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Table of Contents

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

1.1 Objectives................................................................................................................................................1
1.2 Keys to Success.......................................................................................................................................1
1.3 Mission....................................................................................................................................................1
Chart: Highlights.......................................................................................................................................2
2.0 Company Summary.....................................................................................................................................2
2.1 Company Ownership..............................................................................................................................2
2.2 Start-up Summary...................................................................................................................................2
Table: Start-up...........................................................................................................................................3
Chart: Start-up...........................................................................................................................................3
Table: Start-up Funding............................................................................................................................4
2.3 Company Locations and Facilities..........................................................................................................4
3.0 Services.......................................................................................................................................................4
3.1 Service Description.................................................................................................................................5
3.2 Sales Literature.......................................................................................................................................5
3.3 Fulfillment...............................................................................................................................................6
3.4 Technology..............................................................................................................................................6
3.5 Future Services........................................................................................................................................7
4.0 Market Analysis Summary.........................................................................................................................7
4.1 Target Market Segment Strategy............................................................................................................7
4.1.1 Market Needs...................................................................................................................................8
4.1.2 Market Trends..................................................................................................................................8
4.1.3 Market Growth.................................................................................................................................8
4.2 Service Business Analysis......................................................................................................................9
4.2.1 Main Competitors............................................................................................................................9
4.2.2 Business Participants.....................................................................................................................10
4.3 Market Segmentation............................................................................................................................10
Chart: Market Analysis (Pie)..................................................................................................................11
Table: Market Analysis...........................................................................................................................11
5.1 Competitive Edge..................................................................................................................................12
5.2 Marketing Strategy................................................................................................................................12
5.2.1 Marketing Programs......................................................................................................................12
5.2.2 Pricing Strategy..............................................................................................................................13
5.2.3 Promotion Strategy........................................................................................................................13
5.3 Sales Strategy........................................................................................................................................14
5.3.1 Sales Forecast.................................................................................................................................15
Chart: Sales Monthly..........................................................................................................................15
Chart: Sales by Year...........................................................................................................................16
Table: Sales Forecast..........................................................................................................................16
5.3.2 Sales Programs...............................................................................................................................16
5.4 Strategic Alliances................................................................................................................................17
5.5 Milestones.............................................................................................................................................18
Table: Milestones....................................................................................................................................18
6.0 Management Summary.............................................................................................................................18
6.1 Organizational Structure.......................................................................................................................19
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Table of Contents

6.2 Management Team Gaps......................................................................................................................19

6.3 Personnel Plan.......................................................................................................................................19
Table: Personnel......................................................................................................................................20
7.0 Financial Plan............................................................................................................................................20
7.1 Important Assumptions.........................................................................................................................21
Table: General Assumptions...................................................................................................................21
7.2 Key Financial Indicators.......................................................................................................................21
Chart: Benchmarks..................................................................................................................................21
7.3 Break-even Analysis.............................................................................................................................22
Chart: Break-even Analysis....................................................................................................................22
Table: Break-even Analysis....................................................................................................................22
.....................................................................................................................................................................22
7.4 Projected Profit and Loss......................................................................................................................23
Chart: Profit Monthly..............................................................................................................................23
Chart: Profit Yearly.................................................................................................................................24
Chart: Gross Margin Monthly................................................................................................................24
Chart: Gross Margin Yearly...................................................................................................................25
Table: Profit and Loss.............................................................................................................................26
.....................................................................................................................................................................26
7.5 Projected Cash Flow.............................................................................................................................27
Chart: Cash..............................................................................................................................................27
Table: Cash Flow....................................................................................................................................28
.....................................................................................................................................................................28
7.6 Projected Balance Sheet........................................................................................................................29
Table: Balance Sheet...............................................................................................................................29
.....................................................................................................................................................................29
7.7 Business Ratios.....................................................................................................................................30
Table: Ratios...........................................................................................................................................30
Table: Sales Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table: Personnel................................................................................................................................................2
...........................................................................................................................................................................2
Table: General Assumptions.............................................................................................................................3
...........................................................................................................................................................................3
Table: Profit and Loss.......................................................................................................................................4
...........................................................................................................................................................................5
Table: Cash Flow..............................................................................................................................................6
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Table of Contents

Table: Balance Sheet.........................................................................................................................................7

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Ibrio, Inc.

1.0 Executive Summary

Ibrio Incorporated is a small start-up firm located in the business district of Palmyra,
Pennsylvania. We offer Internet and Web-related services to small businesses in the Central
Pennsylvania area. The services we offer include website development and design, hosting,
maintenance, marketing, and analysis.
Given our experience and expertise in both commercial Web development and business-tobusiness sales, we believe we can offer a unique and superior service to small business owners,
in comparison to what is currently available.
The demand and growth rate for Web development and marketing services in the small
business market is at an all time high and shows no sign of slowing anytime soon. Even more
astonishing is the fact that very few Web development companies have taken advantage of the
opportunity, as there are no dominating participants in this huge market.
We believe the reason for this virtually untapped market is due to expensive project costs, the
highest profit margins in Web development today are in servicing large- and medium-sized
corporations. We have developed a system that dramatically reduces steep project costs and
henceforth will allow us to offer the same high-end Web development services as larger
companies receive at a much lower cost to the client.
This business plan will highlight many aspects of our system and our business. It will detail
market growth and demand, and it will outline our projected cash flow and profit margins over
the next three years. All numbers regarding our projected company growth are based on
previous information gathered by activity in the company over the last few months of
operation.
1.1 Objectives
1. Revenues of $200,000 by month 10.
2. Net Profit of 25% in year one and 35% in year two.
3. 65% Gross margin by month 10.
1.2 Keys to Success
1. Offering high-end Web services to small businesses in a way that they can understand and
afford.
2. Build a strong residual income through secondary subscription-based services tailored for
small business (website hosting, marketing, maintenance, consulting).
3. Establishing strategic partnerships with area Internet service providers and computer
consulting companies to refer small business website projects to us in exchange for high
payoffs.
1.3 Mission
Our mission is to provide affordable, accessible, and streamlined Internet and Web services to
small businesses. We have developed a system for offering many different types of Web
services (site development, hosting, marketing, and maintenance) that are exclusively tailored
to fit the needs and resources of small companies.

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Ibrio, Inc.

Chart: Highlights

Highlights
$1,200,000

$1,000,000

$800,000

Sales
Gross Margin

$600,000

Net Profit
$400,000

$200,000

$0
Year 1

Year 2

Year 3

2.0 Company Summary

Ibrio Incorporated is a start-up company that will provide high-end, affordable Internet related
services to small businesses that are looking to expand their existing marketing efforts to reach
the Web. We have a system established that will allow us to offer website development,
hosting, marketing, and maintenance of the same caliber that large companies take advantage
of, at a very affordable rate.
2.1 Company Ownership
Ibrio has been incorporated as a Pennsylvania S corporation based in Lebanon county as of
August 28, 2000. The corporation is privately owned by David W. Hickethier, chief operations
officer and Richard B. Andrews, chief technology officer.
2.2 Start-up Summary
Our start-up plan is a well thought out base to propel us forward with the proper equipment,
marketing tools, and personnel to start our venture. An initial cash investment by the owners in
the amount of $7,300 to purchase office furniture, computer equipment, and software has been
made. Both owners have also invested a combined time of approximately 3,500 working hours
toward the start-up of Ibrio Inc.
The cash requirement of $17,000 are funds that we need to provide the capital to run our
business for the first few months. This capital will fund two employees payroll and
equipment/supplies to get them started. It will cover business expenses for a few months until
our cash flow takes over.

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Ibrio, Inc.

The four-year $20,000 loan has been secured from the XYZ bank to supply the needed capital
explained above.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Business Cards
Phone Line Install (Two Lines)
Computer Monitor
InfoUSA Database
Office Equipment
Dedicated Server Setup Fee
Membership Fees
DSL Setup and Install
Phones
Total Start-up Expenses

$60
$150
$200
$400
$580
$150
$600
$350
$160
$2,650

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

$17,000
$7,650
$0
$24,650

Total Requirements

$27,300

Chart: Start-up

Start-up

$24,000
$21,000
$18,000
$15,000
$12,000
$9,000
$6,000
$3,000
$0
Expenses

Assets

Investment

Loans

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Ibrio, Inc.

Table: Start-up Funding

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

$2,650
$24,650
$27,300

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

$7,650
$17,000
$0
$17,000
$24,650

Liabilities and Capital

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

$0
$20,000
$0
$0
$20,000

Capital
Planned Investment
David W. Hickethier
Richard B. Andrews
Additional Investment Requirement
Total Planned Investment

$3,650
$3,650
$0
$7,300

Loss at Start-up (Start-up Expenses)

Total Capital

($2,650)
$4,650

Total Capital and Liabilities

$24,650

Total Funding

$27,300

2.3 Company Locations and Facilities

We have an established commercial office space in Palmyra, PA under a two year lease that will
expire in October of 2001 with an option to renew every 60 days thereafter. There is
approximately 1,400 sq. ft. capable of housing workstations for up to 12 workers. Palmyra is in
Lebanon county, less than a 60 minute drive to anywhere in our four county target market
area.
3.0 Services
Ibrio Inc. is a full-service Internet solutions provider for small businesses. We focus mainly on
the Web, offering the following as our key 'Bread & Butter' website services:

Design and development.

Marketing and analysis.
Hosting and maintenance.

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Ibrio, Inc.

We currently offer the following secondary services:

E-commerce development.
Website renovations and upgrades.
Application development (i.e. chatrooms, message boards, online polling, live-feed
audio/video, etc.).
Website maintenance training.
Internet/website education seminars.
Database construction.

We have plans to offer the following services within the next year:

Internet access service for small businesses.

Local Area Network (LAN) installation.
Intranet setup and installation.
Result-based website marketing.

3.1 Service Description

Website Design and Development: The service that we offer to small businesses is modeled
after the service that larger Web development firms offer Fortune 1000 companies in the sense
that it is completely customized and unique to each individual client.
Website Marketing and Analysis: After we build the website for our client, or a new client
introduces us to their pre-existing site, we offer this service. As experts of the Web, we can
analyze and test a website based on an established set of standards that account for the
website's aesthetic value, scalability, functionality, ease-of-use, and main customer base. After
an analysis has been made, we then explore and present to the client a detailed list of the most
efficient Internet marketing tools and methods available to them within the constraints of their
budget. This type of service is pertinent to our company given the fact that a very large
percentage of our clients are on a tight budget and can only afford to take advantage of
marketing efforts that are targeted directly at their desired demographic.
Website Hosting and Maintenance: This service is offered for two reasons. The first reason is
because they are both ongoing, continual services that we can use to establish and maintain a
strong residual income. The second reason for offering these services is to allow for packaging
together with other services either Ibrio Inc. offers, or services an outside company can
provide, hence allowing us to expand our range of small business Internet services.
3.2 Sales Literature
Ibrio Inc. currently distributes a sales folder with all the pertinent information about our
company and services. This folder includes our strong points, history, portfolio examples, and
pricing packages info. It also contains facts based on the growth and popularity of the Internet
for small businesses.
Ibrio Inc. currently operates and maintains a fully-functioning website that provides information
about the company, plus a variety of helpful resources for small business owners which we will
be constantly updating.

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Ibrio, Inc.

In the next six months, we plan to produce and distribute bulk mail and fax flyers promoting
our Web development and hosting services to small businesses in Central PA to solicit new
business.
We have plans to offer a more compact version of our main sales folder in a brochure format.
This brochure will be available both as a mailer to interested parties and as a sales solicitation
in area businesses.
3.3 Fulfillment
For the website design, development, marketing, analysis, and maintenance we will employ
industry professionals to handle our clients' needs. Working for the company presently is
Brandon Andrews, a professional website development engineer and strategist with four years
of experience in the commercial Web development industry. To keep employee costs low, we
have designed a "team" development system that will consist of two full-time sales people and
three full-time Web developers. Of the Web developers, one position will be filled by a highlyqualified senior Web professional and two lesser-qualified, lower paid developers. All three will
work full-time on separate projects provided to them by the sales people. However, the senior
developer will have the duty of maintaining the same high quality level of work in the junior
developers' projects, that our clients have learned to expect from us now.
For the website hosting services we offer, Ibrio Inc. has formed several alliances with industry
leaders to provide top-rate, reliable hosting solutions. Forming the alliances has allowed us
much flexibility in important hosting features, customizability, and it has drove costs down
dramatically. All these benefits are crucial to preserving the integrity of our company as being a
'fully-rounded Internet solutions provider' for small businesses.
3.4 Technology
It is a given that technology and keeping up with new innovations strongly influence our
business. We operate a Windows based Local Area Network (LAN) in the office that is
equipped with the most current software and hardware tools available to meet our project
requirements. Within the next year, we will be investing in additional tools that will extend our
capabilities in handling various types of program files (i.e. Macintosh computers, large capacity
data storage, and high-end image scanners). We also have plans to purchase licensing
agreements with our major software vendors to allow for automatic upgrades in new software
tools.
Currently we own and operate both a professional digital and film camera for the purpose of
offering on-site and in-house product and business photography to our clients. We would like to
improve upon these services in the near future by purchasing a more complete photography
system, it has been our experience that this is a service many small businesses are recognizing
as a crucial part of their online marketing efforts and would take advantage of it were we to
offer such a service.

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Ibrio, Inc.

3.5 Future Services

Local Area Network Installation: These days, a quickly increasing number of small
businesses are using computers as a necessary tool in the everyday operations of the company.
We would like to be able to expand our current services to meet this new demand. We will
handle every aspect of setting up a small business with an internal network of computers from
purchasing, installing, and configuring the machines to software integration and educating the
employees on proper usage and operating functions.
Intranet Setup Installation: In our plan, after developing an Internet website for outside
marketing purposes, we would like to offer the service of implementing the website into the
network for use in all the business day-to-day operations. This would include extensive
product/service cataloging, vital employee and management information, sharing of accounting
and inventory details, etc., all intended for strictly company uses.
Internet Access for Small Business: This feature would act as another residual, packageable
service. We would target small businesses exclusively allowing us to provide more flexibility and
affordability to our clients through discounted high volume rates, value added service packages,
and much more aggressive technical support services.
Result-based Marketing: This is a service that no small business can turn down. We have
plans to offer aggressive, intensified marketing services with the fees based solely on results.
To achieve this, we are in the process of forming multiple partnerships and alliances with
industry specific Internet websites and various other software and service-oriented companies
that provide specific marketing services and tools based on results achieved. We feel as though
offering this rare service will dramatically increase our portfolio of clients.
4.0 Market Analysis Summary
Ibrio Inc. will initially focus almost exclusively on small companies looking to develop an
Internet presence for the first time. We will market our services to small business owners as a
"step-by-step" process, initially starting out with a small, simple website, then
gradually improving and adding to the site and their entire online marketing efforts.
Although we plan to bring on many clients who simply will need an online presence and nothing
more, our most important and sought after clients will be those business owners who are ready
to implement a larger percentage of their company onto the Internet. This type of client will
traditionally need one of the following services:

E-commerce/shopping cart.
Database driven websites.
Dynamic content and website features.
Aggressive online website marketing.

4.1 Target Market Segment Strategy

Ibrio Inc. will focus the majority of sales and marketing efforts toward attracting small
businesses. The reason for this decision is simply the low amount of services available for a
market with such a high demand. In addition to the very promising supply and demand ratio, it
is also technically easier and less expensive to market to and attract small website projects
than larger projects.

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Ibrio, Inc.

4.1.1 Market Needs

The need for small business Internet services has existed for several years. Small businesses
and start-up businesses alike are migrating onto the Web at an astonishing rate and making
their online presence a higher priority than in earlier years. We have noticed an enormous hole
however in the small business services that are currently available.
Without a doubt, there is a need for custom, high-end, dynamic services designed exclusively
for small businesses. At this point, the majority of our competitors are offering services tailored
around big business, to small business owners, or they are offering the exact opposite, onedimensional, "cookie cutter" type services.
While every small business has now recognized the need for having a presence on the Internet,
many do not know where to start, how much it will cost, or even how it will benefit their
company. It has been our experience by talking to small business owners that the decision to
take advantage of the Web is not a matter of 'if' but a matter of 'when.'
4.1.2 Market Trends
An important market trend right now is the one toward aggressive online and website
marketing. Although many small businesses are still waiting to gain an Internet presence, those
who already have are beginning to look for more options along the lines of improving their
existing efforts. We believe that in the upcoming years, small companies especially, will start to
look for more ways to increase the traffic to their websites.
Another important trend is the overall merging of daily business operations with the Internet
and World Wide Web. Just as the majority of large companies have already started to use the
Web to handle interoffice tasks, we believe that many smaller companies will begin to realize
the time and money saving advantages to this strategy.
4.1.3 Market Growth
Our target market has been growing and expanding toward Internet and Web usage at an
astonishing rate. In addition, Internet usage by our clients' customers has been growing
exponentially. Below are supporting facts on our target market growth:

By 2001, small businesses (1-99 employees) will spend in upwards of $22 billion to either
gain an Internet presence or improve their existing efforts. This number is up from $12
billion in 2000 (Activemedia Research).
Small and home-based business' Internet usage is at approx. 81%, this is an increase from
only 26% usage in 1996. It is estimated to reach almost 95% by the year 2004 (IDC
Research).
Total U.S. business Information Technology (IT) expenditures for 2000 are $119.1 billion
and will reach $285 billion by the year 2003. The year 2000 will also be the first year that
U.S. businesses spend more of their total IT expenditures on Web-related services than on
IT hardware (IDC Research).
Currently, the total number of online users in the U.S. is 107 million, by 2004 that number
will grow to 210 million (IDC Research).
E-commerce revenue will reach nearly $6.8 trillion by the year 2004, up from $48.6 billion
in 2000 (Forrester Research Group).

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Ibrio, Inc.

4.2 Service Business Analysis

Web services and development companies vary greatly in the type of service they offer and the
type of client they attract. Ibrio Inc. will be relatively unique in the fact that we are marketing
exclusively to small businesses.
This industry consists of many small Web development firms usually less than 10 years old that
generally start out offering services to smaller companies but with long-term goals of catering
to large, corporate Web accounts.
4.2.1 Main Competitors

1. Teeple Graphics: Located approximately 10 miles from our Palmyra offices, they offer Web
development and graphic services.
Strengths: Teeple has a very strong clientele, by talking to several of their Web development
clients, we have come to the conclusion that Teeple offers a very dependable and high-quality
service.
Weaknesses: Teeple Graphics is owned and operated by George Teeple, he is also the only
employee working for the company out of his home, and does not run his business as a fulltime operation. In addition, Teeple Graphics requires all clients who operate an e-commerce
website to pay his company a commission on the revenue generated by the site, this is paid on
top of the development fee that Teeple charges.

2. Sharp Innovations: Located approximately 30 miles from our Palmyra offices, they offer
Web development services to small businesses in the Lancaster, PA area.
Strengths: Sharp Innovations has a large market share in its area, offering a very broad range
of services from Web development, e-commerce, graphic design, and Internet access.
Weaknesses: Sharp Innovations is a young company with very high overhead. They market
themselves as "The Small Business Internet Marketing Professionals of Central PA," but the
types of services they offer and their very high prices do not in anyway reflect the needs of
small business owners. It is also our opinion, after reviewing Sharp Innovations' portfolio that
they lack a certain level of technical and aesthetic design knowledge that so many small
businesses are beginning to demand.

3. Say1.net: Located approximately 10 miles from our Palmyra, PA location. They offer a wide
range of community and business-related Web services in the Lebanon, PA and surrounding
areas.
Strengths: Say1 has established a 'portal' type website designed to serve the Lebanon and
surrounding areas with useful information regarding community events and business listings.
This could serve as a valuable tool to their clients when marketing to that area.
Weaknesses: For a company that claims to be experts in marketing for small business, they do
virtually no advertising of their own and it appears that they lack in the ability to bring on
clients that are outside the city of Lebanon. Even though Web development is a service that
Say1 offers, it is only one in a long list of varied services and we believe this will dramatically
hinder their focus toward leading the industry in our market.

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Ibrio, Inc.

4. WebWorks: Located approximately 25 miles from our Palmyra, PA offices. WebWorks offers
Web development and marketing services to businesses in the Greater Harrisburg, PA area.
Strengths: WebWorks has been in the Web services business for almost six years and has a
very experienced team of developers and programmers. They also offer outstanding marketing
services.
Weaknesses: Although WebWorks is a direct competitor, they have begun to focus a large
portion of their services toward attracting medium- to large-sized companies. Their pricing is
dramatically higher than any competing firms in the Central PA area and they now have put
into effect a policy of only excepting jobs of a certain size.
4.2.2 Business Participants
The Web services and development industry consists mainly of three different types of firms.
The first type are the very large, high revenue companies who service larger Fortune 1000
corporations and well-funded Internet based start-ups exclusively. In this category are only a
few worldwide participants that dominate.
The second type of firm offers pre-fabricated, all-in-one, proprietary type Web services to any
size company at a very low cost or without any cost. The participants in this category consist of
a few dominating companies that mainly all have additional sources of revenue and only offer
Web services as a value-added service or additional attraction.
The third type of firm is our classification, that is the smaller, usually very young companies
that market to small- and medium-sized businesses in their local area. Currently there are a
large number of participants in this category, but no dominating forces.
4.3 Market Segmentation
Our target market is separated into the four surrounding counties listed below:
Dauphin County: Located to the West, approximately five miles from our location. The number
of businesses is estimated at 6,723. It will make up 23% of our four county target area.
Lancaster County: Located Southeast, approx. 20 miles from our location. We would like to
begin marketing in this area within four months. The number of businesses is estimated at
11,299. It will make up 40% of our target area.
Lebanon County: Our office is located in Lebanon County. Lebanon is the smallest of the four
counties and therefore we will market in proportion to its size. The number of businesses is
estimated at 2,547. It will make up 9% of our target area.
York County: Located Southwest, approx. 40 miles from our location. York county is the last of
the four counties we will market in. It will be late next year before we begin marketing in this
county. The number of businesses is estimated at 8,238. It will make up 28% of our target
area.
Our business allows us to offer services to small companies, no matter their geographical
location, and we plan to do so, eventually expanding outside our immediate area. The above

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Ibrio, Inc.

counties are where we will market most heavily and expect to receive the majority of our work.
We do expect to receive a small portion from outside this target area due to ad placement in a
national business directory.
The above demographic information can be found through the Geospatial & Statistical Data
Center.

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Dauphin County
Lancaster County
Lebanon County
York County

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Dauphin County
Lancaster County
Lebanon County
York County
Total

2%
2%
2%
2%
1.88%

Year 1

Year 2

Year 3

Year 4

Year 5

6,723
11,299
2,593
8,238
28,853

6,844
11,502
2,645
8,403
29,394

6,967
11,709
2,698
8,571
29,945

7,092
11,920
2,752
8,742
30,506

7,220
12,135
2,807
8,917
31,079

CAGR
1.80%
1.80%
2.00%
2.00%
1.88%

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Ibrio, Inc.

5.0 Strategy and Implementation Summary

Ibrio Inc. will initially focus all marketing and sales efforts toward the Central Pennsylvania
area, this includes Harrisburg, Lebanon, Lancaster, and York counties.
We will market ourselves as an Internet and Web services organization devoted to offering
high-end services to small businesses exclusively. Our target customer will be the owners of
any small or home-based company who are looking to implement their business into the Web.
5.1 Competitive Edge
We have a valuable competitive edge over our local competitors based on the fact that we have
streamlined all our services into the small business market. Through setting up several
strategic partnerships with various Internet and Web-related companies, we are able to offer
our clients an affordable and efficient proprietary Web package that will meet all their related
needs.
Ibrio Inc. also has as its lead development manager, Brandon Andrews, a main principal in the
company. Brandon Andrews has four years of commercial Web development experience and
has been recognized as a leader and innovator in the graphic design and layout areas of
website development.
5.2 Marketing Strategy
Successful marketing of Web services to small business owners depends on how you approach
and follow-up every potential client. It is very important to deliver our marketing pitch in a
clear, no non-sense method. Details of the Internet and Web are still relatively unknown by
many small business owners, giving it the tendency to confuse and intimidate easily.
5.2.1 Marketing Programs
The following is a summary of our marketing programs from the Milestones table:
We will begin our marketing by acquiring memberships from the following organizations
(October 2-9):

Lebanon Chamber of Commerce.

Harrisburg Chamber of Commerce.
Hershey Partnership.

We plan on doing a large scale marketing project during this month including (March 5 - April 5,
2001):

Radio advertising (WHP 580).

Ad placement in local trade publications (The Central Penn Business Journal).
Billboard Ads to promote wide-spread name recognition.

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Ibrio, Inc.

5.2.2 Pricing Strategy

For most small business owners, cost, both residual and one-time are huge influences on the
decisions they make regarding everyday operations of their company. Even though we offer
100% customized services and our pricing is based on an hourly fee, to make it easier and less
confusing for the clients, Ibrio has established a packaged pricing system.

Budget Domain Website Package ($585.00): For simple, information based websites.
Popular with companies who just need to gain an Internet presence.

Mid-Level Website Package ($945.00): Information based websites with a large amount
of content. Popular with companies that have a large services/products list and/or want to
implement more of their business into the Web.

Catalog Website Package ($1,440.00): Usually reserved for product-oriented websites

that are e-commerce enabled. Popular with companies that have a desire to market heavily
on the Internet or sell their products/services directly from the Web.

Website Hosting (from $15.00 to $45.00 per month): Depending on the type and size of
the website, the price for hosting can vary greatly. The average cost of hosting for most
clients is $25 per month.

Website Maintenance ($45.00 per hour): We charge a set fee of $45.00 per hour billed in
10 minute increments. If a client feels as though they will need their website updated or
maintained on a regular basis, packages are available at a discount rate.

5.2.3 Promotion Strategy

Our target client is part of a very specific demographic, for this reason, we market and promote
our services in a direct and specifically targeted manner.
Print Ads:

Currently we advertise in eight separate area yellow page directories. All our ads appear
under either the Internet Services or Website Design headings.
Ibrio Inc. also has an ad listing in a national business directory under the heading of Web
Developers.
In the near future we will feature ads in several area business publications such as The
Central Penn Business Journal and the Who's Who in Dauphin County.

Direct Mail and Fax:

We have sent out targeted bulk mail flyers promoting special offerings by our company.
We have participated in targeted broadcast fax promotions to small businesses in our area.
In the near future we will begin a new aggressive, ongoing bulk mail campaign to promote
our Web development and hosting services.

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Ibrio, Inc.

Mass Media Ads:

We will begin advertising on a broader scale within the next six months. Radio spots will be
continuously played during local area talk shows and news programs, this placement is
intended to reach the highest percentage of our target client possible.
Billboard ad placement will be the second mass media marketing campaign we will
implement into our marketing efforts. Billboard ads will be intended as 'name recognition'
advertising.

Educational Seminars:

Ibrio Inc. has been invited to speak to business owners and managers at several Internet
and Web-related educational seminars on a variety of topic. In the near future, we will
promote our services through these seminars.

Local Area Commerce Groups:

To promote our services and our name as a participant in the Web services industry, we will
be joining many of the local area Chamber of Commerce groups and various other strategic
partnership clubs.

5.3 Sales Strategy

Our clients are small business owners, most are very protective of their company, and almost
all of them are salesmen themselves. We sell value, service, and quality when we talk to
business owners. We need to convince them that they can look past all of the hype surrounding
the Internet and still see why having a website is worth the money spent.
We currently utilize a database system specifically targeted toward our desired demographic to
establish our first contact with every potential client. It has proven a successful method for
soliciting new business directly due to the method in which we approach the first call. The
salesman always requests to speak to the business owner, asking for him by his first name
only, and when asked who is calling, responds by providing simply his first name as well. Once
on the phone with the business owner, there is absolutely no script and the salesman clearly
identifies himself and asks the business owner if he has ever considered having a website
developed for his company, no matter what the response, a brief conversation will always
pursue, sometimes leading to an appointment, and sometimes to a follow-up call.
Because we have full confidence in our services, and recognize that business owners are
generally open to the idea of utilizing the Internet and most even consider it a necessity, we
take a very low-pressure, non-abrasive approach to direct selling. We will normally present the
information about our company, portfolio, strengths, and pricing to the client and let them
make the decision on their own. This method has proven successful provided that we keep our
follow-up calls consistent and regular until we receive either a yes or no answer.

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Ibrio, Inc.

5.3.1 Sales Forecast

The following table and chart summarize our forecast sales. We expect the first month of
operations (October) to be spent training the new developer and new salesman. November will
be our first month of operation and we expect to grow steadily in the following months.
Website development sales will be the largest portion of our revenue with result-based
marketing following. Maintenance and hosting revenue will be built up slowly but are the
residual base we will stand on in the future.
Chart: Sales Monthly

Sales Monthly
$28,000
$24,000

Website Development

$20,000

Result-based Marketing
$16,000

Maintenance
$12,000

Hosting
$8,000
$4,000

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

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Ibrio, Inc.

Chart: Sales by Year

Sales by Year
$1,200,000
$1,000,000

Website Development
$800,000

Result-based Marketing
$600,000

Maintenance
Hosting

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

Year 2

Year 3

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$117,000
$19,250
$14,230
$14,040
$164,520

$350,000
$81,900
$43,000
$40,000
$514,900

$750,000
$199,500
$130,000
$115,000
$1,194,500

Year 1
$0
$9,900
$0
$5,650
$15,550

Year 2
$0
$35,000
$0
$15,000
$50,000

Year 3
$0
$102,600
$0
$25,000
$127,600

Sales
Website Development
Result-based Marketing
Maintenance
Hosting
Total Sales
Direct Cost of Sales
Website Development
Result-based Marketing
Maintenance
Hosting
Subtotal Direct Cost of Sales

5.3.2 Sales Programs

The following is a summary of the our sales programs from the Milestones table:
October 9-16: Hiring first salesman. We will be training this employee this month to make
telephone calls to business owners in the area and set appointments to meet with them and
show them what we have to offer. Starting in mid-November he/she will begin meeting with
clients alone.
October 23 - November 2: We will be updating our sales literature including creating
brochures, and printing leaflets to be placed in our presentation folders.
February 12-26: Hiring second salesman. We will be training this salesman in the same
fashion previously stated.

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Ibrio, Inc.

5.4 Strategic Alliances

Currently, we do not participate in any co-marketing or co-development efforts with outside
companies. However, we have specific plans to establish several strategic partnership programs
with area ISPs (Internet Service Providers) and computer consulting companies. These
partnerships are intended to attract more sub-contracting work from potential competitors, in
exchange for a commission to be paid for each lead and resulting new client.

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Ibrio, Inc.

5.5 Milestones
The accompanying table lists important program milestones, with dates and managers in
charge, and budgets for each. The milestone schedule indicates our emphasis on planning for
implementation.
What the table doesn't show is the commitment behind it. Our business plan includes complete
provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings every
month to discuss the variance and course corrections.
Table: Milestones

Milestones
Milestone
Incorporation
Acquire Start-up Financing
Accounting/Balance Sheet Setup
Acquire Chamber Memberships
Staff Sales Position #1
Staff Development Position #1
Upgrade Current Sales Literature
Acquire Dedicated Web Host
Service
Staff Development Position #2
Staff Sales Position #2
Acquire Large Scale Outside
Marketing
Staff Developer Postion #3
Other
Totals

Start Date
8/14/2000
8/14/2000
8/31/2000
10/2/2000
10/9/2000
10/16/2000
10/23/2000
11/1/2000

End Date
8/28/2000
10/1/2000
8/31/2000
10/9/2000
10/16/2000
10/23/2000
11/6/2000
11/8/2000

Budget
$500
$0
$300
$600
$2,240
$3,200
$300
$770

Manager
Dave
Dave
Dave
Dave
Dave
Brandon
Dave
Brandon

Department
Admin
Admin
Admin
Marketing
HR
HR
Sales
Development

1/15/2001
2/12/2001
3/5/2001

2/1/2001
2/26/2001
4/5/2001

$3,200
$2,240
$2,000

Brandon
Dave
Dave

HR
HR
Marketing

3/19/2001
1/1/2001

4/2/2001
1/1/2001

$3,200
$0
$18,550

Brandon
ABC

HR
Department

6.0 Management Summary

Ibrio Inc. is owned and operated by two partners with equal equity in the company, and both
directors in the corporation.
David Hickethier attended Williamson College on a three year scholarship basis, earning his
Associates Degree in construction management. He has completed many business management
and business finance courses and has also had hands on experience with managing people. He
has one year experience in Internet and Web-related sales and nearly two total years of
professional sales experience.
R. Brandon Andrews is an experienced website developer and strategist with over four years of
commercial Web and Internet services experience, plus numerous attendance to various related
seminars and educational classes. Previous to the forming of Ibrio Inc., he owned and operated
a sole-proprietorship, which offered similar Web-related services, but did not market exclusively
to small business.

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Ibrio, Inc.

6.1 Organizational Structure

Ibrio Inc. will depend on the two main principals, David Hickethier and Brandon Andrews, for all
management responsibilities. This will include office management, accounts receivable and
payable, marketing, and talent recruitment.
David Hickethier will serve as chief operations officer and sales manager. He will supervise all
salesmen and all sales promotions and projects. David will also be holding the office of the
treasurer therefore will be responsible for all financial related matters.
Brandon Andrews will serve as chief technology officer and lead Web developer. He will be
directly supervising all Web development (employee and sub-contracting projects), and will also
be responsible for any necessary training in the same department.
6.2 Management Team Gaps
The current management team will require support in both the business development and
administrative departments. Both managers have had prior experience in these fields, but feel
as though their experience is limited given the fact that prior working environments rarely
required this type of support.
We will turn to Parks & Company, our finance and accounting firm, to provide expert advise and
counseling in both the business development and administrative support departments. This
strategy will allow the partners of Ibrio Inc. to lend the majority of their time to their respective
areas of the company.
We will turn to the law offices of Keefer Wood Allen & Rahal, LLP for all advice concerning the
legal issues of running Ibrio, Inc.
6.3 Personnel Plan
We visualize implementing a "team" development system that will consist of two full-time sales
people and three full-time Web developers. Of the Web developers, one position will be filled by
a highly-qualified senior Web professional and two lesser-qualified, lower paid developers. All
three will work full-time on separate projects provided to them by the sales people. However,
the senior developer will have the duty of maintaining the same high quality level of work in the
junior developers' projects, that our clients have learned to expect from us now. By May, 2001
we plan to have one of these teams fully functional.
The following table shows how we plan on making the above a reality.

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Ibrio, Inc.

Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

$3,400
$16,228
$10,944
$7,920
$0
$38,492

$25,000
$23,000
$21,000
$21,000
$0
$90,000

$60,000
$27,000
$25,000
$25,000
$0
$137,000

$3,400
$16,504
$10,096
$0
$30,000

$25,000
$23,000
$21,000
$0
$69,000

$60,000
$25,000
$23,000
$0
$108,000

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$68,492

$159,000

$245,000

Production Personnel
Brandon/Web Developer
Keith/Hired in Oct
Developer #2/Hired in Feb
Developer #3/Hired in Apr
Other
Subtotal
Sales and Marketing Personnel
Dave/Marketing
Sales Position #1/Hired in Oct
Sales Position #2/Hired in Feb
Other
Subtotal
General and Administrative Personnel
N/A
N/A
Subtotal
Other Personnel
N/A
N/A
Subtotal
Total People
Total Payroll

7.0 Financial Plan

Ibrio's financials summarize the following areas:

Important Assumptions.
Key Financial Indicators.
Break-even Analysis.
Projected Profit and Loss.
Projected Cash Flow.
Projected Balance Sheet.
Business Ratios.

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Ibrio, Inc.

7.1 Important Assumptions

Our financial assumptions are based on a steady economy and standard numbers for a business
in our industry.
Table: General Assumptions

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

Year 1

Year 2

Year 3

1
10.00%
13.00%
25.42%
0

2
10.00%
13.00%
25.00%
0

3
10.00%
13.00%
25.42%
0

7.2 Key Financial Indicators

The following chart indicates our key financial indicators over the next three years.

Chart: Benchmarks

Benchmarks
7.0
6.0
5.0

Year 1

4.0

Year 2

3.0

Year 3

2.0
1.0
0.0
Sales

Operating Expenses
Gross Margin%

Collection Days

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Ibrio, Inc.

7.3 Break-even Analysis

The following table and chart summarize our break-even analysis. With two developers and two
salesmen we plan on developing eight sites in November and once the two new hires are fully
trained doubling the number to 16 sites a month. (We don't plan on that happening until March
2001).
The average variable cost is an aggregate measure for all the types of services which will be
offered.

Chart: Break-even Analysis

Break-even Analysis
$4,000
$3,000
$2,000
$1,000
$0
($1,000)
($2,000)
($3,000)
($4,000)
$0

$1,600
$800

$3,200
$2,400

$4,800
$4,000

$6,400
$5,600

$8,000
$7,200

$8,800

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$4,649

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

9%
$4,210

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Ibrio, Inc.

7.4 Projected Profit and Loss

Our projected profit and loss is shown on the following table. Some highlights are the Gross
Margin at 67% for our first year and steadily increasing. Our Net Profit/Sales starting at 26%
and increasing by approximately 10% the following two years to reach 45% by our third year.
Chart: Profit Monthly

Profit Monthly
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$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

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Ibrio, Inc.

Chart: Profit Yearly

Profit Yearly

$500,000

$400,000

$300,000

$200,000

$100,000

$0
Year 1

Year 2

Year 3

Chart: Gross Margin Monthly

Gross Margin Monthly

$21,000
$18,000
$15,000
$12,000
$9,000
$6,000
$3,000
$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 24

Ibrio, Inc.

Chart: Gross Margin Yearly

Gross Margin Yearly

$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Year 1

Year 2

Year 3

Page 25

Ibrio, Inc.

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Production Payroll
Other
Total Cost of Sales

$164,520
$15,550
$38,492
$0
$54,042

$514,900
$50,000
$90,000
$0
$140,000

$1,194,500
$127,600
$137,000
$0
$264,600

Gross Margin
Gross Margin %

$110,478
67.15%

$374,900
72.81%

$929,900
77.85%

$30,000
$2,790
$1,020
$0
$33,810
20.55%

$69,000
$3,500
$3,000
$1,000
$76,500
14.86%

$108,000
$10,000
$7,000
$2,500
$127,500
10.67%

$0
$0
$3,180
$4,500
$0
$0
$805
$0
$8,219
$0
$16,704
10.15%

$0
$0
$5,000
$12,000
$2,000
$0
$2,000
$2,500
$19,080
$0
$42,580
8.27%

$0
$0
$12,000
$24,000
$4,000
$0
$5,000
$5,000
$29,400
$0
$79,400
6.65%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

$0
$0
$0
$0
0.00%

Total Operating Expenses

$50,514

$119,080

$206,900

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$59,964
$63,144
$2,600
$14,330

$255,820
$260,820
$2,302
$63,380

$723,000
$735,000
$1,664
$183,340

Net Profit
Net Profit/Sales

$43,034
26.16%

$190,139
36.93%

$537,996
45.04%

Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll
Advertising/Promotion
Travel
Miscellaneous
Total Sales and Marketing Expenses
Sales and Marketing %
General and Administrative Expenses
General and Administrative Payroll
Sales and Marketing and Other Expenses
Depreciation
Rent
Depreciation
Leased Equipment
Utilities
Insurance
Payroll Taxes
Other General and Administrative Expenses
Total General and Administrative Expenses
General and Administrative %
Other Expenses:
Other Payroll
Consultants
Contract/Consultants
Total Other Expenses
Other %

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Ibrio, Inc.

7.5 Projected Cash Flow

Cash flow projections for the first half of the year are slightly declining and in May they begin to
raise sufficiently. We may need to borrow against our accounts receivables but are projecting
that the initial capital raised should cover us until our cash becomes fluid.

Chart: Cash

Cash
$40,000
$35,000
$30,000
$25,000

Net Cash Flow

$20,000

Cash Balance

$15,000
$10,000
$5,000
$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 27

Ibrio, Inc.

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$54,292
$70,969
$125,260

$169,917
$261,372
$431,289

$394,185
$638,141
$1,032,326

$0
$0
$0
$0
$0
$0
$10,700
$135,960

$0
$0
$0
$0
$0
$0
$0
$431,289

$0
$0
$0
$0
$0
$0
$0
$1,032,326

Year 1

Year 2

Year 3

$68,492
$40,764
$109,256

$159,000
$156,598
$315,598

$245,000
$379,881
$624,881

$0
$0
$0
$0
$0
$0
$0
$109,256

$0
$0
$0
$4,589
$0
$20,000
$0
$340,187

$0
$0
$0
$5,222
$0
$20,000
$0
$650,103

$26,704
$43,704

$91,102
$134,806

$382,224
$517,029

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
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

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Ibrio, Inc.

7.6 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and
a sufficiently healthy financial position. The monthly estimates are included in the appendix.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$43,704
$39,260
$7,650
$90,614

$134,806
$122,871
$7,650
$265,327

$517,029
$285,045
$7,650
$809,724

$0
$3,180
($3,180)
$87,434

$20,000
$8,180
$11,820
$277,147

$40,000
$20,180
$19,820
$829,544

Year 1

Year 2

Year 3

$9,050
$0
$0
$9,050

$13,213
$0
$0
$13,213

$32,836
$0
$0
$32,836

Long-term Liabilities
Total Liabilities

$20,000
$29,050

$15,411
$28,624

$10,189
$43,025

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

$18,000
($2,650)
$43,034
$58,384
$87,434

$18,000
$40,384
$190,139
$248,523
$277,147

$18,000
$230,523
$537,996
$786,519
$829,544

Net Worth

$58,384

$248,523

$786,519

Assets
Current Assets
Cash
Accounts Receivable
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

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Ibrio, Inc.

7.7 Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios
for profitability, risk, and return. The Industry Profile ratios, shown for comparison, are based
on Standard Industrial Classification (SIC) code 7375, Information Retrieval Services.
Table: Ratios
Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

212.97%

131.99%

9.70%

Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

44.90%
8.75%
103.64%
-3.64%
100.00%

44.33%
2.76%
95.74%
4.26%
100.00%

34.36%
0.92%
97.61%
2.39%
100.00%

25.00%
46.30%
76.60%
23.40%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

10.35%
22.87%
33.23%
66.77%

4.77%
5.56%
10.33%
89.67%

3.96%
1.23%
5.19%
94.81%

49.40%
21.20%
70.60%
29.40%

100.00%
67.15%
41.00%
1.70%
36.45%

100.00%
72.81%
35.88%
0.68%
49.68%

100.00%
77.85%
32.56%
0.84%
60.53%

100.00%
0.00%
78.10%
0.90%
1.90%

10.01
10.01
33.23%
98.25%
65.61%

20.08
20.08
10.33%
102.01%
91.47%

24.66
24.66
5.19%
91.71%
86.96%

1.57
1.19
70.60%
4.10%
13.80%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

26.16%
73.71%

36.93%
76.51%

45.04%
68.40%

n.a
n.a

2.81
54
5.50
27
1.88

2.81
86
12.17
25
1.86

2.81
93
12.17
21
1.44

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

0.50
0.31

0.12
0.46

0.05
0.76

n.a
n.a

$81,564
23.06

$252,114
111.14

$776,888
434.50

n.a
n.a

0.53
10%
5.67
2.82

0.54
5%
10.78
2.07

0.69
4%
15.98
1.52

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

Activity Ratios
Accounts Receivable Turnover
Collection Days
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

Page 30

Ibrio, Inc.

Dividend Payout

0.00

0.00

0.00

n.a

Page 31

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

$4,800
$0
$110
$200
$5,110

$5,400
$0
$280
$300
$5,980

$7,200
$0
$510
$540
$8,250

$8,400
$0
$750
$780
$9,930

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$19,200
$3,500
$2,290
$2,200
$27,190

$19,200
$4,200
$2,810
$2,700
$28,910

$19,200
$4,900
$3,330
$3,220
$30,650

Month 10

Month 11

Month 12

Sales
Website Development
Result-based Marketing
Maintenance
Hosting
Total Sales
Direct Cost of Sales

0%
0%
0%
0%

$0
$0
$0
$0
$0
Month 1

$0
$0
$0
$0
$0
Month 2

$8,400
$1,750
$1,010
$1,020
$12,180
Month 7

$11,200
$2,100
$1,350
$1,340
$15,990
Month 8

$14,000
$2,800
$1,790
$1,740
$20,330
Month 9

Website Development

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Result-based Marketing

$0

$0

$0

$0

$0

$0

$900

$1,080

$1,440

$1,800

$2,160

$2,520

Maintenance

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Hosting

$0

$0

$350

$350

$350

$350

$350

$1,100

$700

$700

$700

$700

Subtotal Direct Cost of Sales

$0

$0

$350

$350

$350

$350

$1,250

$2,180

$2,140

$2,500

$2,860

$3,220

Page 1

Appendix
Table: Personnel

Personnel Plan
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Production Personnel
Brandon/Web Developer

$0

$200

$200

$200

$300

$300

$300

$300

$400

$400

$400

$400

Keith/Hired in Oct

$0

$0

$1,836

$1,152

$1,584

$1,440

$1,584

$1,512

$1,840

$1,680

$1,760

$1,840

Developer #2/Hired in Feb

$0

$0

$0

$0

$0

$1,440

$1,584

$1,512

$1,656

$1,512

$1,584

$1,656

Developer #3/Hired in Apr

$0

$0

$0

$0

$0

$0

$0

$1,512

$1,656

$1,512

$1,584

$1,656

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

$200

$2,036

$1,352

$1,884

$3,180

$3,468

$4,836

$5,552

$5,104

$5,328

$5,552

Dave/Marketing

$0

$200

$200

$200

$300

$300

$300

$300

$400

$400

$400

$400

Sales Position #1/Hired in Oct

$0

$0

$1,904

$1,080

$1,440

$1,680

$1,680

$1,680

$1,760

$1,760

$1,760

$1,760

Sales Position #2/Hired in Feb

$0

$0

$0

$0

$0

$1,120

$1,232

$1,176

$1,288

$1,760

$1,760

$1,760

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

$200

$2,104

$1,280

$1,740

$3,100

$3,212

$3,156

$3,448

$3,920

$3,920

$3,920

General and Administrative

Personnel
N/A

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

N/A

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

N/A

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

N/A

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$400

$4,140

$2,632

$3,624

$6,280

$6,680

$7,992

$9,000

$9,024

$9,248

$9,472

Sales and Marketing Personnel

Other Personnel

Total People
Total Payroll

Page 2

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

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

13.00%

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 3

Month 4

Month 5

Month 6

Month 10

Month 11

Month 12

Sales

Month 1
$0

$0

$5,110

$5,980

$8,250

$9,930

$12,180

$15,990

$20,330

$27,190

$28,910

$30,650

Direct Cost of Sales

$0

$0

$350

$350

$350

$350

$1,250

$2,180

$2,140

$2,500

$2,860

$3,220

Production Payroll

$0

$200

$2,036

$1,352

$1,884

$3,180

$3,468

$4,836

$5,552

$5,104

$5,328

$5,552

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$200

$2,386

$1,702

$2,234

$3,530

$4,718

$7,016

$7,692

$7,604

$8,188

$8,772

Gross Margin

Month 2

Month 7

Month 8

Month 9

$0

($200)

$2,724

$4,278

$6,016

$6,400

$7,462

$8,974

$12,638

$19,586

$20,722

$21,878

0.00%

0.00%

53.31%

71.54%

72.92%

64.45%

61.26%

56.12%

62.16%

72.03%

71.68%

71.38%

Sales and Marketing

Expenses
Sales and Marketing
Payroll
Advertising/Promotion

$0

$200

$2,104

$1,280

$1,740

$3,100

$3,212

$3,156

$3,448

$3,920

$3,920

$3,920

$0

$0

$230

$230

$230

$300

$300

$300

$300

$300

$300

$300

Travel

$0

$0

$60

$60

$60

$120

$120

$120

$120

$120

$120

$120

Miscellaneous

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Sales and Marketing

Expenses
Sales and Marketing %

$0

$200

$2,394

$1,570

$2,030

$3,520

$3,632

$3,576

$3,868

$4,340

$4,340

$4,340

0.00%

0.00%

46.85%

26.25%

24.61%

35.45%

29.82%

22.36%

19.03%

15.96%

15.01%

14.16%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Gross Margin %
Operating Expenses

General and
Administrative Expenses
General and
Administrative Payroll
Sales and Marketing and
Other Expenses
Depreciation

$0

$0

$300

$300

$300

$300

$330

$330

$330

$330

$330

$330

Rent

$0

$0

$450

$450

$450

$450

$450

$450

$450

$450

$450

$450

Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Leased Equipment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Utilities

$0

$0

$55

$70

$70

$80

$80

$90

$90

$90

$90

$90

Insurance
Payroll Taxes
Other General and
Administrative Expenses
Total General and
Administrative Expenses
General and
Administrative %

12%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0
$0

$48
$0

$497
$0

$316
$0

$435
$0

$754
$0

$802
$0

$959
$0

$1,080
$0

$1,083
$0

$1,110
$0

$1,137
$0

$0

$48

$1,302

$1,136

$1,255

$1,584

$1,662

$1,829

$1,950

$1,953

$1,980

$2,007

0.00%

0.00%

25.48%

18.99%

15.21%

15.95%

13.64%

11.44%

9.59%

7.18%

6.85%

6.55%

Page 4

Appendix
Other Expenses:
Other Payroll

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Consultants

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Contract/Consultants

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Other Expenses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

Total Operating Expenses

$0

$248

$3,696

$2,706

$3,285

$5,104

$5,294

$5,405

$5,818

$6,293

$6,320

$6,347

Profit Before Interest and

Taxes
EBITDA

$0

($448)

($972)

$1,572

$2,731

$1,296

$2,168

$3,569

$6,820

$13,293

$14,402

$15,531

$0

($448)

($672)

$1,872

$3,031

$1,596

$2,498

$3,899

$7,150

$13,623

$14,732

$15,861

Other %

Interest Expense

$217

$217

$217

$217

$217

$217

$217

$217

$217

$217

$217

$217

Taxes Incurred

($65)

($166)

($297)

$339

$629

$270

$488

$838

$1,651

$3,269

$3,546

$3,829

Net Profit

($152)

($499)

Net Profit/Sales

0.00%

0.00%

($891)
-17.44%

$1,017

$1,886

$810

$1,464

$2,514

$4,953

$9,807

$10,639

$11,486

17.00%

22.86%

8.16%

12.02%

15.72%

24.36%

36.07%

36.80%

37.47%

Page 5

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

Cash Sales

$0

Cash from Receivables

$0

$0

$1,686

$0

$0

$1,973

$2,723

$3,277

$4,019

$5,277

$6,709

$114

$3,443

$4,057

$5,565

$6,703

$8,246

Subtotal Cash from Operations

$0

$0

$1,686

$2,088

$6,166

$7,334

$9,584

$11,980

$14,955

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$0

$1,686

$2,088

Month 1

Month 2

Month 3

Month 10

Month 11

Month 12

$8,973

$9,540

$10,115

$10,810

$13,774

$18,256

$19,783

$23,315

$28,370

$0
$0

$0
$0

$0
$0

$0
$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$10,700

$0

$0

$0

$0

$0

$6,166

$7,334

$20,284

$11,980

$14,955

$19,783

$23,315

$28,370

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$9,472

Cash Received
Cash from Operations

Additional Cash Received

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

Expenditures

0.00%

Expenditures from Operations

Cash Spending

$0

$400

$4,140

$2,632

$3,624

$6,280

$6,680

$7,992

$9,000

$9,024

$9,248

Bill Payments

$5

$150

$147

$1,577

$2,045

$2,443

$2,579

$3,754

$5,184

$6,114

$8,051

$8,715

Subtotal Spent on Operations

$5

$550

$4,287

$4,209

$5,669

$8,723

$9,259

$11,746

$14,184

$15,138

$17,299

$18,187

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

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Spent

$5

$550

$4,287

$4,209

$5,669

$8,723

$9,259

$11,746

$14,184

$15,138

$17,299

$18,187

Additional Cash Spent

Page 6

Appendix
Net Cash Flow

($5)

Cash Balance

$16,995

($550)
$16,445

($2,601)

($2,121)

$497

$13,844

$11,723

$12,219

($1,389)

$11,025

$234

$771

$4,645

$6,016

$10,183

$10,830

$21,855

$22,089

$22,860

$27,505

$33,521

$43,704

Month 10

Month 11

Month 12

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1
Assets

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Starting
Balances

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets

$17,000
$0
$7,650
$24,650

$16,995
$0
$7,650
$24,645

$16,445
$0
$7,650
$24,095

$13,844
$3,424
$7,650
$24,918

$11,723
$7,316
$7,650
$26,689

$12,219
$9,401
$7,650
$29,270

$10,830
$11,996
$7,650
$30,476

$21,855
$14,592
$7,650
$44,097

$22,089
$18,602
$7,650
$48,341

$22,860
$23,977
$7,650
$54,487

$27,505
$31,384
$7,650
$66,540

$33,521
$36,980
$7,650
$78,151

$43,704
$39,260
$7,650
$90,614

$0
$0
$0
$24,650

$0
$0
$0
$24,645

$0
$0
$0
$24,095

$0
$300
($300)
$24,618

$0
$600
($600)
$26,089

$0
$900
($900)
$28,370

$0
$1,200
($1,200)
$29,276

$0
$1,530
($1,530)
$42,567

$0
$1,860
($1,860)
$46,481

$0
$2,190
($2,190)
$52,297

$0
$2,520
($2,520)
$64,020

$0
$2,850
($2,850)
$75,301

$0
$3,180
($3,180)
$87,434

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Month 1

Month 2

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

$0
$0
$0
$0

$147
$0
$0
$147

$95
$0
$0
$95

$1,509
$0
$0
$1,509

$1,964
$0
$0
$1,964

$2,359
$0
$0
$2,359

$2,456
$0
$0
$2,456

$3,583
$0
$0
$3,583

$4,982
$0
$0
$4,982

$5,846
$0
$0
$5,846

$7,761
$0
$0
$7,761

$8,403
$0
$0
$8,403

$9,050
$0
$0
$9,050

Long-term Liabilities
Total Liabilities

$20,000
$20,000

$20,000
$20,147

$20,000
$20,095

$20,000
$21,509

$20,000
$21,964

$20,000
$22,359

$20,000
$22,456

$20,000
$23,583

$20,000
$24,982

$20,000
$25,846

$20,000
$27,761

$20,000
$28,403

$20,000
$29,050

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

$7,300
($2,650)
$0
$4,650
$24,650

$7,300
($2,650)
($152)
$4,498
$24,645

$7,300
($2,650)
($650)
$4,000
$24,095

$7,300
($2,650)
($1,542)
$3,108
$24,618

$7,300
($2,650)
($525)
$4,125
$26,089

$7,300
($2,650)
$1,361
$6,011
$28,370

$7,300
($2,650)
$2,171
$6,821
$29,276

$18,000
($2,650)
$3,635
$18,985
$42,567

$18,000
($2,650)
$6,149
$21,499
$46,481

$18,000
($2,650)
$11,101
$26,451
$52,297

$18,000
($2,650)
$20,909
$36,259
$64,020

$18,000
($2,650)
$31,548
$46,898
$75,301

$18,000
($2,650)
$43,034
$58,384
$87,434

$4,650

$4,498

$4,000

$3,108

$4,125

$6,011

$6,821

$18,985

$21,499

$26,451

$36,259

$46,898

$58,384

Net Worth

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