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Organic Future George KruglyanskiyJordan ManchesterJulia MaurathSarah McTiernanElijah MelansonJill RossiMGMT 1101-Business Plan ProjectNovember 25, 2014Executive SummaryOrganic Future will be located in Panama, a country of 3.864 million people (Central Intelligence Agency, 2014). Because Panama is a developing country, our business will focus on cultivating locally grown, organic produce in Panama and subsequently selling this organic produce. Our competitive advantage stems from our company’s ability to produce high-quality, organic fruits and vegetables that are normally imported from other countries instead of being grown locally, which drives up the cost of these imports. Currently, organic imports cost over $7 per pound in supermarkets in Panama (Riba Smith, 2014). Our company will also be able to employ Panamanian farmers at minimum wage, which is $3.00 per hour ( Legal Assistance, 2014). Our company will bring new varieties of organic produce to the country while lowering the prices on fresh fruits and vegetables, making organic produce a good that everyone can afford. Our marketing strategy relies heavily on local community support, specifically through institutions like churches, schools, universities and places of employment. Organic Future will promote our services by collaborating with community leaders in the aforementioned institutions to allow our company to educate their respective constituencies on the benefits of locally grown organic produce. According to the Central Alliance Agency, 85% of Panamanians are Catholic, and we believe that engaging with the people at the grass roots level (in this case, that means Catholic Churches) will be a highly effective way of commercializing our brand and our product before the business is fully implemented. (Central Intelligence Agency, 2014). Organic Future is purchasing a billboard to be centrally located within Panama City to advertise our product, and the company intends to hold organic recipe samplings for a few months out of the year. The target market that we will focus on with respect to production during this engagement ranges from Panamanians aged 18-54, an age demographic that makes up more than 50% of the Panamanian population (Central Intelligence Agency, 2014). We believe that our product can be marketed effectively by touting the benefits of organic produce, especially when compared with produced grown using pesticides and artificial growth hormones. We believe that we will be entering the organic market early enough in Panama to still be in the introduction stage of the product life cycle, which means our product will remain profitable long into the foreseeable future. Organic Future chose Panama as our country in which to base our business due to the fact that it is a developing country with the majority of produce being imported into the country, despite the fact that Panama has a GDP of $61,540,000,000 with agriculture accounting for 3.7% of the gross domestic product. (Central Intelligence Agency, 2014) The reliance on foreign imports into Panama keeps the prices of produce more inflated than if the produce was grown locally. Our store layout is designed to greet the customer and guide them through our store, ensuring that they come into contact with all of our produce before they pay for their groceries. Organic Future’s harvests will be sold at our marketplace within Panama City, Panama (we will expand as demand for our product goes up and our supply increases). Because our business model anticipates the time it will take to educate the farmers on proper growing techniques, as well as the time it will take before we start reaping the yields of that farming, we don’t anticipate our business to be profitable until the fifth month of operation. Overall, we should see $218,393.46 in expenditures in the first year, with much of that money coming in the form of rent and operating costs after our company has already started to generate revenue. However, we anticipate our net income to be $2,781,606.51 after 1 year of operation (See income statement). Company Background/Situational AnalysisOrganic Future will be successful in Panama because organic food is not easily accessible to Panamanian citizens. High-quality produce is currently only attainable for wealthier citizens because they are the only citizens who can afford to purchase the high-priced imported crops (Business Panama, 2014). We have very low competition since we are unique in that we are going to educate Panamanian citizens to grow organic food instead of having it exported from other countries, which is why organic food is currently expensive and unattainable to most citizens. A unique resource of Organic Future is that we will form a college student internship program for agricultural students to earn internship hours and farming experience. They will assist us in educating the citizens of Panama. This will be a program that benefits our company as well as benefits the interns by gaining experience. Corporate Social Responsibility is important to our company because our mission is to help educate Panamanians to grow healthier, better quality food to help improve their nutrition. Since we are helping much of the community (which is largely malnourished (World Health Organization, 2008)), being socially responsible is a main goal of Organic Future. Strengths:High-quality, organic cropsLow competition in the marketLocally grown cropsIncreased job opportunities for Panamanians Service learning and internship opportunities Weaknesses:Small target marketOrganic food is unable to be trademarkedPolitical riskHigh start-up costsLocation of farmlandHigh cost of operationsOpportunities:Export opportunity with expansionRegional expansionExpansion within marketExpansion into other marketsThreats:Rising costs of suppliesCompetitors could lower pricesOther companies entering the marketA strength of Organic Future is that we will introduce high quality, organic products that are essential for nutritional growth to Panamanian citizens. In Panama, 55% of women with average body mass index (over 25 kg/m2) are considered malnourished and 20% of children have stunted growth as a result of malnourishment (World Health Organization, 2008). With access to inexpensive, organic fruits and vegetables, these statistics are sure to change due to increased vitamins and minerals from our products. There are few competitors in organic produce sales, however our type of company (organic produce grown locally) has even less competitors therefore we are at an advantage. Our company’s mission displays corporate social responsibility since our aim is to educate Panamanians to grow organic products to provide low cost healthy fruits and vegetables to citizens, which will increase their health. Because the products are locally produced, there is no need for importing goods. However, since we have a small target market of poor citizens in a single developing country, we have a limited customer base. Although initially there will be a limited customer base, there is the opportunity for our company to grow throughout Central and South America as our premise increases in popularity, increasing regional opportunity. Additionally, with the opportunity for additional types of produce as time goes on, exporting to other countries becomes opportune as well as the ability to feed livestock organic crops, which expands our market into the meat industry. Our start up costs are very high since we have to purchase farmland and farming equipment, rent retail space, and pay employees salary before we start earning revenue. The location of farmland in Panama has a low population therefore it would not be beneficial attempt to sell produce near our farm—we must sell in a place with a high population, so we chose Panama City. Since the farm and the city are far away from one another, our operation expenses will be high for paying for gas as well as a truck driver. Organic food is not a product that we invented; therefore there is always the possibility of more companies entering the market or pre-existing companies lowering prices to increase competition. Lastly, there will always be uncertainty with the Panamanian government; since we will be utilizing schools and places of worship as education zones, government permission is necessary which could be problematic.Management TeamOrganic Future will be a Limited Liability Partnership. Since there are six partners, we have chosen to each have limited liability to protect our personal properties in case of malpractice or bad judgment. Therefore, risk of losing personal assets will be limited to outcomes of each partner’s own acts.Julia Maurath, Chief Executive Officer of Organic Future, is responsible for the overall operations and performance of the company. Ms. Maurath is the link between the branches inside the company and is responsible for the success or failure of Organic Future. Her major duty to the company is to implement corporate policy.George Kruglyanskiy, Vice President of Agriculture, is a team leader working closely with his co-owners of Organic Future to make the company thrive. Mr. Kruglyanskiy will be responsible for over-seeing farmland and the growing of produce. He is also responsible for recruiting and managing volunteers from the U.S. colleges, supervising volunteers, and over-seeing the education process. In addition he will manage the equipment and be responsible for ordering the proper farming tools and necessities. He will manage the amount of time needed to educate farmers, create opportunities, and develop appropriate farming conditions for employees. Jordan Manchester, Vice President of Marketing, is responsible for promoting Organic Future. This means choosing the right target market and the marketing strategy. He is currently studying business management at Emmanuel College, which will be helpful while carrying out his work.Sarah McTiernan, Vice President of Finances, is responsible for managing the company’s budget and preparing the financial statements at the end of the fiscal year. Ms. McTiernan must create the company’s budget each year and be sure it is followed. She will ensure that the company files taxes with the IRS. Her strong mathematic background and work in the financial services office at Emmanuel College has prepared her to take on such tasks. Her work is the customer service field will make it easy to communicate with co-workers, outside affiliates, and potential customers on any financial concerns.Elijah Melanson, Vice President of Operations, served as a Nuclear, Biological, and Chemical Defense Specialist in the United States Marine Corps as a non-commissioned officer. His roles and responsibilities leading Marines prepared him well for the duties of VP of Operations at Organic Future. Mr. Melanson is responsible for everyday operations that help set Organic Future apart as the premier provider of organic produce in Panama. Mr. Melanson has the responsibility of vetting potential employees of the company, which allows him to make personnel decisions in concert with the other ownership partners. Mr. Melanson’s tenacious will and results-oriented mentality make him a natural fit for VP of Operations.Jill Rossi, Vice President of Sales, will oversee Organic Future’s stores. She will design floor plans in stores and be responsible for the hiring of store employees including managers and sales associates. Ms. Rossi will work closely with the Vice President of Finance to set in-store prices for our produce to maximize profits while keeping items affordable. Ms. Rossi has worked closely with consumers in various customer service positions, therefore understands consumer preferences in regards to their habits and willingness to spend.External EnvironmentThere is a necessity for organic food in developing countries, like Panama. Since many citizens are malnourished (World Health Organization, 2014), nutrition must be enhanced and our products will help this occur. We aim to supply fresh organic food to the Panamanian people, which they previously had no access to. Panama, home to the Panama Canal, obtains most of its goods from imports (CIA World Fact Book, 2014). Due to their dependence on imports, there is minimal fresh produce grown in the country. As a result, imported organic produce is very expensive, therefore many citizens cannot afford them. This creates a large demand for Organic Future to employ local farmers and grow crops that are not currently grown locally. Panama has one of the fastest growing economies in Central America. The demand for organic produce would be extremely high because it is currently very expensive. Since eating a healthy diet is currently highly encouraged, citizens desire access to organic food, which is at the growth phase of the product life cycle. The fact that most organic food in Panama is imported causes prices to skyrocket. The population in Panama City is 1.3 million, and people living in urban areas of Panama make up 75.3% of the population (CIA World Fact Book, 2014). We chose to open our supermarket in Panama City due to the high population as well as lack of accessible organic food in the city. Additionally, many individuals in Panama fall below the poverty line. Of the 27.6% that live below the poverty line, most live in rural areas. Organic Future will educate and employ these people and supply the necessary tools to grow organic food. Then we will give these people a marketplace—our store in Panama City—to sell crops. This will facilitate the spread of wealth in Panama. We hope to expand and take advantage of the lack of agriculture in the country using knowledge and resources.Our mission is to create a demand through educating the public, especially women and children. At Organic Future, we understand our clients, their culture, and their roles in society. We aim to provide for the whole Panamanian public with our organic products, but we are aware that at the end of the day most women of the household (typically the wife) are expected to prepare meals for their family. Although the husband and children may have some influence of the food being prepared, the wife takes the ultimate petitor EnvironmentThe organic market is new to Panama and has recently started to grow with the economy. During the past three years there has been significant growth to the organic market as the demand increases with an influx of foreigners. In 2012, Organica, a small super market chain opened their first branch in Panama and have since opened three more branches. Finca Santa Marta seems to be the most profitable operation due to their strategic pricing and delivery. Organic agriculture, a worldwide growth industry, can be a profitable, sustainable business for agricultural producers interested in going through the certification process necessary to enter this market. Organics have continued to expand during the past few years, and industry experts are forecasting steady growth of 9 percent or higher (OTA 2012).Competitors:Finca Santa Marta “is an organic vegetable, fruit and herb farm located in western Panama in the province of Chiriquí” (Finca Santa Marta). Their organic products primarily include vegetables, fruits, and herbs, however they have just introduced organic spices to their product mix. They have a 42-acre farm that includes cattle, chickens, offices, and greenhouses. A strength of Finca Santa Marta is that they have grown from solely growing organic vegetables to also providing organic meats and poultry (Finca Santa Marta, 2014). However, they do not produce a large quantity of their products, therefore are only able to sell their products at 2 different farmer’s markets for a total of 5 hours per week. Their products are relatively low cost—their average cost of vegetables is $2.00. Finca Santa Marta is a private company (Finca Santa Marta, 2014).Organica is a small chain of grocery stores in Panama City that supply the market with organic produce. The majority of these products is imported and is sold at an extremely high cost, with an average vegetable price of $7 per pound, which is a major weakness of the company (Organica, 2014). The retail stores include a food counter titled “SoFresh” that offers pre-made meals made with organic ingredients (Organica, 2014). The company displays corporate social responsibility by supporting an organization that manufactures organic fertilizer used from unsold fruits and vegetables as well as another organization that collects batteries to prevent toxic mercury from impacting the environment through improper disposal (Organica, 2014). Organica is a private company (Organica, 2014).Marketing Goals & ObjectivesTo start, Organic Future will grow carrots, lettuce, cucumbers, broccoli, and melon over 123 acres of land. Each of these crops will be grown on 10 acres. The crops (on average) will be sold for $3 per pound. ?This will put us in competition with the large supermarkets Riba Smith and El Rey, where imported organic fruits and vegetables are generally over $7 per pound (Riba Smith, 2014). The total yield of 1,000,000 will be produce and sold over a four-month period. If we sell 50% of our produce in those four months, it will give us revenue of $375,000 for those four months. Based on this we estimate that we can earn $750,000 in revenue in the first year. The total agriculture industry in Panama is 2,276,980,000(exports & imports)(CIA Fact Book, 2014). To get our market share we divide 750,000 by 2,276,980,000. This gives us a market share of 0.03%. To calculate our return on investment in one year we subtract gains from costs and then divide by costs. 3,000,000(gains) subtract 110,639.16 (cost of goods sold) and divide by 110,639.16 (cost) to get a return on investment of 26%.CropsYield Per Acre (lbs) Yield per 10 acres (lbs) (Johnny Seeds, 2014)Growth time (days)Carrots30,000300,00070-80Lettuce27,000270,00035-60Cucumbers17,500175,00050-70Broccoli10,500105,00075-100Melons15,000150,00070-85TOTAL1,000,000Our other objectives include donating unsold produce to food shelters and others in need. We also plan to run a monthly program to bring in college volunteers in the agricultural field to educate farmers in the area and give them tips on growing and harvesting. This is part of an overall attempt to better the country and improve its economic standing in the world.Marketing Strategy and TacticsOur product line will include organic lettuce, carrots, cucumbers, onions, and melon. We intend to use product differentiation to highlight the differences between our locally grown, organic produce and the produce currently available to Panamanians. The fact that Panamanians grow our produce organically and within the country of Panama sets our product apart from imported produce. As a result of our produce being grown locally and organically, we are able to undercut our competitors’ prices and sell our produce for around $3.00 per pound. Our company stacks up favorably against our competitors when viewed in the light of quality, price, and value; thus, we intend to market ourselves as the premier provider of delicious, fresh and organic produce in Panama. Our initial marketplace will be located in Panama City, Panama’s largest city with a population of 1.2 million people. (BBC, 2013) We intend to commercialize our product and brand by printing flyers and erecting billboards for $700 a month around Panama City, as well as providing samples of our products and demonstrating recipe possibilities in local churches. We will always include the address to our physical location within Panama City on our flyers and billboards. Because over 25% of all Panamanians live in poverty (CIA, 2014), we don’t think it would be smart to attempt to advertise online. If 25% of Panamanians live in poverty and a larger portion of the population lives in economic conditions that prevent them from accessing the Internet, it doesn’t make sense to pay for and maintain an online advertising presence.The first four months of our advertising blitz, we will be disseminating our flyers around Panama City. Our flyers will feature pictures of what our organic produce looks like and the price when compared to our competitor’s imported produce. The flyers will include the physical location of our store within Panama City, as well as our grand opening promotional deals. May through August we will dedicate time to the erection of our company billboard in a highly visible location in Panama City, which we will maintain for four months, or until we feel like it is not worth the advertising cost. September through December we will be visiting local churches to provide samples of organic recipes that the people can use to make delicious, healthy meals on their own. During this time we also intend to donate a portion of our surplus crop in order to foster goodwill for our company throughout our community. For our supermarket’s grand opening week, we will offer customers 20% off their purchase. These tactics will ensure that we will spread the word about our company and our mission so that we will attract customers.Target MarketOrganic Future’s target market will be centralized in Panama City. Our store will appeal to anyone that currently does buy organic products or has always wanted to, mainly due to our lower prices. Our potential market could be families as well as working class individuals. GeographicThe full metro population of our target area, Panama City, is 1.2 million (One World Nations Online 2014). We do not expect the full population to buy from us. Since not everyone in Panama City will have the desire to begin or continue eating organically, we only expect those who do to buy from our store.DemographicsWomen ages 21 and up, since the average Panamanian woman falls pregnant at an age of 21.1 therefore having the responsibility to feed a family healthily Any working class individual in Panama City between the ages of 18 and 54 years old (this age group makes up over 50% of the population)Any individual trying to have a healthier lifestyle or with an interest in buying organic productsPsychographicPeople looking for a good value on quality producePeople who are conscious of their healthPeople who are concerned about how their food is made Life StylePeople who are moving towards healthier eating and a healthier lifestyleCompetitive AnalysisOur biggest competitor, Organica, does not promote their store much, however we still have a disadvantage since it is an established branch throughout Latin America. Finca Santa Marta is another organic produce company that exists in Panama, however they only sell at farmer’s markets for 5 hours per week and does not promote their company. We will educate students and employees through schools, universities, workplaces and fitness centers. We also aim to promote the product quality and service inside bus and metro routes. Panama is changing their life style not only in the way they eat, but also in their fitness habits. During sporting events (such as marathons), we will give out pamphlets with store information and services, which none of our competitors currently do. These will also be found in gyms and fitness centers.Location AnalysisOur store will be located in Panama City, Panama in the neighborhood of San Francisco, which is both a commercial and residential area. Our store will be specifically located on Calle 50 (50th Street), which is purely commercial. This street runs through the whole center of the city. It is a busy street and is the link to most office spaces, neighborhoods, and highways. This allows both residents and people who work in the area to have access to the street, thus they will frequently pass our supermarket. It is always high in traffic and has recently been renovated to ease traffic flow. There are currently additional renovations occurring to further connect Calle 50 to more neighborhoods, which will increase the amount of people traveling through Calle 50 and passing our store. The store’s rent is $3308.00 per month and will cost a total of $39,696.00 for one year. The reason this location is strong for Organic Future’s business is simple: it is easy to reach for any Panamanian inside the city or nearby. It is the most frequently traveled street in the entirety of Panama, which means there are many potential customers.Panama City is not a possible location to grow our produce since it is a metropolitan area with no farmland. Our farm will be located in Las Palmas, which is 205 miles away from our supermarket in the city. We chose this location because it is known for its fertile land, therefore will be a perfect spot to successfully grow crops. The cost of purchasing the 100-acre lot is a one-time payment of $4000.00.Manufacturing PlanIn order to produce the projected amounts of crops, we will need ten acres per crop, therefore fifty acres of farmland (Johnny Seeds, 2014). We will need additional land for parking of our equipment and storage sheds. We will purchase a 100-acre lot at a price of $4000.00 in Las Palmas, 205 miles away from Panama City, which is where our farmland will be (Encuentra, 2014). In order for our produce to be transported to the supermarket, we will purchase a used, refrigerated tractor-trailer truck that is forty feet long for $15,250.00 (Penske Used Trucks, 2014). To overturn the soil to bring the best nutrients to the surface we will need 15 plows for our employees to use that are $100 each (Walmart, 2014). We will need a garage and shed to store our equipment so we will purchase a 20 foot by 20 foot garage for $7,999.00. We will purchase 20 harvesting bins for $11.50 each, bringing that cost to $230.00. These bins will be used for employees to harvest produce into as well as store in the garage (Uline, 2014). We will purchase an additional 10 bins to keep in the refrigerated truck, used to transport produce to our supermarket, and another 10 to use in the storage room of our supermarket.Resource neededCostSource100-acre lot of farmland$4000.00Encuentra Tractor-trailer truck$15,250.00Penske Used Trucks15 Plows$1500.00WalmartGarage$7,999.00Uline40 bins$460.00UlineCropsYield Per Acre (lbs) Seeds needed per acreYield per 10 acres (lbs) Total seeds needed for 10 acresCost for seeds for 10 acresOptimal planting monthGrowth time (days)Carrots30,000720,000300,0007,200,000$3,333.33April70-80Lettuce27,000174,000270,0001,740,000$2,806.45April35-60Cucumbers17,50042,500175,000425,000$2,012.31April50-70Broccoli10,50050,000105,000500,000$186.01April75-100Melons15,00015,000150,000150,000$606.62April70-85TOTAL1,000,000$8,944.72The table below contains the projected yields per acre and per ten acres of each vegetable, the amount of seeds needed to produce those yields, and the approximate price for the seeds (Johnny Seeds, 2014 and Main Street Seed and Supply, 2014). It also contains the optimal month to plant seeds as well as the growth time, which is how we determined when the vegetables would be harvested (Main Street Seed and Supply, 2014).Below is a timeline for the manufacturing of our produce and their transport to our supermarket.We will rent an 1184 square-foot space in a plaza in Panama City, Panama in the neighborhood of San Francisco on Calle 50 (50th Street) for $3308 per month. Our supermarket will be set up as a produce section, as in most chain grocery stores. We will purchase five 3.5 by 2.3 by 2.1 foot wooden crates for $132.00 each (Uline, 2014) to store our melons in the center of the market. We will purchase ten, two-tiered shelves to line the walls of the store that will display our other produce for $200 each (Alibaba, 2014). We will also provide shopping baskets for our customers and will need to purchase 60 for a total of $350 (Store Supply Warehouse, 2014). We will purchase 2 cash registers for a total of $338.90 (Store Supply Warehouse, 2014). We will purchase 5000 plastic bags for customers to carry out their purchases for a total of $89.75 (Store Supply Warehouse, 2014).Resource neededCostSourceSupermarket space$39,696.00 for one yearEncuentra5 crates $660.00Uline10 shelves$2000.00Alibaba60 shopping baskets$350.00Store Supply Warehouse2 cash registers$338.90Store Supply Warehouse5000 plastic bags$89.75Store Supply WarehouseThe diagram below displays our store layout: Income Statement??Income Statement - 12 Months???Period Starting:Totals??Sales?Sales$750,000.00Total Sales$750,000.00??Less Cost of Goods Sold?Materials$2,833,416.00Labor$82,305.00Total Cost of Goods Sold$110,639.16??Gross Profit$639,360.84??Operating Expenses?Salaries and wages?Rent$39,696.00Utilities$3,214.80Repairs and maintenance$8,000.00Insurance$1,200.00Permits/ Lincenses$480.00Travel$3,942.00Telephone/ Internet$839.88Postage$600.00Office supplies$6,420.00Marketing/promotion$8,400.00Bank charges$1,200.00Depreciation$1,896.00Miscellaneous$31,865.65Total Operating Expenses$107,754.33??Cummulative Net Income (Loss)$531,606.51Financial SummaryOur estimated revenue for the first year is $750,000. We arrived at this number by taking our 1,000,000 lbs of produce yielded every four months and selling it for $3.00 a pound ((1,000,000/4)*3=750,000 per 4 months). The average price of organic produce in Panama is $7 per pound, which is why we decided $3.00 per pound would be a competitive price. Assuming we sell 50% of our produce, our revenue is expected to be $375,000 every 4 months. Therefore our monthly revenue should be $93,750. This gives us our total revenue, again, of $750,000 for the first year before costs of goods sold and other expenses are taken into anic Future has many expenses to handle throughout the year. Two expenses fall under our materials expenses during the first year: Plows at a total cost of $1,500 (Wal-Mart, 2014) and seeds at a cost of 8944.72. This is an initial expenditure of $10,444.72. At a monthly minimum wage of $465.00, it will cost Organic future $6,510.00 per month to employee 14 people for the first 3 months of operation. The fourth month we will be adding a truck driver, also at minimum wage, to ship our goods to the store, so that increases our monthly labor costs to $6,975.00 from April through December. Thus, our yearly cost of labor is $82,305.00. Totaling our costs of goods sold to $110,639.16 for the first year. Operating costs are a primary obstacle for any business, and Organic Future is no exception. Organic Future’s operating cost for rent is self-explanatory ($3,308 per month), however, the following expenses require further explanation. Our 100-acre lot of farmland is a one-time cost of $4,000 (Ecuentra, 2014). Organic Future’s truck used to ship our product from farm to shelf is a cost of $15,250.00 (Penske). Our storage facility for our crops is going to cost $7,999.00 (Uline, 2014), and our bins will be a $460.00 expenditure (Uline, 2014). Organic Future will also be purchasing crates (5), shelving units (10), baskets (60), cash registers (2), and plastic bags (5000) all for the store. However, plastic bags will be purchased monthly once the store opens during the fifth month of the first year. These items and fall under the miscellaneous category in the income statement, how each item figures into the cost of $31,147.65 can be seen in the figure below. Miscellaneous ExpendituresItemCostLand$ 4,000.00Truck15,250.00Garage7,999.00Bins (40)460.00In-store Crates (5)660.00Shelving Units (10)2,000.00Shopping Baskets (60)350.00Cash Registers (2)338.90Plastic Bags (5000)89.75Total$ 31,147.65We are purchasing 2 computers ($2,000) from Apple, 2 printers ($200.00) from Office Depot, 2 phones ($500.00) also from Office Depot. Monthly expenses for ink & paper ($210.00) and staples, pens, pencils, etc. ($100.00) were allocated and chould change based on need. This amounts to an initial purchase of $3,010.00, followed by a monthly purchase of $310.00 for those smaller items. Thus, our expenditures for the first year on office supplies totals $6,420.00. The table below illustrates these expenses:Office Supplies ExpenseItemCostComputers (2)$ 2,000.00Printers (2)200.00Phones (2)500.00Ink and Paper210.00Pens, Pencils, Staples, etc.100.00Total$ 6,420.00We think it’s reasonable to assume there will be four bounced checks per month within our store. The cost of each check that bounces is $25.00. Therefore, we are expecting to spend $100 a month in bank charges. While we were unable to find the cost of billboard advertising in Panama, we made a liberal estimate of $700.00 per month as our billboard expense. In terms of advertising via flyers, we calculated those costs under our office supplies (computers, ink, paper and printers), so those totals are not included in our marketing expenditures. A general monthly budget will be allocated for expenses such as, postage ($50 per month), repairs for the truck ($1,000 per month) and insurance ($100 per month). We are spending $71.44 (Numbeo, 2014) at the store and $214.32 at the farm per month for utilities. Our utilities expense for the store is based on the average price in Panama. As for the farm, we expect to use about three times the amount of electricity, water, etc. hence the $214.32 expense for that ($71.44*3 = $214.32). We expect to spend $438.00 monthly in gas for the truck. Organic Future’s travel expense was calculated by taking the price the average price of gas in Panama ($2.19 provided by CNN Money, 2014) and multiplying it by the size of our tank ($2.19*50 gallons=$109.50). Then, multiplying that by 4, since we expect to fill the truck weekly. Our tractor trailer has an estimated life span of 8 years, therefore the monthly depreciation of the truck ($158.00) was calculated by ($15,250/8)/12 = $158.00(rounded). It will be necessary to purchases permits and licenses ($480.00) in order to start up the business, which must be renewed every few years. We will also be purchasing a business phone/Internet bundle for $69.99 a month (Verizon, 2014). The sum total of Organic Future’s operating expenses amounts to $107,754.33 for the first year (see income statement in Appendix A). With our costs of goods sold equaling $110,639.16, the expected gross profit will come to $2,889,360.84. Once operating expenses of $107,754.33 are deducted our final cumulative net income for our first year of operation is $531,607.16.Works CitedAgricultural Marketing Resource Center. 2013. Organic Food Trends. <, 2014. Products.<. 2014. iMac. < Broadcasting Company. 2014. Panama Profile. < Panama. 2013. Labor Force & Salaries. < Intelligence Agency. 2014. The World Fact Book. < Money. 2014. Gas Prices Around the World. < 24, 2014. Lots For Sale. < 24, 2014. For Rent. < Santa Marta. 2013. Welcome to Finca Santa Marta S.A. < Seeds. 2014. Directed Seeded Vegetable Crops.< Street Seed and Supply, 2014. Organic Seeds. < rc.htm>Numbeo. 2014. Cost of Living in Panama.< Depot. 2014. Inkjet All-In-Ones. < Depot. 2014. Multi-Line Corded Phones. < World Nations Online. 2014. Google Earth Panama City Map< Relocation Tours. 2014. Cost of Living in Panama-Food Costs. < Used Trucks, 2014. Inventory.<, 2014. Products.<. 2014. Verizon Solutions for Business Bundles. < , 2014. Precision High Wheel Cultivator.< Health Organization. 2008. Panama Country Profile. < A-1019810120205500 ................
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