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Do you want to start a Christmas tree farm business?
Have you been thinking of starting a tree farm? There is no doubt a Christmas tree farm is a lucrative business venture that promises a handsome return. Christmas is undoubtedly the most popular annual celebration that is widely observed across the world. Amongst the must-haves for a Christmas celebration is a having a Christmas tree. If you’re thinking of how to transform your piece of land to a profitable venture with less risks and easy maintenance, planting Christmas trees is a great idea.
The advantage of managing a Christmas tree farm is it comes with very little maintenance which allows you to concentrate and pursue other ventures. If well taken care of, you will enjoy great profits for an extended period of time. Without the need to spend so much money running a Christmas tree farm, it’s definitely a smart business idea that will always offer a product that is needed on the market. It takes about eight years for Christmas trees to fully mature, so it requires good planning, strategy execution and patience to see the fruits. To be a successful Christmas tree farmer, you need to plan early and lay good strategies at the beginning.
To avoid undergoing the stress of what needs to be done, this well-articulated Christmas tree farm business plan experts with guide you every step of the way.
Executive Summary
2.1 The Business
The Christmas tree farm will be registered as Cole Christmas Tree Farm and will be based in Spring Texas. Starting a Christmas tree farm business requires careful planning an expert management team to oversee and coordinate business activities. Since the owners of the business have property in Spring, Texas, it was found to be the best place to set up the business. The tree farm sits in a strategic location within easy reach of both individuals as well as corporate customers. In addition, the Christmas tree farm is located close to large cities that offer a stable and ready market for products. Cole Christmas Tree Farm will be owned and run by Stephen Copeland who is a Botanist by profession. Copeland has had a successful long career in Botany where he has served in various capacities in different organizations.
2.2 Management
The tree farm will be managed by Mr. Copeland who will be assisted by his son, Andrew Copeland who is a recent business Management graduate from Texas State University. The management structure has been well-planned to ensure efficiency is achieved and professionalism is not compromised.
2.3 Customers
The tree farm will provide various types of Christmas tree varieties to both the residential and commercial market in nearby towns and cities. The aim of starting the business is to make sales both to individual buyers who need a Christmas tree in their home and various distributors and retailers. For corporate bulk sales, the trees are sold wholesale prices.
2.4 Company Target
Cole Christmas Tree Farm aims to start a Christmas tree farm that will be the most famous supplier of quality Christmas trees to both residential and commercial clients. The business is planning to leverage its success by introducing a wide variety of tree varieties to give customers a chance to choose from different species. Thanks to diversification, Mr. Copeland hopes to tap into a market where existing Christmas tree farms only focus on selling one or very few Christmas tree varieties.
Company Summary
3.1 Company Owner
Mr. Copeland is an expert in Botany and has acquired immense experience in core areas of botany such as plant diversity, economic botany, plant breeding and dendrology among others. He has worked several in both local and international organizations spanning a period of over thirty years. During the course of his career, Stephen Copeland has attended numerous high-profile international meetings and conferences in different parts of the world.
3.2 Reason for Starting the Business
Throughout Copeland’s entire career, he has always strived to provide advice and expertise on how to utilize plant diversity for economic purposes. His in-depth study of tree species has enabled him understand how to successfully run tree farms and provide the best quality species. Christmas is a major holiday and the demand for Christmas trees is always at high but there is still lack of sufficient suppliers to meet the demand. Understanding the need to diversify Christmas tree species and offer clients better exemplary service their money, Mr. Copeland decided to start a Christmas tree farm to ensure customers can order nice Christmas trees.
3.3 How the Business will be started
In order to ensure the Tree Farm succeeds, Mr. Copeland has come up with a comprehensive Christmas tree farming business plan. The plan is intended to forecast what is required to start and successfully run the Christmas tree farm. With assistance from financial and business set-up experts, Copeland has forecasted amounts below required for investment group business plan, expenses, assets as well as loans required for the start-up.
A full breakdown of how much is needed to fund the business, sum assets, start-up funding, total liabilities, liabilities, total planned investment, capital required, capital and liabilities as well as start-up expenses as forecasted is indicated below.
| Start-up Expenses | |
| Legal | $2,000 |
| Consultants | $1,000 |
| Insurance | $10,000 |
| Rent | $8,000 |
| Research and Development | $10,000 |
| Expensed Equipment | $15,000 |
| Signs | $5,000 |
| TOTAL START-UP EXPENSES | $51,000 |
| Start-up Assets | $0 |
| Cash Required | $60,000 |
| Start-up Inventory | $30,000 |
| Other Current Assets | $10,000 |
| Long-term Assets | $4,000 |
| TOTAL ASSETS | $10,000 |
| Total Requirements | $15,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $50,000 |
| Start-up Expenses to Fund | $20,000 |
| Start-up Assets to Fund | $22,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $12,000 |
| Non-cash Assets from Start-up | $7,000 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $30,000 |
| Cash Balance on Starting Date | $10,000 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $10,000 |
| Investor 2 | $12,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $70,000 |
| Loss at Start-up (Start-up Expenses) | $55,000 |
| TOTAL CAPITAL | $35,000 |
| TOTAL CAPITAL AND LIABILITIES | $40,000 |
| Total Funding | $70,000 |
Services for Customers
Cole Christmas Tree Farm will provide different types of Christmas trees for their esteemed clients within Spring, Texas and other regions across the state and country. The unique thing about Cole Christmas Tree Farm will be the availability of various Christmas tree species allowing customers to make a choice from various options available. Emphasis has been placed on providing the best quality Christmas trees to ensure customers get full value for their money. Each of the farm’s products will meet the best quality standards.
Cole Christmas Tree Farm intends to offer the following types of Christmas trees:
- Fir Trees which include Douglas Fir, Balsam Fir and Fraser Fir
- Pine Trees comprising of Afgan Pine, White Pine and Scotch Pine
- Cypress Trees including Leyland Cypress and Carolina Sapphire
- Cedar Trees such as Eastern Redcedar
Clearly outlining the types of products to be offered is a critical issue that has been by Cole Christmas Tree Farm when planning how to start a Christmas tree business.
Marketing Analysis of Christmas Tree Business
In a bid to counter challenges that arise when starting a tree farm business, Cole Christmas Tree Farm has carried out an accurate and extensive market analysis. A detailed marketing analysis is aimed at helping the business to understand how to start a Christmas tree farm. This information is critical as it will guide the farm’s strategies that will be implemented over the next few years after inception of the business. This information is included in the initial Christmas tree farm business plan so that all future plans are made in accordance to the facts presented in the analysis of the market niche. Given the importance of having a solid marketing analysis for Cope Christmas Tree Farm, Mr. Copeland obtained help from marketing experts to help develop a solid marketing plan in line with current market demands.
Christmas is a widely celebrated global holiday and as such, there is an increased demand for Christmas trees and other decoration which is expected to become higher in the future. Decorating Christmas trees is a tradition many people cherish. More individuals and businesses are increasingly putting up Christmas trees. According to statistics, about 10,000,000 artificial Christmas trees are sold in the United States each year but this is going down. This signifies the demand for live Christmas trees remains is rapidly increasing and a tree farm would definitely yield good results if well managed.
The management of Cole Christmas Tree Farm knows the success or failure of the business wholly depends on how the enterprise will market itself to its target customers. For marketing analysis and strategy to succeed, it is critical to identify the target audience and prospective customers. Stephen Copeland has done extensive market research and sought help from experts to identify target customers and come up with a defined marketing strategy.
5.1 Market Segmentation
Cope Christmas Tree Farm has identified the following classes of target audiences which it intends to make them potential clients of the tree farm.
A comprehensive market segment that outlines the business target audience is explained as follows.
5.1.1 Individuals
Individual customers will be catered for under the retail scheme. Customers here are diverse and range from residents who live near the tree farm and can therefore, easily buy a Christmas tree from the farm. This category covers all customers living around the Cole Christmas Tree Farm as well as those who reside in the nearby cities and towns. Given the high population of neighboring towns and cities, the demand from individual buyers is extremely high and Cole Farm has to figure out how to ensure there is a steady supply of Christmas trees during peak time. Individual customers are very diverse and consist of people drawn from various social, religious and cultural backgrounds but who dedicate themselves to the spirit of Christmas. Cole Christmas Tree farm has identified individual customers as a lucrative market segment that needs to be adequately catered for.
5.1.2 Companies and Businesses
Cole Christmas Tree Farm intends to sell Christmas trees to various businesses which in this regard, are considered as wholesale customers. Businesses will buy Christmas trees from the business in bulk at wholesale prices and thereafter, sell them to their customers are retail prices. Given the rising demand for Christmas trees, retailers are always on the lookout for suppliers who can guarantee a steady supply chain. Since they purchase in bulk, corporate customers are key to the success of the tree farm considering revenue obtained from their purchases is high. When thinking of how to start a Christmas tree farm, the business knows wholesale buyers are critical for success and have to be accorded utmost professionalism.
5.1.3 Nonprofit Organizations
Cole Christmas Tree Farm hopes to sell their trees to Nonprofit organizations who in most cases, often have no problem spending more to buy trees compared to businesses buying on a wholesale basis. In most cases, this category of clients will buy many Christmas trees and sell them during fundraising and charity events.
5.1.4 Local Councils and Governments
Though not as common as the above customer groups, Cole Christmas Tree Farm will at times sell a few large trees to local councils and governments. Local councils will in most cases buy a tree or two, but will pay a much higher rate than individual customers, wholesale customers and nonprofit organizations. These sales are not easy to come by, but when they do, Cole Farm will earn a significant amount of income.
| Market Analysis | ||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | |
| Individuals | 35% | 10,000 | 13,000 | 16,000 | 19,000 | 22,000 | 12.00% | |
| Companies and Businesses | 25% | 20,000 | 25,000 | 30,000 | 35,000 | 40,000 | 10.00% | |
| Non Profit Organizations | 18% | 6000 | 8,000 | 10,000 | 12,000 | 14,000 | 14.00% | |
| Local Council &Government | 22% | 9000 | 10,500 | 12,000 | 13,500 | 15,000 | 8.00% | |
| Total | 100% | 45,000 | 56,500 68,000 | 79,500 | 91,000 | 10.00% | ||
5.2 Business Target
The business aims to be the best Christmas tree grower in Spring and the entire Harris County in Texas. Cole Christmas Tree Farm hopes to recover the initial capital within the first three years of starting the business as well as grow annual sales by an average of 20%. In order to meet its targets, the farm will emphasize on superb customer service and offer quality Christmas trees. There are concerted efforts to ensure every customer is welcomed in a friendly environment and treated with respect and dignity. The aim of this Christmas tree farm business is to build long-term and sustainable relationships with customers.
5.3 Product Pricing
Product pricing is a key factor that will affect the sales of Christmas products and buyers are keen when it comes to pricing. For this reason, Cole Christmas Tree Farm endeavors to strategically set prices in order to attract more customers, but at the same time, ensure good profits are realized. Given the fact trees take an average of 6-8 years to mature, it makes sense for the business to obtain good profits. Product prices have been determined after doing extensive market research to determine what competitors are charging.
Cole Christmas Tree Farm intends to charge the following average prices for its products:
- Fir Trees $130.00
- Pine Trees $200.00
- Cypress Trees $300.00
- Cedar Trees $400.00
Strategy
After the completion of an extensive market analysis, Mr. Copeland has come up with a winning strategy that will be used to target and reach out to identified customer segments in Section 5.1. The sales strategy has been carefully formulated by the Founder of Cope Christmas Tree Farm with assistance from experts.
The sales strategy entails the following aspects:
6.1 Competitive Analysis
The tree farm will face competition as there are other similar establishments around Spring, Texas and neighboring towns and cities. While deliberating how much does a Christmas tree cost , Cole Farm will keep its prices slightly below the market price for the first few years in order to attract more customers and gain a market presence. Given the fact that the farm sits on a large acreage, it will be easy to strike a balance between offering lower prices and securing good profit margins. The business also understands the competitive nature of the business and thus understands the need to be unique and innovative.
6.2 Sales Strategy
With help from experts, Cole Christmas Tree Farm has come up with an ambitious and exciting strategy to make sure business goals are realized. These strategies entail:
- Maintaining superb quality of trees by ensuring they are well taken care of by professionals from the time the trees are planted until they mature.
- Sell trees at a slightly lower price than competitors and at the same time, offer amazing discounts on bulk purchases.
- The farm will be established in an area that is easily accessible with a good road network to allow customers to visit the business.
- Cole tree farm will focus on selling a great variety of tree species that comes in different sizes and shapes to ensure customers can choose from amongst many options.
- The business will study the market to understand what customers want, identify challenges and loopholes to come up with products that will satisfy client expectations.
- Selectively offer free delivery services especially to a few local residents with an aim of building lasting relationships.
- Intensively market the tree farm on local media platforms, events and exhibitions as well as digital media platforms i.e. social media.
- Build a digital platform to allow customers purchase Christmas trees online without having to physically visit the property.
6.3 Sales Forecast
The business strongly believes in its unique, quality-oriented and superb customer service to attract a loyal customer base. For this reason, the business has forecasted a steady increase in its annual sales. After carefully analyzing the market segmentation, the tree farm has forecasted to achieve the following sales on an annual basis.
The information in the table and column charts below contains details about sales forecasts.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Fir Trees | 200,000 | 300,000 | 260,000 |
| Pine Trees | 300,000 | 350,000 | 450,000 |
| Cypress Trees | 350,000 | 450,000 | 480,000 |
| Cedar Trees | 500,000 | 550,000 | 600,000 |
| TOTAL UNIT SALES | 1,350,000 | 1,650,000 | 1,790,000 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Fir Trees | $130.00 | $150.00 | $170.00 |
| Pine Trees | $200.00 | $300.00 | $400.00 |
| Cypress Trees | $300.00 | $400.00 | $500.00 |
| Cedar Trees | $400.00 | $500.00 | $600.00 |
| Sales | |||
| Fir Trees | $150,000 | $200,000 | $300,000 |
| Pine Trees | $100,000 | $120,000 | $200,000 |
| Cypress Trees | $30,000 | $40,000 | $60,000 |
| Cedar Trees | $120,000 | $170,000 | $200,000 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Fir Trees | $0.50 | $0.60 | $0.70 |
| Pine Trees | $0.30 | $0.35 | $0.40 |
| Cypress Trees | $0.25 | $0.30 | $0.35 |
| Cedar Trees | $2.00 | $3.00 | $4.50 |
| Direct Cost of Sales | |||
| Fir Trees | $80,000 | $100,000 | $150,000 |
| Pine Trees | $45,000 | $70,000 | $105,000 |
| Cypress Trees | $15,000 | $25,000 | $40,200 |
| Cedar Trees | $14,000 | $36,000 | $70,000 |
| Subtotal Direct Cost of Sales | $154,000 | $231,000 | $365,200 |
Personnel Plan
In order to be the market leader in selling Christmas trees, Cole Christmas Tree Farm plans to put together a dedicated, knowledgeable and experienced staff to be involved in day-to-day operations of the business. The following plan is a proposed personnel plan to start Christmas farm as well as their average salaries.
7.1 Staff Plan
Mr. Stephen Copeland who is the business owner will be the General Manager of Cole Christmas Tree Farm. In addition, the business intends to hire the following staff.
- 1 Manager to oversee operations and administration of the tree farm
- 1 Cashier to receive and process payments from customers
- 1 Administrator to perform general admin duties and work closely with the manager
- 2 Sales and Marketing Executives responsible for marketing the Christmas tree farm
- 2 Gardeners to take general care of the farm and ensure favorable conditions for growth of trees
- 2 Tree Farmers to provide advice, supervise and monitor the growth and maintenance of trees
- Cleaners to perform general cleaning duties in the business premises
- Drivers to run various errands for the business as well as deliver customer orders
To keep standards high, all employees will undergo intensive interviews and vigorous on-job training before assuming their positions.
7.2 Average Staff Salaries
The table below clearly illustrates forecasted staff data and the salaries they will earn in the first three years.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Manager | $80,000 | $85,000 | $90,000 |
| Cashier | $40,000 | $45,000 | $50,000 |
| Administrator | $35,000 | $40,000 | $45,000 |
| 2 Sales and Marketing Executives | $100,000 | $120,000 | $130,000 |
| 2 Gardeners | $55,000 | $65,000 | $75,000 |
| 2 Tree Farmers | $120,000 | $160,000 | $180,000 |
| Cleaners | $20,000 | $30,300 | $35,000 |
| Drivers | $50,000 | $53,000 | $60,000 |
| Total Salaries | $500,000 | $598,300 | $665,500 |
Financial Plan
The business enterprise come up with a detailed and elaborate financial plan that will help the business attain its goals. The Cole Christmas Tree Farm will be financed by Stephen Copeland and two investors. At the moment, the funding is sufficient to cater for starting a Christmas tree farm business so no outside loan is required.
8.1 Important Assumptions
Cole Christmas Tree Farm’s financial projections have been forecasted based on the assumptions below.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.00% | 10.00% | 11.00% |
| Long-term Interest Rate | 6.00% | 6.00% | 6.00% |
| Tax Rate | 15.00% | 16.00% | 18.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
The graph and table below illustrates Cole Christmas Tree Farm Brake-even Analysis.
| Brake-Even Analysis | |
| Monthly Units Break-even | 4000 |
| Monthly Revenue Break-even | $100,000 |
| Assumptions: | |
| Average Per-Unit Revenue | $200.20 |
| Average Per-Unit Variable Cost | $0.40 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
The charts below seek to explain the company’s anticipated Profit and Loss statistics based on monthly and annual rates. Using the information, it is easier to see forecasted financial figures for Cole Christmas Tree Farm.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $600,000 | $750,000 | $900,000 |
| Direct Cost of Sales | $45,000 | $50,000 | $60,000 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $45,000 | $50,000 | $60,000 |
| Gross Margin | $300,000 | $350,000 | $400,000 |
| Gross Margin % | 80.00% | 84.00% | 90.00% |
| Expenses | |||
| Payroll | $500,000 | $600,000 | $700,000 |
| Sales and Marketing and Other Expenses | $2,000 | $4,000 | $6,000 |
| Depreciation | $1,000 | $2,000 | $3,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $3,000 | $5,000 | $7,000 |
| Insurance | $1,000 | $1,500 | $1,700 |
| Rent | $5,000 | $6,000 | $7,000 |
| Payroll Taxes | $25,000 | $30,000 | $40,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $150,000 | $200,000 | $250,000 |
| Profit Before Interest and Taxes | $70,000 | $80,000 | $90,000 |
| EBITDA | $30,000 | $35,000 | $40,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $12,000 | $15,000 | $18,000 |
| Net Profit | $60,000 | $75,000 | $90,000 |
| Net Profit/Sales | 20.00% | 30.00% | 40.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
Information about profit and loss as well as total cost of sales has been summarized in the chart below.
8.4 Projected Cash Flow
Cole Christmas Tree Farm projected cash flow is indicated in the column diagram below.
The table below shares comprehensive data about pro forma cash flow, subtotal cash received, subtotal cash spent, sub-total cash from operations and sub-total spent on operations.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $30,000 | $35,000 | $40,000 |
| Cash from Receivables | $5,000 | $7,000 | $9,000 |
| SUBTOTAL CASH FROM OPERATIONS | $35,000 | $42,000 | $49,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $35,000 | $42,000 | $49,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $15,000 | $17,000 | $19,000 |
| Bill Payments | $12,000 | $20,000 | $35,000 |
| SUBTOTAL SPENT ON OPERATIONS | $27,000 | $37,000 | $54,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $28,000 | $40,000 | $56,000 |
| Net Cash Flow | $10,000 | $14,000 | $16,000 |
| Cash Balance | $18,000 | $20,000 | $22,000 |
8.5 Projected Balance Sheet
The projected balance sheet below indicates key information pertaining to Cole Christmas Tree Farm’s total assets, total liabilities, total current assets, total liabilities and capital, total long-term assets, total capital and subtotal current liabilities.
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $140,000 | $180,000 | $220,000 |
| Accounts Receivable | $9,000 | $11,000 | $14,000 |
| Inventory | $1,500 | $3,000 | $4,500 |
| Other Current Assets | $2,000 | $2,000 | $2,000 |
| TOTAL CURRENT ASSETS | $152,000 | $196,000 | $240,500 |
| Long-term Assets | |||
| Long-term Assets | $8,000 | $10,000 | $12,000 |
| Accumulated Depreciation | $11,000 | $13,000 | $15,000 |
| TOTAL LONG-TERM ASSETS | $1,000 | $500 | $300 |
| TOTAL ASSETS | $150,000 | $180,000 | $210,000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $10,000 | $12,000 | $14,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $10,000 | $12,000 | $14,000 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $10,000 | $12,000 | $14,000 |
| Paid-in Capital | $20,000 | $20,000 | $20,000 |
| Retained Earnings | $25,000 | $50,000 | $75,000 |
| Earnings | $80,000 | $110,000 | $140,000 |
| TOTAL CAPITAL | $150,000 | $180,000 | $210,000 |
| TOTAL LIABILITIES AND CAPITAL | $165,000 | $195,000 | $225,000 |
| Net Worth | $190,000 | $210,000 | $250,000 |
8.6 Business Ratios
The following table has data regarding Cole Tree Farm business ratios, net worth, total assets and ratio analysis.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 5.00% | 20.00% | 40.00% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.00% | 4.00% | 3.00% | 8.00% |
| Inventory | 2.00% | 1.80. % | 1.60% | 9.00% |
| Other Current Assets | 1.00% | 2.00% | 1.95% | 20.00% |
| Total Current Assets | 100.20% | 130.10% | 150.25% | 44.00% |
| Long-term Assets | -5.00% | -20.00% | -25.30% | 40.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.00% | 3.00% | 2.50% | 23.70% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 20.50% |
| Total Liabilities | 4.10% | 2.00% | 1.50% | 44.10% |
| NET WORTH | 80.30% | 90.00% | 100.10% | 34.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 80.10% | 82.00% | 84.00% | 0.00% |
| Selling, General & Administrative Expenses | 73.00% | 70.00% | 65.00% | 62.00% |
| Advertising Expenses | 2.00% | 1.00% | 0.20% | 1.20% |
| Profit Before Interest and Taxes | 22.00% | 25.00% | 28.40% | 1.50% |
| Main Ratios | ||||
| Current | 10.1 | 13 | 16 | 0.5 |
| Quick | 23 | 25.88 | 30.36 | 0.3 |
| Total Debt to Total Assets | 2.08% | 1.00% | 0.66% | 45.00% |
| Pre-tax Return on Net Worth | 60.00% | 70.00% | 72.20% | 1.20% |
| Pre-tax Return on Assets | 54.20% | 57.00% | 60.00% | 5.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 15.20% | 18.10% | 20.00% | N.A. |
| Return on Equity | 40.00% | 43.00% | 46.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 3 | 4 | 5 | N.A. |
| Collection Days | 82 | 89 | 104 | N.A. |
| Inventory Turnover | 16 | 19 | 22 | N.A. |
| Accounts Payable Turnover | 13.1 | 13.4 | 15 | N.A. |
| Payment Days | 25 | 25 | 25 | N.A. |
| Total Asset Turnover | 1.6 | 1.4 | 1.2 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.01 | -0.03 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $100,000 | $120,000 | $140,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.35 | 0.38 | 0.41 | N.A. |
| Current Debt/Total Assets | 3% | 2% | 1% | N.A. |
| Acid Test | 20 | 24 | 27 | N.A. |
| Sales/Net Worth | 1.3 | 1 | 0.4 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
Download Christmas Tree Farm Business Plan Sample in pdf
OGScapital staff also specialize in compiling such as organic fertilizer business plan, agriculture farm business plan, aquaponics farm business plan, fountain pepper farm business plan, lawn care business plan, nursery business plan and many others.
OGSCapital’s team has assisted thousands of entrepreneurs with top-rated document, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.
