1. business and industrial

January 2002
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Table of Contents
1.0 Executive Summary.............................................................................................................................1
1.1 Objectives ...................................................................................................................................2
1.2 Mission........................................................................................................................................2
2.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................2
2.2 Start-up Summary ......................................................................................................................2
3.0 Products ...............................................................................................................................................5
4.0 Market Analysis Summary..................................................................................................................5
4.1 Market Segmentation ................................................................................................................5
4.2 Target Market Segment Strategy.............................................................................................6
4.3 Competition and Buying Patterns ............................................................................................7
5.0 Strategy and Implementation Summary ............................................................................................7
5.1 Competitive Edge ......................................................................................................................7
5.2 Sales Strategy............................................................................................................................8
5.2.1 Sales Forecast........................................................................................................................8
6.0 Management Summary.......................................................................................................................9
6.1 Personnel Plan.........................................................................................................................10
7.0 Financial Plan ....................................................................................................................................11
7.1 Important Assumptions............................................................................................................11
7.2 Break-even Analysis................................................................................................................12
7.3 Projected Profit and Loss .......................................................................................................13
7.4 Projected Cash Flow ...............................................................................................................15
7.5 Projected Balance Sheet ........................................................................................................17
7.6 Business Ratios .......................................................................................................................18
Page 1
Keith's Sporting Goods
1.0 Executive Summary
Keith's Sporting Goods (KSG) will be in the business of selling athletic equipment to people at
every fitness level, from aspiring college athletes to weekend warriors. With our knowledgeable
staff we will provide an environment where everyone feels comfortable coming in and asking for
training advice and disc ussing equipment needs.
Based in Eugene, KSG wants to be a rec ognized sporting goods store. An exac t loc ation has yet
to be set, but owners are avidly searching for a high foot traffic loc ation. Ideally that loc ation
would be in c entral Eugene where anyone can travel a short distance to find our store.
We fully expec t to grow quickly. Many businesses start under the same assumption but due to
work ethic, desire, job enjoyment, KSG is expec ting to make a profit in the early stages of its
life. Sales are forec asted to be conservative in the first month but are expec ted to increase by
2% each month thereafter, with a first year growth rate of 12%. This assumption appears to be
ac curate given the fac t that the sporting goods wholesale industry is growing at an 11.5%
annual rate.
Keith's Sporting Goods will be filed as an S Corporation where owners will be protec ted from
various forms of liability and tax shields. In the early stages of business, we will be primarily debt
financed through a loc al bank and the Small Business Association (SBA). We have forec asted the
need for 60% debt, the owner and operator will invest the rest.
Depending on the timing of financing, we expec t to have the store open by January 2002 and to
produce strong profits by the end of that same year.
Page 1
Keith's Sporting Goods
1.1 Objectives
The primary objec tives for the store are:
1. Brand rec ognition. KSG will be a rec ognized sporting goods and fitness store in Eugene.
2. To be operating at a profit by the end of the first year of business.
3. Ac hieve a 15% growth rate in sales from years one and two, and then maintain no less than
a 11.5% growth rate thereafter.
4. Maintain a constant gross margin of 40%. If we are able to do this and keep costs fixed,
sales will be able to grow faster than total costs.
1.2 Mission
KSG strives toward building long-term relationships with our customers and employees. Working
within the community, promoting community service, and encouraging the additional education of
our employees will be constantly emphasized by store management. We feel it is extremely
important to give bac k to the community that supports our operations, while also maintaining an
atmosphere where our employees have the opportunity to improve as individuals.
2.0 Company Summary
KSG intends to provide customers with the quality products they need to maximize athletic
performance and ac complish their physical and mental goals. We will provide our customers with
a knowledgeable staff that enjoys working in an athletic atmosphere and helping others. We will
be loc ated in Eugene where there is a high concentration of health c onsc ious individuals and a
devoted following to both high sc hool and college athletics.
2.1 Company Ownership
With the intent to operate the store I will be considered the owner of Keith's Sporting Goods.
However, I will not be the only one with a capital investment in the company. A loc al investor
will have equal shares in the business. The investor will rec eive dividends starting in year 2, until
he has rec ouped his initial investment, at which time the owner has reserved the option of
buying out his shares.
Under these circumstances, and the fac t that the investment is a relatively small undertaking,
KSG will be filed as an S Corporation. The ownership will be split up evenly between myself and
the other investor, and the rest will be debt financed.
2.2 Start-up Summary
Keith's Sporting Goods will be financed through a combination of 60% debt and 40% equity. A
loc al bank will provide the debt while the equity will be provided by an equal combination of
owner investment and an angel investor. A large portion of the initial investment will be spent on
beginning inventory (83%), which we forec ast to be sold within the first two months. Total
assets will amount to 93.4% of the initial investment.
Page 2
Keith's Sporting Goods
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
$6,610
$93,390
$100,000
$84,901
$8,489
$0
$8,489
$93,390
Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities
$0
$60,000
$0
$0
$60,000
Capital
Planned Investment
Owner/Operator
Angel Investor
Additional Investment Requirement
Total Planned Investment
$20,000
$20,000
$0
$40,000
Loss at Start-up (Start-up Expenses)
Total Capital
($6,610)
$33,390
Total Capital and Liabilities
$93,390
Total Funding
$100,000
Page 3
Keith's Sporting Goods
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Operating Assets
Brochures
Consultants
Insurance
Rent
Marketing/ Advertising - Grand Opening
Renovation
Other
Total Start-up Expenses
$300
$0
$0
$0
$0
$4,310
$1,000
$1,000
$0
$6,610
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$8,489
$82,901
$0
$2,000
$93,390
Total Requirements
$100,000
Page 4
Keith's Sporting Goods
3.0 Products
Keith's Sporting Goods will be a high quality fitness store that foc uses on athletic performance
and maximization of athletic potential. In other words, KSG will be designed to supply athletes
with the essential products that are necessary for ac tive lives.
The core products we will carry are:
• Shoes
• Apparel
• Athletic equipment
To complement these goods, we will also carry training equipment like:
•
•
•
•
Polymeric boxes
Medicine balls
Health supplements
Training literature
4.0 Market Analysis Summary
The Eugene community is very ac tive and has a great athletic heritage. It is the loc ation of the
University of Oregon, home to many running and hiking trails, and has a youth athletic center
called Kidsports. Eugene also happens to be a growing community that has always supported the
small entrepreneurs. Taking these fac tors into consideration, KSG will foc us on three main
groups.
• Young parents with c hildren ac tive in youth sports
• College students
• Ac tive adults
These groups comprise the majority of athletes in the city, and we find them to be the ones with
the disposable income to spend on athletic apparel.
4.1 Market Segmentation
•
•
•
•
Parents (Elementary & Middle Sc hool)
High Sc hool Athletes
College Students
Middle-aged Adults (35+)
Table: Market Analysis
Market Analysis
2002
2003
2004
2005
2006
Potential Customers
Parents
High School Athletes
Growth
17%
25%
3,150
3,600
3,686
4,500
4,313
5,625
5,046
7,031
5,904
8,789
CAGR
17.01%
25.00%
College Students
Middle-aged Adults
Total
7%
10%
10.65%
15,000
50,000
71,750
16,050
55,000
79,236
17,174
60,500
87,612
18,376
66,550
97,003
19,662
73,205
107,560
7.00%
10.00%
10.65%
Page 5
Keith's Sporting Goods
4.2 Target Market Segment Strategy
Bec ause there are so many different sports and levels at which to compete, there is a broad
range of markets for the company to target. At KSG, we will provide a marketplac e that satisfies
the needs of each group. We will stoc k a variety of goods for the wide variety of our customers.
We strive to build long-term, personal relationships with our customers, in order to do this, we
will need to attrac t customers at young ages. Therefore, our primary target market will be
parents with young children. By building a trust relationship, we may be able to maintain a family
right up through the child's college years.
It will be important to target these groups bec ause youth sports are growing at an incredible
rate. Data has indicated that youth sports has the highest growth rate of any segment within
the athletic industry. Capturing the market at a young age will lead to future sales when
athletes spend more money on their athletic needs.
Young parents and high sc hool students will not be the only groups that we will foc us on
bec ause they also make up the smallest population. Foc using on college students and ac tive
adults will also be key.
Page 6
Keith's Sporting Goods
4.3 Competition and Buying Patterns
To an athlete who is serious about ac hieving particular goals, having the correc t athletic
equipment is integral. Somebody who runs many miles over the course of a week needs to have
shoes that not only last over time, but also protect joints from over use. It is the same for a
basketball player who needs to wear light clothing that allows him/her to move freely. In either
case, the athlete is looking for the best equipment and is always open to try new, innovative
products that might help reach peak performance.
In the sporting goods retailing many companies compete in different ways. For example,
Copeland's tries to sell products more on a cost basis using their capitol power to sell products
at the lowest price. When doing this, they sacrifice the customer service and support that many
athletes are looking for.
As a smaller company we intend to provide customers the support and knowledge they need to
fulfill their goals.
5.0 Strategy and Implementation Summary
At KSG, we will use a marketing strategy of developing long-term relationships with our
customers. Being seen at various sporting events will be an integral part of getting our name out
in the community. We want to be seen as a business that cares for our customers and wants to
see them ac complish all of their goals.
We want our customers to have complete trust in what our employees are saying. We want
them to know all the information about what they are buying and what is best for them. If
customers have a good experiences with what they purchase, not only will they more likely be
repeat customers, but also they will tell friends about the quality of operations at KSG.
5.1 Competitive Edge
The number one competitive edge KSG enjoys is providing customers with unparalleled service.
As a smaller operation it will be impossible to compete with Copeland's and Play it Again sports
on a price basis. Providing a group of knowledgeable employees who enjoy what they are doing is
the only way that KSG can provide the best customer service. Once this trust is built our
competitive advantage can be sustained.
The type of equipment that KSG will provide will also be a source of competitive edge. Much of
the equipment found at Keith's will not be found at larger chain stores. For example, it is tough
to find polymeric equipment. In fac t the only way one can buy high-quality equipment is through
catalogs. It is the same for many types of shoes. Stores like Copeland's tend to only sell shoes
that are trendy. Trendy shoes are not a sign of high quality; they are a sign of great marketing.
KSG will provide quality equipment and will be able to educate customers on why certain
equipment is better than the typical mainstream brand equipment.
Page 7
Keith's Sporting Goods
5.2 Sales Strategy
Our sales strategy will be built around fully educating customers about their purchases. Many of
the ac tivities that our store is promoting impac ts the human body. It is important for the
customer to be fully aware of the repercussions of the ac tivity and how eac h piec e of equipment
effects him/her. With that in mind, sales people will take care of customers on a first come first
serve basis. We want to build customer relationships without disc riminating other potential future
customers.
Employees will be paid on an hourly wage with no commissions at the beginning of operations.
After the store has a history, a commission pac kage based on sales and education advancement
can be implemented.
KSG will carry a relatively low amount of inventory and have frequent order repurchases in an
attempt to maintain inventory levels and storage costs. Finally, all sales will be in c ash to
prevent the problems brought along by late ac counts rec eivable payments.
5.2.1 Sales Forecast
The primary products at KSG will include athletic shoes and apparel. We will also sell equipment,
supplements, and health literature, but we forec ast shoes and apparel to drive sales. We expec t
strong growth in the first year due to intense marketing and exposure in the Eugene market.
Forec asted sales are expec ted to increase by 2% from month to month in the first year and then
grow at the industry average of 11.50% per year.
Page 8
Keith's Sporting Goods
Table: Sales Forecast
Sales Forecast
2002
2003
2004
Sales
Shoes
Apparel
Total Sales
$193,134
$241,418
$434,552
$201,245
$251,557
$452,802
$209,697
$261,619
$471,316
Direct Cost of Sales
Shoes
Apparel
Subtotal Direct Cost of Sales
2002
$115,880
$144,851
$260,731
2003
$120,747
$150,934
$271,681
2004
$125,818
$156,971
$282,790
6.0 Management Summary
The owner of KSG will also be the operator and dec ision maker. The philosophy behind the
workforce will be one of total customer satisfac tion and education. Since many customers are
not aware of the many repercussions brought on by athletics, employees will be encouraged to
continually gain new knowledge and insight.
Page 9
Keith's Sporting Goods
6.1 Personnel Plan
Keith's Sporting Goods will begin operations with a relatively small work crew with the intention
to grow as the business grows. The owner/operator will have a base salary of $3,000/mo and
that will be a fixed expense.
We plan on starting with one full time employee who will be the store manager. The manager will
work closely with the owner. During slow hours, they will work closely implementing new
strategies and making store changes. The manager will work 40 hours per week, and will have
the weekends off. The manager's salary, below, includes benefits (paid sick time, holidays, and
insurance coverage).
The owner will work the weekend with the other employees. Aside from the owner and manager,
KSG will need an estimated 51 man-hours over the course of the week. There is no estimated
number of employees needed; we just need to fill the extra 51 hours. Employees will make $8/hr,
and will be looked upon as an integral part of the operation.
Table: Personnel
Personnel Plan
Owner Operator
Manager
Employees
Total People
Total Payroll
2002
$36,000
$43,200
$22,032
5
2003
$36,000
$45,000
$24,000
6
2004
$40,000
$46,000
$25,000
6
$101,232
$105,000
$111,000
Page 10
Keith's Sporting Goods
7.0 Financial Plan
Keith's Sporting Goods will regularly monitor all financial statements bec ause they have a direc t
correlation with the health of our business. We have forec asted into the future with a steady
but moderate growth rate where sales will grow by 2% every month. All sales will be in c ash
leading to positive cash flows whenever asset ac quisition is maintained. Profits will be reinvested
into the business in hopes of future product and store expansions. If no appropriate investment
opportunities present themselves excess cash will be plac ed into the market through a respec ted
financial consultant.
7.1 Important Assumptions
Key assumptions:
• Growth rate of 2% per month
• Daily sales: shoes six per day @ $80 eac h, and apparel 24 items/day @ $25 eac h
• Growth will be steady throughout the year.
Table: General Assumptions
General Assumptions
2002
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
1
2003
2
10.00%
10.00%
25.42%
0
2004
3
10.00%
10.00%
25.00%
0
10.00%
10.00%
25.42%
0
Page 11
Keith's Sporting Goods
7.2 Break-even Analysis
The following table and chart show our break-even point.
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even
$32,540
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
60%
$13,016
Page 12
Keith's Sporting Goods
7.3 Projected Profit and Loss
Due to working with low overhead, we predict early profits in the life of our business. Depending
on the ac curac y of our forec asts, we will adjust the amounts spent on marketing and other longterm assets that will add value to our business.
Page 13
Keith's Sporting Goods
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other
Total Cost of Sales
2002
$434,552
$260,731
$0
$260,731
2003
$452,802
$271,681
$0
$271,681
2004
$471,316
$282,790
$0
$282,790
Gross Margin
Gross Margin %
$173,821
40.00%
$181,121
40.00%
$188,526
40.00%
Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Utilities
$101,232
$21,600
$0
$9,600
$105,000
$21,600
$0
$9,600
$111,000
$21,600
$0
$9,600
$23,760
$0
$0
$23,760
$0
$0
$23,760
$0
$0
$156,192
$159,960
$165,960
$17,629
$17,629
$5,350
$3,042
$21,161
$21,161
$4,200
$4,240
$22,566
$22,566
$3,000
$4,973
$9,236
2.13%
$12,721
2.81%
$14,593
3.10%
Rent
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
Page 14
Keith's Sporting Goods
7.4 Projected Cash Flow
As a retailer, we do not sell on credit, but all of our invetory purchases are made on ac count.
Our net cash outflows are largely a result of repaying the initial loan.
Page 15
Keith's Sporting Goods
Table: Cash Flow
Pro Forma Cash Flow
2002
2003
2004
Cash from Operations
Cash Sales
Subtotal Cash from Operations
$434,552
$434,552
$452,802
$452,802
$471,316
$471,316
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
$0
$0
$0
$0
$0
$0
$0
$434,552
$0
$0
$0
$0
$0
$0
$0
$452,802
$0
$0
$0
$0
$0
$0
$0
$471,316
2002
2003
2004
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
$101,232
$238,435
$339,667
$105,000
$337,901
$442,901
$111,000
$345,980
$456,980
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
$0
$0
$0
$12,000
$0
$0
$0
$351,667
$0
$0
$0
$12,000
$0
$0
$10,000
$464,901
$0
$0
$0
$12,000
$0
$0
$10,000
$478,980
$82,885
$91,374
($12,099)
$79,275
($7,664)
$71,611
Cash Received
Expenditures
Net Cash Flow
Cash Balance
Page 16
Keith's Sporting Goods
7.5 Projected Balance Sheet
Among the importance of monitoring liabilities and assets, cash will be of particular importance to
our organization. We will monitor this section of the Balance Sheet constantly. Without cash we
will be unable to react to market changes or survive through tough economic cycles. Our net
worth will improve as we grow and pay off the initial loan.
Table: Balance Sheet
Pro Forma Balance Sheet
2002
2003
2004
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
$91,374
$26,588
$0
$117,962
$79,275
$27,705
$0
$106,980
$71,611
$28,838
$0
$100,449
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
$2,000
$0
$2,000
$119,962
$2,000
$0
$2,000
$108,980
$2,000
$0
$2,000
$102,449
2002
2003
2004
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$29,335
$0
$0
$29,335
$27,633
$0
$0
$27,633
$28,509
$0
$0
$28,509
Long-term Liabilities
Total Liabilities
$48,000
$77,335
$36,000
$63,633
$24,000
$52,509
$40,000
($6,610)
$9,236
$42,626
$119,962
$40,000
($7,374)
$12,721
$45,347
$108,980
$40,000
($4,653)
$14,593
$49,940
$102,449
$42,626
$45,347
$49,940
Assets
Liabilities and Capital
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
Page 17
Keith's Sporting Goods
7.6 Business Ratios
The table below contains important business ratios from the sporting goods shops industry
(5491), as determined by the Standard Industry Classification (SIC) Index.
Page 18
Keith's Sporting Goods
Table: Ratios
Ratio Analysis
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
2002
0.00%
2003
4.20%
2004
4.09%
Industry Profile
4.20%
22.16%
0.00%
98.33%
1.67%
100.00%
25.42%
0.00%
98.16%
1.84%
100.00%
28.15%
0.00%
98.05%
1.95%
100.00%
40.20%
24.30%
81.10%
18.90%
100.00%
24.45%
40.01%
64.47%
35.53%
25.36%
33.03%
58.39%
41.61%
27.83%
23.43%
51.25%
48.75%
44.70%
13.00%
57.70%
42.30%
100.00%
40.00%
33.60%
1.66%
4.06%
100.00%
40.00%
22.50%
0.85%
4.67%
100.00%
40.00%
21.21%
0.77%
4.79%
100.00%
31.80%
19.00%
1.90%
1.40%
4.02
3.11
64.47%
28.81%
10.24%
3.87
2.87
58.39%
37.40%
15.56%
3.52
2.51
51.25%
39.18%
19.10%
1.97
0.75
57.70%
3.40%
8.20%
Additional Ratios
2002
2003
2004
Net Profit Margin
Return on Equity
2.13%
21.67%
2.81%
28.05%
3.10%
29.22%
n.a
n.a
Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
8.89
9.13
27
3.62
10.01
12.17
31
4.15
10.00
12.17
30
4.60
n.a
n.a
n.a
n.a
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
1.81
0.38
1.40
0.43
1.05
0.54
n.a
n.a
$88,626
3.30
$79,347
5.04
$71,940
7.52
n.a
n.a
0.28
24%
3.11
10.19
0.00
0.24
25%
2.87
9.99
0.79
0.22
28%
2.51
9.44
0.69
n.a
n.a
n.a
n.a
n.a
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout
Page 19
Appendix
Table: Sales Forecast
Sales Forecast
Sales
Shoes
Apparel
Total Sales
Direct Cost of Sales
Shoes
Apparel
Subtotal Direct Cost of Sales
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
0%
$14,400
$14,688
$14,982
$15,281
$15,587
$15,899
$16,217
$16,541
$16,872
$17,209
$17,554
$17,905
0%
$18,000
$32,400
$18,360
$33,048
$18,727
$33,709
$19,102
$34,383
$19,484
$35,071
$19,873
$35,772
$20,271
$36,488
$20,676
$37,217
$21,090
$37,962
$21,512
$38,721
$21,942
$39,495
$22,381
$40,285
Jan
$8,640
$10,800
$19,440
Feb
$8,813
$11,016
$19,829
Mar
$8,989
$11,236
$20,225
Apr
$9,169
$11,461
$20,630
May
$9,352
$11,690
$21,042
Jun
$9,539
$11,924
$21,463
Jul
$9,730
$12,163
$21,893
Aug
$9,925
$12,406
$22,330
Sep
$10,123
$12,654
$22,777
Oct
$10,326
$12,907
$23,233
Nov
$10,532
$13,165
$23,697
Dec
$10,743
$13,428
$24,171
60%
Page 1
Appendix
Table: Personnel
Personnel Plan
Jan
$3,000
$3,600
$1,836
Feb
$3,000
$3,600
$1,836
Mar
$3,000
$3,600
$1,836
Apr
$3,000
$3,600
$1,836
May
$3,000
$3,600
$1,836
Jun
$3,000
$3,600
$1,836
Jul
$3,000
$3,600
$1,836
Aug
$3,000
$3,600
$1,836
Sep
$3,000
$3,600
$1,836
Oct
$3,000
$3,600
$1,836
Nov
$3,000
$3,600
$1,836
Dec
$3,000
$3,600
$1,836
Total People
5
5
5
5
5
5
5
5
5
5
5
5
Total Payroll
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
Owner Operator
Manager
Employees
0%
0%
0%
Page 2
Appendix
Table: General Assumptions
General Assumptions
Jan
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
1
Feb
2
Mar
3
Apr
4
May
5
Jun
6
Jul
7
Aug
8
Sep
9
Oct
10
Nov
11
Dec
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%
30.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
10.00%
25.00%
0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Jan
$32,400
$19,440
Feb
$33,048
$19,829
Mar
$33,709
$20,225
Apr
$34,383
$20,630
May
$35,071
$21,042
Jun
$35,772
$21,463
Jul
$36,488
$21,893
Aug
$37,217
$22,330
Sep
$37,962
$22,777
Oct
$38,721
$23,233
Nov
$39,495
$23,697
Dec
$40,285
$24,171
Other
Total Cost of Sales
$0
$19,440
$0
$19,829
$0
$20,225
$0
$20,630
$0
$21,042
$0
$21,463
$0
$21,893
$0
$22,330
$0
$22,777
$0
$23,233
$0
$23,697
$0
$24,171
Gross Margin
Gross Margin %
$12,960
40.00%
$13,219
40.00%
$13,484
40.00%
$13,753
40.00%
$14,028
40.00%
$14,309
40.00%
$14,595
40.00%
$14,887
40.00%
$15,185
40.00%
$15,488
40.00%
$15,798
40.00%
$16,114
40.00%
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$1,800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$0
$800
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$1,980
$0
$0
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
$13,016
($56)
($56)
$492
$203
$203
$483
$468
$468
$475
$737
$737
$467
$1,012
$1,012
$458
$1,293
$1,293
$450
$1,579
$1,579
$442
$1,871
$1,871
$433
$2,169
$2,169
$425
$2,472
$2,472
$417
$2,782
$2,782
$408
$3,098
$3,098
$400
($164)
($70)
($2)
$68
$138
$211
$284
$359
$436
$514
$593
$675
($383)
-1.18%
($210)
-0.64%
($6)
-0.02%
$203
0.59%
$415
1.18%
$632
1.77%
$853
2.34%
$1,078
2.90%
$1,308
3.44%
$1,542
3.98%
$1,780
4.51%
$2,024
5.02%
Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Utilities
Rent
Payroll Taxes
Other
Total Operating Expenses
Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
15%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$32,400
$32,400
$33,048
$33,048
$33,709
$33,709
$34,383
$34,383
$35,071
$35,071
$35,772
$35,772
$36,488
$36,488
$37,217
$37,217
$37,962
$37,962
$38,721
$38,721
$39,495
$39,495
$40,285
$40,285
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
New Current Borrowing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Other Liabilities (interest-free)
New Long-term Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
$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
$32,400
$33,048
$33,709
$34,383
$35,071
$35,772
$36,488
$37,217
$37,962
$38,721
$39,495
$40,285
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$8,436
$164
$4,910
$4,995
$5,719
$25,085
$26,690
$27,184
$27,688
$28,202
$28,727
$29,262
$29,809
$8,600
$13,346
$13,431
$14,155
$33,521
$35,126
$35,620
$36,124
$36,638
$37,163
$37,698
$38,245
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
$0
$1,000
$0
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
$0
$0
$9,600
$0
$0
$14,346
$0
$0
$14,431
$0
$0
$15,155
$0
$0
$34,521
$0
$0
$36,126
$0
$0
$36,620
$0
$0
$37,124
$0
$0
$37,638
$0
$0
$38,163
$0
$0
$38,698
$0
$0
$39,245
$22,800
$31,289
$18,702
$49,991
$19,278
$69,269
$19,228
$88,497
$550
$89,047
($353)
$88,693
($132)
$88,561
$93
$88,655
$323
$88,978
$558
$89,536
$797
$90,333
$1,041
$91,374
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
0.00%
Additional Cash Spent
Net Cash Flow
Cash Balance
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet
Assets
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Starting Balances
Current Assets
Cash
Inventory
$8,489
$82,901
$31,289
$63,461
$49,991
$43,632
$69,269
$23,407
$88,497
$22,693
$89,047
$23,147
$88,693
$23,610
$88,561
$24,082
$88,655
$24,563
$88,978
$25,055
$89,536
$25,556
$90,333
$26,067
$91,374
$26,588
Other Current Assets
Total Current Assets
$0
$91,390
$0
$94,750
$0
$93,623
$0
$92,676
$0
$111,190
$0
$112,193
$0
$112,303
$0
$112,643
$0
$113,218
$0
$114,033
$0
$115,092
$0
$116,400
$0
$117,962
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$0
$2,000
$93,390
$2,000
$96,750
$2,000
$95,623
$2,000
$94,676
$2,000
$113,190
$2,000
$114,193
$2,000
$114,303
$2,000
$114,643
$2,000
$115,218
$2,000
$116,033
$2,000
$117,092
$2,000
$118,400
$2,000
$119,962
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
$0
$0
$0
$4,744
$0
$0
$4,827
$0
$0
$4,885
$0
$0
$24,196
$0
$0
$25,784
$0
$0
$26,261
$0
$0
$26,748
$0
$0
$27,245
$0
$0
$27,752
$0
$0
$28,269
$0
$0
$28,797
$0
$0
$29,335
$0
$0
Subtotal Current Liabilities
$0
$4,744
$4,827
$4,885
$24,196
$25,784
$26,261
$26,748
$27,245
$27,752
$28,269
$28,797
$29,335
Long-term Liabilities
$60,000
$59,000
$58,000
$57,000
$56,000
$55,000
$54,000
$53,000
$52,000
$51,000
$50,000
$49,000
$48,000
Total Liabilities
$60,000
$63,744
$62,827
$61,885
$80,196
$80,784
$80,261
$79,748
$79,245
$78,752
$78,269
$77,797
$77,335
Paid-in Capital
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
Retained Earnings
Earnings
Total Capital
($6,610)
$0
$33,390
($6,610)
($383)
$33,007
($6,610)
($593)
$32,797
($6,610)
($599)
$32,791
($6,610)
($396)
$32,994
($6,610)
$19
$33,409
($6,610)
$652
$34,042
($6,610)
$1,505
$34,895
($6,610)
$2,583
$35,973
($6,610)
$3,891
$37,281
($6,610)
$5,432
$38,822
($6,610)
$7,213
$40,603
($6,610)
$9,236
$42,626
Total Liabilities and Capital
$93,390
$96,750
$95,623
$94,676
$113,190
$114,193
$114,303
$114,643
$115,218
$116,033
$117,092
$118,400
$119,962
Net Worth
$33,390
$33,007
$32,797
$32,791
$32,994
$33,409
$34,042
$34,895
$35,973
$37,281
$38,822
$40,603
$42,626
Page 6