business plan food manufacturing

Food Manufacturing Business Plans

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Pasta Manufacturer Business Plan

The Pasta Tree seeks to expand its existing wholesale market to statewide retailers.

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Vending Services Business Plan

Chef Vending is a start-up vending machine and commercial food and beverage dispensing equipment company.

Wholesale Food Manufacturer Business Plan

Jean's Tofu Delight, a local manufacturer of tofu pate and related soy products plans on expanding its wholesale distribution into regional supermarkets as well as specialty and healthfood retailers.

Wholesale Juice Business Plan

Oasis Juice, an established, successful producer of natural fruit juice beverages, plans to expand distribution to stores state-wide.

Starting a food production business can be tricky. Before you write a business plan, take look at some sample business plans for other businesses like yours. They’ll help you make sure you get the details right.

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Manufacturing Business Plan Template

Written by Dave Lavinsky

Manufacturing Business Plan

You’ve come to the right place to create your Manufacturing business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Manufacturing companies.

Below is a template to help you create each section of your Manufacturing business plan.

Executive Summary

Business overview.

Perfect Snacks, located in Lincoln, Nebraska, is a food manufacturing company that specializes in the production of snack foods and packaged goods. We manufacture an extensive line of snack products, including trail mix, gummies, and chocolate. Our company focuses on quality and only uses the best natural ingredients in our products. We will primarily sell our products to grocery stores and other establishments that sell snacks, but will also sell bulk orders to individual customers through our website.

Perfect Snacks was founded by Joe Boseley. Joe has been working on the manufacturing company concept over the past few years and began networking with grocery store clients and locating the land to build his manufacturing and distribution center. As a line manager that oversaw dozens of employees, Joe has the proper knowledge and experience to own, manage, and operate his own manufacturing company.

Product Offering

Perfect Snacks will manufacture an extensive list of sweet, salty, and healthy snacks. Some of our initial products will include:

We will primarily sell our products to grocery stores, recreation centers, and other businesses that sell snacks in bulk. Consumers can find our products in stores or buy them in bulk on our website.

Customer Focus

Perfect Snacks will primarily serve the residents of Lincoln, Nebraska. The community has a large population of families and children, who are the primary consumers of snack foods. Therefore, we will market our products to recreational centers, schools, grocery stores, and other establishments that sell snacks to children and their parents.

Management Team

Perfect Snacks is owned by Joe Boseley, a local entrepreneur who has worked in various warehouses and manufacturing companies in Lincoln, Nebraska. Working in the manufacturing industry and in warehouses, Joe is very familiar with the processing and distribution of packaged foods. As a line manager that oversaw dozens of employees, Joe has the proper knowledge and experience to own, manage, and operate his own manufacturing company.

Joe will utilize his past experience with developing staff roles and functions. He is also very familiar with the manufacturing equipment and plans to purchase the latest technology that is efficient and cost effective. His contacts have allowed him to gain concrete Letters of Intent from local supermarket chains to have his manufactured goods in their stores.

Success Factors

Perfect Snacks will be able to achieve success by offering the following competitive advantages:

• Taste: Perfect Snacks’ snack products will be made with the highest quality ingredients and offer quality over quantity.
• Price: Perfect Snacks is able to offer the highest quality snacks at a competitive price point.
• Community Relations: Perfect Snacks will be a pillar in the community and be heavily involved in family-related activities in the area. It will sponsor events, provide snacks for schools and daycares at a discounted price, and donate a portion of its proceeds to area family-related charities and organizations.
• Proprietary Technology: Perfect Snacks will invest heavily on the latest technology to manufacture the snack foods for distribution. It will ensure the food products are made safely and free from any harmful chemicals and ingredients.

Financial Highlights

Perfect Snacks is seeking a total funding of $1,200,000 of debt capital to open its manufacturing company. The capital will be used for funding capital expenditures, salaries, marketing expenses, and working capital. Specifically, these funds will be used as follows:

• Manufacturing facility design/build-out: $400,000
• Equipment and supplies: $375,000
• Initial inventory: $100,000
• Three months of overhead expenses (payroll, rent, utilities): $250,000
• Marketing costs: $50,000
• Working capital: $25,000

The following graph below outlines the pro forma financial projections for Perfect Snacks.

Company Overview

Who is perfect snacks, perfect snacks history.

After conducting a market analysis, Joe Boseley began surveying the local vacant warehouse space and decided on a parcel of land to construct the warehouse and distribution center. Joe incorporated Perfect Snacks as a Limited Liability Corporation on January 1st, 2023.

Once the land is acquired for the warehouse space, construction can begin to build-out the manufacturing facility.

Since incorporation, the Company has achieved the following milestones:

• Located a vacant lot that would be ideal for a manufacturing facility
• Developed the company’s name, logo, and website
• Hired a general contractor and architect for the build-out of the warehouse, small office, and distribution area
• Determined equipment and necessary supplies
• Determined beginning inventory
• Attained Letters of Intent from supermarket clients
• Began recruiting key employees

Perfect Snacks Services

Industry analysis.

The Manufacturing sector’s performance is largely attributable to the value of the US dollar, commodity prices, policy decisions and US manufacturing capacity. Food manufacturing has a history of success as it produces a basic human need. According to Grand View Research, the industry is currently valued at $121 billion and is expected to expand at a compound annual growth rate of 9.5% from now until 2030.

Commodity prices are currently stabilizing from coronavirus-induced volatility and renewed demand, both in the United States and global economies, which is anticipated to facilitate revenue expansion for manufacturers. Moreover, shifting technological change in the Manufacturing sector is anticipated to benefit large, developed economies, such as the United States. Therefore, now is a great time to start a new food manufacturing company in the U.S.

Customer Analysis

Demographic profile of target market.

Perfect Snacks will serve the community residents of Lincoln, Nebraska and its surrounding areas. The community of Lincoln, Nebraska has thousands of households that have children. Statistics show that the main consumers of snack products are children of all ages. They are regularly placed in school lunchboxes, afterschool snacks and programs, and at weekend sporting events. Therefore, we will market to locations where snacks are bought by children or their parents, such as grocery stores, recreational centers, and schools.

The precise demographics Lincoln, Nebraska is as follows:

Customer Segmentation

Perfect Snacks will primarily target the following customer profiles:

• Grocery stores and recreational centers

Competitive Analysis

Direct and indirect competitors.

Perfect Snacks will face competition from other companies with similar business profiles. A description of each competitor company is below.

Snacks N More

Snacks N More is another local manufacturing company that provides snack food to the immediate area. Established over thirty years ago, the company has the knowledge and expertise in food processing, commercialization, and packaging. They are known as a recognized ingredient supplier for the foodservice industry. Their portfolio of products include a variety of nuts, snacks, confections, and dry-blend ingredients. As a private label manufacturer, Snack’s More produces a full line of non-chocolate candy, nuts, and fruit-flavored snacks. The company is known for their fruit flavored snacks, dried raisins, nut mixes, and producing ingredients for local restaurants and establishments. Their line of nuts and dried fruits are often used for baking purposes.

Jaxon’s Candy

Jaxon’s Candy is a manufacturer of all things candy related. As a contract manufacturer, the company works with many companies to create their custom designed confections. Their large 50,000 square foot facility produces over 300,000 pounds of candy every month. All of the products are highly concentrated either in sugar or chocolate, or both. Jaxon’s Candy also designs and manufactures their own custom packaging. The candy produced is also kosher certified, gluten free, peanut free, and non-GMO.

Jaxon’s Candy currently manufactures candy for the following brands – Tommy Candy, Laffy Town, Chocowhoawhoa, Jellylicious, Healthee Candeee, and Sticky Teeth. Jaxon’s Candy can be found in grocery stores and convenient stores along the west coast of the United States.

Gimmy Candy

Gimmy Candy is located in the midwestern portion of the United States and boasts a facility of over 1 million square feet. Their fleet of transportation trucks distributes throughout the continental United States and is considered one of the largest candy manufacturers in the country. Their product portfolio includes assorted chocolates, gummy candy, hard candy, fruit candy, as well as gums and mints. Gimmy Candy was established in 1947 and has grown to be a model of manufacturing companies the industry uses as a model of sustainability and profitability. Their lineup of candy products can be found in every single grocery store and convenient store in the country. Gimmy Candy is considering expanding its distribution globally and start exporting its candy products to Asia, Canada, Europe, and South America. As one of the largest privately held companies in the United States, Gimmy Candy is also considered a top employer in the country and offers its employees a generous benefits package.

Competitive Advantage

Perfect Snacks will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

Perfect Snacks will offer the unique value proposition to its clientele:

• Fresh and comforting taste
• Community family advocate
• Developed with proprietary technology
• Manufactured with fresh, quality ingredients
• Affordable price

Promotions Strategy

The promotions strategy for Perfect Snacks is as follows:

Social Media

Perfect Snacks will invest heavily in a social media advertising campaign. The brand manager will create the company’s social media accounts and invest in ads on all social media accounts. It will use targeted marketing to appeal to the target demographics.

Website/SEO

Perfect Snacks will invest heavily in developing a professional website that displays all of the features and benefits of the snack products. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Major Publications

We will also invest in advertising in selected larger publications until we have achieved significant brand awareness. Advertisements such as billboards and commercials will be shown during peak tv watching time and the billboards will be placed in highly trafficked areas.

Sponsorships

Perfect Snacks will also invest in sponsoring certain athletic and school events so that their banners and collateral material are displayed all over the event where numerous parents and children are at.

Perfect Snacks’s pricing will be moderate so consumers feel they receive great value when purchasing our snack products.

Operations Plan

The following will be the operations plan for Perfect Snacks.

Operation Functions:

• Joe Boseley will be the CEO of Perfect Snacks. He will oversee the general operations and executive aspects of the business.
• Joe is joined by Candace Smith who will act as the warehouse manager. She will train and manage the staff as well as oversee general production of our products.
• Joe will hire an Administrative Assistant, Marketing Manager, and Accountant, to handle the administrative, marketing, and bookkeeping functions of the company.
• Joe will also hire several employees to manufacture our products and maintain the equipment and machinery.

Milestones:

Perfect Snacks will have the following milestones complete in the next six months.

• 02/202X Finalize lease agreement
• 03/202X Design and build out Perfect Snacks
• 04/202X Hire and train initial staff
• 05/202X Kickoff of promotional campaign
• 06/202X Launch Perfect Snacks
• 07/202X Reach break-even

Financial Plan

Key revenue & costs.

Perfect Snacks’s revenues will come primarily from its snack food sales. The company will sell the packaged snacks in local grocery stores, convenience stores, and other locations. As the company’s revenues increase, it will look to gain a wider distribution area.

The land purchase, equipment, supplies, opening inventory, and labor expenses will be the key cost drivers of Perfect Snacks. Other cost drivers include taxes, business insurance, and marketing expenditures.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Average order value: $250

Financial Projections

Income statement, balance sheet, cash flow statement, manufacturing business plan faqs, what is a manufacturing business plan.

A manufacturing business plan is a plan to start and/or grow your manufacturing business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Manufacturing business plan using our Manufacturing Business Plan Template here .

What are the Main Types of Manufacturing Businesses?

There are a number of different kinds of manufacturing businesses , some examples include: Garment manufacturing, Food product manufacturing, Diaper manufacturing, Tile manufacturing, and Toy manufacturing.

How Do You Get Funding for Your Manufacturing Business Plan?

Manufacturing businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Manufacturing Business?

Starting a manufacturing business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Manufacturing Business Plan - The first step in starting a business is to create a detailed manufacturing business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your manufacturing business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your manufacturing business is in compliance with local laws.

3. Register Your Manufacturing Business - Once you have chosen a legal structure, the next step is to register your manufacturing business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your manufacturing business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Manufacturing Equipment & Supplies - In order to start your manufacturing business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your manufacturing business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Home » Food

How to Start a Food Manufacturing Business [Business Plan]

A Food manufacturing business is an enterprise that processes edible raw foods and transform them into food products that can be sold for a profit. There was a time starting a food manufacturing business was a daunting task owing to limited resources.

A good number of potential business owners were also reluctant to venture into the food industry because of the massive amount of capital it used to demand.

However, the advent of technology and industrial innovations, coupled with the numerous available financial assistance programs, provides varying opportunities for entrepreneurs who are eager to start their own business in the food manufacturing industry. You just have to carry out extensive research and steadily seek resources that can help you grow your venture.

Steps on How to Start a Food Manufacturing Business

Conduct market research.

You need to carry out extensive market research because it’s a necessary part of any viable business plan. Carrying out market research helps you know if your products are ideal and sellable to your intended market, as well as analyze if there is both a need for your product and space in the market for you to generate substantial revenue. You must understand the level of demand for the food products you are looking to manufacture.

Also, take time to look at your local shops to see if they already sampling similar products to what you intend to manufacture. Also, consider how your products will go against those existing ranges. Identify the things that make your product ranges more attractive to customers.

a. Who is the Target Audience?

In this line of business, your customer base will more or less depend on the exact sector of the market you are looking to target. They may include:

• Other food manufacturers
• Wholesalers and distributors
• Retail outlets such as supermarkets, delicatessens, butchers, convenience stores, petrol filling station forecourt shops, off-licenses, and health shops
• Tourist and visitor centers, garden centers, airport shops, gift shops
• Farmers markets
• Specialist food suppliers: gourmet hamper, fine food specialists, online businesses
• Catering outlets, pubs, nursing homes, hotels, and so on
• Airlines and rail operators
• Members of the public

 b. Is Food Manufacturing Business a Profitable Business?

Yes. A food manufacturing business is agreeably one of the most lucrative businesses anyone can start. Have it in mind there are over 1 billion people on the planet, and this massive population will always have to feed. As long as you can come up with products that soothe the needs and appetites of the large majority of people and a company that complies with government regulations, you should be massive.

c. Are There Existing Niches in the Industry?

Yes. But this will most often depend on your target market. However, once you decide to target the consumer market, there are different types of food products to choose from. Some ideas include:

• Ready-prepared meals for adult consumers, pubs, catering outlets, and so on. You can also go further by choosing whether these meals will be supplied ready-to-eat, or whether they will require heating or cooking. You might also narrow it down to a particular niche range like organic, vegetarian and vegan, or ethnic
• Baby foods and products specifically for children, things like sandwich box fillers. You might be able to leverage the current emphasis on healthy school meals for children
• Gourmet items such as pates, smoked fish and meat products, and other delicatessen-style products
• Snack items such as biscuits, crisps, confectionery
• Meal preparation ingredients such as ready-made pastry, flavored risottos and couscous, and so on
• Jams, preserves, chutneys, pickles, and similar products

d. Who are the Major Competitors?

• Anheuser-Busch InBev.
• Tyson Foods.
• Archer Daniels Midland Company.
• The Coca-Cola Company
• General Mills
• Smithfield Foods
• Mondelez International
• Kraft-Heinz Company

e. Are There County or State Regulations or Zoning Laws for Food Manufacturing Business?

Yes. Numerous Federal, State, and local governments regulate the operation of all food manufacturing businesses, including small-scale processing . Therefore, it is necessary to note the types of food that are allowed to be manufactured in small-scale facilities and endeavor to contact the appropriate agencies that regulate licensing and facility inspection.

Coupled with State-level regulations, the U.S. Food and Drug Administration (FDA) regulates food safety issues with the Hazard Analysis and Critical Control Points (HACCP) system. Remember to consult with your State agriculture or health department for more information about how to get started.

f. Is There a Franchise for Food Manufacturing Business?

• Advanced Fresh Concepts: $692,000
• Dough & Arrows: $140,000 – $200,000
• Green Bar: $8,168
• Saladworks: $199,730 – $549,295
• Golden Krust: $225,900 – $687,000
• The Salad House: $269,200 – $454,500
• The Dough Dough: $375,000 – $450,000
• Pet Wants: $59,830 – $197,000
• Goodwill: $222,000
• Popeyes Louisiana Kitchen: $383,500 – $3,545,800
• Golden Corral: $2,168,419 – $6,602,5130
• Auntie Anne’s: $30,000
• Creams: $349,795(£275,950) To $461,280 (£363,900)
• Cinnabon: $30,000
• Marble Slab Creamery: $293,085 – $376,135
• Jersey Mike’s Subs: $144,700 – $786,200
• Raw Addiction: $159,400 – $266,900
• Souley Vegan: $162,400 – $251,500
• Cinnaholic: $187,000 – $368,500
• Maoz Vegetarian: $248,000 – $572,500

g. What Do You Need to Start a Food Manufacturing Business?

• Adequate Capital
• Reliable suppliers
• Real Estate

And so much more!

Memorable Food Manufacturing Business Names

• Excellent Foods
• Prime Bites
• Classic Taste
• Elegant Food
• The Traditional Kitchen
• Source of Health
• Organic Food Nutrients
• Atlas Kitchen
• Clean Plate Kitchens
• Zone Bakery Joint
• Full Moon Classics
• Royalty Meals
• King’s Grillz
• Appetizer Pack
• Heavenly Food
• Mama’s Choice
• Morning Bird
• Mountain Peak
• Mum’s Kitchen

Register your Business

A. what type of business structure is best for food manufacturing business.

In the United States, the most common business entities for small food manufacturing businesses are sole proprietorships, LLCs, and co-ops. Other business entity options include partnerships, S-corporations, and C-corporations.

However, new entrants into this business are advised to structure their business as an LLC, mainly because it limits a business owner’s liability for the business. An LLC also offers tax efficiency and remains uncomplicated as to ownership structure, so it’s perfect for a food manufacturing business owner who is seeking adequate protection, but some flexibility when it comes to paying taxes

b. Steps to Form an LLC

• Select a Name for Your LLC.
• File Articles of Organization.
• Pick a registered agent.
• Choose between member and manager management.
• Establish an LLC operating agreement.
• Comply with other tax and regulatory requirements.
• File annual reports.

c. What Type of License is Needed to Open a Food Manufacturing Business?

When looking to venture into the food manufacturing business, have in mind that there are numerous regulatory requirements you need to meet. A good number of these requirements apply to all food manufacturing businesses, and some are specific to the particular food product, such as low-acid canned food, seafood, or juice. Nonetheless, basic licenses you will need include;

• Business licenses and permits
• A food handling permit
• A Certificate of Occupancy or CO for your facility
• A liquor license or beer and wine license to sell alcohol
• A food license to make and sell food out of your home
• A resale license to be able to buy products at wholesale

d. What Type of Certification is Needed to Open a Food Manufacturing Business?

While you may not necessarily need to be certified to start a food manufacturing business, however, there are certifications available to help you boost your credentials and reputation in the industry. Certifications to consider include;

• Certified Food Protection Professional (CFPP)
• Certified Nutrition Specialist (CNS)
• Certified Professional – Food Safety (CP-FS)
• Food Safety Manager Certification
• ServSafe Food Protection Manager Certification
• Certified Pastry Culinarian

e. What Documents are Needed to Open a Food Manufacturing Business?

• FDA Certification
• Federal Tax Payer’s ID
• State Permit and Building Approval
• Business License
• Business Plan
• Employment Agreement (offer letters)
• Operating Agreement for LLCs
• Insurance Policy

f. Do You Need a Trademark, Copyright, or Patent?

Yes. While this will depend on the niche you intend to venture into, your brand is an important aspect of your business, and it will become necessary to protect it by trademarking. Since this industry is massively dependent on repeat customers, you must make sure that people can identify you correctly in the competitive market.

Do your Cost Analysis and Budgeting

A. how much does it cost to start a food manufacturing business.

Aside from the sector and niche you choose, note numerous factors can influence startup costs. For example, while the average cost of opening a full-scale bakery might reach $500,000, opening a food truck could cost as little as $30,000.

In some sectors of this industry, the cost to buy into a franchise will be one of the biggest startup costs an entrepreneur will have to contend with; while in some, property and equipment costs will be the most cost-prohibitive.

b. What are the Costs Involved?

• Setting up a business name: $150 – $200
• Licenses and permits: $200 – $300
• Insurance: $100 – $300
• Business cards and brochures: $200 – $300
• Recipe Process Approval: $70-$100/recipe
• Website setup: $1,000 – $3,000
• Location security deposit: $0 – $5,000
• Site preparation and equipment: $0 – $20,000
• Equipment: $1,500 – $200,000
• Initial Inventory: $500 – $150,000

c. What Factors Determine the Cost of Opening a Food Manufacturing Business?

• The type of food manufacturing business
• Cost of employees and management team
• An initial investment in food product
• Real estate
• Design for a physical space

d. Do You Need to Build a Facility?

This will more or less depend on the niche product you intend to offer in the food manufacturing business. However, note that the building of food manufacturing plants is a strictly regulated process in the U.S. Agencies such as the FDA and USDA play a crucial role in establishing the rules for their safe operation and maintenance, while also stipulating guidelines and tips for the building of new facilities.

While the cost of building a facility will vary from one location to another, the cost to build a 140,000-sq. ft. food manufacturing plant, including standard packing industry equipment, is estimated at $33,663,764.

e. What are the Ongoing Expenses for Running a Food Manufacturing Business?

This will depend on the niche you choose, but here are basic expenses to note;

• Maintenance of your facility and machines
• Cost of mortgage or lease buildings
• Training and certifying employees

f. What is the Average Salary of your Staff?

• Manager: $86,000
• Merchandise Manager: $66,480
• Accountants/Cashiers: $52,600
• Delivery crew: $48,720
• Sales staff: $42,310
• Cleanup crew: $34,120

g. How Do You Get Funding to Start a Food Manufacturing Business?

In this line of business, there are numerous ways to raise capital:

• SBA-guaranteed loans:
• Government grants
• Crowdfunding

Write a Business Plan

A. executive summary.

Classic Foods will be a top-class manufacturer of beverages including 100% juices, juice drinks, lemonades, and plant-based beverages. Our aim at Classic Foods is to offer the highest quality products and we are very ready to see to the needs of our customers.

At Classic Foods, we promise to go above the standard food safety practices by participating in the highest level of Safe Quality Food (SQF) certification. The SQF certification program is an excellent series of standards and best practices well noted by The Global Food Safety Initiative to make sure businesses deliver both safe and quality products.

b. Products and Service

• 100% Fruit Juice
• 100% Vegetable and Fruit Juice Blend
• 100% Vegetable Juice
• Almond milk
• Concentrate
• Juice Drink/Cocktail
• Lemonade/Tea
• Packaged Water

c. Mission Statement

Our mission at Classic Foods is to always make available innovative products, state-of-the-art manufacturing, quality assurance, and industry expertise as the very foundation of our company.

Vision Statement

Our vision at Classic Foods is to always evolve to meet the needs of our customers – today and tomorrow. Note that from unique flavor offerings to imaginative packaging solutions, we at Classic Foods will never stop looking for better ways to serve.

d. Goals and Objectives

Our goals and objectives at Classic Foods include the following:

• Establish a regional sales staff.
• Create concrete sales in the region’s five top cities in Year 2.
• Guarantee tight control of cost and operation during expansion.

e. Organizational Structure

• Merchandise Manager
• Accountants/Cashiers
• Delivery crew
• Sales staff
• Cleanup crew

Marketing Plan

A. swot analysis.

• The strategic location of the facility
• Strong distribution network.
• Low product cost
• Strong supplier relationships
• Skilled and experienced manpower
• Accreditation and certifications.
• Newly established business
• Limited cash flow
• Inadequate supply chain
• Frequent changes in management

Opportunities

• New opportunities for the marketing of products online and on other platforms
• Social media marketing
• High paying capacity of customers
• Healthy and other new choices of consumers
• Partnerships and associations
• Limited suppliers
• Competition in supply chain
• Changing tastes of consumers
• A situation like covid-19 and other emergencies
• New hazards and food safety risks

b. How Do Food Manufacturing Businesses Make Money?

Although this will vary depending on the target audience you service but note that a good number of businesses in this industry make money from selling foods and food products, mainly to clients in a complex commerce ecosystem. Revenue is generated through this and other related services.

c. Payment Options

• Payment via bank transfer
• Payment with cash
• Payment via credit cards
• Payment via online bank transfer
• Payment via check
• Payment via mobile money transfer
• Payment via bank draft

 d. Sales & Advertising Strategies

• Join the Guild of Fine Food as a producer member to get an emailed list of all of the Guild’s retail members who you could contact to find out if they would be interested in stocking your products
• Join a regional specialty trade association to benefit from their marketing initiatives
• Sampling your products at local or regional trade shows
• Attend meet-the-buyer events
• Participate in in-store promotions
• Approach local retailers, wholesalers, and catering outlets with samples of your products
• Include details of relevant items to the Food Standards Agency list of products that don’t contain the six colors associated with hyperactivity in children
• Source an online listing in a specialist food producer directory or the Fairtrade Foundation website
• Create your website with an online ordering facility
• Advertise in trade journals, yearbooks, and directories

Financial Projection

A. how much should you charge for your product/service.

In this line of business, have it in mind that your two largest items of expenditure are going to be raw materials and staff costs.

Owing to that, it is vital to monitor the cost of your ingredients and to make sure that your workforce stays productive and that wasteful processes are reduced as much as possible. Note that if you import raw materials, your costs will be affected by currency fluctuations and also to a degree by fluctuations in farmgate producer prices.

b. How Much Profit Do Food Manufacturing Business Owners Make a Year?

According to industry reports, the annual income of a food manufacturing manager, who is often the owner of the business, ranges from $25,000 to $52,000 per year.

c. What Factors Determine the Amount of Profit to Be Made?

Have it in mind that numerous factors can affect this income, including the number of years the food manufacturing business has been in business, the size and location of the facility, its specializations, and even how efficiently the facility is run.

d. What is the Profit Margin of a Food Manufacturing Business?

The price of products in this industry is fairly regulated and standardized, therefore your earnings will more or less stem from your ability to keep your overhead costs low. The type of food you make and sell will also determine your earnings. Nonetheless, most food products have profit margins within the 30% range.

e. What is the Sales Forecast?

• Year One: $750,000
• Year Two: $1,160,000
• Year Three: $3,200,000

Set Up your Shop 

A. how do you choose a perfect location for food manufacturing business.

First and foremost, note that the location of your manufacturing facility needs to be away from the city but close to the resources necessary to reduce logistics costs. In the same vein, it must be close to the place where you will be selling your products. When choosing a commercial space for your food manufacturing facility, you may want to follow these rules:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• A flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

b. What State and City are Best to Open a Food Manufacturing Business?

• San Francisco, California
• New Orleans, Louisiana
• Chicago, Illinois
• New York City, New York
• Los Angeles, California
• Napa Valley, California
• Charleston, South Carolina
• Seattle, Washington

c. What Equipment is Needed to Operate?

While this will also differ depending on the food products you manufacture, basic equipment to note include;

• Kitchen appliances
• Cold storage
• Flatware and utensils
• Furnishing for the Facility
• Cleaning supplies

Hire Employees

Note that even the smallest establishment may need to hire a couple of extra hands to grow production. Also, note that who you hire and how many people you hire will all depend on your business needs.

Nonetheless, some examples of staff you might need may include delivery drivers, bakers, chefs, and food technicians.

Launch the Business Proper

It is advisable for new businesses to start up by hosting a launch party to let their potential clients know that they exist and the services they offer. However, as your opening day nears, prepare for launch by re-analyzing and improving some crucial elements of your business.

• Develop your website
• Necessary software and tools

a. What Makes a Food Manufacturing Business Successful?

• Timely Fulfillment Of Orders
• Ability To Deliver A Marketable Product And Continue To Develop It
• The Ability To Establish Relationships With Loyal Buyers
• The Ability to Operate With Strong Profit Margins.
• Healthy Balance between Quality and Cost.

b. What Happens During a Typical Day at a Food Manufacturing Business?

• Ordering ingredients and non-food supplies
• Mapping out a budget
• Offering top customer service
• Scheduling employees
• Updating business website
• Maintaining web presence
• Overseeing quality control

c. What Skills and Experience Do You Need to Build a Food Manufacturing Business?

• Attention to detail
• Food manufacturing experience
• Marketing skills
• Business knowledge and experience
• Management experience
• Customer service skills
• Networking skills
• Food service experience

More on Food

How To Write a Business Plan for Food Manufacturing in 9 Steps: Checklist

By alex ryzhkov, resources on food manufacturing.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan

Are you thinking of starting a food manufacturing business? With the steady growth of the industry, now is a great time to seize the opportunity. The food manufacturing sector in the US has been experiencing a growth rate of 3.6% annually , reaching a market value of $890 billion in the past year alone. But before you dive in, it's essential to have a solid business plan in place to ensure your success.

To help you get started, we've put together a comprehensive checklist of the nine crucial steps you need to take to write a business plan for food manufacturing. These steps will guide you through every aspect of launching your business, from conducting market research and identifying your target market to creating a financial plan and assembling a team of experts and advisors. So let's get started!

Conducting thorough market research is the foundation for your business plan. It's essential to understand industry trends, consumer demands, and potential opportunities for growth. By gathering and analyzing data, you can gain valuable insights into the market landscape and tailor your business strategy accordingly.

Once you have a clear understanding of the market, it's time to identify your target market and their specific needs. Understanding your customers' preferences, dietary requirements, and purchasing habits will help you develop products that meet their demands and gain a competitive edge in the market.

Next, analyze your competitors and industry trends. This step allows you to identify your strengths, weaknesses, opportunities, and threats. By assessing your competition, you can differentiate your business and develop a unique value proposition that sets you apart.

Now that you have a solid market understanding, it's time to develop your business model and value proposition. Define how your company will operate, what sets it apart, and why customers should choose your products over others. This step will lay the foundation for your overall business strategy.

Outline your product or service offering in detail. Specify the key features, ingredients, packaging, and any unique selling points that distinguish your products from others in the market. Clearly defining your offerings will help you communicate your value to potential customers and investors.

Determine your production and distribution strategies. This step involves assessing your production capacity, technology requirements, supply chain management, and logistics. A robust production and distribution plan will ensure efficient operations and timely delivery of products to your customers.

Create a financial plan and budget. This step entails estimating your costs, revenues, and profitability projections. Developing a comprehensive financial plan will demonstrate the feasibility of your business and attract potential investors or lenders.

Identify potential sources of funding to support your business. Whether through traditional bank loans, investors, or government grants and programs, exploring various funding options will help you secure the necessary capital to launch and grow your food manufacturing business.

Lastly, assemble a team of experts and advisors. Surrounding yourself with professionals who bring knowledge and experience to the table will strengthen your business's chances of success. Seek out individuals with expertise in food production, supply chain management, finance, and marketing to form a well-rounded team.

By following these nine steps, you'll be well on your way to writing a comprehensive business plan for your food manufacturing venture. Stay tuned for our upcoming blog posts, where we'll delve deeper into each step, providing you with valuable insights and practical tips to help you achieve your goals. Good luck on your entrepreneurial journey!

Conduct Market Research

Market research is a critical step in the process of developing a business plan for food manufacturing. It involves gathering and analyzing information about the industry, target market, customer needs, and competitors. This research provides valuable insights that will guide your decision-making and help you develop a successful business strategy.

When conducting market research, it is important to gather information from a variety of sources. This includes industry reports, market studies, trade publications, and government data. It is also helpful to interview potential customers and industry experts to understand their preferences, challenges, and opportunities.

Here are some important considerations during the market research process:

• Identify the size and growth potential of the food manufacturing industry
• Understand the current market trends and consumer preferences
• Identify target market segments and their specific needs and preferences
• Evaluate the competitive landscape, including both direct and indirect competitors
• Analyze potential barriers to entry and industry regulations
• Identify opportunities for innovation and differentiation
• Consider utilizing online surveys or focus groups to gather customer insights
• Stay updated on industry news and trends through trade shows and conferences
• Use market research as an ongoing process to stay ahead of changing customer needs

Identify Target Market And Customer Needs

Identifying your target market and understanding their needs is essential for the success of your food manufacturing business. This step involves conducting thorough market research and gathering relevant data to help you make informed decisions. Here are some important factors to consider:

• Demographics: Analyze the demographic factors of your target market such as age, gender, income level, and location. This information will help you tailor your products and marketing strategies to meet the specific needs and preferences of your target customers.
• Market Segmentation: Divide your target market into segments based on specific characteristics or behaviors. This will allow you to customize your offerings and marketing messages to better resonate with each segment.
• Customer Needs: Understand the unique needs and preferences of your target customers. Conduct surveys, focus groups, or interviews to gather feedback and insights. This will help you develop products that cater to their specific requirements.
• Competition: Analyze your competitors to identify any gaps or opportunities in the market. Assess their offerings, pricing, and marketing strategies to differentiate your products and meet the unmet needs of your target market.
• Use online tools and resources to gather market data and insights about your target market.
• Attend trade shows, industry events, or join relevant business associations to network with potential customers and gain industry knowledge.
• Stay updated with industry trends and consumer preferences through market research reports and industry publications.
• Consider conducting pilot tests or product trials to gather feedback directly from your target customers.

By identifying your target market and understanding their needs, you can develop products and strategies that effectively meet their demands. This will ultimately contribute to the success and profitability of your food manufacturing business.

Analyze Competitors And Industry Trends

As you embark on the journey of starting a food manufacturing business, it is crucial to thoroughly analyze your competitors and stay up-to-date with industry trends. By understanding the landscape in which you will operate, you can identify opportunities, mitigate risks, and make informed decisions for the success of your venture.

Identify your direct and indirect competitors: Begin by researching and identifying companies that are in direct competition with your food manufacturing business. Look for similarities in your product or service offerings, target markets, distribution channels, and pricing strategies. Additionally, don't overlook indirect competitors that may cater to similar customer needs or provide alternative solutions.

Analyze their strengths and weaknesses: Once you have identified your competitors, analyze their strengths and weaknesses. This analysis will help you understand what sets your business apart and what areas you need to improve upon. Consider factors such as product quality, pricing, brand reputation, customer service, marketing strategies, and innovation.

Stay informed about industry trends: Continuously monitoring and adapting to industry trends is essential for the long-term success of your food manufacturing business. Stay updated on new product developments, emerging technologies, changes in consumer preferences, and regulatory updates that may impact your operations.

Keep an eye on market demand and evolving customer needs: Conduct market research and gather data on market demand for your product or service offering. Stay attuned to changing customer needs and preferences, and identify gaps or opportunities in the market that you can capitalize on.

By diligently analyzing your competitors and staying informed about industry trends, you can position your food manufacturing business strategically, differentiate yourself from competitors, and adapt to changing market conditions. This knowledge will inform your decision-making process and increase your chances of success in the dynamic and competitive food manufacturing industry.

Develop A Business Model And Value Proposition

When it comes to food manufacturing, developing a strong business model and value proposition is crucial for success. Your business model defines how your company will operate, generate revenue, and create value for customers. Your value proposition, on the other hand, articulates the unique benefits and advantages that your products or services offer to customers.

In order to develop a business model, start by identifying the key components of your operation. Consider factors such as the size of production batches, sourcing of ingredients, manufacturing processes, distribution channels, and customer segments. You should also determine how your business will differentiate itself from competitors and create value for customers.

Next, define your value proposition. What makes your food manufacturing business unique? Is it the use of locally sourced ingredients, a commitment to sustainable practices, or a focus on creating innovative and high-quality products? Clearly articulate the benefits that customers can expect when choosing your products or services over those of your competitors.

Tips for developing a business model and value proposition:

• Research and analyze your target market to understand their needs and preferences.
• Consider incorporating trends such as organic, gluten-free, or plant-based options into your business model if they align with customer demands.
• Focus on creating a business model that is scalable and adaptable to future changes in the industry.
• Regularly revisit and reassess your value proposition to ensure it remains relevant and compelling.
• Seek feedback from customers and industry experts to refine and improve your business model and value proposition.

By developing a solid business model and value proposition, you will lay a strong foundation for your food manufacturing business and increase your chances of attracting customers and generating sustainable revenue.

Outline The Product Or Service Offering

Once you have conducted thorough market research and identified your target market and customer needs, it's time to outline your product or service offering . This step is crucial as it will define your unique value proposition and set you apart from your competitors.

Start by clearly defining the features and benefits of your food manufacturing business. What makes your products or services special? How do they meet the specific needs and desires of your target customers? Highlight your competitive advantages, such as unique recipes, high-quality ingredients, or sustainable production practices.

Use this opportunity to differentiate your offerings from what is already available in the market. Analyze your competitors and identify any gaps or areas where you can provide something new or better. This could be through innovative flavors, packaging, or even special dietary options to cater to various customer preferences.

Consider creating a portfolio of products that cater to different customer segments. This can help you maximize your market reach and appeal to a broader customer base. Whether it's offering different sizes, flavors, or packaging options, providing variety will attract more customers and increase sales opportunities.

• Stay updated on industry trends: Keep an eye on emerging trends in the food industry, such as health-conscious or plant-based products, and adapt your product offerings accordingly.
• Focus on product quality: Ensure that your products meet the highest quality standards and consistently deliver superior taste and texture. This will build trust and loyalty among your customers.
• Emphasize packaging and branding: Invest in visually appealing packaging that reflects your brand identity and catches the attention of potential customers. Remember that packaging serves as the first impression for your products.
• Consider customization options: Explore the possibility of offering customizable products to cater to individual customer preferences. This can include personalized flavors, ingredient choices, or even packaging designs.

By outlining your product or service offering, you lay the foundation for your food manufacturing business. This step will guide your future decision-making processes, including production, marketing, and sales strategies. Remember to continuously evaluate and adapt your offerings to stay relevant and meet evolving customer demands.

Determine Production And Distribution Strategies

One of the critical aspects of a food manufacturing business plan is determining the production and distribution strategies. This step involves outlining the processes involved in producing your food products and deciding how they will be efficiently distributed to customers.

Production Strategy: Start by detailing the steps involved in producing your food products. Outline the production process from sourcing ingredients to packaging and labeling. Consider factors such as recipe development, cooking or manufacturing techniques, quality control measures, and food safety protocols.

Distribution Strategy: Next, determine how your products will be distributed to customers. Consider whether you will sell directly to retailers, food service providers, or distributors. Think about the logistics involved, such as transportation and warehousing, as well as maintaining product quality during transit.

When determining your production and distribution strategies, keep in mind the importance of efficiency and quality control . Optimize your production process to minimize waste and maximize output. Consider implementing automation technologies to streamline operations and ensure consistent product quality.

• Establish strong relationships with suppliers to ensure a consistent and reliable source of ingredients.
• Consider leveraging technology solutions, such as inventory management systems, to track production and manage distribution.
• Develop a contingency plan to address unexpected delays or disruptions in the supply chain.
• Regularly review and optimize your production and distribution strategies to remain competitive and meet customer demand.

By carefully determining your production and distribution strategies, you can ensure that your food manufacturing business operates efficiently and delivers high-quality products to your customers. This step is crucial in building a successful and sustainable food manufacturing operation.

Create A Financial Plan And Budget

Creating a thorough financial plan and budget is crucial when developing a business plan for your food manufacturing venture. This step will help you determine the financial feasibility of your business and provide a roadmap for managing your finances effectively.

Here are some key factors to consider when creating your financial plan:

• Sales and revenue projections: Estimate your expected sales and revenue based on market research and your target market analysis. Consider factors such as customer demand, competition, and industry trends.
• Cost of goods sold (COGS): Determine the direct costs associated with producing your food products, including ingredients, packaging materials, labor, and manufacturing overheads. This will help you calculate the gross profit margin.
• Operating expenses: Identify all the fixed and variable expenses involved in running your food manufacturing business, such as rent, utilities, insurance, salaries, marketing costs, and distribution expenses.
• Capital expenditures: Assess the equipment, technology, and facilities required for production and distribution. Calculate the initial investment and ongoing maintenance costs.
• Cash flow management: Create a cash flow projection to track the inflow and outflow of cash over a specific period. This will help you anticipate any cash flow challenges and plan accordingly.

Tips for creating a financial plan and budget:

• Consider seeking professional guidance from an accountant or financial advisor to ensure accuracy and reliability in your financial projections.
• Regularly review and update your financial plan as market conditions and business circumstances change.
• Be realistic and conservative when estimating sales and revenue to avoid overestimating profitability.
• Take into account any regulatory compliance costs, such as obtaining necessary licenses, permits, and certifications.
• Include contingency funds in your budget to address unforeseen expenses or emergencies.

Having a well-defined financial plan and budget will not only help you understand the financial viability of your food manufacturing business but also serve as a valuable tool for attracting potential investors or securing funding from lenders.

Identify Potential Sources Of Funding

Securing funding is a crucial step in turning your food manufacturing business plan into a reality. Without adequate financial resources, it can be challenging to acquire the necessary equipment, technology, and facilities to bring your products to market. Here are some potential sources of funding to consider:

• Personal Savings: Many entrepreneurs start by investing their own savings into their business. This demonstrates your commitment and belief in your venture, and may also attract other potential investors.
• Family and Friends: Networking with your personal connections can be a valuable source of funding. Be sure to approach this option professionally, and clearly outline the terms of any agreements to avoid potential conflicts.
• Bank Loans: Commercial banks offer various types of loans that can help finance your food manufacturing business. Prepare a detailed business plan, financial projections, and collateral to increase your chances of securing a loan.
• Government Grants and Loans: Research if there are any government programs or agencies that provide grants or loans specifically for the food manufacturing industry. These funding options often come with specific requirements and application processes.
• Angel Investors: Angel investors are individuals who provide capital in exchange for equity or ownership stake in a company. They typically look for high-growth potential businesses, so make sure to showcase your unique value proposition and growth strategies.
• Venture Capitalists: Venture capitalists invest in early-stage businesses with the potential for significant returns. They often provide not just funding but also industry expertise and guidance. However, they may require a larger equity share and have strict investment criteria.
• Crowdfunding: Crowdfunding platforms allow you to raise capital from a large number of individuals who believe in your business idea. Be prepared to create a compelling campaign, offer attractive rewards, and market your project effectively.
• Industry-Specific Investors: Explore whether there are any investors or firms specializing in the food manufacturing sector. They may have a deep understanding of the industry and be more inclined to invest in your business.
• Research and understand each funding option's terms and conditions before making a decision.
• Prepare a solid business plan and financial projections to demonstrate the viability and profitability of your food manufacturing business.
• Consider seeking advice from financial professionals or consultants experienced in securing funding for businesses in the food industry.
• Be prepared to negotiate and present a compelling case to potential investors or lenders to increase your chances of securing funding.
• Keep in mind that a combination of funding sources may be necessary to meet your financial needs.

Assemble A Team Of Experts And Advisors

As you embark on the journey of starting a food manufacturing business, it is crucial to assemble a team of experts and advisors who can provide valuable guidance and support. The success of your venture greatly depends on the knowledge and expertise of the individuals you surround yourself with.

1. Seek industry-specific expertise: Look for individuals who have significant experience and knowledge in the food manufacturing industry. They can provide insights into the unique challenges and opportunities that arise in this sector.

2. Build a strong advisory board: Consider inviting experienced professionals to join your advisory board. They can offer strategic guidance and help you navigate through complex issues and decisions.

3. Consult legal and regulatory experts: It is essential to have legal and regulatory experts on your team who can ensure compliance with laws and regulations governing food manufacturing. They can assist with permits, licenses, and other legal obligations.

4. Include financial and accounting professionals: Financial experts and accountants are crucial for establishing accurate financial plans, budgeting, and managing cash flow. They can provide insights into cost control and profitability.

5. Engage in product development specialists: Bringing in product development specialists can help you refine your offerings and ensure they meet customer needs and industry trends. They can also assist with optimizing production processes.

6. Cultivate relationships with suppliers: Building strong relationships with reliable suppliers is vital for sourcing quality ingredients and raw materials. Collaborating with procurement and supply chain experts can help you establish efficient and cost-effective supply chains.

• Look for advisors and experts who have complementary skills and strengths to fill any gaps in your knowledge or experience.
• Consider joining industry associations or networks to connect with potential advisors and experts.
• Regularly communicate and engage with your team of experts and advisors to benefit from their insights and perspectives.
• Stay open to feedback and be willing to adapt your plans based on their recommendations.
• Consider offering equity or consulting opportunities to attract high-quality individuals to your team.

By assembling a diverse and knowledgeable team of experts and advisors , you can tap into their collective experience and expertise to make informed decisions, mitigate risks, and navigate the intricate landscape of food manufacturing. The support and guidance they provide can significantly contribute to the success of your business.

In conclusion, writing a business plan for food manufacturing involves several important steps. Conducting thorough market research, identifying target markets and customer needs, and analyzing competitors and industry trends are essential to ensure the success of your business. Developing a strong business model and value proposition, outlining your product or service offering, and determining production and distribution strategies are crucial for efficient operations. Creating a comprehensive financial plan and budget, identifying potential sources of funding, and assembling a team of experts and advisors will help you navigate the complexities of the industry. By following these nine steps, you can lay the foundation for a successful food manufacturing business and achieve your goals.

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Getting started: A guide to creating a manufacturing business plan

Every day people are trying and failing at entrepreneurism.

The journey is a difficult one, and the chances of success are slim. Those that succeed sometimes have a brilliant idea, while others have a wealth of resources. The one commonality among all successful entrepreneurs is that they had a manufacturing business plan.

You need to know where you are going, how you will get there, and what you will do when you arrive. This is especially important for those in the manufacturing industry because of the significant amount of forethought required.

Even if you are leveraging digital solutions to minimize the amount of time, money, and effort required to bring your product to market, you will still need a plan. This is not an area where you can wing it and hope for the best.

Below, we will examine the basics of a manufacturing business plan, what is necessary to include, how to create one for your own company, and some common mistakes that you should avoid.

Table of contents:

What is a manufacturing business plan, why does a manufacturing company need a business plan, what are the key components of a business plan, how to write a business plan for a manufacturing company, common mistakes to avoid.

A manufacturing business plan is a formal document that outlines the goals and objectives of your business. It includes detailed information about your: 

• Products or services 
• Target market 
• Marketing strategy
• Financial projections 
• Operational details  

The purpose of a business plan is to give you a roadmap to follow as you build and grow your business. It forces you to think through every aspect of your venture and identify potential problems or roadblocks before they happen. 

Manufacturing business plans can also be used to attract investors or secure funding from lenders. If you are looking for outside financing, your business plan needs to be even more detailed and include information on your management team, financial history, and expected growth. 

Ideally, you should update your business plan yearly to ensure that it remains relevant and accurate. As your business grows and changes, so too should your plan. 

No matter how simple or complex your ideas may be, you need a plan, or they will never become a reality. A business plan will clearly understand your costs, competition, and target market. It will also help you to set realistic goals and track your progress over time. 

Let’s look at a manufacturing strategy example. You have a great idea that you think will revolutionize the  automotive industry . Your new safety harness will be made from a lightweight, yet incredibly strong, material that cannot be cut or torn. You are confident that your product will be in high demand and generate a lot of revenue. 

But before you walk into Ford or Toyota to try and get a  purchase order , you need to have a plan. You must know: 

• How much will it cost to produce your product
• How many units do you need to sell to break even 
• Who is your target market is 
• What is your competition selling 
• How will you reach your target market 

You also need to clearly understand the regulatory landscape and what it takes to bring a new product to market. All of this information (and more) should be included in your business plan. 

This is not just a document that you create and forget about. It is a living, breathing tool that should be used to guide your actions as you build and grow your business. 

Every manufacturing business plan will be different, but almost always, they will include the same five components: 

Executive summary

Company description, products and services, market analysis.

• Financial plan 

Let’s take a closer look.

The executive summary is the first section of your business plan, but it is typically written last. This is because it should be a concise overview of everything that follows, and you can only do that once you have completed the rest of your plan. 

Include the following in your executive summary: 

• The problem that your product or service solves
• Your target market
• Your unique selling proposition (what makes you different from your competitors?)
• Your manufacturing business model (how will you make money?)
• Your sales and  marketing strategy
• A brief overview of your financial projections

Someone should be able to quickly scan through your executive summary and have a pretty good understanding of what your business is and how it plans to be successful. 

This is where you can get a bit more creative, explaining your company’s history, mission, and values. You will also include information on your team or management structure. 

It can be simple but should inspire faith in your ability to execute your business plan. 

You will need to provide a detailed description of your product or service, as well as any unique features or benefits that it offers. You should also include information on your  manufacturing process  and  quality control  procedures. 

If you have any patents or proprietary technology, they should be listed here as significant assets for your business. 

For example, let’s say you are planning on creating a brand-new line of disposable coffee cups. The dimensions, materials, and other specifications would be listed here, along with any unique benefits (such as being made from recycled materials). 

You might also include information on your manufacturing process, such as the fact that the cups will be produced in a certified clean room or that you will employ workers local to where the product is sold.

Chances are, you started down this path because you realized that there was a market opportunity for your product or service. In this section, you will need to provide detailed information on the opening, as well as the analysis that convinced you to pursue it. 

This should include: 

• Market size (current and projected)
• Key market segments
• Customer needs and wants
• Competitive landscape 

This is where you will need to do your homework, as you will be justifying your business decision to enter this particular market. The more data and analysis you can provide, the better. 

For our coffee cup example, the market analysis might include:

• Information on how many cups are used every day 
• Projected growth 
• Key segments (such as office workers or on-the-go consumers) 
• Customer needs (such as convenience or sustainability)  

It would also examine the competitive landscape, including both direct and indirect competitors.

Financial plan

You’re in this to make money, and so are your potential investors. In this section, you will need to provide detailed information on your manufacturing business model and how it will generate revenue. This should include: 

• Initial investment
• Sales forecast
• Carrying costs
• Pricing strategy
• Expense budget 

You will also need to provide information on your long-term financial goals, such as profitability or break-even point. Discuss production line details,  inventory management strategies , and other factors impacting your bottom line.

The process of creating a business plan for a manufacturing company is similar to any other type of business. However, there are some key considerations to keep in mind. 

First, you need to understand your industry and what it will take to be successful in it. This includes understanding the competitive landscape,  the costs of goods sold , and the margins you can expect to achieve. 

You also need to have a clear understanding of your target market and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits. 

While there will be many things specific to your company, here are five questions to answer for each of the sections listed above. 

Executive summary: 

• What is the problem that your company will solve? 
• How will your company solve that problem? 
• Who are your target customers? 
• What are your key competitive advantages? 
• What is your business model? 

Company description: 

• What is the legal structure of your company? 
• What are your company’s core values? 
• What is your company’s history? 
• Who are the key members of your management team? 
• Where is your manufacturing facility located? 

Products and services: 

• What product or service does your company offer? 
• How does your product or service solve the problem that your target market has? 
• What are the key features and benefits of your product or service? 
• How is your product or service unique from your competitors? 
• What is the production process for your product or service? 

Market analysis: 

• Who is your target market? 
• What needs or wants does your target market have that your product or service will address? 
• What is the size of your target market? 
• How do you expect the needs of your target market to change in the future? 
• Who are your key competitors, and how do they serve the needs of your target market? 

Financial plan:

• What are the start-up costs for your company? 
• How will you finance your start-up costs? 
• What are your monthly operating expenses? 
• What is your sales forecast for the first year, and how does that compare to your industry’s average sales growth rate? 
• What are your gross margin and profit targets?

Even if you do nothing but answer these questions, you’ll be well on your way to creating a thorough manufacturing business plan. 

How to stabilize your growth

However, new manufacturing entrepreneurs often fall into a handful of traps when creating their business plans.

• Not doing enough research  – You can’t know everything about your industry, but you should do your best to understand as much as you can before writing your business plan. This means talking to experts, reading trade publications, and studying the competition
• Not being realistic  – It’s important to be optimistic when starting a new business, but you also need to be realistic. This is especially true when it comes to financial projections. Don’t overestimate the amount of revenue you will generate or underestimate the costs of goods sold
• Not having a clear understanding of your target market  – You need to know who you are selling to and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits
• Failing to understand your competition  – You need to know who your competitors are, what they are offering, and how you can differentiate yourself. This information will be critical in developing your marketing strategy
• Not having a clear vision for the future  – Your manufacturing business plan should include a section on your long-term goals and objectives. What does your company hope to achieve in the next five years? Ten years? Twenty years? 

Creating a business plan for manufacturing can be simple. It can be quite simple if you break it down into smaller pieces.

Once you have it in place, staying on track can be quite a bit more difficult. By using  ERP software like Katana , you can track all of your key metrics in real time, avoid any potential issues, and make course corrections as needed. 

To start following your plan and creating a successful manufacturing company,  get a Katana demo  today.

• Manufacturing guide
• 1.1. Production vs manufacturing
• 1.2. Production scheduling software
• 1.3. Production tracking software
• 2.1. How to manufacture a product
• 2.2. Manufacturing best practices
• 2.3. A guide to creating a manufacturing business plan
• 2.4. Manufacturer e-commerce
• 2.5. Marketing for manufacturers
• 2.6. Manufacturing business processes
• 2.7. Food manufacturing
• 2.8. Small business manufacturing software
• 3.1. Job shop manufacturing
• 3.2. Production quality control checklist
• 4.1. Just-in-time (JIT) manufacturing
• 4.2. Tips to reduce manufacturing waste
• 4.3. Manufacturing KPIs
• 5. Light manufacturing
• 6. Advanced manufacturing
• 7. IoT in manufacturing
• 8.1. Manufacturing execution system (MES)
• 9.1. Manufacturing overhead formula
• 9.2. Manufacturing inventory software
• 10. Good manufacturing practices (GMP)
• 11.1. MRP in supply chain management
• 11.2. Best MRP software
• 12.1. Best ERP software for manufacturing

More guides from Katana

How To Start A Food Manufacturing Business

Starting a food manufacturing business involves identifying a niche, developing a product and business plan, securing permits and licenses, finding a suitable location, sourcing ingredients and equipment, hiring staff, and implementing efficient production and marketing strategies.

• Last Update: November 23, 2023

• Steps in this Guide: 11

Starting a food manufacturing business can be an exciting and lucrative venture for those with a passion for food and an entrepreneurial spirit. In today’s fast-paced world, people are increasingly seeking convenient and high-quality food products, making the demand for food manufacturing businesses higher than ever. However, embarking on this journey requires careful planning and a comprehensive understanding of the industry. In this blog post, we will explore the essential steps and considerations involved in starting a food manufacturing business, providing you with the knowledge and guidance you need to turn your culinary dreams into a successful and thriving enterprise. Whether you’re an aspiring entrepreneur or an experienced food industry professional looking to expand your operations, this guide will equip you with the essential tools and insights to kickstart your food manufacturing business with confidence.

How To Start A Food Manufacturing Business: Step-by-Step

Step 1: market research & business plan.

After understanding the food market, decide on the type of food to manufacture (organic food, snacks, dairy products, or vegan items). Research the target audience, competitors, pricing strategy, and develop a business plan with detailed strategies, marketing techniques, and financial projections.

Step 2: Legal Requirements

Prior to commencing operations for a food manufacturing business, it is essential to obtain all prerequisite licenses and permits. Typically, this comprises a business license, health department permits, and potentially a food enterprise license. Fulfilling these requirements ensures legal compliance and operational legitimacy.

Step 3: Finding the Location

When selecting a site for your production facility, ensure it complies with health and safety regulations and has ample room for machinery, food production, packaging, and storage needs.

Step 4: Purchase Equipment

Investing in equipment is crucial for food manufacturing, as it varies depending on the type of food produced. This encompasses production machinery, packaging machines, refrigeration units, and quality control tools, ensuring efficient and safe manufacturing processes.

Step 5: Choose Suppliers

In order to ensure a smooth supply chain, it is crucial to identify and negotiate with suppliers who can provide reliable, high-quality raw materials, while also guaranteeing timely delivery.

Step 6: Production Process

Once you have established your manufacturing process, it is crucial to comply with local and national food safety regulations. This involves recipe development, cooking, thorough testing, meticulous packaging, and accurate labeling to ensure high-quality and safe products for consumers.

Step 7: Quality Control

Implementing a robust quality control system is crucial to guarantee the safety and consistency of your product. Ensure rigorous checks for factors like hygiene, taste, texture, color, and nutritional value are in place to maintain high standards and meet customer expectations.

Step 8: Branding and Packing

Developing a strong brand involves creating a distinctive name and logo for your product. Additionally, design packaging that is visually appealing, user-friendly, and able to effectively communicate essential product details.

Step 9: Marketing and Distribution

Promote your brand and market your product through digital marketing, food expos, free tasting, and partnering with vendors, retailers, or distributors to effectively reach your desired customers and increase your brand visibility.

Step 10: Customer Service

Implement an efficient customer support system by ensuring your team is well-informed about your products, enabling them to promptly and effectively address customer inquiries and complaints, delivering optimum satisfaction.

Step 11: Assess and Adjust

To stay competitive, consistently evaluate your business performance by monitoring sales, consumer feedback, and industry trends. This will enable you to make necessary adjustments to your production processes, marketing strategies, or even your product itself.

Starting a food manufacturing business can be a rewarding and profitable endeavor, but it requires careful planning, research, and execution. By understanding the industry landscape, conducting market analysis, developing a solid business plan, ensuring quality control, and meeting regulatory requirements, aspiring entrepreneurs can navigate the challenges and pave the way for success. Moreover, establishing a strong network of suppliers, distributors, and customers, as well as investing in marketing and branding efforts, will contribute to the growth and sustainability of the business. With perseverance, innovation, and a passion for delivering high-quality food products, you can turn your food manufacturing dream into reality. So, take the leap and embark on this exciting journey, one that promises to bring your culinary creations to the world!

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Business Plan Template for Food Manufacturers

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Crafting a solid business plan is the secret ingredient to success in the food manufacturing industry. Whether you're starting a new venture or looking to grow your existing business, ClickUp's Business Plan Template for Food Manufacturers is your recipe for triumph.

With this template, you can:

• Clearly define your business goals, strategies, and target market to attract investors and secure funding
• Outline your production processes, supply chain management, and quality control measures for efficient operations
• Create comprehensive financial projections and budgets to ensure healthy profit margins

Don't let your food manufacturing dreams go stale. Get the ClickUp Business Plan Template for Food Manufacturers and cook up a winning strategy for your success!

Business Plan Template for Food Manufacturers Benefits

When food manufacturers use a business plan template, they gain a range of benefits that can help them succeed in the competitive food industry:

• Secure funding and attract investors by presenting a well-structured and comprehensive plan
• Effectively manage operations and growth with a clear roadmap and strategic goals
• Make informed decisions about product development, pricing, and marketing strategies
• Identify potential risks and challenges, and develop contingency plans
• Set realistic financial projections and monitor performance against targets
• Streamline communication and collaboration within the organization, ensuring everyone is aligned with the business goals.

Main Elements of Food Manufacturers Business Plan Template

When it comes to creating a comprehensive business plan for your food manufacturing business, ClickUp's Business Plan Template has you covered with all the essential elements:

Custom Statuses: Keep track of the progress of each section of your business plan with statuses like Complete, In Progress, Needs Revision, and To Do, ensuring that every aspect of your plan is accounted for and up to date.

Custom Fields: Use custom fields like Reference, Approved, and Section to add specific details and metadata to your business plan, making it easy to organize and track important information.

Custom Views: Access different views such as Topics, Status, Timeline, Business Plan, and the Getting Started Guide to visualize your business plan from various angles, ensuring that you have a clear overview of your goals, tasks, and progress throughout the planning process.

Collaboration and Documentation: ClickUp provides a robust platform for collaboration, allowing multiple team members to work on the business plan simultaneously. With features like Docs and Comments, you can easily collaborate, provide feedback, and make revisions in real-time.

Integration: Seamlessly integrate your business plan with other tools and platforms using ClickUp's wide range of integrations, ensuring that your plan is always up to date and accessible across your entire workflow.

How To Use Business Plan Template for Food Manufacturers

Creating a business plan for your food manufacturing company can be a daunting task, but with ClickUp's Business Plan Template and the following steps, you'll be able to craft a comprehensive plan that sets you up for success:

1. Define your vision and mission

Start by clearly defining your vision and mission for your food manufacturing business. Think about what sets you apart from competitors and identify your target market. This will help guide your decision-making and set the foundation for your business plan.

Use the Goals feature in ClickUp to outline your vision and mission statement and keep everyone aligned with your business objectives.

2. Conduct market research

Before diving into the details of your business plan, it's important to conduct thorough market research. This will help you understand the current trends, demand, and competition in the food manufacturing industry. Identify your target audience, analyze their needs and preferences, and assess the market potential for your products.

Utilize the Table view in ClickUp to organize and analyze your market research data, including competitor analysis, customer profiles, and market trends.

3. Develop your product and pricing strategy

Next, outline your product offerings and pricing strategy. Define your product line, including any unique features or specialties, and determine how your products will differentiate themselves in the market. Consider factors such as production costs, profit margins, and pricing models that align with your target market.

Create custom fields in ClickUp to track and analyze your product development progress, pricing strategies, and cost calculations.

4. Outline your operations and financial plan

In this step, it's important to outline the operational aspects of your food manufacturing business. Define your production process, including sourcing ingredients, manufacturing facilities, quality control, and distribution channels. Additionally, create a financial plan that includes projected revenue, expenses, and cash flow projections.

Use the Gantt chart feature in ClickUp to create a visual timeline of your operations plan, including milestones and dependencies. And utilize the Dashboards feature to track your financial metrics and monitor your business's financial health.

By following these steps and utilizing ClickUp's Business Plan Template, you'll be well on your way to creating a comprehensive business plan that sets the foundation for your food manufacturing company's success.

Get Started with ClickUp’s Business Plan Template for Food Manufacturers

Food manufacturers can use the Business Plan Template for Food Manufacturers in ClickUp to streamline their business planning process and ensure a comprehensive and well-structured plan.

To get started, hit "Add Template" to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you'd like this template applied.

Next, invite relevant team members or guests to your Workspace to start collaborating.

Now, take advantage of the full potential of this template to create a solid business plan:

• Use the Topics View to brainstorm and organize key sections and topics of your business plan
• The Status View will help you track the progress of each section, whether it's complete, in progress, needs revision, or to do
• The Timeline View allows you to set deadlines and milestones for each section of your business plan
• Utilize the Business Plan View to have a comprehensive overview of your entire plan, including goals, strategies, financial projections, and more
• The Getting Started Guide View provides a step-by-step guide to help you navigate the template and create a successful business plan
• Customize the template by adding the custom fields Reference, Approved, and Section to track additional information and progress
• Update statuses, custom fields, and progress as you work through each section to keep everyone informed
• Monitor and analyze your business plan to ensure it aligns with your goals and objectives, and make adjustments as needed for maximum effectiveness.
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How To Start a Small-scale Food Manufacturing Business

• Develop a comprehensive business plan focusing on goals, market analysis, and financial viability.
• Follow all relevant food safety regulations to ensure product safety and build consumer trust.
• Invest in quality equipment, such as liquid filling machines, cappers, and conveyors, for efficient production.
• Remember that building a successful business takes time, patience, dedication, and willingness to seek help.

Starting a small-scale food manufacturing business can be a dream come true for many individuals who have a passion for food and the entrepreneurial spirit to start a business. With the rise of artisanal and locally-made products, there is an increasing demand for high-quality, niche food products that are made with passion and attention to detail.

However, starting a food manufacturing business can be a daunting task, especially if you are new to the industry. This article will provide you with some tips on how to get started and succeed in the food manufacturing industry.

Develop a Business Plan

A solid business plan is the foundation of any successful business, and starting a small-scale food manufacturing business is no exception.  A business plan should include your business goals, market analysis, the products you plan to manufacture, your target market, and other essential elements that will help you plan and manage your business operations.  Your business plan will help you with the following:

Clarify Your Business Goals and Objectives

Having a clear understanding of your goals and objectives is crucial for the success of your small-scale food manufacturing business. These goals should not only focus on the financial aspects, such as revenue and profits, but also on aspects related to product quality, market share, customer satisfaction, and more. By defining your objectives, you can set realistic expectations, devise effective strategies, and measure your progress along the way.

Understand Your Market

In the food manufacturing industry, having a good understanding of your market landscape, competitors, and target audience is essential. The market landscape consists of trends, consumer preferences, and market size that can affect your business. Conducting a thorough competitor analysis will help you identify your competitors’ strengths and weaknesses , their strategies, and gaps that you can fill. Lastly, knowing your target audience means understanding their needs, preferences, and buying behavior.

Determine the Financial Viability of Your Business

Determining the financial viability of your business is integral in mapping out your business plan. It involves a comprehensive understanding of your potential revenue streams, startup costs, production costs, and the pricing of your products. Calculating these financial details can help you identify whether your business can be profitable and sustainable in the long run. You should also consider securing sufficient funding for your startup, whether it’s through personal savings, loans, or investors.

Follow Food Safety Regulations

When running a food manufacturing business, it is essential to prioritize food safety. You must ensure that your products are safe to consume and comply with all relevant food safety regulations.

This includes following strict sanitation practices, implementing hazard analysis and critical control points (HACCP) , and complying with any local, state, or federal regulations. Neglecting food safety can not only endanger public health but also put your business at risk of legal and financial repercussions.

Furthermore, having proper food safety measures in place can also help build consumer trust and maintain a good reputation for your business.

Invest in Equipment & Machinery

Investing in quality equipment and machinery is a significant aspect of starting a small-scale food manufacturing business.  The type of equipment you’ll need will depend on the specific food products you plan to manufacture.  Here are some examples:

Liquid Filling Machines

An essential tool for small-scale food manufacturers who produce liquid products is a high-quality tabletop liquid filling machine . This equipment ensures precision, efficiency, and consistency in filling bottles or other containers. Whether you’re manufacturing beverages, sauces, or dressings, investing in a liquid filling machine will help streamline your production process and contribute to maintaining the quality of your product.

Cappers are another crucial piece of equipment for small-scale food manufacturers, especially those producing bottled or jarred products. These devices are designed to accurately and securely apply caps to your products’ containers, ensuring they are sealed properly for safety, freshness, and quality control. The type of capper you need will depend on the type of caps your packaging uses, so it’s important to choose one that aligns with your specific requirements.

A conveyor system is another essential piece of equipment for your small-scale food manufacturing process. Conveyors streamline your operation by moving ingredients, raw materials, and finished products along the production line efficiently and safely. They can be customized to suit your facility’s space and the specific needs of your operation. In addition, conveyors can reduce labor costs and enhance productivity, making them a worthwhile investment for any food production business.

Starting a small-scale food manufacturing business requires a lot of hard work, dedication, and planning. By following these tips and prioritizing food safety, quality equipment, a strong team, and a well-executed marketing strategy, you can increase your chances of success in the food manufacturing industry. Remember, building a successful business takes time, so don’t be afraid to ask for help or seek advice from industry experts. With patience and perseverance, you can turn your passion for food into a thriving manufacturing business.

About The Author

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Three steps for developing a food manufacturing plan

A food manufacturing plan should include situation analysis, goals and objectives, and function and scope to ensure that the plan goes through smoothly..

Developing a manufacturing plan is generally the second phase in the strategic planning process. After creating a business plan and specifying your food processing plant’s sales and growth projections, a manufacturing plan will identify and assess the processes that are used to manufacture the product to meet those sales goals.

A manufacturing plan requires an in-depth analysis of:

• Physical facility
• Other processes related to manufacturing.

Ultimately, the goal is to ensure the appropriate technology is in place and optimize current production practices to meet sales goals. The process of developing the plan will help identify where constraints exist and highlight areas to improve production efficiency.

The purpose of the manufacturing plan is to:

• Review the current state manufacturing equipment utilization and bottlenecks
• Forecast the effect of projected growth on the utilization of existing equipment and systems
• Develop courses of action to effectively support the projected growth.

The three steps in developing a manufacturing plan are:

1. Situation analysis. This involves a detailed review of the facility’s physical space and plant layout. Your manufacturing plan team should analyze workflow among both process equipment and personnel. For example, how do functional employees move throughout the facility and at what rate? How long does it take raw materials to reach the processing line? A facility assessment is an effective way to analyze the status quo and identify ways to optimize energy usage, improve food safety, minimize risks and save money.

2. Goals and objectives. Every aspect of production should be viewed independently with individual goals established for each process. In most cases, quantifiable goals can be developed for each area including operations, process, product, logistics and the overall facility. For example, how many lines will need to run concurrently in order to meet production goals? How much time does it take for a product to move from packaging to the warehouse or storage facility? Set realistic and quantifiable goals based on your sales objectives in order to design for optimal production efficiency.

3. Function and scope. This step will determine manufacturing concepts and requirements necessary to meet sales goals, including an efficient plant layout for optimal workflow, production process lines and layout, and efficient material handling and distribution. The recommendations set forth in this step will help drive your plant’s master plan based on physical production requirements.

Plant owners often enlist the help of outside consultants when developing a manufacturing plan in order to get an objective perspective on the plant’s current processes. Outside consultants also have the added benefit of being able to share knowledge and case studies from their experience with other food processing plants.

Jonah Petoskey is a project manager at Stellar. This article originally appeared on  Stellar Food for Thought .  Stellar  is a CFE Media content partner.

Original content can be found at stellarfoodforthought.net .

Do you have experience and expertise with the topics mentioned in this content? You should consider contributing to our CFE Media editorial team and getting the recognition you and your company deserve. Click here to start this process.

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Creating a business plan on an annual basis can increase the chances of any small business being successful, and food manufacturing is no exception. A plan for opening a food manufacturing facility is highly detailed, because so many action steps must be implemented on a timely basis to open the facility on schedule. Just as your food recipes describe the ingredients necessary and the proper quantities, your plan shows all the elements that must come together to begin manufacturing your products.also The plan may be required by the state's health department.

Outline the Process

Make a detailed outline of what needs to be done on what dates and by whom. This master task list is the guide to ensuring nothing is overlooked. For example, if the safety and health inspections aren't completed, the manufacturing plant can't start processing, resulting in additional unnecessary expenses.

Funding Requirements and Sources

Most small-business owners don't have the financial resources to completely fund a food manufacturing company. The money has to come from a loan or investors. After the business plan has been completed, you'll know what funds are necessary for the facility, buying equipment and working capital to get the operations to the breakeven point -- where revenue equals expenses. Complete the loan application or investor presentation well before the projected opening date. To cover unexpected expenses, it makes sense to add in a contingency factor of about 10 percent to the projected capital requirements.

Build Out the Facility and Install Equipment

The warehouse or other building has to be built out or customized for the specific type of food manufacturing process. Equipment depends on what food product is being manufactured and could include conveyer belts, ovens, cooking vats, storage, temperature control instruments, refrigerators and freezers. Packaging and packing equipment are required as well. Install any computer systems to regulate the manufacturing process, inventory control and financial programs. Schedule a time for building, safety and health inspections of the facility.

Hire Staffing and Management

Workers should be hired in just enough time to train them on the manufacturing process but not too far in advance of the actual opening date. Otherwise, staff won't have anything to do but still will have to be paid. Management should be hired in advance of opening to assist with ordering and installing equipment, selecting vendors and hiring employees. Check with the heath department of the state, county or city to see what testing or certification food workers require.

Select Material Vendors

The raw materials -- ingredients for your food product -- have to be ordered, as well as packaging and packing materials. As a precautionary measure, it's a good idea to research backup vendors as well as primary vendors. If the primary vendor can't fill the order for whatever reason, the manufacturing process doesn't slow down. Compare prices as well as delivery fees and purchase terms.

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Brian Hill is the author of four popular business and finance books: "The Making of a Bestseller," "Inside Secrets to Venture Capital," "Attracting Capital from Angels" and his latest book, published in 2013, "The Pocket Small Business Owner's Guide to Business Plans."

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Food Manufacturer BUSINESS PLAN

CLARENCE PRATT ENTERPRISES, INC.

14001 Western Hwy. Salt Lake City, UT 84101

This plan for an established minority-owned food manufacturer seeks to expand the distribution of its products within the U.S. military, to build brand equity in retail distribution, to expand the company's product line, and to continue a promotional program. Action steps include featuring company products on the founder's talk show, directing donations to nonprofit youth groups, and donation and promotion programs with the U.S. Defense and Commissary Agency.

EXECUTIVE SUMMARY

Introduction, proposed transaction, summary financial information, key investment considerations, summary financial projections.

Clarence Pratt Enterprises, Inc. is a minority-owned Utah Corporation founded and owned by Clarence Pratt, a graduate of the University of Vermont. The company was incorporated May 24, 1994. To date Clarence Pratt Enterprises, Inc. has developed a line of products marketed under the Clarence Pratt's Original™ brand that are in distribution in the military resale market through the Defense Commissary Agency and in retail distribution in Lindstrom's, Abner Stevens, and Fosters Food and Drug Centers. The company's military distribution is accomplished through a contract allowing access to the market for the company's approved products.

Progress to Date and Recent Accomplishments

The company has quality product formulas, contracted co-packing arrangements, an established network of authorized military distributors, brokerage representation in the military resale market, regional retail, and arrangements with Save-Mart in place.

The company holds a Resale Order Agreement (ROA) with the Defense Commissary Agency that provides access to the market for the company's products. The commissary market averages $5.4 billion in grocery sales annually. There are 300 stores systemwide.

The company, with its ROA, has approved distribution of three products nationwide, four products worldwide, and sixteen products regionally.

The company has established distribution of five products in the Utah Region of Abner Stevens.

The company has established distribution in Fosters Food and Drug Centers Utah division, with product approved for systemwide distribution into 159 stores.

The company has an established retail distributor in the Gulf Coast region of Florida, with four products.

The company is in the final stages of approved distribution in Save-Mart.

Clarence Pratt's Original Products

Barbecue Sauce Spicy Barbecue Sauce Honey Mustard Teriyaki Glaze Roasted Garlic Marinade Sweet & Sour Sauce Salsa Disposable Aluminum Baking Pans Bean Coffees Spices Potato Shells Fresh Pasta FastBind Doodle Stick Pasta Sauce Mixes Chocolate Truffles

The company has established distribution in the Utah Division of Lindstrom's with five products.

Major food manufacturers and corporate co-promotion partners, such as The Shaker Foods company and Foods America, support and participate in the company's cause-marketing programs because they feel it is the right thing to do. Shaker Foods provides advisory consultation and Foods America offers ongoing promotional support of the company's products in military distribution. These relationships are rewarding for both parties.

Foods America is developing a fat-free bacon product, which they will manufacture, market, and distribute under the Clarence Pratt's Original™ label. This type of relationship is consistent with the company's programs. Other companies are suggesting similar types of programs.

A number of high-level industry and commissary marketing executives have expressed a desire to join the company.

Mr. Edward Maas is a national spokesperson for the youth at risk program associated with the company's marketing program.

Proposed Transaction

The company is currently seeking to fund further development of its existing military distribution to market the company's products and build brand equity in retail distribution, expand the company's product line with higher margin products, and carry on an advertising and promotion program to drive and stimulate product sales.

The company projects sales levels in year one of $2,968,389, year two sales of $6,508,268, year three sales of $8,421,342, year four sales of $8,972,021, and year five sales of $9,421,639.

Marketing Strategy

The company has a three-faceted marketing strategy. A national strategy, a retail strategy, and a military resale strategy, based on cause-marketing.

The company's national strategy encompasses "The Clarence Pratt Show™" a topical 30-minute talk show.

The company's retail strategy is to direct a donation of 3% of gross sales to nonprofit groups working to stem the gang problem through interfacing with the stores, the community, and the consumer, who can make a difference.

The company's military strategy encompasses the donation program, as well as promotion periods established by DeCA headquarters.

The company's cause related marketing program centers around the donation of 3% of the company's gross revenues to nonprofit organizations that are helping to fight gang problems in markets where the products are sold. For retail distribution, youth at risk boards are being formed to help determine the recipients of the donations. In the military, the Armed Services YMCA's national and branch offices are our youth at risk boards.

Clarence Pratt, president of the company, also hosts a solution-based television program, "The Clarence Pratt Show™" that promotes the products and establishes strong name recognition and production positioning in markets where the show airs.

The company's innovative cause-marketing program and solution-based television and radio programs position it to garner and secure considerable support, including:

• Retailers foregoing slotting fees
• Retailers foregoing initial free distribution of products
• Retailers either reducing allowances or allowance periods
• Marketing programs and in-store mandatory promotions not required

Television and radio stations offer opportunities to air public service announcements relative to the company's products and youth at risk programs, the cause-marketing program, and charitable donation aspects of the program. The FCC also requires stations to air and support minority and youth-based programs through airing of specific information about specific organizations and or programs that impact the community they are licensed to serve.

Growth Opportunities

Government regulations provide that government entities and companies that do business with the U.S. government are required to purchase and do business with minority-owned companies. This meets this requirement.

The company will vigorously participate in all bidding and "RFP" (Request for Proposal) opportunities to increase and diversify the company's sales activity. These opportunities will come through the Armed Services Support Center (DPSC). This organization is responsible for all troop and support provisioning, worldwide.

Federal acquisition requirements provide for contracts set aside for minority-owned small business and minority preference contracts. Minority preference contracts provide for 10% price advantage over non-minority bidders.

The company has the opportunity through its military broker to penetrate other areas of the military resale marketplace, including the exchanges of all the services.

Key Investment Considerations

The company's strategy of contracting product manufacturing, allows it to operate with smaller staff levels than would be required if the company did its own manufacturing. As the company is able to penetrate additional markets, the costs of operation will increase at a substantially lower rate than revenues will increase.

The company has the ability to increase its margins through negotiation with additional manufacturers and suppliers of products.

Clarence Pratt, president and founder of the company, has consistently demonstrated his ability to implement his vision. Mr. Pratt's unique abilities to attract and develop experienced and skilled management support, secure contacts and contracts, and market his products and company is a great asset to the fast growth of the company. The company's current market penetration is the result of Mr. Pratt's efforts.

Due to the nature of the commissary market and the entry requirements, the company and Mr. Pratt, because of his unique abilities, are constantly presented with new opportunities relating to products and companies wishing access to the commissary market. Each opportunity is evaluated on its merits and its compatibility with the current operations of the company.

The company has filed an application for the 8(a) program which, when approved, will provide a basis for increasing sales, with lower costs, and provide minority preferences for potential contracts with many areas of government purchasing.

The company is pursuing Friendly Inns of America International Corporation for institutional distribution of its products. Friendly Inns of America Corporation is developing a "Market Place" concept to increase its utilization of small businesses in its purchasing. This program will also allow small businesses to purchase goods at the same price that Friendly Inns of America International does.

The company is also working with Friendly Inns of America International as a potential subcontractor for responses to "requests for proposals" from the government. For example, the company is pursuing a "Prime Vendor" contract for Guam.

Clarence Pratt Enterprises, Inc. is a minority-owned for profit Utah corporation, founded by Clarence Pratt. Incorporated in May 1994 to engage in the private labeling of food and food-related products, the company markets 40 products under the Clarence Pratt's Original™ brand.

The company has established distribution as follows: seven products in the Defense Commissary Agency (DeCA), five products in Lindstrom's (Utah Division), seven products in Fosters Food and Drug Centers, six products in Abner Stevens (Utah Division), four products in Top Savings (Gulf Coast of Florida), and sixteen products authorized for Save-Mart.

The company has established contracted manufacturing arrangements for production of the company's products. The company has established worldwide brokerage representation to all elements of the military resale market through R.J. Steele Company of Daytona Beach, Florida. The company has established brokerage representation at Save-Mart and regionally in retail to coincide with its retail distribution.

The company, through its founder, Clarence Pratt, has established significant relationships in its distribution channels. This has created additional opportunities for the company to expand its distribution, increase sales of its products, and through funding implement strategies to achieve projected sales and profitability levels. Mr. Pratt has also developed relationships in several arenas important for the company, including political, government, business, media, and community.

Mr. Pratt hosts "The Clarence Pratt Show™," a weekly 30-minute talk show focusing on solutions to the issues that affect all communities across America. While this show has been on the air longer than the company has been in existence, the affect it has on the company's products and the potential for relationships that benefit the company is significant.

The company was publicly launched on May 27, 1994 with a widely attended press conference and announcement in the Mayor of Provo's office. Attending were representatives of the Governor of the State of Utah, the Attorney General of the State of Utah, and many other dignitaries.

The company's pourable (liquid) food products are based on family recipes of Mr. Pratt. The company contracts for manufacturing as there is an abundance of manufacturing capacity available, the capital costs are significantly less than instituting the company's own manufacturing, and the company has more flexibility with new product development.

The company's central marketing program is cause-related to youth at risk. The company donates 3% of its gross sales (which translates to 50% of the profits from the sale of the products) to nonprofit groups working with youth at risk. This 3% is factored into the pricing of the company's products and is calculated in addition to gross margins on the products. The company has aligned itself with the national Armed Services Youth of Faith Association for distribution of the donation from the company's military commissary distribution. The company's youth at risk program has in part been the reason major manufacturers, such as Foods America and The Shaker Foods company, have supported the company's military distribution through participating in advertising support, or through co-promotions (see Marketing). The company's youth at risk program is also presented to retail grocery chains, as a cause-marketing program, and has, in effect, persuaded retailers to participate by waiving traditional slotting fees and merchandising programs.

This ability to impact this important issue from a positive perspective positions the company distinctly apart from its competitors. Through inclusion of retailers and other participants into the program, the consumer motivation to purchase the company's products is enhanced and translated to these participants. This is true of the company's products and "The Clarence Pratt Show™," which helps television and radio stations meet their programming mandates and is a motivator for them to participate.

The company is minority-owned, which accords the company certain benefits in relation to sales activities with the U.S. government, including potential set aside contracts and minority preferences in purchasing. The company's thrust in this area is directed at the Armed Services Support Center, in Pittsburgh, which is responsible for purchasing all manner of materials, food, and food-related products for provisioning of active duty personnel.

The benefits of cause-marketing and the company's youth at risk program come from the passion of the founder, Clarence Pratt, to make a difference. Knowing that literally no neighborhood in America is exempt from gangs, knowing that solutions come from positive efforts, Mr. Pratt has taken the youth of America as a goal, and through Clarence Pratt's Original™ products and "The Clarence Pratt Show™," he is building a strong foundation for profitability and positive change.

This cause translates directly to benefits for the company. Retailers have waived slotting fees; corporations like Foods America and The Shaker Foods company have taken an active part in helping to establish the company's business. The company's products are advertised in "The Clarence Pratt Show™." The company's promotional activities are enhanced through the youth at risk program with co-demos and co-promotions with complimentary products, thus reducing the cost to the company and through donated assistance in promotions, i.e., Foods America meats for sampling.

The effect of the company's cause-marketing on the consumer is positive. The company's product labels carry the following statement: "3% of gross sales (which translates to 50% of the profits from the sale of the products) are donated to nonprofit groups working with youth at risk." In 1994, Seehaver Worldwide, Inc., a preeminent research company and Keye/Wilson Communications completed which is commonly called the Keye/Wilson Study of the power of cause-marketing on consumers' buying habits.

The foremost guiding findings that emerged from the study were that "consumers believe that business has a responsibility to help improve social ills" and "consumers respond positively with increased brand equity and sales to companies that practice cause-marketing sincerely." Key to the results of the study is the effect of what Keye/Wilson calls "Influentials." These are people who by their nature, income, education, and circumstance affect others.

The company has advantages in its products and distribution. Having access to the military commissary market and the contacts to expand products in distribution in this market is an important aspect to securing new business, new revenue streams, and avenues of profitability. This market averages $5.4 billion in sales annually, ranking it as one of the largest grocery chains in America. The company is also moving to tap the very large Armed Services Support Center market. This agency is responsible for purchasing all materials, food, and food-related products for support of active duty personnel, worldwide. The company is also moving to tap the military base exchange marketplace, with products for this distribution channel.

The company anticipates, through funding, significant growth in its retail distribution within its current distribution channels—i.e., Lindstrom's, Abner Stevens, Fosters Food and Drug Centers, Top Savings, and Save-Mart—increases in its military distribution, and in penetration of other market segments.

From the beginning, Mr. Pratt has successfully sought the advice and help of others to develop Clarence Pratt Enterprises, sell his products, and further his ideas to help youth at risk. For example, Senators Alan Bennett and Robert Thatch were instrumental in making introductions to appropriate persons in the military commissaries (administered by the Defense Commissary Agency, DeCA). In addition, past Representatives Smathers and Hanusik supported the company's entree into the commissary market. Senators Thatch and Bennett are members of the New Challenges Honorary Advisory Board.

With its youth at risk program and through Mr. Pratt's efforts, the company has developed significant co-promotion and advertising support from major food manufacturers, such as Shaker Foods and Foods America, a regional Venture Cola bottling company, and Mountain Bank U.S.

Clarence Pratt Enterprises, Inc. has developed high quality products, which together with its innovative marketing program have resulted in the products' rapid sale into military commissary, military exchange, and retail grocery outlets.

To enable the company to develop these profitable distribution channel relationships, along with its favorable manufacturing, brokerage, and distributor agreements in successfully exploiting the company's market opportunity, CPS is currently seeking $1,000,000 of equity funding.

The funds will be used primarily to provide working capital and to implement programs to drive sales of the company's products in its established lines of distribution. See the attached financial statements (additional detail is available upon request) and the Summary Financial Information section, which follows.

Common Stock Investment

Voting Rights—The stock will be Class A voting stock and will be entitled to one vote for each share of stock.

Distribution Rights—The stock will be co-equal with existing shares held by Mr. Pratt.

Exit Strategy—It is anticipated that the company will do an initial public offering of its stock within the first five years. The company also believes that it will receive attractive buyout offers due to its ability to penetrate retail and especially government markets on behalf of the acquirer. (The company has and expects to continue to receive numerous requests for help in obtaining distribution of other companies' products—especially in government organizations.)

The company's founder and president has demonstrated ability to obtain distribution in military and retail markets for the company's products. Clarence Pratt has also negotiated favorable manufacturing and distribution contracts and developed substantial financing and marketing support from retail grocery chains, manufacturers in the food industry, and politicians and government. Clarence Pratt Enterprises, Inc. is demonstrating that it is the company for the next millennium.

The proposed financing is to accomplish the following:

• Marketing and advertising to increase and drive sales in established commissary and retail grocery markets. Increased volume in sales through commissaries and retail grocery chains.
• Increase gross margins on the company's products through reducing costs of production of the company's pourable products.
• Open distribution in military exchange markets, including Army, Air Force, Navy, Marine Corps, and Coast Guard.
• Develop vendor status in institutional markets, including the Defense Personnel Support Center, the government agency responsible for purchasing of all materials for support of active duty personnel and their dependents. Other distribution channels include food service suppliers, such as Food Monarch and Friendly Inns of America, etc., and federal and state prisons.
• Open new retail market areas, through placement of "The Clarence Pratt Show™" in new markets (see Marketing).
• Bring to market new products and product lines with higher gross margins and introduce these products to the company's established lines of distribution.
• Position the company to take advantage of marketing opportunities for current products and to take advantage of new product procurement.
• Develop infrastructure and supplement management team to bring the company through breakeven to profitability.

The company enjoys several competitive advantages that are either unique to the company or unique to its markets.

• A significant portion of the company's distribution is in a "protected" market, the Defense Commissary Agency. This vital market is not widely known and many medium sized and large companies do not market their products in this channel. The commissaries account for approximately $5.4 billion in sales per year, ranking it as the ninth largest grocery chain in America. Unlike retail grocery, entry into the military commissary market is based on approval of a company's product(s), program, and pricing structure. The goal and mission of the commissaries are to provide their patrons (active duty personnel and their dependents, reservists, and National Guard personnel, and retirees) with quality products at the lowest possible price. Shelf pricing generally must be between 25% and 40% less than the same product on retail grocery shelves to be considered for placement in distribution. Distribution in this channel requires selling product(s) into the system at DeCA headquarters in Arlington, obtaining authorized military distributors to serve the bases, and obtaining authorized military brokerage to serve the bases. Companies who desire can field a direct sales force to supplant the military broker. However, with the exception of perishable products, authorized military distributors, who are independent businesses, not affiliated or aligned with the Defense Commissary Agency, must deliver all products to the base. The number of distributors has recently decreased through acquisitions and mergers, in effect, lessening the opportunities for new products, or new entrants into the market to obtain distribution, even though they may have products authorized by DeCA headquarters.
• With the company's ability to utilize contracted manufacturing and with the company's ability to be a conduit for other company's products into the DeCA system, the company has the advantage of flexibility in its products offered. Uniquely positioned in the military, the company can offer other companies products under the company's contract. This is accomplished under the most favorable possible terms negotiated with each company.
• The company's youth at risk program and its donation of 3% of gross sales to nonprofit groups working with youth at risk, position the company to request and receive accommodations from retailers in foregoing traditional slotting fees and participation in mandatory marketing programs. This significantly reduces the cost of entry for the company. The consumer can react positively to the company's marketing program of its donation to youth at risk. When price and quality are equal, consumers will choose the product that is identified with a cause that they care about, according to the definitive study of cause-related marketing conducted by Keye Wilson Communications and Seehaver Starch Worldwide, a preeminent market research firm. (See Marketing.) The company's competitive advantages, management team, cause-marketing program, and established distribution position it very well to obtain significant profitability through the proposed funding.

The company in its operating history has not shown a profit, as its funds and efforts have been directed at building the product lines and completing development of manufacturing, logistics, transportation, and distribution strategies. There are numerous factors contributing to the operating strength, stability, and exceptional potential growth of Clarence Pratt Enterprises, Inc.

The company's contract with the Defense Commissary Agency (DeCA) provides for the company's access to the commissary market. Only contract holders are authorized to distribute and sell products into the commissary system. The commissary, while like a grocery store, is primarily an important benefit to armed services personnel, their dependents, and retirees, as they can buy food at significantly reduced cost. The contract is not product specific. Products are approved separately. The company can therefore include new Clarence Pratt's Original™ products and/or new products of other companies under its contract. This flexibility will provide for excellent future growth of the product lines of the company, both its own brand and others, as entry into the commissary system is not easy, or profit-driven, and harbors pitfalls for most companies, including brokerage, distributors, and the system of doing business with the military.

The grocery market is large, stable, and showing recurring long-term growth. In 1994 the grocery market was estimated at over $71.6 billion dollars in sales. At the end of the fifth year of operations in this plan, the company projects penetrating less and .03% of this market. Thus, the growth potential in this distribution channel is favorable.

The company principal, Clarence Pratt, has the ability to develop relationships with key individuals and groups that result in numerous and potentially profitable business opportunities for the company in both established lines of distribution and potential lines of distribution.

The company's food products are attractively packaged and manufactured to the highest quality standards. The products are also competitively priced and the company has developed strategies for lowering the costs of production, while not diminishing quality, in order to expand the company's profit margins.

Minority ownership of the company, that meets the federal guidelines, permits the company to participate in various small business and small disadvantaged business programs in various areas of the government market. These include, but are not limited to, the Defense Personnel Support Center (troop provisioning), the General Service Administration (operation of government-owned facilities), and the Department of Justice (federal prisons).

Privately and publicly held corporations often are required to do business with small business and small disadvantaged businesses. As there are relatively few minority-owned companies operating successfully in the food industry, especially in the military resale markets, the opportunity for increasing product lines, sales, and profitability is inherently excellent.

The company's central cause-related community-based marketing program and its donation of 3% of its gross sales to nonprofit groups fighting the gang problem, is a significant marketing strategy. Not only has the company garnered support due to the program from the retail marketplace, food industry and food-industry related companies, such as The Shaker Oats Company, Foods Midwest America, and Venture Cola, have provided marketing and advertising support to the company's products. This support reduces the cost of doing business in the company's distribution channels.

Current management has developed the company's product, infrastructure, and business relationships to get the company to this point. It is anticipated that additional management personnel will be hired and utilized to further the company's strategy of meeting its distribution and product sales goals.

The market conditions under which the company operates, and has operated, have been favorable and it is anticipated to remain so. The company, with funding, will increase it sales and take full advantage of the distribution channels and products established, through increased marketing efforts.

The company's products have been well accepted by the consuming public. The consumer needs to be further educated as to the cause-marketing program of the company. While the Keye Seehaver Study shows the positive bottom line effects of cause-marketing, the consumer must be informed to make the right choice. With funding, the prospects for mid-term and long-term growth are excellent.

Market Analysis

The company's two primary distribution channels—retail grocery and military resale—are similar in that they both resell the company's products, however, the similarity does not continue with the business systems used by these two distinct groups. It is important to understand the system as it relates to marketing to judge the merits of the programs and funding allocations in this business plan.

The most significant difference between the two is that retail is profit-driven and the commissary segment of the military resale system is not, while the Exchange segment of the military resale system, is only marginally profit-driven.

Retail generates revenue from consumer sales and from manufacturers in the form of slotting fees, price allowances, promotional programs, mandatory marketing programs, discounts, incentive programs, and free distribution of product. Thus, entry into this channel is traditionally beyond the financial capability of most small businesses, on other than a limited basis or on a local distribution basis only. The company, with its advantageous youth at risk program, can enter retail without these costly programs.

The commissary sells products to the consumer at the cost it buys the products from the manufacturer, plus a 5% surcharge to cover overhead. DeCA operates from appropriated funds and the revenue generated from the surcharge. DeCA's mission is to provide the patron, active military, dependents, and retirees with the highest quality and lowest cost products. It is not profit-driven. With active competition from discount stores, Save-Mart, and other retail giants, DeCA's growth is certain through its legislated status.

The buying habits of the commissary shopper are beneficial to the company. The commissary shopper often only shops once per month, unless they live on base or within close proximity. It is not uncommon for a customer to drive hundreds of miles to shop at a commissary. Often, rather than buying one of a product, the consumer will buy a month's supply or more at one time.

The commissary market has stabilized and the patronage of the system by authorized consumers is expected to increase. The commissary system has undergone rapid changes, including category management and performance based operation, since its inception only six years ago. At that time the individual commissaries of the U.S. Army, U.S. Navy, U.S. Marine Corps, and the U.S. Air Force were combined into one operation. The same type of consolidation is occurring with the exchanges. The U.S. Army and U.S. Air Force consolidated some years ago.

The fact that the company has obtained distribution in several retail chains without paying slotting fees, or participating in free products programs or mandatory marketing programs, has been to the advantage of lower costs of entry into these distribution channels.

Marketing of the company's products is essential to the continued success in these channels. The company's cause-marketing program is best suited to independent marketing of the Clarence Pratt's Original™ brand, rather than as one of the many participants in store marketing programs. The company does participate in in-store couponing and demo programs.

There are important differences in the makeup of the consumer base of the company's two main channels of distribution that require two approaches.

The consumer base for retail distribution is literally everyone within the local trading area of a grocery store. The consumer base for the military is limited. However, sales from the total authorized commissary and exchange shoppers exceed their small numbers.

The commissaries, with a total of approximately 300 stores worldwide, typically rank as the ninth largest grocery chain in America, with approximately $5.4 billion in annual sales. The number one grocery chain, typically either McSweeney's or Stores U.S.A., have 2,000 plus stores producing $22 billion in sales. Each commissary sells approximately 38.8% more per stores that the leading chains.

One factor that can account for this difference is that within the military resale consumer base are two different elements. First the active duty and dependents either live on base or within close proximity. If the base is located within a populated area, as most are, then they have a choice whether to buy their groceries down the street at the local store or go to the commissary. Retirees on the other hand, will drive many miles to shop at the closest store and will likely purchase more products per shopping trip than they do when they shop at a grocery store.

Product Marketing Strategy

Product formulations, production, distribution, and sales into distribution channels are only part of the process of the success of the company. Once the products are on the shelf, marketing will drive sales to reach projected sales levels.

The company has a three-faceted marketing strategy: a national strategy, a retail strategy, and a military resale strategy, with the national strategy having positive impact on the other two.

National Strategy: "The Clarence Pratt Show™"

This weekly 30-minute, fast-paced, entertaining and informative talk show, is the company's national marketing vehicle. The show has been on the air in the Intermountain market for seven years. It is growing in popularity and this plan calls for expansion of the airing of the program into other markets. Clarence Pratt hosts the program. Clarence Pratt's Original™ products are showcased in the shows. There are cooking segments, using Clarence Pratt's Original™ products in the shows, as well.

This program can have more marketing impact, more impact on product sales, and opening new distribution than any other potential national program, including a national media blitz campaign.

The Clarence Pratt Show™, like the food products, began as an effort to bring about positive change in America's communities. The show has grown and evolved into one of sufficient prominence to become regional and even national in scope. The program serves several needs that make this happen.

First, the television stations of America must show that their programming meets the need and necessity of their broadcast areas, to either obtain or keep their broadcast licenses. Therefore, meeting the Federal Communications Commission's regulations and requirements are important. Stations must ascertain the issues of importance to stations and broadcast programming to meet these needs. Stations must air programming for children and stations must air programming for their minority communities. These are mandated requirements. The Clarence Pratt Show™ meets these requirements.

The show is offered on a barter basis to the stations. This means that the stations receive the show, via satellite, with half the commercial time taken, and half available to them to sell, with no cost for the production of the program to the station. This is important, as other than local news operations, stations have a difficult time producing local programming of note. Most have weekend shows, hosted by either reporters or weekend news anchors, talking about various charity events in their communities. The Clarence Pratt Show™ offers a viable alternative, with shows on topics that can bring positive change to the station's audiences and solutions to the issues. The show adds to the effectiveness and impact of the company's cause-marketing program.

Solutions to the issues that affect our community are presented on the program. The show topics shown below are representative and are the most recent 13 program series produced (11/97).

Show Topics

Youth Support Programs

• Successful methods of turning youth from gangs.

Chamber of Commerce

• Resources for vital information and business assistance.

Teen Pregnancy

• Successful solutions, focusing on prevention and education.

National Academy Group

• Solutions in schools to bridging the gap between academia and work reality.
• Solutions to local issues through the Mayor's office.

City Councils

• The most power rests here. Solutions to gangs, youth problems, community involvement from this perspective.

What Are Our Differences?

• Through the talents of "Boys to Females," a performing female impersonator group, solutions to understanding and accepting differences, while recognizing that we're really all the same.

Republicans and Democrats

• The philosophical differences between the two and how are solutions presented through the party system.

TV—Who Does It Serve?

• Does TV meet our information needs or are we mesmerized by the sensationalism of the news and hypnotized by the entertainment programming? What is TV's role?

U.S. Women Business Owners Organization

• The fastest growing segment of small business—someone has developed solutions to the glass ceiling.

Children's Justice System

• Revolving door? Successful solutions for youth continually going in and out of the system, with no redirection to the positive.

Community Affairs

• Solutions from county government, local charities, and media.

The benefits to the company from "The Clarence Pratt Show™" are significant, and include:

• Significant host recognition transferring to product image
• Builds brand awareness
• Develops commitment to cause-marketing program
• Advertises the products in use
• Advertises the youth at risk program
• Develops broad based community support for the products and program
• Generates revenue
• More effective and less costly than regional/national media campaign

Retail Strategy

The strategy is to direct 3% of the gross sales of the products to nonprofit groups working with youth at risk, in an effort to stem the rising tide of gangs in America. The company uses a cause-related marketing strategy, for two reasons.

The company was founded with one barbecue sauce developed from an old family recipe by Clarence Pratt. The idea came from a need to fund the television show, then called "New Challenges," and on public broadcast television. With the intensely competitive donation solicitation market often barring media applicants, and with having to compete with community groups that the show served for funding, Clarence Pratt thought there had to be a better way. Thus, the barbecue sauce was born.

Grocery stores are members of their communities. They are affected by the rapidly rising gang problem in America, with shootings in their parking lots, rapid rising in pilferage, and shoplifting. They would like to do something about it and consumers would like to do something about it. Clarence Pratt's Original™ products and the grocery store can provide them a way.

The company positions itself, both to store and consumer, as a method to help the youth of the community. While unique, this strategy is effective when it is sincere.

In 1994, Keye/Wilson Communications and Seehaver Worldwide, Inc., a preeminent research firm issued the "Keye Seehaver Study" of the effects of cause-marketing on consumer buying habits. Their foremost finding was that "'consumers believe that business has a responsibility to help improve social ills," and that consumers respond positively with purchases from companies that practice cause-marketing sincerely.

Given that quality of the product and price are equal, the graphic below illustrates the Keye Seehaver finding for how likely consumers are to switch brands, they will also switch stores to meet their need. This is important for stores in their decision to take Clarence Pratt's Original™ products.

The 3% donation, which is detailed on product labels, all marketing and advertising materials, all publicity, and all information used or sent by the company, is what allows the consumer to participate and is central to the marketing strategy.

The declaration on the product labels reads:

3% of the price (which translates to approximately 50% of the profits from the sale of these products) is donated to military youth and nonprofit groups helping youth at risk" in your community.

The retail strategy also includes traditional marketing methods used in innovative ways. Because of the donation from the sale of product, television and radio stations have run public service announcements emphasizing the youth at risk aspects of the program. The program is ideal for interfacing with local community groups much in the same manner as the company has done with the Armed Services YMCA program (see Military Strategy).

Other elements of the retail strategy are:

Product Demonstrations

Co-promotions, in-store couponing, store circulars, electronic media.

The donation is accomplished through local boards comprised of community, business, government, and education leadership. The boards determine which group(s) receive the allocated donation by their effectiveness in doing the job. There is no grant or application procedure, although direct solicitation is not discouraged.

"The Clarence Pratt Show™" affects the retail strategy in that the celebrity status of the host—the transference of image to the products and the community-based nature of both the products and the television show—reinforces product marketing and influences retail grocery chains to take Clarence Pratt's Original™ products, when they might not otherwise have.

Military Strategy

The cause-marketing strategy and the 3% donation are also effective in the military. The company has aligned itself with the national Armed Services YMCA program as both the recipient and determinator of which of the many deserving Armed Services YMCA programs receive donations from the company.

Due to the distinctly different nature of the commissary shopper, the company's strategy is to direct its marketing efforts at the authorized patron, and in locations and through means that reach them specifically. The strategy is to utilize a mix of traditional with innovative uses of media.

Elements of the military strategy are:

Base Newspaper Advertising

Deca specific promotional, definition of retail and military elements.

Product demonstrations are serving sample portions of the products in the store to the consumer. Often a 25-cent coupon that is only immediately redeemable is used. The military allows for and the company participates in setting minimum case purchases for demos. The company currently has a 5 case per product minimum for demos.

Through relationships developed by Clarence Pratt with major corporations, the company undertakes co-promotions with other manufacturers. For example, Foods America is a copromoter of the company's products and annually participates in a holiday promotion with Clarence Pratt's Original™ Disposable Baking Pans in the military. The company is talking with other corporations to develop a cross-couponing program.

The company uses 25-cent-off discount coupons affixed to the bottles or shelf (in pads) to help drive sales.

The company, in retail, participates with 25-cent coupons in the stores' shoppers guides and/or direct-mail newspaper inserts.

The company uses radio advertising to promote its products in retail. Radio is also used to reinforce store-specific promotions and promote the company's products through its youth at risk program.

There are approximately 120 newspaper publications that are targeted at readers around specific military bases of all services. These papers report on the local military community and happenings on or in the base community. The readership is very high among authorized commissary and exchange patrons. There is a prohibition regarding advertising prices of products offered in the commissaries and exchanges in any public media. The company has advertised its youth at risk program and the product image and will continue to do so.

DeCA headquarters establishes two-week promotional periods, most of which are theme-related and that carry specific pricing promotional requirements. The company participates in these programs, where they are beneficial to the company. The company participates in the holiday promotional period, which is a 60-day promotion. DeCA promotes primarily based on price. The pricing structure of the system includes VPR (Variable Promotional Pricing), when required or used by a manufacturer the regular price is lowered during the promotional period. There is usually a functional minimum of 15% reduction for a 30-day period required to participate. The company also uses coupons to drive sales during promotional periods.

Marketing Budget Elements

The plan calls for expending the following budgets in advertising, promotion, and demonstrations. It should be noted that "The Clarence Pratt Show™" is included in the budgets for advertising.

Demos are included for both retail and military distribution, as found in previous sections.

The budget for promotions will be expended on an as-needed basis that is determined by the events and retail distribution channels. The same is true of co-promotions.

Co-promotions and promotional events especially tailored to the distribution channel, incorporating the youth at risk program and coordinated with the company's brokers, are the main thrust of the promotional program. Initial entries into new markets include press conferences announcing the products and youth at risk program.

The company has established products in established distribution channels. Funding is needed to support the marketing programs as previously outlined for the company to drive sales to projected levels.

There are a number of positive factors relating to the company's position that are not reflected in the analysis in the marketing section. The most important in this regard is the company's attractiveness to other companies as an outlet for access to military distribution with products they wish to put into the military resale system.

The marketing analysis is based upon what is currently in-house. As the company and its founder Clarence Pratt attract significant opportunities on a regular basis, it is pertinent to assume that the profit potential possibilities through marketing new products, whether private, labeled, or not, and/or services, and accessing new less costly lines of distribution, i.e., the Armed Services Support Center, will play integral roles in developing the company's positive financial picture.

The attractiveness of the company's youth at risk program generates interest from companies wishing to co-promote their products and/or become involved in solving the gang problem. The food products and the television show, as the major marketing thrust of the company is unique in the industry and positions the company to control its destiny.

The company produces its products in three ways. The company's pourable food products are produced under contract, using the company's formulas and quality control mechanisms. The company purchases private label Clarence Pratt's Original™ products from manufacturers, as in the case of Clarence Pratt's Original™ Disposable Baking Pans. And third, the company puts other companys' products under its contract with the Defense Commissary Agency, or under its representation to the military resale market for exchanges.

The company currently negotiates the most favorable terms possible for the purchase of the products. This is usually 30 days and sometimes longer, if the company's creditor is willing to allow for the cash flow cycle in the military. With funding, the company anticipates to seek out and secure other sources of contract manufacturing of the company's products. The logistical and bottom line benefit of shipping the products only the shortest distance possible will accrue to the bottom line.

While the company maintains an account with a reputable commercial warehouse to store products, orders to either distributors or customers are produced to order and drop shipped.

The following are the resources and or sources of products marketed by the company:

Clarence Pratt's Original™ Products

Private Label Food Manufacturer GB Great Foods, Portland, Maine Remarkable Foods, Grand Rapids, Minnesota Sun Burst, Boise, Idaho Private Label Disposable Baking Pans FoilRite Private Label Pastas and Sauce Mixes Natalina's Premiere Pasta Spices Natalina's Premiere Pasts

Products Marketed by Clarence Pratt Enterprises, Inc.

Fast Bind Fast Bind Enterprises, Phoenix, Arizona Yummy Bite Dog Biscuits Joan's Products, Kansas City, Missouri Cookware Greg's Marketing Group/Direct Europe, Orlando, Florida Crank Case Aid A1 Quality of Redding, California

Distribution and Brokerage

The Defense Commissary Agency requires manufacturers to participate in their distribution system. This means that a company has to have a business relationship with independent distributor(s), authorized by the system, and representation by authorized military brokerage or a direct sales force, to meet the distribution sold into the Marketing Business Unit in Arlington, Virginia. The company has established relationships with some of the top military distribution companies, including the following and the territories they serve:

Southeastern U.S. and Central America Top Savings Military, Savannah, Georgia Northeast Atlantic Region Byrd Lowrey, Emmittsburg, Massachusetts Central Atlantic Region and Europe Armed Forces Distributors of Virginia, Norfolk, Virginia Central States and Midwest Orrion Tackett, Springfield, Illinois Hayden Aaron Sales, Lubbock, Texas G&A Distributors, Norman, Oklahoma C&D Distribution, Kansas City, Kansas Byrd Lowrey Denver, Colorado Southwest Desert Wholesale, Socorro, New Mexico Southwest, Northwest and Pacific Rim Wagner Military Distribution The company is represented by the following brokerage firms, and the territories they serve: Military Resale Market World Wide Sisson company, Daytona Beach, Florida Retail Grocery Young Brokerage, Provo, Utah Moscow, Idaho, Tempe, Arizona, and Socorro, New Mexico Save-Mart, Sam's Clubs HCS, Hope, Arizona

Transportation

Wherever possible, the company utilizes minimum order quantities for a freight discount. The company has negotiated discount tariffs with Greene Freight and Continental U.S. Transport, to transport products nationwide.

Product and Cash Flow System

To date, the company has put into place all of the ingredients for a successful operation, with the exception of the funding. Accomplishments include the following:

• Established channels of distribution through which: (1) its products have been mandated to be carried and sold, and (2) favorable shelving space has been obtained. The company has existing agreements with both military and retail grocery chains that alone would enable it to attain the sales projections represented in the accompanying financial projections.
• The company's youth program has been embraced by its customers as providing a benefit over and above the profit potential represented by the company's products.
• A business concept that enables the company to operate with a small organization with minimal fixed costs.
• Profitable contracts with reputable manufacturers that provide significant contribution towards the company's profitability.

The management of the company has more than 75 years of combined experience in developing contacts; selling products; staffing, organizing and developing start-up organizations; and accounting and management information systems. Mr. Clarence Pratt, a minority executive, has particular expertise in generating and utilizing support for his causes and companies.

A major advantage of the company derives from the fact that it contract manufactures its products. As a result, the organization initially will be very small, consisting of a president, an operations manager, a part-time financial manager, two administrative people, a retail sales vice president, and in a year, a military resale markets sales vice president. Mr. Pratt will continue to develop relationships with various military and retail organizations. The sales vice presidents will also be responsible for expanding sales. Mr. Perkins will come on board full-time when warranted.

Clarence Pratt, Jr., President, is the founder and developer of Clarence Pratt's Original™ products. He has a B.A. in Business Administration from the University of California at Berkeley. With 25 years of experience in advertising, marketing, and developing products and programs, Mr. Pratt has a proven ability to develop and organize sales programs that work. His entertainment and television production experience has helped him in impressing others with the benefit and opportunity that his products and companies offer. In addition, his remarkable vision has enabled him to identify opportunities presented by others' products and ideas, such that others have repeatedly requested his assistance in developing their opportunities. Mr. Pratt serves on numerous boards and committees and is able to use his contacts to put together coalitions that develop solutions. He has also formed numerous partnerships with other companies that have resulted in support of his products.

Russ O'Leary, Vice President of Operations, studied political science and philosophy at the University of the South. Mr. O'Leary has 25 years of experience in distribution management and planning, marketing, and advertising. He has had profit and loss responsibility serving as a branch manager, where he increased sales and related distribution by over 50% in one year. He also served as director of traffic of a common carrier, where he increased sales and distribution by 700% over a 7-year period. This distribution experience has served him well in assisting to put CPE supply agreements in place. His experience in media has helped him to develop an understanding of product positioning. As Mr. Pratt's partner, he has participated in the development of the program since its inception, including developing the business concept and preparing the business plan, designing and developing product labels, coproducing PSA's and other company videos. He has also assisted in developing and setting up the distribution network for the company's products. In conjunction with Mr. Pratt, he prepared the pricing model used to set competitive prices and helped negotiate with manufacturers.

Gregory S. Perkins, Chief Financial Officer. An M.B.A. and a CPA with a B.A. in physics, Mr. Perkins has 25 years of experience in all aspects of financial operations, including 7 years living and working overseas. During 15 years with Intercontinental Corporation, he was CFO of a foreign subsidiary, and as an operations consultant, he developed and sold to senior operating and staff managements over $42 million of profit and controls improvements. As an investment banker he developed $300 million in debt and equity funding for small and medium-size companies. As Executive Vice President and CFO, working with a company suffering significant losses and a severe cash shortage, he cut expenditures and controlled cash outlays to attain profitability. He has developed strategic plans for dozens of different companies in diverse industries and has developed and implemented management information systems, budgeting procedures, and internal controls. He has implemented cash management systems, developed and maintained banking, auditing, and legal relationships. He has extensive experience in contract negotiation and administration.

The following information is an overview of our financial projections.

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Central AeroHydrodynamic Institute (TsAGI)

Established in 1918, Central AeroHydrodynamic Institute (TsAGI) is an aerodynamics specialist research centre based in Zhukovsky, Moscow Region. TsAGI was founded by N.E. Zhukovsky, as a research and development institute aimed at structural design, pilot production and testing to improve aerodynamics, Flight dynamics and Flight control systems for military and commercial applications. It has been involved in the development of Tupolev, Antonov, Ilyushin and Sukhoi aircraft programmes.

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