Comprehensive Financial Plan for GingerJam: Organic Jam Business Strategy

Overview

This is a financial plan for a company known as GingerJam that will specialize in ginger and orange jam production. GingerJam will be based in the US during the first two years of operation. In addition, the company aims to expand its production sites in the UK in the third year of operation. The jam production will be 100% organic as the orange and ginger fruits will be directly acquired from farmers available locally. The processed ginger and orange-based jam will be sold on a retail and wholesale basis. The vision of the Jam company is to be the best jam production company in the US with a mission of offering the best quality in terms of products and services. The objectives of the company include attracting and retaining as many customers as possible, offering the best organic jam product in the market, providing quality services, making high profits, and expanding the business to other countries. The company’s core value is based on performance excellence, teamwork, and integrity.

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Sources of Funding

GingerJam company requires $10,000 as the starting capital. The business aims to source 50% of its funds from personal savings. 40% of the capital funds required to establish the company will be from bank loans whereas the remaining 10% will be from family and friends’ donations. Regarding the expansion of the company’s production sites in the UK during the third year of operations, the capital funds will be sourced from the profits generated during the first two years of its operation in the US.

Profit-and-Loss Statements (3 Years)

GingerJam’s profit and loss statements during the first three years will be based on the company’s yearly financial report on revenues and expenses. The major categories based on revenues and expenses that will determine the profit and loss statements include revenues generated from sales, costs of sales, taxes, salaries, and marketing and advertising costs (CFI, 2022). The first year of GingerJam operation will entail high expenses based on the projected high cost of advertising and marketing the product to potential customers. Social media platforms and celebrities will be used to advertise the products with the costs estimated to be $1,000. Expenses based on the cost of sales are estimated to be $5,000. Expenses based on taxes, insurance, and salaries are estimated to be $4,000. The estimated revenue to be generated from jam product sales is estimated to be $20,000. During the second year, the profit is projected to increase due to a decrease in expenses in relation to marketing as well as the cost of sales. During the third year, the company is not projected to receive any profit as expenses will increase based on establishing production sites in the UK.

Project Revenue

In regard to the projected yearly profits, the company is expected to grow during its second year of operation. During the second year of operation, the company will have attracted many customers, increasing product sales during that fiscal year. In addition, the cost of goods sold as well as the cost of marketing is expected to drop during the second year, increasing the profit gains. However, the company is not expected to grow during its first and third years of operation as most of the resources will be focused on establishing production sites, distribution channels, and marketing and advertisements so as to attract potential customers.

Estimate Direct and Indirect Costs

The estimation of the direct cost is based on direct materials that entail the cost of acquiring orange and ginger fruits from local farmers as well as the transportation costs of acquiring and distributing the jam products (Adamowicz, 2018). The direct labor involved in production and distribution. The direct cost for the production of 1 kg jam product is estimated to be $3 whereas its indirect cost in regard to factory equipment and maintenance cost is estimated to be $5 selling price is estimated to be $10. One unit of 1 kg GingerJam will be sold at $10. The company is estimated to make a profit of 2$ per unit of 1 kg during its first year as represented in table 2 below.

Table 1: Estimate of direct and indirect costs per one unit of 1 Kg

 Conclusion

GingerJam is a jam production company to be based in the US during its first two years of operation. The company will expand by establishing production sites in the UK during the Third year of its operation. The company is expected to make the highest profit during its second year of operation. The first and third year of the company’s operation is projected to have high expenses due to high indirect costs in infrastructure investments in the US and in the UK. The company aims to attract and retain customers by focusing on quality Jam products from natural fruits as well as offering high-quality service delivery to its suppliers, farmers, customers, staff, and all relevant stakeholders involved.

References

Adamowicz, M. (2018). Long-Term Financial Forecasting as a Part af Strategic Planning in Local Government Units. Olsztyn Economic Journal, 13(4), 357-374.

CFI. (2022). Profit and Loss Statement. https://corporatefinanceinstitute.com/resources/accounting/profit-and-loss-statement-pl/