BUS 400 Module 4 Project One Example

Opportunity Assessment: Herbs and Microgreens for Boston Restaurants

[Student Name]

Southern New Hampshire University

BUS 400: Driving Business Opportunities

Project One

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Opportunity Assessment: Herbs and Microgreens for Boston Restaurants

Summary

The herb and microgreen opportunity is real and fits the greenhouse's strengths, but the greenhouse has never grown these crops commercially and the market evidence rests on twelve interviews. I recommend a sixty-day pilot from a converted half-bay, costing about $60,000, supplying twelve to fifteen restaurants along the Thursday Boston route. If the pilot meets targets for quality, reorders and margin, the family should proceed with the full $420,000 build.

Market Feasibility

Module Three found roughly $3.6 million a year of reachable demand among Boston-area independents that pay for local, consistent product, and judged that the greenhouse might win around 150 of those kitchens, some $410,000 of business, by year three. Eight of twelve chefs interviewed expressed interest, and a specialty distributor offered to carry the product. Kotler and Keller (2016) caution that stated interest overstates actual purchasing, so the pilot's reorder rate will be the real test.

Operational Feasibility

Space is available: one 6,000-square-foot bay, currently used for lettuce that has been losing money under grocery pricing, could be converted to vertical racks with LED lighting and its own climate controls. Skills are the gap. The head grower and her team are expert in lettuce, but basil, cilantro and microgreens have different needs for light, temperature, harvest timing and handling. The greenhouse would need to hire a grower with herb experience, budgeted at about $62,000 a year, and train two existing staff.

Logistics fit. The greenhouse's truck already drives to Boston-area grocery warehouses every Thursday, and a route adding twelve to twenty restaurant stops would take about three additional hours. Small orders require different packing and invoicing, which the office can handle with an online ordering form. Food safety certification can be extended to the new crops. Barney (1991) argues that opportunities built on existing resources are more defensible; here the trucks, certification and year-round growing are real assets, while the herb expertise must be bought.

Financial Feasibility

Full conversion would cost about $420,000: $210,000 for vertical racks and irrigation, $150,000 for LED lighting and $60,000 for climate controls and a cooler. Annual operating costs at full scale, including the herb grower, labor, seed, packaging, delivery and electricity, would be about $260,000. At $410,000 of third-year sales, gross profit would be about $150,000, paying back the investment in about three years from full operation, before any effect on the lettuce business. Module Five will build detailed projections.

Risks

Risk assessment

The two highest risks, quality and reorders, are exactly what a pilot can test before the large investment.

The Pilot

A half-bay of about 3,000 square feet can be converted with used racks and temporary lighting for about $60,000, enough to grow basil, cilantro, mint and three microgreens. Over sixty days from January, the greenhouse would supply twelve to fifteen restaurants on the Thursday route, chosen from those interviewed and introduced by the distributor. Ries (2011) describes this kind of minimum viable test as a way to learn what customers actually do at the lowest cost. The pilot would measure product quality through chef ratings collected each week, the share of restaurants reordering after the first month, average weekly order size, gross margin per pound after electricity and the extra hours the route requires.

Organizational Fit

The opportunity also asks something of the organization. The family's son would lead the restaurant business, taking time from operations he now oversees, so the family would need to promote the assistant operations manager to cover part of his role. Staff would need to accept a new kind of work: small, varied orders packed by hand, which some lettuce harvesters may enjoy and others resent. The head grower was initially skeptical and worries that the herb bay will draw attention from her lettuce crop, so the plan keeps her responsible for lettuce quality and makes the new herb grower report to her, which respects her standing and keeps growing decisions in one place. Selling to chefs is also new; the family's experience is with grocery category managers, who negotiate on price and volume, while chefs buy on quality and relationship. The son's interviews suggest he can build those relationships, but the pilot will show whether the time demands are sustainable alongside his other duties.

What the Pilot Will Not Tell Us

A sixty-day winter pilot will show whether chefs reorder and whether quality holds in the hardest growing season, but it will not show summer demand, when local farms compete, or how the business performs at 150 accounts rather than fifteen. It also relies on used racks and temporary lighting that are less efficient than the full build, so its electricity cost per pound will overstate the long-run figure. The decision gates allow for that by measuring margin on a metered basis and adjusting for the more efficient lighting in the full design.

Decision Gates

Proceed with the full build if at least 70 percent of pilot restaurants reorder, average orders reach $45 a week and gross margin per pound is at least 40 percent after metered electricity. Adjust, for example by dropping microgreens and focusing on herbs, if reorders are strong but margins on one product line are weak. Stop if fewer than half the restaurants reorder or quality problems persist after the first month, and return the bay to lettuce.

Conclusion

The opportunity fits the greenhouse's market and assets but depends on skills it lacks and demand that has only been stated, not shown. A sixty-day pilot costing about $60,000 tests exactly those uncertainties, and clear decision gates turn its results into a decision on the full $420,000 investment.

References

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108

Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson.

Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. Crown Business.