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Executive Summary
Jerseys R Us (Jerseys) is a Massachusetts-based collectible sports jersey store. Jerseys
focuses on offering famous player baseball, football and cycling jerseys. Jerseys is an
existing business that is being purchased by Phil Garment. Jerseys will reach profitability by
the end of year one and will modestly generate profits for future years.

The sports collectible market is huge, particularly for sport jerseys. The ages of collectors
ranges from young kids to grown adults. With the growing popularity of eBay, sport
collectible trading has become even more popular with a much more open market. Jerseys
has segmented the market into two niches, children and adults. In general the children are
most interested in the baseball and football jerseys with the adults showing primary interest in
all three.

Jerseys R Us has recognized three keys to success that will be instrumental. The first is
having a comprehensive inventory. This will serve as an attraction to get many
people browsing the store for what is for sale. The second key is to listen to customers.
Having an active feedback loop will be essential for Jerseys to exceed customer expectations.
The last key to success will be to implement and adhere to strict financial controls.

Jerseys' competitive edge of inventory will be leveraged to quickly grow sales. The inventory
is an advantage for two reasons. First, it is very comprehensive, much more so than its
competitors. Second, having a constant turnover of inventory will also be effective in
increasing the times that an individual customer will come back to Jerseys to check up on any
new products.

Jerseys R Us is owned and led by Phil Garment. Phil is a lifelong sports fanatic. He is
passionate about sports which is clear just from speaking with him. After receiving his
undergrad degree, Phil went to work for a leading sports marketing firm where he developed
an incredible web of networking contacts. These contacts are instrumental in getting access to
rare, hard to find jerseys. Phil also received great project management skills from the
experience. To bolster this work experience, Phil studied for an MBA, providing him with the
requisite skills for running a business.
1.1 Mission

It is Jerseys R Us' mission to be the premier jersey collectible store. This will be
accomplished by offering a wide selection of fair-priced jerseys and ensuring complete
customer satisfaction.

1.2 Keys to Success

 Having a comprehensive, worthwhile inventory.

 Listening to customer feedback.
 Follow strict financial controls.

1.3 Objectives

 To be the premier sports jersey collectible store in the Mappleton area.

 Have constant turnover of inventory encouraging customers to come in often.
 Be known for excellent customer service.

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Company Summary
Jerseys is an existing business that is being purchased by Phil Garment. The business will be
a sole proprietorship. The business is being sold because the previous owner is ready to retire.
For a lump sum, the lease will be transferred and Phil will receive the current inventory as
well as the good will of the business. The name will remain the same and the inventory will
also be similar, however, in addition to baseball and football jerseys, Phil will stock cycling
jerseys as well.
2.1 Company History

The business began as Jerseys R Us back in 1980 by Chuck Jack. Chuck is ready to retire and
was looking to get a bit of cash from his business, recognizing that a large portion of his
retirement account will be supplied by his wife's pension.

Past Performance

2000 2001 2002

Sales $114,000 $112,000 $111,000

Gross Margin $65,000 $63,000 $59,000

Gross Margin % 57.02% 56.25% 53.15%

Operating Expenses $0 $0 $0

Inventory Turnover 1.53 1.66 1.76

Balance Sheet

2000 2001 2002

Current Assets

Cash $12,000 $10,000 $8,000

Inventory $32,000 $27,000 $32,000

Other Current Assets $12,000 $14,000 $18,000

Total Current Assets $56,000 $51,000 $58,000

Long-term Assets

Long-term Assets $12,000 $22,000 $34,000

Accumulated Depreciation $3,400 $5,200 $6,700

Total Long-term Assets $8,600 $16,800 $27,300

Total Assets $64,600 $67,800 $85,300

Current Liabilities

Accounts Payable $3,200 $2,500 $15,000

Current Borrowing $1,700 $1,300 $2,200

Other Current Liabilities (interest free) $0 $0 $0

Total Current Liabilities $4,900 $3,800 $17,200

Long-term Liabilities $12,000 $8,000 $8,000

Total Liabilities $16,900 $11,800 $25,200

Paid-in Capital $0 $0 $0

Retained Earnings $47,700 $56,000 $60,100

Earnings $0 $0 $0

Total Capital $47,700 $56,000 $60,100

Total Capital and Liabilities $64,600 $67,800 $85,300

Other Inputs

Payment Days 0 0 0

2.2 Company Ownership

Phil Garment is the sole proprietor.

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Products
Jerseys R Us sells famous players' collectible sport jerseys, typically from baseball, football,
and cycling. There is a huge market for famous player jerseys, especially in Massachusetts
which has rabid sport fans. The products will be procured through two sources, the first is
personal networking, the second is eBay. While some customers might actually wear these
previously worn jerseys, most are purchasing them as a collectible that they will put on
display.

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Market Analysis Summary
The sports collectible market is huge, particularly for sport jerseys. The ages of collectors
ranges from young kids to grown adults. With the growing popularity of eBay, sport
collectible trading has become even more popular with a much more open market. Jerseys
has segmented the market into two niches, children and adults. In general the children are
most interested in the baseball and football jerseys with the adults showing primary interest in
the cycling jerseys.

Jerseys will employ different strategies to market itself to the two different market segments.
While Jerseys will use an active marketing strategy, they will also rely on walk-by traffic as
an excellent source of walk-in customers.

4.1 Market Segmentation

Jerseys will be targeting two distinct types of customers. Each one has its own distinct
demographics.

 Children: these are kids typically ages seven to 15. They often participate in sports
but are also caught up in viewing/following of professional sports and enjoy
collecting memorabilia. While this group does not have significant amounts of
discretionary income, a function of their age, they typically do get an allowance and
save their money for purchases relating to sports.
 Adults: this market segment is typically very active in sports, they either play sports
or follow it religiously. To them, nothing would be better than to stay in front of a TV
for the entire Saturday or Sunday watching all the different games that day. Sixty-five
percent of the adults that collect memorabilia began as a child and have continued into
adulthood. The average income of this group $45,000. Fifty-five percent have at least
some college education. This group enjoys to watch sports, while most of the
observations occur with the TV, this group views live sports at least 10 times a year.

Market Analysis
2003 2004 2005 2006 2007
Potential Customers Growth CAGR
Children 8% 34,878 37,668 40,681 43,935 47,450 8.00%
Adults 7% 41,223 44,109 47,197 50,501 54,036 7.00%
Total 7.46% 76,101 81,777 87,878 94,436 101,486 7.46%

4.2 Target Market Segment Strategy

Jerseys recognizes the need to try to communicate to both segments of the market and that a
campaign must be developed separately for each group. Of the advertising that Jerseys will
be undertaking, some will be utilizing magazines with primary child readership demographics
for the child market, and adult publications for the adult segment. To attract additional child
attention, Jerseys will also sponsor a few little leagues to ensure a presence among the
children. The walk-in traffic of the store will be primarily adults as the store is located in a
busy commercial retail area of the city and while some children do walk through the city
browsing, the walk-in traffic will be primarily adult.

4.3 Industry Analysis

The sport collectibles market is made up primarily of mom and pop stores. There are very
few larger stores or chains. This is the case to a large degree due to the fact that the products
are used, one of a kind items. They are often hard to come by, thereby limiting the ability of a
larger store to buy larger quantities, leveraging scales of economy.

The popularity of eBay has significantly increased the quantity of trades in the U.S., opening
up the market for a much larger audience. While the market has opened up significantly,
prices have seemed to rise. It can be speculated that the prices have risen due to the
phenomenon of a bidding frenzy where people get all worked up about winning the auction
and bid irrationally, relying on emotion to guide them through the auction. Because Jerseys
has inside market knowledge, it is able to avoid the auctions that are unreasonably high and
concentrate on the auctions that have gone unnoticed and are soliciting low bids. The high bid
phenomenon of eBay therefore supplies a steady stream of customers to Jerseys because the
customers are looking for reasonable prices, as well as the ability to touch ad feel before they
purchase.

4.3.1 Competition and Buying Patterns

Jerseys R Us faces two sources of competition:

 Local sports collectible retail stores. There are two other retail stores in the city,
however they tend to concentrate more on equipment than clothing.
 eBay. This is a good source for the same products that Jerseys' sells, however, prices
are not always reasonable.

The buying habits of customers depends to a large degree on age and amount of knowledge
they have regarding the market. The younger the customer, the more likely they will want to
touch and feel what they are buying. The older the customer, the more they are willing to rely
on a description of the item for their purchase as opposed to needing to see it in person.
Additionally, the more information they have about the market, the more confident they are
about bidding or buying something somewhat unknown since they can speculate its worth.
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Strategy and Implementation Summary

Jerseys will leverage its competitive edge of a superior and constantly changing selection to
lure customers and keep them coming back to check on changes in inventory. Sales will be
generated through a combination of a multi-pronged marketing strategy that will drive sales
from both targeted market segments.

5.1 Competitive Edge

Jerseys R Us enjoys a two-pronged competitive edge with its inventory:

 A large inventory to keep everyone happy and interested.

 A constantly revolving inventory which creates incentives for customers to check
back often for new products.

This competitive edge will be maintained through Jerseys' excellent procurement system that
relies on personal contacts as well as excellent eBay skills. Please view the management
section for a more in-depth explanation of Phil's networking contacts.

5.2 Marketing Strategy

Jerseys will have a marketing strategy that will address both market segments, the children
and the adults.

 Advertisements. Placement of ads will be in several different sources, some tailored

to adult readers, and a few tailored to children. The ads will be used to develop
awareness for Jerseys as an excellent source of famous sport jerseys.
 Sponsorship. Jerseys will sponsor several little league sport leagues as a way of
introducing itself to the youngsters.
 Location. The location was chosen to provide a high number of walk-by traffic, so by
virtue of the high foot traffic, location is an element of the market plan.

5.3 Sales Strategy

The sales strategy will be geared at displaying the wide variety of jerseys and the constant
turnover of inventory encouraging frequent visits by customers. Another sales technique that
Jerseys will practice is the willingness to take requests from customers and look for their
preferences. This should drive sales as most competitors will not look out for items that the
customers may want. Typically, most stores will only purchase what they think will sell
without truly soliciting customer input. Not only will this approach drive short term sales by
securing the items that customers desire, it will also propel long-term sales by creating loyal
customers.

5.3.1 Sales Forecast

The sales forecast indicates that because Jerseys is the purchase of an existing business, sales
growth will be small but incremental. Growth within the first couple of months is not
expected to be much due to the somewhat slow transition from old business to new business.
Once old customers become more familiar with the new owners and new customers become
aware of Jerseys, the incremental monthly increase in sales should rise.

Sales Forecast
2003 2004 2005
Sales
Children $46,160 $76,259 $97,731
Adults $53,058 $87,654 $112,334
Total Sales $99,218 $163,913 $210,065
Direct Cost of Sales 2003 2004 2005
Cost of Jerseys $29,766 $49,174 $63,019
Other $0 $0 $0
Subtotal Direct Cost of Sales $29,766 $49,174 $63,019

5.4 Milestones

 Completion of business plan.

 100th new customer.
 First month of serious growth.
 Sustainable profit.
Milestones
Milestone Start Date End Date Budget Manager Department
Completion of business plan 1/1/2003 1/15/2003 $0 Phil Strategic
100th new customer 1/1/2003 1/31/2003 $0 Phil Marketing
First month serious growth 1/1/2003 3/31/2003 $0 Phil Operations
Sustainable profit 1/1/2003 7/31/2003 $0 Phil Operations
Totals $0

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Management Summary
Phil Garment started his sports fanaticism at the young age of nine. That was when he began
trading baseball cards. His fascination continued throughout his life, in part from an
observational standpoint, in part from a participatory standpoint. Phil enjoyed watching,
talking, and playing sports. While Phil was receiving his Bachelors or Arts from Washington
& Jefferson College, he played varsity baseball as well as being on the cycling team. After
graduation, Phil went to work for one of the premier sports marketing firms in NYC. Phil
spent five years at (name omitted) as a support account manager. It was Phil's responsibility
to offer support for the account managers. To some degree this was supporting all
promotional activities that were undertaken for the sports professionals. This job also
required just looking after the stars ensuring their comfort level. As Phil worked within the
organization, he has given increased responsibilities, ultimately being promoted to account
manager. This position provided Phil with excellent project management skills, and it also
provided him with incredible networking contacts to a host of professional athletes. Phil was
in constant contact will all of his clients. Because of his love of the job, he would go out of
his way to exceed their satisfaction. As a result of Phil going out of his way to satisfy his
clients, he developed long-term friendships with his client athletes who felt like they were
indebted to Phil due to all of his hard work.
While Phil enjoyed this work within the sports arena, he recognized his need for more
advanced business skills. Consequently, Phil went back to school to earn his MBA at the
University of Massachusetts. Upon graduation, Phil was temporarily at a loss as to what type
of job he was looking for. He enjoyed his work at the sports marketing firm, yet he longed for
more autonomy. At a party a friend mentioned that he should open up his own sport
collectible store. Phil's initially reaction was that it was below him in terms of his skills,
education, and experience. After contemplating this thought he realized that it was a perfect
job as it challenged his business skills to operate a business, but allowed him to work in the
industry that he loves. While in the process of writing a business plan, Phil heard about a
gentlemen with a sports jersey collectible shop that was looking to retire. They were able to
arrive at a mutually agreeable price and Phil is in the process of continuing Jerseys R Us.

6.1 Personnel Plan

 Phil: marketing, operations and customer service functions.

 Support staff: this will be several part-time employees to help Phil serve customers,
track inventory, and find new purchases.

Personnel Plan
2003 2004 2005
Phil $30,000 $40,000 $45,000
Support staff $12,000 $17,800 $22,000
Total People 2 2 2
Total Payroll $42,000 $57,800 $67,000

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Financial Plan
The following sections outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions

General Assumptions

2003 2004 2005

Plan Month 1 2 3

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

7.2 Business Ratios

The following table indicates industry and business specific Business Ratios, based on
NAICS code 448190, Clothing Stores offering specialized lines of garments.

Ratio Analysis

2003 2004 2005 Industry Profile

Sales Growth -10.61% 65.20% 28.16% 5.27%

Percent of Total Assets

Inventory 2.53% 3.79% 4.14% 38.34%

Other Current Assets 12.86% 13.52% 11.52% 26.48%

Total Current Assets 41.88% 50.49% 60.68% 88.71%

Long-term Assets 58.12% 49.51% 39.32% 11.29%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 4.07% 5.80% 5.83% 37.92%

Long-term Liabilities 3.75% 1.89% 0.31% 12.86%

Total Liabilities 7.82% 7.69% 6.14% 50.78%

Net Worth 92.18% 92.31% 93.86% 49.22%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 70.00% 70.00% 70.00% 14.97%

Selling, General & Administrative Expenses 77.62% 61.65% 56.25% 6.56%

Advertising Expenses 0.00% 0.00% 0.00% 1.14%

Profit Before Interest and Taxes -6.60% 12.55% 20.13% 1.32%

Main Ratios

Current 10.30 8.71 10.41 2.10

Quick 9.68 8.05 9.70 0.86

Total Debt to Total Assets 7.82% 7.69% 6.14% 57.27%

Pre-tax Return on Net Worth -5.40% 13.14% 23.15% 4.00%

Pre-tax Return on Assets -4.98% 12.13% 21.73% 9.36%

Additional Ratios 2003 2004 2005

Net Profit Margin -7.49% 8.50% 13.96% n.a

Return on Equity -5.40% 9.19% 16.21% n.a

Activity Ratios

Inventory Turnover 1.64 9.83 8.87 n.a

Accounts Payable Turnover 7.98 12.17 12.17 n.a

Payment Days 41 23 27 n.a

Total Asset Turnover 0.66 1.00 1.09 n.a

Debt Ratios

Debt to Net Worth 0.08 0.08 0.07 n.a

Current Liab. to Liab. 0.52 0.75 0.95 n.a

Liquidity Ratios

Net Working Capital $56,463 $73,403 $105,726 n.a

Interest Coverage -7.35 31.40 104.43 n.a

Additional Ratios

Assets to Sales 1.51 1.00 0.92 n.a

Current Debt/Total Assets 4% 6% 6% n.a

Acid Test 9.68 8.05 9.70 n.a

Sales/Net Worth 0.72 1.08 1.16 n.a

Dividend Payout 0.00 0.00 0.00 n.a

7.3 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the
break-even point.
Break-even Analysis

Monthly Revenue Break-even $9,047

Assumptions:

Average Percent Variable Cost 30%

Estimated Monthly Fixed Cost $6,333

7.4 Projected Profit and Loss

The following table and charts project Profit and Loss.

Pro Forma Profit and Loss
 2003 2004 2005

Sales $99,218 $163,913 $210,065

Direct Cost of Sales $29,766 $49,174 $63,019

Other Costs of Goods $0 $0 $0

Total Cost of Sales $29,766 $49,174 $63,019

Gross Margin $69,453 $114,739 $147,045

Gross Margin % 70.00% 70.00% 70.00%

Expenses

Payroll $42,000 $57,800 $67,000

Sales and Marketing and Other Expenses $3,000 $3,000 $3,000

Depreciation $5,497 $5,500 $5,500

Rent $10,800 $10,800 $10,800

Utilities $5,400 $5,400 $5,400

Insurance $3,000 $3,000 $3,000

Payroll Taxes $6,300 $8,670 $10,050

Other $0 $0 $0

Total Operating Expenses $75,997 $94,170 $104,750

Profit Before Interest and Taxes ($6,544) $20,569 $42,295

EBITDA ($1,047) $26,069 $47,795

Interest Expense $890 $655 $405

Taxes Incurred $0 $5,974 $12,567

Net Profit ($7,434) $13,940 $29,323

Net Profit/Sales -7.49% 8.50% 13.96%

7.5 Projected Cash Flow

The following table and chart present Projected Cash Flow. Please note that there is a new
investment received in January. This was an investment that Phil made into the business.
Please also note a significant charge listed in January under purchase of long-term assets, the
cost of buying out the lease and the existing business.
Pro Forma Cash Flow

2003 2004 2005

Cash Received

Cash from Operations

Cash Sales $99,218 $163,913 $210,065

Subtotal Cash from Operations $99,218 $163,913 $210,065

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 $85,000 $0 $0

Subtotal Cash Received $184,218 $163,913 $210,065

Expenditures 2003 2004 2005

Expenditures from Operations

Cash Spending $42,000 $57,800 $67,000

Bill Payments $42,054 $85,680 $108,281

Subtotal Spent on Operations $84,054 $143,480 $175,281

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 $2,400 $2,500 $2,500

Purchase Other Current Assets $1,200 $3,000 $0

Purchase Long-term Assets $65,000 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $152,654 $148,980 $177,781

Net Cash Flow $31,565 $14,933 $32,284

Cash Balance $39,565 $54,498 $86,781

7.6 Projected Balance Sheet

The following table displays the Projected Balance Sheet.

Pro Forma Balance Sheet

2003 2004 2005

Assets

Current Assets

Cash $39,565 $54,498 $86,781

Inventory $3,772 $6,231 $7,985

Other Current Assets $19,200 $22,200 $22,200

Total Current Assets $62,537 $82,929 $116,967

Long-term Assets

Long-term Assets $99,000 $99,000 $99,000

Accumulated Depreciation $12,197 $17,697 $23,197

Total Long-term Assets $86,803 $81,303 $75,803

Total Assets $149,340 $164,232 $192,770

Liabilities and Capital 2003 2004 2005

Current Liabilities

Accounts Payable $3,874 $7,326 $9,041

Current Borrowing $2,200 $2,200 $2,200

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $6,074 $9,526 $11,241

Long-term Liabilities $5,600 $3,100 $600

Total Liabilities $11,674 $12,626 $11,841

Paid-in Capital $85,000 $85,000 $85,000

Retained Earnings $60,100 $52,666 $66,606

Earnings ($7,434) $13,940 $29,323

Total Capital $137,666 $151,606 $180,929

Total Liabilities and Capital $149,340 $164,232 $192,770

Net Worth $137,666 $151,606 $180,929

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Appendix

Sales Forecast

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales

Children 0% $2,116 $2,600 $2,821 $3,102 $3,585 $3,875 $4,147 $4,271 $4,544 $4,747 $5,035 $5,317

Adults 0% $2,432 $2,989 $3,243 $3,565 $4,121 $4,454 $4,767 $4,909 $5,223 $5,456 $5,787 $6,112

Total Sales $4,548 $5,589 $6,064 $6,667 $7,706 $8,329 $8,914 $9,180 $9,767 $10,203 $10,822 $11,429

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cost of Jerseys $1,364 $1,677 $1,819 $2,000 $2,312 $2,499 $2,674 $2,754 $2,930 $3,061 $3,247 $3,429

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $1,364 $1,677 $1,819 $2,000 $2,312 $2,499 $2,674 $2,754 $2,930 $3,061 $3,247 $3,429

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Phil 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Support staff 0% $0 $0 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200

Total People 0 0 2 2 2 2 2 2 2 2 2 2

Total Payroll $2,500 $2,500 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700
General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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%

Long-term Interest
10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Rate

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

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales $4,548 $5,589 $6,064 $6,667 $7,706 $8,329 $8,914 $9,180 $9,767 $10,203 $10,822 $11,429

Direct Cost of Sales $1,364 $1,677 $1,819 $2,000 $2,312 $2,499 $2,674 $2,754 $2,930 $3,061 $3,247 $3,429

Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $1,364 $1,677 $1,819 $2,000 $2,312 $2,499 $2,674 $2,754 $2,930 $3,061 $3,247 $3,429

Gross Margin $3,183 $3,913 $4,245 $4,667 $5,394 $5,830 $6,240 $6,426 $6,837 $7,142 $7,575 $8,001

Gross Margin % 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 70.00%

Expenses

Payroll $2,500 $2,500 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700

Sales and Marketing and

$250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Other Expenses

Depreciation $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $459

Rent $900 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900

Utilities $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450

Insurance $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Payroll Taxes 15% $375 $375 $555 $555 $555 $555 $555 $555 $555 $555 $555 $555

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $5,183 $5,183 $6,563 $6,563 $6,563 $6,563 $6,563 $6,563 $6,563 $6,563 $6,563 $6,564

Profit Before Interest and

($2,000) ($1,270) ($2,318) ($1,896) ($1,169) ($733) ($323) ($137) $274 $579 $1,012 $1,437
Taxes

EBITDA ($1,542) ($812) ($1,860) ($1,438) ($711) ($275) $135 $321 $732 $1,037 $1,470 $1,896

Interest Expense $83 $82 $80 $78 $77 $75 $73 $72 $70 $68 $67 $65

Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($2,083) ($1,352) ($2,398) ($1,975) ($1,245) ($808) ($396) ($209) $204 $511 $946 $1,372

Net Profit/Sales -45.80% -24.19% -39.54% -29.62% -16.16% -9.70% -4.45% -2.27% 2.09% 5.00% 8.74% 12.00%

Pro Forma Cash Flow

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash Received

Cash from Operations

Cash Sales $4,548 $5,589 $6,064 $6,667 $7,706 $8,329 $8,914 $9,180 $9,767 $10,203 $10,822 $11,429

Subtotal Cash from Operations $4,548 $5,589 $6,064 $6,667 $7,706 $8,329 $8,914 $9,180 $9,767 $10,203 $10,822 $11,429

Additional Cash Received

Sales Tax, VAT, HST/GST Received 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 (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 $85,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $89,548 $5,589 $6,064 $6,667 $7,706 $8,329 $8,914 $9,180 $9,767 $10,203 $10,822 $11,429

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Expenditures from Operations

Cash Spending $2,500 $2,500 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700 $3,700

Bill Payments $15,077 $2,308 $2,313 $2,485 $2,483 $2,482 $2,480 $2,478 $2,477 $2,475 $2,473 $2,523

Subtotal Spent on Operations $17,577 $4,808 $6,013 $6,185 $6,183 $6,182 $6,180 $6,178 $6,177 $6,175 $6,173 $6,223

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

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing

Other Liabilities Principal

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment

Long-term Liabilities Principal

$200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Repayment

Purchase Other Current Assets $0 $0 $0 $0 $400 $0 $0 $300 $0 $500 $0 $0

Purchase Long-term Assets $65,000 $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 $82,777 $5,008 $6,213 $6,385 $6,783 $6,382 $6,380 $6,678 $6,377 $6,875 $6,373 $6,423

Net Cash Flow $6,771 $581 ($148) $282 $923 $1,947 $2,534 $2,502 $3,390 $3,328 $4,448 $5,007

Cash Balance $14,771 $15,352 $15,204 $15,485 $16,408 $18,356 $20,890 $23,392 $26,782 $30,110 $34,558 $39,565

Pro Forma Balance Sheet

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Assets Starting Balances

Current Assets

Cash $8,000 $14,771 $15,352 $15,204 $15,485 $16,408 $18,356 $20,890 $23,392 $26,782 $30,110 $34,558 $39,565

Inventory $32,000 $30,636 $28,959 $27,139 $25,140 $22,828 $20,329 $17,655 $14,901 $11,971 $8,910 $5,663 $3,772

Other Current Assets $18,000 $18,000 $18,000 $18,000 $18,000 $18,400 $18,400 $18,400 $18,700 $18,700 $19,200 $19,200 $19,200

Total Current Assets $58,000 $63,407 $62,311 $60,343 $58,625 $57,636 $57,085 $56,945 $56,992 $57,453 $58,220 $59,422 $62,537
Long-term Assets

Long-term Assets $34,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000

Accumulated Depreciation $6,700 $7,158 $7,616 $8,074 $8,532 $8,990 $9,448 $9,906 $10,364 $10,822 $11,280 $11,738 $12,197

Total Long-term Assets $27,300 $91,842 $91,384 $90,926 $90,468 $90,010 $89,552 $89,094 $88,636 $88,178 $87,720 $87,262 $86,803

Total Assets $85,300 $155,249 $153,695 $151,269 $149,093 $147,646 $146,637 $146,039 $145,628 $145,631 $145,940 $146,684 $149,340

Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Current Liabilities

Accounts Payable $15,000 $2,231 $2,230 $2,402 $2,401 $2,399 $2,397 $2,396 $2,394 $2,392 $2,391 $2,389 $3,874

Current Borrowing $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $17,200 $4,431 $4,430 $4,602 $4,601 $4,599 $4,597 $4,596 $4,594 $4,592 $4,591 $4,589 $6,074

Long-term Liabilities $8,000 $7,800 $7,600 $7,400 $7,200 $7,000 $6,800 $6,600 $6,400 $6,200 $6,000 $5,800 $5,600

Total Liabilities $25,200 $12,231 $12,030 $12,002 $11,801 $11,599 $11,397 $11,196 $10,994 $10,792 $10,591 $10,389 $11,674

Paid-in Capital $0 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000

Retained Earnings $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100 $60,100

Earnings $0 ($2,083) ($3,435) ($5,833) ($7,808) ($9,053) ($9,861) ($10,257) ($10,466) ($10,262) ($9,751) ($8,806) ($7,434)

Total Capital $60,100 $143,017 $141,665 $139,267 $137,292 $136,047 $135,239 $134,843 $134,634 $134,838 $135,349 $136,294 $137,666

Total Liabilities and Capital $85,300 $155,249 $153,695 $151,269 $149,093 $147,646 $146,637 $146,039 $145,628 $145,631 $145,940 $146,684 $149,340

Net Worth $60,100 $143,017 $141,665 $139,267 $137,292 $136,047 $135,239 $134,843 $134,634 $134,838 $135,349 $136,294 $137,666

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