Write a one page and a half memo format based on your critical review of the sample business plan attached, summarize its strengths and weakness; focus on weaknesses, suggest recommendations for improvements.

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Table of Contents

Executive Summary. 1

Chart: Highlights. 1

Keys to Success. 2

Mission. 2

Company Summary. 2

Company Ownership. 2

Start-up Summary. 2

Table: Start-up. 3

Table: Start-up Funding. 5

Products. 7

Market Analysis Summary. 7

Market Segmentation. 7

Table: Market Analysis. 8

Chart: Market Analysis (Pie) 9

Strategy and Implementation Summary. 9

Competitive Edge. 9

Marketing Strategy. 10

Pricing Strategy. 10

Sales Strategy. 10

Sales Forecast 11

Management Summary. 14

Personnel Plan. 14

Table: Personnel 14

Financial Plan. 15

Projected Cash Flow.. 15

Table: Cash Flow.. 15

Chart: Cash. 16

Break-even Analysis. 17

Table: Break-even Analysis. 17

Chart: Break-even Analysis. 18

Projected Profit and Loss. 19

Table: Profit and Loss. 19

Chart: Profit Monthly. 20

Chart: Profit Yearly. 21

Chart: Gross Margin Monthly. 22

Chart: Gross Margin Yearly. 23

Projected Balance Sheet 24

Table: Balance Sheet 24

Business Ratios. 25

Table: Ratios. 25

Table: Sales Forecast i

Table: Personnel ii

Table: General Assumptions. iii

Table: Profit and Loss. iv

Table: Cash Flow.. vi

Table: Balance Sheet viii

Executive Summary

The Year 1 season will be a great one for women looking for distinctive outdoor clothing online. Liquid Culture will eliminate the middle man and offer creative outdoor clothing that is both functional and beautiful. The savings are passed on to our customers who will be paying a fraction of what they normally do for current retreated fashion in stores.

Liquid Culture's Year 1 line consists of the best fabric, designs and styling on the market. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, have fifteen years of experience between them in the outdoor garment industry. Maggie has been a senior clothing designer for Manic Woman Clothing for the past seven years.  Larry has been the website administrator for South Face the past eight years.

Another strength of Liquid Culture is that it will not maintain any clothing inventory. Liquid Culture has contracted with Magic Clothing Company, located in Los Angeles, California, to produce and ship all Liquid Culture clothing.  Our design team will work closely with the Magic's Indonesian-based manufacturing facilities. The Magic Clothing Company will maintain the inventory and will produce sufficient product to meet the planned demand.

Chart: Highlights

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Keys to Success

  • Accessible website that is entertaining to surf. Like a trip to your favorite store where you always find something new that you want.
  • Establishing a strong advertising campaign in a traditional media vehicle; i.e. magazines.
  • Excellent vendor relationship that will facilitate quality manufacturing of Liquid Culture's clothing and quick shipment of orders.
  • Acquiring an excellent design staff.

Mission

Liquid Culture's mission is to present consumers with designs, styling and clothes that energizes any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.

Company Summary

Liquid Culture will offer creative women's outdoor clothing, online, that is both functional and beautiful. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, will create a cost-effective operation that will eliminate the cost of inventory by having a third-party, Magic Clothing Company, handle all manufacturing and shipping of clothing to the customer. Liquid Culture will process the order and collect the payment online. The order will then be sent to Magic Clothing Company to be filled and shipped. Liquid Culture will focus on clothing design and marketing of its products.

Company Ownership

Liquid Culture is owned by Larry Wilson and Maggie Granger.

Start-up Summary

Liquid Culture's start-up costs consists mostly of design and marketing. Liquid Culture has $260,000 in investments and $200,000 in a short-term loan.

 

Table: Start-up

Start-up 
  
Requirements 
  
Start-up Expenses 
Legal$1,000
Stationery etc.$500
Brochures$0
Consultants$5,000
Insurance$0
Rent$2,000
Leased Office Equipment$10,000
Computer Equipment/Software$30,000
Website$10,000
Other$0
Total Start-up Expenses$58,500
  
Start-up Assets 
Cash Required$401,500
Start-up Inventory$0
Other Current Assets$0
Long-term Assets$0
Total Assets$401,500
  
Total Requirements$460,000

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Table: Start-up Funding

Start-up Funding 
Start-up Expenses to Fund$58,500
Start-up Assets to Fund$401,500
Total Funding Required$460,000
  
Assets 
Non-cash Assets from Start-up$0
Cash Requirements from Start-up$401,500
Additional Cash Raised$0
Cash Balance on Starting Date$401,500
Total Assets$401,500
  
  
Liabilities and Capital 
  
Liabilities 
Current Borrowing$0
Long-term Liabilities$200,000
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Total Liabilities$200,000
  
Capital 
  
Planned Investment 
Investor 1$130,000
Investor 2$130,000
Other$0
Additional Investment Requirement$0
Total Planned Investment$260,000
  
Loss at Start-up (Start-up Expenses)($58,500)
Total Capital$201,500
  
  
Total Capital and Liabilities$401,500
  
Total Funding $460,000

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Products

Liquid Culture will sell women's outdoor clothing online. We will offer outdoor clothing  for almost every type of active use. We will focus on the seasonal clothing demands of our customers including the following:

  • Fleece outerwear.
  • Rain gear, waterproof breathables, as well as coated nylon.
  • Synthetic clothing for outdoor activities.
  • Hats.
  • Shorts.
  • Pants.
  • Shirts.

Market Analysis Summary

In the past 15 years, women's outdoor wear has grown into a billion dollar niche in the clothing industry. The popularity of the Internet has launched a number of online stores for women's outdoor wear but no company is exclusively selling their products online.  There are a number of reasons for this but the strongest is that the concept is new and untested.  Will customers buy something that they wear that can only be seen online?  We believe they will, if the process is fun and the products are great and cheap. 

The key is marketing our target customers in the traditional advertising medium for fashion, i.e. women fitness magazines.

The ads will focused on the eliminating the middle man in your clothing budget and stepping up to the distinctive style of Liquid Culture. The company logo will also be an important marketing tool in bringing customers to our website.

Market Segmentation

Liquid Culture will be focusing on two distinct groups of women that purchase outdoor clothing:

  • Women 17-25 years of age: Youth drives the market so this is the important group to attract to the website.  They have less money than the older group so we must give them what they want for less.  The key is to have inexpensive selections in each clothing group that have the popular cut. The company's logo attractiveness to this group can not be stressed strongly enough. The initial small purchases will grow larger over time.
  • Women 26-40 years of age: They are the core group that will drive Liquid Culture's success.  This target group is responsible for the growth of outdoor women's wear.  They will be harder to pull into the website. Once there, the key will be promoting the quality, attractiveness and savings.  In addition, we will have to assure that the purchase will fit the way the customer wants it to.  It will be crucial that the return policy is hassle-free and speedy.

Table: Market Analysis

Market Analysis       
   Year 1 Year 2 Year 3 Year 4 Year 5 
Potential CustomersGrowth     CAGR
Women Ages 16-2520%6,000,0007,200,0008,640,00010,368,00012,441,60020.00%
Women Ages 26-4015%5,000,0005,750,0006,612,5007,604,3758,745,03115.00%
Other0%000000.00%
Total17.81%11,000,00012,950,00015,252,50017,972,37521,186,63117.81%

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Chart: Market Analysis (Pie)

Strategy and Implementation Summary

Liquid Culture will win market share in the women's outdoor clothing niche by aggressively pursuing visibility with its target customers.

Competitive Edge

Liquid Culture's competitive edge is its focus on the process than on product.  The website is just the endpoint of an entire marketing program to drive customers' interest in Liquid Culture.  Though we have confidence in the quality and attractiveness of our products, we know that building the road to the website is our most important job. 

Larry Wilson's experience with South Face is pivotal to the success of Liquid Culture's website.  South Face's website averaged five million hits a year and is considered one of the most accessible and attractive websites in the clothing industry.  His experience is invaluable in assuring customers' satisfaction with the shopping experience online.

Larry will introduce a new clothing measurement feature that is fun to use and will reduce customers confusion on how the clothing will fit.  This will increase customer satisfaction and reduce returns.

Maggie Granger will be in charge of the clothing design team. As senior clothing designer for Manic Woman Clothing, she watched the Manic Woman's sales grow by 20% for the past five years.  Her clothing designs have been praised in the industry and have spawned many imitators.  With Liquid Culture, Maggie is ready to change how quality women's outdoor clothing is sold. 

Liquid Culture's agreement with Magic Clothing Company is another strong competitive advantage.  Our design team will work closely with the Magic's Indonesian-based manufacturing facilities. The Magic Clothing Company will maintain the inventory and will produce sufficient product to meet the planned demand. This will keep production costs low for products and put a cap on Liquid Culture's overhead.

Marketing Strategy

Liquid Culture's marketing strategy is a simple one.  In women's fitness magazines like Self, Shape and Strive, Liquid Culture will introduce customers to their products and website. We will also advertise in CosmoGirl and Ellegirl magazines.

For the first two months, Liquid Culture will offer 10% off for all purchases under $100 and 15% off all purchases over $100. We will offer the same discount strategy three more times during the year when new seasonal clothing is introduced.

Pricing Strategy

Liquid Culture's pricing strategy is to pass on most of the store mark-up to the consumer in reduced price for clothing.  This advantage has no negative impact on our sales profit and will also absorb some of the initial cost of offering discounts during our first three months of operation.

Sales Strategy

Liquid Culture will launch a $245,000 ad campaign targeted at our core customer groups. The focus of the ads will be to "keep the money you give to the middleman" and use it to get outdoors and enjoy life.  Liquid Culture's attractive logo will be heavily displayed in these ads. We estimate it will take most of the year to build our sales to the point where we begin to show a profit. 

Liquid Culture will offer discounts at various times of the year to even out seasonality and build initial awareness of the website.

Sales Forecast

Sales Forecast   
  Year 1 Year 2 Year 3
Sales   
Clothing$2,170,000$3,000,000$4,300,000
Other$0$0$0
Total Sales$2,170,000$3,000,000$4,300,000
    
Direct Cost of Sales Year 1 Year 2 Year 3
Clothing$1,249,000$1,800,000$2,580,000
Other$0$0$0
Subtotal Direct Cost of Sales$1,249,000$1,800,000$2,580,000

Chart: Sales Monthly

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Chart: Sales by Year

Management Summary

Larry Wilson will manage the marketing team, as well as the development and administration of Liquid Culture's website.  Maggie Granger will be in charge of the clothing design team. She will also manage the production of the designs by Magic Clothing Company.

Personnel Plan

Besides Larry and Maggie, Liquid Culture will have a staff of eight:

  • Three member clothing design team.
  • Web administrator.
  • Two member marketing team.
  • Office manager.
  • Accountant.

Table: Personnel

Personnel Plan   
  Year 1 Year 2 Year 3
Marketing/Website Director$84,000$90,000$95,000
Design Director$84,000$90,000$95,000
Designers$144,000$156,000$166,000
Web Administrator$48,000$52,000$56,000
Office Manager$36,000$39,000$42,000
Marketing Staff$96,000$104,000$112,000
Accountant$39,600$44,000$48,000
Other$0$0$0
Total People888
    
Total Payroll$531,600$575,000$614,000

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Financial Plan

The following is the financial plan for Liquid Culture.

Projected Cash Flow

The following table and chart are the projected cash flow for three years.

Table: Cash Flow

Pro Forma Cash Flow   
  Year 1 Year 2 Year 3
Cash Received   
    
Cash from Operations   
Cash Sales$2,170,000$3,000,000$4,300,000
Subtotal Cash from Operations$2,170,000$3,000,000$4,300,000
    
Additional Cash Received   
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$2,170,000$3,000,000$4,300,000
    
Expenditures Year 1 Year 2 Year 3
    
Expenditures from Operations   
Cash Spending$531,600$575,000$614,000
Bill Payments$1,590,840$2,410,513$3,317,830
Subtotal Spent on Operations$2,122,440$2,985,513$3,931,830
    
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$44,796$44,796$44,796
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
Subtotal Cash Spent$2,167,236$3,030,309$3,976,626
    
Net Cash Flow$2,764($30,309)$323,374
Cash Balance$404,264$373,956$697,330

Chart: Cash

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Break-even Analysis

Our break-even analysis is based on running costs, the costs we incur to keep the business running, not on theoretical fixed costs that would be relevant only if we were closing. Fixed costs include payroll, rent, utilities, and marketing costs.

Table: Break-even Analysis

Break-even Analysis 
  
Monthly Revenue Break-even$177,248
  
Assumptions: 
Average Percent Variable Cost58%
Estimated Monthly Fixed Cost$75,228

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Chart: Break-even Analysis


Projected Profit and Loss

The following table and charts are the projected profit and loss for three years.

Table: Profit and Loss

Pro Forma Profit and Loss   
  Year 1 Year 2 Year 3
Sales$2,170,000$3,000,000$4,300,000
Direct Cost of Sales$1,249,000$1,800,000$2,580,000
Other Production Expenses$0$0$0
Total Cost of Sales$1,249,000$1,800,000$2,580,000
    
Gross Margin$921,000$1,200,000$1,720,000
Gross Margin %42.44%40.00%40.00%
    
    
Expenses   
Payroll$531,600$575,000$614,000
Sales and Marketing and Other Expenses$265,000$340,000$440,000
Depreciation$0$0$0
Leased Equipment$0$0$0
Utilities$2,400$2,400$2,400
Insurance$0$0$0
Rent$24,000$24,000$24,000
Payroll Taxes$79,740$86,250$92,100
Other$0$0$0
    
Total Operating Expenses$902,740$1,027,650$1,172,500
    
Profit Before Interest and Taxes$18,260$172,350$547,500
EBITDA$18,260$172,350$547,500
  Interest Expense$17,574$13,281$8,801
  Taxes Incurred$206$47,721$161,610
    
Net Profit$481$111,349$377,089
Net Profit/Sales0.02%3.71%8.77%

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Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Projected Balance Sheet

The following is the projected balance sheet for three years.

Table: Balance Sheet

Pro Forma Balance Sheet   
  Year 1 Year 2 Year 3
Assets   
    
Current Assets   
Cash$404,264$373,956$697,330
Inventory$264,000$237,790$338,983
Other Current Assets$0$0$0
Total Current Assets$668,264$611,746$1,036,313
    
Long-term Assets   
Long-term Assets$0$0$0
Accumulated Depreciation$0$0$0
Total Long-term Assets$0$0$0
Total Assets$668,264$611,746$1,036,313
    
Liabilities and Capital Year 1 Year 2 Year 3
    
Current Liabilities   
Accounts Payable$311,080$188,009$280,283
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Subtotal Current Liabilities$311,080$188,009$280,283
    
Long-term Liabilities$155,204$110,408$65,612
Total Liabilities$466,284$298,417$345,895
    
Paid-in Capital$260,000$260,000$260,000
Retained Earnings($58,500)($58,019)$53,329
Earnings$481$111,349$377,089
Total Capital$201,981$313,329$690,418
Total Liabilities and Capital$668,264$611,746$1,036,313
    
Net Worth$201,981$313,329$690,418

Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return. These ratios have been determined by the 5137 industry, Women's and Children's Clothing, as found in the Standard Industry Code (SIC) Index.

Table: Ratios

Ratio Analysis    
  Year 1 Year 2 Year 3Industry Profile
Sales Growthn.a.38.25%43.33%10.40%
     
Percent of Total Assets    
Inventory39.51%38.87%32.71%34.10%
Other Current Assets0.00%0.00%0.00%25.70%
Total Current Assets100.00%100.00%100.00%89.40%
Long-term Assets0.00%0.00%0.00%10.60%
Total Assets100.00%100.00%100.00%100.00%
     
Current Liabilities46.55%30.73%27.05%40.70%
Long-term Liabilities23.22%18.05%6.33%9.00%
Total Liabilities69.78%48.78%33.38%49.70%
Net Worth30.22%51.22%66.62%50.30%
     
Percent of Sales    
Sales100.00%100.00%100.00%100.00%
Gross Margin42.44%40.00%40.00%24.80%
Selling, General & Administrative Expenses42.42%36.29%31.23%14.80%
Advertising Expenses11.29%10.00%9.30%0.90%
Profit Before Interest and Taxes0.84%5.75%12.73%2.00%
     
Main Ratios    
Current2.153.253.702.36
Quick1.301.992.491.09
Total Debt to Total Assets69.78%48.78%33.38%49.70%
Pre-tax Return on Net Worth0.34%50.77%78.03%4.90%
Pre-tax Return on Assets0.10%26.00%51.98%9.70%
     
Additional Ratios Year 1 Year 2 Year 3 
Net Profit Margin0.02%3.71%8.77%n.a
Return on Equity0.24%35.54%54.62%n.a
     
Activity Ratios    
Inventory Turnover10.917.178.95n.a
Accounts Payable Turnover6.1112.1712.17n.a
Payment Days274025n.a
Total Asset Turnover3.254.904.15n.a
     
Debt Ratios    
Debt to Net Worth2.310.950.50n.a
Current Liab. to Liab.0.670.630.81n.a
     
Liquidity Ratios    
Net Working Capital$357,185$423,737$756,030n.a
Interest Coverage1.0412.9862.21n.a
     
Additional Ratios    
Assets to Sales0.310.200.24n.a
Current Debt/Total Assets47%31%27%n.a
Acid Test1.301.992.49n.a
Sales/Net Worth10.749.576.23n.a
Dividend Payout 0.000.000.00n.a

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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
Sales             
Clothing0%$40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
Other0%$0$0$0$0$0$0$0$0$0$0$0$0
Total Sales $40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
              
Direct Cost of Sales  Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Clothing $20,000$20,000$31,000$42,000$58,000$78,000$100,000$120,000$150,000$180,000$210,000$240,000
Other $0$0$0$0$0$0$0$0$0$0$0$0
Subtotal Direct Cost of Sales $20,000$20,000$31,000$42,000$58,000$78,000$100,000$120,000$150,000$180,000$210,000$240,000



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
Marketing/Website Director0%$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000
Design Director0%$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000$7,000
Designers0%$12,000$12,000$12,000$12,000$12,000$12,000$12,000$12,000$12,000$12,000$12,000$12,000
Web Administrator0%$4,000$4,000$4,000$4,000$4,000$4,000$4,000$4,000$4,000$4,000$4,000$4,000
Office Manager0%$3,000$3,000$3,000$3,000$3,000$3,000$3,000$3,000$3,000$3,000$3,000$3,000
Marketing Staff0%$8,000$8,000$8,000$8,000$8,000$8,000$8,000$8,000$8,000$8,000$8,000$8,000
Accountant0%$3,300$3,300$3,300$3,300$3,300$3,300$3,300$3,300$3,300$3,300$3,300$3,300
Other0%$0$0$0$0$0$0$0$0$0$0$0$0
Total People 888888888888
              
Total Payroll $44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300


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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 Month 12
Plan Month 123456789101112
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 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 000000000000



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Table: Profit and Loss

Pro Forma Profit and Loss             
   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
Direct Cost of Sales $20,000$20,000$31,000$42,000$58,000$78,000$100,000$120,000$150,000$180,000$210,000$240,000
Other Production Expenses $0$0$0$0$0$0$0$0$0$0$0$0
Total Cost of Sales $20,000$20,000$31,000$42,000$58,000$78,000$100,000$120,000$150,000$180,000$210,000$240,000
              
Gross Margin $20,000$20,000$29,000$38,000$52,000$62,000$80,000$100,000$100,000$120,000$140,000$160,000
Gross Margin % 50.00%50.00%48.33%47.50%47.27%44.29%44.44%45.45%40.00%40.00%40.00%40.00%
              
              
Expenses             
Payroll $44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300
Sales and Marketing and Other Expenses $30,000$20,000$10,000$40,000$15,000$45,000$15,000$15,000$25,000$10,000$30,000$10,000
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 $200$200$200$200$200$200$200$200$200$200$200$200
Insurance $0$0$0$0$0$0$0$0$0$0$0$0
Rent $2,000$2,000$2,000$2,000$2,000$2,000$2,000$2,000$2,000$2,000$2,000$2,000
Payroll Taxes15%$6,645$6,645$6,645$6,645$6,645$6,645$6,645$6,645$6,645$6,645$6,645$6,645
Other $0$0$0$0$0$0$0$0$0$0$0$0
              
Total Operating Expenses $83,145$73,145$63,145$93,145$68,145$98,145$68,145$68,145$78,145$63,145$83,145$63,145
              
Profit Before Interest and Taxes ($63,145)($53,145)($34,145)($55,145)($16,145)($36,145)$11,855$31,855$21,855$56,855$56,855$96,855
EBITDA ($63,145)($53,145)($34,145)($55,145)($16,145)($36,145)$11,855$31,855$21,855$56,855$56,855$96,855
  Interest Expense $1,636$1,604$1,573$1,542$1,511$1,480$1,449$1,418$1,387$1,356$1,324$1,293
  Taxes Incurred ($19,434)($16,425)($10,716)($17,006)($5,297)($11,288)$3,122$9,131$6,140$16,650$16,659$28,668
              
Net Profit ($45,346)($38,325)($25,003)($39,681)($12,359)($26,338)$7,284$21,306$14,328$38,850$38,871$66,893
Net Profit/Sales -113.37%-95.81%-41.67%-49.60%-11.24%-18.81%4.05%9.68%5.73%12.95%11.11%16.72%



Table: Cash Flow

Pro Forma Cash Flow             
   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received             
              
Cash from Operations             
Cash Sales $40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
Subtotal Cash from Operations $40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
              
Additional Cash Received             
Sales Tax, VAT, HST/GST Received0.00%$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 (interest-free) $0$0$0$0$0$0$0$0$0$0$0$0
New Long-term 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 $40,000$40,000$60,000$80,000$110,000$140,000$180,000$220,000$250,000$300,000$350,000$400,000
              
Expenditures  Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
              
Expenditures from Operations             
Cash Spending $44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300$44,300
Bill Payments $2,102$62,079$34,651$53,959$87,754$97,272$144,323$153,408$177,993$225,221$251,516$300,561
Subtotal Spent on Operations $46,402$106,379$78,951$98,259$132,054$141,572$188,623$197,708$222,293$269,521$295,816$344,861
              
Additional Cash Spent             
Sales Tax, VAT, HST/GST Paid Out $0$0$0$0$0$0$0$0$0$0$0$0
Principal Repayment of Current Borrowing $0$0$0$0$0$0$0$0$0$0$0$0
Other Liabilities Principal Repayment $0$0$0$0$0$0$0$0$0$0$0$0
Long-term Liabilities Principal Repayment $3,733$3,733$3,733$3,733$3,733$3,733$3,733$3,733$3,733$3,733$3,733$3,733
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 $50,135$110,112$82,684$101,992$135,787$145,305$192,356$201,441$226,026$273,254$299,549$348,594
              
Net Cash Flow ($10,135)($70,112)($22,684)($21,992)($25,787)($5,305)($12,356)$18,559$23,974$26,746$50,451$51,406
Cash Balance $391,365$321,253$298,570$276,578$250,791$245,487$233,130$251,689$275,663$302,408$352,859$404,264

 

 

 

 

 

 

 

 

 

 

Table: Balance Sheet

Pro Forma Balance Sheet             
   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
AssetsStarting Balances            
              
Current Assets             
Cash$401,500$391,365$321,253$298,570$276,578$250,791$245,487$233,130$251,689$275,663$302,408$352,859$404,264
Inventory$0$22,000$22,000$34,100$46,200$63,800$85,800$110,000$132,000$165,000$198,000$231,000$264,000
Other Current Assets$0$0$0$0$0$0$0$0$0$0$0$0$0
Total Current Assets$401,500$413,365$343,253$332,670$322,778$314,591$331,287$343,130$383,689$440,663$500,408$583,859$668,264
              
Long-term Assets             
Long-term Assets$0$0$0$0$0$0$0$0$0$0$0$0$0
Accumulated Depreciation$0$0$0$0$0$0$0$0$0$0$0$0$0
Total Long-term Assets$0$0$0$0$0$0$0$0$0$0$0$0$0
Total Assets$401,500$413,365$343,253$332,670$322,778$314,591$331,287$343,130$383,689$440,663$500,408$583,859$668,264
              
Liabilities and Capital  Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
              
Current Liabilities             
Accounts Payable$0$60,945$32,890$51,043$84,565$92,471$139,236$147,529$170,514$216,893$241,522$289,834$311,080
Current Borrowing$0$0$0$0$0$0$0$0$0$0$0$0$0
Other Current Liabilities$0$0$0$0$0$0$0$0$0$0$0$0$0
Subtotal Current Liabilities$0$60,945$32,890$51,043$84,565$92,471$139,236$147,529$170,514$216,893$241,522$289,834$311,080
              
Long-term Liabilities$200,000$196,267$192,534$188,801$185,068$181,335$177,602$173,869$170,136$166,403$162,670$158,937$155,204
Total Liabilities$200,000$257,212$225,424$239,844$269,633$273,806$316,838$321,398$340,650$383,296$404,192$448,771$466,284
              
Paid-in Capital$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000$260,000
Retained Earnings($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)($58,500)
Earnings$0($45,346)($83,671)($108,674)($148,355)($160,714)($187,052)($179,767)($158,461)($144,134)($105,284)($66,413)$481
Total Capital$201,500$156,154$117,829$92,826$53,145$40,786$14,448$21,733$43,039$57,366$96,216$135,087$201,981
Total Liabilities and Capital$401,500$413,365$343,253$332,670$322,778$314,591$331,287$343,130$383,689$440,663$500,408$583,859$668,264
              
Net Worth$201,500$156,154$117,829$92,826$53,145$40,786$14,448$21,733$43,039$57,366$96,216$135,087$201,981

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