Feasibility study: pure argan oil

Management Team

As I mentioned early, the company will be founded and owned with three co-partners, Bouchaib Jarir, Adil Fennan, and Ibrahim Izarazen , with 33.33% for each one.

Bouchaib Jarir (myself) co-partner with a master degree from Cambridge College. I have a five year working as an accountant for different companies in Morocco. And about seven years working in retail as a store manager in the US. I will manage all kind of the relationships with the customers and their inquiries. In addition, I will manage also the advertising of our product in the US market.

Ibrahim Izarazen, holds a Bachelor Degree from Hassan II University in Business in Morocco. And has more than 10 years as experience working as an accountant and was promoted to financial director in a big company GOCOM in Morocco. Ibrahim will manage the relationships with suppliers in Morocco. And manage all kind of deliveries from Morocco to the US and to the Italy. Also, he will be responsible for looking for new potential customers in Morocco.

The third copartner is Adil Fennan, who has a bachelor degree in English education from Hassan II University in Morocco. Adil has immigrated to the Italy ten years ago. He developed some personal business there. Adil, will manage all relationships with customers in UE market.

Exit Strategy

The expected exit strategy will be determined according to the volume of our company at the closing time. If the annual of the company's revenue is under $100,000.00, the expected exit strategy will be simple and easy to practice, as long as we wouldn't have a lot of equipment and inventory.If our company failed to generate enough benefits and achieve the planned objectives, the main and first exit strategy will be to liquidate the company and close it. We can return the rest of the inventory to the suppliers, close the bank account, close all the online selling accounts and do the legal closing procedures for the company in Morocco.

If the annual revenue is bigger than $ 100 thousands, the expected exit strategy will be sell it to another company or another third party. And the rest ofthe sale revenue will be shared by the partners, after paying all the receivables accounts.

Financial Plan

The financial plan is a statement where we can use to manage the current financial data for the company and predict the future cash flows and assets values. The financial plan helps us to determine the right financial strategy and the right amount of reinvested capital, in order to avoid all kind of rupture in cashes and working capital.

The predicted financial plan below is presenting my prevision for the expected sales and expenses for the first three years and present only my part which is the US market.

The expected financial plan is based on the prices of our principal supplier Yourgan, and more precisely based on the sale of DR50A Organic Argan oil drop bottle 50 ml 12 $ .

Yourgan Products Prices List coldpressed

REF DESIGNATION U.P $ LAT Organic Argan oil 1 Litre 24.5 $

DR100A Organic Argan oil drop bottle 100 ml 4.4 $

DR50A Organic Argan oil drop bottle 50 ml 3.4 $

DR30A Organic Argan oil drop bottle 30 ml 2.3 $

Summarize estimates made in previous sections:	First Year	Second Year	ThirdYear
A. Annual unit sales:	3,600	5,000	7,000
B. Price per unit:	12	12	12
C. Variable cost per unit (production and sales):	3	3	3
D. Fixed costs per unit (admin, production, and sales):	6*3,600 =21,600	6*5,000 =30,000	6*7,000 =42,000
E. One-time start-up costs (equipment, marketing, legal, etc.):	5,000	0	0
F. Working capital rqd (receivables, inventory, etc.):	6,000	7,000	8,000
Calculate estimated annual gross revenues and income:
G. Estimated annual revenues (A*B):	43,200	60,000	84,000
H. Estimated annual variable costs (A*C):	10,800	15,000	21,000
I. Estimated annual contribution margin (G-H-D):	10,800	15,000	21,000
Calculate break-even figures:
J. Contribution margin per unit (B-C):	9	9	9
K. Annual break-even quantity (D/J):	2,400	3,333	4,667
L. Ratio of break-even to expected quantities (K/A):	66.67%	66.66%	66.67%
Estimate the money you will initially need to start your business:
M. Total up-front funds required (E+F):	11,000	7,000	8,000
N. Additional units to cover up-front funds (M/J):	1,222	778	889
O. Break-even quantity with up-front funds (K+N):	3,622	4,111	5,556
Calculate financial performance figures:
P. Payback period for startup funds (M/I):	1.02	0.47	0.38
Q. Annual return on start-up investment (I/M):	0.98	2.14	2.62
R. Variable cost to price ratio (C/B):	25%	25%	25%
S. Contribution margin ratio (I/G):	25%	25%	25%

· The estimated annual margin for the first year is $10,800; $15,000 for the second year and $21,000 for the third year.

· The purchase price for DR50A Organic Argan oil drop bottle 50 ml is 3.4 $

· The fixed cost per unit, which I determined with $6 include the purchase price $ 3.4 plus $2.6 per unit will cover the payroll, the Amazon center seller fee and other management fees. However, the expected variable cost is $3 per unit and will cover advertisement, delivery fees and the refund fees.

· The sale price will be $12 for DR50A Organic Argan oil drop bottle 50 ml, which give only a $ 3 of benefit representing only 25% from the sale price.

Even though, these numbers don't look attractive enough for a third party, but for me it is more than attractive, it is more than promising numbers knowing that our goal in the first three years just find a way in the market and attract the most possible number of customers.

The startup cash will be $15,000 which present the company creation fee as well as office suppliers and working capital.

The startup amount will be divided on the three partners, and my contribution will be $5,000 from my saving funds.

The expected inventory will be 900 unit, which will cover three month of sale ($3,060)

The expected profit&loss for the first three years

	Year 1	Year 2	Year 3
Sales	43,200 (3,600*12)	60,000 (5,000*12)	84,000 (7,000*12)
Expenses	37,400 (10,800+5,000+2,1600)	45,000 (3,0000+15,000)	63,000 (42,000+21,000)
Operating Profit	5,800	15,000	21,000