Do you want to start butchery business plan?

Executive Summary

Company Summary

Products

Marketing Analysis of Butchery Business

Strategy

Personnel plan

Financial Plan

Do you want to start butchery business plan?

Do you want to start a butcher shop? Opening a butcher shop is not only an easy business venture but also very profitable. To make the most out of your startup and make it a success, you need to develop a business plan first.

Below we have provided an in-depth business plan of a butchery business startup, named ‘Meat & Meat,’ to help you make one for your business.

Executive Summary

Before you think about how to open a butcher shop, you will have to develop a comprehensive meat shop business plan which will serve as a guide for you throughout your business journey.

2.1 The Business

Meat & Meat will be a licensed and ensured butchery shop located in the center of Harrisburg, Pennsylvania. Meat & Meat will be a one-stop shop to fulfill all the meat-related needs of the customer.

2.2 Management

The business will be solely owned and operated by Mike Kin been working in the meat industry for the last 15 years and is known for his exceptional management skills. Mike will hire a small team comprising of butchers, drivers, and assistants for operating and managing the shop.

2.3 Customers

Our customers will be the residential community living near our shop as well as different businesses like hotels, restaurants, and grocery stores. We will provide fresh and highest quality meat including beef, chicken, mutton, pork, and fish, all of which will meet the quality standards set by federal and state food authorities.

2.4 Target of the Company

Our target is to become the most trustworthy meat supplier of the city within six months of our launch and open five more shops by the end of the third year in different cities, as indicated in our meat business plan.

Butcher Shop Business Plan 1

Company Summary

3.1 Company Owner

Mike Kin doesn’t have a college degree but when it comes to business, he knows it all. Mike has been working in the meat industry ever since he graduated from high school. He had the opportunity to work in several national and international food processing brands.

Known for his business acumen and incredible management skills, Mike enjoys extensive contacts in the meat and food processing industry.

3.2 Why the Business is being started

Mike is starting a butcher shop to enter the gigantic food processing industry. This startup will serve as the first step for him and would eventually pave the way for bigger initiatives.

Mike will be launching his first meat shop in Harrisburg and plans to open his outlets in five more cities within the next three years.

3.3 How the Business will be started

Meat & Meat will be launched in a 300 square foot shop located in the center of the city. The shop was previously in use as a grocery store, so it would be easily converted into a butcher shop. The meat business plan developed by Mike dictates all the things which will be needed for the startup. They include a meat storage facility, meat packaging facility, meat transportation vehicles, woodwork for display, and furniture for Mike’s office and guests’ waiting room.

Mike made a contract with a slaughterhouse located in a suburban part of the city to provide an unending supply of meat. Negotiation with a slaughterhouse is important and must be done before starting a butchery business plan so that other things can be planned accordingly. The company’s financial experts have forecasted following costs for the start-up:

Butcher Shop Business Plan 2

The detailed start-up information is as follows:

Start-up Expenses  
Legal $55,300
Consultants $0
Insurance $32,750
Rent $32,500
Research and Development $32,750
Expensed Equipment $32,750
Signs $1,250
TOTAL START-UP EXPENSES $187,300
Start-up Assets $0
Cash Required $332,500
Start-up Inventory $32,625
Other Current Assets $232,500
Long-term Assets $235,000
TOTAL ASSETS $121,875
Total Requirements $245,000
START-UP FUNDING $0
START-UP FUNDING $273,125
Start-up Expenses to Fund $11,875
Start-up Assets to Fund $15,000
TOTAL FUNDING REQUIRED $0
Assets $23,125
Non-cash Assets from Start-up $18,750
Cash Requirements from Start-up $0
Additional Cash Raised $18,750
Cash Balance on Starting Date $21,875
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 $332,500
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $695,000
Loss at Start-up (Start-up Expenses) $313,125
TOTAL CAPITAL $251,875
TOTAL CAPITAL AND LIABILITIES $251,875
Total Funding $255,000

Products

Meat & Meat will be a one-stop shop for the customers to fulfill all their meat-related needs. The shop will provide fresh and highest quality meat, which meets all quality standards set by federal and state food authorities. According to Mike’s butchery business plan, his shop will provide the following products to its customers:

  • Poultry: Chicken Kiev, Chicken Cordon Bleu, Cutlet, Kebab
  • Lamb: Chop, Flank, Leg
  • Pork: Boiling Bacon, Chop, Rasher, Sausage
  • Beef: Filet Porterhouse Steak, Rib-Eye Steak, Roast Beef, T-Bone Steak, Mignon, Kebab, London Broil
  • Fish: Salmon, Tuna, Shrimp

Marketing Analysis of Butchery Business

The most important component of an effective business plan for a butcher shop  is its accurate marketing analysis. Considering the importance of this phase, Mike acquired the services of marketing experts to help him. They helped him prepare a meat market business plan  and also guide him how to start a butcher shop.

5.1 Market Trends

As for a general trend, the market demand for butcher businesses is on the rise, mainly because of the rapidly growing fast food industry. According to recent statistics, there are more than 6,000 federally registered meat slaughtering and processing facilities in the United States. From restaurants to grocery stores, hotels to households, meat is an important food material for US citizens.

According to recent statistics, the US meant consumption was around 55% for red meat, 36.8% for poultry and 8.2% fish. These stats will be thoroughly considered while designing the market strategy of our meat retailing business.

5.2 Marketing Segmentation

Before starting a butcher shop business, it is extremely important for you to identify your target audience so that you can find ways to attract them towards you and convert them into your customers. Our marketing experts have identified the following type of target audience for our butcher shop.

Butcher Shop Business Plan 3

The detailed marketing segmentation comprising of our target audience is as follows:

5.2.1 Local Community: The first category of our customers includes the community residing near our shop. The community includes both single and married persons and we have the right products for everyone. From red meat to chicken and fish, we will provide high-quality and fresh meat for all the non-veg members of the local community. We will also provide meat in ready-to-cook packaging.

5.2.2 Hotels & Restaurants: The second group of our target customers will be the hotels and restaurants located in the vicinity of our shop. Meat products are an essential offering of all hotels and restaurants so we can get a lot of business from this customer group.

5.2.3 Grocery Stores: The third category includes the grocery and convenience stores located near us. Many people prefer to shop everything from grocery stores and they usually don’t visit meat shops for the purpose. We will supply the chief portion of our ready-to-cook meat to this consumer group.

The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Local Community 32% 11,433 13,344 16,553 18,745 20,545 13.43%
Hotels & Restaurants 48% 22,334 32,344 43,665 52,544 66,432 10.00%
Grocery Stores 20% 12,867 14,433 15,999 17,565 19,131 15.32%
Total 100% 46,634 60,121 76,217 88,854 106,108 9.54%

5.3 Business Target

Our business targets are as follows:

  • To become the most trustworthy meat supplier of the city within six months of our launch
  • To recover the initial investment within one year of launch by increasing sales
  • To open five more shops by the end of the third year in different cities, which will be decided later

5.4 Product Pricing

After considering the market demands, we have priced all our products in similar ranges as of our competitors. Though our prices will be the same, we will offer better quality meat to our customers that will meet all the standards of food authorities.

Strategy

Sales strategy is one of the most important components of a butcher shop business plan and hence it must be developed with great care. Sales strategy must be planned before you think about other details of how to start a butcher shop business because it will decide the success of your business.

6.1 Competitive Analysis

We will be facing a really tough competition because there are numerous butcher shops and meat providing facilities in our vicinity. However, we can out-perform our competitors by providing exceptional quality products. In addition to that, our excellent customer service would also help us retain our customers. Our location is the perfect location to start a butcher shop since it is almost in the center of the city.

6.2 Sales Strategy

We will deploy both new and tested sales strategies to target our customers. Some of the innovative strategies that we will use to attract, convert and retain our customers are as follows:

  • Conducting health-related seminars, webinars, workshops, and conferences in different institutions to advance the importance of healthy meat. By these sessions, we will also advertise ourselves as the one-point stop to get all healthy meat.
  • Advertising our meat shop in food magazines, TV stations, newspapers, and social media.
  • Offering a 20% discount on all our products for the first three months of our launch.

6.3 Sales Monthly

Butcher Shop Business Plan 4

6.4 Sales Yearly

Butcher Shop Business Plan 5

 

6.5 Sales Forecast

Our forecasted sales pattern, in accordance with our butchery business plan, is given in the following column chart:

Butcher Shop Business Plan 6

The detailed sales forecast is given in the following table:

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Lamb & Beef 1,887,030 2,680,320 2,588,240
Poultry 802,370 815,430 823,540
Pork 539,320 770230 1,002,310
Fish 265,450 322,390 393,320
TOTAL UNIT SALES 3,494,170 4,588,370 4,807,410
Unit Prices Year 1 Year 2 Year 3
Lamb & Beef $140.00 $150.00 $160.00
Poultry $600.00 $800.00 $1,000.00
Pork $700.00 $800.00 $900.00
Fish $650.00 $750.00 $850.00
Sales
Lamb & Beef $2,149,800 $2,784,000 $3,383,200
Poultry $120,050 $194,500 $268,500
Pork $50,110 $71,600 $93,000
Fish $139,350 $194,600 $249,850
TOTAL SALES
Direct Unit Costs Year 1 Year 2 Year 3
Lamb & Beef $0.70 $0.80 $0.90
Poultry $0.40 $0.45 $0.50
Pork $0.30 $0.35 $0.40
Fish $3.00 $3.50 $4.00
Direct Cost of Sales
Lamb & Beef $989,300 $1,839,000 $2,679,700
Poultry $66,600 $119,900 $173,200
Pork $17,900 $35,000 $52,100
Fish $19,400 $67,600 $115,800
Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

Personnel plan

It is highly advisable to prepare a personnel plan before you think about how to set up a butchery business since it is one of the biggest contributing factors of the success of any business. Preparing it well ahead allows you to make better choices in other aspects.

The personnel plan for Meat & Meat is as follows:

7.1 Company Staff

Mike will act as the CEO of the company and will initially hire following people on renewable contracts of one year:

  • 1 Manager to manage the overall operations
  • 2 Cashiers to receive cash from the people
  • 2 Accountants to maintain financial records
  • 4 Sales Executives responsible for marketing and advertising the butcher shop
  • 10 Butchers for meat processing
  • 6 Packaging Assistants for meat packaging
  • 5 Drivers for transportation purposes
  • 8 Cleaners for cleaning purposes

7.2 Average Salary of Employees

The average salary of employees is as follows:

 Personnel Plan      
Year 1 Year 2 Year 3
Manager $85,000 $95,000 $105,000
Cashiers $152,000 $159,000 $166,000
Accountants $145,000 $152,000 $159,000
Sales Executives $210,000 $240,000 $270,000
Butchers $550,000 $650,000 $750,000
Packaging Assistants $410,000 $440,000 $480,000
Drivers $50,000 $55,000 $60,000
Cashiers $187,000 $194,000 $201,000
Total Salaries $760,000 $890,000 $1,020,000

Financial Plan

The final thing to do before you think about how to start a meat market  is to develop a comprehensive financial plan which will cover the detailed costs of your startup. It should include all the costs starting from the rent of the shop to the costs incurred on the procurement of inventory. Before starting his butchery business, Mike acquired the services of financial experts to develop a meat market business plan. The financial plan developed with their help is as follows:

8.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 11.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 26.42% 27.76% 28.12%
Other 0 0 0

 

 

8.2 Brake-even Analysis

Butcher Shop Business Plan 7

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 11.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 26.42% 27.76% 28.12%
Other 0 0 0

 

 

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $309,069 $385,934 $462,799
Direct Cost of Sales $15,100 $19,153 $23,206
Other $0 $0 $0
TOTAL COST OF SALES $15,100 $19,153 $23,206
Gross Margin $293,969 $366,781 $439,593
Gross Margin % 94.98% 94.72% 94.46%
Expenses
Payroll $138,036 $162,898 $187,760
Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
Depreciation $2,070 $2,070 $2,070
Leased Equipment $0 $0 $0
Utilities $4,000 $4,250 $4,500
Insurance $1,800 $1,800 $1,800
Rent $6,500 $7,000 $7,500
Payroll Taxes $34,510 $40,726 $46,942
Other $0 $0 $0
Total Operating Expenses $188,766 $220,744 $252,722
Profit Before Interest and Taxes $105,205 $146,040 $186,875
EBITDA $107,275 $148,110 $188,945
Interest Expense $0 $0 $0
Taxes Incurred $26,838 $37,315 $47,792
Net Profit $78,367 $108,725 $139,083
Net Profit/Sales 30.00% 39.32% 48.64%

8.3.1 Profit Monthly

Butcher Shop Business Plan 8

8.3.2 Profit Yearly

Butcher Shop Business Plan 9

8.3.3 Gross Margin Monthly

Butcher Shop Business Plan 10

8.3.4 Gross Margin Yearly

Butcher Shop Business Plan 11

8.4 Projected Cash Flow

Butcher Shop Business Plan 12

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $40,124 $45,046 $50,068
Cash from Receivables $7,023 $8,610 $9,297
SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
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 $47,143 $53,651 $55,359
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $21,647 $24,204 $26,951
Bill Payments $13,539 $15,385 $170,631
SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
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 $35,296 $35,489 $43,882
Net Cash Flow $11,551 $13,167 $15,683
Cash Balance $21,823 $22,381 $28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $184,666 $218,525 $252,384
Accounts Receivable $12,613 $14,493 $16,373
Inventory $2,980 $3,450 $3,920
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $12,420 $14,490 $16,560
TOTAL LONG-TERM ASSETS $980 $610 $240
TOTAL ASSETS $198,839 $232,978 $267,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,482 $10,792 $12,102
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $9,482 $10,792 $12,102
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $48,651 $72,636 $96,621
Earnings $100,709 $119,555 $138,401
TOTAL CAPITAL $189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
Net Worth $182,060 $226,240 $270,420

 

8.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 4.35% 30.82% 63.29% 4.00%
Percent of Total Assets 4.35% 4.71% 5.80%  9.80%
Accounts Receivable 5.61% 4.71% 3.81% 9.70%
Inventory 1.85% 1.82% 1.79% 9.80%
Other Current Assets 1.75% 2.02% 2.29% 27.40%
Total Current Assets 138.53% 150.99% 163.45% 54.60%
Long-term Assets -9.47% -21.01% -32.55% 58.40%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.68% 3.04% 2.76% 27.30%
Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
Total Liabilities 4.68% 3.04% 2.76% 54.10%
NET WORTH 99.32% 101.04% 102.76% 44.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.18% 93.85% 93.52% 0.00%
Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
Advertising Expenses 2.06% 1.11% 0.28% 1.40%
Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
Main Ratios
Current 25.86 29.39 32.92 1.63
Quick 25.4 28.88 32.36 0.84
Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 19.20% 21.16% 23.12% N.A.
Return on Equity 47.79% 50.53% 53.27% N.A.
Activity Ratios
Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
Collection Days 92 99 106 N.A.
Inventory Turnover 19.7 22.55 25.4 N.A.
Accounts Payable Turnover 14.17 14.67 15.17 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 1.84 1.55 1.26 N.A.
Debt Ratios
Debt to Net Worth 0 -0.02 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $120,943 $140,664 $160,385 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.45 0.48 0.51 N.A.
Current Debt/Total Assets 4% 3% 2% N.A.
Acid Test 23.66 27.01 30.36 N.A.
Sales/Net Worth 1.68 1.29 0.9 N.A.
Dividend Payout 0 0 0 N.A.