Overview and business plan

“Boone Street Market”

Business plan overview for Board of Mayor and Aldermen

Presented November, 2013

What? 

Boone Street Market will be a retail storefront where local farmers can sell their products and consumers can access locally-raised farm produce.  Much like a farmers market, all items will be identified by the grower and location of the farm.   A small commercial kitchen space in the building will allow farmers to legally sample their foods or create new products for sale. It can also be used for cooking classes, demonstrations, local food meals, or for the store itself to prepare food items to sell.

Where?

The market will be located at the former Exxon station at 101 Boone Street.

When? 

Earliest projected opening is mid-summer 2014, dependent on fundraising and renovation schedule.  Once open, planned operating hours are Monday-Friday, 10am-7pm, with possible Saturday afternoon hours based on demand and ability to staff.

Who? 

The Boone Street Market will be governed by Jonesborough Locally Grown (JLG), the Tennessee non-profit organization which operates the Jonesborough Farmers Market. 

The JLG board of directors includes Saturday Farmers Market founders Curtis Buchanan, Karen Childress, and Melinda Copp (also representing the Town of Jonesborough), along with community volunteers.

Why? 

The success of the Saturday Farmers Market and the dramatic growth of the winter online ordering system demonstrate a strong market for local food.  A retail store will serve more growers, more customers, support the local agricultural economy and enhance the business mix in the historic district.

Online market notes:

• Online ordering from the Jonesborough Farmers Market tripled between the 2010/11 and 2011/12 season, then doubled again in the 2012/13 season.
• In the first week of online ordering in 2013, orders up 25%
• Successful independently-run local food store of this type is operating in Huntington, WV and another is planned to open this year in Glade Springs, VA.

Management and Operations

Products Sold

The store will focus on the sale of locally-produced food products. Non-food items may be allowed at the discretion of the board (such as fundraising items).  

Vendors permitted

Full-season vendors of the Jonesborough Farmers Market will be the first group invited to sell at the store, but other vendors of local food products will also allowed. Priority will be given to Jonesborough Farmers Market vendors, and to items produced in closest proximity to the market.

All vendors selling at the store must comply with state regulations, and the store will comply with TDA/Heath Department regulations for retail sale of produce and for the kitchen.

Operations

The store will sell products on a consignment basis, with vendors setting prices and all proceeds going to vendors.  The vendor “table fee” will be 20% of sales retained by the store to cover operating cost only.  An annual membership fee and a monthly shelf-stocking fee will also be charged to vendors who are not part of the Jonesborough Farmers Market. 

The volunteer board of JLG will set store policies and employ a full-time manager and a part-time Assistant Manager/Volunteer Coordinator.  An accountant will be contracted to pay employees, pay vendors, and file taxes.

 

Other Services

The store design includes a commercial kitchen that can be used by vendors to legally prepare processed foods for sale.  The kitchen also makes possible samplings/tastings, cooking classes, or for the store to prepare foods for sale or consumption on site. 

There will be indoor and outdoor seating area where customers can enjoy coffee and baked goods sold at the store, or prepared food items from the kitchen.

We also envision a members-only online ordering system, based on our online ordering software.  Store members could view current inventory on a website and place an order for pick-up at the store. 

Finally, the plaza area offers an ideal location for occasional mid-week markets or special events for vendors to sell produce or items such as crafts and plants that the store cannot accommodate.

Financial Assumptions

Although non-profit, Boone Street Market is planned to be self-supporting. When fully staffed, we estimate annual operating expenses at $120,000, which will be covered once monthly sales average $36,875.

Since operating income will be covered with a vendor fee based on percentage of sales, the critical financial assumption is the level of sales that will be realized. 

Our online market sold an average of $5000 per month in 2012-2013.  This represents orders placed in a 2-day window of time by people who are able to pick up that order in a one-hour window of time.  Since the store will expand that shopping window by 2.5 times, and the pick-up window by 50 times, we project that a reasonable estimate for initial monthly sales is 4-5 times our online average, or $22,000 per month for the first 6 months, growing steadily after that period.

The Wild Ramp (similar store in Huntington, WV) reached $30,000 in sales in its first year of operation.  This is the store that JLG Board Members visited in May 2013.   The Wild Ramp is located in a city approximately the size of Johnson City, and we feel they offer a benchmark for sales that we can meet or exceed. In Jonesborough, our location and our years of developing our farmers’ market customer and vendor base offer additional advantages.  For this reason we feel it is realistic to project a break-even point for covering all operating costs when monthly sales reach $38,750 projected in the 2^nd full year of operation.

Sales & Income Projections	2014	2015	2016	2017
Average monthly sales of	$20,000	$26,500	$36,875	$40,000
Boone Street Market Income
20% consignment fee for sales	$24,000	$63,600	$88,500	$96,000
5% sales to non-members (25% of sales)	$1,500	$3,975	$5,531	$6,000
Vendor memberships	$500	$1,200	$1,400	$1,600
Jonesborough Locally Grown other income	$38,375	$22,300	$22,400	$22,500
TOTAL INCOME	$64,375	$91,075	$117,831	$126,100
TOTAL OPERATING EXPENSES	$99,772	$104,854	$117,824	$124,028
surplus/(deficit)	-$35,397	-$13,779	$7	$2,072

Startup Expenses and Sources of Capital

Start-up expenses are significant due to the need to expand and renovate the building, equip it for the commercial kitchen and produce sales, and cover operating expenses during the months when sales are getting established. 

Funding for equipment and renovation will come from grants and donations. The Town of Jonesborough will partner in grant writing. JLG will conduct a capital donation campaign with a goal of 15 donors at $5000 each, and multiple donors at smaller amounts, special events, etc. 

Startup Expense Summary, with projected opening Summer 2014

Renovation estimate Based on 1180 sq feet @ $50 per sq ft, plus 160 sf at $100	$75,000
Equipment (coolers, freezers, shelving, software, computer/software needs, kitchen equipment)	$57,294
Operational Start up costs  (amount needed to cover all operating expenses before opening & during 1st 6 months)	$99,772
TOTAL	$232,066.00

Sources of Capital

Grants:
Rural Development Small Business Enterprise Fund	$57,294	Proposal to be submitted by Feb 10th
Fundraising:
JLG Major Donors campaign	$75,000	Goal to raise by April 1st
JLG Membership campaign	$20,000	To be raised April-August 2014
JLG other income:
Projected revenue from store	$25,500
JLG other income:
Earned income from vendor fees, farm to table fundraiser	$9,200
Funds already received/pledged*	$45,175	See detail below
TOTAL	$232,169.00

*Funds pledged to Boone Street Market project as of January 2014

Donated staff time (Executive Director)	$27,000
ARCD cost-share savings on ½ time store assistant manager	$6,000
Farm Credit Services (donation received 12/13)	$3,500
JLG balance forward (designated for store)	$8,675
Total	$45,175.00

Agreement with Town of Jonesborough

• JLG has secured a lease agreement with the Town for use of the building and plaza for $1 per year for 3 years, and town will share costs of utilities for first two years.
• Town will cover exterior maintenance, JLG will cover interior and insurance. 
• Town will partner with fundraising by submitting and managing any grants for which the town is the primary applicant.  Town will accept tax-deductible donations on behalf of JLG for contributions designated for the improvement of the building.
• Renovation will be designed by JLG with input and approval of TOJ. Preliminary design attached.
• Exterior restroom will be available for town use when store is closed.
• It will be a priority that the parking space in front of the building is available for short-term parking only.
• Upon dissolution, any fixed assets raised by funds contributed directly to the town will remain with the town.