coffee export business plan

Legal Page
Confidentiality Agreement

This sample business plan has been made available to users of Bplans.com, published
The undersigned reader acknowledges that the information provided by _________________________ in
bythis
Palo
Alto Software.
Our sample
plans reader
were developed
bydisclose
existingit companies
and
business
plan is confidential;
therefore,
agrees not to
without the express
written
permission
of
_________________________.
new business start-ups as research instruments to determine market viability, or funding
availability. Names, locations and numbers may have been changed, and substantial
It is acknowledged by reader that information to be furnished in this business plan is in all respects
portions
of text
may have
to preserve

confidential
in nature,
otherbeen
than omitted
information
which is in the public domain through other means
and that any disclosure
or use of information.
same by reader, may cause serious harm or damage to
confidentiality
and proprietary
_________________________.

You
are welcome to use this plan as a starting point to create your own, but you do not
Upon request, this document is to be immediately returned to _________________________.
have permission to reproduce, resell, publish, distribute
or___________________
even copy this plan as it exists here.
Signature

Requests for reprints, academic use, and other dissemination of this sample plan should
___________________
beName
emailed
to or
theprinted)
marketing department of Palo Alto Software at
(typed

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

Copyright Palo Alto Software, Inc., 2020 All rights reserved.


Silvera and Sons, Ldta

1.0 Executive Summary
Silvera & Sons prepares green Arabica coffee beans grown in Brazil for exportation to American
specialty roasters and sells to wholesalers on the Brazilian market. We will expand production
capacity from 72,000/60kg bags per year to 120-160,000/60kg per year. Our coffee stands out
from that of the competition. We prepare the top five percent, in terms of quality standards, of
all Arabica beans on the market. Our customers seek this product as it provides them with a
point of differentiation to specialty roasters. In the past six years, demand for our coffee has
exceeded the amount we are able to supply and we have been forced to refuse requests for
larger shipments.
We predict growth of thirty percent in the first year with sales exceeding ($BRL) expectations. In
year three the plant will run at maximum capacity and based on the current price of coffee we
expect excellent profits ($BRL). We have positive indicators from current importers that the
additional amount of beans will be sold.
Our keys to success are:

1. Establishing and maintaining working relationships and contractual agreements with
American importers and Brazilian coffee brokers and wholesalers.

2. Bringing the new facility to maximum production within three years of operation.
3. Increasing our profit margin with the use of improved technology in the new facility.
4. Effectively communicating to current and potential customers, through targeted efforts, our

position as a differentiated provider of the highest quality Arabica beans in the world.
Chart: Highlights

Page 3


Silvera and Sons, Ldta

1.1 Objectives
The objectives of Silvera & Sons:

•
•
•
•

Increase production and sale from 78,000/60kg bags per year to approximately
100,000/60kg bags per year in the first year of operation at the proposed facility and reach
maximum capacity of 120,000/60kg bags per year by year three.
Increase sales substantially in the first full year of operation.
Establish strategic relationships with 10-15 American importers in Los Angeles, San
Francisco, & Seattle.
Increase gross margins in the next three years.

1.2 Mission
Silvera & Sons Ltda seeks to serve coffee importers and enthusiasts by exceeding minimum
acceptable quality standards and by providing the highest quality product at the lowest possible
price. We value our relationships with current and future customers and hope to communicate
our appreciation to them through our outstanding, guaranteed product quality, personal service,
and efficient delivery. Our commitment to our customers and the country of Brazil will be

reflected through honest and responsible business.
1.3 Keys to Success
The keys to success for Silvera & Sons are:

•
•
•
•

Establishing and maintaining working relationships and contractual agreements with
American importers and Brazilian coffee brokers and wholesalers.
Bringing the new facility to maximum production within three years of operation.
Increasing our profit margin with the use of improved technology in the new facility.
Effectively communicating, to current and potential customers, our position as a
differentiated provider of the highest quality Arabica beans in the world.

2.0 Company Summary
Silvera & Sons buys and prepares raw coffee in parchment (pergamino), or coffee in its postharvest stage. The finished product, green Arabica coffee beans are packaged in 60kg sacks
and sold on the U.S. and Brazilian market. Our customers are primarily American importers and
Brazilian wholesalers who provide high-quality beans to the specialty roasting market.
2.1 Company Ownership
Silvera & Sons Ltda. is a private, family owned preparer and exporter of Brazilian-grown, green
Arabica coffee beans. It is owned and operated by Marco Silvera Sr. and his sons, Marco Silvera
Jr. and Antonio Silvera.
2.2 Company History
Silvera & Sons is in its sixth year of operation. The current plant has been in operation for 15
years and for 12 of those years was managed by Marco Silvera Sr. who was then an employee of

Page 4

Silvera and Sons, Ldta

the former owner, Cafe Fina. Since the plant was purchased, Silvera & Sons has maintained
maximum production and sales. It is currently operating at maximum capacity.
Table: Past Performance
Past Performance
1996

1997

1998

$16,262,532
$2,439,380
15.00%
$12,196,899
12.00

$17,304,066
$2,630,218
15.20%
$12,631,968
12.00

$18,345,600
$2,814,215
15.34%
$13,346,424
12.00

1996

1997

1998

$0
$0
$0
$0

$0
$0
$0
$0

$994,260
$355,200
$243,936
$1,593,396

Long-term Assets
Accumulated Depreciation
Total Long-term Assets

$0
$0
$0

$0
$0
$0

$521,650
$100,000
$421,650

Total Assets

$0

$0

$2,015,046

Accounts Payable
Current Borrowing
Other Current Liabilities (interest free)
Total Current Liabilities

$0
$0
$0
$0

$0
$0
$0
$0

$8,435
$58,000
$0
$66,435

Long-term Liabilities
Total Liabilities

$0
$0

$0
$0

$402,000
$468,435

Paid-in Capital
Retained Earnings
Earnings
Total Capital

$0
$0
$0
$0

$0
$0

$0
$0

$525,000
$85,985
$935,626
$1,546,611

Total Capital and Liabilities

$0

$0

$2,015,046

0

0

60

Sales
Gross Margin
Gross Margin %
Operating Expenses
Inventory Turnover
Balance Sheet

Current Assets

Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets

Current Liabilities

Other Inputs
Payment Days

Page 5


Silvera and Sons, Ldta

Chart: Past Performance

2.3 Company Locations and Facilities
The Silvera & Son's main warehouse and office is located in Ouro Fino. The warehouse has the
capacity to prepare approximately 6,000 60kg bags of exportable coffee beans. The proposed
new warehouse and preparation facility site is also located in Ouro Fino. The new facility will be
3.500m2 and will have 30 selecting machines with capacity to prepare 40,000 bags for
exportation and 80,000 bags for storage. The proposed facility will also handle shipping.
3.0 Products
Silvera & Sons deal exclusively in green coffee, grown in the southern states of Brazil and onehundred percent Arabica. Beans in parchment are purchased directly from growers and are dehusked and packaged into 60kg sacks in the Silvera & Sons' plant. The final product is suitable
for sale and exportation.
3.1 Competitive Comparison
In order to differentiate our product, coffee, which is a commodity, from the product offering of
competitors, all beans are guaranteed fresh and are shipped within seven days of preparation.

In addition all beans are sorted at ninety-five percent screen 18 and above compared to the
industry standard ninety percent screen of 17 and above. The beans shipped by Silvera & Sons
are therefore larger than most and are guaranteed fresh. In addition, all of the farms from which
Silvera & Sons purchases coffee adhere to environmentally sound farming practices and avoid
the use of pesticides and chemicals in crop production.
There are approximately ten competitors who offer a product similar to ours. Our research
indicates that with the additional capacity we would become one of the top four, in terms of
quantity, providers. We have the advantage of established distribution channels and reputation.
In addition, improvements to our marketing efforts will further separate us from the larger
market and from our close competitors.

Page 6


Silvera and Sons, Ldta

3.2 Sales Literature
Silvera & Sons currently works with two importers in the United States who handle all of our
shipments. Likewise, we have dealt with the same Brazilian wholesalers, for internal sales, each
year. Sales to this point have been handled through personal selling. Additional sales literature
will include a website, direct mail to specialty roasters and importers, and print advertising in
several trade publications including Coffee Times, a monthly publication which targets American
business dealing with issues relevant to the coffee industry.
3.3 Sourcing
Both the existing and the proposed facilities are ideally located in Ouro Fino, in the state of
Minas Gerais. Minas Gerais is the largest coffee producing state in Brazil and beans produced in
the region are of the highest quality. With additional financing, we would be able to buy larger
volumes at lower prices. We now buy from one or more of six private growers or grower
cooperatives. Contracts are secured six months in advance of harvest.
3.4 Technology

Improvements in technology will include the use of partially automated selecting machines
which will allow for increased production capacity with a lower machine-to-operator ratio than
we currently employ. Additional storage capabilities will decrease shipping charges and will
reduce the need for permanent shipping employees by thirty-five percent. High-technology
information system upgrades will improve all aspects of business, especially inventory control,
tracking of shipments, and communication with clients in import countries.
3.5 Future Products
Alternative to the Arabica bean, Coffea Robusta, though it shares some similarities with the
Arabica bean, is very different. Coffea Robusta is grown at lower elevations and has a higher
yield per plant as well as being more resistant to disease. It also has up to twice the caffeine
level as it's cousin the Arabica Bean. Due to the lower cost and larger market amount of
Robusta coffee, it is found primarily on supermarket shelves. The Arabica species grows at much
higher elevations, better soil rich areas, and is the source of the worlds finest coffees.
By providing the finest species of coffee, Silvera & Sons has taken the first step towards a
differentiated product. To further distinguish our coffee, we adhere to higher quality standards
than approximately ninety-five percent of the market. In addition, all of our beans are of the
Bourbon Santos variety. The "Bourbon" strain is considered one of the finest Brazil has to offer. It
is grown in the mountains surrounding Sao Paulo and is highly sought after by specialty roasters
from around the world. We have assumed the position of a specialized provider of this
exceptional coffee. Our customers, American and Brazilian specialty roasters, recognize Silvera
& Sons for our ability to provide the type of beans they require to produce award winning coffee.
4.0 Market Analysis Summary
Coffee is the second largest commodity market next to oil and Brazil has remained the largest
producer of coffee in the world for two centuries. Imports of Arabica coffee in the United States
have increased ninety-four percent in the past five years and consumption of coffee within
Brazil has seen similar increases. In addition, demand for green coffee is above the market
clearing level, and market price and crop yield estimates are at an all time high.
The increase in the number of independent specialty roasters in the United States and Brazil has
contributed to and is an indicator of the increased demand for coffee. Within the larger coffee

Page 7


Silvera and Sons, Ldta

market is our target market is the specialty roaster. These discerning customers want the
highest quality coffee beans. They serve the growing "gourmet" coffee market and are
represented by large American companies like Starbucks and thousands of smaller specialty
roasters. The Arabica bean is considered to be the best in the world and as such, the demand
for Arabica beans is high on the specialty roaster market. Specialty roasters are willing to pay
more for Arabica beans and attempt to distinguish themselves via the characteristics of the
bean they use i.e. the location in which it was grown, farming methods, bean size, etc. The final
consumer is relatively price insensitive if the coffee is good, has won awards, or is compatible
with a popular trend. We estimate that specialty roasting in the U.S. alone is a ($USD) onebillion market.
4.1 Market Segmentation
The potential customer groups for Silvera & Sons are:

•

•
•

American importers of green Arabica beans: Market research suggests that there are
approximately 200 importers of green Arabica coffee on the West and East Coasts of the
United States that would be able to handle the quantities of our shipments and are in our
target market . Combined, they import a total of four to five million/60kg bags of Brazilian
coffee per year.
Brazilian green coffee wholesalers: This market serves as a safety valve for our export
business. By maintaining relationships with Brazilian wholesalers we have an alternative
market with established distribution channels.

Brazilian specialty roasters: As we move towards maximum capacity 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 four years into operation of the new facility.

Table: Market Analysis
Market Analysis
Potential Customers
U.S. Importers (60kg bags)
Brazilian Wholesalers (60kg bags)
Total

1999

2000

2001

2002

20

70,140
30,060
100,200

88,376
37,876
126,252

111,354
47,724
159,078

140,306
60,132
200,438

176,78
75,76
252,55

Growth
26%
26%
26.00%

Page 8


Silvera and Sons, Ldta

Chart: Market Analysis (Pie)

4.2 Industry Analysis
Coffee has been a growing industry for the past five years. The most notable growth has been in
the American market where imports have increased almost one-hundred percent and the
market price has nearly doubled. The number of specialty roasters has increased from a handful
of well known companies to thousands of independent entities. There is a constant struggle
within this market to produce the best coffee and serve one or more niches within the larger

market. Brazilian coffee producers and exporters have made great efforts to improve
agricultural techniques, processing methods, and distribution in order to better serve this
growing market. Demand for Brazilian coffee is currently greater than supply.
4.2.1 Competition and Buying Patterns
The purchase decision for our customer is based on trust in our process and bean selection. We
have established relationships with our customers which extend beyond that of the buyer/seller.
The Silvera & Sons label means that the product has been chosen and prepared with the highest
quality standards in mind. Our beans are priced up to nine percent higher than similar products.
Our customers are willing to pay more for our product because they are familiar with us and
trust in the quality of our beans. This is the result of their success in the marketplace with our
product.

Page 9


Silvera and Sons, Ldta

4.2.2 Main Competitors
There are approximately 150 exporters of green Arabica beans in Brazil. According to the
Brazilian Coffee Exporters Association, ABECAFE, fifty percent (50%) of all green coffee exports
come from their 45 members. Approximately eighty percent (80%) of these exports come from
20 ABECAFE members. Market contributions of individual exporters are held in strict confidence
and are not available to the public. However, based on this information and given the large
number of remaining exporters not affiliated with ABECAFE who account for the remaining sixty
percent (60%) of all exports, we assume that many of the largest competitors are amongst the
ABECAFE members. They are:
Agro Food

Cooxupe

Mitsui Alimentos

Allcoffee

Cotia Trading

Nicchio Cafe

Bramazonia

Custudio Forzza

Nova America

Cafe do Ponto

Esteve

N.S. da Guia

Cafeeira Carolina

Eurobrasil

Ottoni & Filhos

Cargill Agricola

Fazenda da Serra

Porto de Santos

Casas Sendas

Guaxupe

Ref. Oleos Brasil

Cocam

Inter-Continental

R&G

Comexim

JR Exportadora

Rio Doce

Comercial Ben.

MC Coffee

Tres Coracoes

Compel

Melitta

Volcafe

4.2.3 Industry Participants
Silvera & Sons deals exclusively in the exportation and sale of green Arabica beans. There are
approximately 150 Brazilian businesses in this market. However, approximately 30 companies
account for approximately eighty percent of the total amount of green Arabica exports. In
addition many of these companies prepare, export and sell, to the Brazilian market, other coffee
products. Additional products include:

•
•
•
•

Green Robusta (Conillon) beans: The Robusta bean is produced in far less quantity, in Brazil,
than the Arabica and is considered an inferior species. The Robusta market represents less
than ten percent of all coffee produced in Brazil.
Soluble coffee products: These are instant (water soluble) coffees and are either
decaffeinated or not. Sales of soluble coffee products account for approximately twelve
percent of the total market.
Roasted & Ground coffee: Approximately eighty-five percent of all roasted and ground coffee
(decaffeinated and non-decaffeinated) goes to internal consumption and represents
approximately twenty-seven percent of the total coffee market.
Primary competitors include: Golden Brazil, Bramazonia, Comexim, and Nicchio Cafe.

4.2.4 Distribution Patterns
All of the coffee produced for exportation by Silvera & Sons and approximately eighty-five
percent of all coffee produced for exportation in Brazil is shipped from Porto de Santos. Prepared
coffee is shipped via rail and/or truck from the Silvera & Sons plant in Ouro Fino to Porto de
Santos. From the port it is then shipped, in 40 foot containers to the port of Miami via cargo

Page 10


Silvera and Sons, Ldta

ship. Distribution charges are assumed by Silvera & Sons up to the arrival of the shipments in
Miami whereupon importers assume responsibility, as detailed in contract, of the shipment and
additional distribution charges.
5.0 Strategy and Implementation Summary
Silvera & Sons strategy is to expand production capabilities in order to fulfill the requests of
importers with whom we currently deal for larger orders which we are unable to currently fulfill.
In addition Silvera & Sons seeks to establish additional contracts with importers on the West
Coast of the United States and increase the volume of green coffee sold on the Brazilian market.
We intend to first maximize quantity of coffee sold within existing channels and second,
establish additional accounts through targeted marketing efforts.
5.1 Competitive Edge
Silvera & Sons competitive edge comes from the advantage of having established relationships
with American importers, and Brazilian coffee growers, green coffee brokers and wholesalers.
Silvera & Sons has received affirmation of the demand for their product in the form of requests
from importers for larger product shipments. Ours is a superior product offering because of the
larger average size of the bean and because we purchase from growers who rely on the use of
chemicals and pesticides less than two percent of the time. In addition, prompt preparation and
shipment provides importers with a product that is up to one month fresher than beans sold by
many exporters.
5.2 Strategy Pyramid
Our main strategy is to communicate the unique and desired attributes of our coffee to larger
segments of the American and Brazilian markets. We sell a superior product, yet one that can
be considered a commodity. It is therefore important that we effectively communicate the
unique aspects which make it ideally suited for a niche market.

The unique aspects of our products include superior product selection and preparation, quality
assurance, and efficient distribution. These are things we have done since we started doing
business. The tactics we will use to communicate these strengths include, personal selling,
targeted print advertising, and improved communication capabilities via information system
improvements and a sophisticated website.
As tactics below the pyramid, we have identified three specialty publication in the United States
and two in Brazil in which we will run print ads. We also plan to increase personal selling efforts
to additional American importers. Part of the personal selling will include invitations to importers
to visit our facilities, at our expense.
5.3 Marketing Strategy
Silvera & Sons marketing strategy will include the use of targeted print media advertising and
direct selling to importers in the United States who provide green coffee to specialty roasters.
We will capitalize on existing relationships with importers who have stated their willingness to
contact West Coast affiliates and recommend Silvera & Sons coffee. We have positioned
ourselves as a differentiated provider of the highest quality Arabica beans. The primary goal of
all marketing efforts will be to communicate this to existing and potential customers.

Page 11


Silvera and Sons, Ldta

5.3.1 Promotion Strategy
Relationships are key to success in the export business. Importers in Florida have on several
occasions visited the Silvera & Sons facility, family home, and farms from which coffee is
purchased. Additional accounts and contacts with West Coast importers have all been
established and maintained through personal contact. Personal selling will remain our most
important means of promotion. Marco Silvera Jr. will continue to lead this effort. In addition to
personal selling Silvera & Sons has identified several specialty publications within which print
advertisements will run. Direct mail, in the form of personal letters will also be used to

communicate with existing and potential clients. Our budget for promotion activities is as
follows:

•
•
•

Personal Selling which includes phone expenses, travel for Silvera & Sons employees and for
importers who we invite to Brazil: ($BRL) 35,000 annually.
Print Advertising in three specialty publications and direct mail: ($BRL) 12,000 monthly.
World Wide Web presence: ($BRL) 125,000 to produce a new site and $2,500 annually to
maintain the site.

5.3.2 Distribution Strategy
Distribution is one of the greatest challenges faced by Silvera & Sons. The distribution system of
Brazil is largely outdated and inefficient. Moreover, taxes, specifically excise taxes are high.
Distribution costs for internal sales are absorbed by the customer but distribution costs for
exports are absorbed by us. Increasing the volume of our exports makes us eligible to receive
reduced fees and helps ensure that trucks and rail cars are running at maximum capacity.
5.3.3 Marketing Programs
Our most important marketing program is an increase in personal selling combined with
targeted direct mail and print advertising. Marco Silvera Jr. will be responsible, with a budget of
($BRL) 35,000 and a milestone date of May 30, 1999. The program is intended to establish
contractual agreements with 10 additional importers, increase brand awareness of our product
in the United States, and communicate our position as a provider of the highest quality green
Arabica beans on the market.
Another key marketing program is the development of a sophisticated Website. The goal of this
program is to increase our presence on the world wide web and provide additional means of
communication and customer data collection. The website will cost ($BRL) 125,000.
5.3.4 Positioning Statement

For American importers of Brazilian coffee who use our coffee to supply specialty roasters,
Silvera & Sons coffee beans are the highest quality and largest beans available. Unlike many
exporters, our beans exceed the minimum acceptable quality standards and are shipped within
one week of preparation to ensure the largest and freshest beans on the market. Our products
are perfectly suited for the specialty roasting market which constantly strives to offer award
winning coffee.
5.3.5 Pricing Strategy
Because Silvera & Sons adheres to higher quality standards, the price of our coffee is slightly
higher (four to nine percent) than the market average. The import market largely determines
the price of imported coffee in the United States. Beans that do not meet Silvera & Sons quality

Page 12


Silvera and Sons, Ldta

standards are resold on the Brazilian market at the current market price. Green coffee, on the
import market, now sells for US$ 213.56/60kg bag. According to Silvera & Sons pricing strategy,
Silvera & Sons coffee would sell for approximately US$ 224/60kg bag. Importers have to this
point been willing to pay the additional cost.
5.4 Sales Strategy
Silvera & Sons strategy focuses first on meeting the increased demand from importers with
whom we have established relationships for larger orders. These importers are critical to our
ability to acquire additional accounts on both the East and West coasts of the United States
without having to spend a great deal on sales efforts. Secondly we will focus on increasing the
volume, while maintaining the percentage of sales, of beans sold to the internal Brazilian
market. When we have reached maximum sales to existing channels we can then shift the
majority of our focus to securing additional import accounts.
5.4.1 Sales Forecast
The following chart and table show our present sales forecast. We project healthy growth in

sales in 1999, a slightly smaller increase again in 2000, and reach maximum for production
capacity in 2001 representing a large growth over the previous year.
Table: Sales Forecast
Sales Forecast
1999

2000

2001

Import and Export
Other
Total Unit Sales

100,200
0
100,200

120,000
0
120,000

160,000
0
160,000

Unit Prices
Import and Export
Other

1999
$262.08
$0.00

2000
$275.18
$0.00

2001
$288.29
$0.00

Import and Export
Other
Total Sales

$26,260,416
$0
$26,260,416

$33,021,600
$0
$33,021,600

$46,126,400
$0
$46,126,400

Direct Unit Costs
Import and Export

Other

1999
$212.00
$0.00

2000
$222.60
$0.00

2001
$233.20
$0.00

$21,242,400
$0
$21,242,400

$26,712,000
$0
$26,712,000

$37,312,000
$0
$37,312,000

Unit Sales

Sales

Direct Cost of Sales
Import and Export
Other
Subtotal Direct Cost of Sales

Page 13


Silvera and Sons, Ldta

Chart: Sales Monthly

Chart: Sales by Year

5.4.2 Sales Programs
Personal selling: Through personal contact we need to confirm in writing orders for larger
quantities of our product from American importers and Brazilian wholesalers. In addition we
need to establish sales agreements with at least six, possibly ten, additional American
importers. Marco Silvera Jr. is responsible and the due date is May 30, with a budget of ($BRL)
24,000.

Page 14


Silvera and Sons, Ldta

5.5 Strategic Alliances
Our most valued alliances are those we have developed with American importers. They have
the ability and willingness to purchase larger quantities of our products and recommend us to
other importers. Additional alliances with trucking contractors and the Porto de Santos Cafe

Commission are currently established.
5.6 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.
Table: Milestones
Milestones
Milestone
Secure Financing
Establish Import Accounts
Increase Production
Hire Intl. Legal & Finance Specialist
Totals

Start Date
1/1/1999
1/1/1999
1/1/1999
1/1/2000

End Date
2/1/1999
5/1/1999
9/1/1999
3/1/2000

Budget
$12,000
$18,000
$18,000

$35,000

Manager
M. Silvera Sr.
M. Silvera Jr.
A Silvera
TBA

$83,000

Chart: Milestones

6.0 Management Summary
Silvera & Sons management consists of four full-time employees. Additional assistance is
acquired on a part-time basis and/or through the use of consultants, specifically in legal
matters. Detailed descriptions are found in the following section.

Page 15


Silvera and Sons, Ldta

6.1 Management Team
Silvera & Sons is organized into three functional areas: product sourcing, sales, and marketing;
production and shipping; and finance and administration.
Marco Silvera Sr: CEO/President in charge of finance and administration. Marco Silvera Sr., 57
has worked in the coffee export business for 30 years. Before starting Silvera & Sons he was the
Chief Financial Officer and general manager of the Cafe Fino coffee company. He began working
for Cafe Fino after he finished an accounting degree at the University of Southern California. The
current Silvera & Sons plant was formerly owned by Cafe Fino and was sold to Mr. Silvera who

had decided to "retire" and wanted to run a small business. Cafe Fino had purchased larger
facilities and no longer needed the plant.
Marco Silvera Jr: Vice president in charge of product sourcing, sales, and marketing. Marco
Silvera Jr., 32 completed his MBA at Syracuse University and worked for several years on the
Brazilian stock and commodities market as a broker. He later took a position as an International
Sales and Marketing Representative for a major agricultural brokerage and supply firm in Sao
Paulo. He is expected to succeed his father as CEO of Silvera & Sons Ltda.
Antonio Silvera: Vice president in charge of production and shipping. Antonio Silvera, 29 worked
as a civil engineer for two years for the Brazilian government after completing an engineering
degree at the University of Brazil, Sao Paulo. He is responsible for the supervision of all plant
employees.
Additional Management:
Ralph Henzo, CFO:
Gracie, Renoldo, & Fertado Attorneys at Law, Sao Paulo.
6.2 Management Team Gaps
We currently lack a full-time professional who can deal with the changing legal and financial
aspects of international business. We have relied on legal consultants but are now analyzing the
possibility of adding an additional position to deal exclusively with international issues. In
addition, as we continue to grow and hire more personnel, we may hire a controller.

Page 16


Silvera and Sons, Ldta

6.3 Personnel Plan
The personnel plan requires an increase in plant employees from 11 to 17-20 within the next
three years. Additional employees will also be added to increase administrative and accounting
support. One additional employee will be added to the sales and marketing division. We will
retain all current employees as they will not have to relocate.

Table: Personnel
Personnel Plan
1999

2000

2

$38,400
$219,996
$42,000
$300,396

$41,088
$228,796
$47,000
$316,884

$43,9
$237,9
$50,0
$331,9

$45,000
$180,492
$225,492

$48,150
$80,000
$128,150

$51,5
$85,0
$136,5

$50,400
$42,000
$9,000
$18,000
$119,400

$53,928
$44,940
$9,360
$22,000
$130,228

$57,7
$44,9
$44,7
$26,0
$173,3

Name or Title or Group
Name or Title or Group
Name or Title or Group
Subtotal

$0
$0

$0
$0

$0
$0
$0
$0

Total People

15

16

$645,288

$575,262

Production Personnel
Antonio Silvera, VP Production
Plant Employees
Other
Subtotal
Sales and Marketing Personnel
Marco Silvera Jr, VP Sales/Mktg.
Other
Subtotal
General and Administrative Personnel
Marco Slivera Sr, CEO
Ralph Henzo, CFO

Admin/Acctg. Staff
Other
Subtotal
Other Personnel

Total Payroll

$641,8

7.0 Financial Plan
We want to finance growth through a combination of long-term debt and cash flow. Purchase of
the larger facility and equipment will require approximately eighty percent debt financing.
Additional technology will be primarily financed with cash-flow. Inventory turnover must remain
at or above four or we run the risk of backing up orders and jeopardizing our freshness
guarantees. We have had no problems with accounts receivable and we expect to maintain our
collection days at 30 with thirty percent of sales on credit.
In addition, we must achieve gross margins of thirty-five percent and hold operating costs no
more than sixty-five percent of sales.

Page 17


Silvera and Sons, Ldta

7.1 Break-even Analysis
The break-even analysis shows that Silvera & Sons has sufficient sales strength to remain
viable. Our per month break-even point projections are detailed in the following table and chart.
Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Units Break-even
Monthly Revenue Break-even

2,049
$537,078

Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost

$262.08
$212.00
$102,629

Page 18


Silvera and Sons, Ldta

7.2 Important Assumptions
Important assumptions for this plan are found in the following table. These assumptions largely
determine the financial plan and require that we secure additional financing.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate

Long-term Interest Rate
Tax Rate
Other

1999

2000

2001

1
14.00%
9.00%
47.00%
0

2
14.00%
9.00%
47.00%
0

3
14.00%
9.00%
47.00%
0

7.3 Key Financial Indicators
The most important factor to Silvera & Sons anticipated growth is the procurement of necessary

financing. The size of the orders currently requested by importers are larger than what can be
produced given our present plant capacity.
The following chart shows changes in key financial indicators: sales, gross margin, operating
expenses, collection days, and inventory turnover. The growth in sales goes above thirty percent
in the first year, twenty percent in second, and back to thirty percent in year three after which it
will settle. We expect to increase gross margin but our projections show a decline in the first two
years following the purchase of the new facility. This is due to the facilities not being run at
maximum capacity. The projections for collection days and inventory turnover show that we
expect a decline in these indicators.
Chart: Benchmarks

Page 19


Silvera and Sons, Ldta

7.4 Projected Profit and Loss
We expect to close the first year of production in the new facility with quite exempary ($BRL)
sales and to increase our sales in the second and third years. Net earnings will be above
industry average ($BRL).

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 20


Silvera and Sons, Ldta

Table: Profit and Loss
Pro Forma Profit and Loss
1999

2000

2001

$26,260,416
$21,242,400
$300,396
$300,000
$21,842,796

$33,021,600
$26,712,000
$316,884
$345,000
$27,373,884

$46,126,400
$37,312,000
$331,912
$410,000
$38,053,912

$4,417,620
16.82%

$5,647,716

17.10%

$8,072,488
17.50%

$225,492
$144,000
$21,000
$24,000
$414,492
1.58%

$128,150
$165,000
$22,500
$26,500
$342,150
1.04%

$136,521
$165,000
$24,000
$28,500
$354,021
0.77%

$119,400
$0
$216,000
$50,400

$36,000
$72,000
$305,250
$0
$0
$799,050
3.04%

$130,228
$0
$216,000
$50,400
$36,000
$75,000
$300,000
$0
$0
$807,628
2.45%

$173,377
$0
$216,000
$50,400
$36,000
$78,000
$300,000
$0
$0
$853,777

1.85%

$0
$18,000
$0
$18,000
0.07%

$0
$24,000
$0
$24,000
0.07%

$0
$30,000
$0
$30,000
0.07%

Total Operating Expenses

$1,231,542

$1,173,778

$1,237,798

Profit Before Interest and Taxes
EBITDA

Interest Expense
Taxes Incurred

$3,186,078
$3,402,078
$269,166
$1,370,949

$4,473,938
$4,689,938
$238,449
$1,990,680

$6,834,690
$7,050,690
$225,191
$3,106,465

Net Profit
Net Profit/Sales

$1,545,964
5.89%

$2,244,809
6.80%

$3,503,035
7.59%

Sales
Direct Cost of Sales
Production Payroll
Other Costs of Sales
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll
Advertising/Promotion
Travel
Other Sales and Marketing Expenses
Total Sales and Marketing Expenses
Sales and Marketing %
General and Administrative Expenses
General and Administrative Payroll
Marketing/Promotion
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other General and Administrative Expenses
Total General and Administrative Expenses
General and Administrative %
Other Expenses:
Other Payroll
Consultants

Other Expenses
Total Other Expenses
Other %

Page 21


Silvera and Sons, Ldta

Chart: Profit Monthly

Chart: Profit Yearly

Page 22


Silvera and Sons, Ldta

7.5 Projected Cash Flow
Silvera & Sons expects to manage cash flow over the next three years with the assistance of a
loan supported by the Central Bank of Brazil. This financing assistance is required to provide the
working capital to meet the current needs for the construction of the new production facility and
additional personnel, distribution costs, and other related expenses.
Table: Cash Flow
Pro Forma Cash Flow
1999

2000

2001

$26,260,416
$26,260,416

$33,021,600
$33,021,600

$46,126,400
$46,126,400

$0
$0
$0
$2,700,000
$0
$0
$0
$28,960,416

$0
$0
$0
$0
$0
$0
$650,000
$33,671,600

$0
$0

$0
$0
$0
$0
$650,000
$46,776,400

1999

2000

2001

$645,288
$23,678,478
$24,323,766

$575,262
$30,335,893
$30,911,155

$641,810
$42,448,245
$43,090,055

$0
$57,996
$0
$305,250
$60,000

$2,700,000
$0
$27,447,012

$0
$0
$0
$294,636
$75,000
$0
$0
$31,280,791

$0
$0
$0
$0
$85,000
$0
$0
$43,175,055

$1,513,404
$2,507,664

$2,390,809
$4,898,473

$3,601,345
$8,499,818

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 23


Silvera and Sons, Ldta

Chart: Cash

Page 24


Silvera and Sons, Ldta

7.6 Projected Balance Sheet
As shown in the balance sheet in the following table, our net will grow quickly by the end of
1999 and to continue steadily through the end of the plan period. The monthly projections are in
the appendix.
Table: Balance Sheet
Pro Forma Balance Sheet
1999

2000

2001

$2,507,664
$1,958,880
$303,936
$4,770,480

$4,898,473
$3,079,078
$378,936
$8,356,487

$8,499,818
$4,777,515
$463,936
$13,741,269

$3,221,650
$316,000
$2,905,650
$7,676,130

$3,221,650
$532,000
$2,689,650
$11,046,137

$3,221,650
$748,000
$2,473,650
$16,214,919

1999

2000

2001

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$1,786,801
$4
$0
$1,786,805

$2,556,635
$4
$0
$2,556,639

$3,572,383
$4
$0
$3,572,387

Long-term Liabilities
Total Liabilities

$2,796,750
$4,583,555

$2,502,114
$5,058,753

$2,502,114
$6,074,501

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$525,000
$1,021,611
$1,545,964
$3,092,575
$7,676,130

$1,175,000
$2,567,575
$2,244,809
$5,987,383
$11,046,137

$1,825,000
$4,812,383
$3,503,035
$10,140,418
$16,214,919

Net Worth

$3,092,575

$5,987,383

$10,140,418

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

7.7 Business Ratios
Standard business ratios are included in the following table. The ratios show an aggressive plan
for growth in order to reach maximum production within three years. Return on investment
increases each year 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. Projections are based on the 1997/98 selling price. Industry Profile is based on
NAICS code 311920, Coffee and Tea Manufacturing.

Page 25