College Cafe

www.thecollegecafe.
com June 2004
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Table of Contents
1.0 Executive Summary.............................................................................................................................1 1.1 Opportunity..................................................................................................................................1 1.2 Solution .......................................................................................................................................1 1.3 Market .........................................................................................................................................1 1.4 Financial & Capital Requirements ...........................................................................................2 1.5 Objectives ...................................................................................................................................2 2.0 Company Summary.............................................................................................................................2 2.1 Company Ownership .................................................................................................................3 2.2 Company Locations and Facilities ..........................................................................................3 2.3 Mission........................................................................................................................................3 2.4 Keys to Success ........................................................................................................................3 2.5 Management Summary .............................................................................................................4 2.6 Management Team....................................................................................................................5 2.7 Start-up Summary ......................................................................................................................5 3.0 Products ...............................................................................................................................................7 3.1 Textbook Exchange ...................................................................................................................7 3.2 Auctions ......................................................................................................................................7 3.3 Classifieds ..................................................................................................................................8 3.4 Retail ...........................................................................................................................................8 3.5 Teacher Evaluations ..................................................................................................................8 3.6 Bloggers......................................................................................................................................9 3.7 Future Products ..........................................................................................................................9 4.0 Market Analysis Summary................................................................................................................10 4.1 Market Growth..........................................................................................................................11 4.2 Market Trends ..........................................................................................................................12 4.3 Market Segmentation..............................................................................................................13 4.4 Target Market Segment Strategy...........................................................................................14 4.5 Competitive Comparison........................................................................................................14 4.5.1 University Bookstores ..........................................................................................................15 4.5.2 Online Bookstores & Retail Websites................................................................................16 5.0 Marketing Strategy............................................................................................................................17 5.1 Strategic Alliances...................................................................................................................17 5.2 Promotion Strategy..................................................................................................................17 5.3 Marketing Programs................................................................................................................18 6.0 Sourcing .............................................................................................................................................18 7.0 Technology.........................................................................................................................................19 8.0 Milestones ..........................................................................................................................................19 9.0 Financial Plan ....................................................................................................................................20 9.1 Important Assumptions............................................................................................................20 9.2 Start-up Funding ......................................................................................................................21 9.3 Use of Funds ............................................................................................................................22 9.4 Exit Strategy .............................................................................................................................23 9.5 Key Financial Indicators ..........................................................................................................23 9.6 Break-even Analysis................................................................................................................23 9.7 Sales Strategy..........................................................................................................................24 9.8 Personnel Plan.........................................................................................................................26 9.9 Projected Profit and Loss .......................................................................................................27
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Table of Contents
9.10 Projected Cash Flow ......................................................................................................................31 9.11 Projected Balance Sheet......................................................................................................33 9.12 Business Ratios.....................................................................................................................34
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The College Cafe - www.thecollegecafe.com

1.0 Executive Summary
The College Cafe is a student-to-student Internet marketplac e providing college students with the opportunity to buy, sell and trade college textbooks, participate in auctions, post classified ads, provide teacher evaluations, and buy products for college. The College Cafe's target market consists of over 15.8 million college students who spend $200 billion annually. The College Cafe was founded in July of 2003 and is presently in its start-up stage.
1.1 Opportunity
College students are eager to find ways to get "quick cash" at the end of every semester. One method c ollege students use is to sell their old textbooks at the end of every semester, however the re-sell market is controlled by the loc al university bookstore. Bec ause university bookstores monopolize the market, students rec eive only a frac tion of the value paid for the book, typically 75% or less of the purchase prices. The bookstores then re-sell the books bac k to other students, rec eiving over 125% profit. The current situation creates a lose-lose situation for students and a win-win situation for bookstores. Students are looking for convenient, money saving ways to purchase textbooks and to rec eive more value when re-selling textbooks at the end of each semester.
1.2 Solution
The College Cafe will enable students to buy, sell, and trade used textbooks direc tly to other students, by-passing the university bookstores. By selling textbooks to other students, the seller can rec eive more money than the bookstore will pay and the buyer can pay less than the bookstore charges. In addition to textbooks, students will be able to sell class notes, old tests, computers, dorm ac cessories, used CDs, tutoring services or anything students wish to sell via an online student-to-student marketplac e. In addition, the College Cafe will offer other services such as classifieds, teacher evaluations, weblogs (bloggers), specialized content and retail. The College Cafe will establish itself as the leading online student-to-student marketplac e by combining extensive market-specific expertise with Internet tec hnologies to generate revenue while creating a win-win solution for students. The College Cafe will ac hieve market dominance by utilizing extensive domain experience, a loc al grass roots marketing strategy, an exceptional management team, superior software, and the formation of strategic alliances, memberships and partnerships with c ompanies within the college market.
1.3 Market
The U.S. college student market is a growing yet underserved niche market. The U.S. Department of Education expec ts the U.S. college student market to grow from 15.8 million students in 2003 to 17.2 million in 2008. Ac cording to Harris Interac tive college students are expec ted to spend over $200 billion in 2004.
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1.4 Financial & Capital Requirements

Ac cording to the opportunities and requirements for The College Cafe described in this business plan, we have determined the following financial projec tions: Generate exceptional revenues by the end of year one. Report profits during the 9th month of operation. Exceed a 1.5x increase in sales and profits by the end of year three. The College Cafe will require an initial seed investment as well as later rounds of investment. The initial seed capital will be used for marketing and customer ac quisition, software and website development.
1.5 Objectives
The College Cafe will strive to ac hieve the following objec tives: Bec ome the leading Internet student-to-student marketplac e Attrac t 500,000 registered users in the first year Ac hieve 50,000 visits per month Establish sustainable profitability within the first year
2.0 Company Summary

The College Cafe was founded in July 2003 and is presently in its start-up stage. The College Cafe website has been in operation with limited functionality since August 2003. The College Cafe is currently being test marketed at Georgia State University.
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2.1 Company Ownership
The College Cafe is a Limited Liability Company and is solely owned by its founder, Gerald Owens.
2.2 Company Locations and Facilities

800 Peac htree Street - Unit 8429 Atlanta, GA 30308 United States www.thecollegeCafe .com www.thecollegeCafe .net The College Cafe's data center is hosted and maintained by Atl-Connec t Internet Services. AtlConnec t is loc ated in Atlanta, Georgia.
2.3 Mission
The College Cafe's mission is to provide college students a valuable and unique source for products, services and information. In order to ac hieve our mission, The College Cafe commits to the following philosophies: It's all about the product. Our customers are our employers. Don't be greedy. Keep our employees happy.
2.4 Keys to Success

Our key to success will lie in our ability to exec ute our business model. In order to ac hieve success, we need to foc us on the following areas to establish The College Cafe as a successful and profitable enterprise. They are: Rec ruit an exceptional management and marketing team with extensive domain experience in the college market. Create and maintain a "Grass Roots" marketing campaign. Offer innovative and unique products and services. Form strategic alliances and partnerships with c ompanies suppling products to the college market.
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2.5 Management Summary
The strength of The College Cafe's management team stems from the combined expertise in both management and tec hnical areas. The College Cafe rec ognizes that additional staff is required to properly support marketing, sales, research, and support functions. Currently, The College Cafe is supported by three people with experience in e-commerce strategy, website architecture and design and graphic design. Additional employees may be required in the areas of senior level management, Web development, marketing, sales, human resources/rec ruiting, administration, customer support and other critical operational positions. The College Cafe will utilize current college students to fill positions in the areas of regional campus marketing, loc al advertisement sales, administration, customer support other non-critical operational positions. These positions will be full-time, part-time and intern positions depending on the loc al market. Using current college students will enable The College Cafe to rec eive inexpensive loc al employment and valuable market feedback from The College Cafe's target market while also providing real world work experience to college students. The College Cafe will utilize consultants and contrac tors during website enhancements and development efforts. Board of Directors At this time The College Cafe is seeking individuals for a Board of Direc tors. These individuals will include highly qualified business and industry professionals/experts along with members of the investment team. These individuals will assist our management team in making appropriate dec isions, forming strategic alliances and taking the most effective ac tion to be the industry leader.
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2.6 Management Team
Our management team consists of three dedicated employees and two tec hnical advisors. Their bac kgrounds consist of more than 30 years of experience in e-commerce, marketing and the Internet technology. In addition to their professional experience, the management team has over 30 years of college domain experience. Gerald Owens, Founder, Chief Technical Officer/Web Development Mr. Owens has over 12 years of work experience including engineering, programming and sales. He was successful in founding the start-up company, DCSi-Online, an online intermediary serving the building automation industry. Mr. Owens has a Bachelor of Science degree in Electrical Engineering form North Carolina State University and a MBA with a concentration in E-commerce and Computer Information Systems from Georgia State University. He is an active member of the Technology Association of Georgia (TAG) and the Southeastern Regional Internet Society (SERIS). Kelly Mitchell - Online User Experience and Marketing Ms. Mitchell has 7 years' experience in the interactive space, specializing in online branding, marketing, and user experience design. Her most recent position involves leading a user experience team for a Fortune-50 company. Ms. Mitchell has a Bachelor of Science degree from the University of Georgia and has received art direction training from the Woodruff School of Art in Atlanta. She is an active member of the Atlanta Interactive Marketing Association. Andra Powers - Marketing and Communications Ms. Powers has 10 years marketing and communications experience. She has worked for two major corporations headquartered in Atlanta, Georgia and has experience in sales, employee communications, public relations, interactive communications and technology marketing. Ms. Powers has a wealth of knowledge regarding interactive web management, project management, account/vendor management, customer needs analysis, concept strategy, and building quality strategic interpersonal relationships. She has a Bachelor of Science degree in Communications from Florida State University. Chris Durant - Advisor Mr. Durant has 10 years technology and business experience in system integration. He has worked for both large corporations, such as Georgia Pacific Corporation, and small start-up firms. Mr. Durant has a Bachelor Business Administration in Management Science and Computer Information Systems from the University of Georgia as well as an MBA and graduated top of the MS/CIS program from Georgia State University with a concentration in electronic Commerce. He also holds extensive network design experience and is an industry certified Network Engineer. Brian Dupree - Advisor Mr. Dupree has 20 years experience in the technology industry. He has extensive experience managing and developing mission critical software systems for business applications. Recently, he has worked as a senior consultant for an e-business consulting company where he has participated in advanced web application projects. Mr. Dupree holds a Masters Degree in Mathematics and Computer Science and a MBA with a concentration in e-commerce from Georgia State University.
2.7 Start-up Summary

Our start-up costs assumptions are shown in the following table and chart, and include Web hosting, software, development and marketing expenses. The start-up costs were financed by direc t owner investment.
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Table: Start-up
Start-up Requirements Start-up Expenses Domain Name Registration SSL Encrynption GeoTrust True Site Certificate Auction & Classified Software (Xcent) Legal Fees Utilitizes Merchant Account Fees Computers (2 @ $2000) Programming & Site Development Site Hosting (1st 3 months) Miscellance Expenses Beta Launch Promotions Search Engine Registration Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements
$15 $100 $100 $800 $150 $100 $200 $4,000 $50,000 $120 $1,000 $1,000 $100 $57,685
$2,315 $5,000 $150,000 $157,315 $215,000
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3.0 Products
The College Cafe will offer college students a unique blend of products, services, and content that is not offered by any single company on the Internet. The College Cafe will aggregate participants, products, services and content to create a student-to-student marketplac e and retail website targeting 15.8 million college students. The following describe The College Cafe's revenue models:
3.1 Textbook Exchange

The College Cafe will offer functionality to allow students to buy, sell and trade their used textbooks with other students. Spec ifically, the Textbook Exchange functionality allows students to post their textbooks online for sale or trade, upload images, and indicate the condition of the book. Students looking for used textbooks will be able to search for used textbooks for sale or trade in their loc al area or nationwide. A fee will be charge for posting textbooks. The fee may vary based on the asking price of the textbook. Sample textbook categories include: Ac counting Business Computer Sc ience Engineering Marketing History Law Physics Political Sc ience
3.2 Auctions
The College Cafe will offer a powerful auction pac kage. The Auction functionality will have many features such as Standard, Reverse, Multi Item, Dutch and Blind auctions; Flash Buy and Proxy Bidding. A fee will be charged for posting items to be auctioned. The posting fee structure will be similar to eBay's. Sample auctions categories include: Textbooks Class Notes Old Tests Used CDs & DVDs Computer Equipment Tickets Elec tronics Games Dorm Furnishing
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3.3 Classifieds
The College Cafe will offer fee based, student targeted, classifieds ads. Here many features such as image upload, Web links and nested categories will be offered. A fee will be charged for posting a classified. The amount charged will be based on the length of time the classified will be posted. Sample classified categories include: Textbooks Class Notes Tutors Room Wanted For Rent For Sale Tickets Rides Help Wanted For Hire
3.4 Retail
The College Cafe will sell products targeted to college students. Margins will range from 10% to 50% depending on the product. Sample product categories include: Textbooks CDs & DVDs Computer Equipment Elec tronics Games Appliances Dorm Furnishings University Merchandise Clothes General Merchandise
3.5 Teacher Evaluations

The College Cafe will enable students to post and review teac her evaluations. The teacher evaluation functionality will be a value added service encouraging students to visit the site each semester. Revenue for teacher evaluations will be generated from the sale of banner ad space loc ated within the teac her evaluation pages. Banner ad sales will be targeted toward loc al businesses on or around campus. The fee for banner ad space will be determined by the length of posting, number of users for teac her evaluations and demand.
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3.6 Bloggers
The College Cafe will offer Weblogs (Bloggers) services with topics tailored toward students. Weblog functionality will be a value added service to encourage students to return to the site. Revenue for the Weblog will be generated from the sale of banner ad space loc ated within the Weblog pages. Depending on the Weblog topic, banner ad sales will be targeted toward either loc al businesses in or around campus or national companies. The fees for banner ad space will be determined by the length of posting, number of users for the Weblog and demand. Weblog topics will include: College Sports Politics Entertainment Tec hnology News
3.7 Future Products

Overall, we conclude that our current products, services and banner ad strategy will ensure a strong market presence and continued revenue growth. However as part of our growth model, we will regularly examine new services, products, categories and content to support demand. Brick & Mortar Locations - The College Cafe will evaluate opening retail outlets in proximity to college campuses to support and complement the online presences. Franchise rights may also be available. Employment Opportunities - The College Cafe will offer a loc al and national job posting service so that students may search for new opportunities within the loc al community and nationwide. A fee will be charged for posting jobs. Apartment Finder - The College Cafe will offer a loc al and national apartment finder service so that students may search for apartments within the loc al community and nationwide. A fee will be charged for postings. Club & Organization Finder - The College Cafe will offer a loc al and national club and organization finder service so that students may search for clubs and organization within the loc al community and nationwide. A fee will be charged for posting. Targeted Content - The College Cafe will offer content. Sample topics will include: News Wine & Dine Weather What's Happening Best Of
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4.0 Market Analysis Summary
The U.S. college student market is a growing yet under-served niche market. The U.S. Department of Education expec ts the U.S. college student market to grow from 15.8 million students in 2003 to 17.2 million in 2008. Ac cording to a Harris Interac tive study conducted in the spring of 2002, college students spend an estimated $200 billion dollars per year. As of 2003, it is estimated that college students were spending $1.4 billion online. John Gerac i, Vice President of Youth Research at Harris Interac tive concludes: "The college consumer is easily overlooked since most information sources that marketers rely on for trac king consumer behavior tend to under-represent college students. However, it is a consumer group that marketers should rec ognize as offering substantial opportunity. Connec ting with c onsumers during the college years can pay great dividends, both now and well into the future."
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4.1 Market Growth
Ac cording to the findings from the 360 Youth/Harris Interac tive College Explorer Study estimated the U.S. college market will spend nearly $200 billion dollars a year. University Bookstores The National Association of College Stores estimated U.S./Canadian university bookstore sales to be $11.12 billion for the 2001-2002 ac ademic year and online textbooks sales to be an estimated $1.8 billion. University bookstores sell a variety of items, ranging from textbooks to toothpaste. The following table display the estimate of average product sales in the entire university bookstore market, from largest to smallest segments[1]. Course materials General/trade books Student supplies Computer products Insignia merchandise Other merchandise Total 70.67% 3.40% 5.49% 7.63% 7.85% 4.96% 100% $7.858 billion $.378 billion $.611 billion $.849 billion $.872 billion $.552 billion $11.12 billion
Textbooks The total textbook/c ourse materials market is estimated to be $7.8 billion based on sales data for the 2001-2002 ac ademic year. The textbook market is made up of three segments - new texts, used texts, and custom-published materials(or course pac ks). The percent of total store sales and estimated market size of each segment is provided below. New texts Used texts Course packs Total Course Materials 54.71% 14.86% 1.10% 70.67% $6.1 billion $1.6 billion $0.1 billion $7.8 billion
Online Retail Jupiter forec asts that online retail spending in the will grow by 28 percent in 2003 to $52 billion. The research c ompany estimates that by 2007, online retail spending will reach $105 billion and ac count for five percent of all retail spending. Jupiter estimates that the online retail will grow at an average annual growth rate of 21 percent between 2002 and 2007. [1] National Association of College Stores (2000-2001)
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4.2 Market Trends
The follow statistics indicate that college students are rec eptive to the Internet channel for the products, services and content offered by the College Cafe. The following U.S. college student statistics were based on a report by the Student Monitor and the Harris Interac tive Explorer Study. 99% of college students use the Internet 93% of college students use the Internet every month 72% of college students ac cess the Internet at least daily 92% of college students own a computer 13% of college students plan on buying a computer in the next year 15% of college students indicated they are the first to buy a new tec h gadget or device Students average 9 hours per week online Students average 9 hours per week watching TV Students average 10 hours per week listening to the radio
Ac cording to the Harris Interac tive Study, college students spend an average of $287 per month on disc retionary items (which is defined as spending on anything other than tuition, room/board, rent/mortgage, books/sc hool fees). Participation/Spending by College Students on Entertainment and Leisure Activities Spending Category Purchase Videos/DVDs (not including equipment) Purchase Music CDs, Tapes, etc. Purchase Video Games (not including equipment) Vacation Travel Purchase reading material (not for use in school) Going to Movies Attending Music Concerts Going to an Amusement Park Projected Yearly % Students Participating Spending (in millions)* in Past Year $2,754 $2,746 $2,284 $4,607 $1,009 $887 $791 $456 70% 76% 37% 61% 83% 91% 49% 41%
Projec tions based on Spring 2002 360 Youth/Harris Interac tive College Explorer Study; this represents a partial list of categories for entertainment and leisure ac tivities. The National Association of College Stores estimates U.S. college store sales to be $11.12 billion for the 2001-2002 ac ademic year. College stores sell a variety of items, ranging from textbooks to toothpaste.
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4.3 Market Segmentation
The following table illustrates the future growth of rate of college students by age group and sex. SOURCE: U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P-25, Nos. 1092, 1095, and "National Population Estimates," Dec ember 2001, and "Annual Projec tions of the Total Resident Population: 1999 to 2100," January 2000
Table: Market Analysis

Market Analysis 2004 Potential Customers 18-24 years of age 25-29 years of age Male Female Total Growth 1% 2% 2% 2% 1.55% 28,400,000 17,900,000 6,900,000 9,000,000 62,200,000 2005 28,684,000 18,258,000 7,038,000 9,180,000 63,160,000 2006 28,970,840 18,623,160 7,178,760 9,363,600 64,136,360 2007 29,260,548 18,995,623 7,322,335 9,550,872 65,129,378 2008 29,553,153 19,375,535 7,468,782 9,741,889 66,139,359 CAGR 1.00% 2.00% 2.00% 2.00% 1.55%
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4.4 Target Market Segment Strategy
The potential market for The College Cafe consists of 15.8 million college students enrolled in over 4,180 institutions. For the Phase 1 launch of The College Cafe, we plan to foc us our marketing effort on a subset market loc ated in the Southeastern U.S. We plan to expand to new markets with a phased approach foc using on a new region of the country eac h semester. The Phase 1 target market segment will consist of the following universities: University/College Auburn University Clemson University East Carolina University Emory University Florida State University Georgia State University Georgia Tech Miami-Dade Community College Mississippi State University North Carolina State Tulane University University of Alabama University of Florida University of Georgia University of Kentucky Enrollment 21,505 16,396 18,271 11,300 30,401 23,000 13,800 46,834 15,628 28,281 10,921 18,342 45,114 31,280 23,540
University of Miami 13,651 University of North Carolina 24,368 University of South Carolina 25,447 University of Tennessee 25,401 Total 419,940 Phase 2 will foc us on additional colleges and universities loc ated in the southeast with the addition of colleges and universities in the Northeast.
4.5 Competitive Comparison

Competitors of The College Cafe includes traditional university bookstores, online textbook retailers, textbook exchange sites, textbook price comparison sites, online auction sites and online content specific sites targeting the college student market.
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4.5.1 University Bookstores
The major objec tive and strategy of university bookstores is to maintain c ompetitive pricing and customer service. The strengths of the traditional university bookstores are current customer relationships and loc ation to the University. The major weaknesses of university bookstores are the limited product selec tion and lac k of value added services that can be offered online. The National Association of College Stores estimates U.S./Canadian university bookstore sales to be $11.12 billion for the 2001-2002 ac ademic year. There are approximately 4,840 college bookstores serving 4,182 institutions in the United States and 170 college stores in Canada. Larger universities will often have several stores to serve students, smaller sc hools in a loc al area may be served by a single store, and several sc hools in an urban community may share multiple retail outlets. While many college stores share a common mission, they vary widely in size, loc ation, ownership, and customer base. The majority of stores are owned or operated by the university they serve. On-campus stores are mostly institutional, but they may also be contrac t managed, cooperatives, or student associations. Off-campus stores are typically privately owned. Sales volume in c ollege stores is determined by many fac tors, but the major influence on sales seems most closely tied to the size of the institution served. Ac cording to the NACS College Store Industry Financial Report 2003, average sales per college store were $6,320,556 while the median was $3,303,062. The majority of college stores have less than $1 million in sales each year. Ac cording to the NACS College Store Industry Financial Report 2003, college stores returned a median net income of 7.3% of net sales to their institutions. NACS Membership by Sales Volume Sales Volume in $$ Member Stores Under $1 million $1 to $3 million $3 to $7 million Over $7 million 57.0% 27.5 % 9.8% 5.8%
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4.5.2 Online Bookstores & Retail Websites
The major objec tive and strategy of online competitors is to maintain brand awareness, offer value added services, product selec tion/availability, order fulfillment and customer service. The strengths of existing online bookstores and retail sites are current customer relationships and brand awareness. The major weaknesses of online competitors is barriers to entry, concern about security & fraud, shipping charges, on-time fulfillment and returns proc essing. Based on the 2003 College Store Industry Financial Report, total online sales at university bookstores for 2001-2002 are estimated to be $150 million or 1.41% of total college store sales. With a "click and mortar" strategy, the university bookstore can offer the convenience of web ordering, paired with: Ease of returns The ability to pick up items for immediate use One-stop shopping Ac curate information on what textbooks students need for their courses The trust and security of buying from a well-known source with an on-campus loc ation
The following table lists some of the major independent online retailers not associated with a university bookstore: Company Amazon.c om Barnes Noble.com Bigwords.com Collegebooksdirec t.com Collegeclub.com Ebay.com Ecampus.com Business Model Online retailer Online retailer Allows student to buy and sell textbooks Buys and sells new and used textbooks Integrated media and ecommerce Online retail Online Auction Disc ount college textbooks Merchandise Limited content Online textbook retailer Network of university bookstore for brick and mortar presences Online Auction Online student disc ounts on software Online retail various college market merchandise Online research papers assistance Online retail various college market merchandise Textbook price comparison engine
Efollett.com
Half.com JourneyEd.com Lazystudents.com
Studentmarket.com TextbooksDirec t.com
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Textbooksource.net Buys and sells used textbooks Offline buy-back Online sales Buys and sells new and used textbooks Buys and sells new and used textbooks
TextbooksX.com Varsitybooks.com
5.0 Marketing Strategy

The College Cafe's customers will be the 15.8 million college students in the United States. This segment is a niche market that has no single business entity ac counting for any significant percentage of total aggregated college student purchases. The main business model for The College Cafe relies on college students providing textbooks, auctions, classifieds and teac her evaluations available on the website. Therefore, our foc us will be on the marketing strategy to increase student traffic and usage. In turn, visitor volume and transactions will maintain the inventory of products and services offered. The College Cafe rec ognizes the key to success as an extensive promotion strategy to attrac t users. Once additional funding is secured the advertising and promotion plan will be implemented.
5.1 Strategic Alliances

The College Cafe is looking to form relationships with major companies in the college student market. Companies that we will approach included university merchandise manufac turers or resellers, specialized content suppliers, new and used textbook wholesalers and loc al businesses.
5.2 Promotion Strategy

The College Cafe's overall advertising and promotional objec tives are to: Ac quire customers and generate sales. Position The College Cafe as the market leader. Increase company awareness and brand name rec ognition among c ollege students. Collec t market research to create immediate and long-term marketing plans.
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5.3 Marketing Programs
The College Cafe will attrac t customers by using a mixture of traditional and online advertising strategies to create a grassroots marketing campaign. Since the majority of The College Cafe's customer ac quisition will result from direc t promotion loc al to universities, The College Cafe will rec ruit current college students to fill positions in the areas of campus marketing, loc al advertisement sales and implementation of a "grassroots" marketing campaign. The following is a list of advertising and promotional channels The College Cafe will utilize: 1. Posting Flyer in and around campuses 2. Direc t Mailings 3. University and loc al newspaper advertising and inserts 4. Promotional item distribution 5. Advertisements at on-campus kiosk 6. "Welcome Bac k to Sc hool" registration booths 7. "Welcome Bac k to Sc hool" care-pac kage inserts 8. Sponsorship of rec reational/intermural team sports 9. Sponsorships of campus or community events 10. University and loc al newspaper advertising 11. Indoor/outdoor billboard advertisements at college sporting events 12. Banner ads on selec t related sites with a significant level of traffic 13. Links on related web sites 14. Traditional media including direc t mailings, magazines, radio and TV 15. Registration with all the major search engines
6.0 Sourcing
The main business model for The College Cafe relies on college students providing the textbooks, auctions, classifieds and teac her evaluations that are posted on the website. Therefore, our foc us relies heavily on the marketing strategy that will increase traffic and usage and, in turn, maintain our inventory of products and services. For the retail business component we will establish relationships with manufac turers or distributors that offer drop-shipments direc t to the customer. This will allow The College Cafe to keep expenses associated with inventory and distribution to a minimum. We will be contrac ting students as subjec t matter experts to provide the content in the weblogs. The use of students as weblog content experts will help keep costs to a minium yet still providing interesting and relevant content. For content and other value added service we will establish relationships with 3rd party vendors. This will enable The College Cafe to offer a wide variety of products and services online yet allow The College Cafe to foc us on the key business elements; textbooks, auctions, classifieds and teac her evaluations.
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7.0 Technology
The website is designed with the needs of the college student as the foc us. The College Cafe is built using Microsoft tec hnologies which will provide the flexibility to easily expand products and service offerings in the future. The College Cafe will initially host the website with an external web-hosting vendor thus reducing initial start-up cost. At a later date, The College Cafe may elec t to bring hosting in-house for better support and maintenance. The Textbook Exchange, Auction, Classified, and User Administration software was purchased from Xc ent Software, Inc and modified to support The College Cafe's business needs. The rights to the source code of the Xc ent's software were included in the purchase price of the software. This will enable our programmers to customize the software to support The College Cafe's growing business needs. The College Cafe website and databases are hosted by Atl-Connec t Internet Services which guarantees 99.99% uptime. In addition to Web hosting, Atl-Connec ts provides site monitoring and statistical performance metrics that include uptime, page views, unique users, banner impressions, search keywords stats and link stats from other sites.
8.0 Milestones
The ac companying table lists important milestones with dates and managers in c harge. The milestone sc hedule also indicates our initial beta launch of the website at Georgia State University.
Table: Milestones
Milestones Milestone Business Concept & Planning Beta Site Development Beta Site Launch Beta Site Promotional Campaign Beta Site Analysis Secure Funding for Phase 1 Launch Phase 1 - Site Development Phase 1 - Launch Phase 1 - Promotional Campaign Secure Funding for Phase 2 Totals Start Date 6/1/2003 7/1/2003 10/1/2003 10/1/2003 10/15/2003 7/1/2004 2/1/2004 8/15/2004 8/15/2004 10/1/2004 End Date 7/15/2003 10/1/2003 10/2/2003 2/15/2004 2/28/2004 7/30/2004 8/15/2004 8/17/2004 10/1/2004 10/30/2004 Budget $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Manager GLO, KM, AP GLO, KM GLO GLO, KM, AP Department Management Web Web Marketing
GLO, KM, AP Web & Marketing GLO Management GLO, KM GLO GLO, KM, AP GLO Web Web Marketing Management
Page 19
9.0 Financial Plan

The following are the summarized points from The College Cafe's financial plan. All charts and tables supporting these results are included in the appendix at the end of the business plan: The College Cafe will generate assertive revenues by the end of year one. The College Cafe will start reporting sustained profits during the 9th month of the 1st year. Sales and profits by year three will top 1.5x that of year one. The College Cafe will require an initial investment in c apital to finance the marketing campaign and launch strategy. The College Cafe will require additional investment to fund additional Web development, sales and marketing efforts and general operating expenses. The College Cafe will provide a complete student-to-student marketplac e. Investment contac ts have already been approached and their expressions of satisfac tion and encouragement are numerous. We intend to continue our advances with more unique and effec tive business solutions for the the college market. Based on the attac hed financial projec tions, we believe that this venture represents a sound business investment.
9.1 Important Assumptions

The financial projec tions are based on the following assumptions and fac ts for the industry as outlined in our market analysis: As of 2003, college students spend and estimated $200 billion annually. There are over 15.8 million college students. The founders have contributed significant capital. The fee for posting textbooks will equal $3 per textbook. The fee for posting classifieds will equal $5 per classified. The sales margin for products sold will average 15% and vary based on product. Page 20

Table: General Assumptions
General Assumptions FY 2005 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 9.00% 5.00% 27.00% 0 2 9.00% 5.00% 27.00% 0 FY 2006 3 9.00% 5.00% 27.00% 0 FY 2007
9.2 Start-up Funding

In order to implement The College Cafe Phase 1 marketing campaign and launch strategy, we are seeking an initial seed investment of $150,000. An additional investment of $1 million will be required for operational expenses, continuing marketing campaigns, additional website enhancements, maintenance and support as necessary to establish and maintain The College Cafe as the leading online student-to-student market plac e. As detailed in the Cash Balance chart for one year, The College Cafe will be able to begin and sustain its operations with the above mentioned investments. We are confident the opportunities in the market plac e are so compelling that with year one cash flows, The College Cafe will grow and take advantage of the growth in the college market.
Page 21

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 $57,685 $157,315 $215,000
$155,000 $2,315 $0 $2,315 $157,315
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Gerald Owens Andrea Powers Kelley Mitchell Allison Elliott Additional Investment Requested Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital
$5,000 $0 $0 $0 $5,000
$50,000 $5,000 $2,500 $2,500 $150,000 $0 $210,000 ($57,685) $152,315
Total Capital and Liabilities Total Funding
$157,315 $215,000
9.3 Use of Funds

Initial funding proc eeds will be used primarily for marketing, additional website development and maintenance. All the equipment needed will be leased or purchased, and included in the operational expenses. The rest of the funds will be used as working capital to maintain the operations until revenues generated by The College Cafe will be at the point where we can sustain operational expenses.
Page 22

9.4 Exit Strategy
The financial projec tions indicate that The College Cafe will have generated enough cash in the next five years to permit the exit of the outside investors if so desired. It is the founders' choice to continue with the company's profitable operations until The College Cafe is presented with a viable offer for ac quisition or the opportunity of an IPO is contemplated.
9.5 Key Financial Indicators

The following chart shows changes in key financial indicators: sales, gross margin, and operating expenses.
9.6 Break-even Analysis

A break-even analysis table has been c ompleted on the basis of average costs/prices.
Table: Break-even Analysis

Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $133,362
56% $58,648
Page 23
9.7 Sales Strategy

The table and charts below show our forec asts for sales and costs of sales. Annual figures for three years are shown. Monthly estimates for the first year are included in the appendix.
Table: Sales Forecast

Sales Forecast FY 2005 Sales Textbook Exchange Classifieds Auctions Retail Advertisement Total Sales Direct Cost of Sales Textbook Exchange Classifieds Auction Retail Advertisement Subtotal Direct Cost of Sales $741,000 $596,000 $291,000 $206,000 $278,500 $2,112,500 FY 2005 $391,000 $258,000 $170,500 $193,500 $170,500 $1,183,500 FY 2006 $963,300 $774,800 $378,300 $267,800 $362,050 $2,746,250 FY 2006 $430,100 $283,800 $187,550 $212,850 $187,550 $1,301,850 FY 2007 $1,252,290 $1,007,240 $491,790 $348,140 $470,665 $3,570,125 FY 2007 $473,110 $312,180 $206,305 $234,135 $206,305 $1,432,035
Page 24
Page 25

9.8 Personnel Plan
The table below shows our forec asts for personnel. Annual figures for three years are shown. Monthly estimates for the first year are included in the appendix.
Table: Personnel
Personnel Plan Gerald Owens Kelley Mitchell Andrea Powers College Reps (1 at each College for phase 1) Students Interns Total People Total Payroll FY 2005 $66,000 $60,000 $57,000 $228,000 $0 22 $411,000 FY 2006 $70,000 $65,000 $60,000 $250,000 $0 0 $445,000 FY 2007 $75,000 $70,000 $65,000 $300,000 $0 0 $510,000
Page 26

9.9 Projected Profit and Loss
The table and charts below present our forec asted for profit and loss. Annual figures for three years are shown. Monthly estimates for the first year are included in the appendix.
Page 27

Table: Profit and Loss
Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales Gross Margin Gross Margin % FY 2005 $2,112,500 $1,183,500 $0 $1,183,500 $929,000 43.98% FY 2006 $2,746,250 $1,301,850 $0 $1,301,850 $1,444,400 52.60% FY 2007 $3,570,125 $1,432,035 $0 $1,432,035 $2,138,090 59.89%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Web Hosting Utilities Website Enhancement Projects Insurance Payroll Taxes Other General and Administrative Expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales
$411,000 $0 $0 $720 $1,200 $225,000 $1,200 $59,850 $4,800
$445,000 $0 $0 $1,000 $1,500 $200,000 $15,000 $64,650 $7,500
$510,000 $0 $0 $1,250 $2,000 $200,000 $17,500 $74,250 $10,000
$703,770 $225,230 $225,230 $275 $60,738 $164,218 7.77%
$734,650 $709,750 $709,750 $63 $191,615 $518,072 18.86%
$815,000 $1,323,090 $1,323,090 $0 $357,234 $965,856 27.05%
Page 28
Page 29
Page 30

9.10 Projected Cash Flow
The table and chart below show our cash flow predictions. Annual figures for three years are shown. Monthly estimates for the first year are included in the appendix.
Table: Cash Flow

Pro Forma Cash Flow FY 2005 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 FY 2006 FY 2007
$2,112,500 $2,112,500
$2,746,250 $2,746,250
$3,570,125 $3,570,125
$0 $0 $0 $0 $0 $0 $150,000 $2,262,500 FY 2005
$0 $0 $0 $0 $0 $0 $0 $2,746,250 FY 2006
$0 $0 $0 $0 $0 $0 $0 $3,570,125 FY 2007
$411,000 $1,290,342 $1,701,342
$445,000 $1,883,557 $2,328,557
$510,000 $2,068,700 $2,578,700
$0 $3,600 $0 $0 $0 $0 $0 $1,704,942 $557,558 $559,873
$0 $1,400 $0 $0 $0 $0 $0 $2,329,957 $416,293 $976,167
$0 $0 $0 $0 $0 $0 $0 $2,578,700 $991,425 $1,967,591
Page 31
Page 32

9.11 Projected Balance Sheet
The table below details our projec ted balance sheet. Annual figures for three years are shown. Monthly estimates for the first year are included in the appendix.
Table: Balance Sheet

Pro Forma Balance Sheet FY 2005 Assets Current Assets Cash 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 FY 2006 FY 2007
$559,873 $5,000 $564,873
$976,167 $5,000 $981,167
$1,967,591 $5,000 $1,972,591
$150,000 $0 $150,000 $714,873 FY 2005
$150,000 $0 $150,000 $1,131,167 FY 2006
$150,000 $0 $150,000 $2,122,591 FY 2007
$246,941 $1,400 $0 $248,341 $0 $248,341 $360,000 ($57,685) $164,218 $466,533 $714,873 $466,533
$146,563 $0 $0 $146,563 $0 $146,563 $360,000 $106,533 $518,072 $984,604 $1,131,167 $984,604
$172,132 $0 $0 $172,132 $0 $172,132 $360,000 $624,604 $965,856 $1,950,460 $2,122,591 $1,950,460
Page 33

9.12 Business Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5942.9904, College book stores, are shown for comparison.
Page 34

Table: Ratios
Ratio Analysis Sales Growth Percent of Total Assets 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 Additional Ratios Net Profit Margin Return on Equity Activity Ratios 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 FY 2005 0.00% FY 2006 30.00% FY 2007 30.00% Industry Profile 4.01%
0.70% 79.02% 20.98% 100.00% 34.74% 0.00% 34.74% 65.26%
0.44% 86.74% 13.26% 100.00% 12.96% 0.00% 12.96% 87.04%
0.24% 92.93% 7.07% 100.00% 8.11% 0.00% 8.11% 91.89%
26.25% 81.30% 18.70% 100.00% 39.21% 14.66% 53.87% 46.13%
100.00% 43.98% 39.49% 13.37% 10.66%
100.00% 52.60% 33.69% 8.19% 25.84%
100.00% 59.89% 33.21% 7.00% 37.06%
100.00% 32.36% 20.70% 1.71% 1.42%
2.27 2.27 34.74% 48.22% 31.47% FY 2005 7.77% 35.20%
6.69 6.69 12.96% 72.08% 62.74% FY 2006 18.86% 52.62%
11.46 11.46 8.11% 67.83% 62.33% FY 2007 27.05% 49.52%
1.85 0.71 3.32% 58.10% 7.93%
n.a n.a
6.23 27 2.96
12.17 40 2.43
12.17 28 1.68
n.a n.a n.a
0.53 1.00
0.15 1.00
0.09 1.00
n.a n.a
$316,533 820.51
$834,604 11265.87
$1,800,460 0.00
n.a n.a
0.34 35% 2.27 4.53 0.00
0.41 13% 6.69 2.79 0.00
0.59 8% 11.46 1.83 0.00
n.a n.a n.a n.a n.a
Page 35
Appendix
Table: Sales Forecast
Sales Forecast Jun Sales Textbook Exchange Classifieds Auctions Retail Advertisement Total Sales Direct Cost of Sales Textbook Exchange Classifieds Auction Retail Advertisement Subtotal Direct Cost of Sales 0% 0% 0% 0% 0% $1,000 $1,000 $1,000 $1,000 $1,000 $5,000 Jun $1,000 $1,000 $1,000 $1,000 $1,000 $5,000 Jul $25,000 $20,000 $10,000 $2,500 $2,500 $60,000 Jul $5,000 $2,000 $2,500 $1,500 $2,500 $13,500 Aug $35,000 $25,000 $20,000 $5,000 $5,000 $90,000 Aug $10,000 $5,000 $5,000 $5,000 $5,000 $30,000 Sep $50,000 $40,000 $25,000 $10,000 $10,000 $135,000 Sep $15,000 $10,000 $7,500 $10,000 $5,000 $47,500 Oct $35,000 $30,000 $20,000 $10,000 $15,000 $110,000 Oct $20,000 $15,000 $10,000 $12,000 $10,000 $67,000 Nov $50,000 $45,000 $25,000 $12,500 $20,000 $152,500 Nov $30,000 $20,000 $15,000 $15,000 $10,000 $90,000 Dec $60,000 $50,000 $30,000 $15,000 $25,000 $180,000 Dec $40,000 $25,000 $17,500 $20,000 $15,000 $117,500 Jan $75,000 $60,000 $30,000 $20,000 $25,000 $210,000 Jan $45,000 $27,000 $20,000 $22,000 $20,000 $134,000 Feb $80,000 $75,000 $25,000 $20,000 $30,000 $230,000 Feb $40,000 $30,000 $20,000 $25,000 $20,000 $135,000 Mar $90,000 $70,000 $30,000 $25,000 $40,000 $255,000 Mar $50,000 $33,000 $22,000 $25,000 $25,000 $155,000 Apr $115,000 $80,000 $35,000 $35,000 $50,000 $315,000 Apr $60,000 $40,000 $25,000 $27,000 $27,000 $179,000 May $125,000 $100,000 $40,000 $50,000 $55,000 $370,000 May $75,000 $50,000 $25,000 $30,000 $30,000 $210,000
Page 1
Appendix
Table: Personnel
Personnel Plan Gerald Owens Kelley Mitchell Andrea Powers College Reps (1 at each College for phase 1) Students Interns Total People Total Payroll 0% 0% 0% 0% 0% Jun $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Jul $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Aug $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Sep $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Oct $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Nov $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Dec $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Jan $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Feb $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Mar $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 Apr $5,500 $5,000 $4,750 $19,000 $0 22 $34,250 May $5,500 $5,000 $4,750 $19,000 $0 22 $34,250
Page 2
Appendix
Table: General Assumptions
General Assumptions Jun Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 9.00% 5.00% 27.00% 0 2 9.00% 5.00% 27.00% 0 Jul 3 9.00% 5.00% 27.00% 0 Aug 4 9.00% 5.00% 27.00% 0 Sep 5 9.00% 5.00% 27.00% 0 Oct 6 9.00% 5.00% 27.00% 0 Nov 7 9.00% 5.00% 27.00% 0 Dec 8 9.00% 5.00% 27.00% 0 Jan 9 9.00% 5.00% 27.00% 0 Feb 10 9.00% 5.00% 27.00% 0 Mar 11 9.00% 5.00% 27.00% 0 Apr 12 9.00% 5.00% 27.00% 0 May
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales Gross Margin Gross Margin % Jun $5,000 $5,000 $0 $5,000 $0 0.00% Jul $60,000 $13,500 $0 $13,500 $46,500 77.50% Aug $90,000 $30,000 $0 $30,000 $60,000 66.67% Sep $135,000 $47,500 $0 $47,500 $87,500 64.81% Oct $110,000 $67,000 $0 $67,000 $43,000 39.09% Nov $152,500 $90,000 $0 $90,000 $62,500 40.98% Dec $180,000 $117,500 $0 $117,500 $62,500 34.72% Jan $210,000 $134,000 $0 $134,000 $76,000 36.19% Feb $230,000 $135,000 $0 $135,000 $95,000 41.30% Mar $255,000 $155,000 $0 $155,000 $100,000 39.22% Apr $315,000 $179,000 $0 $179,000 $136,000 43.17% May $370,000 $210,000 $0 $210,000 $160,000 43.24%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Web Hosting Utilities Website Enhancement Projects Insurance Payroll Taxes Other General and Administrative Expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 15%
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $100
$34,250 $0 $0 $60 $100 $10,000 $100 $4,988 $100
$34,250 $0 $0 $60 $100 $10,000 $100 $4,988 $100
$34,250 $0 $0 $60 $100 $10,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $25,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $10,000 $100 $4,988 $500
$34,250 $0 $0 $60 $100 $10,000 $100 $4,988 $500
$64,598 ($64,598) ($64,598) $35 ($17,451) ($47,182) -943.64%
$49,598 ($3,098) ($3,098) $33 ($845) ($2,285) -3.81%
$49,598 $10,403 $10,403 $31 $2,800 $7,571 8.41%
$49,998 $37,503 $37,503 $29 $10,118 $27,356 20.26%
$64,998 ($21,998) ($21,998) $26 ($5,946) ($16,077) -14.62%
$64,998 ($2,498) ($2,498) $24 ($681) ($1,841) -1.21%
$64,998 ($2,498) ($2,498) $22 ($680) ($1,839) -1.02%
$64,998 $11,003 $11,003 $20 $2,965 $8,018 3.82%
$64,998 $30,003 $30,003 $17 $8,096 $21,889 9.52%
$64,998 $35,003 $35,003 $15 $9,447 $25,541 10.02%
$49,998 $86,003 $86,003 $13 $23,217 $62,773 19.93%
$49,998 $110,003 $110,003 $11 $29,698 $80,294 21.70%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow Jun 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 $0 $300 $0 $0 $0 $0 $0 $35,148 $94,852 $97,167 $0 $300 $0 $0 $0 $0 $0 $52,819 $32,181 $129,349 $0 $300 $0 $0 $0 $0 $0 $63,257 $26,743 $156,092 $0 $300 $0 $0 $0 $0 $0 $83,569 $51,431 $207,523 $0 $300 $0 $0 $0 $0 $0 $108,558 $1,442 $208,964 $0 $300 $0 $0 $0 $0 $0 $127,319 $25,181 $234,145 $0 $300 $0 $0 $0 $0 $0 $155,557 $24,443 $258,588 $0 $300 $0 $0 $0 $0 $0 $182,810 $27,190 $285,777 $0 $300 $0 $0 $0 $0 $0 $202,487 $27,513 $313,290 $0 $300 $0 $0 $0 $0 $0 $209,122 $45,878 $359,168 $0 $300 $0 $0 $0 $0 $0 $230,518 $84,482 $443,650 $0 $300 $0 $0 $0 $0 $0 $253,777 $116,223 $559,873 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
$5,000 $5,000
$60,000 $60,000
$90,000 $90,000
$135,000 $135,000
$110,000 $110,000
$152,500 $152,500
$180,000 $180,000
$210,000 $210,000
$230,000 $230,000
$255,000 $255,000
$315,000 $315,000
$370,000 $370,000
0.00%
$0 $0 $0 $0 $0 $0 $125,000 $130,000 Jun
$0 $0 $0 $0 $0 $0 $25,000 $85,000 Jul
$0 $0 $0 $0 $0 $0 $0 $90,000 Aug
$0 $0 $0 $0 $0 $0 $0 $135,000 Sep
$0 $0 $0 $0 $0 $0 $0 $110,000 Oct
$0 $0 $0 $0 $0 $0 $0 $152,500 Nov
$0 $0 $0 $0 $0 $0 $0 $180,000 Dec
$0 $0 $0 $0 $0 $0 $0 $210,000 Jan
$0 $0 $0 $0 $0 $0 $0 $230,000 Feb
$0 $0 $0 $0 $0 $0 $0 $255,000 Mar
$0 $0 $0 $0 $0 $0 $0 $315,000 Apr
$0 $0 $0 $0 $0 $0 $0 $370,000 May
$34,250 $598 $34,848
$34,250 $18,269 $52,519
$34,250 $28,707 $62,957
$34,250 $49,019 $83,269
$34,250 $74,008 $108,258
$34,250 $92,769 $127,019
$34,250 $121,007 $155,257
$34,250 $148,260 $182,510
$34,250 $167,937 $202,187
$34,250 $174,572 $208,822
$34,250 $195,968 $230,218
$34,250 $219,227 $253,477
Page 5
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet Jun Assets Current Assets Cash 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 $150,000 $0 $150,000 $157,315 $150,000 $0 $150,000 $252,167 Jun $150,000 $0 $150,000 $284,349 Jul $150,000 $0 $150,000 $311,092 Aug $150,000 $0 $150,000 $362,523 Sep $150,000 $0 $150,000 $363,964 Oct $150,000 $0 $150,000 $389,145 Nov $150,000 $0 $150,000 $413,588 Dec $150,000 $0 $150,000 $440,777 Jan $150,000 $0 $150,000 $468,290 Feb $150,000 $0 $150,000 $514,168 Mar $150,000 $0 $150,000 $598,650 Apr $150,000 $0 $150,000 $714,873 May Starting Balances Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
$2,315 $5,000 $7,315
$97,167 $5,000 $102,167
$129,349 $5,000 $134,349
$156,092 $5,000 $161,092
$207,523 $5,000 $212,523
$208,964 $5,000 $213,964
$234,145 $5,000 $239,145
$258,588 $5,000 $263,588
$285,777 $5,000 $290,777
$313,290 $5,000 $318,290
$359,168 $5,000 $364,168
$443,650 $5,000 $448,650
$559,873 $5,000 $564,873
$0 $5,000 $0 $5,000 $0 $5,000 $210,000 ($57,685) $0 $152,315 $157,315 $152,315
$17,334 $4,700 $0 $22,034 $0 $22,034 $335,000 ($57,685) ($47,182) $230,133 $252,167 $230,133
$27,101 $4,400 $0 $31,501 $0 $31,501 $360,000 ($57,685) ($49,467) $252,848 $284,349 $252,848
$46,573 $4,100 $0 $50,673 $0 $50,673 $360,000 ($57,685) ($41,896) $260,419 $311,092 $260,419
$70,948 $3,800 $0 $74,748 $0 $74,748 $360,000 ($57,685) ($14,540) $287,775 $362,523 $287,775
$88,766 $3,500 $0 $92,266 $0 $92,266 $360,000 ($57,685) ($30,617) $271,698 $363,964 $271,698
$116,088 $3,200 $0 $119,288 $0 $119,288 $360,000 ($57,685) ($32,458) $269,857 $389,145 $269,857
$142,669 $2,900 $0 $145,569 $0 $145,569 $360,000 ($57,685) ($34,297) $268,018 $413,588 $268,018
$162,141 $2,600 $0 $164,741 $0 $164,741 $360,000 ($57,685) ($26,279) $276,036 $440,777 $276,036
$168,065 $2,300 $0 $170,365 $0 $170,365 $360,000 ($57,685) ($4,390) $297,925 $468,290 $297,925
$188,702 $2,000 $0 $190,702 $0 $190,702 $360,000 ($57,685) $21,151 $323,466 $514,168 $323,466
$210,712 $1,700 $0 $212,412 $0 $212,412 $360,000 ($57,685) $83,923 $386,238 $598,650 $386,238
$246,941 $1,400 $0 $248,341 $0 $248,341 $360,000 ($57,685) $164,218 $466,533 $714,873 $466,533
Page 6

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www.thecollegecafe.

com June 2004

Copyright Palo Alto Software, Inc., 1995-2007. All rights reserved.

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

1.4 Financial & Capital Requirements

2.0 Company Summary

The College Cafe - www.thecollegecafe.com

2.2 Company Locations and Facilities

2.4 Keys to Success

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

2.7 Start-up Summary

The College Cafe - www.thecollegecafe.com

$2,315 $5,000 $150,000 $157,315 $215,000

The College Cafe - www.thecollegecafe.com

3.1 Textbook Exchange

The College Cafe - www.thecollegecafe.com

3.5 Teacher Evaluations

The College Cafe - www.thecollegecafe.com

3.7 Future Products

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

Table: Market Analysis

The College Cafe - www.thecollegecafe.com

4.5 Competitive Comparison

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

Half.com JourneyEd.com Lazystudents.com

Studentmarket.com TextbooksDirec t.com

The College Cafe - www.thecollegecafe.com

5.0 Marketing Strategy

5.1 Strategic Alliances

5.2 Promotion Strategy

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

9.0 Financial Plan

9.1 Important Assumptions

The College Cafe - www.thecollegecafe.com

9.2 Start-up Funding

The College Cafe - www.thecollegecafe.com

$155,000 $2,315 $0 $2,315 $157,315

$50,000 $5,000 $2,500 $2,500 $150,000 $0 $210,000 ($57,685) $152,315

Total Capital and Liabilities Total Funding

9.3 Use of Funds

The College Cafe - www.thecollegecafe.com

9.5 Key Financial Indicators

9.6 Break-even Analysis

Table: Break-even Analysis

The College Cafe - www.thecollegecafe.com

9.7 Sales Strategy

Table: Sales Forecast

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

The College Cafe - www.thecollegecafe.com

$411,000 $0 $0 $720 $1,200 $225,000 $1,200 $59,850 $4,800

$445,000 $0 $0 $1,000 $1,500 $200,000 $15,000 $64,650 $7,500

$510,000 $0 $0 $1,250 $2,000 $200,000 $17,500 $74,250 $10,000

$703,770 $225,230 $225,230 $275 $60,738 $164,218 7.77%