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Table of Contents

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


Chart: Highlights..................................................................................................................................1
1.1 Mission...............................................................................................................................................2
1.2 Keys to Success..................................................................................................................................2
2.0 Company Summary...............................................................................................................................2
2.1 Start-up Summary..............................................................................................................................3
Table: Start-up.....................................................................................................................................3
Table: Start-up Funding.......................................................................................................................3
Chart: Start-up......................................................................................................................................5
2.2 Company Ownership.........................................................................................................................5
3.0 Products..................................................................................................................................................5
4.0 Market Analysis Summary....................................................................................................................6
4.1 Market Segmentation.........................................................................................................................6
Table: Market Analysis........................................................................................................................6
Chart: Market Analysis (Pie)...............................................................................................................7
5.0 Strategy and Implementation Summary.................................................................................................7
5.1 Competitive Edge...............................................................................................................................7
5.2 Sales Strategy.....................................................................................................................................8
5.2.1 Sales Forecast..............................................................................................................................8
Table: Sales Forecast.......................................................................................................................8
Chart: Sales Monthly.......................................................................................................................9
6.0 Management Summary........................................................................................................................10
6.1 Personnel Plan..................................................................................................................................10
Table: Personnel.................................................................................................................................10
....................................................................................................................................................................10
7.0 Financial Plan.......................................................................................................................................11
7.1 Projected Cash Flow........................................................................................................................11
Chart: Cash.........................................................................................................................................11
Table: Cash Flow...............................................................................................................................11
7.2 Break-even Analysis........................................................................................................................12
Table: Break-even Analysis...............................................................................................................12
7.3 Projected Profit and Loss.................................................................................................................14
Chart: Profit Monthly.........................................................................................................................14
Table: Profit and Loss........................................................................................................................14
7.4 Projected Balance Sheet...................................................................................................................15
Table: Balance Sheet..........................................................................................................................15
7.5 Ratios...............................................................................................................................................16
Table: Ratios......................................................................................................................................16
................................................................................................................................................................17
Page 1

Table of Contents

Table: Sales Forecast.................................................................................................................................17


....................................................................................................................................................................18
Table: Personnel.........................................................................................................................................19
....................................................................................................................................................................19
Table: General Assumptions......................................................................................................................20
....................................................................................................................................................................20
Table: Profit and Loss................................................................................................................................21
....................................................................................................................................................................21
Table: Cash Flow.......................................................................................................................................22
Table: Balance Sheet..................................................................................................................................23

Page 2

Appendix
1.0 Executive Summary
The demographics of home ownership has changed radically in the South Gate section of Gilmore. Today, over 40% of the area's homes
are owned by women. In addition, 60% of the area's rentals are owned by women. More often than not, it's a woman who will now head
to the hardware store for repair parts and advice. Today's hardware store, which more and more are dominated by the mega-store chains,
are cold, uninviting and usually involve more driving time. Clara's Hardware is uniquely positioned to take advantage of this new fact of
life. Conveniently located to serve the South Gate area, Clara's Hardware offers parts, material, and advice to tackle any home repair, as
well as lawn care. The focus is on helping the customer identify what they want as soon as they enter the store.
Through the use of a selection of hardware goods, superior personal customer attention, and reasonable prices, Clara's Hardware will
capitalize on this incredible opportunity. A location has been secured that offers very good foot traffic and easy accessibility. The store will
efficiently lay out the store to increase sales and give the customers the upmost in attention. The projected growth rate for Clara's
Hardware is quite steady. The store will reach profitability by month six and will have revenue of approximately $100,000 by year three.

Chart: Highlights

Highlights
$1,200,000
$1,000,000

Sales

$800,000

Gross Margin
$600,000

Net Profit
$400,000
$200,000
$0
Year 1

Year 2

Year 3

Page 1

Appendix
1.1 Mission
The mission of Clara's Hardware is to offer quality hardware products in a customer-friendly shopping environment. Our customers will get
assistance quickly and will leave the store prepared to get the job done right the first time. Clara's Hardware will also focus on anticipating
the seasonal needs of its customers and providing the best products at competitive prices. Most importantly, Clara's Hardware will make
the additional 15 minute drive to a mega-hardware store, too far to go and too expensive to entertain.
1.2 Keys to Success

Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The plaza's primary tenants
are the area's successful supermarket, drug store, and appliance store. South Gate Plaza has easy access points on both of the area's
major cross streets and is the biggest shopping center in South Gate's residental area. The closest hardware store to the South Gate
area is a twenty minute drive.

Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring
in local customers by marketing these items at competitive prices.

Repair/Project Resource Area: The first section customers will find when they enter is a repair/project resource area that they can
use to plan repairs or projects. There will be a repair/project resource person to answer questions and direct them to the section of
store where the needed products are.

In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area
will be used to conduct short trainings and demonstrations in home repair and home projects.

2.0 Company Summary


Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The store's owner, Clara Johnson,
has worked in the hardware industry for over ten years. Most recently, she was the shift manager at Home Depot located in Waterfront
Shopping Center. Her area of expertise was home repairs. She conducted four presentations a week on all manner of home repair.
The business will make a profit in month six, and will grow steadily each consecutive month.

Page 2

Appendix
2.1 Start-up Summary
The start-up cost of Clara's Hardware will consist primarily of inventory and display equipment. Clara Johnson will invest $80,000. She
will also secure a $150,000 SBA loan.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Insurance
Rent
Start-Up Inventory
Display Set-Up
Cash Reserve for Hiring
Advertising
Other
Total Start-up Expenses

$1,000
$0
$0
$0
$0
$3,000
$50,000
$5,000
$20,000
$0
$0
$79,000

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

$121,000
$0
$0
$30,000
$151,000

Total Requirements

$230,000

Table: Start-up Funding

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

$79,000
$151,000
$230,000

Assets

Page 3

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

$30,000
$121,000
$0
$121,000
$151,000

Liabilities and Capital


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

$0
$150,000
$0
$0
$150,000

Capital
Planned Investment
Clara Johnson
Silent Partner
Other
Additional Investment Requirement
Total Planned Investment

$80,000
$0
$0
$0
$80,000

Loss at Start-up (Start-up Expenses)


Total Capital

($79,000)
$1,000

Total Capital and Liabilities

$151,000

Total Funding

$230,000

Page 4

Appendix
Chart: Start-up

Start-up
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Expenses

Assets

Investment

Loans

2.2 Company Ownership


Clara's Hardware is owned by Clara Johnson.
3.0 Products
Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The primary focus will be to satisfy
the seasonal needs of the area's customers.

Fall/Winter: Weatherization projects.


Spring: Garden/lawn projects/home improvement projects.
Summer: Outdoor building projects.

Page 5

Appendix
4.0 Market Analysis Summary
In the past ten years, most local hardware stores have closed due to the success of large hardware mega-stores drawing away local
customers. The attraction of the larger stores has always been price and and a large inventory. Customers would rather drive 20 minutes
and make sure they will find what they want rather than drive five minutes and hope the local store will have it at a low price. Yet these
same hardware mega-stores are sterile and not customer-friendly. Customers can wander the aisles, aimlessly lost, looking for a two
dollar item. And when they do find the right section, they will most likely select the most popular brand no matter how large the selection
is. What these store offer in price and selection, they lose in creating a confusing, frustrating maze for their customers.
Clara believes that a local hardware store can provide a reasonable selection in the most important product areas, be competitive in
pricing, and offer the customer a shopping environment that will assure repeat business.
4.1 Market Segmentation
Clara's Hardware will focus on three significant customer groups:

Women home owners: Many women home owners perform their own home repairs and home improvement projects. Clara knows
this first hand since she has helped many of these women in mastering the skills needed to do the work successfully. Clara's Hardware
will be uniquely designed to be responsive to the shopping environment that will attract and retain this important customer group.

Customers who need assistance in planning a project/repair: This customer group can have the most frustrating experience in
the hardware mega-stores. If they can't make the scheduled demos or trainings, they are left to sort thing out with whoever they can
flag down in the store help them. Clara's Hardware will be set-up to provide resources and assistance as soon as they walk into the
store.

Local repair and home improvement professionals: The South Gate area supports a good number of repair and home
improvement professionals. Currently, the hardware mega-stores have their business but Clara's Hardware can win a increasing share
of this customer group through aggressive marketing. Time is money and if Clara's Hardware can save them a trip outside the area,
they will buy there.

Table: Market Analysis

Market Analysis
Potential Customers
Women Home Owners
New Repair/Project Customers
Repair/Home Improvement
Professionals

Year 1

Year 2

Year 3

Year 4

Year 5

15,000
40,000
42

16,500
48,000
44

18,150
57,600
46

19,965
69,120
48

21,962
82,944
50

Growth
10%
20%
5%

CAGR
10.00%
20.00%
4.46%

Page 6

Appendix
Total

17.51%

55,042

64,544

75,796

89,133

104,956

17.51%

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Women Home Owners


New Repair/Project Custom ers
Repair/Hom e Improvem ent Professionals

5.0 Strategy and Implementation Summary


Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore Sun, to advertise. In addition, we will
have a drawing for five $1,000 home improvement gift certificates that can be redeemed at selected home improvement professionals.
We will have new drawings each week for the first eight weeks of the store's operation. Clara's Hardware will use the drawings to make
connections with the local home improvement professionals. It is our plan to recoup some of the gift certificate money in material
purchases that will be made by the home improvement professionals the winners select.
5.1 Competitive Edge
Clara's Hardware's competitive edge is:

Page 7

Appendix

Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The closest hardware store to
the South Gate area is a twenty minute drive.

Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring
in local customers by marketing these items at competitive prices.

Repair/Project Resource Area: The first section customers will find when they enter the store is a repair/project resource area that
they can use to plan repairs or projects. There will be a repair/project resource person there to answer their questions and direct
them to the section of store where the needed products are.

In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area
will be used to conduct short trainings and demonstrations in home repair and home projects.

5.2 Sales Strategy


The sales strategy of Clara's Hardware is simple. First, create a shopping environment that will create confidence in the customer that he
or she will get the needed material, part, or instructions to get the job done right the first time. Second, make the store easy to navigate,
so customer can get in and out as quickly as possible. Third, know your customer's seasonal hardware needs and offer it at competitive
prices.
5.2.1 Sales Forecast
Clara's Hardware will hit the ground running in April.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Hardware
Other
Total Sales

$964,000
$0
$964,000

$1,090,000
$0
$1,090,000

$1,240,000
$0
$1,240,000

Direct Cost of Sales


Hardware
Other
Subtotal Direct Cost of Sales

Year 1
$474,000
$0
$474,000

Year 2
$500,000
$0
$500,000

Year 3
$612,000
$0
$612,000

Sales

Page 8

Appendix
Chart: Sales Monthly

Sales Monthly
$100,000
$90,000
$80,000
$70,000
$60,000

Hardware

$50,000

Other

$40,000
$30,000
$20,000
$10,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

Page 9

Appendix
6.0 Management Summary
Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of Clara's Hardware.
6.1 Personnel Plan
Clara's Hardware will have the following staff members:

Manager.
Assistant Manager.
Office Manager/Accountant.
Checkers (full time and part time).
Two Customer Assistants.
Stockers (full time and part time).

Table: Personnel

Personnel Plan
Manager
Assistant Manager
Office Manager/Bookkeeper
Checkers
Customer Assistants
Stockers
Other
Total People
Total Payroll

Year 1

Year 2

Year 3

$36,000
$36,000
$36,000
$32,400
$60,000
$39,600
$0
9

$40,000
$39,000
$39,000
$35,500
$68,000
$44,000
$0
9

$45,000
$43,000
$42,000
$40,000
$74,000
$48,000
$0
9

$240,000

$265,500

$292,000

Page 10

Appendix
7.0 Financial Plan
The following is the financial plan for Clara's Hardware.
7.1 Projected Cash Flow
The following table and chart highlight the projected cash flow for three years.

Chart: Cash

Cash
$150,000
$120,000
$90,000

Net Cash Flow

$60,000

Cash Balance

$30,000
$0

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

($30,000)

Table: Cash Flow

Pro Forma Cash Flow


Year 1

Year 2

Year 3

Cash Received

Page 11

Appendix
Cash from Operations
Cash Sales
Subtotal Cash from Operations

$964,000
$964,000

$1,090,000
$1,090,000

$1,240,000
$1,240,000

$0
$0
$0
$0
$0
$0
$0
$964,000

$0
$0
$0
$0
$0
$0
$0
$1,090,000

$0
$0
$0
$0
$0
$0
$0
$1,240,000

Year 1

Year 2

Year 3

$240,000
$648,662
$888,662

$265,500
$734,321
$999,821

$292,000
$856,105
$1,148,105

Sales Tax, VAT, HST/GST Paid Out


Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$0
$0
$0
$30,000
$0
$0
$0
$918,662

$0
$0
$0
$30,000
$0
$0
$0
$1,029,821

$0
$0
$0
$30,000
$0
$0
$0
$1,178,105

Net Cash Flow


Cash Balance

$45,338
$166,338

$60,179
$226,517

$61,895
$288,412

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

7.2 Break-even Analysis


The monthly sales break-even point is $65,133.
Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$65,133

Page 12

Appendix
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

49%
$33,107

Chart: Break-even Analysis

Break-even Analysis
$20,000

$10,000

$0

($10,000)

($20,000)

($30,000)
$0

$20,000
$40,000
$60,000
$80,000
$100,000
$10,000
$30,000
$50,000
$70,000
$90,000
$110,000

Page 13

Appendix
7.3 Projected Profit and Loss
The following table and chart highlight the projected profit and loss for three years.

Chart: Profit Monthly

Profit Monthly
$15,000
$12,000
$9,000
$6,000
$3,000
$0
($3,000)
($6,000)
($9,000)
($12,000)
($15,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

Table: Profit and Loss

Pro Forma Profit and Loss


Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other Production Expenses
Total Cost of Sales

$964,000
$474,000
$0
$474,000

$1,090,000
$500,000
$0
$500,000

$1,240,000
$612,000
$0
$612,000

Gross Margin
Gross Margin %

$490,000
50.83%

$590,000
54.13%

$628,000
50.65%

Page 14

Appendix

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

$240,000
$75,000
$4,284
$0
$6,000
$0
$36,000
$36,000
$0

$265,500
$100,000
$4,285
$0
$6,000
$0
$36,000
$39,825
$0

$292,000
$100,000
$4,285
$0
$6,000
$0
$36,000
$43,800
$0

Total Operating Expenses

$397,284

$451,610

$482,085

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$92,716
$97,000
$13,375
$23,802

$138,390
$142,675
$10,500
$38,367

$145,915
$150,200
$7,500
$41,525

Net Profit
Net Profit/Sales

$55,539
5.76%

$89,523
8.21%

$96,891
7.81%

7.4 Projected Balance Sheet


The following table highlights the projected balance sheet for three years.
Table: Balance Sheet

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

$166,338
$46,200
$0
$212,538

$226,517
$48,347
$0
$274,864

$288,412
$68,666
$0
$357,078

$30,000
$4,284
$25,716
$238,254

$30,000
$8,569
$21,431
$296,295

$30,000
$12,854
$17,146
$374,224

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

Page 15

Appendix
Liabilities and Capital

Year 1

Year 2

Year 3

$61,715
$0
$0
$61,715

$60,233
$0
$0
$60,233

$71,272
$0
$0
$71,272

Long-term Liabilities
Total Liabilities

$120,000
$181,715

$90,000
$150,233

$60,000
$131,272

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

$80,000
($79,000)
$55,539
$56,539
$238,254

$80,000
($23,461)
$89,523
$146,062
$296,295

$80,000
$66,062
$96,891
$242,952
$374,224

$56,539

$146,062

$242,952

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

Net Worth

7.5 Ratios
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC)
code 5251, Hardware Stores, are shown for comparison.

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

13.07%

13.76%

6.00%

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

19.39%
0.00%
89.21%
10.79%
100.00%

16.32%
0.00%
92.77%
7.23%
100.00%

18.35%
0.00%
95.42%
4.58%
100.00%

48.50%
20.20%
79.70%
20.30%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

25.90%
50.37%
76.27%
23.73%

20.33%
30.38%
50.70%
49.30%

19.05%
16.03%
35.08%
64.92%

37.60%
19.70%
57.30%
42.70%

Sales Growth
Percent of Total Assets

Percent of Sales

Page 16

Appendix
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes

100.00%
50.83%
45.07%
7.78%
9.62%

100.00%
54.13%
45.92%
9.17%
12.70%

100.00%
50.65%
42.83%
8.06%
11.77%

100.00%
33.80%
21.10%
1.90%
1.10%

3.44
2.70
76.27%
140.33%
33.30%

4.56
3.76
50.70%
87.56%
43.16%

5.01
4.05
35.08%
56.97%
36.99%

2.24
0.58
57.30%
2.20%
5.30%

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

5.76%
98.23%

8.21%
61.29%

7.81%
39.88%

n.a
n.a

10.91
11.51
27
4.05

10.58
12.17
30
3.68

10.46
12.17
28
3.31

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

3.21
0.34

1.03
0.40

0.54
0.54

n.a
n.a

$150,823
6.93

$214,631
13.18

$285,806
19.46

n.a
n.a

0.25
26%
2.70
17.05
0.00

0.27
20%
3.76
7.46
0.00

0.30
19%
4.05
5.10
0.00

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

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

$85,000

$79,000

$95,000

Sales
Hardware

0%

$50,000

$60,000

$70,000

$75,000

$85,000

$90,000

$100,000

$85,000

$90,000

Page 17

Appendix
Other
Total Sales
Direct Cost of Sales
Hardware
Other
Subtotal Direct Cost of Sales

0%

$0
$50,000
Month 1

$0
$60,000
Month 2

$0
$70,000
Month 3

$0
$75,000
Month 4

$0
$85,000
Month 5

$0
$90,000
Month 6

$0
$100,000
Month 7

$0
$85,000
Month 8

$0
$90,000
Month 9

$0
$85,000

$0
$79,000

$0
$95,000

Month 10

Month 11

Month 12

$25,000

$30,000

$35,000

$37,000

$42,000

$45,000

$50,000

$42,000

$45,000

$42,000

$39,000

$42,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$25,000

$30,000

$35,000

$37,000

$42,000

$45,000

$50,000

$42,000

$45,000

$42,000

$39,000

$42,000

Page 18

Appendix
Table: Personnel

Personnel Plan

Manager
Assistant Manager
Office Manager/Bookkeeper
Checkers
Customer Assistants
Stockers
Other
Total People
Total Payroll

0%
0%
0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

Month
10
$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9
$20,000

Month
11
$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9
$20,000

Month
12
$3,000
$3,000
$3,000
$2,700
$5,000
$3,300
$0
9
$20,000

Page 19

Appendix
Table: General Assumptions

General Assumptions
Plan Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
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
Tax 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%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

Other

Page 20

Appendix
Table: Profit and Loss

Pro Forma Profit and


Loss
Month 10

Month 11

Month 12

Sales

$50,000

Month 1

$60,000

Month 2

$70,000

Month 3

$75,000

Month 4

$85,000

Month 5

$90,000

Month 6

$100,000

Month 7

$85,000

Month 8

$90,000

Month 9

$85,000

$79,000

$95,000

Direct Cost of Sales

$25,000

$30,000

$35,000

$37,000

$42,000

$45,000

$50,000

$42,000

$45,000

$42,000

$39,000

$42,000

Other Production
Expenses
Total Cost of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$25,000

$30,000

$35,000

$37,000

$42,000

$45,000

$50,000

$42,000

$45,000

$42,000

$39,000

$42,000

Gross Margin

$25,000

$30,000

$35,000

$38,000

$43,000

$45,000

$50,000

$43,000

$45,000

$43,000

$40,000

$53,000

50.00%

50.00%

50.00%

50.67%

50.59%

50.00%

50.00%

50.59%

50.00%

50.59%

50.63%

55.79%

Payroll

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

Sales and Marketing and


Other Expenses
Depreciation

$20,000

$25,000

$5,000

$0

$5,000

$5,000

$0

$5,000

$0

$0

$5,000

$5,000

$357

$357

$357

$357

$357

$357

$357

$357

$357

$357

$357

$357

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

Gross Margin %

Expenses

Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating
Expenses
Profit Before Interest and
Taxes
EBITDA
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

15%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$3,000
$0

$46,857

$51,857

$31,857

$26,857

$31,857

$31,857

$26,857

$31,857

$26,857

$26,857

$31,857

$31,857

($21,857)

($21,857)

$3,143

$11,143

$11,143

$13,143

$23,143

$11,143

$18,143

$16,143

$8,143

$21,143

($21,500)

($21,500)

$3,500

$11,500

$11,500

$13,500

$23,500

$11,500

$18,500

$16,500

$8,500

$21,500

$1,188

$1,167

$1,146

$1,125

$1,104

$1,083

$1,063

$1,042

$1,021

$1,000

$1,229

$1,208

($6,926)

($6,920)

$587

$2,993

$2,999

$3,605

$6,612

$3,018

$5,124

$4,530

$2,137

$6,043

($16,160)

($16,146)

$1,369

$6,983

$6,998

$8,413

$15,427

$7,042

$11,956

$10,571

$4,986

$14,100

-32.32%

-26.91%

1.96%

9.31%

8.23%

9.35%

15.43%

8.28%

13.28%

12.44%

6.31%

14.84%

Page 21

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 Received
Cash from Operations
Cash Sales

$50,000

$60,000

$70,000

$75,000

$85,000

$90,000

$100,000

$85,000

$90,000

$85,000

$79,000

$95,000

Subtotal Cash from Operations

$50,000

$60,000

$70,000

$75,000

$85,000

$90,000

$100,000

$85,000

$90,000

$85,000

$79,000

$95,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Additional Cash Received


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

0.00%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Other Liabilities (interestfree)


New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$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

$0

$0

$0

$0

$0

$0

$0

$0

$50,000

$60,000

$70,000

$75,000

$85,000

$90,000

$85,000

$90,000

$85,000

$79,000

$95,000

Month 10

Month 11

Month 12

Subtotal Cash Received


Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

$100,000
Month 7

Month 8

Month 9

Expenditures from Operations


Cash Spending

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$2,443

$72,903

$61,038

$53,644

$50,302

$63,191

$64,703

$69,019

$49,207

$60,646

$50,758

$50,807

$22,443

$92,903

$81,038

$73,644

$70,302

$83,191

$84,703

$89,019

$69,207

$80,646

$70,758

$70,807

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current


Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

$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

$24,943

$95,403

$83,538

$76,144

$72,802

$85,691

$87,203

$91,519

$71,707

$83,146

$73,258

$73,307

Subtotal Cash Spent

Page 22

Appendix
Net Cash Flow

$25,057

($35,403)

($13,538)

($1,144)

$12,198

Cash Balance

$146,057

$110,654

$97,115

$95,972

$108,169

$12,797

($6,519)

$18,293

$112,478

$4,309

$125,275

$118,756

$137,049

$138,903

$1,854

$144,645

$5,742

$166,338

$21,693

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

$121,000
$0
$0
$121,000

$146,057
$27,500
$0
$173,557

$110,654
$33,000
$0
$143,654

$97,115
$38,500
$0
$135,615

$95,972
$40,700
$0
$136,672

$108,169
$46,200
$0
$154,369

$112,478
$49,500
$0
$161,978

$125,275
$55,000
$0
$180,275

$118,756
$46,200
$0
$164,956

$137,049
$49,500
$0
$186,549

$138,903
$46,200
$0
$185,103

$144,645
$42,900
$0
$187,545

$166,338
$46,200
$0
$212,538

$30,000
$0
$30,000
$151,000

$30,000
$357
$29,643
$203,200

$30,000
$714
$29,286
$172,940

$30,000
$1,071
$28,929
$164,544

$30,000
$1,428
$28,572
$165,244

$30,000
$1,785
$28,215
$182,584

$30,000
$2,142
$27,858
$189,836

$30,000
$2,499
$27,501
$207,776

$30,000
$2,856
$27,144
$192,100

$30,000
$3,213
$26,787
$213,336

$30,000
$3,570
$26,430
$211,533

$30,000
$3,927
$26,073
$213,618

$30,000
$4,284
$25,716
$238,254

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month
10

Month
11

Month
12

Starting
Balances

Current Assets
Cash
Inventory
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

$0
$0
$0
$0

$70,860
$0
$0
$70,860

$59,246
$0
$0
$59,246

$51,982
$0
$0
$51,982

$48,198
$0
$0
$48,198

$61,040
$0
$0
$61,040

$62,379
$0
$0
$62,379

$67,392
$0
$0
$67,392

$47,175
$0
$0
$47,175

$58,954
$0
$0
$58,954

$49,080
$0
$0
$49,080

$48,679
$0
$0
$48,679

$61,715
$0
$0
$61,715

Long-term Liabilities
Total Liabilities

$150,000
$150,000

$147,500
$218,360

$145,000
$204,246

$142,500
$194,482

$140,000
$188,198

$137,500
$198,540

$135,000
$197,379

$132,500
$199,892

$130,000
$177,175

$127,500
$186,454

$125,000
$174,080

$122,500
$171,179

$120,000
$181,715

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

$80,000
($79,000)
$0
$1,000
$151,000

$80,000
($79,000)
($16,160)
($15,160)
$203,200

$80,000
($79,000)
($32,306)
($31,306)
$172,940

$80,000
($79,000)
($30,937)
($29,937)
$164,544

$80,000
($79,000)
($23,954)
($22,954)
$165,244

$80,000
($79,000)
($16,956)
($15,956)
$182,584

$80,000
($79,000)
($8,543)
($7,543)
$189,836

$80,000
($79,000)
$6,884
$7,884
$207,776

$80,000
($79,000)
$13,926
$14,926
$192,100

$80,000
($79,000)
$25,882
$26,882
$213,336

$80,000
($79,000)
$36,453
$37,453
$211,533

$80,000
($79,000)
$41,439
$42,439
$213,618

$80,000
($79,000)
$55,539
$56,539
$238,254

($15,160)

($31,306)

($29,937)

($22,954)

($15,956)

($7,543)

$14,926

$26,882

$37,453

$42,439

$56,539

Net Worth

$1,000

$7,884

Page 23