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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................2
1.1 Objectives ...................................................................................................................................2
1.2 Keys to Success ........................................................................................................................2
1.3 Mission........................................................................................................................................3
2.0 Company Summary.............................................................................................................................3
2.1 Company Ownership .................................................................................................................3
2.2 Start-up Summary ......................................................................................................................4
Chart: Start-up .........................................................................................................................4
Table: Start-up .........................................................................................................................5
Table: Start-up Funding ..........................................................................................................6
3.0 Products ...............................................................................................................................................6
4.0 Market Analysis Summary..................................................................................................................7
4.1 Market Segmentation ................................................................................................................7
Table: Market Analysis ...........................................................................................................8
Chart: Market Analysis (Pie) ..................................................................................................8
4.2 Industry Analysis .........................................................................................................................8
4.2.1 Competition and Buying Patterns................................................................................9
5.0 Strategy and Implementation Summary ............................................................................................9
5.1 Competitive Edge....................................................................................................................10
5.2 Marketing Strategy ..................................................................................................................10
5.3 Sales Strategy..........................................................................................................................10
5.3.1 Sales Forecast ............................................................................................................10
Chart: Sales Monthly ...................................................................................................11
Chart: Sales by Year ...................................................................................................11
Table: Sales Forecast.................................................................................................12
6.0 Management Summary ....................................................................................................................12
6.1 Personnel Plan.........................................................................................................................13
Table: Personnel ...................................................................................................................13
7.0 Financial Plan ....................................................................................................................................13
7.1 Important Assumptions............................................................................................................13
Table: General Assumptions ...............................................................................................13
7.2 Break-even Analysis................................................................................................................14
Chart: Break-even Analysis .................................................................................................14
Table: Break-even Analysis .................................................................................................14
7.3 Projected Profit and Loss .......................................................................................................15
Table: Profit and Loss ..........................................................................................................15
Chart: Profit Monthly .............................................................................................................16
Chart: Profit Yearly................................................................................................................16
Chart: Gross Margin Monthly ...............................................................................................17
Chart: Gross Margin Yearly..................................................................................................17
7.4 Projected Cash Flow...............................................................................................................17
Chart: Cash ...........................................................................................................................18
Table: Cash Flow..................................................................................................................19
7.5 Projected Balance Sheet ........................................................................................................20
Table: Balance Sheet ...........................................................................................................20
7.6 Business Ratios .......................................................................................................................21
Page 1
Table of Contents
Table: Ratios .........................................................................................................................22
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6
Page 2
Flyleaf Books
1.0 Executive Summary
Introduction
Flyleaf Books is a start-up used bookstore in the Cleveland, Ohio area. It is the goal of the
company management to ac quire loc al market share in the used bookstore industry through
low price, a dominant selection of products, a competitive variety of services including a
buybac k/trade program and hard to find book search, plus a relaxing, friendly environment that
encourages browsing and reading.
Company
Flyleaf will be a limited liability corporation registered in the state of Ohio. The company will be
jointly owned by Mr. James Vinck, a former head librarian of the Philadelphia City Library, and
his wife Arac ela.
Mr. Vinck is establishing this firm as a growth-oriented endeavor in order to supplement his
retirement, continue meeting people with similar interests, and to leave a viable business to his
children. Flyleaf Books will be establishing its store in one of the busiest section of Brecksville, an
outlying suburb of Cleveland. This area is well know for its upsc ale residents and high-quality
establishments. Our fac ility is a former 8,000 square ft. furniture store which allows the company
to stoc k a large amount of inventory.
Products/Services
Flyleaf Books will offer a wide range of book, magazine, and music selections. This includes just
about every conceivable category including fiction, non-fiction, business, sc ience, children's,
hobbies, collecting, and other types of books. Our music selection will concentrate on CD's as
these are the most popular and take up the least amount of floor space. In addition, we will be
offering a competitive buy and trade service to assist in lowering our inventory ac quisition
costs and making our store more attrac tive to our customers. In addition, we offer a search
and order service for customer seeking to find hard to get items. Flyleaf Books will have a
relaxed "reading room" type atmosphere that we will encourage through the plac ement of
chairs, couches, etc.
Market
Our market is fac ing a dec line in growth over the past two years. This is attributed to the overall
weak economy. Book store industry sales rose only 3.6% for last year whereas overall U.S.
retail sales grew by 4.3%. However, management believes that this may be an advantage to the
used bookstore industry. As customers cut bac k on purchasing, used bookstores will look more
attrac tive to customers who still wish to purchase books. Therefore, management believes
this may be a good time to get into the industry and gain market share.
The bookstore industry as a whole is going through a large consolidation. Previously, the
market was dominated by loc al, small stores and regional chains. With the advent of the
"superstore" as created by Barnes & Noble, the largest players in the market have been able to
gather significant market share and drive many independent booksellers out of the market.
Where independent booksellers can still create a viable position for themselves within the market
is in the used books segment. This segment generally does not attrac t big companies since the
"superstore" concept is much more difficult to replicate in a market with such low profit
margins. This tends to favor the loc al independent bookseller in the used book market segment
Page 1
Flyleaf Books
as long as they can ac quire a sufficiently large enough fac ility to house an attrac tive inventory
and compete with the national chains.
Financial Considerations
Our start-up expenses come to $178,000, which are single time fees associated with opening the
store. These costs are financed by both private investors and SBA loans. Please note that we
expec t to be operating at a loss for the first couple of months before advertising begins to
take effect and draw in c ustomers. Flyleaf Books will be receiving periodic influxes of cash to
cover operating expenses during the first two years as it strives toward sustainable
profitability. Funding has been arranged through lending institutions and private investors
already. We do not anticipate any cash flow problems during the next three years.
1.1 Objectives
These are the goals for the next three years for Flyleaf Books:
We must attain a high level of visibility through the media, billboards, and other
advertising.
Page 2
Flyleaf Books
We must establish rigid proc edures for cost control and incentives for maintaining tight
control in order to bec ome THE low-cost leader in used books.
In order to continually attrac t customers, we must be able to keep the maximum
amount of inventory available and ac hieve a high level of customer service.
1.3 Mission
Flyleaf Book's mission is to provide used quality literature of all types at the lowest possible
prices in the Cleveland, OH area. The company additionally seeks to provide a comfortable
atmosphere for its clients that promotes browsing, relaxation, and an enjoyable environment to
spend extend time in. Flyleaf's attrac tion to its customers will be our large selection of books,
magazines, used CD's and our purchasing/buyback option, which lower our book ac quisition costs
and allows our customers to disc ard unwanted books/CD's in exchange for cash.
Page 3
Flyleaf Books
2.2 Start-up Summary
Our start-up expenses come to $178,000, which are largely single time fees assoc iated with
opening the store. These costs are financed by both private investment and short- and longterm SBA guaranteed loans.
Page 4
Flyleaf Books
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Pre-sale advertising/marketing
Land location and finders fee
Insurance
Rent
Expensed Equipment
Initial store facilities
Other
Total Start-up Expenses
$2,400
$4,000
$20,000
$1,780
$6,000
$25,000
$50,000
$3,000
$112,180
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
$33,820
$16,000
$8,000
Long-term Assets
Total Assets
$8,000
$65,820
Total Requirements
$178,000
Page 5
Flyleaf Books
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
$112,180
$65,820
$178,000
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
$32,000
$33,820
$0
$33,820
Total Assets
$65,820
$15,000
$75,000
$8,000
$10,000
$108,000
Capital
Planned Investment
Mr. James Vinck
Mrs. Aracela Vinck
Additional Investment Requirement
$50,000
$20,000
$0
$70,000
($112,180)
($42,180)
$65,820
$178,000
3.0 Products
Flyleaf Books will offer a wide range of book, magazine, and music selections. This includes just
about every conceivable category including fiction, non-fiction, business, sc ience, children's,
hobbies, collecting, and other types of books.
Our music selection will concentrate on CDs as these are the most popular and take up the least
amount of floor space. In addition, we will be offering a competitive buy and trade service to
assist in lowering our inventory ac quisition costs and making our store more attrac tive to our
customers. We also offer a search and order service for customer seeking hard to find items.
Another less obvious service to our customers will be the relaxed "reading room" type
atmosphere that we will encourage through the plac ement of chairs, couches, and etc. We
strongly encourage our customers to spend as long as they like reading through our book
selection and enjoying a quiet, relaxing environment. Our store hours will be 8:30 a.m. to 8:00
p.m. Monday-Friday and 10:00 a.m. to 6:00 p.m. Saturday. Once profitability bec omes stable,
Page 6
Flyleaf Books
we will extend these hours.
Casual Shoppers: These are customers who go to the bookstore with no set idea of
what they want to purchase. They seek to spend a fair amount of time browsing the
store and often are considered impulse buyers. Often they leave the store with small
purchases or without buying anything. These customers are attrac ted to bookstores with
low prices and large inventory.
"Hard to Find" Shoppers: These are customers with very specific needs. They are
looking for a difficult to obtain item, usually a book that is out of print. If we can satisfy
this customer, then we are able to build significant customer loyalty. These clients are
generally price insensitive and are also drawn to stores that have large inventory.
Specific Category Shoppers: These customers are those types that generally buy
Page 7
Flyleaf Books
books or music of one category, such as fiction or romance. These customers generally
have a good idea of what they want to purchase and have the greatest buybac k/trade
potential. These customers represent the highest volume purchaser, often leaving the
store having spent $30-$50.
The following table and pie graph show how our market segments are broken up into size and
relative percentages. We use the city of Brecksville census information to determine growth
figures.
Growth
2%
2%
2%
2.00%
Year 1
Year 2
Year 3
Year 4
Year 5
78,000
22,000
50,000
150,000
79,560
22,440
51,000
153,000
81,151
22,889
52,020
156,060
82,774
23,347
53,060
159,181
84,429
23,814
54,121
162,364
CAGR
2.00%
2.00%
2.00%
2.00%
Flyleaf Books
to be initially quite high but overall volume sales to be low, and then seeing this taper off to
industry norms.
The bookstore industry as a whole is going through a large consolidation. Previously, the
market was dominated by loc al, small stores and regional chains. With the advent of the
"superstore" as created by Barnes & Noble, the largest players in the market have been able to
gather significant market share and drive a lot of independent booksellers out of the market.
Where independent booksellers can still create a viable position for themselves is within the used
books segment. This segment generally does not attrac t big companies since the "superstore"
concept is much more difficult to replicate in a market with such low profit margins. Dominant
selection, both in used and new books is the key to bringing in new customers and the only
way to do that is to operate at a low-price leader. These two fac tors tend to favor the loc al
independent bookseller in the used book market segment as long as they can ac quire a
sufficiently large enough fac ility to house an attrac tive inventory and LOCALLY compete with the
national chains.
Flyleaf Books
Page 10
Flyleaf Books
Page 11
Flyleaf Books
Table: Sales Forecast
Sales Forecast
Year 1
Year 2
Year 3
Sales
Fiction Books
Sci-Fi Books
Magazines/newspapers
Children's Books
Biography Books
Business Books
CD's and Music
Other
Total Sales
$164,292
$184,829
$143,756
$184,829
$123,219
$112,951
$184,829
$205,366
$1,304,071
$172,507
$194,070
$150,944
$194,070
$129,380
$118,599
$188,526
$209,473
$1,357,569
$182,512
$205,327
$159,698
$205,327
$136,884
$125,477
$199,460
$214,081
$1,428,767
Year 1
$126,505
$142,318
$110,692
$142,318
$94,879
Year 2
$131,105
$147,494
$114,717
$147,494
$98,329
Year 3
$136,884
$153,995
$119,774
$153,995
$102,663
$86,972
$142,318
$158,131
$1,004,135
$90,135
$143,279
$159,199
$1,031,752
$94,108
$149,595
$160,561
$1,071,575
Business Books
CD's and Music
Other
Subtotal Direct Cost of Sales
Page 12
Flyleaf Books
6.1 Personnel Plan
Initially the company will have a small staff including upper management and sales personnel. We
expec t to expand our personnel and extend our hours once we begin to make a profit.
Table: Personnel
Personnel Plan
Mr. James Vinck
Mr. Todd Vinck
Salesperson
Year 1
$42,000
$18,000
$10,200
Year 2
$48,000
$25,000
$11,000
Year 3
$48,000
$30,000
$11,000
Salesperson
Salesperson
Salesperson
Salesperson
Total People
$10,200
$10,200
$10,200
$10,200
5
$11,000
$10,200
$10,200
$10,200
5
$11,000
$10,200
$10,200
$10,200
5
Total Payroll
$111,000
$125,600
$130,600
Year 1
1
10.00%
Year 2
2
10.00%
Year 3
3
10.00%
10.00%
30.00%
0
10.00%
30.00%
0
10.00%
30.00%
0
Page 13
Flyleaf Books
7.2 Break-even Analysis
The following table and chart show our Break-even Analysis. We are deliberately setting these
average costs a little low in order to be conservative and give us an idea of the maximum
amount of inventory we need to move per month.
$90,541
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
77%
$20,824
Page 14
Flyleaf Books
7.3 Projected Profit and Loss
The following table explains our itemized costs and determines gross and net margin. Please note
that these predictions are weighted toward having higher costs in c omparison to revenues in
case unexpec ted hidden costs arise.
Year 2
$1,357,569
$1,031,752
$0
$1,031,752
Year 3
$1,428,767
$1,071,575
$0
$1,071,575
Gross Margin
Gross Margin %
$299,936
23.00%
$325,817
24.00%
$357,192
25.00%
Expenses
Payroll
Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales
$111,000
$125,600
$130,600
$36,000
$0
$0
$15,000
$0
$0
$15,000
$0
$0
Rent
Utilities
Insurance
Payroll Taxes
Other
$60,000
$3,600
$7,200
$17,093
$15,000
$65,000
$4,000
$7,200
$18,840
$10,000
$68,000
$4,000
$7,500
$19,590
$10,000
$249,893
$245,640
$254,690
$50,044
$80,177
$102,502
EBITDA
Interest Expense
Taxes Incurred
$50,044
$13,750
$10,888
$80,177
$13,900
$19,883
$102,502
$12,050
$27,136
Net Profit
Net Profit/Sales
$25,406
1.95%
$46,394
3.42%
$63,316
4.43%
Page 15
Flyleaf Books
Page 16
Flyleaf Books
Page 17
Flyleaf Books
anticipate any cash flow problems during the next three years.
Page 18
Flyleaf Books
Table: Cash Flow
Pro Forma Cash Flow
Year 1
Year 2
Year 3
$1,304,071
$1,304,071
$1,357,569
$1,357,569
$1,428,767
$1,428,767
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
$0
$0
$0
$5,000
$0
$50,000
$0
$0
$54,000
$1,413,071
$0
$0
$0
$0
$0
$0
$1,357,569
$0
$0
$0
$0
$0
$0
$1,428,767
Year 1
Year 2
Year 3
$111,000
$1,156,323
$1,267,323
$125,600
$1,190,738
$1,316,338
$130,600
$1,233,157
$1,363,757
$0
$0
$0
$7,000
$0
$15,000
$0
$0
$0
$0
$5,000
$0
$0
$10,000
$0
$0
$0
$1,267,323
$0
$0
$1,328,338
$0
$0
$1,388,757
$145,748
$179,568
$29,231
$208,799
$40,010
$248,809
Page 19
Flyleaf Books
7.5 Projected Balance Sheet
The following table is the Projected Balance Sheet for Flyleaf Books.
Year 2
Year 3
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
$179,568
$122,562
$8,000
$310,130
$208,799
$97,179
$8,000
$313,978
$248,809
$102,019
$8,000
$358,828
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$8,000
$0
$8,000
$318,130
$8,000
$0
$8,000
$321,978
$8,000
$0
$8,000
$366,828
Year 1
Year 2
Year 3
Accounts Payable
Current Borrowing
Other Current Liabilities
$125,904
$20,000
$10,000
$95,358
$13,000
$10,000
$101,892
($2,000)
$10,000
$155,904
$118,358
$109,892
Long-term Liabilities
Total Liabilities
$125,000
$280,904
$120,000
$238,358
$110,000
$219,892
Assets
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
$124,000
$124,000
$124,000
($112,180)
$25,406
$37,226
($86,774)
$46,394
$83,619
($40,381)
$63,316
$146,935
$318,130
$321,978
$366,828
$37,226
$83,619
$146,935
Page 20
Flyleaf Books
7.6 Business Ratios
We are using the industry standard Business Ratios for independent used bookstore chains as a
comparison to our own.
Page 21
Flyleaf Books
Table: Ratios
Ratio Analysis
Year 1
n.a.
Year 2
4.10%
Year 3
5.24%
Industry Profile
2.27%
38.53%
2.51%
97.49%
2.51%
100.00%
30.18%
2.48%
97.52%
2.48%
100.00%
27.81%
2.18%
97.82%
2.18%
100.00%
22.18%
26.81%
56.12%
43.88%
100.00%
49.01%
39.29%
88.30%
11.70%
36.76%
37.27%
74.03%
25.97%
29.96%
29.99%
59.94%
40.06%
26.39%
24.87%
51.26%
48.74%
100.00%
23.00%
100.00%
24.00%
100.00%
25.00%
100.00%
23.55%
21.05%
0.00%
3.84%
20.58%
0.00%
5.91%
20.57%
0.00%
7.17%
16.21%
0.85%
1.02%
1.99
2.65
3.27
1.68
1.20
88.30%
97.50%
11.41%
1.83
74.03%
79.26%
20.58%
2.34
59.94%
61.56%
24.66%
0.71
4.63%
57.28%
10.83%
Additional Ratios
Year 1
Year 2
Year 3
1.95%
68.25%
3.42%
55.48%
4.43%
43.09%
n.a
n.a
10.91
10.12
27
4.10
9.39
12.17
35
4.22
10.76
12.17
29
3.89
n.a
n.a
n.a
n.a
7.55
0.56
2.85
0.50
1.50
0.50
n.a
n.a
$154,226
3.64
$195,619
5.77
$248,935
8.51
n.a
n.a
0.24
49%
1.20
35.03
0.00
0.24
37%
1.83
16.24
0.00
0.26
30%
2.34
9.72
0.00
n.a
n.a
n.a
n.a
n.a
Sales Growth
Percent of Total Assets
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth
Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Page 22
Appendix
Table: Sales Forecast
Sales Forecast
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$8,000
$9,200
$10,580
$12,167
$12,836
$13,542
$14,287
$15,073
$15,902
$16,776
$17,699
$18,230
$9,000
$7,000
$9,000
$10,350
$8,050
$10,350
$11,903
$9,258
$11,903
$13,688
$10,646
$13,688
$14,441
$11,232
$14,441
$15,235
$11,849
$15,235
$16,073
$12,501
$16,073
$16,957
$13,189
$16,957
$17,890
$13,914
$17,890
$18,873
$14,679
$18,873
$19,911
$15,487
$19,911
$20,509
$15,951
$20,509
0%
0%
0%
$6,000
$5,500
$9,000
$6,900
$6,325
$10,350
$7,935
$7,274
$11,903
$9,125
$8,365
$13,688
$9,627
$8,825
$14,441
$10,157
$9,310
$15,235
$10,715
$9,822
$16,073
$11,305
$10,363
$16,957
$11,926
$10,932
$17,890
$12,582
$11,534
$18,873
$13,274
$12,168
$19,911
$13,673
$12,533
$20,509
0%
Sales
Fiction Books
0%
Sci-Fi Books
Magazines/newspapers
Children's Books
0%
0%
0%
Biography Books
Business Books
CD's and Music
Other
$10,000
$11,500
$13,225
$15,209
$16,045
$16,928
$17,859
$18,841
$19,877
$20,970
$22,124
$22,788
Total Sales
$63,500
$73,025
$83,979
$96,576
$101,887
$107,491
$113,403
$119,640
$126,220
$133,163
$140,486
$144,701
Month 1
$6,160
Month 2
$7,084
Month 3
$8,147
Month 4
$9,369
Month 5
$9,884
Month 6
$10,427
Month 7
$11,001
Month 8
$11,606
Month 9
$12,244
Month 10
$12,918
Month 11
$13,628
Month 12
$14,037
Sci-Fi Books
$6,930
$7,970
$9,165
$10,540
$11,119
$11,731
$12,376
$13,057
$13,775
$14,533
$15,332
$15,792
Magazines/newspapers
Children's Books
Biography Books
$5,390
$6,930
$4,620
$6,199
$7,970
$5,313
$7,128
$9,165
$6,110
$8,198
$10,540
$7,026
$8,648
$11,119
$7,413
$9,124
$11,731
$7,821
$9,626
$12,376
$8,251
$10,155
$13,057
$8,705
$10,714
$13,775
$9,183
$11,303
$14,533
$9,688
$11,925
$15,332
$10,221
$12,282
$15,792
$10,528
$4,235
$6,930
$7,700
$48,895
$4,870
$7,970
$8,855
$56,229
$5,601
$9,165
$10,183
$64,664
$6,441
$10,540
$11,711
$74,363
$6,795
$11,119
$12,355
$78,453
$7,169
$11,731
$13,034
$82,768
$7,563
$12,376
$13,751
$87,320
$7,979
$13,057
$14,508
$92,123
$8,418
$13,775
$15,305
$97,190
$8,881
$14,533
$16,147
$102,535
$9,369
$15,332
$17,035
$108,175
$9,651
$15,792
$17,546
$111,420
Business Books
CD's and Music
Other
Subtotal Direct Cost of Sales
Page 1
Appendix
Table: Personnel
Personnel Plan
Mr. James Vinck
Mr. Todd Vinck
Salesperson
0%
0%
0%
Month 1
$3,500
$1,500
$850
Month 2
$3,500
$1,500
$850
Month 3
$3,500
$1,500
$850
Month 4
$3,500
$1,500
$850
Month 5
$3,500
$1,500
$850
Month 6
$3,500
$1,500
$850
Month 7
$3,500
$1,500
$850
Month 8
$3,500
$1,500
$850
Month 9
$3,500
$1,500
$850
Month 10
$3,500
$1,500
$850
Month 11
$3,500
$1,500
$850
Month 12
$3,500
$1,500
$850
Salesperson
Salesperson
Salesperson
Salesperson
0%
0%
0%
0%
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
$850
Total People
Total Payroll
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
Page 2
Appendix
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate
Month 1
1
10.00%
Month 2
2
10.00%
Month 3
3
10.00%
Month 4
4
10.00%
Month 5
5
10.00%
Month 6
6
10.00%
Month 7
7
10.00%
Month 8
8
10.00%
Month 9
9
10.00%
Month 10
10
10.00%
Month 11
11
10.00%
Month 12
12
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
Tax Rate
Other
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
30.00%
0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$63,500
$48,895
Sales
Direct Cost of Sales
Other Costs of Goods
Month 2
$73,025
$56,229
Month 3
$83,979
$64,664
Month 4
$96,576
$74,363
Month 5
$101,887
$78,453
Month 6
$107,491
$82,768
Month 7
$113,403
$87,320
Month 8
$119,640
$92,123
Month 9
$126,220
$97,190
Month 10
$133,163
$102,535
Month 11
$140,486
$108,175
Month 12
$144,701
$111,420
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$48,895
$56,229
$64,664
$74,363
$78,453
$82,768
$87,320
$92,123
$97,190
$102,535
$108,175
$111,420
Gross Margin
Gross Margin %
$14,605
23.00%
$16,796
23.00%
$19,315
23.00%
$22,212
23.00%
$23,434
23.00%
$24,723
23.00%
$26,083
23.00%
$27,517
23.00%
$29,031
23.00%
$30,627
23.00%
$32,312
23.00%
$33,281
23.00%
Payroll
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$3,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Rent
Utilities
Insurance
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$5,000
$300
$600
$1,830
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$1,388
$2,000
$2,000
$2,000
$0
$2,000
$0
$2,000
$0
$3,000
$0
$2,000
$0
$21,980
$21,538
$21,538
$19,538
$21,538
$19,538
$21,538
$19,538
$22,538
$19,538
$21,538
$19,538
($7,375)
($4,742)
($2,222)
$2,675
$1,897
$5,185
$4,545
$7,980
$6,493
$11,090
$10,774
$13,744
EBITDA
Interest Expense
($7,375)
$750
($4,742)
$1,167
($2,222)
$1,167
$2,675
$1,167
$1,897
$1,167
$5,185
$1,167
$4,545
$1,167
$7,980
$1,167
$6,493
$1,208
$11,090
$1,208
$10,774
$1,208
$13,744
$1,208
Taxes Incurred
($2,438)
($1,773)
($1,017)
$452
$219
$1,206
$1,014
$2,044
$1,585
$2,964
$2,870
$3,761
($5,688)
-8.96%
($4,136)
-5.66%
($2,372)
-2.82%
$1,056
1.09%
$511
0.50%
$2,813
2.62%
$2,365
2.09%
$4,769
3.99%
$3,699
2.93%
$6,917
5.19%
$6,696
4.77%
$8,775
6.06%
Expenses
Payroll Taxes
Other
Net Profit
Net Profit/Sales
15%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$63,500
$63,500
$73,025
$73,025
$83,979
$83,979
$96,576
$96,576
$101,887
$101,887
$107,491
$107,491
$113,403
$113,403
$119,640
$119,640
$126,220
$126,220
$133,163
$133,163
$140,486
$140,486
$144,701
$144,701
Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
0.00%
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$5,000
$0
$0
$0
$0
$0
$0
$0
$0
$50,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$4,000
$63,500
$123,025
$83,979
$96,576
$151,887
$107,491
$113,403
$119,640
$131,220
$133,163
$140,486
$148,701
Expenditures
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
$9,250
Bill Payments
Subtotal Spent on Operations
$11,257
$20,507
$96,997
$106,247
$76,325
$85,575
$86,731
$95,981
$96,929
$106,179
$96,744
$105,994
$100,395
$109,645
$106,932
$116,182
$111,169
$120,419
$118,979
$128,229
$123,138
$132,388
$130,727
$139,977
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Dividends
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$20,507
$106,247
$85,575
$95,981
$106,179
$105,994
$109,645
$116,182
$120,419
$128,229
$132,388
$139,977
$42,993
$16,778
($1,596)
$595
$45,708
$1,497
$3,758
$3,458
$10,802
$4,934
$8,099
$8,724
Cash Balance
$76,813
$93,590
$91,994
$92,589
$138,297
$139,794
$143,552
$147,010
$157,812
$162,746
$170,844
$179,568
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Starting Balances
Current Assets
Cash
Inventory
$33,820
$16,000
$76,813
$53,785
$93,590
$61,852
$91,994
$71,130
$92,589
$81,800
$138,297
$86,298
$139,794
$91,045
$143,552
$96,052
$147,010
$101,335
$157,812
$106,909
$162,746
$112,789
$170,844
$118,992
$179,568
$122,562
$8,000
$57,820
$8,000
$138,597
$8,000
$163,443
$8,000
$171,124
$8,000
$182,388
$8,000
$232,595
$8,000
$238,839
$8,000
$247,605
$8,000
$256,345
$8,000
$272,721
$8,000
$283,534
$8,000
$297,836
$8,000
$310,130
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$8,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$8,000
$65,820
$8,000
$146,597
$8,000
$171,443
$8,000
$179,124
$8,000
$190,388
$8,000
$240,595
$8,000
$246,839
$8,000
$255,605
$8,000
$264,345
$8,000
$280,721
$8,000
$291,534
$8,000
$305,836
$8,000
$318,130
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
$8,000
$94,465
$73,446
$83,500
$93,708
$93,404
$96,835
$103,236
$107,207
$114,883
$118,780
$126,385
$125,904
Current Borrowing
Other Current Liabilities
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$15,000
$10,000
$20,000
$10,000
$20,000
$10,000
$20,000
$10,000
$20,000
$10,000
$33,000
$119,465
$98,446
$108,500
$118,708
$118,404
$121,835
$128,236
$132,207
$144,883
$148,780
$156,385
$155,904
$75,000
$75,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$125,000
$108,000
$194,465
$223,446
$233,500
$243,708
$243,404
$246,835
$253,236
$257,207
$269,883
$273,780
$281,385
$280,904
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
$70,000
$70,000
$70,000
$70,000
$70,000
$120,000
$120,000
$120,000
$120,000
$120,000
$120,000
$120,000
$124,000
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
($112,180)
$0
($42,180)
($5,688)
($47,868)
($9,823)
($52,003)
($12,196)
($54,376)
($11,140)
($53,320)
($10,629)
($2,809)
($7,816)
$4
($5,451)
$2,369
($682)
$7,138
$3,018
$10,838
$9,935
$17,755
$16,631
$24,451
$25,406
$37,226
$65,820
$146,597
$171,443
$179,124
$190,388
$240,595
$246,839
$255,605
$264,345
$280,721
$291,534
$305,836
$318,130
($42,180)
($47,868)
($52,003)
($54,376)
($53,320)
($2,809)
$4
$2,369
$7,138
$10,838
$17,755
$24,451
$37,226
Page 6