Retail Store Sample Business Plan

To learn more about Business Plan Pro and other planning products for small and medium sized businesses, visit us at www.paloalto.com. This is a sample business plan and the names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to resell, reproduce, publish, distribute or even copy this plan as it exists here. Bu sin Copyright © Palo Alto Software, Inc., 1995-2008. ess Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Pla nP This plan may be edited using Business Plan Pro and is one of 500+ sample plans available from within the software. ro This sample business plan was created using Business Plan Pro®business planning software published by Palo Alto Software, Inc. Sa All rights reserved. Clara's Hardware Store - Sample Plan mp le Confidentiality Agreement It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a business plan. It does not imply an offering of securities. Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com sin ess Pla nP ro Sa Upon request, this document is to be immediately returned to _______________. mp le The undersigned reader acknowledges that the information provided by _______________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________. Table of Contents 1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 3.0 4.0 5.0 mp le 4 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sa 6 6 6 7 7.0 Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com sin ess Pla nP Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ro 6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 9 9 10 11 13 13 Clara's Hardware Store 1.0 Executive Summary The demographics of home ownership has changed radically in the South Gate section of Gilmore. Today, over 40% of the area's homes are owned by women. In addition, 60% of the area's rentals are owned by women. More often than not, it's a woman who will now head to the hardware store for repair parts and advice. Today's hardware store, which more and more are dominated by the mega-store chains, are cold, uninviting and usually involve more driving time. Clara's Hardware is uniquely positioned to take advantage of this new fact of life. Conveniently located to serve the South Gate area, Clara's Hardware offers parts, material, and advice to tackle any home repair, as well as lawn care. The focus is on helping the customer identify what they want as soon as they enter the store. Through the use of a selection of hardware goods, superior personal customer attention, and reasonable prices, Clara's Hardware will capitalize on this incredible opportunity. A location has been secured that offers very good foot traffic and easy accessibility. The store will efficiently lay out the store to increase sales and give the customers the upmost in attention. The projected growth rate for Clara's Hardware is quite steady. The store will reach profitability by month six and will have revenue of $100,000 by year three. 1.1 Mission 1.2 Keys to Success • Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 1 sin • • • ess Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The plaza's primary tenants are the area's successful supermarket, drug store, and appliance store. South Gate Plaza has easy access points on both of the area's major cross streets and is the biggest shopping center in South Gate's residental area. The closest hardware store to the South Gate area is a twenty minute drive. Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring in local customers by marketing these items at competitive prices. Repair/Project Resource Area: The first section customers will find when they enter is a repair/project resource area that they can use to plan repairs or projects. There will be a repair/project resource person to answer questions and direct them to the section of store where the needed products are. In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area will be used to conduct short trainings and demonstrations in home repair and home projects. Pla The mission of Clara's Hardware is to offer quality hardware products in a customer-friendly shopping environment. Our customers will get assistance quickly and will leave the store prepared to get the job done right the first time. Clara's Hardware will also focus on anticipating the seasonal needs of its customers and providing the best products at competitive prices. Most importantly, Clara's Hardware will make the additional 15 minute drive to a mega-hardware store, too far to go and too expensive to entertain. nP ro Sa mp le Clara's Hardware Store Highlights (Planned) $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 2003 mp Sa 2004 2.0 Company Summary The business will make a profit in month six, and will grow steadily each consecutive month. 2.1 Company Ownership Clara's Hardware is owned by Clara Johnson. Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 2 sin ess Pla Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The store's owner, Clara Johnson, has worked in the hardware industry for over ten years. Most recently, she was the shift manager at Home Depot located in Waterfront Shopping Center. Her area of expertise was home repairs. She conducted four presentations a week on all manner of home repair. nP ro 2005 le Sales Gross Margin Net Profit Clara's Hardware Store 2.2 Start-up Summary Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Start-Up Inventory Display Set-Up Cash Reserve for Hiring Advertising Other Total Start-up Expense Start-up Assets Needed Cash Balance on Starting Date Other Short-term Assets Total Short-term Assets Long-term Assets Total Assets Total Requirements Funding Investment Clara Johnson Silent Partner Other Total Investment $1,000 $0 $0 $0 $0 $3,000 $50,000 $5,000 $20,000 $0 $0 $79,000 $121,000 $0 $121,000 ess Short-term Liabilities Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities sin Loss at Start-up Total Capital Total Capital and Liabilities Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 3 Pla $80,000 $0 $80,000 $0 $0 $0 $0 $150,000 $150,000 ($79,000) $1,000 $151,000 nP $30,000 $151,000 $230,000 ro Sa mp Table: Start-up le The start-up cost of Clara's Hardware will consist primarily of inventory and display equipment. Clara Johnson will invest $80,000. She will also secure a $150,000 SBA loan. Clara's Hardware Store Start-up $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Expenses ro Assets 3.0 Products • • • Fall/Winter: Weatherization projects. Spring: Garden/lawn projects/home improvement projects. Summer: Outdoor building projects. Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 4 sin In the past ten years, most local hardware stores have closed due to the success of large hardware mega-stores drawing away local customers. The attraction of the larger stores has always been price and and a large inventory. Customers would rather drive 20 minutes and make sure they will find what they want rather than drive five minutes and hope the local store will have it at a low price. Yet these same hardware mega-stores are sterile and not customer-friendly. Customers can wander the aisles, aimlessly lost, looking for a two dollar item. And when they do find the right section, they will most likely select the most popular brand no matter how large the selection is. What these store offer in price and selection, they lose in creating a confusing, frustrating maze for their customers. Clara believes that a local hardware store can provide a reasonable selection in the most important product areas, be competitive in pricing, and offer the customer a shopping environment that will assure repeat business. ess 4.0 Market Analysis Summary Pla Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The primary focus will be to satisfy the seasonal needs of the area's customers. nP Sa Investment Loans mp le Clara's Hardware Store 4.1 Market Segmentation • • • Table: Market Analysis Market Analysis Potential Customers Women Home Owners New Repair/Project Customers Repair/Home Improvement Professionals Total nP Growth 10% 20% 5% 2002 15,000 40,000 42 ro 2003 16,500 48,000 44 64,544 55,042 Local repair and home improvement professionals: The South Gate area supports a good number of repair and home improvement professionals. Currently, the hardware mega-stores have their business but Clara's Hardware can win a increasing share of this customer group through aggressive marketing. Time is money and if Clara's Hardware can save them a trip outside the area, they will buy there. Sa 2004 18,150 57,600 46 75,796 Customers who need assistance in planning a project/repair: This customer group can have the most frustrating experience in the hardware mega-stores. If they can't make the scheduled demos or trainings, they are left to sort thing out with whoever they can flag down in the store help them. Clara's Hardware will be set-up to provide resources and assistance as soon as they walk into the store. mp 2005 19,965 69,120 48 89,133 Women home owners: Many women home owners perform their own home repairs and home improvement projects. Clara knows this first hand since she has helped many of these women in mastering the skills needed to do the work successfully. Clara's Hardware will be uniquely designed to be responsive to the shopping environment that will attract and retain this important customer group. le Clara's Hardware will focus on three significant customer groups: Pla 2006 21,962 82,944 50 104,956 CAGR 10.00% 20.00% 4.46% 17.51% 17.51% Market Analysis (Pie) ess sin Bu Women Home Owners New Repair/Project Customers Repair/Home Improvement Professionals Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 5 Clara's Hardware Store 5.0 Strategy and Implementation Summary Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore Sun, to advertise. In addition, we will have a drawing for five $1,000 home improvement gift certificates that can be redeemed at selected home improvement professionals. We will have new drawings each week for the first eight weeks of the store's operation. Clara's Hardware will use the drawings to make connections with the local home improvement professionals. It is our plan to recoup some of the gift certificate money in material purchases that will be made by the home improvement professionals the winners select. Clara's Hardware's competitive edge is: • • • Repair/Project Resource Area: The first section customers will find when they enter the store is a repair/project resource area that they can use to plan repairs or projects. There will be a repair/project resource person there to answer their questions and direct them to the section of store where the needed products are. In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area will be used to conduct short trainings and demonstrations in home repair and home projects. • Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 6 sin The sales strategy of Clara's Hardware is simple. First, create a shopping environment that will create confidence in the customer that he or she will get the needed material, part, or instructions to get the job done right the first time. Second, make the store easy to navigate, so customer can get in and out as quickly as possible. Third, know your customer's seasonal hardware needs and offer it at competitive prices. ess 5.2 Sales Strategy Pla nP Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring in local customers by marketing these items at competitive prices. ro Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The closest hardware store to the South Gate area is a twenty minute drive. Sa 5.1 Competitive Edge mp le Clara's Hardware Store 5.2.1 Sales Forecast Table: Sales Forecast (Planned) Sales Forecast Sales Hardware Other Total Sales Direct Cost of Sales Hardware Other Subtotal Direct Cost of Sales 2003 $964,000 $0 $964,000 2003 $474,000 $0 $474,000 2004 $1,090,000 $0 $1,090,000 2004 $500,000 $0 $500,000 2005 $1,240,000 $0 $1,240,000 Sales Monthly (Planned) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 nP Apr May Jun ro Hardware Other Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 7 sin ess Pla Jul Aug Sep Oct Nov Dec Jan Feb Mar Sa 2005 $612,000 $0 $612,000 mp le Clara's Hardware will hit the ground running in April. Clara's Hardware Store 6.0 Management Summary 6.1 Personnel Plan Clara's Hardware will have the following staff members: • • • • • • Manager. Assistant Manager. Office Manager/Accountant. Checkers (full time and part time). Two Customer Assistants. Stockers (full time and part time). Table: Personnel (Planned) Personnel Plan Manager Assistant Manager Office Manager/Bookkeeper Checkers Customer Assistants Stockers Other Total Payroll Total People Payroll Burden Total Payroll Expenditures 2003 $36,000 $36,000 $36,000 $32,400 $60,000 $39,600 $0 $240,000 nP 9 $36,000 $276,000 9 $39,825 $305,325 Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 8 sin ess Pla ro 2004 $40,000 $39,000 $39,000 $35,500 $68,000 $44,000 $0 $265,500 Sa 2005 $45,000 $43,000 $42,000 $40,000 $74,000 $48,000 $0 $292,000 9 $43,800 $335,800 mp le Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of Clara's Hardware. Clara's Hardware Store 7.0 Financial Plan 7.1 Break-even Analysis The monthly sales break-even point is $50,526. Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Sales Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost 842 $50,526 $60.00 $3.00 $48,000 Break-even Analysis $10,000 $0 ($10,000) ($20,000) ($30,000) ($40,000) ($50,000) $0 Pla $12,000 nP $24,000 $36,000 $48,000 $60,000 $20,000 Monthly break-even point Break-even point = where line intersects with 0 Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 9 sin ess ro Sa mp le The following is the financial plan for Clara's Hardware. Clara's Hardware Store 7.2 Projected Profit and Loss Table: Profit and Loss (Planned) Pro Forma Profit and Loss Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Operating Expenses: Advertising/Promotion Travel Miscellaneous Payroll Expense Payroll Burden Depreciation Leased Equipment Utilities Insurance Rent Inventory Contract/Consultants Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Extraordinary Items Net Profit Net Profit/Sales 2003 $964,000 $474,000 $0 -----------$474,000 $490,000 50.83% Sa Pla $0 Apr May Jun $75,000 $0 $0 $240,000 $36,000 $4,284 $0 $6,000 $0 $36,000 $0 $0 -----------$397,284 $92,716 $0 $13,375 $23,802 $0 $55,539 5.76% $100,000 $0 $0 $265,500 $39,825 $4,285 $0 $6,000 $0 $36,000 $0 $0 -----------$451,610 $138,390 $0 $10,500 $38,367 $0 $89,523 8.21% Bu sin ess $20,000 $15,000 $10,000 $5,000 ($5,000) ($10,000) ($15,000) ($20,000) Jul Aug Sep Oct Nov Dec Jan Feb Mar Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 10 nP Profit Monthly (Planned) ro mp 2004 2005 $1,090,000 $1,240,000 $500,000 $612,000 $0 $0 ----------------------$500,000 $612,000 $590,000 $628,000 54.13% 50.65% $100,000 $0 $0 $292,000 $43,800 $4,285 $0 $6,000 $0 $36,000 $0 $0 -----------$482,085 $145,915 $0 $7,500 $41,525 $0 $96,891 7.81% le The following table and chart highlight the projected profit and loss for three years. Clara's Hardware Store 7.3 Projected Cash Flow Table: Cash Flow (Planned) Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales From Receivables Subtotal Cash from Operations Additional Cash Received Extraordinary Items Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spent on Costs and Expenses Wages, Salaries, Payroll Taxes, etc. Payment of Accounts Payable Subtotal Spent on Operations 2003 mp 2004 $1,090,000 $0 $1,090,000 $0 $0 $0 $0 $0 $0 $0 $0 $1,090,000 2004 $69,087 $305,325 $616,784 $991,196 $0 $0 $0 $30,000 $0 $0 $0 $0 $1,021,196 $68,804 $269,689 2003 $964,000 $0 $964,000 Sa ro nP $0 $0 $0 $0 $0 $0 $0 $0 $964,000 $62,818 $276,000 $515,297 $854,115 $0 $0 $0 $30,000 $0 $0 $0 $0 $884,115 $79,885 $200,885 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 Short-term Assets Purchase Long-term Assets Dividends Adjustment for Assets Purchased on Credit Subtotal Cash Spent Net Cash Flow Cash Balance ess Pla Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 11 sin le 2005 $1,240,000 $0 $1,240,000 $0 $0 $0 $0 $0 $0 $0 $0 $1,240,000 2005 $80,302 $335,800 $713,784 $1,129,886 $0 $0 $0 $30,000 $0 $0 $0 $0 $1,159,886 $80,114 $349,803 The following table and chart highlight the projected cash flow for three years. Clara's Hardware Store Cash (Planned) $250,000 $200,000 $150,000 $100,000 $50,000 $0 ($50,000) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 12 sin ess Pla nP ro Sa mp le Net Cash Flow Cash Balance Clara's Hardware Store 7.4 Projected Balance Sheet Table: Balance Sheet (Planned) Pro Forma Balance Sheet Assets Short-term Assets Cash Other Short-term Assets Total Short-term Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 2003 $200,885 $0 $200,885 $30,000 $4,284 $25,716 $226,601 2003 $50,062 $0 $0 $50,062 $120,000 $170,062 2004 $269,689 $0 $269,689 $30,000 $8,569 $21,431 $291,120 2004 $55,058 $0 $0 $55,058 $90,000 $145,058 2005 $349,803 $0 $349,803 $30,000 $12,854 $17,146 $366,949 7.5 Ratios Bu Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 13 sin ess Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5251, Hardware Stores, are shown for comparison. Pla $80,000 ($79,000) $55,539 $56,539 $226,601 $56,539 nP $80,000 ($23,461) $89,523 $146,062 $291,120 $146,062 ro $60,000 $123,997 $80,000 $66,062 $96,891 $242,952 $366,949 $242,952 2005 $63,997 $0 $0 $63,997 Sa mp le The following table highlights the projected balance sheet for three years. Clara's Hardware Store Table: Ratios (Planned) Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Short-term Assets Total Short-term Assets Long-term Assets Total Assets Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Net Worth 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 Business Vitality Profile Sales per Employee Survival Rate Additional Ratios Net Profit Margin Return on Equity 2002 0.00% 0.00% 0.00% 0.00% 88.65% 11.35% 100.00% 0.00% 22.09% 52.96% 75.05% 24.95% 100.00% 50.83% 45.07% 7.78% 9.62% 2003 13.07% 0.00% 0.00% 0.00% 92.64% 7.36% 100.00% 0.00% 18.91% 30.92% 49.83% 50.17% 2004 13.76% Industry Profile 6.00% 11.00% 48.50% 20.20% 79.70% 20.30% 100.00% 37.60% 30.00% 19.70% 49.70% 50.30% 100.00% 33.80% 21.10% 1.90% 1.10% 2.24 0.58 57.30% 2.20% 5.30% Industry $0 0.00% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a nP 4.01 4.01 75.05% 187.64% 46.82% 2002 $107,111 2002 5.76% 98.23% 0.00 0 0.00 11.29 4.25 3.01 0.29 $150,823 6.93 0.24 22% 4.01 17.05 $0 ro 4.90 4.90 49.83% 101.94% 51.14% 2003 $121,111 2003 8.21% 61.29% 0.00 0 0.00 11.29 3.74 0.99 0.38 $214,631 13.18 0.27 19% 4.90 7.46 0.00 Pla Debt Ratios Debt to Net Worth Short-term Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage ess Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Total Asset Turnover sin Bu Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 14 Sa 100.00% 54.13% 45.92% 9.17% 12.70% mp 0.00% 17.44% 16.35% 33.79% 66.21% 100.00% 50.65% 42.83% 8.06% 11.77% 5.47 5.47 33.79% 63.15% 41.81% 2004 $137,778 2004 7.81% 39.88% 0.00 0 0.00 11.29 3.38 0.51 0.52 $285,806 19.46 0.30 17% 5.47 5.10 0.00 0.00% 0.00% 0.00% 95.33% 4.67% 100.00% le Appendix Appendix Table: Sales Forecast (Planned) Sales Forecast Sales Hardware Other Total Sales Direct Cost of Sales Hardware Other Subtotal Direct Cost of Sales Apr $50,000 $0 $50,000 Apr $25,000 $0 $25,000 May $60,000 $0 $60,000 May $30,000 $0 $30,000 Jun $70,000 $0 $70,000 Jun $35,000 $0 $35,000 Jul $75,000 $0 $75,000 Jul $37,000 $0 $37,000 Aug $85,000 $0 $85,000 Aug $42,000 $0 $42,000 Sep $90,000 $0 $90,000 Sep $45,000 $0 $45,000 Oct $100,000 $0 $100,000 Oct $50,000 $0 $50,000 Nov $85,000 $0 $85,000 Nov $42,000 $0 $42,000 Dec $90,000 $0 $90,000 Dec $45,000 $0 $45,000 Jan $85,000 $0 $85,000 Jan $42,000 $0 $42,000 Feb $79,000 $0 $79,000 u B in s s e P s n la r P S o m a Feb $39,000 $0 $39,000 Mar $95,000 $0 $95,000 Mar $42,000 $0 $42,000 le p 2003 $964,000 $0 $964,000 2003 $474,000 $0 $474,000 2004 $1,090,000 $0 $1,090,000 2004 $500,000 $0 $500,000 2005 $1,240,000 $0 $1,240,000 2005 $612,000 $0 $612,000 Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 1 Appendix Appendix Table: Personnel (Planned) Personnel Plan Manager Assistant Manager Office Manager/Bookkeeper Checkers Customer Assistants Stockers Other Total Payroll Total People Payroll Burden Total Payroll Expenditures Apr $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 May $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Jun $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Jul $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Aug $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Sep $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Oct $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Nov $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 Dec $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 Jan $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 Feb $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 u B in s s e P s n la r P S o 9 $3,000 $23,000 9 $3,000 $23,000 m a 9 $3,000 $23,000 Mar $3,000 $3,000 $3,000 $2,700 $5,000 $3,300 $0 $20,000 9 $3,000 $23,000 le p 2003 $36,000 $36,000 $36,000 $32,400 $60,000 $39,600 $0 $240,000 9 $36,000 $276,000 2004 $40,000 $39,000 $39,000 $35,500 $68,000 $44,000 $0 $265,500 9 $39,825 $305,325 2005 $45,000 $43,000 $42,000 $40,000 $74,000 $48,000 $0 $292,000 9 $43,800 $335,800 Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 2 Appendix Appendix Table: Profit and Loss (Planned) Pro Forma Profit and Loss Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Operating Expenses: Advertising/Promotion Travel Miscellaneous Payroll Expense Payroll Burden Depreciation Leased Equipment Utilities Insurance Rent Inventory Contract/Consultants Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Extraordinary Items Net Profit Net Profit/Sales Apr $50,000 $25,000 $0 -----------$25,000 $25,000 50.00% $20,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$46,857 ($21,857) $0 $1,229 ($6,926) $0 ($16,160) -32.32% May $60,000 $30,000 $0 -----------$30,000 $30,000 50.00% $25,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$51,857 ($21,857) $0 $1,208 ($6,920) $0 ($16,146) -26.91% Jun $70,000 $35,000 $0 -----------$35,000 $35,000 50.00% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $3,143 $0 $1,188 $587 $0 $1,369 1.96% Jul $75,000 $37,000 $0 -----------$37,000 $38,000 50.67% $0 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$26,857 $11,143 $0 $1,167 $2,993 $0 $6,983 9.31% Aug $85,000 $42,000 $0 -----------$42,000 $43,000 50.59% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $11,143 $0 $1,146 $2,999 $0 $6,998 8.23% Sep $90,000 $45,000 $0 -----------$45,000 $45,000 50.00% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $13,143 $0 $1,125 $3,605 $0 $8,413 9.35% Oct $100,000 $50,000 $0 -----------$50,000 $50,000 50.00% $0 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$26,857 $23,143 $0 $1,104 $6,612 $0 $15,427 15.43% Nov $85,000 $42,000 $0 -----------$42,000 $43,000 50.59% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $11,143 $0 $1,083 $3,018 $0 $7,042 8.28% Dec $90,000 $45,000 $0 -----------$45,000 $45,000 50.00% Jan $85,000 $42,000 $0 -----------$42,000 $43,000 50.59% Feb $79,000 $39,000 $0 -----------$39,000 $40,000 50.63% u B in s s e P s n la r P S o $0 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$26,857 $18,143 $0 $1,063 $5,124 $0 $11,956 13.28% m a $0 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$26,857 $16,143 $0 $1,042 $4,530 $0 $10,571 12.44% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $8,143 $0 $1,021 $2,137 $0 $4,986 6.31% le p Mar $95,000 $42,000 $0 -----------$42,000 $53,000 55.79% 2003 $964,000 $474,000 $0 -----------$474,000 $490,000 50.83% $5,000 $0 $0 $20,000 $3,000 $357 $0 $500 $0 $3,000 $0 $0 -----------$31,857 $21,143 $0 $1,000 $6,043 $0 $14,100 14.84% $75,000 $0 $0 $240,000 $36,000 $4,284 $0 $6,000 $0 $36,000 $0 $0 -----------$397,284 $92,716 $0 $13,375 $23,802 $0 $55,539 5.76% 2004 $1,090,000 $500,000 $0 -----------$500,000 $590,000 54.13% $100,000 $0 $0 $265,500 $39,825 $4,285 $0 $6,000 $0 $36,000 $0 $0 -----------$451,610 $138,390 $0 $10,500 $38,367 $0 $89,523 8.21% 2005 $1,240,000 $612,000 $0 -----------$612,000 $628,000 50.65% $100,000 $0 $0 $292,000 $43,800 $4,285 $0 $6,000 $0 $36,000 $0 $0 -----------$482,085 $145,915 $0 $7,500 $41,525 $0 $96,891 7.81% Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 3 Appendix Appendix Table: Cash Flow (Planned) Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales From Receivables Subtotal Cash from Operations Additional Cash Received Extraordinary Items Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spent on Costs and Expenses Wages, Salaries, Payroll Taxes, etc. Payment of Accounts Payable 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 Short-term Assets Purchase Long-term Assets Dividends Adjustment for Assets Purchased on Credit Subtotal Cash Spent Net Cash Flow Cash Balance Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb $50,000 $0 $50,000 $0 $0 $0 $0 $0 $0 $0 $0 $50,000 Apr $4,280 $23,000 $1,284 $28,564 $0 $0 $0 $2,500 $0 $0 $0 $0 $31,064 $60,000 $0 $60,000 $0 $0 $0 $0 $0 $0 $0 $0 $60,000 May $5,279 $23,000 $38,823 $67,101 $0 $0 $0 $2,500 $0 $0 $0 $0 $69,601 $70,000 $0 $70,000 $0 $0 $0 $0 $0 $0 $0 $0 $70,000 Jun $4,527 $23,000 $47,284 $74,812 $0 $0 $0 $2,500 $0 $0 $0 $0 $77,312 $75,000 $0 $75,000 $0 $0 $0 $0 $0 $0 $0 $0 $75,000 Jul $4,466 $23,000 $40,728 $68,194 $85,000 $0 $85,000 $0 $0 $0 $0 $0 $0 $0 $0 $85,000 Aug $5,464 $23,000 $40,493 $68,958 $90,000 $0 $90,000 $0 $0 $0 $0 $0 $0 $0 $0 $90,000 Sep $5,823 $23,000 $49,288 $78,111 $0 $0 $0 $2,500 $0 $0 $0 $0 $80,611 $100,000 $0 $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $100,000 Oct $85,000 $0 $85,000 $0 $0 $0 $0 $0 $0 $0 $0 $85,000 Nov $90,000 $0 $90,000 $0 $0 $0 $0 $0 $0 $0 $0 $90,000 Dec 0.00% u B in s $18,936 $139,936 s e ($9,601) $130,334 P s ($7,312) $123,022 $0 $0 $0 $2,500 $0 $0 $0 $0 $70,694 n la $0 $0 $0 $2,500 $0 $0 $0 $0 $71,458 $13,542 $140,870 r P $6,122 $23,000 $52,497 $81,619 $0 $0 $0 $2,500 $0 $0 $0 $0 $84,119 $15,881 $166,141 $5,460 $23,000 $54,896 $83,356 S o $5,469 $23,000 $49,144 $77,612 $0 $0 $0 $2,500 $0 $0 $0 $0 $80,112 $9,888 $175,173 m a $85,000 $0 $85,000 $0 $0 $0 $0 $0 $0 $0 $0 $85,000 Jan $5,107 $23,000 $49,110 $77,217 $0 $0 $0 $2,500 $0 $0 $0 $0 $79,717 $79,000 $0 $79,000 $0 $0 $0 $0 $0 $0 $0 $0 $79,000 Feb $5,066 $23,000 $45,952 $74,018 $0 $0 $0 $2,500 $0 $0 $0 $0 $76,518 $2,482 $182,938 le p Mar 2003 $95,000 $0 $95,000 $0 $0 $0 $0 $0 $0 $0 $0 $95,000 Mar $5,754 $23,000 $45,798 $74,553 $0 $0 $0 $2,500 $0 $0 $0 $0 $77,053 $17,947 $200,885 $964,000 $0 $964,000 $0 $0 $0 $0 $0 $0 $0 $0 $964,000 2003 $62,818 $276,000 $515,297 $854,115 $0 $0 $0 $30,000 $0 $0 $0 $0 $884,115 $79,885 $200,885 2004 2005 $1,090,000 $0 $1,090,000 $0 $0 $0 $0 $0 $0 $0 $0 $1,090,000 2004 $69,087 $305,325 $616,784 $991,196 $0 $0 $0 $30,000 $0 $0 $0 $0 $1,021,196 $68,804 $269,689 $1,240,000 $0 $1,240,000 $0 $0 $0 $0 $0 $0 $0 $0 $1,240,000 2005 $80,302 $335,800 $713,784 $1,129,886 $0 $0 $0 $30,000 $0 $0 $0 $0 $1,159,886 $80,114 $349,803 $0 $0 $0 $2,500 $0 $0 $0 $0 $85,856 $4,306 $127,328 $9,389 $150,259 ($856) $165,285 $5,283 $180,456 Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 4 Appendix Appendix Table: Balance Sheet (Planned) Pro Forma Balance Sheet Assets Short-term Assets Cash Other Short-term Assets Total Short-term Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Accounts Payable Current Borrowing Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $0 $0 $0 $150,000 $150,000 $80,000 ($79,000) $0 $1,000 $151,000 $1,000 Apr $37,239 $0 $0 $37,239 $147,500 $184,739 $80,000 ($79,000) ($16,160) ($15,160) $169,579 ($15,160) May $45,926 $0 $0 $45,926 $145,000 $190,926 $80,000 ($79,000) ($32,306) ($31,306) $159,620 ($31,306) Jun $39,389 $0 $0 $39,389 $142,500 $181,889 $80,000 ($79,000) ($30,937) ($29,937) $151,951 ($29,937) Jul $38,854 $0 $0 $38,854 $140,000 $178,854 $80,000 ($79,000) ($23,954) ($22,954) $155,900 ($22,954) Aug $47,541 $0 $0 $47,541 $137,500 $185,041 Sep $50,660 $0 $0 $50,660 $135,000 $185,660 Oct $53,258 $0 $0 $53,258 $132,500 $185,758 Starting Balances $121,000 $0 $121,000 $30,000 $0 $30,000 $151,000 Apr $139,936 $0 $139,936 $30,000 $357 $29,643 $169,579 May $130,334 $0 $130,334 $30,000 $714 $29,286 $159,620 Jun $123,022 $0 $123,022 $30,000 $1,071 $28,929 $151,951 Jul $127,328 $0 $127,328 $30,000 $1,428 $28,572 $155,900 Aug $140,870 $0 $140,870 $30,000 $1,785 $28,215 $169,085 Sep $150,259 $0 $150,259 $30,000 $2,142 $27,858 $178,117 Oct $166,141 $0 $166,141 $30,000 $2,499 $27,501 $193,642 Nov $165,285 $0 $165,285 $30,000 $2,856 $27,144 $192,429 Dec $175,173 $0 $175,173 $30,000 $3,213 $26,787 $201,960 Jan $180,456 $0 $180,456 $30,000 $3,570 $26,430 $206,886 Feb $182,938 $0 $182,938 $30,000 $3,927 $26,073 $209,011 u B in s s e P s $80,000 ($79,000) ($16,956) ($15,956) $169,085 ($15,956) n la $80,000 ($79,000) ($8,543) ($7,543) $178,117 ($7,543) $80,000 ($79,000) $6,884 $7,884 $193,642 $7,884 r P Nov $47,503 $0 $0 $47,503 $130,000 $177,503 S o Dec $47,577 $0 $0 $47,577 $127,500 $175,077 $80,000 ($79,000) $25,882 $26,882 $201,960 $26,882 Jan $44,433 $0 $0 $44,433 m a Feb $44,072 $0 $0 $44,072 $122,500 $166,572 $80,000 ($79,000) $41,439 $42,439 $209,011 $42,439 Mar $200,885 $0 $200,885 $30,000 $4,284 $25,716 $226,601 le p 2003 $200,885 $0 $200,885 $30,000 $4,284 $25,716 $226,601 2003 $50,062 $0 $0 $50,062 $120,000 $170,062 $80,000 ($79,000) $55,539 $56,539 $226,601 $56,539 2004 $269,689 $0 $269,689 $30,000 $8,569 $21,431 $291,120 2004 $55,058 $0 $0 $55,058 $90,000 $145,058 $80,000 ($23,461) $89,523 $146,062 $291,120 $146,062 2005 $349,803 $0 $349,803 $30,000 $12,854 $17,146 $366,949 2005 $63,997 $0 $0 $63,997 $60,000 $123,997 $80,000 $66,062 $96,891 $242,952 $366,949 $242,952 Mar $50,062 $0 $0 $50,062 $125,000 $169,433 $120,000 $170,062 $80,000 ($79,000) $55,539 $56,539 $226,601 $56,539 $80,000 ($79,000) $13,926 $14,926 $192,429 $14,926 $80,000 ($79,000) $36,453 $37,453 $206,886 $37,453 Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 5