A Junior Achievement Company
Executive Summary
Floral Ink was established as a Junior Achievement Company in the fall of 2003. The company has an executive consisting of a President, VP Finance, VP Marketing, VP Production, VP Human Resources, and VP Information Technology. This executive will be responsible for the management of the company on behalf of its 32 shareholders. The company employs each of the shareholders in various capacities.
The company was established to produce and sell flower pot pen sets (its only product). Sales will be accomplished through special selling events (i.e. trade shows) and direct employee sales. It is expected that most sales will be household based in the local Dartmouth area with some potential for commercial business customers. Consignment to other retail businesses will be explored.
A main goal of the company is to produce a useful and quality product. The product being produced meets that goal. It is practical, useful, aesthetically pleasing, and reasonably priced. A market assessment was completed which suggested the product could expect to generate a reasonable amount of sales for both personnel use and as gifts.
The company will initially be financed through the sale of 32 common shares with a par value of $5.00 each ($160.00 of equity). This financing will be sufficient to start up the company. Therefore, additional financing is not anticipated.
A break-even analysis was conducted by the company and will continue to be updated at weekly meetings by the VP Finance. This analysis determined that 169 units would need to be produced at an estimated cost of $2.71/unit and sold at a selling price of $10.00/unit to reach break-even. The sales goal for the company is established at 300 units. At this level of sales, it is predicted the company’s net earnings will be $413.00, resulting in earnings of $12.90/share.
The company has set an attendance goal of 85%. The VP Human Resources will endeavor to motivate all company employees to accomplish this goal. A web site will be developed by the VP Information Technology and will be on-line.
The following reports by department VP’s detail the company’s business plan.
Mission Statement
“Floral Ink intends to manufacture a quality and useful product that will be in demand. The company will strive to maintain employee dedication and interest while increasing their involvement and business knowledge. In return, the company will reward its employees with salary, commission and a high return on shares. The company aims to be the top Junior Achievement Company in Nova Scotia.”
To accomplish our mission the following goals have been established:
· To maintain attendance of at least 85%
· To produce and sell 300 units resulting in a share value of $17.90/share
· To keep company members informed and involved in the business
· To have repeat customer business and no defective products
· To receive recognition through Junior Achievement company and individual awards
The following product company slogan has been developed:
“Need a pen? Pick a flower!”
Management Team
Floral Ink will be established as a shareholder owned company. The company has an executive consisting of a President, VP Finance, VP Marketing, VP Production, VP Human Resources, and VP Information Technology. This executive will be responsible for the management of the company on behalf of its 32 shareholders.
The executive positions are filled by the following individuals:
Position |
Name |
Junior Achievement Experience |
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President |
Matthew Ryan |
Second Year in Company Program Second Year on Executive Committee |
|
VP Finance |
Chantal Matthews |
Third Year in Company Program Second Year on Executive Committee |
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VP Marketing |
Kyle Boutt |
First Year in Company Program First Year on Executive Committee |
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VP Production |
Shayla Fitzsimmons |
Third Year in Company Program Third Year on Executive Committee |
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VP Human Resources |
Katrina Collins |
Third Year in Company Program First Year on Executive Committee |
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VP Information Technology |
Matt Chaisson |
Second Year in Company Program First Year on Executive Committee |
The executive of the company is experienced and reliable, most having participated in the company program for two or three years.
Company Product
Floral Ink will produce a pen set consisting of 3 pens decorated as flowers contained in a flowerpot. Red kidney beans will be used to imitate the soil. The choice of flowers and flower color can be customized to meet the consumer’s request. In addition, the consumer can select the choice of pen ink and flowerpot color.
This product is a novelty item as opposed to a consumer necessity. Therefore, the product must be aesthetically pleasing, useful and reasonably priced. To our knowledge, this product will be unique to the market in the local area.
Customers buying this product will have a frequently used and everyday item conveniently located at their home or work place. The pens included are less likely to be misplaced or dislodged due to their modified design and dedicated storage area. In addition, the product will add to the décor of its surroundings. The ability to customize the product may be of interest to the customer.
This product can easily be produced, in-house, by the company employees at a low unit cost.
Marketing and Sales
The target market of Floral Ink will primarily be females of all ages at all education levels. The product is inexpensive and makes a great gift, so there is no limit to any consumer group. Everyone could use this product because it will make finding a pen easier when one is needed. Our product will allow consumers to keep their pens in one location. Others may be reluctant to take them because they are clearly not theirs due to their unique design. Market research allowed the company to draw the above conclusions.
We will be promoting our product at banks and trade fairs by placing sales booths at these locations. We will attempt to have signs placed in some local craft stores. The marketing budget is fifty dollars and is being spent on necessary marketing supplies and on sales initiatives for employees.
Our market is not overly price-sensitive. The product’s price could possibly be reviewed and adjusted at a later stage if deemed necessary. We have no direct competitors, although we must compete with all craft stores.
We have initially established a selling price of ten dollars per unit. This price was established by a break-even analysis conducted by the company along with market research. We concluded that the price could be between ten and fifteen dollars and the market would buy it. We choose ten dollars thinking we could make more sales with a lower price. Approximately 169 units will need to be sold at this price to break even. The company has established a sales goal of 300 units. A revised break-even analysis and product cost will be conducted if initial assumptions change.
We will mainly conduct sales through direct door-to-door marketing, however we will make some sales through trade fairs and craft shows. We intend to have some products on consignment at local craft stores. Additionally, there may be some corporate sales.
We have multiple sales initiatives in place. A commission of ten percent of the selling price will be paid on personal sales. We will be having two sales initiative draws. Our first draw will be for ten dollars of movie money after the Christmas season. The second draw will be at the end of the program and will be for twenty dollars in movie money. Each sale made by a non-executive associate is worth one ballot for that associate in the draw. As well, an employee’s sales will be a factor considered when the company decides on the representatives we will be sending to Junior Achievement’s Atlantic Conference in St. John’s, Newfoundland in the spring.
We intend to conduct one sales training module before the JA trade fair. Another training session will be held after Christmas so our sales personnel are able to compete in a more difficult market after Christmas.
Production
During the coming fiscal year, Floral Ink, a Junior Achievement Company will manufacture quality Flower Pot Pens.
Flower Pot Pens require the following tools and materials for manufacturing.
Tools: 1 Hot Glue Gun
14 Paint Brushes
4 Water Buckets
Materials: 8-inch ceramic flowerpots ($0.63 per unit)
Tole paint of various different colors ($0.12 per unit)
Water-based varnish ($0.69 per unit)
Green floral tape ($0.06 per unit)
Red, blue and black pens with removable ends ($0.10 per unit)
Fake flowers ($0.17 per unit)
Red kidney beans ($0.80 per unit)
Glue sticks for the glue gun ($0.01 per unit)
Ready supplies of the above materials exist at various local retailers. The company will utilize a computerized inventory system.
An assembly line is used to manufacture the Flower Pot Pens, with seven different stations. They are as follows:
Station #1 The ends are removed from each of the pens.
Station #2 Green floral tape is wrapped around the pens. Halfway down the
pen the tape is cut and a flower leaf is added. The rest of the pen is
then covered with the green floral tape.
Station #3 The top of the flower is glued onto the pen where the end was
removed.
Station #4 The pots are painted in various colors and styles (some are solid,
some are sponged, etc.)
Station #5 The pots are varnished. Fifty percent are painted and then
varnished, while the other fifty percent are varnished unpainted.
Station #6 The final product is put together. The kidney beans are added to
the pot and three pens are placed in it.
Station #7 The products are inspected for quality, and if deemed fit, they are
labeled with a JA sticker. If deemed unfit, they are sent back to the
assembly line to be fixed.
By using the assembly line approach identified above, we expect to produce forty units each week. At that production level, a ready supply of product will be available for sale. At twenty-five units per week for twelve weeks of production, the supply for the sales goal of 300 units can be met. Should demand for the product fluctuate then production levels will be modified accordingly.
The total cost to make one Flower Pot Pen is $2.58, however, an additional five percent was allotted for scrap, such as broken pots or dead pens, and purchase of required tools. With the addition of five percent, the cost to make one unit is $2.71. To sell 300 units, we will require $813.00 to purchase raw materials. The product will be sold for ten dollars each.
Human Resources and Compensation
The company has an executive consisting of a President, VP Finance, VP Marketing, VP Production, VP Human Resources, and VP Information technology. This executive will be responsible for the management of the company on behalf of its 32 shareholders (executives are also company shareholders and included in this number). The company also employs each of the shareholders in various capacities.
The salary for the executive committee members will be $2/session (one session/program week). Wages for production workers and sales staff will be $0.50/hour during session time. If an employee does not attend a session, they do not earn their salary or wage for that session. Any employee who works overtime to attend a company sales event or extra production meeting will earn $0.50/hour. We have budgeted 120 overtime hours during the course of the program.
The following details our wage budget assuming 100% attendance:
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Wage Type
|
Quantity |
# of Sessions |
Wage Rate |
# of Hours |
Wage Budget |
|
Executive |
6 members |
14 |
$2.00/session |
|
$168.00 |
|
Director |
26 members |
14 |
$0.50/hour |
2 |
$364.00 |
|
Overtime |
|
|
$0.50/hour |
120 |
$60.00 |
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Total Budget |
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$592.00 |
In addition, direct personal sales by employees (including executive staff) will receive ten percent of the sales price in commission.
Staff will be trained for the various roles they will fulfill in the company. The production of the product will mostly involve manual labour with limited skill requirements and little training (all production will be supervised by the VP Production). Additional roles will include sales and management (executive staff). The VP Marketing will offer sales training internally. Management training will be conducted externally at a Junior Achievement training session. Additional training will be conducted as needed internally.
An attendance goal of 85% has been established. The VP of Human Resources will be responsible for employee motivation, attendance records, and payroll. An employee’s attendance will be a factor considered when the company decides on the representatives sent to the Junior Achievement Atlantic Conference in St. John’s, Newfoundland in the spring.
The VP Human Resources will also act as the corporate secretary (i.e. maintaining shareholder list and share sales). During capitalization of Floral Ink, 32 shares were sold at a par value of $5/share ($160 equity financing).
Information Technology
The importance of IT is increasing and is becoming more and more relevant as more people are connecting to the Internet. In terms of this company, this tool is impractical for generating sales, as too many security risks are present. However, the Internet can prove invaluable in communicating information to the public about Floral Ink, our product, and Junior Achievement.
The company’s web site will be located at http://www.geocities.com/jafloralink/. Company information can be attained at the web site including our business plan, information on our board of directors, as well as an open forum which can be used for any and all inquiries. The VP IT intends to take full advantage of technology in hopes of catapulting Floral Ink to success.
Finance and Budget Forecast
Floral Ink will raise its initial capital through share sales to each of its company members. These funds will be used to start up the company.
Floral Ink will operate a bank account at Scotiabank. Both the VP Finance and the President will have signing authority on company cheques and all cheques must be signed by one of the above as well as by one Company Program Advisor.
The company will strive to maintain a positive cash flow and the VP Finance plans to use both paper and computer tools to keep accurate financial records.
The following break-even analysis shows that Floral Ink will break-even after achieving sales of 169 units. This analysis assumes perfect attendance for all company members. If attendance is less than 100%, the break-even point will be reached with fewer unit sales. This analysis will be updated weekly to provide the status of operations to all shareholders/
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Break-Even Analysis |
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Projected Costs to Week 18 |
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# of |
# of Weeks |
Wage |
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Members |
Remaining |
Rate |
Total |
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Wages |
26.00 |
14 |
1.00 |
$364.00 |
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Salaries |
6.00 |
14 |
2.00 |
168.00 |
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$532.00 |
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Overtime |
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60.00 |
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JA Fees |
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394.00 |
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Marketing Supplies |
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50.00 |
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Scrapbook |
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25.00 |
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Total Costs |
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$1,061.00 |
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Gross Margin Per Unit |
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$6.29 |
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Unit Sales Required to Break Even |
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169 |
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Gross Margin Per Unit |
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Selling Price |
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10.00 |
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Commission - 10% of selling price |
-1.00 |
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Unit Cost Per Item |
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-2.71 |
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Gross Margin |
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6.29 |
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The following is a projected income statement assuming Floral Ink will make its projected sales goal of 300 units. At this level of sales, the company will make a net profit of $413.00 resulting in earnings per share of $12.90.
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Floral Ink |
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Projected Income Statement |
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For Period Ending Week 18 |
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Sales Income (300 units @ $10/unit) |
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$ 3,000.00 |
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Cost of Sales |
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Materials (300 units @ $2.71) |
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813.00 |
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Salaries and Wages |
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532.00 |
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Overtime Wages |
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60.00 |
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1,405.00 |
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Gross Profit |
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1,595.00 |
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Expenses |
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Achievers Commissions |
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300.00 |
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JA Period 1 |
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80.00 |
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JA Period 2 |
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170.00 |
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JA Period 3 |
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144.00 |
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Marketing |
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50.00 |
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Scrapbook |
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25.00 |
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Total Expenses |
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769.00 |
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Net Profit Before Taxes |
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826.00 |
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50% |
JA Profit Tax on Income |
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413.00 |
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Net Profit |
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$ 413.00 |
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Earnings Per Share |
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$ 12.90 |
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Share Value |
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$ 17.90 |
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Floral Ink - A Junior Achievement Company. Special thanks to Scotia Bank for their Support.