ASSIGNMENT on Busine ines s Plan
Submi Su bmitt tted ed to
Submi Submitt tted ed by
:
:
Abdullah M. Taher
Shantanu Das
Faculty, School of Business tio n Manag emen t Course: Prod Produ uctio ctio n & O per atio Dhanmondii Campu Campuss [B2602] AUB, Dhanmond Dhaka, Bang Bangladesh.
BBA, 29th Batch (B) ID: 200712883
AUB,Dhanmond Dhanmondii Camp Campus us
Dhaka, Bang Bangladesh.
Date Date of Submi ub missi ssion: on: 09-03-2010.
BUSINESS PLAN
Glob lobeNet Wire irele les ss
Broa roadband
[Wi-MAX ISP]
Prepared by: Serial 1 2
Name waqas Salman khan
ID 172 163
Page 2 of 28
Table of Contents Serial
Subject
1
Executive Summary
1.1 1.2 1.3 2
Co-subject
Page
Mission Keys to Success Objectives
03 04 04 04
Company Ownership Start-up Summary
05 05 05
Company Summary
2.1 2.2 3
Service
07
4
Market Analysis Summary
08 08 09 09 10
4.1 4.2 4.3 4.3.1 5
Strategy and Implementation Summary
5.1 5.2 5.3 5.3.1 5.4 6
10 11 11 11 13
Website Marketing Strategy Development Requirements
14 14 14
Personnel Plan
14 15
Break-even Analysis Projected Profit and Loss Projected Cash Flow Projected Balance Sheet Business Ratios
15 15 16 19 20 21
Financial Plan
8.1 8.2 8.3 8.4 8.5 9
Competitive Edge Marketing Strategy Sales Strategy Sales Forecast Milestones
Management Summary
7.1 8
10
Web Plan Summary
6.1 6.2 7
Market Segmentation Target Market Segment Strategy Service Business Analysis Competition and Buying Patterns
Appendix
23
Page 3 of 28
Executive Summary GlobeNet Wireless Broadband is an innovative start-up company that provides wireless broadband internet connections to several Dhaka Metropolitan Areas. Utilizing Wi-MAX technology and proprietary antennas and repeaters, GlobeNet will be able to serve a larger area with broadband Internet connections. GlobeNet was been founded by Fahad Karim. With a MBA and an undergraduate Computer Science degree from the Harvard University (USA), Fahad has the skills to execute on this wellresearched business plan. Fahad spent two years in the Karim Associates, which gave him not only an incredible and reasonable boost in confidence to accomplish a business venture, but also provided him with solid project management skills and experience. The market for wireless broadband Internet connections in Bangladesh is new but is widely open. Demand for traditional broadband connections is surpassing conservative forecasts. The wireless market is even more exciting due to the significantly lower costs needed in terms of delivery infrastructure. As GlobeNet's customer base grows, costs decrease through scales of economy, creating an even more compelling argument for GlobeNet's existence. GlobeNet has targeted three distinct groups. The first is students, a market segment that uses the Internet the most and also have high expectations regarding the speed of the connection. The second group is professionals, people with disposable income, not a lot of excessive time on their hands, and a group that uses the Internet a fair amount, both personally as well as professionally. The last group that will be targeted is techies. This group is the early adopters of any type of technology and spend incredible amounts of time immersed in Internet technology. GlobeNet is a compelling business concept that leverages advances in technology and proprietary tools to offer a market need at below market prices. In addition to earning great margins with low infrastructure costs, margins increase as the customer base increases. This exciting business plan has a high likelihood of success with Fahad Karim responsible for the execution of it. The business will earn modest profits in year two, increasing exponentially in year three. Net profit is forecasted to be commensurate in years two and three.
Page 4 of 28
1.1 Mission It is GlobeNet Wireless's mission to provide fast, wireless Internet access at a reasonable price. The most important thing to remember is that every customer must be satisfied with our services.
1.2 Keys Success
to
Practice disciplined growth. Reach profitability by year two. • Ensure that the customer's needs are met and maintain • a 90% customer retention ratio. •
1.3 Objectives • • •
Provide, fast, reliable, wireless Internet access. Treat customers with the upmost respect. Become profitable within two years.
Page 5 of 28
Company Summary GlobeNet Wireless will be formed in 2011 to offer an inexpensive, wireless broadband Internet connection to compete with DSL or cable offerings. Using Wi-MAX technology, it is inexpensive to set up a neighborhood network. The company was founded by Fahad Karim. Fahad will rely on outside investors for the necessary start-up costs.
2.1 Company Ownership GlobeNet Broadband Wireless is a Wi-NET BD Pvt. Ltd. company with Fahad Karim as the principal and majority owner.
2.2 Start-up Summary Equipment that will be needed is as follows: • • • • •
Three computer workstations; Wireless access point; Five repeaters; Five antennas; Assorted office equipment and supplies.
Page 6 of 28
Start-up Funding
Start-up Expenses to Fund
$9,500
Start-up Assets to Fund
$60,500
Total Funding Required
$70,000
Assets Non-cash Assets from Start-up
$5,000
Cash Requirements from Start-up
$55,500
Additional Cash Raised
$0
Cash Balance on Starting Date
$55,500
Total Assets
$60,500
Liabilities and Capital Liabilities Current Borrowing
$0
Long-term Liabilities
$0
Accounts Payable (Outstanding Bills)
$0
Other Current Liabilities (interest-free) $0 Total Liabilities
$0
Capital Planned Investment Investor 1
$15,000
Investor 2
$55,000
Additional Investment Requirement
$0
Total Planned Investment
$70,000
Loss at Start-up (Start-up Expenses)
($9,500)
Total Capital
$60,500
Total Capital and Liabilities
$60,500
Total Funding
$70,000
Page 7 of 28
Start-up
Requirements Start-up Expenses Legal $2,000 Stationery etc. $100 Consultants $1,000 Insurance $200 Rent $200 Research and Development $1,000 Expensed Equipment $5,000 Total Start-up Expenses $9,500 Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets
$55,500 $0 $5,000 $60,500
Total Requirements
$70,000
Servic es GlobeNet offers wireless broadband Internet access. The service is DSL speed with customers only needing a Wi-MAX card/modem and to live within range of the signal which covers a thirty block radius currently. There are plans to enlarge the coverage area as more customers sign up. Wi-MAX technology is based off of 2.4 Mhz spectrum wireless transmissions. Using the same wave lengths that some cordless phones use, the Internet signals are broadcasted out through the neighborhood. With the supplied password and a Wi-MAX receiver in each customer's computer, customers will have fast, wireless Internet connections.
Page 8 of 28
Market Summary
Analysis
Within the last three years there has been a proliferation of broadband Internet connections. With so many people enjoying fast connections at work, they are no longer willing to deal with a dial-up connection at home. With the advent of Wi-MAX technology, customers can now enjoy a fast connection without having to lay expensive cables since the signal is sent via radio waves. The targeted market segments are: students, professionals, techies.
4.1 Market Segmentation The market can be segmented into three distinct groups: •
Students: these are people currently in academia and are accustomed to fast connections and are willing to pay for it. This group uses the Internet the most, whether they are trading MP3s or downloading videos.
Professionals: this group conducts a fair amount of business over the Internet, whether banking, e-commerce, or communications. •
•
Techies: this group embraces technology as they enjoy challenging themselves with technology and the complexity it brings.
Other than the students, GlobeNet' customers are fairly affluent (household income of >$50,000) and spend their money on technology offerings, whether it is digital cable, cellular service, or broadband Internet connections. The target customers are also generally well educated with 65% having a college degree and 20% having a graduate degree. Combining several demographic factors, GlobeNet arrives at the following primary customer profile: Spends 10 hours a week on the Internet away from home. Has purchased something from a website at least once within • the last two months. Educated with at least some course work for an undergraduate • degree. Household income of at least $50,000. • •
Page 9 of 28
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Students Professionals Techies Total
Growth 9% 8% 11% 8.87%
4.2 Target Strategy
CAGR 54,000 34,000 10,000 98,000
Market
58,860 36,720 11,100 106,680
64,157 39,658 12,321 116,136
69,931 42,831 13,676 126,438
76,225 46,257 15,180 137,662
9.00% 8.00% 11.00% 8.87%
Segment
GlobeNet has chosen the three aforementioned target markets due to their adoption of broadband Internet technology. It is these three groups that are most likely to use a fast connection and the most willing to pay a premium for the connection.
4.3 Service Analysis
Business
There are three main participants within the consumer broadband Internet market. •
• •
DSL (digital subscriber line). A connection that utilizes the copper phone lines as the method of transmission. Cable. A connection that uses cable TV wiring for transmission. Satellite connections. These use satellites, in orbit to provide "cable" TV as well as Internet connections to residential and remote consumers.
Page 10 of 28
4.3.1 Competition and Buying Patterns As mentioned in the previous section, DSL, cable, and satellite access are the competitors in the broadband market. Consumer buying patterns are based on two factors: •
Availability: not every type of broadband connection is available to every consumer. Consumers often pick service providers based on what is available to them.
•
Convenience: this is often based on where the outlet cords are based in the house, whether the computer will be located closer to the cable TV or nearer to a phone jack.
Strategy Summary
and
Implementation
Simply put, GlobeNet' strategy is to offer a service, demanded by customers, at a price that undercuts the competition. This will be accomplished, not by accepting below-market margins, but by leveraging technology, to help drive GlobeNet' costs down. Awareness regarding GlobeNet' services will be generated effectively and inexpensively to the specific target segments that GlobeNet has focused on.
5.1 Competitive Edge GlobeNet' competitive edge is the effective and efficient use of Wi-MAX technology. Wi-MAX, while a fairly recent technology, has been adopted by several different service providers as well as used for home-based networks. What provides GlobeNet with a competitive edge is its efficient use of the technology. GlobeNet has developed a proprietary antenna that allows for signal transmission over great distances with less signal loss. Additionally, GlobeNet has significantly reduced administrative costs by having most administrative activities like marketing, sales, and service details administered via the Internet.
Page 11 of 28
5.2 Marketing Strategy As the name implies, GlobeNet will be using a GlobeNet approach to developing awareness of the offered services. GlobeNet will adopt a multi- pronged marketing approach:
Advertising/postings with local retailers and commercial businesses. This will provide GlobeNet with great visibility in the exact community that it operates in. Mailings. GlobeNet will adopt a targeted mailing campaign to local residents. Website. GlobeNet will leverage its website as a comprehensive and efficient source of marketing/sales information.
•
•
•
5.3 Sales Strategy The sales strategy that GlobeNet will adopt is based on developing an awareness of GlobeNet' service as a viable alternative to Cable and DSL within the community. The message used will be that you can receive broadband speed connections to your computer, wherever it may be, even your laptop on your front lawn, at a price that is a fraction of the current competitors'. This will be done with targeted advertising with local retail/commercial establishments in the area. Additionally, GlobeNet will rely on mailings to get the word out. Lastly, GlobeNet will have a website for marketing, sales, and administrative purposes.
5.3.1 Sales Forecast GlobeNet has developed a conservative sales forecast. Adoption rates of customers are fairly steady from one month to the next. A conservative approach has been adopted to minimize any external variables that may effect future operations. GlobeNet believes that it will experience extensive growth for several years for several reasons. The first is the general adoption of broadband connections which has been encouraging for the last several years. Another reason GlobeNet believes their forecast to be accurate is it offers a viable, less expensive alternative to current broadband connections.
Page 12 of 28
Sales Forecast
Year 1
Year 2
Year 3
Monthly Internet Service
$36,584
$132,665 $211,443
Other
$0
$0
$0
Total Sales
$36,584
$132,665
$211,443
Direct Cost of Sales
Year 1
Year 2
Year 3
Administrative costs
$1,829
$6,633
$10,572
Other
$0
$0
$0
$6,633
$10,572
Sales
Subtotal Direct Cost of Sales $1,829
Page 13 of 28
5.4 Milestones Milestones are a very important aspect of a business plan. They provide concrete, achievable, yet lofty goals that the business must concentrate on. By targeting lofty goals, GlobeNet ensures that it is aiming high, therefore it is more likely to achieve more. The milestones that GlobeNet has chosen are very specific to the company and will be embraced by all employees.
Milestones
Milestone Business plan completion First 10 customers Profitability Enlargement of the network Totals
Start Date End Date Budget
Manager
Department
1/1/2003
$0
Fahad
Management
1/1/2003 3/30/2003 $0 1/1/2003 2/1/2004 $0
Fahad Fahad
Sales Operations
1/1/2003
Fahad
Operations
2/1/2003
2/1/2004
$0 $0
Page 14 of 28
Web Summary
Plan
The website will be used for: • •
Marketing/sales; Administrative functions.
6.1 Website Strategy
Marketing
All of GlobeNet' marketing information will be present on the website for viewing and for downloading/printing. Awareness regarding the website will be accomplished by inclusion of the website address on all printed materials. Additionally, the website will have a comprehensive submission procedure to all of the popular search engines.
6.2 Development Requirements The website will be developed in-house by leveraging interns.
Management Summary Fahad Karim, founder and president will be the anchor of the management team. Fahad received his undergraduate degree in computer science from the HARVARD University. While Fahad enjoyed the course work he recognized that it was not something that he was interested in pursuing as a career. Fahad decided that it would be in his best interest to study for an MBA, however, he was not immediately ready to do this. So Fahad headed off to Ghana with the Peace Corps to develop community-based trading systems. Fahad's Peace Corp experience was invaluable, providing him with extensive project management experience as well as giving him confidence that he could accomplish anything he set his mind out to do. After getting back to the States, Fahad began the MBA program at the University of Chicago. Fahad's course of study concentrated on entrepreneurial ventures, recognizing at some point his desire to start his own business. Near the end of his second year, Fahad began to hear about Wi- MAX technology. He became interested in what he saw was a strong market need for inexpensive broadband Internet
connections transmitted wirelessly, thereby significantly decreasing delivery costs. Fahad formed GlobeNet Wireless to fulfill this market need.
Page 15 of 28
7.1 Personnel Plan The two main employees beyond Fahad are: •
Technician: this position is responsible for the smooth operation of the wireless network as well as the website.
•
Administration: this is a general customer service position, assisting in sales and support.
Personnel Plan
President Technician Administration Total People
Year 1 Year 2 $24,000 $36,000 $19,800 $21,600 $15,000 $18,000 3 3
Year 3 $48,000 $21,600 $18,000 3
Total Payroll
$58,800 $75,600 $87,600
Financial Plan The following sections outline important financial information.
8.1 Break-even Analysis Average per-unit revenue: based on the $20 monthly access fee. Average per-unit variable cost: costs based on infrastructure, and administrative costs. Estimated monthly fixed costs: Internet connections costs.
Page 16 of 28
Break-even Analysis
Monthly Revenue Break-even
$8,072
Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost
5% $7,668
8.2 Projected Profit and Loss The following table and charts show the Projected Profit and Loss.
Page 17 of 28
Page 18 of 28
Pro Forma Profit and Loss
Year 1
Year 2
Year 3
Sales
$36,584
$132,665
$211,443
Direct Cost of Sales
$1,829
$6,633
$10,572
Other Costs of Sales
$0
$0
$0
Total Cost of Sales
$1,829
$6,633
$10,572
Gross Margin
$34,755
$126,032
$200,871
Gross Margin %
95.00%
95.00%
95.00%
$58,800
$75,600
$87,600
Sales and Marketing and Other Expenses $2,400
$5,600
$12,000
Depreciation
$996
$1,002
$1,002
Rent
$2,400
$2,400
$2,400
Utilities
$9,600
$13,000
$15,000
Insurance
$3,000
$3,000
$3,000
Payroll Taxes
$8,820
$11,340
$13,140
Other
$6,000
$6,000
$6,000
Total Operating Expenses
$92,016
$117,942
$140,142
Profit Before Interest and Taxes
($57,261)
$8,090
$60,729
EBITDA
($56,265)
$9,092
$61,731
Interest Expense
$0
$0
$0
Taxes Incurred
$0
$2,427
$18,219
Net Profit
($57,261)
$5,663
$42,510
Net Profit/Sales
-156.52%
4.27%
20.10%
Expenses Payroll
Page 19 of 28
8.3 Projected Cash Flow The following table and chart display the Projected Cash Flow.
Pro Forma Cash Flow
Year 1
Year 2
Year 3
Cash Sales
$36,584
$132,665
$211,443
Subtotal Cash from Operations
$36,584
$132,665
$211,443
Sales Tax, VAT, HST/GST Received
$0
$0
$0
New Current Borrowing
$0
$0
$0
New Other Liabilities (interest-free)
$0
$0
$0
New Long-term Liabilities
$0
$0
$0
Sales of Other Current Assets
$0
$0
$0
Sales of Long-term Assets
$0
$0
$0
New Investment Received
$0
$0
$0
Subtotal Cash Received
$36,584
$132,665
$211,443
Expenditures
Year 1
Year 2
Year 3
Cash Spending
$58,800
$75,600
$87,600
Bill Payments
$31,112
$49,195
$77,871
Subtotal Spent on Operations
$89,912
$124,795
$165,471
Cash Received Cash from Operations
Additional Cash Received
Expenditures from Operations
Page 20 of 28
Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
Principal Repayment of Current Borrowing $0
$0
$0
Other Liabilities Principal Repayment
$0
$0
$0
Long-term Liabilities Principal Repayment
$0
$0
$0
Purchase Other Current Assets
$0
$0
$0
Purchase Long-term Assets
$0
$0
$0
Dividends
$0
$0
$0
Subtotal Cash Spent
$89,912
$124,795
$165,471
Net Cash Flow
($53,328)
$7,870
$45,972
Cash Balance
$2,172
$10,042
$56,014
8.4 Projected Balance Sheet The following table presents the Projected Balance Sheet. Pro Forma Balance Sheet
Year 1
Year 2
Year 3
Cash
$2,172
$10,042
$56,014
Other Current Assets
$0
$0
$0
Total Current Assets
$2,172
$10,042
$56,014
Long-term Assets
$5,000
$5,000
$5,000
Accumulated Depreciation
$996
$1,998
$3,000
Total Long-term Assets
$4,004
$3,002
$2,000
Total Assets
$6,176
$13,044
$58,014
Liabilities and Capital
Year 1
Year 2
Year 3
Accounts Payable
$2,938
$4,142
$6,603
Current Borrowing
$0
$0
$0
Other Current Liabilities
$0
$0
$0
Subtotal Current Liabilities
$2,938
$4,142
$6,603
Long-term Liabilities
$0
$0
$0
Total Liabilities
$2,938
$4,142
$6,603
Assets Current Assets
Long-term Assets
Current Liabilities
Co pyr ight
©
2010,
Glo be Net Wireless Broadband
Page 21 of 28
Paid-in Capital
$70,000
$70,000
Retained Earnings
($9,500)
($66,761) ($61,098)
Earnings
($57,261) $5,663
$42,510
Total Capital
$3,239
$8,902
$51,412
Total Liabilities and Capital $6,176
$13,044
$58,014
Net Worth
$8,902
$51,412
$3,239
$70,000
8.5 Business Ratios The following table illustrates the different Business Ratios, based on NAICS code 518111, Internet Service Providers.
Ratio Analysis
Year 1
Year 2
Year 3
Industry Profile
0.00%
262.63%
59.38%
15.97%
Other Current Assets
0.00%
0.00%
0.00%
56.35%
Total Current Assets
35.17%
76.99%
96.55%
87.48%
Long-term Assets
64.83%
23.01%
3.45%
12.52%
Total Assets
100.00%
100.00%
100.00%
100.00%
Current Liabilities
47.56%
31.76%
11.38%
30.66%
Long-term Liabilities
0.00%
0.00%
0.00%
23.07%
Total Liabilities
47.56%
31.76%
11.38%
53.73%
Net Worth
52.44%
68.24%
88.62%
46.27%
Sales
100.00%
100.00%
100.00%
100.00%
Gross Margin
95.00%
95.00%
95.00%
100.00%
251.52%
90.73%
74.90%
73.80%
Advertising Expenses
0.00%
0.00%
0.00%
1.37%
Profit Before Interest and Taxes
-156.52%
6.10%
28.72%
1.03%
Current
0.74
2.42
8.48
1.97
Quick
0.74
2.42
8.48
1.50
Total Debt to Total Assets
47.56%
31.76%
11.38%
59.78%
Pre-tax Return on Net Worth
-1767.98%
90.88%
118.12%
2.93%
Pre-tax Return on Assets
-927.10%
62.02%
104.68%
7.28%
Sales Growth Percent of Total Assets
Percent of Sales
Selling, General Expenses
&
Administrative
Main Ratios
Page 22 of 28
Additional Ratios
Year 1
Year 2
Year 3
Net Profit Margin
-156.52%
4.27%
20.10%
n.a
Return on Equity
-1767.98%
63.62%
82.69%
n.a
Accounts Payable Turnover
11.59
12.17
12.17
n.a
Payment Days
27
26
24
n.a
Total Asset Turnover
5.92
10.17
3.64
n.a
Debt to Net Worth
0.91
0.47
0.13
n.a
Current Liab. to Liab.
1.00
1.00
1.00
n.a
Net Working Capital
($765)
$5,900
$49,412
n.a
Interest Coverage
0.00
0.00
0.00
n.a
Assets to Sales
0.17
0.10
0.27
n.a
Current Debt/Total Assets
48%
32%
11%
n.a
Acid Test
0.74
2.42
8.48
n.a
Sales/Net Worth
11.30
14.90
4.11
n.a
Dividend Payout
0.00
0.00
0.00
n.a
Activity Ratios
Debt Ratios
Liquidity Ratios
Additional Ratios
Page 23 of 28
Appendix Sales Forecast
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Sales Monthly Internet 0% $0 Service
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
Other
0% $0
$0
$0
$0
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
Total Sales Direct Sales
Cost
$0
$0
$0
$0
$0
$0
$0
$0
$0
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12
of
Administrative costs
$0
$0
$60
$106
$127
$144
$177
$194
$216
$245
$266
$294
Other
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$60
$106
$127
$144
$177
$194
$216
$245
$266
$294
Subtotal
Direct
Cost of Sales
Personnel Plan
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 President
0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Technician
0% $0
$1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Administration
0% $0
$0
$1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
2
3
Total People
1
3
3
3
3
3
3
3
3
3
Total Payroll
$2,000 $3,800 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300
General Assumptions
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Plan Month
1
2
3
4
5
6
7
8
9
10
11
12
Current Interest Rate
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Longterm Interest Rate
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate
30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other
0
0
0
0
0
0
0
0
0
0
0
0
Page 24 of 28
Pro Forma Profit and Loss
Month Month Month 1 2 3 Sales
Month 4
Month 5
Month 6
Month 7
Month 8
Month Month Month Month 9 10 11 12
$0
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
Direct Cost Sales
of
$0
$0
$60
$106
$127
$144
$177
$194
$216
$245
$266
$294
Other Costs Sales
of
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$60
$106
$127
$144
$177
$194
$216
$245
$266
$294
Gross Margin
$0
$0
$1,140 $2,006 $2,417 $2,743 $3,366 $3,683 $4,106 $4,654 $5,057 $5,583
Gross Margin %
0.00% 0.00%
Total Cost
of Sales
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
95.00 %
Expenses Payroll
$2,000 $3,800 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300
Sales and Marketing
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
Depreciati on
$83
$83
$83
$83
$83
$83
$83
$83
$83
$83
$83
$83
Rent
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
Utilities
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
$800
Insurance
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$250
$300
$570
$795
$795
$795
$795
$795
$795
$795
$795
$795
$795
Other
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
Total Operating Expenses
$4,333 $6,403 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128 $8,128
Profit Before Interest and Taxes
($4,33 ($6,40 ($6,98 3) 3) 8)
($6,12 2)
($5,71 1)
($5,38 5)
($4,76 2)
($4,44 5)
($4,02 ($3,47 ($3,07 ($2,54 2) 4) 1) 5)
EBITDA
($4,25 ($6,32 ($6,90 0) 0) 5)
($6,03 9)
($5,62 8)
($5,30 2)
($4,67 9)
($4,36 2)
($3,93 ($3,39 ($2,98 ($2,46 9) 1) 8) 2)
Interest Expense
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Taxes Incurred
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Net Profit
($4,33 ($6,40 ($6,98 3) 3) 8)
($6,12 2)
($5,71 1)
($5,38 5)
($4,76 2)
($4,44 5)
($4,02 ($3,47 ($3,07 ($2,54 2) 4) 1) 5)
Net Profit/Sale s
0.00% 0.00% 582.33 289.85 224.50 186.54 134.41 114.65 93.06 % % % % % % %
and Other Expenses
Payroll Taxes
15 %
70.91 %
57.70 %
43.30 %
Page 25 of 28
Pro Forma Cash Flow
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Cash Received Cash from Operations
Cash Sales
$0
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
Subtotal Cash from Operations
$0
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
0.00 $0 %
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Current Borrowing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Other Liabilities (interestfree)
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
New Longterm Liabilities
$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
Subtotal Cash Received
$0
$0
$1,200 $2,112 $2,544 $2,887 $3,543 $3,877 $4,322 $4,899 $5,323 $5,877
Expenditur es
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12
Additional Cash Received Sales Tax,
VAT, HST/GST Received
Expenditur from es Operations
Cash Spending Bill Payments
Subtotal Spent on
$2,000 $3,800 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $5,300 $75
$2,259 $2,530 $2,807 $2,851 $2,873 $2,890 $2,923 $2,940 $2,962 $2,991 $3,012
$2,075 $6,059 $7,830 $8,107 $8,151 $8,173 $8,190 $8,223 $8,240 $8,262 $8,291 $8,312
Operations
Additional
Page 26 of 28
Cash Spent Sales Tax,
VAT, HST/GST Paid Out
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Liabilities Principal Repaymen t
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Long-term Liabilities Principal Repaymen t
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Purchase Other Current Assets
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Purchase Long-term Assets
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Dividends
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Subtotal Cash Spent
$2,075 $6,059 $7,830 $8,107 $8,151 $8,173 $8,190 $8,223 $8,240 $8,262 $8,291 $8,312
Principal Repaymen
t of Current Borrowing
Flow
($2,07 ($6,05 ($6,63 ($5,99 ($5,60 ($5,28 ($4,64 ($4,34 ($3,91 ($3,36 ($2,96 ($2,43 5) 9) 0) 5) 7) 6) 7) 6) 8) 3) 8) 5)
Cash Balance
$53,42 $47,36 $40,73 $34,74 $29,13 $23,84 $19,20 $14,85 $10,93 $7,575 $4,607 $2,172 5 6 7 2 5 9 1 6 8
Net
Cash
Pro Forma Balance Sheet
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 Assets
Startin g Balanc es
Current Assets Cash
$55,50 $53,4 $47,36 $40,73 $34,74 $29,13 $23,84 $19,20 $14,85 $10,93 $7,575 $4,607 $2,172 0 25 6 7 2 5 9 1 6 8
Other Current Assets
$0
Total Current Assets
$55,50 $53,4 $47,36 $40,73 $34,74 $29,13 $23,84 $19,20 $14,85 $10,93 $7,575 $4,607 $2,172 0 25 6 7 2 5 9 1 6 8
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Longterm
Page 27 of 28
Assets Longterm Assets
$5,000
$5,00 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 0
Accumul ated $0 Depreciat ion
$83
Total Longterm Assets
$5,000
$4,91 $4,834 $4,751 $4,668 $4,585 $4,502 $4,419 $4,336 $4,253 $4,170 $4,087 $4,004 7
Total Assets
$60,50 $58,3 $52,20 $45,48 $39,41 $33,72 $28,35 $23,62 $19,19 $15,19 $11,74 $8,694 $6,176 0 42 0 8 0 0 1 0 2 1 5
Liabilities and Capital
$166
$249
$332
$415
$498
$581
$664
$747
$830
$913
$996
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Liabilities Accounts $0 Payable
$2,17 $2,436 $2,712 $2,756 $2,776 $2,793 $2,825 $2,841 $2,862 $2,890 $2,911 $2,938 5
Current Borrowin $0 g
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Current $0 Liabilities
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Subtotal Current $0 Liabilities
$2,17 $2,436 $2,712 $2,756 $2,776 $2,793 $2,825 $2,841 $2,862 $2,890 $2,911 $2,938 5
Longterm $0 Liabilities
$0
Total $0 Liabilities
$2,17 $2,436 $2,712 $2,756 $2,776 $2,793 $2,825 $2,841 $2,862 $2,890 $2,911 $2,938 5
Paid-in Capital
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$70,00 $70,0 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 $70,00 0 00 0 0 0 0 0 0 0 0 0 0 0
Retained ($9,50 ($9,5 Earnings 0) 00)
($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 ($9,50 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0)
($4,3 33)
($10,7 ($17,7 ($23,8 ($29,5 ($34,9 ($39,7 ($44,1 ($48,1 ($51,6 ($54,7 ($57,2 36) 24) 46) 57) 42) 04) 49) 71) 45) 16) 61)
Earnings $0 Total Capital
$60,50 $56,1 $49,76 $42,77 $36,65 $30,94 $25,55 $20,79 $16,35 $12,32 $8,855 $5,784 $3,239 0 67 4 6 4 3 8 6 1 9
Total Liabilities $60,50 $58,3 $52,20 $45,48 $39,41 $33,72 $28,35 $23,62 $19,19 $15,19 $11,74 $8,694 $6,176 and 0 42 0 8 0 0 1 0 2 1 5 Capital Net Worth
$60,50 $56,1 $49,76 $42,77 $36,65 $30,94 $25,55 $20,79 $16,35 $12,32 $8,855 $5,784 $3,239 0 67 4 6 4 3 8 6 1 9
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