Overview:

As per our research the Adult Day Care facilities have just started to tap into the millions of older
adults that need some care provided during the day when their loved ones are at work. Our new
location to be opened in Allen, TX would be an ideal location within the Collin County as there
are no Adult Day Care centers within Allen, TX.
Happy Horizons, LLC realizes that financing management is the blood stream for successful
business operations. We are planning to have a very strong financial start to cover initial cost
and ensure continuous growth. Initial cash investments of $250,000 will be secured from the
partners. Happy Horizons, LLC will secure additional capital of $200,000 for building lease,
long and short term assets, and maintaining strong cash-flow. Happy Horizons, LLC will
allocate $30,000 for marketing budget 60 days prior to initial opening. We will obtain 7 (a) loan
from SBA; the interest rate will be prime rate (+3%) (Small Business Administration, 2013).
Based on current interest rate we will assume 9% interest rate fully amortized in 3 years.
Obtained funds will be utilized to cover start-up cost and monthly expenses including:
Property Lease
Equipment Purchase
Insurance
Cover deficiency in cash-flow in the first year of operations.
Sales Forecast:
The sales forecast is based upon the demographics of Allen, TX and research which states there
is an increasing demand among people with live in parents who will pay for private services. Our
sales forecast is also based upon a three month starting period of marketing, hiring employees
and preparing the facility in Allen, TX. We will generate revenues from four different services
line. Weekly guest service will generate the main cash stream for the company (98.82%),
registration fee, transportation and hair styling services will generate 1.18% of the total revenue;
however, those are important part of the business plan and services provided to our guests.
Happy Horizons, LLC anticipates starting with 19 guests within the first month of operations.
This will generate an amount of $40,432 in gross sales during the month of operations,
continuous growth is expected through-out the year. With anticipated growth rate of 3% per
month, we are expecting gross sales in the amount of $617,050 generated from 28 guests in the
first year of operations. While shuttle and hair styling are complementing our main service, they
are scheduled to generate annual revenue of $4,477 combined.


Figure 1Collin County Map (courtesy of http://www.cityofallen.org/DocumentCenter/Home/View/157)
Happy Horizons, LLC anticipates continuous growth through-out the operations period,
however profitability will begin in the 2nd year.

Expenses:
Happy Horizons, LLC realizes the importance of the first impression and the importance of
initial investment in high quality equipment and furniture. Costs will include equipments, and
furnitures. Our fixed asset estimated as following:
Capital Purchases
Item Cost
Purchase
Date
Years
of
Service
Salvage
Value
Facilities Month Year


Interior Construction $65,000 Dec 2013 5 $0
Interior Designer $5,000 Dec 2013 5 $0
Equipment
Stove $3,000 Jan 2014 5 $0
Dish Washer $800 Jan 2014 5 $0
Microwave Oven $550 Jan 2014 5 $0
Refrigerator $4,000 Jan 2014 5 $0
Garbage Disposal $300 Jan 2014 5 $0
Television 42" $700 Jan 2014 5 $0
-$500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2014 2015 2016 2017 2018
5-Year Financials At-a-Glance
Gross
Sales
Gross
Profit
Net
Profit
Television 72" $1,800 Jan 2014 5 $0
Passenger Cars $18,000 Jan 2014 5 $0
Minivan $20,000 Jan 2014 5 $0
Minivan $20,000 Jan 2014 5 $0
Dining Sets $3,000 Jan 2014 5 $0
Dining Tables $3,000 Jan 2014 5 $0
Great room furniture $5,000 Jan 2014 5 $0
Office furniture $20,000 Jan 2014 5 $0
Gym Equipment $5,000 Jan 2014 5 $0
Hair Stylist Equipments $1,000 Jan 2014 5 $0
Cookware $4,000 Jan 2014 5 $0
Clinic $2,000 Jan 2014 5 $0
Computer
Hardware/Software

Server $2,000 Jan 2014 5 $0
Guests work stations $4,000 Jan 2014 5 $0
Managements Laptops $7,500 Jan 2014 5 $0
Desktops $3,000 Jan 2014 5 $0
Printers $2,000 Jan 2014 5 $0
Security Cameras $1,000 Jan 2014 5 $0

Facility and staffing will consume 75.6% of our monthly expenses. The average rent rate in the
selected area will be $18.20 per sqft. (Show Case, 2013). We will require at least 10,000 sqft.
For our operations, the total annual rent cost $182,000 per year.

Revenue:
Company revenue will be generated primarily from registration and weekly fees collected from
guests, charge of $100 per applicant will collected at the time of registration and an amount of
$100 per day that will cover the tuition. Company will consider discounted monthly tuition after
2 years of operations. Maximum capacity of the center will be 75 guests; this will create revenue
of $2,328,485 per year.
Our projected gross income beginning the 2
nd
year of operation will be $64,455 per month, this
amount will cover the entire expense and the company will reach its break-even point. Happy
Horizons, LLC realizes that the income generated from operations in the first year will not be
sufficient to sustain its financial obligations. The secured financing of $200,000 will aid
operations expenses in the first year until the business reaches break-even point.
Break-even Estimates

Year (1) 2014 - 2015
Monthly Average $60,095.14
Year (2) 2015 - 2016
Monthly Average $62,855.87


$318,000.00
$47,700.00
$7,000.00
$5,000.00
$182,004.00
$12,000.00
$36,330.00
$12,000.00
$3,600.00
$18,000.00
$1,200.00
$2,400.00
$15,533.16
Happy Horizons - Monthly Expenses
Salaries and wages
Payroll taxes
Professional services
Marketing and advertising
Rent
Maintenance
Depreciation
Insurance
Telephone service
Ratio Analysis:
At a quick review at the table below, the company will have a healthy current ratio to meet its
short term liabilities and debt. The first year reflects healthier current ratio due to the loan
collected to help with the operations. Our cash turnover ratio indicates that our invested amount
will not yield sufficient return in the first year of operations, the year after every invested dollar
will turn 2.51 times. Since shareholders invested with large initial cash amount, Happy Horizons,
LLC has a great leverage based on the debt to equity ratio. After completing the first year in
business, companys operations will yield good return on investment, sales, and assets; this will
generate good cash liquidity which will enable the company to invest in more locations and add
more services for the guests. (Investopedia, 2013)
Key Ratios
Year 1 (2014-2015) Current
Ratio
Cash
Turnover
Debt
to
Equity
Return on
Investment
Return
on
Sales
Return on
Assets
1st Quarter 6.76 0.37 0.45 -11% -33% -7%
2nd Quarter 6.11 0.46 0.45 -7% -18% -5%
3rd Quarter 5.70 0.53 0.42 -3% -8% -2%
4th Quarter 5.41 0.60 0.38 -1% -3% -1%

Year 2 (2015-2016) 3.83 2.51 0.27 34% 18% 27%

Year 3 (2016-2017) 3.95 1.76 0.30 68% 43% 52%

Year 4 (2017-2018) 3.37 1.25 0.41 72% 59% 51%

Year 5 (2018-2019) 3.22 0.88 0.45 55% 63% 38%

Growth Potential:
After completion the 3
rd
year of operations, we will assess current assets and current liabilities.
This will allow for close evaluation of the company. We will use our leverage and market
knowledge to opening new facility to service more guests. New location will accommodate 75
guests, once we reach this milestone; we will be able to eliminate items from operations that
does not yield required return for stakeholders. Pre-marketing campaign will precede our grand-
opening; the new location would reach break-even point within 180 days of operations.

Cash Flow
The cash flow is based upon the assumptions and analysis of the operations of Happy Horizons,
LLC. The rent will be $15,167 a month and will begin funding of operations with a loan of
$200,000 and the partners will each invest $50,000 for a total investment of $250,000. It is
expected that Happy Horizons, LLC operations will provide adequate cash flow. This
capitalization is more than adequate to support the start-up and operation of Happy Horizons
LLC.
Happy Horizons, LLC is projecting sales for the first quarter of operations during which time it
will hire and train employees, complete its build-out, and will start its marketing. It is projected
that there will be a slow buildup starting with approximately 19 guests and steady growth over a
five-year-period. With the expected investment and borrowing Happy Horizons, LLC will start
with approximately $450,000, and then start to build up a cash balance over the five year period.
The number provided below are based upon the assumption that the investors do not withdraw
any of their investment or returns and the $200,000 loan is paid in full at the end of the three year
period.
Expected Cash Balances at Year End
2014 2015 2016 2017 2018
Projected Year
Cash Balance
$196,095 $389,858 $1,025,162 $2,322,015 $3,890,682

Balance Sheet
By having a substantial amount of cash flow during its first year of operations and being fairly
sustainable during the first five years we expect to pay off the $200k loan by end of the third
year. The operations of Happy Horizons, LLC should remain fairly constant over a five year
period with the only major change being an increase in the number of employees to support the
growth of additional guests.


Balance Sheet

2014 2015 2016 2017 2018
Assets
Current Assets $157,514 $293,173 $839,357 $2,000,405 $3,409,620
Fixed Assets $145,320 $108,990 $88,660 $48,330 $8,000
Total Assets $302,834 $402,163 $928,017 $2,048,735 $3,417,620

Liabilities
Current
Liabilities
$66,488 $129,803 $263,985 $649,963 $1,115,590
Long-Term
Liabilities
$72,725 0 0 0 0
Total Liabilities $139,213 $129,803 $263,985 $649,963 $1,115,590
Net Worth
Paid-In Capital $250,000 $250,000 $250,000 $250,000 $250,000
Retained
Earnings
-$86,380 $22,361 $414,032 $1,148,772 $2,052,030
Total Net Worth $163,620 $272,361 $664,032 $1,398,772 $2,302,030

Total Net
Liabilities and
Net Worth
$302,834 $402,163 $928,017 $2,048,735 $3,417,620

Income Statement
Happy Horizons, LLC expects a positive cash flow through its 5 years of operations and negative
accounting income until the beginning of second year of operations. The start-up costs and sales
growth creates a typical circumstance where Happy Horizons, LLC is able to fund operations in
the first year but will not make profits until the second year of operations.
Analysis of the Sales Projections indicates that the breakeven point for profitability is 29 guests
which can be reached at the beginning of year 2 in January 2015. As the income increases it
corresponds to the growth of the number of guests. The facility can accommodate 75 guests.



Expected Sales and Gross Revenue
2014 2015 2016 2017 2018
Total Guests 287 409 584 821 900
Gross Revenue
624,817 932,273 1,394,556 2,057,947 2,373,730

The size of Happy Horizons, LLC will easily accommodate the number of guests required to
meet the pro forma calculation of income and cash flow. At the end of the fifth year if the
partners decide to sell off the business or offer franchise to other investors, this income
statement analysis provides important insights into how effectively management is controlling
expenses, the amount of interest income and expense, and the taxes paid.


Income and Expenses

2014 2015 2016 2017 2018
Income
Net Sales

COGS

$618,157

$45,677

$922,335

$68,220

$1,379,728

$101,877

$2,036,104

$150,163

$2,348,187

$174,903

Gross Profit $572,480 $854,114 $1,277,852 $1,885,941 $2,173,284

Expenses
Employee
Salary
$318,000 $327,540 $343,095 $430,097 $479,467
Rent $182,004 $182,004 $182,004 $182,004 $182,004
Other $160,763 $171,666 $161,588 $171,045 $181,450
Total Expenses $660,767 $691,036 $686,687 $783,146 $842,921
Net Income
before Taxes
$(88,287) $163,078 $591,164 $1,102,795 $1,330,363
Less: Provision
for Taxes
0 $57,077 $206,908 $385,978 $465,627
Net Profit $(88,287) $106,001 $384,257 $716,817 $864,736

Valuation after Five Years
Happy Horizons, LLC is expected to generate $864,736 in cash at the end of the 5th year after
paying off expenses and the $200,000 loan off. At the end of 5 years partners will value the
business and income. The business is expecting that the baby boomer generation will provide
customers to Happy Horizons, LLC for at least 20 years after it opens its door to the public.

The valuation will be calculated using the Discounted Cash Flow approach. This analysis
assumes that both the costs and the revenues will increase with inflation at approximately the
same rate over time, thereby alleviating the need to adjust the net present value of the cash flows
for inflation. Discounted rate taking into consideration the prime rate and risk
premium. Opportunity cost of 10% was assumed, company will be valued at $2,078,061.92.

Discount Rate 10%
Initial Investment -$450,000.00
2014 - Year 1 -$88,287.18
2015 - Year 2 $163,078.00
2016 - Year 3 $591,164.00
2017 - Year 4 $1,102,975.00
2018 - Year 5 $1,330,363.00
NPV $2,078,061.92


Exit Strategy
The partners of Happy Horizons, LLC plan to operate the business for a five-year period after
which it will offer franchises to other investors who want to follow our business model. Happy
Horizons, LLC will be setup as a Limited Liability Company and will obtain appropriate licenses
in the state of Texas. Federal taxation will be selected as a partnership and each member will
have the right of first refusal to purchase any other member's interest if such member desires to
sell their membership interest. If the investment environment is favorable, the Limited Liability
Company can convert to a corporation and sell stock. Each investor will receive an interest in the
new corporation in an ownership interest percentage equal to their ownership interest percentage
in the Limited Liability Company.
There are several possible exit strategies:
If the heirs of the original partners of Happy Horizons, LLC want to continue to
operate the company, the partners can create separate Limited Family partnerships
and place their ownership interests in their own limited family partnerships for the
benefit of their heirs.
If the franchise plan is successful, the original partners of Happy Horizons, LLC may
decide to convert the Limited Liability Company to a corporation and sell stock
through an IPO in the open stock market.
The employees of Happy Horizons, LLC may decide they want to purchase
ownership interests in Happy Horizons, LLC and the original partners can sell the
company to the employees, or other investors.
If the company is not successful, the only major liability will be the lease. The
original partners may decide to close the doors if the business is not successful and
negotiate favorable terms for cancellation of the lease and distribute any remaining
assets or equipment to the original partners.
It is expected that Happy Horizons, LLC will be successful and will pay off all its debt in
a timely fashion. The ultimate goal for Happy Horizons, LLC is to franchise the concept,
convert to a corporation and become a publically traded company through an IPO.



Appendix A Balance Sheet
Balance Sheet
ASSETS
Current Assets
Cash $227,927
Accounts Receivable $0
Inventory -$8,025
Other Current Assets $0
Total Current Assets $219,901
Fixed Assets
Land $0
Facilities $70,000
Equipment $92,150
Computers & Telecommunications $19,500
(Less Accumlated Depreciation) $9,083
Total Fixed Assets $172,568
Other Assets $0
TOTAL ASSETS $392,469
LIABILITIES
Current Liabilities
Short-Term Notes Payable $62,164
Income Taxes Due $0
Other Current Liabilities $0
Total Current Liabilities $62,164
Long-Term Liabilities
Long-Term Notes Payable $123,146
Other Long-Term Liabilities $0
Total Long-Term Liabilities $123,146
NET WORTH
Paid-In Capital $250,000
Retained Earnings -$42,842
Total Net Worth $207,158
TOTAL LIABILITIES AND NET WORTH $392,469
Happy Horizons, LLC
First Quarter
2014

Appendix B Income Statement

Income Statements 2014
January February March April May June July August September October November December TOTAL
INCOME
Gross Sales $43,100 $43,461 $45,621 $47,782 $49,944 $52,106 $54,268 $54,180 $56,443 $58,607 $58,520 $60,784 $624,817
(Commissions) $24 $25 $25 $26 $27 $28 $29 $30 $30 $31 $32 $33 $341
(Returns and allowances) $419 $441 $463 $484 $506 $528 $550 $550 $572 $594 $595 $617 $6,320
Net Sales $42,657 $42,995 $45,133 $47,272 $49,411 $51,550 $53,689 $53,601 $55,841 $57,981 $57,894 $60,135 $618,157
(Cost of Goods) $3,035 $3,190 $3,346 $3,502 $3,658 $3,815 $3,971 $3,978 $4,135 $4,292 $4,299 $4,456 $45,677
GROSS PROFIT $39,623 $39,805 $41,787 $43,770 $45,752 $47,735 $49,718 $49,623 $51,706 $53,689 $53,595 $55,678 $572,480
EXPENSES - General and Administrative
Salaries and wages $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $26,500 $318,000
Employee benefits $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll taxes $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $3,975 $47,700
Professional services $583 $583 $583 $583 $583 $583 $583 $583 $583 $583 $583 $583 $7,000
Marketing and advertising $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,500 $2,500 $5,000
Rent $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $15,167 $182,004
Equipment rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Maintenance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000
Depreciation $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $3,028 $36,330
Insurance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000
Telephone service $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600
Utilities $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $18,000
Office supplies $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $1,200
Postage and shipping $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400
Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Entertainment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest on loans $1,500 $1,464 $1,427 $1,390 $1,353 $1,315 $1,277 $1,239 $1,201 $1,162 $1,123 $1,084 $15,533
Other (change title here) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other (change title here) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL EXPENSES $54,853 $54,816 $54,780 $54,743 $54,705 $54,668 $54,630 $54,592 $54,553 $54,515 $56,976 $56,937 $660,767
Net income before taxes -$15,230 -$15,012 -$12,993 -$10,973 -$8,953 -$6,933 -$4,912 -$4,969 -$2,847 -$825 -$3,381 -$1,258 -$88,287
Provision for taxes on income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
NET PROFIT -$15,230 -$15,012 -$12,993 -$10,973 -$8,953 -$6,933 -$4,912 -$4,969 -$2,847 -$825 -$3,381 -$1,258 -$88,287
Appendix C Cash Flow


Cash Flow 2014
January February March April May June July August September October November December TOTAL
CASH RECEIPTS
Income from Sales
Cash Sales $43,100 $43,461 $45,621 $47,782 $49,944 $52,106 $54,268 $54,180 $56,443 $58,607 $58,520 $60,784 $624,817
Collections $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cash from Sales $43,100 $43,461 $45,621 $47,782 $49,944 $52,106 $54,268 $54,180 $56,443 $58,607 $58,520 $60,784 $624,817
Income from Financing
Interest Income $3 $200 $190 $182 $175 $171 $168 $165 $164 $164 $163 $163 $1,907
Loan Proceeds $200,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $200,000
Equity Capital Investments $250,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $250,000
Total Cash from Financing $450,003 $200 $190 $182 $175 $171 $168 $165 $164 $164 $163 $163 $451,907
Other Cash Receipts $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL CASH RECEIPTS $493,103 $43,660 $45,811 $47,964 $50,119 $52,276 $54,436 $54,345 $56,607 $58,771 $58,683 $60,948 $1,076,724
CASH DISBURSEMENTS
Inventory $500 $515 $530 $546 $563 $580 $597 $615 $633 $652 $672 $692 $7,096
Operating Expenses $50,325 $50,325 $50,325 $50,325 $50,325 $50,325 $50,325 $50,325 $50,325 $50,325 $52,825 $52,825 $608,904
Commissions/Returns & Allowances $443 $466 $488 $511 $533 $556 $579 $580 $603 $626 $627 $650 $6,660
Capital Purchases $181,650 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $181,650
Loan Payments $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $6,360 $76,319
Income Tax Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investor Dividend Payments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Owner's Draw $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL CASH DISBURSEMENTS $239,278 $57,666 $57,704 $57,742 $57,781 $57,821 $57,861 $57,880 $57,921 $57,963 $60,484 $60,527 $880,629
NET CASH FLOW $253,825 -$14,006 -$11,893 -$9,778 -$7,662 -$5,545 -$3,425 -$3,535 -$1,314 $808 -$1,801 $421 $196,095
Opening Cash Balance $0 $253,825 $239,819 $227,927 $218,148 $210,486 $204,942 $201,516 $197,981 $196,667 $197,475 $195,674
Cash Receipts $493,103 $43,660 $45,811 $47,964 $50,119 $52,276 $54,436 $54,345 $56,607 $58,771 $58,683 $60,948
Cash Disbursements $239,278 $57,666 $57,704 $57,742 $57,781 $57,821 $57,861 $57,880 $57,921 $57,963 $60,484 $60,527
ENDING CASH BALANCE $253,825 $239,819 $227,927 $218,148 $210,486 $204,942 $201,516 $197,981 $196,667 $197,475 $195,674 $196,095 $196,095
References:
(2013, 11 28). Retrieved from Investopedia: http://www.investopedia.com/
Show Case. (2013, 11 11). Listings. Retrieved from http://www.showcase.com/:
http://www.showcase.com/#&&/wEXAQURV29ya2Zsb3dIaXN0b3J5SUQFJDM0NzY0MzdkLTAwOGMtNGNhYi04ZDRmLTczNDZkMTNhM2M3ZZDkAcNcca
n3jJYAVpbhYGd2rvb/
Small Business Administration. (2013, 11 2). 7(a) Loan Amounts, Fees & Interest Rates. Retrieved from www.SBA.gov: http://www.sba.gov/content/7a-loan-
amounts-fees-interest-rates