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Table of Contents

1.0 Executive Summary...............................................................................................................................1

Chart: Highlights..................................................................................................................................2
1.1 Objectives..........................................................................................................................................3
1.2 Mission...............................................................................................................................................3
1.3 Keys to Success..................................................................................................................................3
2.0 Company Summary...............................................................................................................................3
2.1 Company Ownership.........................................................................................................................3
2.2 Start-up Summary..............................................................................................................................4
Table: Start-up.....................................................................................................................................4
..............................................................................................................................................................4
Chart: Start-up......................................................................................................................................6
3.0 Products..................................................................................................................................................6
4.0 Market Analysis Summary....................................................................................................................6
4.1 Market Segmentation.........................................................................................................................7
Table: Market Analysis........................................................................................................................7
Chart: Market Analysis (Pie)...............................................................................................................8
4.2 Industry Analysis...............................................................................................................................8
4.2.1 Competition and Buying Patterns...............................................................................................8
5.0 Strategy and Implementation Summary.................................................................................................8
5.1 Competitive Edge...............................................................................................................................9
5.2 Marketing Strategy.............................................................................................................................9
5.3 Sales Strategy.....................................................................................................................................9
5.3.1 Sales Forecast............................................................................................................................10
Table: Sales Forecast.....................................................................................................................10
Chart: Sales Monthly.....................................................................................................................11
Chart: Sales by Year......................................................................................................................11
6.0 Management Summary........................................................................................................................11
6.1 Personnel Plan..................................................................................................................................13
Table: Personnel.................................................................................................................................13
7.0 Financial Plan.......................................................................................................................................13
7.1 Important Assumptions....................................................................................................................13
Table: General Assumptions..............................................................................................................13
................................................................................................................................................................13
7.2 Break-even Analysis........................................................................................................................14
Table: Break-even Analysis...............................................................................................................14
Chart: 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........................................................................................................................18
Table: Cash Flow...............................................................................................................................18
Page 1

Table of Contents

Chart: Cash.........................................................................................................................................19
7.5 Projected Balance Sheet...................................................................................................................20
Table: Balance Sheet..........................................................................................................................20
................................................................................................................................................................20
7.6 Business Ratios................................................................................................................................21
Table: Ratios......................................................................................................................................22
Table: Sales Forecast...................................................................................................................................1
......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2
......................................................................................................................................................................2
Table: General Assumptions........................................................................................................................3
......................................................................................................................................................................3
Table: Profit and Loss..................................................................................................................................4
......................................................................................................................................................................4
Table: Cash Flow.........................................................................................................................................5
Table: Balance Sheet....................................................................................................................................6

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MillenniumMart Inc.

1.0 Executive Summary

Introduction
MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will
continue to exist into the future - the need for speed. MillenniumMart will be the first fully
automated, 24 hour convenience store that is more like an enormous dispensing machine than
the traditional store.
The company expects to capture market share by becoming the low cost leader in the
convenience store industry by significantly reducing one of the primary expenses, which is
labor. Through our completely automated shopping experience, customers will have the chance
to shop for everyday items at reduced prices, thus undercutting competition such as 7-11,
AmPm, Circle K, and other local convenience store chains. The possibilities for expansion are
excellent not only in the local area, but in neighboring communities as well.
The Company
The company is a joint venture start-up company between the principals, Mr. Bean and his
associates, and the management of Martin-Bower, one of the country's largest and most
successful food distributors. The company will be incorporated as a class C corporation in the
state of Delaware with all shares held by private investors.
Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a
further 11% shares based on growth and profitability after the first five years. MillenniumMart
is expected to open its first store in downtown Manhattan in March of Year 1.
The company will be set up with a board of directors. Mr. James Bean, a former senior manager
of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of
CFO.
The Products/Services
MillenniumMart will sell the same products as other convenience stores in the same packaging
sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks,
fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as
canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives
and cleaning supplies, pet supplies, paper products, toothpaste, etc.
All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant,
Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash,
stamps, Lotto and phone cards and other coupons and will have the ability to create personal
accounts that can display preferred items, retain shopping lists and other services. An
automated, interactive "customer service rep" will be able to answer questions and pass on
comments to the company's management.
In addition, the company is looking into ways to sell restricted items such as beer, wine and
cigarettes and to set up a separate Internet area for remote access to the Web and email for its
customers.
The Market
Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S.
retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once
again that the convenience store industry has become a powerful force in U.S. retailing.

Page 1

MillenniumMart Inc.

Convenience stores serve the entire purchasing population of its geographical area but focuses
on customers who need to purchase items outside of normal working hours such as swing shift
employees and quick shoppers looking for snacks and related items. Therefore we have
segmented our market into night shoppers, quick shoppers, and others. Growth rates for these
three segments match the population growth for the surrounding area.
Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors
include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.
Financial Considerations
Our start-up requirements come to $453,000, which are largely single time fees associated with
opening the store. These costs are financed by both private investors and the investment of
Martin-Bower. It should be noted that we expect to be operating at a loss for the first six
months before advertising begins to take effect and draw in customers.
MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses
during the first two years as it strives toward sustainable profitability. Almost all of this funding
has been arranged through lending institutions and private investors already. We do not
anticipate any cash flow problems during the next three years.

Chart: Highlights

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MillenniumMart Inc.

1.1 Objectives
These are the goals for the next three years for MillenniumMart:

Achieve profitability by July Year 1;

Earn approximately $200,000 in sales by Year 3;
Start paying dividends by Year 3;
Start up second store by Year 4.

1.2 Mission
MillenniumMart's primary objective is to create a new and revolutionary distribution outlet that
will significantly reduce prices for its customers and provide greater services with an equal level
of quality. The company seeks to be first to market with this daring new idea so as to capture
market share and create greater than average profits.
1.3 Keys to Success
In order to survive and expand, MillenniumMart must keep the following issues in mind:

We must attain a high level of visibility through the media, billboards, and other advertising.
We must establish rigid procedures for cost control and incentives for maintaining tight
control.
We must expend a significant amount on R&D in order to constantly be able to offer better
and greater products and services.

2.0 Company Summary

Automated stores such as MillenniumMart are not new, they have existed in Asia, especially in
Japan for a number of years now and have been quite successful there. Mr. James Bean,
MillenniumMart's founder and the driving force behind the joint venture, has been intrigued with
the idea of bringing this new type of store to the U.S. since it can significantly reduce costs and
the ability of an automated store to provide products and services is only limited to the
imagination of management.
The company is a joint venture start-up company between the principals, Mr. Bean and his
associates, and the management of Martin-Bower, one of the country's largest and most
successful food distributors. The company will be incorporated in the state of Delaware with all
shares held by private investors.
2.1 Company Ownership
We will be structured as a C-Corporation which operates as a standard corporation. This form
was chosen by the Board of Directors because of various tax advantages. Retained earnings will
not be distributed as dividends for at least five years, thus enabling the early retirement of the
debt. Additionally, the corporate structure offers limited personal liability.
The company is a joint venture start-up between the principals, Mr. Bean and his associates,
and the management of Martin-Bower, one of the country's largest and most successful food

Page 3

MillenniumMart Inc.

distributors. The company will be incorporated in the state of Delaware with all shares held by
private investors.
Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a
further 11% shares based on growth and profitability after the first five years. MillenniumMart
is expected to open its first store in downtown Manhattan in March of 2003. The company will
be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower
is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.
2.2 Start-up Summary
Our start-up expenses come to $453,000, which are largely single time fees associated with
opening the store. These costs are financed by both private investors and the investment of
Martin-Bower.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Pre-sale advertising/marketing
Land location and finders fee
Consultants
Insurance
Rent
Research and Development
Expensed Equipment
Initial store facilities
Other
Total Start-up Expenses

$2,400
$8,000
$8,000
$4,000
$1,780
$12,000
$10,000
$50,000
$150,000
$3,000
$249,180

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$113,820
$10,000
$8,000
$72,000
$203,820

Total Requirements

$453,000

Page 4

MillenniumMart Inc.

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$249,180
$203,820
$453,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$90,000
$113,820
$0
$113,820
$203,820

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$15,000
$100,000
$8,000
$10,000
$133,000

Capital
Planned Investment
Private Investors
Martin-Bower management
Other
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

$150,000
$110,000
$60,000
$0
$320,000
($249,180)
$70,820

Total Capital and Liabilities

$203,820

Total Funding

$453,000

Page 5

MillenniumMart Inc.

Chart: Start-up

3.0 Products
As the most progressive company in the industry, MillenniumMart plans to offer a greater
number of products and services in the future so as to create another dimension of competitive
advantage. So that our customers will feel secure, we will subscribe to the security services
offered by the shopping center of which we are a part. This will cut down on graffiti and
loitering and insure the safety of both employees and customers.
MillenniumMart will sell the same products as other convenience stores in the same packaging
sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks,
fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as
canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives
and cleaning supplies, pet supplies, paper products, toothpaste, etc.
All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant,
Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash,
stamps, Lotto and phone cards and other coupons and will have the ability to create personal
accounts that can display preferred items, retain shopping lists and other services. An
automated, interactive "customer service rep" will be able to answer questions and pass on
comments to the company's management.
4.0 Market Analysis Summary
Our market is booming. Convenience store industry sales rose 8.6% for 2002. Overall U.S.
retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once
again that the convenience store industry has become a powerful force in U.S. retailing.
Convenience stores serve the entire purchasing population of its geographical area but focuses
on customers who need to purchase items outside of normal working hours such as swing shift
employees and quick shoppers looking for snacks and related items. Therefore we have

Page 6

MillenniumMart Inc.

segmented our market into night shoppers, quick shoppers, and others. Growth rates for these
three segments match the population growth for the surrounding area.
Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors
include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.
4.1 Market Segmentation
Our target market for our test store encompasses a five mile radius in which the approximate
population is 150,000 (based on census information).
The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic
(19%) with occupations classified as professional/technical, homemaker, or retired. The
majority of household incomes range from $20,000 - $30,000 (50.3%), yet there are also
affluent household incomes ranging from $50,000 - $100,000 (15.4%).
The median income in this area is $48,096, compared to the whole New York area which is
$34,248. The typical "head of household" age is 25 - 34 (22.4%) or age 34 - 44 (23.1%) with a
median age of 44.4 years old and an average age of 32 years old.
Target market segments
Convenience stores serve the entire purchasing population of its geographical area but focuses
on customers who need to purchase items outside of normal working hours such as swing shift
employees and quick shoppers looking for snacks and related items.
Table: Market Analysis

Market Analysis
Potential Customers

Growth

Late night shoppers

Quick shoppers
Other
Total

3%
2%
3%
2.68%

Year 1

Year 2

Year 3

Year 4

Year 5

78,000
42,000
30,000
150,000

80,340
42,840
30,840
154,020

82,750
43,697
31,704
158,151

85,233
44,571
32,592
162,396

87,790
45,462
33,505
166,757

CAGR
3.00%
2.00%
2.80%
2.68%

Page 7

MillenniumMart Inc.

Chart: Market Analysis (Pie)

4.2 Industry Analysis

Convenience store industry sales rose 8.6% to $86.3 billion for 2002. Overall U.S. retail sales
grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the
convenience store industry has become a powerful force in U.S. retailing.
Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%). The
2002 results confirm that a new, upward trend is emerging. This upward trend is based on
several factors, and occurred along with a slow rebound in the general economy.
Merchandise sales per customer increased 7.4% in 2000 suggesting that convenience stores
are placing higher priority in filling the customers' needs. Companies that align themselves
properly to fill those needs will be successful in the future.
4.2.1 Competition and Buying Patterns
7-11 holds approximately 30% of the industry market, and in 1999 their net income was $160
million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery
establishments on the east coast.
5.0 Strategy and Implementation Summary
MillenniumMart's competitive edge will be the lower prices we will charge our customers and the
novel purchasing experience that will draw shoppers.
The most critical element of MillenniumMart's success will be its marketing and advertising. In
order to capture attention and sales MillenniumMart will use prominent signs at the store
locations, billboards, media bites on local news, and radio advertisements to capture customers.

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MillenniumMart Inc.

Many of the initial customers will be drawn to the unique nature of the store and will then have
the opportunity to realize the cost savings of MillenniumMart. We expect an average 27%
increase in sales from year to year. This may seem very high, but considering the level of initial
sales and the growth possibilities, management actually considers this to be conservative.
5.1 Competitive Edge
MillenniumMart's competitive edge will be the lower prices we will charge our customers and the
novel purchasing experience that will draw shoppers. In the convenience store industry, low
cost and availability are the two success criteria. We plan to create these advantages in a new,
high-tech environment that will retain customers.
5.2 Marketing Strategy
The most critical element of MillenniumMart's success will be its marketing and advertising.
Convenience stores serve the entire purchasing population of its geographical area but focuses
on customers who need to purchase items outside of normal working hours such as swing shift
employees and quick shoppers looking for snacks and related items. In order to capture
attention and sales MillenniumMart will use prominent signs at the store locations, billboards,
media bites on local news, and radio advertisements to capture customers. Many of the initial
customers will be drawn to the unique nature of the store and will then have the opportunity to
realize the cost savings of MillenniumMart. Since automated shopping is still in its infancy, the
firm expects to invest a great deal of its available cash and revenues in marketing efforts.
5.3 Sales Strategy
Since our store will be a stand-alone, remote facility, there is little in the way being able to
directly influence how we close the sales other than to have an attractive storefront with our
low prices and easy-to-use system. We believe that this in itself is its own seller. One critical
procedure to ensure top customer service and reliability will be establishing a method
for keeping enough inventory of all our products. We will be using industry data on inventory
for other convenience store chains to assist us.

Page 9

MillenniumMart Inc.

5.3.1 Sales Forecast

Based on a 20% mark-up, our forecasted sales for years one, two, and three respectively are:
$2,480,106; $3,149,735; $4,000,163. This gives us an average 27% increase from year to
year. This may seem very high, but considering the level of initial sales and the growth
possibilities, management actually considers this to be conservative.
These sales figures are based on a conglomerate of commuter and walk-by traffic with an
average $3.00 purchase amount conforming to industry averages. The target profit margin was
defined as an average net profit of all merchandise.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Drinks
Snacks
Magazines/newspapers
General grocery items
Other
Total Sales

$978,070
$873,277
$209,586
$279,449
$139,724
$2,480,106

$1,242,149
$1,109,061
$266,175
$354,900
$177,450
$3,149,735

$1,577,529
$1,408,508
$338,042
$450,723
$225,361
$4,000,163

Direct Cost of Sales

Drinks
Snacks
Magazines/newspapers
General grocery items
Other
Subtotal Direct Cost of Sales

Year 1
$753,114
$672,423
$161,382
$215,175
$107,588
$1,909,682

Year 2
$956,455
$853,977
$204,955
$273,273
$136,636
$2,425,296

Year 3
$1,214,697
$1,084,551
$260,292
$347,056
$173,528
$3,080,125

Sales

Page 10

MillenniumMart Inc.

Chart: Sales Monthly

Chart: Sales by Year

6.0 Management Summary

As stated earlier, MillenniumMart will be a joint venture between Mr. Wallace Bean and his
associates and the management of Martin-Bower, a large food distribution company. The
company officers will include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru Takeda,

Page 11

MillenniumMart Inc.

who will be operations manager. Since the firm is a start-up, there will be little in the way of
formal structure at first. The company also plans to hire three technicians who will service the
automated store and a office manager. Additional personnel will be added once more stores are
set up.
Mr. Wallace Bean is a graduate of the University of Texas, Austin's school of business. He has
worked for more than twelve years in the food distribution and grocery store industry, including
positions as vice president of marketing for Fry's Food and Drug, director of special projects for
Giant Foods and more recently, senior vice president for Martin-Bower.
Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight
years experience working for various companies. Her last job was as a financial analyst for
Circle K corporation.
Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been operational
manager for Kiyama Inc. for the past six years which operates approximately six hundred
automated convenience stores throughout Japan. Mr. Takeda has moved to the United States
for the express purpose of bringing this new type of store to this country.

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MillenniumMart Inc.

6.1 Personnel Plan

Initially the company will only have a small staff including upper management, an operations
technician and office manager. All other services, such as bookkeeping, will be outsourced.
Table: Personnel

Personnel Plan
Mr. Bean
Mrs. Tuck
Mr. Takeda
Office manager
Technicians
Total People
Total Payroll

Year 1

Year 2

Year 3

$42,000
$42,000
$30,000
$20,400
$33,000
7

$48,000
$48,000
$40,000
$22,000
$56,000
7

$52,000
$52,000
$48,000
$28,000
$58,000
7

$167,400

$214,000

$238,000

7.0 Financial Plan

The following tables illustrate our financial projections over the next three years. Please note
that we expect to be operating at a loss for the first six months before advertising begins to
take effect and draw in customers.
As retained earnings increase, a debt retirement fund will be established to encourage early
repayment, thus relieving interest expense. Also, a 30-day payment period for purchases will
be used to avoid incurring liabilities.
7.1 Important Assumptions
MillenniumMart is basing its assumptions on a stable growth market using average interest
rates over the past ten years.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
30.00%
0

2
10.00%
10.00%
30.00%
0

3
10.00%
10.00%
30.00%
0

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MillenniumMart Inc.

7.2 Break-even Analysis

The following table and chart show our Break-even Analysis. Although our break-even
point seems quite high, we are expecting to have higher than average fixed costs during the
period of this plan due to customer "creation costs," R&D costs, higher rent in a premier spot,
higher percentage of payroll costs to overall fixed costs with a small company, and the need to
import and pay for the store facilities. We expect to have a more reasonable positive retained
earnings point around year 5.
Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$165,326

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

77%
$38,025

Chart: Break-even Analysis

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MillenniumMart Inc.

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 comparison to revenues
in case unexpected hidden costs arise. The charts give a visual representation of the data.
Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

$2,480,106
$1,909,682
$0
$1,909,682

$3,149,735
$2,425,296
$0
$2,425,296

$4,000,163
$3,080,125
$0
$3,080,125

$570,424
23.00%

$724,439
23.00%

$920,037
23.00%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased equipment
Rent
Utilities
Accounting/bookeeping
Insurance
Payroll Taxes
Other

$167,400
$60,000
$7,200
$50,000
$84,000
$28,800
$6,500
$14,400
$0
$38,000

$214,000
$130,000
$7,200
$60,000
$84,000
$30,000
$9,000
$14,400
$0
$45,000

$238,000
$130,000
$7,200
$60,000
$84,000
$30,000
$9,000
$14,400
$0
$45,000

Total Operating Expenses

$456,300

$593,600

$617,600

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$114,124
$121,324
$16,250
$29,362

$130,839
$138,039
$16,400
$34,332

$302,437
$309,637
$14,650
$86,336

$68,512
2.76%

$80,107
2.54%

$201,451
5.04%

Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales
Gross Margin
Gross Margin %

Expenses

Net Profit
Net Profit/Sales

Page 15

MillenniumMart Inc.

Chart: Profit Monthly

Chart: Profit Yearly

Page 16

MillenniumMart Inc.

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

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MillenniumMart Inc.

7.4 Projected Cash Flow

MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses
during the first two years as it strives toward sustainable profitability. Almost all of this funding
has been arranged through lending institutions and private investors already. We do not
anticipate any cash flow problems during the next three years.
Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$2,480,106
$2,480,106

$3,149,735
$3,149,735

$4,000,163
$4,000,163

$0
$5,000
$0
$50,000
$0
$0
$54,000
$2,589,106

$0
$0
$0
$0
$0
$0
$78,000
$3,227,735

$0
$0
$0
$0
$0
$0
$0
$4,000,163

Year 1

Year 2

Year 3

$167,400
$2,177,877
$2,345,277

$214,000
$2,961,091
$3,175,091

$238,000
$3,558,207
$3,796,207

$0
$0
$0
$0
$0
$0
$0
$2,345,277

$0
$7,000
$0
$5,000
$0
$0
$0
$3,187,091

$0
$13,000
$0
$10,000
$0
$30,000
$50,000
$3,899,207

$243,829
$357,649

$40,643
$398,292

$100,956
$499,248

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
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
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
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
Net Cash Flow
Cash Balance

Page 18

MillenniumMart Inc.

Chart: Cash

Page 19

MillenniumMart Inc.

7.5 Projected Balance Sheet

The following table shows the Projected Balance Sheet for MillenniumMart.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$357,649
$371,402
$8,000
$737,050

$398,292
$282,345
$8,000
$688,637

$499,248
$358,578
$8,000
$865,826

$72,000
$7,200
$64,800
$801,850

$72,000
$14,400
$57,600
$746,237

$102,000
$21,600
$80,400
$946,226

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$428,518
$20,000
$10,000
$458,518

$226,798
$13,000
$10,000
$249,798

$298,335
$0
$10,000
$308,335

Long-term Liabilities
Total Liabilities

$150,000
$608,518

$145,000
$394,798

$135,000
$443,335

$374,000
($249,180)
$68,512
$193,332
$801,850

$452,000
($180,668)
$80,107
$351,439
$746,237

$452,000
($150,561)
$201,451
$502,891
$946,226

$193,332

$351,439

$502,891

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 20

MillenniumMart Inc.

7.6 Business Ratios

We are using the industry standard business ratios for independent convenience store chains as
a comparison to our own. There are some significant differences between the two since we have
a completely different storefront than our competitors. First of all our accounts receivable are
very different as we expect to have higher sales using credit cards than other stores, due to the
convenience of using credit cards and cash cards at our facility. There is generally a three day
waiting period to receive funds from the credit card company. This is a short period of time
compared to a normal collection day period of 30 days, but it is still something we need to
factor for.
In addition, we expect higher percentages in inventory as we will be operating only one store
initially and even many independent convenience store owners often have two or more
facilities. Our long-term assets are low since we are only renting our facilities.

Page 21

MillenniumMart Inc.

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

27.00%

27.00%

2.27%

Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

46.32%
1.00%
91.92%
8.08%
100.00%

37.84%
1.07%
92.28%
7.72%
100.00%

37.90%
0.85%
91.50%
8.50%
100.00%

22.18%
26.81%
56.12%
43.88%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

57.18%
18.71%
75.89%
24.11%

33.47%
19.43%
52.91%
47.09%

32.59%
14.27%
46.85%
53.15%

26.39%
24.87%
51.26%
48.74%

100.00%
23.00%
20.26%
0.00%
4.60%

100.00%
23.00%
20.10%
0.00%
4.15%

100.00%
23.00%
17.78%
0.00%
7.56%

100.00%
23.55%
16.21%
0.85%
1.02%

1.61
0.80
75.89%
50.63%
12.21%

2.76
1.63
52.91%
32.56%
15.34%

2.81
1.65
46.85%
57.23%
30.41%

1.68
0.71
4.63%
57.28%
10.83%

Sales Growth
Percent of Total Assets

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
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

2.76%
35.44%

2.54%
22.79%

5.04%
40.06%

n.a
n.a

10.91
6.06
27
3.09

7.42
12.17
43
4.22

9.61
12.17
26
4.23

n.a
n.a
n.a
n.a

3.15
0.75

1.12
0.63

0.88
0.70

n.a
n.a

$278,532
7.02

$438,839
7.98

$557,491
20.64

n.a
n.a

0.32
57%
0.80
12.83
0.00

0.24
33%
1.63
8.96
0.00

0.24
33%
1.65
7.95
0.25

n.a
n.a
n.a
n.a
n.a

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

$28,000
$25,000
$6,000
$8,000
$4,000
$71,000

$33,040
$29,500
$7,080
$9,440
$4,720
$83,780

$38,987
$34,810
$8,354
$11,139
$5,570
$98,860

$46,005
$41,076
$9,858
$13,144
$6,572
$116,655

$54,286
$48,469
$11,633
$15,510
$7,755
$137,653

$64,057
$57,194
$13,727
$18,302
$9,151
$162,431

$75,588
$67,489
$16,197
$21,596
$10,798
$191,668

$89,193
$79,637
$19,113
$25,484
$12,742
$226,169

$105,248
$93,971
$22,553
$30,071
$15,035
$266,879

$124,193
$110,886
$26,613
$35,484
$17,742
$314,917

$146,547
$130,846
$31,403
$41,871
$20,935
$371,602

$172,926
$154,398
$37,056
$49,407
$24,704
$438,491

Sales
Drinks
Snacks
Magazines/newspapers
General grocery items
Other
Total Sales

0%
0%
0%
0%
0%

Direct Cost of Sales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Drinks

$21,560

$25,441

$30,020

$35,424

$41,800

$49,324

$58,202

$68,679

$81,041

$95,628

$112,841

$133,153

Snacks

$19,250

$22,715

$26,804

$31,628

$37,321

$44,039

$51,966

$61,320

$72,358

$85,382

$100,751

$118,887

Magazines/newspapers

$4,620

$5,452

$6,433

$7,591

$8,957

$10,569

$12,472

$14,717

$17,366

$20,492

$24,180

$28,533

General grocery items

$6,160

$7,269

$8,577

$10,121

$11,943

$14,093

$16,629

$19,623

$23,155

$27,322

$32,240

$38,044

Other

$3,080

$3,634

$4,289

$5,061

$5,971

$7,046

$8,315

$9,811

$11,577

$13,661

$16,120

$19,022

$54,670

$64,511

$76,123

$89,825

$105,993

$125,072

$147,585

$174,150

$205,497

$242,486

$286,134

$337,638

Subtotal Direct Cost of Sales

Page 1

Appendix
Table: Personnel

Personnel Plan
Mr. Bean
Mrs. Tuck
Mr. Takeda
Office manager
Technicians
Total People
Total Payroll

0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$1,500
5

$3,500
$3,500
$2,500
$1,700
$3,000
6

$3,500
$3,500
$2,500
$1,700
$3,000
6

$3,500
$3,500
$2,500
$1,700
$4,500
7

$3,500
$3,500
$2,500
$1,700
$4,500
7

$3,500
$3,500
$2,500
$1,700
$4,500
7

$3,500
$3,500
$2,500
$1,700
$4,500
7

$12,700

$12,700

$12,700

$12,700

$12,700

$12,700

$14,200

$14,200

$15,700

$15,700

$15,700

$15,700

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

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

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

Plan Month

Other

Month 12

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$71,000

$83,780

$98,860

$116,655

$137,653

$162,431

$191,668

$226,169

$266,879

$314,917

$371,602

$438,491

Direct Cost of Sales

$54,670

$64,511

$76,123

$89,825

$105,993

$125,072

$147,585

$174,150

$205,497

$242,486

$286,134

$337,638

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$54,670

$64,511

$76,123

$89,825

$105,993

$125,072

$147,585

$174,150

$205,497

$242,486

$286,134

$337,638

Gross Margin

$16,330

$19,269

$22,738

$26,831

$31,660

$37,359

$44,084

$52,019

$61,382

$72,431

$85,469

$100,853

Gross Margin %

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

23.00%

Other Costs of Goods

Expenses
Payroll

$12,700

$12,700

$12,700

$12,700

$12,700

$12,700

$14,200

$14,200

$15,700

$15,700

$15,700

$15,700

Sales and Marketing and Other

Expenses
Depreciation

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

Leased equipment

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$6,000

Rent

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

$7,000

Utilities

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$2,400

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$750

$750

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$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
$3,000

$0
$4,000

$0
$5,000

$0
$10,000

$35,400

$35,400

$35,400

$35,400

$35,400

$35,400

$36,900

$36,900

$39,400

$40,400

$41,650

$48,650

Profit Before Interest and Taxes

($19,070)

($16,131)

($12,662)

($8,569)

($3,740)

$1,959

$7,184

$15,119

$21,982

$32,031

$43,819

$52,203

EBITDA

($18,470)

($15,531)

($12,062)

($7,969)

($3,140)

$2,559

$7,784

$15,719

$22,582

$32,631

$44,419

$52,803

$958

$1,375

$1,375

$1,375

$1,375

$1,375

$1,375

$1,375

$1,417

$1,417

$1,417

$1,417

($6,008)

($5,252)

($4,211)

($2,983)

($1,534)

$175

$1,743

$4,123

$6,170

$9,184

$12,721

$15,236

Net Profit

($14,020)

($12,254)

($9,826)

($6,961)

($3,580)

$409

$4,066

$9,621

$14,396

$21,430

$29,681

$35,550

Net Profit/Sales

-19.75%

-14.63%

-9.94%

-5.97%

-2.60%

0.25%

2.12%

4.25%

5.39%

6.80%

7.99%

8.11%

Accounting/bookeeping
Insurance
Payroll Taxes
Other
Total Operating Expenses

Interest Expense
Taxes Incurred

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

Cash Sales

$71,000

$83,780

$98,860

$116,655

$137,653

$162,431

$191,668

$226,169

$266,879

$314,917

$371,602

$438,491

Subtotal Cash from Operations

$71,000

$83,780

$98,860

$116,655

$137,653

$162,431

$191,668

$226,169

$266,879

$314,917

$371,602

$438,491

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$5,000

$0
$0

$0
$0

$0
$0

Cash Received
Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing

0.00%

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$50,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$50,000

$0

$0

$0

$0

$0

$0

$4,000

Subtotal Cash Received

$71,000

$133,780

$98,860

$116,655

$187,653

$162,431

$191,668

$226,169

$271,879

$314,917

$371,602

$442,491

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

Expenditures from Operations

Cash Spending

$12,700

$12,700

$12,700

$12,700

$12,700

$12,700

$14,200

$14,200

$15,700

$15,700

$15,700

$15,700

Bill Payments

$12,062

$120,914

$94,045

$108,734

$126,066

$146,518

$170,637

$198,680

$232,293

$272,239

$319,734

$375,955

Subtotal Spent on Operations

$24,762

$133,614

$106,745

$121,434

$138,766

$159,218

$184,837

$212,880

$247,993

$287,939

$335,434

$391,655

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$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

Subtotal Cash Spent

$24,762

$133,614

$106,745

$121,434

$138,766

$159,218

$184,837

$212,880

$247,993

$287,939

$335,434

$391,655

Net Cash Flow

$46,238

$166

($7,885)

($4,779)

$48,887

$3,212

$6,831

$13,289

$23,886

$26,979

$36,168

$50,835

Cash Balance

$160,058

$160,225

$152,340

$147,561

$196,448

$199,661

$206,492

$219,780

$243,667

$270,645

$306,813

$357,649

Additional Cash Spent

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

$113,820
$10,000
$8,000
$131,820

$160,058
$60,137
$8,000
$228,195

$160,225
$70,962
$8,000
$239,186

$152,340
$83,735
$8,000
$244,074

$147,561
$98,807
$8,000
$254,368

$196,448
$116,592
$8,000
$321,040

$199,661
$137,579
$8,000
$345,239

$206,492
$162,343
$8,000
$376,835

$219,780
$191,565
$8,000
$419,345

$243,667
$226,047
$8,000
$477,713

$270,645
$266,735
$8,000
$545,380

$306,813
$314,747
$8,000
$629,561

$357,649
$371,402
$8,000
$737,050

$72,000
$0
$72,000
$203,820

$72,000
$600
$71,400
$299,595

$72,000
$1,200
$70,800
$309,986

$72,000
$1,800
$70,200
$314,274

$72,000
$2,400
$69,600
$323,968

$72,000
$3,000
$69,000
$390,040

$72,000
$3,600
$68,400
$413,639

$72,000
$4,200
$67,800
$444,635

$72,000
$4,800
$67,200
$486,545

$72,000
$5,400
$66,600
$544,313

$72,000
$6,000
$66,000
$611,380

$72,000
$6,600
$65,400
$694,961

$72,000
$7,200
$64,800
$801,850

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
$15,000
$10,000
$33,000

$117,795
$15,000
$10,000
$142,795

$90,440
$15,000
$10,000
$115,440

$104,554
$15,000
$10,000
$129,554

$121,209
$15,000
$10,000
$146,209

$140,862
$15,000
$10,000
$165,862

$164,052
$15,000
$10,000
$189,052

$190,981
$15,000
$10,000
$215,981

$223,271
$15,000
$10,000
$248,271

$261,643
$20,000
$10,000
$291,643

$307,280
$20,000
$10,000
$337,280

$361,179
$20,000
$10,000
$391,179

$428,518
$20,000
$10,000
$458,518

$100,000
$133,000

$100,000
$242,795

$150,000
$265,440

$150,000
$279,554

$150,000
$296,209

$150,000
$315,862

$150,000
$339,052

$150,000
$365,981

$150,000
$398,271

$150,000
$441,643

$150,000
$487,280

$150,000
$541,179

$150,000
$608,518

$320,000
($249,180)
$0
$70,820
$203,820

$320,000
($249,180)
($14,020)
$56,800
$299,595

$320,000
($249,180)
($26,274)
$44,546
$309,986

$320,000
($249,180)
($36,100)
$34,720
$314,274

$320,000
($249,180)
($43,061)
$27,759
$323,968

$370,000
($249,180)
($46,641)
$74,179
$390,040

$370,000
($249,180)
($46,232)
$74,588
$413,639

$370,000
($249,180)
($42,166)
$78,654
$444,635

$370,000
($249,180)
($32,545)
$88,275
$486,545

$370,000
($249,180)
($18,150)
$102,670
$544,313

$370,000
($249,180)
$3,280
$124,100
$611,380

$370,000
($249,180)
$32,962
$153,782
$694,961

$374,000
($249,180)
$68,512
$193,332
$801,850

$70,820

$56,800

$44,546

$34,720

$27,759

$74,179

$74,588

$78,654

$88,275

$102,670

$124,100

$153,782

$193,332

Starting Balances

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
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
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

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