Best Ice Cream

There’s Best and then there’s the rest.

Business Plan

April 2013

Sherif Alghali

Owner & Founder

TABLE OF CONTENTS

EXECUTIVE SUMMARY ....................................................................................................................1

LEADERSHIP ....................................................................................................................................2

PRODUCT OFFERING .......................................................................................................................2

MARKET ..........................................................................................................................................2

COMPETITION ..................................................................................................................................3

DIFFERENTIATION ...........................................................................................................................3

MARKETING STRATEGY ..................................................................................................................3

VISION AND OBJECTIVES.................................................................................................................4

FINANCIAL SUMMARY .....................................................................................................................6

FINANCING STRATEGY ....................................................................................................................6

FINANCIAL PROJECTIONS .............................................................................................. ATTACHED

Sherif O Alghali Best Ice Cream

EXECUTIVE SUMMARY

Overview: Best Ice Cream is an ice cream truck that focuses on festivals, high-traffic parks, and special events in Dallas, Texas. We provide an alternative to the high-end specialty ice cream trucks in Dallas, in which patrons are charged upwards of $5 for ice cream. We will provide traditional ice cream novelties at a price point of $3. We believe that there is a large market of families that want simple and affordable ice cream at fairs, festivals, and special events. This will be a part- time business that operates on weekends and holidays.

Product Offering: Best Ice Cream provides packaged ice cream, chips, sodas, bottled water, pickles, and candy at high traffic parks and special events in Dallas, Texas. Our main focus will be traditional ice cream treats like ice cream sandwiches, popsicles, fruit bars, and packaged cones.

Market: The packaged ice cream market has been growing steadily year over year. This is an industry with a history of consistent growth that is projected to continue in the future. Best Ice Cream’s target markets are middle to upper-middle class families that attend fairs, special events and high-traffic parks in Dallas, Texas.

Competition: Local direct competitors include Gypsy Scoops, Short-n-Sweet Ice Cream, and Coolhaus to name a few. These companies all have a social media presence and are found at the special events and festivals that we target. The barriers to entry are medium; to begin operations a modest capital outlay is required. To be successful, networking and social media skills are essential.

Differentiation: At Best Ice Cream we differentiate ourselves from the competition through our use of technology, our simple approach to ice cream, and our service. We will make use of Square Register to drive our analytics and customer loyalty strategy. We will offer simple, traditional ice cream that our competitors do not offer. We will make a point to provide quick and friendly service.

Marketing Strategy: Our ice cream novelties will be sold at an average price of $3. Best Ice Cream will be located in and serve Dallas, Texas. To reach our target market, we will heavily use Social Media and the web. We will develop pages on Twitter, LinkedIn, Facebook, Google+, and Yelp, as well as our own Webpage.

Revenue Model and Financial Projections:

Per Unit Dollars

Sales price 3.00$ 100% 2.00$ 100% 2.00$ 100%

Non-owner labor cost - - -

Other variable costs (0.60) (0.55) (0.30)

Fin. stmt. gross profit 2.40 80% 1.45 73% 1.70 85%

Owner labor value - - -

Pro forma gross profit 2.40$ 80% 1.45$ 73% 1.70$ 85%

Year 1 total units sold 8,407 6,556 1,378

Ice Cream Novelties Drinks Pickles

Year one summary income statement:

Sales: 41,000$ 100%

COGS 9,000 22%

Gross profit 32,000 78%

Overhead 17,500 43%

Pretax income 14,500 35%

Tax expense 3,600 9%

Owner withdrawals 7,000 17%

Net income 3,800$ 9%

Management:

Company Name:

Industry:

Owner investment - cash 1,000$

Owner investment - equipment 2,000

Vehicle and/or equipment loan -

Start up financing 5,000

Total start up costs: 8,000$

Plan Purpose:

Sherif Alghali

Best Ice Cream

Mobile Food Service

Business advisors and

debt funding

Sherif O Alghali Best Ice Cream

2

LEADERSHIP

As the owner of Best Ice Cream, Sherif will be in charge of servicing customers, sales, lead generation and forging partnerships with event organizers and park managers. Sherif has over five years of customer service experience. He also spent four years running his own computer services business. In addition, Sherif has spent time working with Steve Akinbinu of Good Time Ice Cream, learning the business of selling ice cream. Sherif has also had extensive business training. He is a graduate of the PEP entrepreneurship program, which consisted of over five months of business training in which he developed and eventually pitched a business concept to over two hundred executives. This combined with his skills in public speaking, sales, and management make him imminently capable of making Best Ice Cream a successful venture. In addition, Sherif brings more than 12 years of experience in the information technology industry, with nearly four years supporting restaurant and retail point of sale systems. He worked for Luby’s Inc. at their corporate office as a help desk specialist, where he worked remotely and on-site supporting hardware, operating systems and networks. He currently works for Rogers-O’Brien Construction as a help desk specialist, supporting over 200 users in multiple sites throughout Texas. This background in IT will help him in executing Best Ice Cream’s technology and Social Media strategy Sherif is currently a student at Western Governor’s University working towards a Bachelor’s degree in Information Technology. Sherif also has earned several industry certifications from Microsoft, Cisco, and Comptia. Sherif is a member of the DFW World Affairs Council.

PRODUCT OFFERING

Best Ice Cream provides packaged ice cream, chips, sodas, bottled water, pickles, and candy at high traffic parks and special events in Dallas, Texas. Our main focus will be traditional ice cream treats like ice cream sandwiches, popsicles, fruit bars, and packaged cones. Our main products will be ice cream novelties, drinks and pickles. These three product groups will make up 61%, 32% and 7%, respectively of our annual revenues. Our first priority when we begin operations in July 2013 will be to build relationships with park managers and special event planners.

MARKET

The packaged ice cream market has been growing steadily year over year. This is an industry with a history of consistent growth that is projected to continue in the future. Best Ice Cream’s target markets are middle to upper-middle class families that attend fairs, special events and high-traffic parks in Dallas, Texas. We believe that these families are not properly served and present on opportunity for us. This will be a part-time venture. We will operate on

Sherif O Alghali Best Ice Cream

weekends and holidays. This is a seasonal business. While there are some opportunities for us during the winter, late-fall and early-spring, sales during these time are limited. Our greatest opportunities will be in the late-spring, summer and early-fall.

COMPETITION

There is a great deal of competition in the packaged ice cream industry. There is a lot of indirect competition in the form of ice cream parlors and shops, convenience and drug stores, and traditional ice cream trucks. Nationally our largest competitors are ice cream parlors, Baskin-Robbins and Ben and Jerry’s; convenience and drug stores like, Walgreens, CVS, and 7 Eleven. Locally we will compete indirectly with Braum’s and Dairy Queen. The traditional ice cream trucks and carts are too numerous to count. We consider them indirect competitors because they mostly roam neighborhoods and are not found at the festivals and special events that we will target. Local direct competitors include Gypsy Scoops, Short-n-Sweet Ice Cream, and Coolhaus to name a few. These companies all have a social media presence and are found at the special events and festivals that we target. The barriers to entry are medium; to begin operations a modest capital outlay is required. To be successful, networking and social media skills are essential.

DIFFERENTIATION

At Best Ice Cream we differentiate ourselves from the competition through our use of technology, our simple approach to ice cream, and our service. Many in our industry accept only cash and do not track inventory in a meaningful way. We intend to use Square Register to handle credit card transactions and inventory, which will give us access to analytics. This will allow us to determine which products sell best at which locations, and what our turnover time is for our inventory. Thereby, we will be able to operate much more efficiently and profitably than the competition. We will also make use of Social Media to spread the word about our business and post a schedule for our loyal customers. We also differentiate ourselves by our simple approach to ice cream. Many of our direct competitors sell specialized products, like custom-built ice cream sandwiches. We offer traditional packaged ice cream at an affordable price for those who prefer something familiar. This is something that is not found at most events in Dallas. Finally, we differ from our competition in our commitment to service. We will offer friendly, hassle-free service. While this seems like a given in any business, it is not standard in our industry. We will commit to a set of best practices when serving customers. This will allow us to standout from our competitors.

MARKETING STRATEGY

Price

Best Ice Cream offers its products at three different price points our ice cream novelties will be sold at an average price of $3. Our sodas will be sold at an average price of $2. Pickles will be sold at an average price of $1.

Sherif O Alghali Best Ice Cream

Place

Best Ice Cream is located in North Dallas, but will serve all of Dallas. There are numerous high-traffic parks, festivals, and special events in Dallas that present a great opportunity for us.

Promotion

To reach our target market, we will heavily use Social Media and the web. We will develop pages on Twitter, LinkedIn, Facebook, Google+, and Yelp, as well as our own Webpage. The owner will also use his extensive personal network and web presence to get out the word about the business. Additionally, we will use Square Register to implement a rewards program to develop a loyal customer base. We will wear a uniform of Khaki pants or shorts with a polo shirt bearing our name and logo. Our truck will also have our name and logo as well as our Web address. The most important promotional work we will do will be to network and develop relationships with event organizers, planners and park managers. We will pass out business cards and fliers at small business events in Dallas, such as those sponsored by the Dallas Small Business Development Center, Minority Business Council and Dallas Chamber of Commerce. We will also join the previously mentioned organizations and others like the DFW World Affairs Council and Dallas Public Radio to increase our networking opportunities.

VISION AND OBJECTIVES

Two Months Before Starting

Research/Advisory • Finalize business plan • Further research startup costs • Recruit advisory team including an accountant, bookkeeper and lawyer Marketing • Create marketing strategy • Develop plan to assess marketing effectiveness • Write 100 objectives and responses • Register with Chamber of Commerce and Minority Business Council Compliance • Get Texas Sales Tax ID • Organize business as RFL Investment Corporation • Obtain DBA for Best Ice Cream • Open a business checking account Other • Obtain a phone • Acquire appropriate insurance • Buy needed tools

Sherif O Alghali Best Ice Cream

• Secure legal counsel

First Two Months After Starting

• Assess marketing strategy effectiveness • Generate publicity by talking to civic groups about entrepreneurship • Participate in community events to increase networking opportunities

First Year

• Make a sales goal of $41,000 • Develop job description for the salesperson position • Create standard operating procedures for each position • Hire first employee • Work with a mentor from SCORE • Update my business skills through the Dallas Small Business Assistance Center • Expand marketing • Expand Equipment • Be profitable in the first year

Second Year

• Expand to cover events in Richardson • Update business plan • Update sales goal • Expand service offered

Third Year

• Further standardize practices • Expand geographic area • Research franchising • Update sales goal

Fourth Year

• Sell the business

Philanthropy

At Best Ice Cream we believe that making a positive impact on the world as a whole is a central part of our mission. As such we will focus our philanthropic efforts on donating 5% of profits to organizations that provide vocational training to young people. We believe this helps them to find better jobs, thereby empowering them to become productive citizens.

Community Impact

In the communities in which we operate we intend to pursue our philanthropic efforts as well as sponsoring events for community non-profits and organizations. Through these services we believe that we can assist these groups in better serving our community, which in turn will enable the community in which we serve to flourish.

Sherif O Alghali Best Ice Cream

FINANCIAL SUMMARY

Best Ice Cream’s revenue model1 is based on selling the following three products: • Ice cream novelties at an average price of $3. This service has a material cost of $.60,

producing a gross profit of $2.40 for each product sold. Materials include wholesale ice cream. We project selling 8,407 of these in the first year for revenues of $25,200.

• Drinks at an average price of $2. This product has a material cost of $.55, producing a

gross profit of $1.45 for each product sold. Materials include wholesale drinks. We project selling 6,556 of these in the first year for revenues of $13,100.

• Pickles at an average price of $2. This product has a material cost of $.30, producing a

gross profit of $1.70 for each service sold. Materials include wholesale pickles. We project selling 1,378 of these in the first year for revenues of $2,800.

This will generate more than $41,100 in first-year revenues with a net profit of more than $3,900. This is a 9% net margin after deducting $10,600 in total owner compensation ($7,000 cash withdrawals and $3,600 income taxes). Best Ice Cream will have a positive cash flow in the second month of operations.

FINANCING STRATEGY

Best Ice Cream will start in July 2013. Total start-up funding is $8,000. This amount will cover all equipment, beginning cash balance and other start-up costs. Sherif will save $1,000. He also currently owns a truck valued at $2,000, which he will use to start the business. The combined $3,000 will be Sherif’s initial capital contribution. The company will have an additional $5,000 in debt financing that will be repaid in 24 months at 18%

1 The revenue model in the Executive Summary includes money paid for non-owner labor plus the economic

value of the owner’s labor (not necessarily cash paid). Initially, the business will be unincorporated and, as such, receives no tax deduction for money paid to the owner. A deduction for owner’s labor is included in the Executive Summary so the reader can assess the pro forma gross profit of the products and/or services. Estimating this pro forma gross profit requires the PEP participant to value his time in calculating a realistic sales price for his company’s services. The attached financial projections differ in that non-owner labor is included in cost of goods sold, and money withdrawn by the owner is shown as owner withdrawals after calculating the business’s tax expense but before net income.

Assumptions Used in Projected Income and Cash Flow Statements

Year 1

Note 1 Business Organization and Taxation

Note 2 Accounting Method

Note 3 Start-up costs

Paid or

contributed in

Month 1

marketing, business cards, fliers 500

cell phone purchase

car/truck lease down payment

permits 100

supplies, office & misc.

Truck repairs and improvements 2,000

S Corp Filing 300

Register Equipment 550

Cash needed for start-up expenses 3,450

Paid or

contributed in

Month 1

Equipment

Financing

Depreciable

Assets company car, truck or van 2,000 2,000 company trailer -

computer, printer, fax -

-

-

-

building/office deposit N/A N/A

beginning cash balance 2,550 N/A N/ACash needed for start-up assets 4,550 - 2,000

60 assumed life (months)

33 monthly depreciation

Total start up cost 8,000

Funding sources

Cash owner will contribute 1,000

Value of assets owner currently owns

and will contribute to the company 2,000

Total owner contribution 3,000

Vehicle loan and other equipment

debt (see note 5 for financing) -

Start-up financing owner needs (see

note 5 for financing) 5,000 Total start up cost 8,000

Sherif Alghali DBA Best Ice Cream

The business is a sole proprietorship and, accordingly, all taxes are the personal liability of the owner. The revenue

model (note 4) includes a deduction for the owner's labor to mirror the cost structure of an incorporated business.

This owner labor charge is deducted in calculating pro forma gross profit but is not included in the income statement

presentation in arriving at taxable income. The income statement reports owner withdrawals after calculating tax

expense and before net income.

The financials assume that all revenues are collected in the month of sale and all expenses are paid in the month the

obligation is incurred. The financial statements assume there will be no accounts receivable and no accounts

payable.

The projected financials assume the business will secure initial financing and pay start-up expenses in month 1.

Sales and normal operating activities will begin in month 2.

The income statement assumes a flat 25% federal tax rate (10% personal income tax and 15% self employment tax).

Federal taxes are paid quarterly.

Assumptions Used in Projected Income and Cash Flow Statements

Year 1

Note 4 Revenue Model

Product 1 Product 2 Product 3

Product name

Product description

Price per unit 3.00 100% 2.00 100% 2.00 100%

Cost of one unit hours rate hours rate hours rate

Non-owner payroll exp. - 0% - 0% - 0%

Non-owner payroll tax - 0% - 0% - 0%

cost 1 description 0.60 20% 0.55 28% 0.30 15%

cost 2 description 0% 0% 0%

cost 3 description 0% 0% 0%

cost 4 description 0% 0% 0%

Total variable costs 0.60 20% 0.55 28% 0.30 15%

Income statement gross profit per unit 2.40 80% 1.45 73% 1.70 85%

hours rate hours rate hours rate

Owner's labor charge - 0% - 0% - 0%

Pro forma gross profit 2.40 80% 1.45 73% 1.70 85%

Start-up Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Year

Ice Cream Novelties sold 1,200 1,300 1,000 500 387 220 210 200 830 1,160 1,400 8,407

Drinks sold 660 820 560 1,171 1,288 100 95 102 465 550 745 6,556

Pickles sold 180 215 170 59 64 64 61 60 120 165 220 1,378

total revenue 5,280 5,970 4,460 3,960 3,865 988 942 924 3,660 4,910 6,130 41,089

total cost of sales 1,137 1,296 959 962 960 206 197 194 790 1,048 1,316 9,063

total income statement gross profit (excludes owner labor) 4,143 4,675 3,501 2,998 2,905 782 745 730 2,870 3,862 4,814 32,026

Owner's labor hours (time spent directly related to sales) - - - - - - - - - - - -

Note 5 Financing

Start-up financing, see Note 3

Amount borrowed 5,000 principal, begin 5,000 4,825 4,648 4,468 4,286 4,100 3,912 3,721 3,527 3,527 3,331

Interest rate 18% interest expense 75 72.38069235 69.7221 67.02362 64.2846655 61.50462784 58.68289 55.81883 52.91180004 52.91180004 49.96117 524.41741

Payback period (months) 24 principal payment -174.62051 -177.2398175 -179.898 -182.597 -185.3358443 -188.115882 -190.938 -193.8017 -196.7087098 -196.7087098 -199.659 -1472.547

Grace period (months) - principal, end 4,825 4,648 4,468 4,286 4,100 3,912 3,721 3,527 3,331 3,331 3,131

Monthly payment 250

Note 6 Payroll - nondirect

Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Year

# of employees 1 1 1 1 1

average hours each employee worked per month 60 60 60 60 60

average per hour wage 10.00 10.00 10.00 10.00 10.00

salary expense 600 600 600 - - - - - - 600 600 3,000

Drinks

Sherif Alghali DBA Best Ice Cream

Ice Cream Novelties

Wholesale ice cream Wholesale drinks

Pickles

Any pre-packaged ice cream novelty 16.9 ounce sodas, teas and water Pickles

Wholesale pickles

Projected Income and Cash Flow Statements

Year 1

Assump-

tions

Start-up

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Year

% of

Total

Revenue

Revenue 2

Ice Cream Novelties 4 - 3,600 3,900 3,000 1,500 1,161 660 630 600 2,490 3,480 4,200 25,221 61%

Drinks 4 - 1,320 1,640 1,120 2,342 2,576 200 190 204 930 1,100 1,490 13,112 32%

Pickles 4 - 360 430 340 118 128 128 122 120 240 330 440 2,756 7%

Total revenue - 5,280 5,970 4,460 3,960 3,865 988 942 924 3,660 4,910 6,130 41,089 100%

Cost of Goods Sold 2

Ice Cream Novelties 4 - 720 780 600 300 232 132 126 120 498 696 840 5,044 12%

Drinks 4 - 363 451 308 644 708 55 52 56 256 303 410 3,606 9%

Pickles 4 - 54 65 51 18 19 19 18 18 36 50 66 413 1%

Total COGS - 1,137 1,296 959 962 960 206 197 194 790 1,048 1,316 9,063 22%

Gross profit - 4,143 4,675 3,501 2,998 2,905 782 745 730 2,870 3,862 4,814 32,026 78%

Expenses 2

Auto or truck lease - - 0%

Depreciation 3 - 33 33 33 33 33 33 33 33 33 33 33 367 1%

Gasoline & fuels - 300 300 300 300 300 300 300 300 300 300 300 3,300 8%

Insurance - bonding - - 0%

Insurance - vehicle - 200 200 200 200 200 200 200 200 200 200 200 2,200 5%

Interest - equip & start up 5 - 75 72 70 67 64 62 59 56 53 53 50 680 2%

Marketing 500 100 100 100 100 100 1,000 2%

Office - rent - - 0%

Office - insurance - - 0%

Office - telephone - - 0%

Office - utilities - - 0%

6 - 600 600 600 - - - - - - 600 600 3,000 7%

Payroll taxes (9%) 6 - 54 54 54 - - - - - - 54 54 270 1%

Permits 100 100 0%

Supplies - 50 50 50 50 50 50 50 50 50 50 50 550 1%

Tax service - - 0%

Telephone - cellular - 100 100 100 100 100 100 100 100 100 100 100 1,100 3%

2,850 - - - - - - - - - - - 2,850 7%

- 100 100 100 100 100 100 100 100 100 100 100 1,100 3%

- 200 200 200 200 200 1,000 2%

- - 0%

Total expenses 3,450 1,812 1,710 1,607 850 848 945 842 839 1,136 1,690 1,787 17,517 43%

Taxable profit (loss) 1 (3,450) 2,331 2,965 1,894 2,148 2,058 (163) (97) (109) 1,734 2,172 3,027 14,509 35%

Tax (expense) benefit 1 (461) (1,525) 92 (1,733) (3,627) -9%

Owner's withdrawals 1 - (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (7,000) -17%

Net profit (loss) (3,450) 1,331 1,503 894 1,148 533 (163) (97) (17) 734 1,172 294 3,882 9%

Depreciation 3 - 33 33 33 33 33 33 33 33 33 33 33 367

Equipment purchases 3 (2,000) - - - - - - - - - - - (2,000)

Principal, equipment loan 5 - - - - - - - - - - - - -

Repay debt financing 5 5,000 (175) (177) (180) (183) (185) (188) (191) (194) (197) (197) (200) 2,934

Owner contribution 3 3,000 - - - - - - - - - - - 3,000

Net cash flow 2,550 1,189 1,360 747 999 381 (318) (254) (178) 571 1,008 127 8,183

Cash, period start - 2,550 3,739 5,099 5,846 6,845 7,226 6,908 6,654 6,476 7,047 8,055 -

Cash, period end 2,550 3,739 5,099 5,846 6,845 7,226 6,908 6,654 6,476 7,047 8,055 8,183 8,183

Sherif Alghali DBA Best Ice Cream

The accompanying assumptions are an integral part of this financial statement.

Start-up expenses

Commissary Rent

Event Costs

Payroll - not owner and not

in COGS