liquid butter

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I have the business plan, but i just need the financial work, and i already have some numbers, but it’s not complete, so i just need you to fill it as much as you can, starting from page 9

Liquid butter

Our business, is being started in April, 2015. We are selling a healthy liquid butter

product. Right now, we have one employee and ourselves involved in this business. We are

located in Burnside, Nova Scotia, in the heart of the industrial park. With this business plan, we

are hoping to get an investment, totaling, for a 33% share in our company.

For our business, we are going to be selling an alternative to margarine and solid butter in

a liquid form, calling it. To create awareness of our product, we are going to be doing many

demos around local grocery stores, so people can not only taste our product, but they can also see

many interesting ways the product can be used. The product’s popularity has been growing as

people are considering it a perfect substitute for solid butter and margarine, which have been in

use since the ancient times. Liquid butter has some advantages over other alternatives that are

making it popular. Firstly, the cost of liquid butter is lower as compared to that of margarine and

butter. Consumers always seek to acquire the maximum value of their money. Consumption of

the liquid butter implies that consumers are in a position to obtain the same satisfaction at a

lesser cost. The product has lower fat content making it better than other alternatives in the

perspective of health implications. Of late, people are more concerned with what they eat and

they are avoiding consuming fats as much as possible. Using liquid butter is a good way of

avoiding fat in food and still experiencing the satisfaction that is comparable to that of

consuming margarine and butter. Liquid butter is also easy to use, making it preferred to

margarine and butter. Our profit will be fully made from the sales of our product to stores across

Canada. This business is going to start as a partnership, with hopes of growing into a corporation

in the coming years. Within 5 years, we hope to have reached a personal sales goal of

$7,500,000, and have our business operating everywhere across Canada within 10 years of

opening.  Halifax is the best location in Canada to launch a product in the category of liquid

butter. It is the capital city of Nova Scotia and one of the most densely populated areas in Canada

(Hargreaves, 1999). It, therefore, provides a concentrated market that is ideal for a business

The food industry is one of the biggest industries in the world, and while there are many

changes taking place every year, it is one industry that will sustain itself for many years to come.

In Canada, there was an average of $5,754 spent on food in 2013, not including restaurant

purchases, and this was increased almost $200 from the previous year, indicating that Canadians

are increasing their spending every year. Of this $5,754, over a fifth was spent on products such

as ours, with a total of $1,378 being spent on “other” food purchases. (Government of Canada ,

2015) In Nova Scotia, the average spending was just under the Canadian average, at $5,306 per

household being spent annually. However, when looking at the “other” category, you find that

the total being spent on this is $1,355, only $23 less than the Canadian average, meaning that

Nova Scotian’s are spending quite a bit in this area. (Government of Canada, 2015) When it

comes to trends in the food industry, many things are coming and going all the time. Whether it

is the gluten free trend, the natural food trend, or the antibiotic free trend, the trends that come

and go all seem to have the same goal, and it is to make consumers healthier. Since the late

1990’s, all food trends have seemed to have that common goal, and there is no immediate

The food industry definitely has different market structures. There are restaurants who

could buy food products, grocery stores, convenience stores, and of course, end users, which can

also be segmented. From naturalists, to those who purchase a lot of processed foods and anyone

in between. We are going to specifically target the consumers who are trying to purchase healthy

alternatives to their favorite comfort food. This is one of the biggest target markets in the end

user segment. Everyone wants to eat healthier, and with many local grocery stores starting to

implement new strategies to offer a cheaper, healthier array of foods, it is the best time to target

Our company will be the producer and distributor of this product. We will be the sole

producer of the product, and we will then go to local stores such as Sobeys, Superstore, and

Walmart to get our products on their shelves. From there, we will keep a good relationship with

these stores so it will open up sampling and demo opportunities. Many other companies in our

industry are structured very similar to ours, with them being the main producer and having an

ongoing relationship with local stores to have their products promoted.

As mentioned in the above section, we have chosen to target consumers who want to live

a healthy lifestyle, and be able to buy products that taste like their favorite comfort food, but in

reality, is good for them. Consumers in this target group exist all over North America. There has

been such a health craze over the last 10 years that almost everyone has been part of this segment

at one point or another. However, as a general rule, they tend to usually be the typical soccer

mom type. They want the best for their family, and they need to find healthy alternatives that

their kids will eat. Like any segment, there are outliers from the norm, which as of late, have

included males and females aged 20-30, who want to eat healthy, but still want food that isn’t

bland. It is a growing segment, with people of all ages and walks of life joining in daily. These

customers usually are the customers who have a specific grocery day, where they will buy their

groceries for the week, however will usually end up in a grocery store almost every day of the

week. If they are truly part of the segment, they usually don’t care how much a product costs, as

Halifax has a population of 414,400 while areas within a radius of one hundred

kilometers from the city have a population of around 140,000 (Zimmerman & Brash, 2007).

Considering the population of the surrounding areas is essential as a substantial proportion of

residents of these areas do their shopping in Halifax. The market area of the new product is,

therefore, comprised of the Halifax population plus the surrounding areas. Chances of capturing

a sustainable market share are high as customers are concentrated in one location. A new product

is likely to gain acceptance very fast as the distribution channels are already established. There

are popular retail outlets that carry operations in the area. These outlets can be utilized to

facilitate full market exploitation. There are also large restaurants capable of buying liquid

Sales for the market area refer to the total sales of liquid butter products in Halifax and its

outlying cities. Data concerning the sales of liquid butter products is not available from the local

authority. However, total sales in the market area can be computed using the per capita sales of

the entire province (Zikmund & Babin, 2013). Enquiring from the necessary consultants revealed

that the total annual sales of liquid butter in the Nova Scotia region are $1 442 000. The province

has a total population of 921,727. The per capita sales are computed as the total sales divided by

the total population (Zimmerman & Brash, 2007); $1 442 000 divided by 921,727 results to

$1.56. Calculating the size of the market involves adding the total Halifax population and the

proportion of the surrounding population that shop in Halifax. Consulting the relevant experts

revealed that around twenty percent of people living out of the municipality, but within a radius

of one hundred kilometers purchase in the city. The total population living within this radius is

140,000. Twenty percent of this population is 28,000. It means, 28,000 of people living outside

the Halifax municipality purchase in the city. The market potential for this population is

computed by multiplying 28,000 by $1.56 (per capita sales) that results to $ 43 680. The market

potential for Halifax is calculated by multiplying the area’s population by per capita sales

(414,400* $ 1.56) that result to $646,464. The total market potential comprise Halifax market

potential plus the market potential for areas surrounding Halifax ($646,464 +$ 43 680), which is

Currently, there are eight producers of liquid butter and among them two are spray bottles

that are substantially similar to the product being introduced. The estimate is that the total selling

space of the existing firms is 13000 square meters. The proposed manufacturer will have a

market space of 1000 square meters. The market share is the proportion of the new

manufacturer’s area as compared to the total space of all players in the market. The total selling

space in the market after the entry of the new firm will be (17000+1000) = 18000. The market

share of the new producer is 1000 divided by 18000, which is 0.0556 that is equivalent to 5.56

percent. The market share needs to be adjusted as new products encounter difficulties in the

market (Bell et al., 2001). The product will be competing with reputable brands and may take

time before gaining widespread acceptance. The most probable market share is 5 percent that

considers the difficulties encountered during the entry stages.

The success of the product will be determined by the realities in both internal and

external environments. SWOT analysis involves evaluating the company’s strengths,

weaknesses, opportunities and threats (Hill & Westbrook, 1997). The process involves assessing

the organization’s internal and external environment. Analyzing the internal environment leads to

the revelation of strengths and weaknesses. The internal environment includes factors that are

within the firm’s boundaries. Factors in this environment can be influenced by policies and

Evaluating the new company’s internal environment leads to the identification of some

strengths and weaknesses. Firstly, the company has sufficient resources that increase its ability to

respond to competitive forces. The availability of finances will enable the company hires

competent employees. A number of competitors lack a sound financial base and may fail to

address competitive forces adequately. The management team also consists of highly competent

individuals, who can support formulation of quality strategies.

Weaknesses: the workforce is not very conversant with the liquid butter market. It may

take a considerable duration to master the trends in the industry. The launching of a product in an

environment characterized by competition requires investment in information management. The

company needs to be aware of the competition and the conditions in the environment. It is

obvious the company possesses less information as compared to other players in the industry. It

means that such players have an advantage over the enterprise.

Analyzing the external environment facilitates identification of factors that present

opportunities and threats to the company. The external environment involve micro and macro

environment. Microenvironment entails elements that are close to the organization. Micro

environmental factors are unique to an industry, meaning that the factors in consideration are

only relevant to firms operating in the liquid butter sector. The macro environment entails factors

affecting all companies in an economic system. Macro environmental factors are general factors

such as economic, social, legal, political, technological and global factors, both micro and macro

environmental factors, present opportunities and threats.

The industry comprises firms, which have been selling liquid butter for a considerable

duration. The first movers invest heavily in research and development. This investment aimes at

ensuring the product on offer is in line with the market expectations. They also invest in the

creation of distribution infrastructure aimed at ensuring the free flow of products from the

manufacturers to the target consumers. The fact that eight firms have been serving liquid butter

market in Halifax implies that they have set a stage for newcomers. The company has the

opportunity of avoiding some costs incurred by the first movers. The development in technology

presents an opportunity of perfecting organization’s processes. New inventions in information

communication technology can be exploited to support the free flow of information in the

organization’s processes (Valentin, 2001). Other technologies can be used in the improvement of

product quality, as well as a reduction in production costs. Social environment presents an

opportunity to the company as the society is becoming more conscious about healthy eating.

Emphasis is being put on avoiding foods containing high levels of fats, sugar and other

chemicals that have adverse implications for people’s health. It, therefore, means that the market

for liquid butter is likely to increase. Such an increase presents an opportunity of increasing the

The economic environment presents both opportunities and threats to the company.

Trends in economic conditions have implications for the people’s purchasing power. A condition

of depression reduces the people’s purchasing power while a boom increases (Valentin, 2001). It

means that the company’s sales will be pegged on the prevailing economic conditions. The

international environment presents a threat to the new company. The Halifax municipal authority

allows both local and foreign companies to serve the market without restrictions. It implies that

the company is facing both local and international competitors. The high level of competition

can compromise the firm’s ability to penetrate the market. The legal environment keeps on

changing, and such dynamics may affect the firm negatively. Industries operating in the food

sector are highly regulated to ensure safety of consumers. Legislatures and other policy makers

focus on creating laws that govern the conduct of producers to ensure unhealthy products do not

find their way to the market. Failure to comply with the established legal framework leads to

high legal costs (Dealtry, 1992). The legal environment, hence, presents a threat to the company.

The marketing mix is comprised of marketing variables that are combined to form the

marketing strategy. The four main components of the marketing mix are price, product, place,

and promotion (Bowman & Gatignon, 2010). The marketing mix adopted should consider the

conditions in the external environment, as well as the company’s internal threats and

opportunities. First, in the price variable the company should pursue a penetration strategy.

Market entry strategies can be either skimming or penetration (Richter, 2012). Skimming

strategy involves introducing the product at a high price to enable the company to realize

maximum returns. Penetration strategy is concerned with introducing the product at a low price

to encourage product acceptance. The firm should adopt a penetration strategy where the product

is launched at a relatively lower price. This strategy will enable the firm to capture a large market

The product variable should be an integral part of the firm’s market entry strategy. The

company should invest in research and development to ensure the product is of high quality. It

should be packaged in different sizes to enable the firm serve different market segments

comprised of both gross and light consumers. The packaging should be captivating with an aim

of capturing the attention of potential and actual buyers. There should be information systems,

enabling the firm to gather customers’ opinions concerning the product. Such opinions should be

incorporated in customization of the product. The firm should strive to create a product that

match or beat the quality of competitor’s products.

Place variable should also be given emphasis when formulating the marketing mix.

Place/distribution considers how the product flows from the producer to the consumers (Bowman

& Gatignon, 2010). The industry has functioning distribution channels that the company can

utilize. Investment in the creation of distribution channels should be avoided as it would amount

to duplication of resources. The company should identify major retail outlets and liaise with

them in delivering the product to different customers. Where applicable, the company should

lease shelves in the main retail outlets with an aim of popularizing the product among the

retailers’ customers, and also to ensure product availability.

Promotion variable is a critical component of the marketing mix. Promotion is the

process of communicating persuasive information to actual and potential customers (Bowman &

Gatignon, 2010). The market is not aware of the firm’s product, and awareness needs to be

created. The company should invest heavily in advertisement through the local media. Integrated

marketing should be practiced where only the relevant information is communicated to the target

customers. The company should ensure that the communication of persuasive information

reaches the potential customers to endear the product to them.

The promotion activities should be carried out through the radio and television media.

The first year should be characterized by aggressive advertising through the television and radio

broadcast. The first month after introducing the product should be characterized by more of a

television advertisement. The company should either choose CTV Television Network or CBC

television. In case there are adequate resources, the company should pay for advertisements in

When the products gain substantial popularity, the company should reduce television

advertisement and exploit radio commercial. This move emanates from the fact that television

advertisement is more costly as compared to radio advertising. CBC radio is the perfect radio

advertisement channel as it has many audiences. It is estimated that production of a quality

television commercial done by professional costs more than $10,000 (CTV 2015). The cost of

putting the commercial on the air is determined by its length and the time of putting it on air. A

thirty seconds commercial can work for the company which would cost around $10 000 per day.

The company should, therefore, set aside around $ 4,000,000 for advertising on the radio and

January  February  March April May June July August

$60000 $60000 $60000 $60000 $60000 $60000 $60000 $60000

$300000

$300000

0

$100000 $100000 $100000 $100000 $10000

Free samples $40000 $40000 $40000 0 0 0 0 0

$320000

$316000

0

Decembe

Total

$60000 $60000 $60000 $720000

$225000 $225000 $225000 $300000

0

$100000 $100000 $100000 $120000

0

Free samples 0 0 0 $120000

Total $385000 $385000 $385000 $504000

0

For our business, we have key people we will need to be successful. We need to have an

employee who has a lot of knowledge of the food industry. This person must have knowledge of

the industry we are entering, someone who has previously worked in the industry would be a

preferred person. We will also need someone with extensive knowledge on running a business.

Someone who has a business degree and knows what it takes to start and maintain a small

business. We will also need employees who can make the product and bottle it. While these

employees won’t need to have extensive knowledge on the product, or previous education, it is a

necessity that they have the ambition and drive. As our business grows, we will need to also

grow our employees to include personnel who can maintain relationships with stores we are

selling our product to, someone who is strictly in charge of the marketing, a financial officer as

well as many other business related positions. While we are still in the beginning stages of

running our business, we won’t need to acquire outside personnel for accounting or IT jobs, as

we already have people with those skills, but as our business grows it is definitely something

Our main supplier is going to be Farmers Dairy, located in Bedford. By having a local

supplier, it will allow us to market our product as a local product, which is another selling point.

Also, by having a supplier so close to our manufacturing facility, it will really cut down on the

delivery charges. As of now, we haven’t had conversations with potential back up suppliers,

however it is something worth looking into in the near future, as our company grows. Our

inventory is going to be stored right in our manufacturing facility. Our product will be made of

real butter, so it will be perishable, and will have to stay refrigerated, but our facility will have

the capacity to store product when need be. We hope to perfect an inventory system where we

only have what we need on hand, so we eliminate the chances of losing our inventory. We hope

to be able to implement a system where the companies who sell our product can get on an

ordering schedule so we can track what we need and when we need it. When we first start up, all

our sales will be through stores, so we will be selling to the stores on a credit account. We are

offering a 30 day payment period on all credit accounts, and hope that once we are an established

business we can offer a 10% discount to any customer who pays within a 10 day period. Like

most businesses, we are hoping to have a 100% pay rate, but if we have a supplier who doesn’t

pay, we plan to contact the customer, and if we still don’t receive our payment, they will not

receive any more product, as well as any legal action we must take. We must follow proper food

safety regulations, and all employees of our company will be required to take the appropriate

food safety courses. Since we are dealing with a perishable product, proper guidelines must be

Our business will be located in Burnside, Nova Scotia. We chose this location because of

the close proximity to our customers, as well as our supplier. Also, since it is an industrial park,

it is the perfect place to start a manufacturing business. Although it isn’t cheap, in the long run it

ends up being the perfect place for us. We do have one main competitor near us, although they

aren’t a direct competitor, Saputo. Since they have recently purchased a main competitor of our

supplier, it could turn into an alternative supplier in the long run. Due to the nature of our

business, location wasn’t overly important to us. Our biggest thing with our location was making

sure it was close enough to our supplier that delivery charges wouldn’t get too expensive. This

location will cost us $1.2 million to purchase, but it is a  17,000 square foot warehouse, which

would give us room have our refrigerated section, our manufacturing floor, and have office

spaces, some of which we can rent out to help cover costs. (General Realty , 2015).

Other Current Assets __________

Other Fixed Assets ___________

Total Fixed Assets. __________

Long-term Loans Payable 20,000

Other Long-term Liabilities ____________

Retained Earnings ____________

Total Equity __________

Balance Sheet Year End (Year 1) (Insert Date)

Other Current Assets __________

Other Fixed Assets ___________

Total Fixed Assets. __________

Other Long-term Liabilities ____________

Retained Earnings ____________

Total Equity __________

Balance Sheet Year End (Year 2)  (Insert Date)

Other Current Assets __________

Other Fixed Assets ___________

Total Fixed Assets. __________

Other Long-term Liabilities ____________

Retained Earnings ____________

Total Equity __________

Balance Sheet Year End (Year 3) (Insert Date)

Fixtures 1,200,000

Total Fixed Assets. ___________

Total Assets __________

Total Long-term Liabilities ____________

Total Equity ____________

Total Liabilities and Equity __________

For the One Year Period Ended: April 30, 2016

Cost of Goods Sold ____________

Mortgage 144,493.80

Salaries 25,000

Insurance 1,750

Depreciation expense 5,000

Maintenance 7,000

Advertising 5,040,000

Income Tax ____________

For the One Year Period Ended:  April 30, 2017

Cost of Goods Sold ____________

Mortgage 144,493.80

Salaries 25,000

Insurance 1,750

Depreciation expense 5,000

Advertising 4,500,000

Delivery 250,000

Total Operating Expenses ____________

Income Tax ____________

For the One Year Period Ended: April 30, 2018

Cost of Goods Sold ____________

Mortgage 144,493.80

Salaries 50,000

Insurance 1,750

Depreciation expense 5,000

Advertising 3,000,000

Delivery 200,000

Total Operating Expenses ____________

Income Tax ____________

PROJECTED CASH FLOW                                        YEAR 1 OF OPERATION, Ending: April 30, 2016

MONTH                                   1                2      3        4             5            6       7                8           9              10   11                12

PROJECTED CASH FLOW                                        YEAR 2 OF OPERATION, Ending: April 30, 2017

MONTH                                                 1            2        3         4              5               6                   7      8            9            10                   11          12

PROJECTED CASH FLOW                                        YEAR 3 OF OPERATION, Ending: April 30, 2018

MONTH                                                    1            2       3          4             5                  6   7       8            9            10                 11          12

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