In order to start running the business, PickItEasy will need a loan that could cover the expenses of the first 6 months of operations. To evaluate the value of the loan needed, we listed the main investments that we will need to make during the first six months, including the salaries of the employees. All the following values are expressed in euros.
YEAR 1
With this calculation, we obtain a total value of 81,305 euros. In order to have an error margin in this forecast, we will raise a total amount of 85,000 euros. Currently, the French government offers to the start-ups the possibility to obtain loans at an interest rate of 0%. In the following parts of this financial plan, we will base our calculations with this idea that this loan will be refund in 5 years.
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8.2. Projected Profit and Loss Statement
To do our forecasts, we considered that we will be operating during the first year with the model of a single office, delivering to 8 companies, as described in this business plan. From the second year, we will be opening a new warehouse each year, delivering from 8 to 12 companies each.
We can see in the Profit and Loss Statement in the following page, that the “Gross profit margin
%” is significantly growing through the years. This is because, during the first year, we plan to work with Metro as our single supplier. But from the second year, we plan to use more and more the central purchasing agencies as suppliers, and with them, the cost of the products is significantly lower.
In the “Salaries & Employment Taxes” calculation, we considered that the General Manager and the Head of Partnerships were not paid during the first year. The IT Manager will be paid as a full-time worker during the first six months but will be paid as a half-time worker for the rest of the time. Also, we included the salaries of the Products Purchasers & Deliverers, and the subcontracting of the cleaners. From the second year, the staff is doubled, because of the new warehouse, and all the employees receive a salary.
In the “Depreciation part”, we only considered the trucks and the lockers. For the trucks, we plan to buy one each year, at a price of 7,500 euros, and we considered that they were depreciating over 4 years. On the other hand, for the lockers, the calculation is made according to the number of new lockers that we will need to buy each year, which depends on the number of new partner companies. We considered that they were depreciating over 8 years.
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8.3. Projected Cash Flow Statement
YEAR 1 YEAR 2 YEAR 3 YEAR 4
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8.4. Net Present Value
For the calculation of the Net Present Value, we used a discount rate of 8%. This value might be a bit overestimated, but we selected it because it is the high range of rate of return of an equity portfolio currently.
YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4
Cash -85 000 158 847 721 818 2 082 063 4 107 468
Discount Rate 8% 8% 8% 8% 8%
Present Value -78 704 136 185 573 002 1 530 379 2 795 473
Total Net Present Value 4 956 336
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With its logistical system, and its technique to deliver fresh food to its customers, PickItEasy is a company with key competitive advantages. Our development timeline for the future is ambitious, but we really think that it is feasible. Our ambition, combined with the fact that consumers tend to change their way of consuming, to constantly look for the most convenient, will make that we will become in the next few years, one of the main actors of the industry.
PickItEasy wants to promote social values that are values in which we truly believe. It is our responsibility, as founders of the company, to develop our business with these values as a core basis. Our delivery system is organized so that the CO2 emissions are minimized as much as possible. On top of this, we want in the future to find a partner association with which we could plant trees, depending on the number of customers orders received. This way, we would not only be CO2 emissions reducers, but also O2 creators. Additionally, the employment discrimination issue in France is important, despite the significant and historical diversity in the country. This is why it is time to act against it, and PickItEasy will make all the possible efforts to make this change happen.
Given the worldwide current situation, and the economic uncertainty, PickItEasy will not have the same development timeline as initially planned. We will follow closely the evolution of the situation in France, and we will take decisions later concerning the starting date of operations.
In order to start operating in a proper way, we need to find companies that fit our partnership strategy, and we need to be sure that the workers will be going to their workplace, with an extremely low probability of a “second epidemic wave” during the following months. We will then wait that these conditions are gathered before starting the development, in order to not take important financial risks. We are however very determined to develop this project and the current economic situation also makes that it is unlikely that other competitors will develop a similar business in the next few months, which is to our benefit. Finally, as we explained in this business plan, we could take advantage from this epidemic by having stricter hygiene rules, because the consumer behavior in France will definitely change forever.