Financial Model For the Food and Beverage Manufacturing Industry– Case Study

Introduction

At Oak Business Consultant, clients are provided with tailored business and financial consulting services, which include financial modeling, market analysis, business planning, and strategic advisory to steer businesses toward success. This report constitutes a case study based on one of our clients operating in the food and beverage manufacturing industry. This client approached us for a comprehensive analysis of its financials, and this report highlights the main findings of the detailed financial model for our client’s food and beverage manufacturing business.

Client Background

Our client is a noticeable competitor in the food and beverage manufacturing industry. It emerged at a time when cold-pressed juices were gaining popularity. However, these juices posed logistical challenges—they were perishable, heavy, and inconvenient for on-the-go consumers. Our client identified this gap and managed to carve out a significant niche for itself by introducing a line of cold-pressed juice powders, a convenient solution without compromising on the nutritional value.

However, in light of challenges arising due to an innovative product offering, the client sought expertise to navigate and effectively position themselves in a rapidly changing market. They partnered with Oak Business Consultant to assist in developing a detailed food and beverage manufacturing financial model based on its financial activities within a specified period. This collaboration showcases how Oak Business Consultant turns potential challenges into avenues for growth for businesses in any industry.

Challenges 

1. Product Awareness

• Difficulty in increasing awareness within the potential consumer base regarding the benefits of an innovative product and how it stands out among other traditional alternatives.
• Difficulty in clearing customer’s doubts about the authenticity, nutritional value, and quality of the product.

2. Market Positioning

• Difficulty in strengthening the market position in the presence of large and well-established competitors.
• Due to strong customer loyalty towards established brands in the food and beverage manufacturing industry, increasing market power in the short term becomes a daunting task.

3. Product Price and Variety

• In the initial stages of business, it is a challenge to produce a variety of complementary products along with cold-pressed powdered juice.

• With a limited product variety, scaling the business and entering new market segments or demographics could be challenging, as it restricts the appeal to a broader audience.
• Difficulty in cutting costs at the initial stages for a unique product might deter potential customers who are used to a wider range of choices in traditional juices at different price levels.

4. Production and Material Sourcing

• Producing cold-pressed juice powders might involve specialized processes and equipment, potentially driving up manufacturing costs compared to traditional juices.
• Ensuring the premium quality and nutritional value of the powders may require sourcing higher-grade ingredients, which can be more expensive.

Solutions

Oak Business Consultant provided the following solutions to the client for the above-mentioned challenges:

1. Product Awareness

• Oak Team provided a detailed marketing plan that highlighted the costs and potential benefits of carrying out various educational/marketing campaigns through which the client can communicate the benefits of cold-pressed juice powders.
• The financial model was tailored in a way that the client could carry out a cost-benefit analysis of collaborating with food and beverage manufacturing companies and influencers to offer product samples for review and promotion purposes.

2. Market Positioning

• At Oak, the team prepared financial tools that can aid in carrying out detailed competitor analysis and the customers, which can further assist in identifying the gaps in its growth strategies. After these initial steps, the client was able to establish a strong brand identity and story that resonates with consumers, emphasizing the brand’s uniqueness and values.
• Through a user-friendly website marketing expenditure tool provided by us, the client was able to understand the crucial role that advertising and marketing play in an entity’s growth in this digital era.

3. Product Price and Variety

• The Oak team provided expert guidance and consulting services to the client regarding the expansion of product lines and various financing options that are available in the market and align with the specific needs of the client.
• The financial tools that the team provided are structured to enable the client to assess the financial impacts of different product price levels and make decisions accordingly.

4. Production and Material Sourcing

• The experts from Oak’s team provided a comprehensive business plan that highlighted the importance of incorporating research and development (R&D) activities in the client’s operations to find more efficient and cost-effective production methods without compromising product quality.
• Moreover, throughout various consultation sessions, the team provided expert advice about partnering with suppliers or manufacturers who have the required expertise and equipment to streamline production.

Financial Highlights

This financial analysis section of the report contains a review of three major financial statements of our client and comments on its financial metrics. By evaluating these statements — the Income Statement, the Balance Sheet, and the Cash Flow Statement — we gain comprehensive insights into the company’s revenue streams, asset management, liabilities, and cash operations.

Moreover, it contains an analysis of the company’s sales performance on leading e-commerce platforms: Amazon and Shopify. This offers a window into the company’s digital market penetration, customer preferences, and online sales trends.

Income Statement

The first section of the financial statement analysis is the Income Statement. Our Team prepared an easy-to-understand income statement for our client’s company to track financial performance over time. We prepared both an actual income statement and a five-year forecasted income statement. The forecasted income statements will aid in analyzing the future performance of the firm. Moreover, a constant annual growth rate (CAGR) has been calculated for each figure in both income statements. These income statements not only contain a breakdown of income and expenses but also different financial ratios such as EBIT margin and net profit margin.

This tool lets the company monitor its annual profitability. By adding data to the forecasted income statement, they can predict future profits.

In addition, the model contains a two-year comparison of this company’s income statements for a total period of 6 years. The images below show the different income statements we have developed for our client.

Cash Flow Statement

As per our client’s requirements regarding cash flow analysis, we prepared a cash flow statement. It highlights the cash flow provided through the company’s operating, investing, and financing activities for four years. This tool will aid our client in tracking its cash inflows and outflows over a specified period. The model offers insight into the company’s liquidity and efficiency. It showcases the ability to generate cash for operations, debt settlement, business reinvestment, and shareholder returns.

Balance Sheet

Similar to Income Statement and Cash Flow Statement, the model has a detailed Balance Sheet. It lists all assets, liabilities, and equity for a year. Along with separate columns for percentage changes for each year.

This will assist the client in getting a glance at its financial and liquidity position. Furthermore, the client can easily compute the net worth of the entity. As such, the balance sheet becomes an essential tool for informed decision-making, facilitating strategic planning, and assessing the viability of potential investments or financial commitments.

Three Statement Model

Apart from separate tools for the income statement, balance sheet, and cash flow statement, we also prepared a three-statement model as a part of the financial model of the client. In this three-statement model, we prepared all three financial statements, one after the other, and also five-year projected financial statements. We prepared an automatic and dynamic model for client data input. This allows viewing results for subsequent years. Additionally, we added assumption tables at the model’s end. This facilitates easy changes to assumptions for desired results.

Dashboard

In this financial model for our client’s food and beverage manufacturing business, we included a dashboard containing charts of various financial metrics we have computed in the previously mentioned tools. In this way, the client will get a glance at the major figures and how they differ from the previous year’s figures. For instance, we have included graphs for actual and forecasted cash flow and actual and forecasted EBITDA.

E-commerce Expansion

To boost the sales of its e-commerce business unit, our client decided to enter the e-commerce market and offer its product on leading online stores, i.e., Amazon and Shopify. However, before taking any major action, the client requested our team for a feasibility report so that it could examine the strengths and weaknesses of this project. Therefore, we prepared a comprehensive feasibility study outlining the costs that the client will incur and the earnings that will be generated from this endeavor. In other words, this document aimed to offer the client a clear roadmap, ensuring they’re equipped with all pertinent information before diving into the e-commerce realm.

Conclusion

Oak Business Consultant is a trusted partner when it comes to the preparation of customized financial models, business strategies, and pitch decks specifically designed for startups operating in diverse industries. Our extensive knowledge and experience are derived from a true comprehension of our client’s changing requirements and financial circumstances, guaranteeing our unwavering support at each stage of their growth journey. In this report, we highlighted how the team at Oak Business Consultant met the client’s requirements and prepared a user-friendly financial model accordingly. By the end of this collaboration, our client was provided with a financial model that offers precise financial projections, identifies and mitigates risks, attracts potential investors, optimizes costs, assists in resource allocation, facilitates scenario analysis, supports sustainability planning, and aids in strategic decision-making. This comprehensive tool empowers businesses to navigate the complexities of their financial landscape and chart a successful course toward profitability and sustainability.

We pride ourselves on in-depth market research, which, combined with our precise financial forecasting, offers businesses a clear roadmap towards achieving their milestones. With a professional financial and business analysts team, Oak Business Consultant goes above and beyond to deliver unparalleled financial planning and strategic guidance, ensuring that every entrepreneur we partner with is equipped for success.

What Oak Business Consultant Offers?

At Oak Business Consultant, we are dedicated to providing expert financial and business analysis to support your financial planning needs. Our array of services encompasses Financial Modeling, Business Plans, Pitch Decks, and more. With a focus on aiding in fundraising and devising growth-centric business plans, we equip business owners with strategies to target the right market and predict future financials, which can be easily integrated into your models. Explore our template offerings through the provided URLs: 

• Juice Bar Pitch Deck Template
• Juice Bar Excel Financial Model
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• Snack and Non-alcoholic Beverage Bar Financial Model Template
• Cake Bakery Pitch Deck Template
• Coffee Shop Business Plan
• Coffee Shop Pitch Deck Template
• Coffee Shop Excel Financial Model Projection Template
• Cafe Financial Model Excel Template
• Bubble Tea Cafe Excel Financial Model

By utilizing our financial services, you may streamline your business processes. For comprehensive support during your company’s launch, feel free to reach out to us. Discover why many Micro-Small and Mid-sized Businesses continuously favor our financial planning services by exploring our portfolio. Embark on this journey with us, and we assure you a path leading to success.