Financial Summary
Smooth Ride Smoothies is on the road to success with a total first year net income of $32,744. This is a positive outcome, especially because of the competition and significant expenses for permits, startup, advertising and inventory.
For the first year, Smooth Ride Smoothies has a revenue projection of $180,000. This is if all goes as planned. This figure came from selling 150 smoothies a day at an average price of $5.00, 5 days every week, all year round. This equals 36,000 smoothies every year at an average $5.00 price equaling a total of $180,000.
There is minimal vacation or holidays off, and we work through the rain and snow. Therefore, have to take into account the very few days off for holidays, and the loss in sales from promotions and serious weather conditions. There will be a minute estimated number of days that the smoothie truck is not in business. The projected amount lost will be around $3,750. For one of our promotions, buy 10 smoothies; get a free $5.00 smoothie. Figure 1 out of every 11 smoothies is free. This promotion will end up costing $16,364 because we will give away about 3,273 smoothies per year. After adding the two totals and deducting them from the total projected revenue. There is a net income of (180,000-20,114)= $159.886.
Starting a business gets awfully pricey once you include inventory-cost of goods sold. The total inventory for Smooth Ride Smoothies includes the fruit, milk, orange juice, cups, lids, straws, and spoons. This in total costs for inventory for the first year is projected at $49,091. This constitutes for Cost of goods sold which makes the gross profit a total of (159,886-49,091)= $110,794 (“Grocery”).
In addition to the cost of goods sold, there are many operating expenses. These include the price of gas, a parking space for the truck when it is not in use; start up expenses, salaries, advertising/marketing and additional supplies. The salaries include 4 workers throughout the week. Since Smooth Ride Smoothies only operates Tuesday through Saturday, 8 hours a day; there is not a large necessity for a lot of employees. We will pay minimum wage of $8.00 and the total salaries paid to employees for the year will amount to $33,280. Another part of the operating expenses includes the gas and parking. The gas will not be too overwhelming because the route of our business is in a small vicinity of Boston. Estimated, the gas will cost about $10,000. This cost not only includes driving, but also when the truck is stationed in order to operate the facilities inside the truck there needs to be power. Then there is the parking space that is $500 a month with a total of $6,000 a year (“Storage/Parking Garage”). Another cost in the operating expenses includes advertising. Our advertising includes fliers and business cards, which totals $760 (“Pricing,” 2012). The most important expenses to start the business are the startup expenses. This includes, permits ($638), insurance ($5,596), the concession trailer that latches on the back of the truck ($16,675), a refrigerator ($2,745), a freezer ($800), four blenders (at $60.00=$240), and an ice-maker ($1,316) (“Mobile Food Truck”, “Commercial Vehicle Insurance”, “True t-43”, “9404f-7 randell”,“Dce33a-1bd scotsman”, “2013 8.5×18 concession trailer”, “Waring Pro Professional”). The startup expenses in total equal $28,010. After adding all of these totals together, the projected operating expenses are $78,050.
To achieve the net income, the operating expenses are subtracted from the gross sales. The net income equals (110,794-78,050): $32,744, which was previously stated. This means that the business has a profit of almost $33,000. This will be advantageous to the company’s survival, especially with competition. It will allow Smooth Ride Smoothies to continue advertising and marketing in order to get college students and other customers’ attentions. This income will also increase at the years go on because there will be less start up expenses each year. The first year is always the hardest and coming out with a positive net income is a success.
Manufacturing/Service Plan
Our smoothies/inventory will be made and stored on our concession trailer. Our inventory should rotate almost daily, which will ensure freshness and quality. Our trailer is an 8.5×18 ft. unit; which will be large enough to store our inventory and operate out of. The trailer already includes sinks, A/C, water tanks, and other essential items. However, we will be purchasing a fridge/freezer (“2013 8.5×18 concession trailer”). We have found a used, under the counter freezer for $800. This freezer has the capacity of 5.66 cubic feet (“9404f-7 randell”). An ice maker is an obvious essential for our smoothie business. We have found an ice maker which can produce 30 pounds of ice every 24 hours (“Dce33a-1bd scotsman”). This should be enough ice to continue production of smoothies, even on the busiest days. Our refrigeration unit will cost approximately $2,700, and will be 47 x 29.5 x 78.38 inches in size (“True t-43”). We will be purchasing four blenders to begin our business venture. Blenders are easily accessible, and if we need more, we can purchase more accordingly.
Fridge: $2,744.83 (“True t-43”)
Freezer: $800 (“9404f-7 randell”)
Ice Maker: $1,316.33 (“Dce33a-1bd scotsman”)
Trailer: $16,675 (“2013 8.5×18 concession trailer”)
Blenders (4): 239.96 (“Waring Pro Professional”)
Our total cost for our unit will be, $21,776.12
After paying for the trailer and equipment, we have $18,463 left for inventory and gasoline. Our inventory is attached in an excel document.
We have found a space to park our concession trailer while not in service in Brockton. This will cost us $500 a month (“Storage/Parking Garage). Parking will cost $6,000 yearly.
In order to obtain proper permits to run Smooth Ride Smoothies, we will be submitting a single application to the city of Boston. That single application will have to be approved by the Mayor’s Office, Public Works, Transportation, Inspectional Services, and the Fire Departments (“Mobile Food Truck”).
Mobile food truck:
$100 for health permit fee
$500 for food truck ordinance fee
$38 for application for Boston Fire department fee
in total Permits will cost $638 (“Mobile Food Truck”)
Commercial vehicle insurance for our business is $5596.00 per year. (“Commercial Vehicle Insurance”)
Income Statement
Revenue
Sales: $180,000
-Sales discounts $20,114
Net Sales: $159,886
– Cost of Goods Sold
Inventory: $49,091
Gross Profit (159,886-49,091): $110,794
– Operating Expenses
Salaries: $33,280
Advertising: $760
Supplies/Startup: $28,010
Gas: $5,000
Parking: $6,000
Total: $78,050
Net Income (110,794-78,050): $32,744
Smooth ride smoothies 