Table of Contents
1.0 Executive Summary .................................................................................................................... 1 1.1 Objectives.................................................................................................................................... 1 Chart: Highlights .......................................................................................................................... 2 1.2 Mission .......................................................................................................................................... 2 1.3 Keys to Success ........................................................................................................................ 2 2.0 Company Summary ..................................................................................................................... 2 2.1 Company Ownership ............................................................................................................... 2 2.2 Start-up Summary ................................................................................................................... 3 Table: Start-up.............................................................................................................................. 3 Table: Start-up Funding ............................................................................................................ 4 Chart: Start-up ............................................................................................................................. 5 3.0 Services ............................................................................................................................................ 5 4.0 Market Analysis Summary ........................................................................................................ 6 4.1 Market Segmentation ............................................................................................................. 6 Table: Market Analysis ............................................................................................................... 7 Chart: Market Analysis (Pie).................................................................................................... 7 4.2 Target Market Segment Strategy ...................................................................................... 7 4.3 Service Business Analysis ..................................................................................................... 8 4.3.1 Competition and Buying Patterns .............................................................................. 8 5.0 Strategy and Implementation Summary ............................................................................ 9 5.1 Competitive Edge ..................................................................................................................... 9 5.2 Marketing Strategy .................................................................................................................. 9 5.3 Sales Strategy ......................................................................................................................... 10 5.3.1 Sales Forecast.................................................................................................................. 10 Chart: Sales by Year ............................................................................................................. 12 Table: Sales Forecast ........................................................................................................... 11
Table of Contents
Chart: Profit Yearly .................................................................................................................... 19 7.4 Projected Cash Flow .............................................................................................................. 20 Chart: Cash .................................................................................................................................. 20 Table: Cash Flow ........................................................................................................................ 21 7.5 Business Ratios ....................................................................................................................... 21 Table: Ratios ................................................................................................................................ 22 7.6 Projected Balance Sheet...................................................................................................... 23 7.6 Projected Balance Sheet...................................................................................................... 23 Table: Balance Sheet ................................................................................................................ 23 Table: Sales Forecast ......................................................................................................................... 1 Table: Personnel ................................................................................................................................... 2 Table: Personnel ................................................................................................................................... 2 Table: General Assumptions ............................................................................................................ 3 Table: General Assumptions ............................................................................................................ 3 Table: Profit and Loss ......................................................................................................................... 4 Table: Profit and Loss ......................................................................................................................... 4 Table: Cash Flow .................................................................................................................................. 5 Table: Cash Flow .................................................................................................................................. 5 Table: Balance Sheet .......................................................................................................................... 6 Table: Balance Sheet .......................................................................................................................... 6
PC Repair
1.0 Executive Summary PC Repair will provide computer and technical consulting (repairs, training, networking and upgrade service) to local small businesses as well as home PC users. The company will focus on marketing, responsiveness, quality, and creating and retaining customer relations. PC Repair was initially formed as a sole proprietorship, but was reconfigured as an S Corporation in December of 2004. PC Repair will at first be a home office start-up, utilizing one studio room in the owner's home and serving customers in the local Ramsford-onBitstream area. In the third month of our plan, we will move into a leas ed office space and hire a second technician. As sales increase, we will hire additional personnel. The Market The very nature of the computing industry, with its extraordi nary rate of technological development, creates a constant need for businesses skill ed in updating and advising advisi ng customers on computer-related issues. In town, the majority of potential customers are dissatisfied with existing options, creating an attractive niche for an innovative start-up. Small business PC users will provide the majority of our business revenue. Business Week expects the computing industry to grow at a rate of 12 % and the processor speeds to continue to expand for years to come, providing a rich resource for sales. PC Repair has decided to focus mainly on the small business market, as these customers typically don't have a full-time IT person, but have full-time IT needs. PC Repair will offer an affordable, on-demand service for these customers. We can also offer maintenance agreements that generate additional monthly income. For our residential customers, we will offer a very affordable and helpful service with a very fl exible schedule to meet their needs. Our ta rget market will focus on Ramsford-on-Bitstream and the surrounding areas. Market research indicates there is an abundance of business for a small company such as PC Repair. Start-up Funding and Financials To get PC Repair started the owner is providing cash and assets. We are also seeking a short-
PC Repair
Chart: Highlights
1.2 Mission Our goal is to set the standard for on-site computer solutions through fast, on-site service and response. Our customers will always receive one-on-one personal attention at a very affordable price. Our customers will receive the highest quality of customer service available. Our employees will receive extensive training, a great place to work, fair pay and benefits, and incentives to use their own good judgement to solve customers' problems.
PC Repair
operations of the company as we expand the pers onnel to 5 within the next three years, lease a separate space for offices, and purchase company vehicles and cell phones. The owner, Jack Hacker, has 10 years of experience in the fields of technical support, networking, and computer training and repair. Jack has also spent the last three years as the manager of a custom computer building and repair store, and understands the computer needs of small businesses. 2.2 Start-up Summary Total start-up expenses include initial expenses for establishing our website, setting up the business, and doing our pre-opening advertising. Exact all ocations are shown in the table. The bulk of our start-up requirements are asset needs: we need diagnostic and repair equipment, half of which will be contributed to the business by the owner from his own materials. We are treating this equipment as assets because we expect it to last at least three years, and to have some resale value when we are through with it; we will buy additional expensed equipment in years two and three. We also need start-up inventory which includes RAM, spare hard drives, cables, and cases. Although we will keep expenses to a minimum for the first three months, before we move, we will also need cash at start-up, to see us through the next several months with a positive cash balance. We plan to fund our total start- up requirements direct owner investment (including the contributed assets), and a three-year loan secured with the owner's collateral (his home equity). We should be able to easil y repay this loan within three years, even wi th a much lower sales revenue than projected. (See the Cas h Flow table for projected repayment.) Table: Start-up
PC Repair
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
$3,025 $39,200 $42,225
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
$11,200 $28,000 $0 $28,000 $39,200
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities
$19,225 $0 $0 $0 $19,225
Capital Planned Investment Owner Investor Additional Investment Requirement Total Planned Investment
$23,000 $0 $0 $23,000
Loss at Start-up (Start-up Expenses) Total Capital
($3,025) $19,975
PC Repair
Chart: Start-up
3.0 Services PC Repair will offer computer repairs, training, networking and upgrade service to clients in two major categories: home PC users and small business users. As PC Repair and the client demands grow, we will offer software development to our business clients. From the very first day, we will offer on-site repair and consulting services, so that our clients don't need to take time out of their busy days to haul a computer in to our workshop. This is
PC Repair
4.0 Market Analysis Summary PC Repair will provide computer support in both a consulting and technical capacity to small business owners as well as home PC users. Since PC Repair is currently a one man operation, its growth in the first three months wi ll be limited by the owner's capacity to complete work. However, these first three months are critical for establishing our credibility and a reputation for getting the job done quickly and well. We will focus on delivering excellent service, and using the good word of mouth from this initial period to network with other potential clients. Personal market research by the owner indicates an attractive market niche for our services, of which PC Repair will take full advantage. The very nature of the computing industry, with its extraordinary rate of technological development, creates a constant need for businesses skilled in updating and advising customers on computer-related issues. National chains, such as "Geeks on Call," and Best Buy's "Geek Squad" have seen rapid growth in demand for these services in the last few years. Customers are seeking skilled help with everything from installation of software and hardware components, to networking, to transferring files from an old computer to a new one. Those who can often enlist their techsavvy children's help, but others are not so fortunate, and small-business owners need reliable and quick help with all their computer needs, s ince every hour down may mean an hour or more of lost revenue, especially for any business wi th a website or those doing e -commerce. 4.1 Market Segmentation The existing computer service market is so extensive that categorizing it is rather difficult. We have broken our potential market down into two groups, based on their needs: home PC users and small business clients. Home PC User Our home PC user market includes non-tech-savvy residents of the local area (15 mile radius),
PC Repair
quality repairs and support are available in a crisis. Their hardware needs will include the same items as home users, plus servers, backup systems, data storage, and wireless networking. The portion of the small business market we a re targeting is growing at around 2% a year. Table: Market Analysis
Market Analysis
Potential Customers Home PC Users Small Business Users Other Total
Year 1
Year 2
Year 3
Year 4
Year 5
25,000 10,000 0 35,000
26,750 10,100 0 36,850
28,623 10,201 0 38,824
30,626 10,303 0 40,929
32,770 10,406 0 43,176
Growth 7% 2% 0% 5.39%
Chart: Market Analysis (Pie)
CAGR 7.00% 1.00% 0.00% 5.39%
PC Repair
person, as frustrated clients waited for days or weeks for their critical components to be returned to full capacity, with no inexpensive alternative to the existing computer repair shops. All of our clients need technical assistance, but we are also selling peace of mind: our clients will know that friendly, efficient help is just a phone call away. As more and more companies switch their support services to automated call centers or touch-tone menus, the simple reassurance of hearing another human voice on the phone withi n a few rings is immeasurable. Even better is knowing that within a few hours, someone will show up and take care of their problem. Both the software and hardware si de of the computer industry continue to turn out new and revised computer components at alarming rates. For PC Repair this means job security well into the future. As reported by the Wall Street Journal , there seems to be no end to the development of the computer market. Business Week expects the computing industry to grow at a rate of 12% and the processor speeds to continue to expand for year s to come. 4.3 Service Business Analysis Secondary market research shows computer service customers tend to be very loyal to providers that do good work and satisfy their needs. An analysis of PC Repair's main competitors shows no overwhelming strengths that would be significant barriers to entry into the market, as our local competitors have seri ous weaknesses. The computer maintenance and repair industry is fragmented, with a few large, national players and hundreds of small, local stores. While most computers are actually repaired in-store, near the customer, parts for the repair come from major manufacturers and distributors; delays in receiving necessary parts can significantly slow down the repair process. Large chains have solved this problem by keeping vast amounts of inventory in stock at all times, while local stores offer customers the trade-off of personal interaction and trust that may make up for some delay. PC Repair has established a relationship with a local distributor to do rapid special-ordering;
PC Repair
1. Competitor A. They are a well established provider of computer upgrades and services, and do quick work. However, they have a high staff turnover, a young and inexperienced staff, and are more interested in selling new components than in maintaining existing machines or finding custom solutions. They do not offer any kind of pi ck-up and drop-off service, and do not offer on-site help. Th ey really only offer hardware support. 2. Competitor B. Smaller and less known then A, B provides many services for residents living in east and south parts of town. T hey are more willing to spend time with a client, figuring out exactly what his or her needs a re, and suggesting new options than c ompetitor A. However, they have an inefficient ordering system and an unkempt shop, which deters potential customers and can turn existing customers to the competition. They also do not offer on-site services, although they are considering instituting a trial pick-up/drop-off service. They are in the best positi on to copy our innovations and steal customers, but their management is complacent and may not respond to competition. Both of these companies charge rates in excess of PC Repair; we will be able to attract the price-sensitive market without much work. 5.0 Strategy and Implementation Summary Our Strategy and Implementation turn on three points: 1. A value proposition of timely and practical solutions, at a reasonable rate, coupled with a 100% guarantee. 2. Exploiting our competitors weaknesses: a competiti ve edge based on quick, effective, and sympathetic customer service, which meets the customer where his needs are, rather than trying to fit him into an existing box. 3. Quickly establishing a brand identity and developing a great reputation among local customers to generate word of mouth advertising.
PC Repair
around times. They will announce our opening date, and include a coupon for free diagnostic service for the first 20 customers. We will follow up on these opening ads with a smaller direct-marketing campaign to small business owners, with lists drawn from the local Chamber of Commerce. Jack will use his contacts with business customers from his years as a manager to create a "buzz" about this new business. We will continue periodic advertisements, including several promotions (discounts, free diagnosis, etc.) throughout the first year. We expect a small but steady response from home PC users who see our ads elsewhere, but will also run monthly ads in sections other than the business one. We will offer a promotion during the first 90 days of business to generate business traffic and word of mouth. Our promo is Spyware r emoval on any desktop PC for $70 including tax and software. Spyware is a huge problem for a lot of residential and small business customers, and the offer should draw a lot of i nterest. 5.3 Sales Strategy Our marketing strategy will generate customer inquiries. We will close the deals by offering an outstanding service and a very reasonable price. Happy customers generate repeat business and word of mouth. Our toll free number is operational 24 hours a day, seven days a week, and from 8am to 9pm, I will be available to answer calls. At other times, or when I am on the phone, an answering service we have hired will catch callers and give them an estimated wait time for a call-back; this is another step towards delivering a complete solution to our customers. Sales forecast figures are based on industry figures for the typical growth of a start-up and reflect repeat business generated through meeting customer needs.
PC Repair
The one element of sales not represented in the tabl e below is direct costs for our maintenance contracts. We estimate these costs at 12% of sales revenue, but expect a delayed occurrence that is, we will sell maintenance contracts starting in February, but do not expect to actually perform maintenance on computers guaranteed under them for the first few months. We will incur more and more costs from these as time goes on, and the computers ag e - most of the service in a maintenance contract is performed within the last quarter of the specified period. Projections for the direct costs for these contracts can be found in the Profit and Loss Table, as other costs of sales. Table: Sales Forecast
Sales Forecast
Year 1
Year 2
Year 3
Home PC Unit Small Business Unit Promo Maintenance Contracts Total Unit Sales
166 264 235 32 697
200 300 0 60 560
225 350 0 85 660
Unit Prices Home PC Unit Small Business Unit Promo Maintenance Contracts
Year 1 $280.00 $500.00 $50.00 $400.00
Year 2 $300.00 $600.00 $0.00 $600.00
Year 3 $300.00 $600.00 $0.00 $600.00
$46,480 $132,000 $11,750 $12,800 $203,030
$60,000 $180,000 $0 $36,000 $276,000
$67,500 $210,000 $0 $51,000 $328,500
Year 1 $84.00
Year 2 $90.00
Year 3 $90.00
Unit Sales
Sales Home PC Unit Small Business Unit Promo Maintenance Contracts Total Sales Direct Unit Costs Home PC Unit
PC Repair
Chart: Sales by Year
Chart: Sales Monthly
PC Repair
5.4 Milestones Our milestones, listed in the table below, outline the major events that will promote, as well as insure the success of PC Repair and keep it a going concern well into the future. We will measure our success in meeting these milestones every month, and adjust the plan to keep up with our objectives. Name recognition, in particular, is very important to breaking into this market - we will conduct a survey by calling 200 randomly selected small businesses from the Chamber of Commerce listings on the specified dates and asking them whether they have heard of PC Repair, and if so, what their impression is of our service. If any of the respondents have actually used our services, we will elicit feedback on their experience with us, and suggestions for improvement. We will also ask i f they would recommend us to a colleague. Table: Milestones
Milestones
Milestone Procurement of materials for opening Start-up Ad Campaign Get Loan Approved Open Business Name Recognition by 5% of potential market Meet with Leasing Agent Interview potential Techs Move into Leased Space Sign on Leased Vehicle Targeted Ads Begin 1st Tech Starts 2nd Round Tech Interviews Direct marketing to Small Businesses Increase Name Recognition to 20%
Start Date 12/1/2004
End Date 2/1/2005
Budget $1,200
Manager JMH
Department Department
12/15/2004 1/1/2005 2/7/2005 2/28/2005
2/6/2005 1/17/2005 2/8/2005 2/28/2005
$1,200 $0 $0 $0
JMH JMH JMH JMH
Department Department Department Department
3/1/2005 3/1/2005 4/1/2005 4/15/2005 4/15/2005 5/1/2005 7/1/2005 7/1/2005
3/10/2005 4/25/2005 4/10/2005 4/20/2005 5/15/2005 5/1/2005 7/31/2005 9/30/2005
$0 $0 $2,000 $6,000 $4,000 $0 $0 $8,000
JMH JMH JMH JMH JMH JMH JMH JMH
Department Department Department Department Department Department Department Department
8/1/2005
8/2/2005
$0
JMH
Department
PC Repair
Chart: Milestones
6.0 Management Summary PC Repair will be owned and managed by Jack Hacker. Jack has 10 years of experience in the fields of technical support, networking, and computer training and repair. Jack has also spent the last three years as the manager of a custom computer building and repair store, and understands the computer needs of small businesses. Jack is adept at managing his time, and at quickly responding to multiple customer calls and needs.
PC Repair
6.1 Personnel Plan Jack Hacker will be the only employee for the first few months; his salary is directly related to the success of the business, and wil l never exceed 18% of sales revenue. In the third month, we will move to a leased office space and hire a second employee, with a third hire planned for August, if projections are on target. We plan to hire additional part-time employees in the second year, to better handle the increasing sales. Our employees will be skilled professionals, with equally strong technical and people skills. It is very important to Jack that they be paid salaries commensurate with their abilities and dedication- happy tech support people make for happy customers. To that end, our full-time employees will receive health benefits (premiums spli t between the employee and PC Repair), paid holidays, and sick time. Those benefits a re included in the payroll totals listed below. Table: Personnel
Personnel Plan
Year 1
Year 2
Year 3
Owner Tech1 Tech2 Part Time Total People
$33,000 $21,600 $14,400 $0 3
$38,000 $30,000 $30,000 $12,000 5
$40,000 $30,000 $30,000 $15,000 5
Total Payroll
$69,000
$110,000
$115,000
7.0 Financial Plan The following sections include the annual estimates for the standard set of financial tables. Detailed monthly pro-forma tables are included in the appendix.
PC Repair
7.2 Break-even Analysis Fixed costs are projected at a monthly average for the first year. This includes payroll, moving expenses and rent, purchase of a company vehicle, and other neces sities like cell phones and the answering service. Variable costs (inventory used in repairing or servicing computers) are projected as well. At these levels, what we need to bring in per month to break even is shown in the table and chart below. We wi ll reach our break-even point mid-year, although we expect sales in November and December to di p below this level because of holidays.
Chart: Break-even Analysis
PC Repair
7.3 Projected Profit and Loss The table below shows our projected profit and loss. There are two lines for direct cost of sales - the second line shows projected i nventory costs of fulfilling our maintenance contrac ts. The marketing/promotion line shows our planned advertising program expenses. Although these are aggressive, we must spend heavily in the first year in order to establish the brand recognition that will help us break in to the local market. This table also shows our projected expense increases as we hire more employees and move into a larger rented space. Befor e the move, the owner will absorb expenses related to utilities. In years two and three, we have budgeted for additional expensed equipment to expand our diagnostic and repair capabilities to keep up with orders. We are seeking a modest net profit i n the first year. As our reputation grows, we will see higher revenues and net profit over the next three years. Chart: Gross Margin Monthly
PC Repair
Chart: Gross Margin Yearly
Table: Profit and Loss Pro Forma Profit and Loss
Sales Direct Cost of Sales Costs of Fulfilling Maintenance Contracts Total Cost of Sales
Year 1
Year 2
Year 3
$203,030 $42,604 $1,488 $44,092
$276,000 $55,800 $4,320 $60,120
$328,500 $64,350 $6,120 $70,470
PC Repair
Chart: Profit Monthly
Chart: Profit Yearly
PC Repair
7.4 Projected Cash Flow The Cash Flow chart, below, shows our projected cash position for the first year; the table following it shows highlights for the first three years. With the requested start-up funding, we will maintain a positive cash balance throughout, and repay the loan within three years.
Chart: Cash
PC Repair
Table: Cash Flow
Pro Forma Cash Flow
Year 1
Year 2
Year 3
$203,030 $203,030
$276,000 $276,000
$328,500 $328,500
$0 $0 $0 $0 $0 $0 $0 $203,030
$0 $0 $0 $0 $0 $0 $0 $276,000
$0 $0 $0 $0 $0 $0 $0 $328,500
Year 1
Year 2
Year 3
$69,000 $110,873 $179,873
$110,000 $142,543 $252,543
$115,000 $163,375 $278,375
$0 $6,564 $0 $0 $0 $0 $0 $186,437
$0 $6,550 $0 $0 $0 $0 $0 $259,093
$0 $6,111 $0 $0 $0 $0 $0 $284,486
Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent
PC Repair
Table: Ratios
Ratio Analysis
Year 1
Year 2
Year 3
Industry Profile
n.a.
35.94%
19.02%
5.23%
Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets
8.22% 16.81% 100.00% 0.00% 100.00%
9.07% 12.72% 100.00% 0.00% 100.00%
5.90% 8.15% 100.00% 0.00% 100.00%
2.79% 51.19% 75.09% 24.91% 100.00%
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
42.77% 0.00% 42.77% 57.23%
22.55% 0.00% 22.55% 77.45%
11.07% 0.00% 11.07% 88.93%
31.75% 18.48% 50.23% 49.77%
100.00% 78.28% 38.70% 0.00% 10.44%
100.00% 78.22% 65.72% 0.00% 16.28%
100.00% 78.55% 64.96% 0.00% 21.64%
100.00% 100.00% 80.06% 1.23% 1.95%
2.34 2.15 42.77% 59.02% 33.78%
4.43 4.03 22.55% 63.01% 48.80%
9.03 8.50 11.07% 63.16% 56.17%
1.53 1.24 57.27% 2.73% 6.39%
Additional Ratios
Year 1
Year 2
Year 3
Net Profit Margin Return on Equity
6.93% 41.32%
9.73% 44.10%
14.69% 44.21%
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
n.a n.a
PC Repair
7.6 Projected Balance Sheet The Balance Sheet shows a steadily increasing net worth over the next three years. Since we are planning to rent, and because computer technology changes so rapidly, we will have only short-term assets, such as computer equipment and furniture. This will make our net worth much more liquid than many similar businesses. Table: Balance Sheet
Pro Forma Balance Sheet
Year 1
Year 2
Year 3
$44,593 $4,890 $10,000 $59,482
$61,500 $7,129 $10,000 $78,629
$105,514 $7,239 $10,000 $122,753
$0 $0 $0 $59,482
$0 $0 $0 $78,629
$0 $0 $0 $122,753
Year 1
Year 2
Year 3
$12,783 $12,661 $0 $25,444
$11,620 $6,111 $0 $17,731
$13,590 $0 $0 $13,590
$0
$0
$0
Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities
Appendix Table: Sales Forecast
Sales Forecast
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Home PC Unit
3
5
3
15
18
20
20
20
17
15
10
20
Small Business Unit
3
3
3
10
25
35
40
45
50
15
10
25
Promo
0
0
10
30
40
0
40
40
40
0
0
35
Maintenance Contracts
0
1
1
2
3
3
3
4
4
3
4
4
Total Unit Sales
6
9
17
57
86
58
103
109
111
33
24
84
Unit Prices
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Home PC Unit
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
$280.00
Small Business Unit
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$500.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$50.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
$400.00
Unit Sales
Promo Maintenance Contracts Sales Home PC Unit Small Business Unit
$840
$1,400
$840
$4,200
$5,040
$5,600
$5,600
$5,600
$4,760
$4,200
$2,800
$5,600
$1,500
$1,500
$1,500
$5,000
$12,500
$17,500
$20,000
$22,500
$25,000
$7,500
$5,000
$12,500 $1,750
Promo
$0
$0
$500
$1,500
$2,000
$0
$2,000
$2,000
$2,000
$0
$0
Maintenance Contracts
$0
$400
$400
$800
$1,200
$1,200
$1,200
$1,600
$1,600
$1,200
$1,600
$1,600
$2,340
$3,300
$3,240
$11,500
$20,740
$24,300
$28,800
$31,700
$33,360
$12,900
$9,400
$21,450
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
Home PC Unit
$252
$420
$252
$1,260
$1,512
$1,680
$1,680
$1,680
$1,428
Small Business Unit
$315
$315
$315
$1,050
$2,625
$3,675
$4,200
$4,725
$5,250
Promo
$0
$0
$40
$120
$160
$0
$160
$160
Maintenance Contracts
$0
$0
$0
$0
$0
$0
$0
$567
$735
$607
$2,430
$4,297
$5,355
$6,040
Total Sales Direct Unit Costs Home PC Unit Small Business Unit Promo Maintenance Contracts
30.00% 21.00% 8.00% 12.00%
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$84.00 $105.00 $4.00 $0.00
$84.00 $105.00 $4.00 $0.00
$1,260
$840
$1,680
$1,575
$1,050
$2,625
$160
$0
$0
$140
$0
$0
$0
$0
$6,565
$6,838
Direct Cost of Sales
Subtotal Direct Cost of Sales
$2,835
$1,890
$0 $4,445
Page 1
Appendix Table: Personnel
Personnel Plan
Owner Tech1 Tech2 Part Time Total People
Total Payroll
0% 0% 0% 0%
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
$2,000 $0 $0 $0 1
$2,000 $0 $0 $0 1
$2,500 $0 $0 $0 1
$2,500 $2,400 $0 $0 2
$3,000 $2,400 $0 $0 2
$3,000 $2,400 $0 $0 2
$3,000 $2,400 $2,400 $0 3
$3,000 $2,400 $2,400 $0 3
Month 9 $3,000 $2,400 $2,400 $0 3
Month 10 $3,000 $2,400 $2,400 $0 3
Month 11 $3,000 $2,400 $2,400 $0 3
Month 12 $3,000 $2,400 $2,400 $0 3
$2,000
$2,000
$2,500
$4,900
$5,400
$5,400
$7,800
$7,800
$7,800
$7,800
$7,800
$7,800
Page 2
Appendix Table: General Assumptions
General Assumptions
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
1
2
3
4
5
6
7
8
9
10
11
12
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
7.00%
Long-term 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%
0
0
0
0
0
0
0
0
Plan Month Current Interest Rate
Other
0
0
0
Month 12
0
Page 3
Appendix Table: Profit and Loss
Pro Forma Profit and Loss
Sales Direct Cost of Sales Costs of Fulfilling Maintenance Contracts Total Cost of Sales
Month 1
Month 2
Month 3
Month 4
Month 5
$2,340
$3,300
$3,240
$11,500
$20,740
Month 6 $24,300
Month 7 $28,800
Month 8 $31,700
Month 9 $33,360
Month 10 $12,900
Month 11 $9,400
Month 12 $21,450
$567
$735
$607
$2,430
$4,297
$5,355
$6,040
$6,565
$6,838
$2,835
$1,890
$4,445
$0
$0
$48
$96
$144
$144
$144
$192
$192
$144
$192
$192
$567
$735
$655
$2,526
$4,441
$5,499
$6,184
$6,757
$7,030
$2,979
$2,082
$4,637
Gross Margin
$1,773
$2,565
$2,585
$8,974
$16,299
$18,801
$22,616
$24,943
$26,330
$9,921
$7,318
Gross Margin %
75.77%
77.73%
79.78%
78.03%
78.59%
77.37%
78.53%
78.68%
78.93%
76.91%
77.85%
78.38%
$16,813
Payroll
$2,000
$2,000
$2,500
$4,900
$5,400
$5,400
$7,800
$7,800
$7,800
$7,800
$7,800
$7,800
Marketing/Promotion
$4,000
$1,000
$3,000
$2,000
$2,000
$3,000
$3,000
$2,000
$2,000
$2,000
$2,000
$2,000
Depreciation
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Lease
$0
$0
$1,000
$1,000
$1,000
Expenses
Expensed Equipment Insurance Website
$1,000
$1,000
$1,000
$1,000
$1,000
$0 $1,000
$0 $1,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$150
$0
$300
$300
$300
$300
$300
$300
$300
$300
$300
$300 $200
$40
$40
$200
$200
$200
$200
$200
$200
$200
$200
$200
$200
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Mileage
$80
$85
$95
$100
$200
$300
$300
$300
$300
$300
$300
$300
Vehicles
$0
$0
$6,000
$800
$800
$800
$800
$800
$800
$800
$800
$800
Cell Phones
$0
$60
$120
$120
$120
$120
$120
$120
$120
$120
$120
$120
Utilities
$0
$0
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$0 $0
$0 $0
$120 $2,000
$120 $0
$120 $0
$120 $0
$120 $0
$120 $0
$120 $0
$120 $0
$120 $0
$120 $0
$6,470
$3,185
$15,835
$10,040
$10,640
$11,740
$14,140
$13,140
$13,140
$13,140
$13,140
$13,140
Profit Before Interest and Taxes
($4,697)
($620)
($13,250)
($1,066)
$5,659
$7,061
$8,476
$11,803
$13,190
($3,219)
($5,822)
$3,673
EBITDA
($4,697)
($620)
($13,250)
($1,066)
$5,659
$7,061
$8,476
$11,803
$13,190
($3,219)
($5,822)
$3,673
$109
$106
$103
$99
$96
$93
$90
$87
$83
$80
($1,442)
($218)
($4,006)
($350)
$1,669
$2,090
$2,516
$3,515
$3,932
($990)
($1,770)
$1,080
($2,309)
($4,129)
$2,519
Answering Service
Internet Moving Expenses Total Operating Expenses
Interest Expense Taxes Incurred Net Profit Net Profit/Sales
15%
($3,364)
($508)
($9,347)
($816)
$3,894
$4,878
$5,870
$8,201
$9,175
-143.77%
-15.39%
-288.48%
-7.09%
18.78%
20.07%
20.38%
25.87%
27.50%
-17.90%
$77
-43.93%
$74
11.75%
Page 4
Appendix
Table: Cash Flow
Pro Forma Cash Flow
Month 1
Month 2
Month 3
Month 4
Month 5
Cash Sales
$2,340
$3,300
Subtotal Cash from Operations
$2,340
$3,300
$0 $0
New Other Liabilities (interest-free) New Long-term Liabilities
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$3,240
$11,500
$20,740
$24,300
$28,800
$31,700
$33,360
$12,900
$9,400
$21,450
$3,240
$11,500
$20,740
$24,300
$28,800
$31,700
$33,360
$12,900
$9,400
$21,450
$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
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
$2,340
$3,300
$3,240
$11,500
$20,740
$28,800
$31,700
Month 1
Month 2
Month 3
Month 4
Month 5
$2,000
$2,000
$2,500
$4,900
$5,400
$5,400
$7,800
$7,800
$7,800
$7,800
$7,800
$105
$3,102
$2,353
$10,424
$8,954
$13,556
$15,209
$15,896
$16,290
$16,282
$4,550
$4,152
$2,105
$5,102
$4,853
$15,324
$14,354
$18,956
$23,009
$23,696
$24,090
$24,082
$12,350
$11,952
Cash Received Cash from Operations
Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing
Subtotal Cash Received Expenditures
0.00%
$24,300 Month 6
Month 7
Month 8
$33,360 Month 9
$12,900 Month 10
$9,400 Month 11
$0 $21,450 Month 12
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations
$7,800
Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$547
$547
$547
$547
$547
$547
$547
$547
$547
$547
$547
$547
Other Liabilities Principal Repayment
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Long-term Liabilities Principal Repayment
$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
$2,652
$5,649
$5,400
$15,871
$14,901
$19,503
$23,556
Net Cash Flow
($312)
($2,349)
($2,160)
($4,371)
$5,839
$4,797
$5,244
Cash Balance
$27,688
$25,340
$23,179
$18,809
$24,647
$29,444
$34,688
Principal Repayment of Current Borrowing
Subtotal Cash Spent
$24,243
$24,637
$24,629
$7,457
$8,723
($11,729)
$42,145
$50,868
$39,139
$12,897 ($3,497) $35,642
$0 $12,499 $8,951 $44,593
Page 5
