Business Plan

5/1/2013
Montana State University
Tim Reusch, Alex Crosby, and MacKenzie Brosius
Table of Contents
1.0 Executive Summary ................................................................................................................... 4
1.1 Objectives ................................................................................................................................ 5
1.2 Mission..................................................................................................................................... 5
1.3 Keys to Success ....................................................................................................................... 5
2.0 Company Summary ................................................................................................................... 6
2.1 Company Ownership ............................................................................................................ 6
2.2 Startup Summary ................................................................................................................... 6
3.0 Products ....................................................................................................................................... 8
4.0 Market Analysis Summary ....................................................................................................... 8
4.1 Market Segmentation............................................................................................................. 9
4.2 Industry Analysis ................................................................................................................. 11
4.2.1 Competition and Buying Patterns ............................................................................. 12
5.0 Opportunity Analysis and Research ..................................................................................... 13
5.1 SWOT Analysis..................................................................................................................... 13
5.1.1 Strengths ........................................................................................................................ 13
5.1.2 Weaknesses ................................................................................................................... 14
5.1.3 Opportunities................................................................................................................ 14
5.1.4 Threats ........................................................................................................................... 14
5.2 Competitive Analysis .......................................................................................................... 15
5.3 Marketing Strategy .............................................................................................................. 15
5.4 Sales Strategy ........................................................................................................................ 16
5.4.1 Sales Forecast ................................................................................................................ 16
5.5 Milestones ......................................................................................................................... 17
6.0 Management Summary ........................................................................................................... 18
6.1 Personnel Plan ...................................................................................................................... 18
7.0 Financial Plan............................................................................................................................ 19
7.1 Startup Funding ................................................................................................................... 19
7.2 Important Assumptions ...................................................................................................... 21
7.3 Break-even Analysis ........................................................................................................ 21
7.4 Projected Profit and Loss .................................................................................................... 22
7.5 Projected Cash Flow ............................................................................................................ 23
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 7.6 Projected Balance Sheet ....................................................................................................... 24
7.7 Business Ratios ..................................................................................................................... 24
7.8 Long-term Plan ..................................................................................................................... 26
Appendix ............................................................................................................................................ 27
Sales Forecast ................................................................................................................................. 27
Personnel ........................................................................................................................................ 27
Profit and Loss ............................................................................................................................... 28
Cash Flow ....................................................................................................................................... 29
Balance Sheet .................................................................................................................................. 31
Calling Tree Questions ................................................................................................................. 33
IBISWorld Graphs ......................................................................................................................... 34
Survey Results................................................................................................................................ 36
References ....................................................................................................................................... 37

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This is a business plan. It does not imply an offering of securities.

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1.0 Executive Summary
The Hanging Gardens of Babylon were one of the seven wonders of the ancient world. The
gardens utilized hydroponics to create hanging gardens the towered hundreds of feet into the
air. From this, we get our name Babylon Produce. Babylon Produce is a socially conscious,
privately owned, limited liability corporation that is a Montana based hydroponic heirloom
tomato producer. We provide high quality varieties of heirloom tomatoes at competitive market
prices with minimal environmental impact. Current trends show increased demand for foods
that are sourced locally and grown responsibly. Current production methods require tomatoes
to be picked weeks early and shipped vast distances to get to market during the winter months
(Nov-June) in the Pacific Northwest. This method causes tomatoes to lose both taste and
nutritional value while being shipped. The demand for high quality fresh tomatoes does not
diminish during these months, leaving Babylon Produce an opportunity to capitalize on this
gap in the marketplace, because our produce is of higher quality, available year round, and
picked for the best taste and nutritional value.
Revenue will be from prearranged purchasing agreements with regional retailers throughout
Montana and the Pacific Northwest. The purchasing agreements will be negotiated before any
produce is planted. This guarantees that with each additional contract a specified margin can be
achieved by Babylon Produce. We aim to produce at economies of scale to create higher profit
margins. Our goal is to provide an economically viable and environmentally sustainable
business model that provides a proper return for our investors while taking care of the
communities that make us successful. We believe that this will result in Babylon Produce
becoming the leading producer of heirloom tomatoes in the Pacific Northwest.
Babylon Produce has a system of core values that allow us to operate as innovators in the
industry. These include conducting business in an honorable and transparent fashion,
teamwork, stewardship, and sustainability. Sustainability means that we reduce and reuse our
natural resources to improve production efficiency and reduce our environmental impact.
Babylon Produce will be embraced by the community through our efforts of stewardship. We
provide an educational and innovative work environment for our employees, via a variety of
programs working in conjunction with Montana State University that allow employees to learn
new skills and gain valuable industry knowledge while a part of the team at Babylon Produce.

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1.1 Objectives
The objectives of Babylon Produce:
Increase production and sale from 115,536lbs per year to 380,750lbs per year in the first 5
years of operations.
Establish strategic relationships with key distributors, wholesalers, and retailers in
Montana, Idaho, Oregon, North Dakota, Wyoming and South Dakota.
Increase gross margins with each expansion of greenhouse capacity.
Develop dominant market position in Gallatin County.

1.2 Mission
Babylon Produce's mission is to "Be the highest quality and most reliable producer in the eyes of
our customers." We are passionate about responsibly growing the highest quality heirloom
tomatoes that never compromises taste and nutrition. It is important for Babylon Produce
not only to grow a quality product, but also help educate our customers about alternative
growing methods in the mountain west region.

1.3 Keys to Success

Economies of Scale: Reducing average costs by spreading fixed costs over larger production
volumes allows field and greenhouse vegetable growers to be more competitive. These lower
per-unit costs allow farmers to widen profit margins without raising prices.

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Production of premium produce: Farmers who produce premium vegetables can find buyers in
the fresh produce market where prices are highest. Premium goods can also generate brand
loyalty.

Ability to alter goods and services produced in favor of market conditions: The ability to alter
the balance between different crops in response to changes in market conditions is important for
a farm's viability. Farmers need to be able to change their production mix to maximize farm
returns.

Appropriate physical growing conditions: These play a critical role in shaping the success of
growing vegetables. Growing conditions influence harvest levels and crop quality.

Availability of water: Water access issues can affect the quality of harvests. It will be important
that we utilize our water retention system.

2.0 Company Summary

Babylon Produce grows and sells hydroponic heirloom tomatoes, which are vine ripened and
hand-picked. The heirloom tomatoes are packaged and distributed in 10lb cases and sold to
retailers, restaurants, and distribution companies in western Montana. Our customers are
primarily Montana based wholesalers who provide high-quality produce to consumers.

2.1 Company Ownership

Tim Reusch is the founder and will serve as the CEO of Babylon Produce. Mr. Reusch has
received his bachelor's degree in Sustainable Food and Bionenergy Systems with an emphasis in
crop production. He is a current master's candidate at Montana State University studying
Sustainable Food Systems as well. Mr. Reusch's previous hydroponic production experience has
included an internship at Good Life Farms as a production assistant, and at The Land Pavilion
in Walt Disney World as a plant science intern operating a hydroponic greenhouse. Mr.
Reusch's team includes people with extensive knowledge in finance, marketing and business
management.

2.2 Startup Summary

Start-up costs associated with hydroponic greenhouses are asset heavy and require significant
capital investment. The startup expenses are necessary to establish an environment suitable for
production. As soon as the greenhouse is complete, orders can then be fulfilled within the first
few months of production.

These start-up costs include:

Legal

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 Website Construction

Starting Assets:
Land Acquisition
Greenhouse Structure Construction
Greenhouse Environmental Control Equipment
Growing and Delivery Equipment

The funds sought for opening operations with 8 production bays is $430,000 with projected net
profits in the first year of roughly $114,290, a profit margin of 24.7%. The purpose of this
business plan is to secure an initial loan of $107,500 at a return of 15%. This investment will
allow Babylon Produce the means to perform the necessary steps to obtain a $322,500 loan.

Table: Startup
Startup

Requirements

Startup Expenses
Legal $1,500
Website $1,000
Inserted Row $0
Total Startup Expenses $2,500

Startup Assets
Cash Required $15,000
Startup Inventory $0
Other Current Assets $0
Long-term Assets $415,000
Total Assets $430,000

Total Requirements $432,500

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3.0 Products
Babylon Produce will be the sole producer of hydroponic heirloom tomatoes in Montana and
the Pacific Northwest. Babylon Produce will offer three different varieties of heirloom tomatoes
(Pink Brandywine, Cherokee Purple, and Big Rainbow). Tomatoes will be grown in Babylon
Produce's controlled environment production facility. The heirloom tomatoes will be vine-
ripened and handpicked to ensure the highest quality of product for the consumer. Babylon
Produce will focus solely on the production of three varieties of tomatoes to create a simple
business model and focus on growing one type crop well. Future crops of Babylon Produce will
focus on addressing the market demand for other crops that cannot be grown in the production
region year-round.

4.0 Market Analysis Summary

Tomatoes account for 7.6% of the vegetables grown in the US. It is a $1.9B market. The west
purchases considerably more fresh vegetables per capita than the rest of the country.

Demand Influences

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The main factor the influences demand is season. In Montana and surrounding states, quality
tomatoes, let alone heirlooms are scarce. In the summer, with farmers markets, they are much
more attainable by consumers. The demand for tomatoes in the western US is growing 4%
annually. However, the tomatoes will become available in late July and lasting until September
if they are locally produced in Montana. Buying local is an increasing purchaser trend in the
tomato industry, leaving producers to adapt and shift production and sourcing to localized
regions. Buying local is no longer a commodity; it has become a lifestyle habit (Mintel-Oxygen,
2010). "When it comes to buying local vegetables, 44% on average say they usually or always do
so, compared to 51% of those aged 18-24" With that, 41% of people shop at farmer's markets and
36% agree that it is more important to buy local than organic (Mintel-Oxygen, 2011). Currently
there are 2 greenhouses that produce heirloom tomatoes on a commercial scale. In our current
target areas, there are no hydroponic heirloom tomato producers. Our major customers include
vendors and distributors (see attached calling list for potential clients in Gallatin Valley.)

Target Demographics
The demographic for hydroponic heirloom tomatoes cannot be easily defined, accordingly
demographic research was split into search categories. Categories to be studied and reviewed
were: heirloom, local, and tomatoes. A national survey conducted in 2008 by a research
institution Knowledge Networks found that 82% of participants polled had purchased locally
grown produce, with the term local defined as being grown within a 300 mile radius (AAE,
2008). Heirloom tomato purchasing demographic largely belonged to consumers who were
involved in Community Supported Agriculture programs, as well as consumers who purchase
from locally sourced grocery stores such as Whole Foods, Trader Joes, local cooperatives which
accounts for $10 billion dollars in annual sales and roughly 3% of the total retail food dollar
(Whole Food, 2012).
Further research conducted by Penn State University designed to help producers identify who
their consumers were in the mid-Atlantic region. Common responses to demographic questions
were: female (79.9%), Caucasian (82.9%), member of a two-adult household (53.1%), no children
in the household (64%), under the age of 50 (51%), an associate level or technical degree or less
(60.6%), and an income of $75,000 or lower (62.2%) of the roughly one thousand six hundred
completed surveys (Penn State, 2010).

4.1 Market Segmentation

The potential customer segments for Babylon Produce are:
1. Regional distributors with established clientele: Market research suggests that they
currently cannot meet the demand for high quality heirloom tomatoes. These
distributors would be able to handle the quantities of our production facilities and are in
our target market. Combined they distribute throughout most of western Montana and
surrounding states.

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2. Produce wholesalers: This market serves as a safety valve for our business. By
maintaining relationships with produce wholesalers we have an alternative market with
established distribution channels.
3. Fresh produce markets (including grocery store's fresh produce section): This market
provides us with an alternative distribution method with produce needs that are subject
to local demand. This market will be essential to establishing Babylon Produce's brand
identity.
4. High end restaurants: As we establish our products reputation we will plan to more
aggressively target this audience. We hope to eventually reduce transactions with
wholesalers and capture their value-added costs as profit. We anticipate that this effort
will begin approximately two years into operation of our first greenhouse.

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Table: Market Analysis
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Montana 4% 9,500,000 9,880,000 10,275,200 10,686,208 11,113,656 4.00%
Idaho 4% 81,700,000 84,968,000 88,366,720 91,901,389 95,577,445 4.00%
Oregon 4% 38,000,000 39,520,000 41,100,800 42,744,832 44,454,625 4.00%
North Dakota 4% 55,100,000 57,304,000 59,596,160 61,980,006 64,459,206 4.00%
Wyoming and South
4% 3,800,000 3,952,000 4,110,080 4,274,483 4,445,462 4.00%
Dakota
Total 4.00% 188,100,000 195,624,000 203,448,960 211,586,918 220,050,394 4.00%

4.2 Industry Analysis

NAICS code: 11120

Although the vegetable industry only accounts for 3% of US harvested acreage and farm
numbers, it is responsible for 12% of all crop revenue. Since 2004 the price of tomatoes and
vegetables has grown 60%. The annual compound growth of tomato prices from 2013 to 2018 is
expected to be 1.8%. This allows producers to achieve strong returns on each acre planted. This
is important when producing indoors because of the high capital costs to construct a
greenhouse. Greenhouse crops are especially profitable because of their consistent high quality
and preferable taste.

Crop Volatility
In traditional farm practices extreme variation in outputs are common due to unpredictable
factors like weather. The price of vegetables is closely tied to industry revenue. For example,
prices climbed by 7.4% in 2010 (due to freezing temperatures in Florida, which decimated
supply), leading to a 2.5% revenue gain in the same year.
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Smoothing Out Supplies
Changes in consumer preferences over the past five years have led retailers to demand fresh
produce year round. This is consistent with our sampling of local businesses and research
conducted with local suppliers. Greenhouse crop production cannot adequately meet this
demand; this has led to increased trade in the fresh market. This increase in imports is limited
due to the fresh nature of the produce. Because the transportation radius is limited it leads to
Canada and Mexico comprising more than 70% of both imports and exports. Babylon Produce
can capitalize on this and save suppliers time and money by supplying the heavy demand
locally and reduce our reliance on imported produce.

Industry Size and Yields

The vegetable farming industry is comprised of many small players; the average revenue
generated by each farm is $631,629 which Babylon Produce will be able to achieve be year 5 of
operations. The average market share of a single vegetable farm is well below 1% of total
industry revenue. This leaves room for new entrants in the marketplace.

Recent consumer focus on non-GMO crops produced by agricultural giants like Monsanto will
allow smaller operations such as Babylon Produce to use this publicity in our favor. Marketing
our crops as GM-free, this attracts a steadily growing segment of consumers that are willing to
pay premium prices for premium products.

4.2.1 Competition and Buying Patterns

The purchase decision for our end consumers is based on trust in our production process and
tomato selection. We will establish relationships with our customers which will extend beyond
that of the buyer/seller. The Babylon Produce label will stand for a product that has been
personally hand-picked and grown with the highest quality and nutritional standards in mind.
Our tomatoes are priced higher than traditional tomatoes that are at competitive market prices
with other heirloom tomato producers. Our customers are willing to pay more for our product
because they will be familiar with us and trust in the quality of our tomatoes. The retailers,
restaurants and distributors will prefer to work with us because of our consistent supply of
premium tomatoes year round.

The main factor the influences demand for tomatoes is season. In Montana quality tomatoes, let
alone heirlooms, are scarce. In the summer, due to farmers markets, they are much more
available to consumers. The demand for tomatoes in the western US is growing 4%
annually. However, fresh tomatoes do not become available until late July and only last until
September if they are locally produced in Montana. Buying local is an ever increasing purchaser
trend in the tomato industry, leaving producers to adapt and shift production and sourcing to
localized regions. Buying local is no longer a commodity; it has become a lifestyle habit (Mintel-
Oxygen, 2010). "When it comes to buying local vegetables, 44% on average say they usually or

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always do so, compared to 51% of those aged 18-24" With that, 41% of people shop at farmer's
markets and 36% agree that it is more important to buy local than organic (Mintel-Oxygen,
2011). Currently there are 2 greenhouses that produce heirloom tomatoes on a semi-commercial
scale in Montana. In our current target markets, there are no hydroponic heirloom tomato
producers. Our major customers include vendors and distributors (see attached calling list for
potential clients in Gallatin Valley.)

5.0 Opportunity Analysis and Research

Babylon Produce's strategy is to expand production capabilities in order to fulfill the requests
of distributors and retailers with whom we currently are contacting for larger orders which
we initially will be unable to fulfill. In addition Babylon Produce seeks to establish additional
contracts with distributors in surrounding states and increase the volume of heirloom
tomatoes sold in the tomato market. We intend to first maximize quantity of tomatoes sold
within existing channels and second, establish additional accounts through targeted marketing
efforts.

5.1 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company,
and describes the opportunities and threats facing Babylon Produce.

5.1.1 Strengths
1. The team has had some commercial hydroponic growing experience.
2. Climate controlled growing area.
3. The cultivation method of Babylon Produce is not susceptible to weather conditions.
4. Our production system has the ability to reuse water and nutrients reducing the amount
of inputs required.
5. Stable and predictable production allows for consistent yield and financial projections.
6. Competitive advantage based on taste and nutritional value for clients creates value for
a premium crop.
7. There are fewer natural resources required for growing, reducing operating costs.
8. Extended growing season (from 4 months in Montana to year-round) gives Babylon
Produce a production advantage over every tomato producer in the valley.
9. Cost advantage over competitors-sourced locally due to the economy of scale of our
production practices.
10. Greater yield per sq. ft. than conventional agricultural methods producing tomatoes.
11. Babylon Produce has the ability to adapt to market demands and grow alternative
produce.
12. We are able to meet increasing consumer demand for local produce without
compromising quality.

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5.1.2 Weaknesses
1. Due to the complexity and amount of environmental required there is a large amount of
start-up capital required.
2. Age and lack of opportunity of employment limits the total amount of production
experience on the team.
3. Our premium tomatoes also demand a higher selling price.
4. Pre-purchase requirement to sell our tomatoes may not be agreeable with all produce
purchasers.
5. Product life cycle is shorter than the conventionally grown tomato creating limited
opportunity to sell and distribute tomatoes.
6. Established supply chains for designated target market are used to the current product
and may be hesitant to switch to a new product.

5.1.3 Opportunities
1. There are not currently any other hydroponic heirloom producers in the mountain west.
2. There are also very few heirloom producers in our area, none that would be to our scale
of production.
3. Difficult degree of entry into the hydroponic production due to amount technical skill
and knowledge required.
4. There is an increasing desire in for consumers to source their produce locally and how
it's produced.
5. Year-round supply at a consistent price for regional food distributors.
6. The current market perception is negative out of season tomato quality, allowing
Babylon Produce to be the company to create a paradigm shift.
7. Babylon Produce will embrace the cultural sentiments of purchasing locally; become the
local supplier of heirloom tomatoes.
8. The current lack of competition within target markets reduces the immediate production
competition.

5.1.4 Threats
1. The market is currently open for larger agricultural companies to enter a relatively
untapped market.
2. The harsh winter climate of Montana increases the cost of production.
3. There is the potential of heirloom tomatoes becoming a fad product, and no longer
having market support.
4. The risk of foodborne pathogen potential is prevalent due to the potential of human
error in the production system.
5. The product spoilage creates a limited window for distribution.
6. There is a minimal, yet possible chance of crop diseases or pest damage (example: mites)
which could ruin a season's supply.

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5.2 Competitive Analysis
Direct competition for Babylon Produce consists of other heirloom tomato producers, even if
they are not hydroponically grown. Indirect competition consists of imported tomatoes that are
of a much lower quality. Our main competitive advantage is our ability to grow heirloom
tomatoes without herbicides and pesticides in a controlled environment year-
round. Eliminating the use of these chemicals reduces the amount of environmental
contamination and adverse health effects on our population.

In order to differentiate our tomatoes from our competitors, our tomato production will focus
on heirloom varieties of uncompromised quality and taste. Our heirloom tomatoes are open
pollinated non-hybrid cultivar, which means that they are not cross-bred between multiple
strains and are naturally pollinated via pollinators such as bees. This preserves the flavor profile
and nutritional content of the tomato. Hybrid varieties typically possess thick skins, chewy
textures and have lost vital nutrients that contribute to the flavor of the tomato. In contrast,
heirloom tomatoes are characteristically known for their superior flavor, texture and wide
coloration of the fruit.

Current consumer preferences are shifting against GM produce from the likes of Monsanto
creating a steadily growing consumer base that is socially conscious pertaining to how and
where their produce is coming from. Our tomatoes are GMO free and will be marketed as such
to capitalize on this market trend. In addition to being GMO free our tomatoes are produces
through practices that emphasize social and environmental stewardship. Todays consumers
demand not only superior flavor and texture but also responsible business practices. Babylon
Produce will have the production capability and expertise to produce a premium product while
reducing the use of our finite natural resources in Gallatin Valley. This bolsters Babylon
Produce's reputation as well as reduces production costs.

There currently are not any producers growing hydroponic heirloom tomatoes on a commercial
scale in Montana. The only current competition in Montana is from small organic
farms with limited distribution networks. There are significant barriers to entry that would
prevent competitors from entering our market space. Our first mover advantage will allow us to
realize economies of scale ahead of our future competition that will provide us with
considerable cost advantages. Babylon Produce's controlled production environment provides
us with a production advantage against other producers in the valley that grow outdoors or in
greenhouses utilizing traditional growing methods. We will have the ability to produce our
tomatoes year-round with mitigated risk from weather volatility which is common to
the mountain west region. The stability of our tomato production will allow wholesalers and
retailers to rely on us to provide a consistent high quality product for their clientele.

5.3 Marketing Strategy

Babylon Produce is positioned uniquely as all producers in the region either use pesticides,
herbicides, GM produce, and intense tillage methods (disrupts the soil profile) to produce and

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distribute their tomatoes. Our marketing strategy will be networking and developing
relationships with food distributors, wholesalers, local retailers and restaurants to identify their
precise needs and regional demand. We will capitalize on existing relationships that were
contacted during market research that have stated their willingness to source their tomatoes
through us and recommend Babylon Produce tomatoes. We have positioned ourselves as a
differentiated provider of the highest quality tomatoes. The primary goal of all marketing
efforts will be to communicate this to potential customers. We will emphasize this by informing
and introducing our tomatoes to produce buyers across Montana and in surrounding states. We
can accomplish this at a rapid pace by showcasing our tomatoes at selected trade shows and
designated restaurants and produce markets. Samples will be available as well as a
knowledgeable promotion associate that will explain the benefits of hydroponic heirloom
tomatoes. Our first targeted marketing territory will be the Gallatin Valley concentrating on
those clients that have the highest reputation.

Once established in Gallatin Valley we will choose several counties in Montana to focus on
based the average pound per household of tomatoes purchased and average income (Simply
Map, 2012). These counties include: Lewis & Clark, Flathead, Missoula, and Yellowstone. In
order to break even we need to operate at 24.3% of our production capacity. We plan to produce
at a 95% pack out rate due to the demand for our product that is not currently being met by any
operators within the industry. We will experience self-sustained growth through leveraging and
reinvestment of our retained earnings in order to exponentially expand our greenhouse
capacity.

5.4 Sales Strategy

Babylon Produce's strategy focuses first on meeting the demand of local distributors, retailers,
and restaurants with whom we have started to establish relationships with. These clients are
critical to our ability to acquire additional accounts in the Pacific Northwest region of the
United States without having to spend significant amounts on sales efforts. Secondly we will
focus on increasing the volume of our sales to regional retailers and distributors. When we have
reached the maximum sales to existing local channels we can the shift the majority of our focus
to securing additional regional accounts.

5.4.1 Sales Forecast

The following chart and table show our present sales forecast. We have priced our product at
competitive market prices within our region. Due to the large demand for heirloom tomatoes
both locally and regionally we feel that the demand for our products will exceed our ability to
fill that demand. We project sales to remain consistent at a 95% pack out rate due to our limited
capacity of installed greenhouses. Capital transferred to retained earnings will be used to
reinvest in additional greenhouse capacity in the future. As we expand, economies of scale will
be determined to generate a high degree of production efficiency.

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Table: Sales Forecast
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales
Heirloom Tomatoes 115,536 150,200 195,255 292,900 380,750
Other Produce 0 0 0 0 0
Total Unit Sales 115,536 150,200 195,255 292,900 380,750

Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5

Heirloom Tomatoes $4.00 $4.00 $4.00 $4.00 $4.00
Other Produce $0.00 $0.00 $0.00 $0.00 $0.00

Sales
Heirloom Tomatoes $462,144 $600,800 $781,020 $1,171,600 $1,523,000
Other Produce $0 $0 $0 $0 $0
Total Sales $462,144 $600,800 $781,020 $1,171,600 $1,523,000

Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5

Heirloom Tomatoes $0.80 $0.80 $0.80 $0.80 $0.80
Other Produce $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales

Heirloom Tomatoes $92,429 $120,160 $156,204 $234,320 $304,600
Other Produce $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $92,429 $120,160 $156,204 $234,320 $304,600

5.5 Milestones
The accompanying table shows specific milestones, with responsibilities assigned, dates, and
budgets. The milestones represented in this plan are those which we have determined to be the
most important. The production schedule is based on continuous plantings each month. During
the first month of operation only one stage of planting will occur and the second month will
have one seeding and one growing stage. During the start-up period, the employees will be
located and trained.

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Table: Milestones
Milestones

Milestone Start Date End Date Budget Manager

Identify initial sources of
4/29/2013 10/29/2013 $0 Tim Reusch
capital
Incorporate and develop
4/29/2013 2/28/2014 $10,000 Tim Reusch
website
Purchase land and source
11/1/2013 4/1/2014 $60,000 Tim Reusch
materials for construction
Interstate
Construction 5/1/2014 8/1/2014 $370,000 Greenhouse
Design
Grow first harvest 9/1/2014 11/15/2014 $4,500 Tim Reusch
Plant second harvest 10/1/2014 12/15/2014 $4,500 Tim Reusch
Totals $449,000

6.0 Management Summary

Babylon Produce consists of 1 full time employee. Additional assistance is acquired on a part-
time bases and/or though the use of consultants, specifically in legal matters and growing.
During each expansion phase of production, an additional employee will be hired to meet the
total amount of work hours required for production.

6.1 Personnel Plan

The personnel plan requires an increase in greenhouse employees from 1 full time and 1 part
time employee to 4 full time employees within the next 5 years. Additional employees will also
be added to increase administrative support. One additional employee will be added to the
sales and marketing division.

Table: Personnel Plan

Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Tim Reusch, CEO and Head Grower $36,000 $40,000 $45,000 $50,000 $55,000
Assistant Grower $13,080 $31,200 $31,200 $39,000 $44,000
Assistant Grower $0 $13,080 $31,200 $37,000 $39,000
Assistant Grower $0 $0 $13,080 $31,200 $37,000
Assistant Grower $0 $0 $0 $0 $25,000
Consultant $24,000 $0 $0 $0 $0
Sales and Marketing Director $0 $0 $30,000 $35,000 $40,000
Administration Assistant $0 $0 $28,000 $31,200 $33,000
Total People 2 2 2 3 4

Total Payroll $73,080 $84,280 $178,480 $223,400 $273,000

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7.0 Financial Plan
We will finance growth through leveraging our retained earnings to finance long-term debt.
Purchase of additional capacity and equipment will require 70% debt financing. This will allow
Babylon Produce to continue to grow and experience greater economies of scale while allowing
management to have complete control over the company.

7.1 Startup Funding

Owner
Tim Reusch will invest cash, benefits and labor to the start up.

Investors
Babylon Produce is in the process of negotiating with potential investors for the seed cash
needed to start the business. It is expected that Babylon Produce will need to raise $107,500 at a
rate of no more than 15% interest to each investor.

Bank Financing
Babylon Produce will be submitting business plans and other requested documents to financial
institutions in pursuit of the additional capital required to finance the rest of the company and
provide adequate operating cash for the business. It is expected that the loan will be a part of
the SBA 7(a) program. It is assumed that the terms of the loan will require repayment in 20
years at a rate of 6.5%

19 | P a g e
Table: Startup Funding
Startup Funding
Startup Expenses to Fund $2,500
Startup Assets to Fund $430,000
Total Funding Required $432,500

Assets
Non-cash Assets from Startup $415,000
Cash Requirements from Startup $15,000
Additional Cash Raised $7,500
Cash Balance on Starting Date $22,500
Total Assets $437,500

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $322,500
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $322,500

Capital

Planned Investment
Owner $10,000
Investor $107,500
Additional Investment Requirement $0
Total Planned Investment $117,500

Loss at Startup (Startup Expenses) ($2,500)

Total Capital $115,000

Total Capital and Liabilities $437,500

Total Funding $440,000

20 | P a g e
7.2 Important Assumptions
Important assumptions for this plan are found in the following table. These assumptions
are projected 2.5% above current LIBOR 20 year bond rates. The tax rate assumption is based on
a report issued by the United States Department of Agriculture as well as the current tax policy
from the Montana Department of Revenue. These assumptions largely determine the financial
plan.

7.3 Break-even Analysis

The break-even analysis shows that Babylon Produce can sufficiently cover our fixed
costs operating at a low percentage of our production capacity. Our break-even point is roughly
4,000lbs of tomatoes sold per month. Our sales forecast for the next year predicts our demand to
be over 10,000lbs per month on average. Projections are detailed in the following table.

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 3,917

Monthly Revenue Break-even $15,669

Assumptions:
Average Per-Unit Revenue $4.00
Average Per-Unit Variable Cost $0.80
Estimated Monthly Fixed Cost $12,536

21 | P a g e
7.4 Projected Profit and Loss
We expect to close the first year of production with revenues of $462,000 and increase that
number through year 5 to $1.5MM. Net earnings in year 1 will be $114,291 and increase to
$358,000 by year 5.

Table: Projected Profit and Loss

Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $462,144 $600,800 $781,020 $1,171,600 $1,523,000
Direct Cost of Sales $92,429 $120,160 $156,204 $234,320 $304,600
Other Costs of Sales $54,000 $70,200 $912,60 $136,890 $177,957
Total Cost of Sales $146,429 $190,360 $156,204 $371,210 $482,557

Gross Margin $315,715 $410,440 $624,816 $800,390 $1,040,443

Gross Margin % 68.32% 68.32% 80.00% 68.32% 68.32%

Expenses
Payroll $73,080 $84,280 $178,480 $223,400 $273,000
Marketing/Promotion $12,000 $24,000 $30,000 $40,000 $60,000
Depreciation $21,480 $27,924 $36,300 $54,451 $70,800
Payroll Taxes $3,468 $3,468 $6,936 $6,936 $10,404
Other $2,490 $2,490 $4,980 $4,980 $7,470
Utilities $35,916 $46,690 $60,700 $91,050 $118,360
Insurance $1,992 $2,589 $3,366 $5,049 $6,564

Total Operating Expenses $150,426 $191,441 $320,762 $425,866 $546,598

Profit Before Interest and

$165,289 $218,999 $304,054 $374,524 $493,845
Taxes
EBITDA $186,769 $246,923 $340,354 $428,975 $564,645
Interest Expense $20,585 $22,914 $29,028 $40,410 $55,188
Taxes Incurred $24,614 $33,354 $46,782 $56,833 $74,615

Net Profit $120,090 $162,731 $228,244 $277,281 $364,041

Net Profit/Sales 25.99% 27.09% 29.22% 23.67% 23.90%

22 | P a g e
7.5 Projected Cash Flow
Babylon Produce expects to manage cash flow by accounting for operating cashflow needs
during the first few years of operation. This anticipation of capital requirements is required to
maintain solvency while scaling production up to meet current customer demand.

Table: Projected Cash Flow

Pro Forma Cash Flow
Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received

Cash from Operations

Cash Sales $462,144 $600,800 $781,020 $1,171,600 $1,523,000
Subtotal Cash from Operations $462,144 $600,800 $781,020 $1,171,600 $1,523,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0
New Long-term Liabilities $0 $96,000 $124,800 $270,400 $243,360
Sales of Other Current Assets $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0
Subtotal Cash Received $462,144 $696,800 $905,820 $1,442,000 $1,766,360

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations

Cash Spending $73,080 $84,280 $178,480 $223,400 $273,000
Bill Payments $265,576 $332,584 $353,562 $641,504 $816,961
Subtotal Spent on Operations $338,656 $416,864 $532,042 $864,904 $1,089,961

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0
Principal Repayment of Current
$0 $0 $0 $0 $0
Borrowing
Other Liabilities Principal Repayment $0 $0 $0 $0 $0
Long-term Liabilities Principal
$10,840 $14,268 $18,410 $26,571 $32,476
Repayment
Purchase Other Current Assets $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $96,000 $124,800 $270,400 $243,360
Dividends $0 $0 $0 $0 $0
Subtotal Cash Spent $349,496 $527,132 $675,252 $1,161,875 $1,365,797

Net Cash Flow $112,648 $169,668 $230,568 $280,125 $400,563

Cash Balance $135,148 $304,816 $535,384 $815,509 $1,216,073

23 | P a g e
7.6 Projected Balance Sheet
As shown in the balance sheet in the following table, our net will grow from approximately
$114,000 to more than $1.1MM by the end of year 5. The monthly projections are in the
appendix.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets

Current Assets
Cash $135,148 $304,816 $535,384 $815,509 $1,216,073
Inventory $30,881 $53,438 $69,465 $120,245 $135,454
Other Current Assets $0 $0 $0 $0 $0
Total Current Assets $166,029 $358,255 $604,849 $935,754 $1,351,527

Long-term Assets
Long-term Assets $415,000 $511,000 $635,800 $906,200 $1,149,560
Accumulated Depreciation $21,480 $49,404 $85,704 $140,155 $210,955
Total Long-term Assets $393,520 $461,596 $550,096 $766,045 $938,605
Total Assets $559,549 $819,851 $1,154,945 $1,701,799 $2,290,132

Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5

Current Liabilities
Accounts Payable $12,798 $28,637 $29,098 $54,842 $68,249
Current Borrowing $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0
Subtotal Current Liabilities $12,798 $28,637 $29,098 $54,842 $68,249

Long-term Liabilities $311,660 $393,392 $499,782 $743,611 $954,495

Total Liabilities $324,458 $422,029 $528,880 $798,453 $1,022,744

Paid-in Capital $117,500 $117,500 $117,500 $117,500 $117,500

Retained Earnings ($2,500) $117,590 $280,321 $508,565 $785,846
Earnings $120,090 $162,731 $228,244 $277,281 $364,041
Total Capital $235,090 $397,821 $626,065 $903,346 $1,267,387
Total Liabilities and Capital $559,549 $819,851 $1,154,945 $1,701,799 $2,290,132

Net Worth $235,090 $397,821 $626,065 $903,346 $1,267,387

7.7 Business Ratios

Standard business ratios are included in the following table. The ratios show an aggressive
plan for growth Return on investment over time will increase as we bring the new facility to
maximum capacity and production. Return on sales and assets remain strong and cost of goods
decreases based upon efficiency projections.

24 | P a g e
Table: Business Ratios
Ratio Analysis
Industry
Year 1 Year 2 Year 3 Year 4 Year 5
Profile
Sales Growth n.a. 30.00% 30.00% 50.01% 29.99% 2.64%

Percent of Total Assets

Inventory 5.52% 6.52% 6.01% 7.07% 5.91% 5.98%
Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 30.68%
Total Current Assets 29.67% 43.70% 52.37% 54.99% 59.02% 40.16%
Long-term Assets 70.33% 56.30% 47.63% 45.01% 40.98% 59.84%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 2.29% 3.49% 2.52% 3.22% 2.98% 15.10%

Long-term Liabilities 55.70% 47.98% 43.27% 43.70% 41.68% 42.26%
Total Liabilities 57.99% 51.48% 45.79% 46.92% 44.66% 57.36%
Net Worth 42.01% 48.52% 54.21% 53.08% 55.34% 42.64%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 68.32% 68.32% 80.00% 68.32% 68.32% 70.24%
Selling, General & Administrative
42.33% 41.23% 50.78% 44.65% 44.41% 11.41%
Expenses
Advertising Expenses 2.60% 3.99% 3.84% 3.41% 3.94% 0.32%
Profit Before Interest and Taxes 35.77% 36.45% 38.93% 31.97% 32.43% 5.07%

Main Ratios
Current 12.97 12.51 20.79 17.06 19.80 1.43
Quick 10.56 10.64 18.40 14.87 17.82 1.03
Total Debt to Total Assets 57.99% 51.48% 45.79% 46.92% 44.66% 57.36%
Pre-tax Return on Net Worth 61.55% 49.29% 43.93% 36.99% 34.61% 10.63%
Pre-tax Return on Assets 25.86% 23.92% 23.81% 19.63% 19.15% 4.53%

Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 25.99% 27.09% 29.22% 23.67% 23.90% n.a
Return on Equity 51.08% 40.91% 36.46% 30.69% 28.72% n.a

Activity Ratios
Inventory Turnover 2.92 2.85 2.54 2.47 2.38 n.a
Accounts Payable Turnover 21.75 12.17 12.17 12.17 12.17 n.a
Payment Days 27 22 30 23 27 n.a
Total Asset Turnover 0.83 0.73 0.68 0.69 0.67 n.a

Debt Ratios
Debt to Net Worth 1.38 1.06 0.84 0.88 0.81 n.a
Current Liab. to Liab. 0.04 0.07 0.06 0.07 0.07 n.a

Liquidity Ratios
Net Working Capital $153,230 $329,617 $575,751 $880,912 $1,283,277 n.a
Interest Coverage 8.03 9.56 10.47 9.27 8.95 n.a

Additional Ratios
Assets to Sales 1.21 1.36 1.48 1.45 1.50 n.a
25 | P a g e
Current Debt/Total Assets 2% 3% 3% 3% 3% n.a
Acid Test 10.56 10.64 18.40 14.87 17.82 n.a
Sales/Net Worth 1.97 1.51 1.25 1.30 1.20 n.a

7.8 Long-term Plan

In addition to the enclosed financial information contained in this business plan, Babylon
Produce would like to make the following observations that were not emphasized in this
business plan:

The business plan covers only five years of operations. We consider these initial financial
projections to be reasonable. Growth is limited to financing capabilities and is not hindered by
limited demand. While developing this plan we were only able to talk with several potential
customers in Gallatin county. As our research shows, the tomato market in Montana as well as
surrounding states is very large and continuing to grow. We feel that many more potential
customers exist. The business plan does not include the potential for additional investments
from outside sources once extensive market demand is determined. Demand for high quality
tomatoes is continuing to increase faster than the production capacity of suppliers.

Market prices of produce have been increasing rapidly and were not incorporated into our sales
forecast. As prices increase, Babylon Produce will become increasingly profitable.

The opportunity may exist to acquire existing hydroponic production facilities as we establish
ourselves in the market place. This may require additional outside capital or may be able to be
financed through existing cash flows. If the opportunity were to present itself, we would
readdress our financing appropriately.

26 | P a g e
Appendix

Sales Forecast
Sales
Forecast
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Unit Sales
Heirloom
9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628
Tomatoes
Other
0 0 0 0 0 0 0 0 0 0 0 0
Produce
Total Unit
9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628 9,628
Sales

Month Month Month Month Month Month Month Month Month Month Month Month
Unit Prices
1 2 3 4 5 6 7 8 9 10 11 12
Heirloom
$4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00 $4.00
Tomatoes
Other
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Produce

Sales
Heirloom
$38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512
Tomatoes
Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Produce
Total Sales $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512

Direct Unit Month Month Month Month Month Month Month Month Month Month Month Month
Costs 1 2 3 4 5 6 7 8 9 10 11 12
Heirloom
20.00% $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80 $0.80
Tomatoes
Other
0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Produce

Direct Cost
of Sales
Heirloom
$7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702
Tomatoes
Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Produce
Subtotal
Direct Cost $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702
of Sales

Personnel
Personnel Plan
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Tim Reusch, CEO and
$3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Head Grower
Assistant Grower $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090 $1,090
Assistant Grower $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assistant Grower $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assistant Grower $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consultant $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $0 $0 $0 $0 $0 $0
Sales and Marketing
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Director
Administration Assistant $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 2 2 2 2 2 2 2 2 2 2 2 2

Total Payroll $8,090 $8,090 $8,090 $8,090 $8,090 $8,090 $4,090 $4,090 $4,090 $4,090 $4,090 $4,090

27 | P a g e
Profit and Loss
Pro Forma Profit
and Loss
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
$38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512
Sales
Direct Cost of Sales $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702 $7,702
Other Costs of Sales $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500
$12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202 $12,202
Total Cost of Sales

$26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310 $26,310
Gross Margin
Gross Margin % 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32% 68.32%

Expenses
Payroll $8,090 $8,090 $8,090 $8,090 $8,090 $8,090 $4,090 $4,090 $4,090 $4,090 $4,090 $4,090
Marketing/Promotio
$1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
n
Depreciation $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790 $1,790
15%
Payroll Taxes $289 $289 $289 $289 $289 $289 $289 $289 $289 $289 $289 $289
15%
Other $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208 $208
15%
Utilities $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993 $2,993
Insurance $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166 $166

Total Operating $14,536 $14,536 $14,536 $14,536 $14,536 $14,536 $10,536 $10,536 $10,536 $10,536 $10,536 $10,536
Expenses

Profit Before $11,774 $11,774 $11,774 $11,774 $11,774 $11,774 $15,774 $15,774 $15,774 $15,774 $15,774 $15,774
Interest and Taxes
$13,564 $13,564 $13,564 $13,564 $13,564 $13,564 $17,564 $17,564 $17,564 $17,564 $17,564 $17,564
EBITDA
Interest Expense $1,742 $1,737 $1,733 $1,728 $1,723 $1,718 $1,713 $1,708 $1,703 $1,698 $1,693 $1,688
Taxes Incurred $1,706 $1,707 $1,708 $1,709 $1,710 $1,711 $2,392 $2,393 $2,393 $2,394 $2,395 $2,396

$11,669 $11,673 $11,677 $11,682 $11,686 $11,690

Net Profit $8,326 $8,329 $8,333 $8,337 $8,342 $8,346
Net Profit/Sales 21.62% 21.63% 21.64% 21.65% 21.66% 21.67% 30.30% 30.31% 30.32% 30.33% 30.34% 30.35%

28 | P a g e
Cash Flow
Pro Forma
Cash Flow
Month Month Month Month Month Month Month Month Month Month
Month 2 Month 9
1 3 4 5 6 7 8 10 11 12
Cash
Received

Cash from
Operations
$38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512
Cash Sales $38,512 $38,512 $38,512 $38,512 $38,512
Subtotal
$38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512
Cash from $38,512 $38,512 $38,512 $38,512 $38,512
Operations

Additional
Cash
Received
Sales Tax,
VAT, 0.00%
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST
Received
New
Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
New Other
Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
(interest-
free)
New Long-
term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Sales of
Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets
Sales of
Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
New
Investment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received
Subtotal
$38,512 $38,512 $38,512 $38,512 $38,512 $38,512 $38,512
Cash $38,512 $38,512 $38,512 $38,512 $38,512
Received

Expenditure Month Month Month Month Month Month Month Month Month Month
Month 2 Month 9
s 1 3 4 5 6 7 8 10 11 12

Expenditure
s from
Operations
Cash
$8,090 $8,090 $8,090 $8,090 $8,090 $8,090 $4,090 $4,090 $4,090 $4,090 $4,090 $4,090
Spending
Bill $30,483 $13,213 $30,475 $13,205 $30,490 $13,260
$1,447 $43,003 $13,873 $31,135 $13,865 $31,127
Payments
Subtotal
$38,573 $21,303 $38,565 $21,295 $34,580 $17,350
Spent on $9,537 $51,093 $17,963 $35,225 $17,955 $35,217
Operations

Additional
Cash Spent
Sales Tax,
VAT, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST

29 | P a g e
Paid Out
Principal
Repayment
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
of Current
Borrowing
Other
Liabilities
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment
Long-term
Liabilities
$877 $881 $886 $891 $896 $901 $906 $911 $916 $920 $925 $930
Principal
Repayment
Purchase
Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Assets
Purchase
Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $10,414 $39,459 $22,194 $39,461 $22,196 $35,486 $18,261
$51,974 $18,879 $36,145 $18,880 $36,147
Cash Spent

Net Cash $28,098 ($13,462 $16,318 $16,316 $20,251

($947) ($949) $3,026 $19,633 $2,367 $19,632 $2,365
Flow )
Cash $50,598 $36,188 $52,507 $51,557 $67,874 $70,900 $91,151 $110,784 $113,150 $132,783 $135,148
$37,136
Balance

30 | P a g e
Balance Sheet
Pro Forma
Balance
Sheet
Month Month Month Month Month Month Month Month Month Month Month Month
1 2 3 4 5 6 7 8 9 10 11 12
Starting
Assets
Balances

Current
Assets
$22,500 $50,598 $37,136 $36,188 $52,507 $51,557 $67,874 $70,900 $91,151 $110,78 $113,15 $132,78 $135,14
Cash
4 0 3 8
$23,107 $33,905 $26,202 $37,000 $29,298 $40,095 $32,393 $24,690 $35,488 $27,786 $38,583 $30,881
Inventory $0
Other
Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
Total
$22,500 $73,705 $71,040 $62,391 $89,507 $80,855 $107,96 $103,29 $115,84 $146,27 $140,93 $171,36 $166,02
Current
9 3 1 2 6 6 9
Assets

Long-term
Assets
Long-term $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00 $415,00
Assets 0 0 0 0 0 0 0 0 0 0 0 0 0
Accumulat
ed $10,740 $12,530 $14,320 $16,110 $17,900 $19,690 $21,480
$0 $1,790 $3,580 $5,370 $7,160 $8,950
Depreciati
on
Total Long-
$415,00 $413,21 $411,42 $409,63 $407,84 $406,05 $404,26 $402,47 $400,68 $398,89 $397,10 $395,31 $393,52
term
0 0 0 0 0 0 0 0 0 0 0 0 0
Assets
Total $437,50 $486,91 $482,46 $472,02 $497,34 $486,90 $512,22 $505,76 $516,52 $545,16 $538,03 $566,67 $559,54
Assets 0 5 0 1 7 5 9 3 1 2 6 6 9

Liabilities Month Month Month Month Month Month Month Month Month Month Month Month
and Capital 1 2 3 4 5 6 7 8 9 10 11 12

Current
Liabilities
Accounts $41,967 $30,063 $12,176 $30,056 $12,168 $30,048 $12,818 $12,814 $30,694 $12,806 $30,686 $12,798
$0
Payable
Current
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
Other
Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Subtotal
$41,967 $30,063 $12,176 $30,056 $12,168 $30,048 $12,818 $12,814 $30,694 $12,806 $30,686 $12,798
Current $0
Liabilities

Long-term $322,50 $321,62 $320,74 $319,85 $318,96 $318,06 $317,16 $316,26 $315,35 $314,43 $313,51 $312,59 $311,66
Liabilities 0 3 2 6 5 9 8 2 1 5 5 0 0
Total $322,50 $363,59 $350,80 $332,03 $349,02 $330,23 $347,21 $329,08 $328,16 $345,12 $326,32 $343,27 $324,45
Liabilities 0 0 5 2 1 7 6 0 5 9 1 6 8

Paid-in $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50 $117,50
Capital 0 0 0 0 0 0 0 0 0 0 0 0 0
Retained
($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500)
Earnings
$16,655 $24,989 $33,326 $41,668 $50,013 $61,682 $73,356 $85,033 $96,715 $108,40 $120,09
Earnings $0 $8,326
0 0
Total $115,00 $123,32 $131,65 $139,98 $148,32 $156,66 $165,01 $176,68 $188,35 $200,03 $211,71 $223,40 $235,09
Capital 0 6 5 9 6 8 3 2 6 3 5 0 0
Total $437,50 $486,91 $482,46 $472,02 $497,34 $486,90 $512,22 $505,76 $516,52 $545,16 $538,03 $566,67 $559,54

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Liabilities 0 5 0 1 7 5 9 3 1 2 6 6 9
and Capital

$115,00 $123,32 $131,65 $139,98 $148,32 $156,66 $165,01 $176,68 $188,35 $200,03 $211,71 $223,40 $235,09
Net Worth
0 6 5 9 6 8 3 2 6 3 5 0 0

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Calling Tree Questions

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IBISWorld Graphs

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Survey Results
Heirloom Willingness Average volume
Source of
Name Tomato to Purchase Price per pound. moved in
Tomatoes
Purchaser Locally Summer
Seasonal peak
Southern price $45 per
FSA Yes California and Yes 10lb. case. $20 1 case per week
Mexico per/10lb case low
price
Seasonal peak
Southern price $43 per
Approx. 4 cases
Sysco Yes California and Yes 10lb. case.
per week
Mexico $19per/10lb case
low price
200lbs per week in
$5 per pound in the summer, needs
Co-op Yes Alpine Organics Yes
the summer more always sells
out.
Rosauer's Yes Peirone Produce Yes No response 5 cases per week
Company sourced- 20-30 cases per
Produce Partner week (includes
Peirone $45 11lb. cases in
Yes and Milissa's Yes other areas as well
Produce the summer
World Wide as the Gallatin
Variety Valley)
Costco No response No response No response No response No response
Safeway No response No response No response No response No response
California and
Information
Albertson's Yes occasionally a Yes $40 per 10lb case
unavailable.
regional producer

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References
References for the analysis, understanding, and completion the business plan are sourced from
peer-reviewed journal articles, industry research databases, land grant university crop
simulators. Crop simulators were from Texas A&M authored by Dr. Jose Pena of the
Agricultural Extension Office. Building and Construction cost simulator from Ohio State
University co-authored by Donnell, Ted Short in conjunction with Robert Moore, Extension
Associate, Department of Agricultural, Environmental, and Developmental Economics, OSU,
Columbus, Ohio and Chad Draper, Design Engineer, Department of Food, Agricultural, and
Biological Engineering, OSU/OARDC, Wooster, Ohio. On the Ohio State University Hydroponic
Program Team were, Dr. Harold Keener, Program Leader , Dr. Beth Fausey, Hydroponics and
Floriculture Program Manager Dr. Robert Hansen, Research Scientist, Dr. Peter Ling,
Horticulture Engineer, Dr. Bill Bauerle, Horticulture and Crop Science.

Bauerle, B et. al. (2011). Hydroponic Tomato Budget Analysis (Multiple Bay): Calculates
expected income from growing hydroponic lettuce in a multiple bay quonset house. Ohio State
University.

Chamberlain, A., Hyde, J., Kelley, K.(2010) Consumer purchasing behavior, knowledge of, and
attitudes towards locally-grown produce in the Mid-Atlantic region. Departments of
Horticultural Sciences and Agricultural Economics & Rural Sociology. The Pennsylvania State
University. University Park, PA.

Jacobowitz, J. The battle for Market Share, who owns the natural pie. (2011). Whole Foods
Magazine. http://www.wholefoodsmagazine.com/columns/merchandising-insights/battle-
market-share

McFadden, D., Nurse, G. Onozaka, (2008). Local Food Consumers: How motivations and
perceptions translate to buying behavior. Agricultural and Applied Economics Association. JEL
Classifications. Q13, D12.

Mintel-Oxygen. (2010 and 2011). Consumer purchasing trends in regards to local food.
www.minteloxygen.com

Pena, J. (2005). Greenhouse Vegetable Production Economic Considerations, Marketing, and

Financing. Aggie Horticulture. Texas Cooperative Extension.

Sherman, A. (2013). Fast-growing Small-Business Industries in the West . IBIS World.

www.ibisworld.com

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Tim Reusch Resume

Timothy J. Reusch
timreusch9@gmail.com 616.540.0997

EDUCATION
Undergraduate Degree
Sustainable Food and Bio-energy Systems
Montana State University
2007-2011
Crop Production Option

Graduate Degree
Health and Human Development
Montana State University
Anticipated Graduation: May 2014
Sustainable Food Systems Option

PROFESSIONAL BACKGROUND

MARKETING AND COMMUNICATIONS COORDINATOR, MONTANA STATE

UNIVERSITY September 2012-Present
Marketing coordinator at Townes Harvest Garden, a student farm at Montana State University.
Responsibilities include recruitment of CSA members, networking with local organizations,
oversee market operations, weekly newsletter, and website operation and maintenance.

PLANT SCIENCE INTERN, WALT DISNEY WORLD December 2011-June 2012

Maintained and operated a creative hydroponics greenhouse in the Land Pavilion at Epcot.
Also conducted informational show tours to guests wanting to learn more about hydroponics
and greenhouse crop production.

GOOD LIFE FARMS, May 2011-August 2011

Learned production and business operating practices of a small-scale commercial hydroponics
farm. Operated a farmers market stand at the Carmel Farmers Market. Maintained and
cultivated heirloom tomato field.

INTERN, TOWNES HARVEST GARDEN May 2009-September 2009

Learned production practices and techniques for market garden operations. Collaboratively
organized and managed a Community Supported Agricultural (CSA) market garden.

ASSISTANT RESIDENT DIRECTOR August 2010-May 2011

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Work collaboratively with Resident Director to supervise eleven Resident Advisors. Also was
the advisor for the South Hedges Residence Hall Association (RHA).

RESIDENT ADVISOR August 2008-May 2010

Developed positive floor communities and participated in a weekly on-call rotation. Served as a
campus liaison between students and RHA as well as local campus organizations and
community groups.

CIRCULATION DESK LIBRARIAN October 2007-May of 2008

Utilized library technology to aide students in research and basic data collection.

ADDITIONAL RELATED EXPERIENCE

Active member of Friends of Local Foods September 2009-Fall 2010
Constructed basic hydroponics unit Spring 2010
Attendee of the 2009 Bioneers conference Fall 2009
Conducted informal research for residential geothermal heating and cooling systems for
residential settings
Planted and maintained a 50x100 foot personal vegetable garden for family in Michigan
Created and presented an educational lecture on the current issues relating to sustainability
and climate change and the possible solutions to freshman seminar classes
Inter-Mountain Affiliate of College and University Residence Halls (IACURH) annual
Conference Entertainment Chair Fall 2010
Member of Men Stopping Rape Spring 2009-Fall 2010
Serv Safe Certified: certificate number: 7667434
Conducted a company sustainability analysis for Timeless Seeds Inc, Ulm, MT.
Led a discussion seminar in regards to sustainable food production and hydroponics.

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Alex Crosby Resume

Alexander H. Crosby
408 W. Cleveland
Bozeman, MT 59715
224-717-1419
alex.crosby1@msu.montana.edu

EDUCATION:
Bachelors of Science, Business Marketing, Minors: Finance and Entrepreneurship
Montana State University,
Bozeman, MT
Expected Date of Graduation: May 2013
Cumulative GPA: 3.16

EXPERIENCE:
Energy Intern for Gov. Schweitzer
The Campus Special
Campus Manager
Developed and implemented event marketing campaign for The Campus Special
Hired and trained a team of 4 students for on campus promotion, building brand
awareness
Analyzed results of operation to discover more efficient ways of promoting the product
Reported directly to the National Event Marketing Manager and submitted daily written
reports

5280 Ad Agency
Brand Ambassador
Built brand awareness by distributing product information for the Alltel Weekend of
Fun promotional tour in Billings and Missoula, MT
Checked in clients and distributed event tickets
Oversaw transportation of valuable products and event equipment from Billings to
Bozeman
Set up event equipment, tent, and signs

Weed Man Lawn Care

Salesman, Supervisor, Canvasser
Ranked in the top 10 in the country for North Americas largest lawn care company,
selling lawn care over the phone.
Performed in home sales

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 Over the course of 3 seasons was instrumental in increasing company revenue to over
$200,000
Supervisor
Developed and implemented canvassing techniques for company
Planned which neighborhoods to canvass each night
Managed and oversaw 8-10 employees each night, making sure that no one is idle for
extended amounts of time, coaching employees while shuttling them to a new streets
Brought leads per night from 10-15 per night to averaging over 40 a night
Canvasser
Solicited free quotes from households
Led company in obtaining quotes

Illinois Elite Windows and Siding

Manager
Taught canvassers how to solicit leads for windows and siding
Planned which neighborhoods to canvass each night
Managed 6-8 employees each night while performing their jobs with them
Lead company in obtaining quotes
Facilitated sales in excess of $50,000

ACTIVITIES: ACHIEVEMENTS:
MSU Rugby Deans List
Marketing Club 31 on ACT
Finance Club 1380 on SAT
Management Club

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MacKenzie Brosious Resume

MacKenzie Brosious
(406) 239-9859 9 Gardner Park Drive MBrosious@gmail.com
Bozeman, MT 59715
Skills
Organizational skills including: problem solving, planning, and listening
Computer proficiency in Word, Excel, PowerPoint, Access, and Page Maker
Strengths in setting goals, visualization, and efficiency
Ability to work independently as well as on a team

Education
Montana State University, Bozeman, MT
B.S. in Business with an option in Management, Graduation: Spring 2013
o Course work including: Business Communications, Strategic Planning, Management of
Resources, and Marketing
GPA: 3.5
University of Montana, Missoula, MT, Fall 2008 - Spring 2010
Experience
Yoga Instructor, Montana State University, August 2011- Present
Led between 5-40 students through poses
Developed new teaching plan weekly
Altered classes to fit all levels of abilities

Receptionist, Solace Spa at Big Sky Resort, Big Sky, MT, 5/12 - 8/12, Seasonal Position
Provided excellent customer service to multiple customers at one time
Welcomed guests by making sure they had everything they needed and answered questions
Scheduled appointments in person and over the phone

Planning Intern, Diocese of Helena- Resurrection Parish, Bozeman, MT 1/11 3/12

Analyzed previous business information to form a more efficient system
Addressed over 200 people for public speeches and announcements
Directed teams of over 20 students for retreat planning and leadership development

Kids Camp Counselor, The Resort at Paws Up, Greenough, MT, 5/10 - 8/10, Seasonal Position
Facilitated special requests made by parents
Formed and executed daily activities for 1-15 children
Provided excellent customer service while giving guests a Montana experience

Activities / Honors
Activities include rock/ice climbing, mountain biking, and backcountry skiing
Upheld leadership position on the University of Montana Triathlon Team
Black belt in Kajukenbo
Sponsored by GU Energy Gel

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