SSJQ Rabbitry Ltd.

Raising 500k to build high tech rabbit farming.

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SSJQ RABBITRY LTD. Business Plan Prepared By: SSJQ Rabbitry Ltd. 508 Baysprings Lane SW Airdrie, AB T4B 3X8 Main: (403) 393-1798 Alternate: (587) 227-5539 Email: [email protected] Executive Summary This business plan has been prepared to obtain financing in the amount of $500,000 to expand production, set up equipment and facilities, and implement an aggressive sales and marketing program. SSJQ Rabbitry Ltd. is a new company which produces purebred rabbit meat for consumers, commercial purchase, pet suppliers, and gardening industries with a potential market of over $150 million over the next 5 years. SSJQ Rabbitry Ltd. will be profitable within the first year of operations and conservatively expects to achieve sales of almost $300,000 with net profits of over $200,000 by the end of the second year. The company will be self-sustaining by the end of the first year. The major markets for the product are throughout, Asia, Europe and North America. An extensive market survey has revealed that no other product presently on the market compares with SSJQ Rabbitry in terms of quality, breed, and competitive pricing. Full production can begin within 3 months after financing has been arranged and the first 800 rabbits will be available for market within 6 months after financing. SSJQ Rabbitry Ltd. is prepared to offer equity return for investment in the Company. The Company will also consider other arrangements to obtain the necessary finances. No guarantees are expressed or implied regarding the success of the venture described in this busines plan. Table of Contents SSJQ RABBITRY LTD. Business Plan Table of Contents 1. The Business Venture 2. The Company 3. Management 4. The Product 5. The Market Place 6. Market Size 7. The Competition 8. Sales Plan 9. Sales Forecast 10. Sources of Market Information 11. Product Development 12. Production 13. Product Cost 14. Gross Profit 15. Financial Requirements 16. Pro Forma Income Statements 17. Cash Flow Projections 18. Disbursement Summary 1. The Business Venture This business plan has been prepared in order to raise the financing necessary to further expand, to produce and to distribute purebred rabbit meat that has widespread commercial, pet supply, gardening, and consumer applications. The product, which are called kits, are ready for sale at 8 weeks or 5lbs, whichever comes first, in supply of demand within those markets mentioned above. The increasing concerns about health, environmental impact, and sustainable livestock production c From the consumer perspective the growing demand for rabbit meat fulfills consumption markets and producers feel more Canadians would be eating rabbit if not for slow moving government policies. Beef, chicken and pork have very visible marketing campaigns and producers believe rabbits will be a part of this market with targeting eco-friendly meats, which are on the rise. Rabbits are cost efficient and easy to raise and maintain, and best of all they cannot be medicated if sick as they die too quickly, so the lean white meat is free from hormones and antibiotics. The idea for the business was conceived by Mr. Mbachu as a result of 10 years prior experience in rabbit farming 2. The Company SSJQ Rabbitry Ltd. was incorporated in the Province of Alberta on January 20, 2016. The Company’s Business Address is: 508 Baysprings Lane SW Airdrie, AB T4B 3X8 Main: (403) 393-1798 Alternate: (587) 227-5539 Email: [email protected] SSJQ Rabbitry Ltd. was established to breed and distribute purebred rabbit meat for consumption. At present, the Company has one full time employee. The company is presently operating out of the residence of one of the principals. The two principals of the Company are: Mr. Elvis Mbachu, Owner and CEO, and is responsible for operations and production. Mrs. Melissa Mbachu, Co-Owner and CFO, and is responsible for marketing and financial record keeping. The $500,000 will be supplemented by revenue generated from sales of the product to cover the total financial requirements for the first year of operation. The business will be self-sustaining by the end of the first year of operations. SSJQ Rabbitry Ltd. is prepared to offer common (voting) shares in return for the investment. SSJQ Rabbitry Ltd. is also prepared to consider other forms of financing such as debentures, preferred shares or other arrangements. 3. Management The current members of the management group are the principals of SSJQ Rabbitry Ltd. Mr. Mbachu studied Agriculture Biotechnology at the University of Lethbridge and has 10 years’ experience in rabbit breeding. Mr. Mbachu also holds a Journeyman ticket in the trades, as a B-Pressure Welder. Mr. Mbachu is currently employed as owner and CEO of SSJQ Rabbitry Ltd. full time. Mr. Mbachu is responsible for production and operations of the business. Mrs. Mbachu holds a graduate degree in Arts at the University of Lethbridge and is currently one year in pursuit of a Master of Business Administration, with Athabasca University. Mrs. Mbachu is responsible for marketing campaigns and financial record keeping. Mr. and Mrs. Mbachu each own 50% of SSJQ Rabbitry Ltd. The sales and marketing functions will be the responsibility of both the owner and co-owner, until a full-time sales manager position can be created. Both Mr. and Mrs. Mbachu are working full time at SSJQ Rabbitry Ltd., and pledge full allegiance to the Company, and will continue to do so when financing has been arranged. Accounting and financial control functions will be handled by CFO and co-owner, Mrs. Mbachu a master’s level student, and she is prepared to continue to work for modest compensation until production expansion is completed and ready for distribution. Detailed resumes of the management team members are available to serious investors. 4. The Product SSJQ Rabbitry Ltd. is an agricultural Company, focused on commercial purebred rabbit breeding, and is competitively priced offering the highest quality grade of meat for consumers. Careful attention and detail go into production to produce consistent results customers want. The Company is progressively forward thinking and innovative desiring to mainstream rabbit meat locally and throughout Canada, for consumption, while ensuring ethical integrity of breeding practices and business consumer relations. Rabbits processed for meat are called fryers. The heard size consists of mainly two different types of purebred rabbits, New Zealand, Flemish Giant, and mixed, all of which are most sought after by consumers. Fryers are ready for sale at 8-10 weeks old or 5lbs, and are advertised through social media accounts, SSJQ’s Rabbitry website, word of mouth, relationship building, and potential sales leads. Product programs are consistent with market demands which is maintaining top quality grade and producing appropriate weight and age. Of all traditional livestock animals’ rabbits are the leanest meat and highest-protein, low-calorie with very little fat, a little like chicken but with a slightly gamy flavour, and “more meat per bone” than other meats. Rabbits’ feed efficiency makes the meat more sustainable than other meats. Chefs like the versatility of rabbit; it adds richness to slow-cooked dishes of many cuisines but can be roasted or grilled. Positive reviews of such dishes are common. Further, the Company raises fryers without the use of any steroids, hormones or antibiotics and has no environmental footprint impact like other traditional livestock. Rabbits are notoriously known for their fertility and multiplicity and are a long-term sustainable substitute to traditional livestock breeding, where shortages are on the rise due to COVID facility closures world-wide. 5. The Market Place The primary markets for SSJQ Rabbitry at this time, which provide the greatest sales potential in the shortest period of time, are in Canada and the United States, however long-term, China is the number one consumer of rabbit meat world-wide, the Company is open to international distribution in long term goal planning. Consumer, grocery retail, gardening and pet food suppliers, and high-end restaurants are all prospective customers for the livestock product. In the gardening retail space livestock waste is an extremely lucrative market highly sought after. The major potential market in the consumer sector is accessed through online social media and large supermarket retailers, such as: · Superstores, Walmart’s · Ethnic Supermarkets (Asian, Halal etc.) · Pet Food Suppliers (Pet Smart, Pet Value etc.) · Gardening Retailers (Blue Grass) · Fine Dining Establishments Primary customers are in the commercial retail and gardening space. Considerable interest in the product has already been expressed, with two commercial contracts secured, and 1 gardening contract by the following: · Frank Abbar (Halal Butcher Shop) · Tony Mann (Lebanese Cuisine) · Sukky Johnson (Matters of the Garden) All of the above producers feel there will be increased demand for rabbit meat and its by-products because of rabbit’s sustainable production on the environment and numerous health benefits. Additionally, there is no other competitor in the market producing the same level of quantity, quality, and competitive pricing as SSJQ Rabbitry. All producers are interested in high quality grade products with production reaching desired weight within 8-10 weeks. SSJQ Rabbitry is in need of expansion in order to fulfill purchase orders. Retail price of one fryer is $25 dollars whole, or $5-$7 dollars per pound. Purchases are subject to fryers making weight within the 8–10-week period, which is well established by the Company. Potential to produce 1,000 fryers monthly is high and subject to successful funding for the use of production and operation expansion. 6. Market Size The Alberta Rabbit Producers Association was established in 2009, with members selling 800 pounds of rabbit meat, since then there has been exponential growth and demand. Annual consumption of rabbit per capita in Canada has seen steady growth since 2006 to 2014, increasing again in 2018 and 2019. As of 2016 there were 470 rabbit farms in Alberta, with a head count at 4,917, in Canada, a little over 4,000 farms with a head count just under 200,000. In the United States, as of 2017, there were 8,864 farms with a total head count of 280,336. The larger breeds, such as Flemish Giant and New Zealand, can be sold for an average of $25 dollars per head, and purebred and pedigreed breeds for $30-50 dollars per head. For online retail prices, rabbit varies from $6 to $17 dollars per pound. Total Canadian market sales volume potential over the next 5 years is estimated at $25 million. Total USA market sales volume potential over the next 5 years is estimated at $35 million. 7. The Competition There are 3 known competitors in Canada producing rabbit meat that are similar to SSJQ Rabbitry. The three competitors are: 1. Seven Bells Fold 2. J & M Farms 3. Kootenay Natural Meats 1. Seven Bells Fold is a small farm near Sandy Lake, Manitoba. The farmers raise rabbit and sheep and focus on the marketing and selling of the rabbit’s manure. Last update to their website was dated 2019, so it’s difficult to determine if they are still in production. In 2019 the farmers herd size was between 30-60 animals. They are not considered to be a threat, as the owners are re-tired, and it would appear the farm runs more as a hobby farm. 2. J & M Farms are located in Southern Alberta, Lethbridge and raise rabbits for commercial meat consumption, among other livestock. J & M Farms concentration on other product offerings makes SSJQ Rabbitry more unique and competitive in the commercial retail space. Because of the farms smaller scale and variety of products, this competitor is not considered to be a serious threat to the marketability of SSJQ Rabbitry. 3. Kootenay Natural Meats is a lamb and rabbit farm in Creston, British Columbia with most focus on their lambs. Their rabbit is sold whole only and is only available sporadically throughout the year with limited quantity, which distinguishes SSJQ Rabbitry from them. As this farm operates on a small scale in rabbit production, and the last known update to their website was 2019, this competitor is not considered a serious threat to SSJQ Rabbitry Ltd. The SSJQ Rabbitry Advantage The cost of our rabbits will be substantially lower than the competitions because of the superior quality in mass production amounts with the use of advanced European technology. The balance of the market is completely wide-open, high demand is there with little to no processing facilities accommodating smaller livestock. The technology that will be implemented will encompass all phases of production and operations. There are no other competitors within all of Canada that are producing at the mass scale SSJQ Rabbitry will be processing once approved funding, approximately 800 does. SSJQ Rabbity has two secured commercial customers buying in bulk quantity and they are demanding for more rabbits. Additionally, SSJQ Rabbitry has one gardening contract, in which it sells them manure. With SSJQ’s technical breeding skill and capabilities to mass scale quickly, high quality and reliability coupled with competitive pricing can be realized. Our adaptability, which appeals to a wide range of markets, separate us from our competitors and gives SSJQ Rabbitry a cutting-edge advantage, as we think about our earth’s delicate future. 8. Sales Plan A sustainable business is one that creates an acceptable profit for its owners but minimizes the damage to the environment and enhances the existence of the people with whom it has contact. In other words, it balances economic, environmental and societal interests. This gives the organization its ‘licence to operate’ in society. The assumption is that a sustainable business is more likely to remain successful in the long run than one which focuses on economic goals alone. The sales program for the first year will concentrate on developing the Canadian marketplace. The U.S. sales program will commence after year 3 of production. The sales organization will be divided into two groups: · Consumer sales · Commercial sales The consumer sales group will concentrate on developing a dealer network (retailers) that will sell the product to the consumer. The initial sales efforts will concentrate on wholesale retailers such as superstores and Costco’s and ethnic supermarkets such as Halal butcher shops. The consumer sales group will initially require one full time salesperson to develop the Canadian consumer market, looking to expand to two full time salespeople by end of year 1. The commercial sales group will require one full time salesperson initially, expanding to two salespeople by end of year 2, to concentrate on developing a wholesale distributor network with at least 3 distributors in Canada and 6 distributors in the U.S. The distributors will have access to the major suppliers in their respective areas. All sales in Canada will be handled by SSJQ Rabbitry, with U.S. sales being handled by their U.S. distributors. One secretary and one sales order clerk will provide sales support for both the consumer sales group and the commercial sales group. Both positions planned to commence by end of year 1. A simple but effective advertising campaign will be implemented to support the sales efforts. Consumer advertising will consist of monthly advertisements on social media sites, such as Facebook, Instagram, SSJQ Rabbitry’s website, and LinkedIn. Plans to expand advertisements to the U.S. is set for year 3 of production. 9. Sales Forecast The following sales forecast is considered to be an estimate based on the responses from the companies listed above. Additional sales can be anticipated with increased market penetration and product recognition. Unit Sales/Month Average Unit Selling Price Total Sales ($CAD) ($CAD) Year 1 5,000 $25 $1,500,000 Year 2 15,000 $25 $4,500,000 Year 3 25,000 $25 $7,500,000 Note: Year 1 will commence approximately 10 months after financing has been arranged, and Year 3 will represent approximately 30% of the estimated total market (2024). Sales over the first and second year will be divided approximately as follows: 45% to Western Canada 55% to Central and Eastern Canada Division of sales over the third year will be approximately: 35% to Western Canada 50% to Central and Eastern Canada 15% to the United States The above estimates of sales are considered to be extremely conservative in view of the advanced technical production, unique operating features and the competitive selling price of rabbits. 10. Sources of Market Information The market and sales data were collected by a combination of market surveys and research of published information. The market survey was conducted in Western, Central and Eastern Canada. Market Research was also obtained from the following references: Alberta Rabbit Breeders (2021). Rabbit Breeders. Alberta Rabbit Breeders Association. Retrieved from Dika, R. (2012). New processing plant will make rabbit sector “a major player”. Alberta Farmer Express. Retrieved from Gerson, J. (2015). Cute Bunny Syndrome, government bureaucracy hampering growth of rabbit meat industry, producers say. National Post. Retrieved from Government of Canada. (2020). Rabbit industry at a glance in Canada. Retrieved from Kienlen, A. (2020). Increasing demand has Alberta’s rabbit industry hopping along. Alberta Farmer Express. Retrieved from Langford, S. (2019). 7Ps of The Marketing Mix: The Acronym Sent to Streamline your Strategy. Online Blog. Retrieved from marketing-mix-7ps Mcmenamin, H. (2012). Rabbit Farming. The Canadian Encyclopedia. Retrieved from Rabbit Farming. (2012). “Rabbit Advocacy Animal Matters”. Rabbit Farming – The Canadian Encyclopedia. Retrieved from Wood, M. B. (2014). The Marketing Plan Handbook. Fifth Edition, by Pearson Education Inc. Retrieved from 9781269715508/cfi/6/2!/4/[email protected]:0.00 11. Product Development Intelligent technology for rabbit farming has been developed to prove the concept and basic operation on a mass scale of production. The technology more than satisfactorily demonstrates the technical feasibility and basic operation of the production of rabbits for market consumption. The following is a list of additional design and development work that is required before the product is ready for mass production. The man hour’s column is the estimated number of hours to complete each task. TASK PERSON HOURS 1. Refine design to improve operation and reduce costs 160 2. Build technical and reliability testing and evaluation 80 3. Conduct performance and reliability testing on intelligent 160 technology 4. Modify design and repeat performance testing as required 40 5. Prepare formal production drawings, design packaging and 250 establish projected manufacturing costs Special test equipment will be required to conduct performance and reliability tests for rapid production within humane conditions. The test equipment will consist of both natural and artificial insemination and measuring of controlled environmental variables, such as handling, nutrition, lighting, and heating. There are no major or critical risks, that are anticipated, to be able to successfully complete the testing developments. The technical feasibility of breeding, housing and processing has already been proven with high-tech rabbit farming. This special facility with the test equipment mentioned above will be required to complete the development and begin mass production. 12. Production SSJQ Rabbitry will produce its products using intelligent high tech rabbit farming European technology. The technology is a fully automated system for all processes in which one farm can be serviced with 2-3 employees, utilizing a high veterinary safety level. Artificial insemination forecasts accurate birth times for production volume and financial flows. A hangar is needed which is 28 by 53 meters, and ranges in cost from $25-$40 dollars per square foot which can be easily installed with metal framing and multi-thermal panels. Cage modules are used with zinc-plated mesh panels and impact eco-friendly resistant plastics. Each cage is two tiered with precise calculated ergonomics allowing for extensive transformative options. Feed supply is scheduled and regulated by computer technology, and water is provided in drinking troughs through nipple drinkers, which is available to rabbits at all times. The feeding and watering system is connected to each cage. The rabbits are raised with no use of antibiotics, hormones or steroids of any kind at any time. Disease control and bulking is used with all-natural products. A comfortable microclimate is provided by an inlet and exhaust ventilation system with climate control function and air quality control. Heating is provided by electricity or gas-powered heat generators. Manure collection is electronically controlled using a conveyer belt or scraper transporters for two types of automated manure collection, of which after a certain period of time is removed from the farm and sold to gardening retailers as another lucrative revenue stream. Slaughter and processing can be carried out in a small room that combines meat processing and packaging functions. This type of highly modern and sophisticated technology is a dietetic type of rabbit meat production with high productivity and a minimum scope of work, making rabbit breeding a very attractive industry for investors. 13. Product Cost The following is an estimated projection of initial production costs for one high tech rabbit farm based on the production run of 800 rabbits. Materials Estimated Costs Farming Land $100,000 Hangar (28mX53m, $40/sq) $60,000 Cages (800X$100 per cage) $80,000 Automated technology $25,000 (feeding, drinking, conveyor’s, climate) Waste management and collection $5,000 Slaughter, processing, and packaging $30,000 Total Product Cost (per unit) $25.00 Suitable farming space has been identified in southern Saskatchewan. Four months after the time of financing has been arranged production can be set up and operations can start with the first 800 rabbits. The first 800 does’, with an average litter of 10-12 kits, will produce 9,600 units within 12 weeks after the start of production. 14. Gross Profit The suggested retail price for rabbit meat is $5-$7 dollars per pound, excluding taxes. The discount desired by major retail outlets for the consumer market is 32% off the list price. A 32% discount has been used in determining gross profit. The selling price to the commercial wholesale distributor will be the same as the retail outlets and will be established at a 32% discount below the retail list price. Net selling price by SSJQ Rabbitry (CAD) $17.00 Cost of Sales (product cost) per unit $4.00 Gross profit per unit $13.00 Margin 76.5% 15. Financial Requirements Refer to the Pro Forma income statements and Cash Flow projections. The procurement and production of SSJQ Rabbitry has been completely financed to date from personal resources by Mr. and Mrs. Mbachu. Total investment to date is estimated at $35,000 not including the Principals time. Additional financing in the amount of $200,000 is required to complete product development and research, set up production and establish a marketing program. The following is a summary of the projected first year total costs. Production development costs $300,000 Operational costs (year 1) $40,000 Sales and marketing expenses $100,000 Administration and overhead $60,000 Total (year 1) $500,000 The above costs include production labour, materials, and capital equipment for production and operations. SSJQ Rabbitry Ltd. operations will be self-sustaining by the end of the first year. 16. Pro Forma Income Statements Year 1 Year 2 Year 3 Sales $1,500,000 $4,500,000 $7,500,000 (Revenue) Cost of Sales $352,500 $1,057,500 $1,762,500 Gross Profit $1,147,500 $3,442,500 $5,737,500 Sales $822,000 $3,188,500 $5,539,500 Expenses Administration $60,000 $98,000 $118,000 and overhead Operational *$40,000 $29,000 **$80,000 Net Profit $225,500 $127,000 $198,000 *Excludes Equipment **Includes New Product Development (future technology) 17. Cash Flow Projections (in Thousands of $) Quarter 1 2 3 4 5 6 7 8 9 10 11 12 Sales $0 40.8 81.5 163.5 163.5 163.5 163.5 173.5 173.5 204 284 284 Cash Receipts $0 24.5 31.5 139 163.5 163.5 163.5 173.5 173.5 180 235 235 Disbursements -$80 -80 -60 -125 -126.5 -136.5 -136.5 -174.5 -173.5 -178 -200 -202 Opening Balance $0 -80 -45 -95 -91 -51 -24 -20 -21 -82 -37 -30 Closing Balance -$80 -45 -95 -91 -51 -24 -20 -21 -82 -37 -30 -29 18. Disbursement Summary (in Thousands of $) Quarter 1 2 3 4 5 6 7 8 9 10 11 12 Inventory $4 4.8 5 7.2 9.6 9.6 9.6 14.4 18 21.6 21.6 24 Production $45 82 67 91 96 105 105 105 163 206 270 285 Sales $7 40 25 34 42 45 45 45 62 65 60 61.5 Administration $8 21 16 24 30 30 34 36 36 39 45 45 Total Disbursements $64 147.8 113 156.2 177.6 189.6 193.6 200.4 279 331.6 396.6 415.5 

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