enterprises, LLC most important marketing program is our marketing strategy with Kickstart 360 vending locators. They bring decades of industry experience and top-notch website development to our business. The key to vending machines is bringing in high traffic locations for our state of the art vending machines. They offer a three-phase approach with telemarketing, website leads, and Google AdWords. We have received most of our current locations with our website and google AdWords. One was found with telemarketing being the least effective. The other way is visiting businesses that we believe would be locations and ask how happy they are with their current vendor, we did receive a location that way and plan to pitch our business with anyone we meet that would benefit from our machines and service.We will also expand its advertising budget, by participating in community events and fairs, and seek out innovative creative ways in which to market our company to the area.PricingOur pricing model is simple we charge 2x-3x what we purchased the product for. Example a can of coke cost me $0.23, and I turn around and sell it for $1.00. Some products that are more expensive like energy drinks this does not work on but that is not the norm.Risk FactorAs with any business there are certain risk involved. With a vending business risks that come with it include competition from bigger companies that want bigger locations and accounts. Since locations are the key in this business it is vital that a bad location that does not produce solid revenue be removed and replaced as soon as a better one is available. The threat of being sued is also a significant risk say from buying an expired product or choking on something we sold out of our machines is a petitionIndustry operators are expected to experience increasing competition from a variety of external competitors, including micro markets, grocery stores, convenience stores and even companies that provide free snacks and beverages to their employees. These alternatives provide a variety of options and are often not constrained by space, unlike vending machines. Therefore, shops such as convenience stores and grocery stores can offer a wider selection of products than vending machines. Additionally,some companies offer free food and beverages to their employees as a perk for working for the company. As this trend continues, free food and drinks offered by companies act as a direct substitute to industry products and decreases the attractiveness of vending machines.Our advantagesPeople make purchases from vending machines because of the convenience factor. The location of machines plays a big part in determining how convenient vending machines are for consumers. For a long time, vending machine operators experienced strong consumer demand, as many customers had no choice but to purchase food and beverages from the machines due to a lack of alternative options. However, as office culture becomes more open and companies upgrade their offices to attract and keep talented employees, consumers have an increasing number of food options. We see this as a positive because it has allowed the emergence of healthy vending and smarter solutions for customers and workplaces.?On a cost basis we are the same or better than convenience store prices and with the added hassle that employees must drive there to get products if we offer the same or better price that they can buy right there at their work it’s a win for the business and the employee.Increasingly, companies are competing on product offering. Over the previous five-year period, the healthy eating index, which measures the percentage of a recommended diet that an average American consumes, rose. As the index rises, Americans increase their demand for low calorie, salt and fat snacks and beverages. Additionally, demand for more specialty products, such as organic foods, has also been on the rise. According to the US Department of Agriculture (USDA), between 2012 and 2014 (latest data available), sales for organic products increased from $28.4 billion to $35.0 billion. Our Vending machine company?can tailor our?products to meet consumers increased health consciousness and demand for specialty products and we?able to capture more customers and drive revenue growth.Financing NeededWe are financing our business currently with $25,000 from a 0% business credit card that we used for the startup funding of the business. We have paid back approximately $8,000 from this initial investment from our vending machine sales. We expect to have that initial investment paid by the end of 2018. We are not paying ourselves a salary currently and do not expect to for the next several years because we both have full time jobs that cover our personal obligations. We expect to double in machine locations every year and so our startup funds are being used primarily for these items.15 new machines: ($42,000) for 2018, :30 new machines ($92,400) for 2019, truck purchase: $25,000 rented storage unit: $6,000 initial advertising: $2,000permits, legal and licensing: $1,000 initial food supplies: $1,830cash reserves as we ramp up: $30,000We are requesting $200k in the form of SBA veterans advantage express line of credit to fund large purchases and working capital when we need it.Financial ConsiderationsOur expansion requirements come to $200,000 which are largely equipment purchases like more new vending machines, products to fill and the cost of buying a delivery vehicle which will save us money in both trips and not having to rent a moving truck. These costs we are seeking an SBA veterans advantage line of credit at a local financial institution. It should be noted that we expect to be operating at a loss for the first few months before as we initially secure locations and begin operating for profit.E&JH Enterprises, LLC will be receiving periodic influxes of cash both from the business and from our personal jobs where we hold full time positions to cover operating expenses and financial obligations during the first two years as it strives toward sustainable profitability. Almost all this funding currently used has been arranged through lending institutions already. We do not anticipate any cash flow problems during the next three years.ForecastOur forecast of financial predictions below is a conservative?estimate on what we plan on receiving each month. Projections are based on average sales of a machine which is based on a seasonal average, because drinks make up the most sales and are sold more in warmer months than in colder months. Sales are not as consistent some months verses others especially once you consider holidays and employee breaks from work and students in schoolFinancial Highlights by YearRevenue/Expenses20182019202020212022Revenue$98,198$155,916$229,116$346,716$577,716Direct Costs$2,015$9,105$18,818$34,850$68,047Gross Margin$96,183$146,811$210,298$311,866$509,669Gross Margin %98%94%92%90%88%Operating ExpensesSalaries & Wages$0$0$0$50,000Employee Related Expenses$0$0$0$10,000Leased storage space$2,640$2,640product storage racks$1,500$3,000$5,000website hosting / maintenance$58$348$348$348$348Business Insurance$288$288$288$288legal protection$468$468$468$468Google Adwords credits$1,000$1,500$3,000$6,000Vending Productsaccounting tracking softwareRepairs & MaintenanceTotal Operating Expenses$58$3,604$5,604$11,744$69,744Operating Income$96,125$143,207$204,694$300,122$439,925Interest Incurred$0$0$0$0$0Depreciation and Amortization$2,441$5,641$10,044$17,267Income Taxes$19,225$28,153$39,811$58,015$84,532Total Expenses$21,298$43,303$69,874$114,653$239,590Net Profit$76,900$112,613$159,242$232,063$338,126Net Profit / Sales78%72%70%67%59% ................
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