Sample Business Plan home improvement price

HomeImprovementPriceSearch HIPricesearch.com (An InternetPrice Guide) BUSINESS PLAN William Rogers and Christie Holliday 7564 W. Louisiana Ave. Lakewood, CO 80232 303-984-0619 Email: Cholliday@worldnet. att.net WMMRogers@woddnet. att.net CONFIDENTIAL INFORMATION This business plan is the property of Home Improvement Price Search and is considered strictly confidential. It contains information intended only for the person to whom it is transmitted. With receipt of this plan, recipient acknowledges and agrees that: i) in the event recipient does not wish to pursue this matter, this document will be returned, to the address listed above as soon as possible; ii) the recipient will not copy, fax, reproduce, divulge, or distribute this confidential plan, in whole or in part, without the expressed written consent of Home Improvement Price Search; iii) all of the information herein will be treated as confidential material with no less care than that afforded to your own company confidential material. This document does not constitute an offer to sell, or a solicitation of an offer to purchase. Business Plan #: 6 Provided To: Dennis Ciccone, Managing Director Signature: Company: Date: Lycos Ventures 9/6/99 Copyright 1999- Home Improvement Price Search (Confidential) TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................... OBJECTNES..................................................................................................................... 3 4 THE COMPANY .......................................................................................... MASSION ........................................................................................................................... How HOME IMPROVEMENT PRICE SEARCII WORKS ...................................................... TECHNOLOGY ................................................................................................................... REVENUE STREAMS .......................................................................................................... CAPrrALREQUIREMENTS .................................................................................................. HOMEIMPROVEMENT PRICESEARCHSERVICE ............................................................. 4 4 5 5 6 6 7 MARKET DEFINITION / TARGET MARKET .......................................... MARKET ANALYSIS ................................................................................. MARKET TRENDS ................................................................................... COMPETITION ......................................................................................... MANAGEMENT SUMMARY ................... . .......................................................................... MAIN MANAGEMENT TEAM ............................................................................................ LEGAL BUSINESS DESCRIPTION ....................................................................................... STRATEGY ...................................................................................................................... VALUE PROPOSmONS FOR CONSUMER HOME IMPROVEMENT USERS ............................... 8 9 10 10 11 11 12 12 13 VALUEPROPOSITIONSORPROFESSIONAL F BUILDERS ...................................................... VALUEPROPOSITIONSOROURBUSINESS F SUPPLIERS ...................................................... INTELLECTUAL PROPERTY STRATEGY ............................................................................. FACILITmS ..................................................................................................................... RISKS/ SOLUTIONS ......................................................................................................... SUPPLIER INFORMA'nON ................................................................................................. 13 13 13 13 13 14 COMPETITIVE ANALYSIS & STRATEGY ............................................ BARRIERS TOENTRY...................................................................................................... SERVICE SUPPORT & ...................................................................................................... 14 15 15 MARKETING ............................................................................................ COMPETITIVE EDGE ........................................................................................................ POSITIONING STATEMENT ............................................................................................... 16 16 16 MARKETINGPROMOTION / STRATEGY ............................................................................. WEBS[TE PRICING AD STRATEGY .................................................................................... SUPPLIER FEE................................................................................................................. MARKETING COMMUNICATIONS ..................................................................................... FUaXJRE SERVICES .......................................................................................................... 16 17 17 18 18 FINANCIAL REQUIREMENTS ................................................................ FINANCIAL TABLESANDCHARTS ............................................................................... 19 19-25 Copyright1999 - Home ImprovementPriceSearch (Confidential) 2 By using our search site, the consumer will quickly find product prices and store locations for 'all of their remodeling needs. Utilizing this accurate and highly accessible information, they will save time, save money, get the best product and price for their project, and accomplish all of this in the convenience of their own home or office. In addition to the do-it-yourselfremodeler, Home Improvement Price Search will also be widely used by professional contractors and rental property owners. Home Improvement Price Search will ease such tedious tasks as construction estimating. Due to the enormous number of building products used in professional construction, it is necessary for the estimator to do heavy research, consulting many sources in order to create a suitable bid for a contract. Often it takes the estimator a week or more to put his bid together leaving the estimator and his company in a poor position to bid quickly and competitively. By using Home Improvement Price Search, the estimator can bypass the hours of research necessary to find out which companies might have any of the hundreds of products he may need per job. Moreover, by using Home Improvement Price Search's current pricing, he can accurately calculate his final bid. Our company realizes that there is an enormous need in the ever-growing home improvement market for a tool that can access accurate price and product information. Objectives Advertising sales and supplier feesof $5,203,800 in 2000 and $16,632,000 millionby 2002 > Averagegrossmarginof 70%. Net incomemore than46% of sales by the thirdyear. The Company Mission The most effective sites on the Interact go beyond being communications vehicles. They become integrated into people's lives. The names of those well-known websites become household words such as YAHOO/, AMAZON, and EBAY. Our goal is to be such a site and to brand Home Improvement Price Search as the premier price and product search service for the homeowner remodeler and the professional contractor. Our website will be the first stop for anyone who is planning to purchase remodeling products. By the end of the third year of business, Home Improvement Price Search will be so well known that it will simply be a 'no-brainer'for a home remodeler to consult our site before purchasing any home improvement product. We intend to utilize the submitted databases of the largest home improvement stores in the country to offer the very latest pricing for home improvement products. Our site will enable residential remodelers, professional contractors and even construction industry estimators to accomplish their research with ease and efficiency. The rewards from this endeavor could be huge for Home Improvement Price Search, for its investors, and for its users. Copyright1999 - Home ImprovementPriceSearch (Confidential) 4 How Home Improvement Price Search Works The Website will work in this way: the customer will select the basic category of product. A series ofpopup menus will be used to zero in on the specific item they are looking for. They will be presented with a list of products that fit their criteria and a list of suppliers who offer the product sorted by price. As selections are made, a tally function and printable list will be . created for the user's convenience. This list will include all selections, prices, supplier contact telephone numbers and addresses. If the supplier has a website, a link will be provided. We aim to serve the entire online community as a trusted resource for the remodeling product and pricing research. We aim to stimulate wide usage of our search service by making the content convenient to access and relevant to their needs. We aspire to carry a reputation in the marketplace for developing and delivering a time saving, better-way product. We can achieve this by utilizing cutting edge website development, having a close understanding of market trends and needs, and delivery of the service in an innovative and profitable way for both consumers and businesses. Technology Home Improvement Price Search will utilize the product and price database information of leading home improvement product suppliers such as Home Depot, Eagle Hardware, Home Base, etc. and those of leading Internet suppliers such as SuperBuild.com, HouseMart.com, Builders Depot, and BathWise.com. Products and prices will also be included from online home improvement supply auctions. Our service is Internet based and protected by copyright. The type of technology that we propose is commonly being used by websites on the Internet to deliver pricing, purchasing and product information. These types ofwebsites offer search services to the consumer for locating many consumer items but none are exclusively focused on the home improvement/contractor market. By way of showing the demand for website pricing services, we can look at two successful Internet sites that offer a similar service. These are PriceWatch.com and PriceScan.com. PriceWatch is a computer parts, computer hardware and software price guide. The PriceWatch website serves over 40 million pages per month. PriceSCAN.com is also an online price search site offering the latest prices for computers, books, sporting goods, and music. According to Forbes magazine writer, Scott Woolley, "The wealth of pricing data, and the ability to get it for free at PriceSCAN's web site, lets a customer click a few buttons to compare prices for the same products -- something that would take days or weeks to do off-line." PriceSCAN was also named one of the 50 most incredibly useful sites on the Intemet in the June issue of YAHOO! Internet Life. Clearly, consumer demand for information-rich online price guides is undeniable. Copyright1999 - Home ImprovementPrice Search (Confidential) 5 Revenue Streams We have structured the Home Improvement Price Search to be self-supporting and profitable on advertising revenue and supplier fees alone however, we will be implementing other revenue streams such as: Ability forvisitorsomakepurchases t fromoursuppliers ithout w leaving oursite. We willcollect percentagefeachsale. a o )_ Online salesofexclusive ardtofindnon-traditional h custom home products illbeoffered. ewill w W contract ithFederal xpress w E todeliverhedrop-shipped t items. >, Exclusive ponsorship s willbeofferedtomajorplayers inthehomeimprovement industry reas a such these: as A prominent banktofinanceonline homeimprovement loans A prominent insuranceompanyo offer c t additional insurance nline home o to remodelers ), Visitor racking t information willbe madeavailable fora fee toresearch companies. New revenue streams will develop as the company grows. Capital Requirements Home Improvement Price Search is a start-up company. With the financing contemplated herein, our company expects to achieve $993,300 in advertising fees in the first year of full launch.We can achievethis because the invested funds will allow us to build a dynamicwebsite,to marketour service and to increase research and development for new improvements to the website. We can provide an exit for this investment within 5 years by a dividend of excess profits or by public offering. $3,500,000 stertp Fin=aci.g _3.000.0oo izs0o.oo0 =2.o00.0oo =_,500,000 =1,000,000 $_00.000 =o _enses Assets In_e,t Lo,._ We will require an investment totaling $3,475,000 to implement our plan. Financing will be used for the following purposes: 1. To contract withan IntemetDevelopment/Hosting Service forthefollowingervices: s ), Serverhosting ndmaintenance a _, Assistance infinalcreation website of lookandfeel ( design/site apping) m Databasesoftware andImplementation Supplier atabase Intemet onversionssistance d to c a _, Databaseprotection >, Secureserverwithe-commerceapability c Customprogramming Copyright - Home 1999 Improvement SearchConfidential) Price ( 6 >, > _, > Search enginecreation Abilityfor the companyto answerall user Emailfromthe location the companyoffice of Abilityforthe companyto add unlimitednumberof supplierdatabasesto oursite Tracldngand Reporting 2. Accounting Services 3. Insurance,licenses,and legal services. 4. Contracting withan advertising-rep agencyand developmentof a campaignto promoteour service. 5. To recruitandtrain staffas necessary. 6. Supportfor ongoingresearchand developmentto improveourcompetitiveadvantages. 7. Domainregistration and Search Enginesubmission WoddWide Web for 8. Office Space rental/fumishings 9. OfficeEquipment(computers,elephone,etc.) t Home Improvement Price Search Service Home Improvement improvement product state of the art website Home Improvement Price Search will offer an Internet search site for accessing home prices and supplier availability. Our principal product will consist of a designed to be a timesaving, moneysaving tool for home remodelers. Price Search will deliver the following services at launch: > Searchfor price& locationby ProductName _, Searchfor price& locationby ProductType Searchfor price& locationby StoreName Searchfor price& locationby ManufacturerName Searchfor price& locationby ManufacturerPart Number Searchfor price& locationby Location/ State or MajorCity _> EasySite Navigation with Pop-upmenus MaterialsTally Function > Abilityfor visitors purchasesupplierproductsdirectlythroughoursite to _, PrintableListof User Selections ;_ Emailanswersand "How to" tipsfrom expertsemployedby Home ImprovementPrice Search _" A chat roomcommunity with keywordsearchcapability, where userscan exchangeinformation with fellowremodelers Critical factors in the delivery of our service are the construction obtaining reliable Internet hosting. of a professional website and Copyright 1999- HomeImprovement PriceSearch (Confidential) 7 Market Definition / Target Market We define our market as an Internet price and product search site for remodeling, building, and construction materials. According to the report by the Harvard Joint Center for Housing Studies, Americans spend approximately $150 billion dollars a year on residential remodeling - an amount that rivals the homebuilding industry and accounts for approximately 2 percent of the gross domestic product. 1 Significant findings of the Harvard study include: >, Oneintenhomeowners spends over$5,000a yearonremodelingndthisgroup a accountsor f over50 percent ftotalspending. o _, W'_hin twoyearsof having child, ver75 percent f homeowners a o o report homeimprovement, a andspend percent 40 morethanothers. _, Homebuyers spend averageof$2,000moreonremodeling an dudng thefirsttwoyearsafter purchase thannon-movers; trade-up buyers pend s threetimesmorethanfirst-time uyers. b _, Theaging babyboomers illproduce of w moregrowth theuseof professional in contractors for homeimprovements, aswellas ininstalled alesprograms yhomecenters. s b Typical targeted users for our product are "do-it-yourself' homeowners, rental property owners and the professional remodeling contractor who currently uses supplier catalogs, books, or CD-ROM databases for estimating/bidding purposes. They will be motivated to use our service because of the immediate access to current product pricing and availability. We want our users to perceive our service as a time saving, accurate and reliable tool that they can use to improve their lives or to grow their business. We define our market segment as comprising consumers motivated toward "do-it-yourself' home improvements. "Remodelingisuniqueamongconstruction activitiesin that "do-it-yourself" wners o undertakea largeportionof the workratherthan hireprofessional ontractors. n fact, c I halfof all remodeling homeownersperform"do-it-yourself" projects,accounting for about$20 billionin materialsspendingeachyear. Withthe baby boomersnow in their peak-eamingages of their40s and 50s, they have the financialresourcesto make even more discretionary improvements their homes." in From:'The Remodeling Futures Program Study" HarvardJointCenterfor HousingStudies For the residential remodeler and professional contractor alike, our website will offer relevant price and product data in minutes. For a homeowner to undertake this research themselves would take hours or even days. Because Home Improvement Price Search will contract with many major home improvement suppliers, both physical and virtual, prices will be quite competitive and offer our website users the opportunity of saving time and money, while significantly increasing the sales of our suppliers. We envision that Home Improvement Price Search will become an indispensable tool for the consumer and professional alike. Copyright1999 - Home Improvement rice Search (Confidential) P 8 Market Analysis "The residentialremodelingindustrynowrivalshomebuildingin size, generating expenditures about$150 billiona year and accounting about2% of gross of for domesticproduct(GDP). Beyondits contribution the economy,the remodeling to industryplaysa criticalrole in preserving and enhancingthe nearly120 millionunits that comprisethe nation's$8 trillioninvestmentn housing." i HarvardJointCenterfor HousingStudies"ImprovingAmerk:a's Housing" We expect to compete in the Interact information delivery market of the World Wide Web. Larger traditional home improvement retailers such as Home Depot, Home Base and Eagle Hardware are already aware of the power of Interact use in their business, as evidenced by their company websites on the web. These companies and companies like them will be very interested in signing up as suppliers for our service. Traditional merchants can no longer ignore the impact of the growing online population. If they do not position themselves strategically on the Internet, they will run the risk of losing market share to their competitors. Savvy traditional merchants realize that they must either adapt to new technology or be left behind. The virtual home improvement marketers and auctioneers already understand the strength of the Internet and they too will be pleased to have Home Improvement Price Search as a partnerin promoting and selling their wares. Even if all traditional home improvement suppliers create individual e-commerce sites, customers will always come to Home Improvement Price Search first so that they can have a complete overview of product pricing all in one stop. As the website grows, we will expand to a wider range of supplier types. Our site may contain prices on related home improvement purchases such as appliances, carpeting etc. Research proves the need for inclusion of these interrelated products. Kermit Baker, the director of the Harvard Housing Study, explains: "The contribution of remodeling to our nation's economy has long boon underestimated. ot only is remodeling sizeableindustryin itsown right,butit N a stimulatessubstantial dditionalspendingfor relatedactivitieslikehomefurnishings, a appliances,and lawnand garden products." Home Improvement Price Search knows that an everincreasing number of individuals are relying on the Internet as an important knowledge resource. These users are more engaged by the Internet as a whole, are more price sensitive, are heavier users of news and information, and are concerned about easier pot_.u-_ Market bySeoment • u.8..o_.O_r, • Cont;t;'uelJon Induslw • o_,, Copyright1999 - Home ImprovementPriceSearch (Confidential) 9 navigation on the Net. The major forces affecting increasing web use will be, the falling cost of computers and the continued tendency toward Internet literacy overall. Main drivers for Home Improvement Price Search will be continual residential remodeling expenditures, and explosive building industry growth. Consumers and businesses are beginning to view the Internet as a vital source of information. They are looking to the World Wide Web for helpful solutions to manage the time constraints and stress of daily life. Market Trends In each of the past two years, Americans have spent $120 billion improving and repairing their homes according to the U.S. Census Bureau. The National Association of Home Builders _AHB) projects that residential remodeling expenditures will grow 3 to 5 percent annually over the next five years. In their recent report, the Harvard Nearly Half Of Owner-Occupied Homes Are Over 35 Years Old ls-3s Years oN 34.30% -_ _ YearsoN & Over 19.60% \ 36-55 Years Old University Joint Center for Housing Studies states: 15Years Old& Under 22.40% 23.70% "Just as the population is aging as a result of pattems of births and longer life spans, the housing stock is also aging. Nearly halfof owner-occupied homesare over 35 years old. As homesage, expenditures maintenance for and repairsare essentialto prevent physicaldeterioration. ut,changingstyles,technologies, nd space needs also B a encourageownersof older homesto investin improvements enhance theirresidences. to As the baby boomersreachtheir40s, 50s, and early60s, they will continueto driveboth homeownershipratesand homevaluesto new heights.They willalso spendmore on remodeling their olderand morevaluableproperties, urtherstimulating f housing investment.Those boomerswhoremainor becomerenterswilldemand moreexpensive and amenity-richapartments." Competition We are not aware of any direct Intemet competition, but there are alternatives to our service in the marketplace. They take the form of supplier catalogs or books such as the "National Building Cost Manual" along with several other books which are more specific in nature. There are also CD-ROM databases available such as "National Construction Estimator" which, like the books, is updated annually and which deliver the same non-current pricing. These resources are outdated almost as soon as they are published. Weekly newspaper advertisements for the major home improvement chains are also available; however, these show only a few selected products each week Copyright 1999 - Home Improvement Price Search (Confidential) 10 There are also many home improvement sites on the Internet. Our nearest competitors on the World Wide Web are simply instructional and product information sites such as ImproveNet http://www.improvenet.com/, which lists remodelers and designers, gives tips on remodeling projects, and has pictures of several products for design ideas. Also Remodeling Online http://www.remodeling.hw.net/offers "How To" instructions for those that are considering a remodel or home improvement activity. This site also includes sol, ware, design advice, product descriptions and financing information. Still other home improvement websites are: The Sound Home Resource Center http://www.soundhome.com/ Home Builders Utopia www.home-builders.com Build.Corn http://www.build, eom/ The Home Improvement Connection http://www.geopages.com/RodeoDrive/1618/ HandyManNet! http://www, handymannet, corn/ Do It Yourself HQ http://pwp.usa.pipeline.com/-sivprob All of these sites offer very similar information, but none are offering a product and price search service. Our service will be unique because of its ability to offer instant results from numerous sources for remodeling products and prices_ Home Improvement Price Search can accelerate the speed of materials research for the consumer and dramatically increase estimating productivity in the professional contractor trade. We are also unique because there is no price and product search service currently being offered to the home remodeler and professional contractor market. Home Improvement Price Search will have an excellent advantage in the marketplace because it will be the first source to offer a new high-tech, easier-way to find this high-demand information. Management Summary The initial management team depends on the founders themselves, with back up from the other team members in the roles COO, CIO and General Manager. As the company grows, we will take on additional consulting help, and add other staffas necessary. Our management philosophy is based on responsibility and mutual respect. People who work at Home Improvement Price Search will want to work at Home Improvement Price Search because we have an environment that encourages creativity and achievement. Main Management Team (Founder/PresidenO Christie Holliday: Christie is a veteran of the broadcasting field where she has gained experience with public relations, cost management, employee management, and extensive experience with commercial production and advertising for television. Christie has also developed a good knowledge of the Intemet including HTML (hypertext markup language) as well as other programming languages and techniques used for Internet maintenance and construction. Copyright1999 - Home ImprovementPrice Search (Confidential) 11 (FounderVice President) William Rogers: Bill has been in the Building-Construction industry for over thirty years. He was educated at Cambridge University and Colchester Technical College in England as a master craftsman. He brings to the company extensive experience in project management, including cost management, scheduling, employee management, and public relations. Bill has a great reputation for his abilities as a trouble shooter and problem solver. (COO) Kevin Holliday: Kevin comes to Home Improvement Price Search with over 26 years in public relations. His extensive sales management, strategy planning and performance evaluation experience will be a huge asset to our business. Currently Kevin is the regional manager for the Pacific Northwest for a large national company. He also conducts ongoing training courses on business strategy and techniques for company employees. (General Manager/CIO) Debbie Sehmitz: Debbie's has a degree in Business Management and 11 years of experience to go along with it. She brings strong business development, strategic planning, and management talents to the company. Her broad range of computer knowledge and people skills coupled with great personal enthusiasm for the company makes her a perfect fit as a team member. Please see the personnel plan on page 24 for additional information. Legal Business Description Home Improvement Price Search will be an incorporated company based in the Denver area and owned by its principal investors and principal operators. It will be founded as an Internet Information Service. William Rogers and Christie Holliday conceived Home Improvement Price Search in 1998. It will be an Internet product and price search engine for the consumer residential remodeling community and for the professional contractor, offering real time product pricing and availability. Strategy The Home Improvement Price Search market strategy is to become established and branded as the leading Internet service for remodeling materials pricing and supplier information. Home Improvement Price Search will address the needs of the entire range of the consumer remodeling market and the professional contractor. It will use its core technology, knowledge and expertise in the industry to be the leading resource of it's kind. We are very aware of the opportunity for our product to be utilized in many other areas of the professional building trades. Such users might include, General Contractors, Plumbing and Electrical Contractors, Designers, Painting Contractors, Flooring and Roofing Contractors, HVAC, Drywall, Millwork, and Cabinet Contractors. Copyright 1999 - Home Improvement Price Search (Confidential) 12 Value Propositions for Consumer Home Improvement Users Time saving _, Extremelyconvenient > EmoUonal atisfaction s due to reducedeffort > Stressreductiondue to havingquickinformation theirfingertips at > Reducedcostdue to lessrunningaround Biggersavingsbecauseof abilityto findthe bestpriceavailable _, Ease of use due to well developednavigationat ourwebsite > 24 houra day availability Value Propositions for Professional Contractors >, Increasedbidaccuracy > Improvedgrossmargin ;_ Improvedrevenuethroughabilityto producemore bidsin shortertime. _, Improvedproductivity throughabilityto quicklyproducebids _, Lowerman hourcost by usingIntemet Technology _, Reducedestimatingresearchskills ;_ Reducedworkplacestress Value Propositions for our Business Suppliers ;, Abilityfor theirstore(s)to be openfor perusal24 hoursper day / 7 daysa week Abilityto adjustany priceat any time _, Greatly expandedmarket reach _, Probabilityof greatersales > Greater customerbase _, Greatervisibility .- Intellectual Property Strategy of copyright, trademark and contractual The Company plans to rely on a combination provisions to protect its intellectual property rights in its service. Facilities Our headquarters facility will be located in the Denver Colorado area. This location will be large enough to provide needed space for initial business launch and expansion to meet demand over the next 3 years. Risks / Solutions The possibility of downtime is a critical issue. Home Improvement Price Search's success and credibility will depend upon availability oftwenty-fo_ hour a day access. Our host provider must have the ability to handle large numbers of users simultaneously with little slowdown in service. We are aware that should our servers become inaccessible for any reason, or slow to access, this would cause great inconvenience to our users and certainly reflect on their confidence in us. We must be a reliable service. To combat any eventuality of downtime other than normal site maintenance, we will contract with a hosting service that has a low downtime ratio and one who will have back up Copyright 1999- HomeImprovement PriceSearch(Confidential) 13 equipment for just such occurrences. System monitoring software will be utilized so that we will know immediately of any problems with the site. Home Improvement Price Search is dependent on access to supplier database information. It is dependent on the suppliers, for timely delivery of current prices and the ability to honor the prices posted at our site. These obligations will be stated in our legal contracts with suppliers. The company will keep up with site maintenance, upgrades and website stabilization and will be able to support itself through advertising sales and other revenue streams. Future service plans will also rely heavily on good supplier support. Home Improvement Price Search is aware of its responsibility to create good relationships with our suppliers and to develop comprehensive legal contracts with them. Supplier Information Home Improvement Price Search will focus our first supplier sign-up efforts on the major traditional home improvement chain stores such as Home Depot, Lowe's, and Menards as well as virtual home improvement merchants like SuperBuild, Sears Craftsman Tools, Builders Depot, and HouseMart. This will enable us to effectively launch the website on a national scale. While contracting with major chain store suppliers such as those listed above, we will also be contacting major physical and virtual store suppliers who specialize in one type of product, such as lumber, plumbing, tile, and electrical. From there, we will begin to enlist the medium sized regional physical stores in various states. These stores may have only a few outlets throughout their state. The idea is to have available at our site, as much national and local market information as possible. We will then focus on independent suppliers who sell exclusive and hard to find custom items. These Suppliers may be national or international. There is a huge demand for custom items in the luxury home market. Online home improvement auctions will also be included at our site. We will monitor all live auctions in which home improvement products are available. We will report the location, current bid price, and time left at the auction. Competitive Analysis & Strategy This Internet market segment is not shared with any direct competitors. Competition does exist in the form of supplier catalogs, books and CD-ROM databases. Delivering a home improvement price search site that works for the consumer and professional contractor is a viable endeavor and one that the ever-growing online community is waiting for. Copyright 1999- Home ImprovementPdce Search (Confidential) 14 We intend to create a loyal following at our website by: ;_ Effective websitebranding >, Emphasizingour abilityto offer immediatepricing any home remodeling on products >, Buildinga relationships withour siteusers- Personalization Focusingon homeownersand professional ontractors keytarget markets c as Competing websites will surely arise in the future, but we intend to cultivate user loyalty through excellent service, continuing site improvements, and in paying particular attention to" customer interaction such as surveys and suggestions along with immediate email response and follow-up with human interaction. Barriers to Entry The primary barrierto entry for our service is time to market. That is; time it will take to build the website and sign on suppliers. We estimated that Home Improvement Price Search has a good lead over any potential competitors. The company intends to take steps to lessen time to market by contracting with a top rated web developer and host service provider for completion of the website. This provider will be expected to deliver in a timely fashion our completed, high quality site. As website construction progresses, the company managers will be developing relations with major home improvement suppliers and implementing an advertising campaign. All of this will be done with an eye toward the soonest possible launch time. We anticipate 3 to 5 months for initial launch from the time we receive start up capital. This will depend upon how quickly the site can be built and how quickly we can sign up suppliers. Service & Support Service and support should be considered of major concern to the company, and we wish to impress our users with the support we provide. We intend to ask questions about their remodeling needs and encourage them to give their opinion of our site. An on-site FAQ (Frequently Asked Questions) will also be available and will be continually updated through analysis of customer feedback. Customer feedback will assist us in site design, supplier selection, supplier monitoring, and to gage our market reach. We will provide an email address where users can reach us with their queries and suggestions. An automatic response will be sent thanking the user for their input. Soon after this automated response is sent, we answer their query or suggestion personally. Answering personally may seem to be a trivial or time-consuming element of business, but experience shows that there is no better way to achieve a rapport with a person than by personal response. This will help to build a friendship between our users and us. Copyright1999 - Home ImprovementPrice Search(Confidential) 15 Marketing Competitive Edge ), Home Improvement Price Search starts with a critical competitive edge; there is no Internet competitor at this time that can offer the specific information that we will be providing. Because of this lack of competition, our positioning for Internet entry is excellent, but only if we launch in a timely manner and maintain focus in our strategy, marketing, and business development. Home Improvement Price Search has sustainable value, something that can be maintained and developed over time. ), The Home Improvement Price Search name is a competitive advantage. It allows instant recognition of what the user will find at the site. Immediacy of information is another advantage of our website. Internet delivery of fast, information is the wave of the future. Consumers are becoming more educated to new technology. They demand fast & accurate information. Home Improvement Price Search will fill those demands. Positioning Statement Homeowner remodelers and professional contractors who want to save time and effort in their search for building materials will fmd Home Improvement Price Search to be an indispensable partner. Our positioning should be as a strategic ally with our suppliers and users. By building a business based on long-standing relationships with satisfied suppliers and users, we will simultaneously build defenses against competition. The longer the relationship stands, the more we help our customers understand what we offer them and why they need it. Marketing / Promotion Strategy We will contract with a successful Internet advertising-rep firm such as WebConnect, or 24/7 Media to place outgoing advertisements for Home Improvement Price Search on the web and to service our incoming advertising accounts. These ad-rep firms are capable of national ad sales, ad serving, ad targeting, ad tracking/reporting, billing, and collections. In addition to an Internet advertising agency, a print ad agency will also be retained. Contracting with ad rep firms will allow us to outsource the activities of a sales force/marketing team and to maximize revenue by using a trained sales force with experience. We can then focus on building and maintaining the site. Internet advertising combined with newspaper, magazine, link sharing, and free advertising such as site reviews in all media forms, will help us accelerate our revenue growth and brand awareness. As our revenue grows, we will implement television-advertising campaigns. We will seek partnerships with online home improvement sites such as Improvenet.com, the PBS site "This Old House", and Bob Vila's home site at Bobvila.com. These sites provide "how- to" assistance and advice to do-it-yourself homeowners on various projects. We can work on a business to business level and help to promote each other's sites. Copyright - Home 1999 Improvement SearchConfidential) Price ( 16 We will be requesting reviews and interviews from major trade journals and newspapers and site reviews from the major Internet search engines (Yahoo! Lycos, Alta Vista, etc). We will also periodically circulate press releases to newspapers, magazines and trade journals. Home Improvement Price Search will be approaching advertising scientifically, as we improve our customer targeting ability. Our target group is vast but fairly narrow and easily identifiable. We must always have a relatively heavy PR component to our marketing, because website reviews are critical. Our site must live up to expectations. A good website has the ability to sell itself simply through word of mouth. At the core of our marketing strategy will be our continual emphasis on service and support and on building good relationships with both our users and suppliers. As a business that is part of the physical and virtual communities, we will join the Chamber's of Commerce locally and on the Internet. Website Ad Pricing Strategy Our advertising pricing strategy will be based on competitive parity guidelines. We will develop a comprehensive advertising rate card offering ad packages for General rotation (random placement throughout site), Channel-targeted (targeting customers by content and interests), Keyword rotations (ads that appear as a result of a specific keyword search), Tag Lines (12 words or less which appear below a banner ad), and various other options for advertising on our site. Premium ad packages and special sponsorship options will also be offered. Home Improvement Price Search will continually stay abreast of the newest and best ways to advertise on the web so that we can offer the most comprehensive strategies to our advertising buyers. Pricing will be reviewed periodically to ensure that potential profits are not squandered. Supplier Fee Our financial tables show a fee of $250 per month per supplier. This fee covers inclusion of the supplier's prices and description data into our database, links to their site, the ability to make sales directly from our site 24 hours a day, and the ability for the supplier to make price and data changes in real time. The supplier will receive the added advertising value of having their business name repeatedly seen by millions of online visitors. Copyright1999 - Home Improvement Price Search (Confidential) 17 Marketing Communications Home Improvement extensive promotion. advertising agencies and promotion plans Price Search recognizes the key to success after launch will be This will be done aggressively on a selective scale. Upon funding, will be selected and, with their assistance, comprehensive advertising will be drafted. Our efforts will focus on product branding and enhancing our reputation and company name to provide wide consumer recognition. We must remain on top of new Internet technologies " for information delivery, because this is our bread and butter. Home Improvement Price Search will keep our customers informed about any updates or changes at our service through e-mail alerts, direct mail and online announcements at the website. We are aware that the most successful companies are those determined and talented enough that they dominate their marketing channels in a way that effectively blocks out all serious competition. Home Improvement Price Search intends to be such a company. Future Service Plans Responding to market needs, we plan to follow our initial service launch with extensions to our site, some of which will include: )_ Additional e-commerce revenue streams )_ Additional exclusive roduct p offerings fromnational andinternational supplierspecializing hard s in tofindandcustomitems ), The addition f rental quipment o e suppliers Addition suppliersorappliances, of f carpeting, etc. ), Project hecklists aidourvisitors c to ), Toolreviews anduses Realtimechats focused onvarious projectsndmoderated a bya fieldexpert Permit andcodeinformation >, Expansion fthesiteto international o markets ), HomeImprovement PriceSearchMembershipardDiscount C Cards. Visitors will linger at our site due to the array of information and features that are offered. The site will be a visually appealing, powerful tool for our users and a fun place to be. People need a reason to go online besides just to buy something. With our content, there will always be a reason. This personalization will forge an emotional connection between the customers and the company. Copyright - Home 1999 Improvement SearchConfidential) Price ( 18 Financial Requirements Home Improvement Price Search will be seeking a $3,475,000 investment to fund our company start-up and growth until year two of full launch. At that time, we predict that we will have reached a positive cash flow position. The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales and moderate growth in operating expenses with few spikes. The following pages contain the tables and remaining charts of our financial plan. Because rapid growth is anticipated, a possible second round of financing may be sought. Benchmark Compadson 3.50 3.00 2,50 2.00 1.50 t.OO 0.50 0.00 Sales Gross OpEx AR Est • 2o00 • • 2001 2002 We would like the reader to note that our financial tables and charts were done using very conservative income figures and moderate to high expenditure. We did this to show that even on a small scale, Home Improvement Price Search will be successful and profitable. Copyright 1999 - Home Improvement Price Search (Confidential) 19 ,_ment Pdoe Search - stmrt..p Plan ;_.._,, " _ '-..;_.,. I.. :_.i_ .-.i_+_ :..',. %_'.,;_-_.i : :!i_.._ -._'. :":_:._._:._..;. Le(jal $15,000 Office Equip $20,000 Office Supplies $2,000 WebsiteConstruction $1,200,O00 OfficeRental $5,000 :Marketin 9 $1,000,000 insurance $8,000 iConsuitants $15,O00 Misc. $10,000 Other TotalStart-up Expense $0 $2,275,000 |_ Start-up F I an c I g n n $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 Stm._=p,_==t=_N_d , CaSh Requirements Start.¢_ tnv_=_/ Other Short-term Assets Totalhort-term S Assets Lone-term Assets Totalssets A Total 8.t_.up R.equlnm_e.. ntm... Left to finance: _ $1,200,O00 ,tO $I,200,000 $0 $1,200,000 $8,478,000 $0 $1,ooo,ooo $500,000 SO Expenses Assets Investmem Loans Start,-up Funding:pare Investors Owners Other Totalinvestment Short-tramLiabilities UnpaidExpenses Short-term Loans Interest-free Short-term Loans Subtotal hort-term S Liabilities Long-term Liabilities TOtldL_ltl_ , ., , : $0 $0 $0 $0 $0 ,$0 '" $3,475,000 $0 $0 $3,475,000 :. Loss at Start-up Total Capital Checkline ($2,275,0()0) $1,200,000 $0 Copyright 1999- HomeImprovement PriceSearch (Confidential) age19 P Home Improvement Pdce Search - Profit and Lou Sales DirectCoatofSales TotaiCostofSaJes $191,500 $231,800 $259,50015312,400 ]$365.300 $418,200 $471,100 $524,000 $576,900 $629,800]$682,700 $735,600, $5,398,800 $12,321,000 $16,872,000 $56,950 $68,540 $76,350 I $91,720 !$107.090 $122,460 $137,830 $153,200 $168,570 $183,94015199,310 $214,680 $1,580,640 $3,651,300 $5,013,600 $56,950 $68,540 $76,350 I $91,720 i$107,090 $122,460 $137,830 $153,200 $168,570 $183,94015199,310 $214,680I $1,580,640 $3,651,300 $5,013,600 GrouMa_In =_-.. $258,210 ,$295,740 .$333,270 :._:70.76%i 70.78% $445,860 $483,390 $520.920,$3,818,160 $6,689,700 $11,858,400 er_ll_; I $134,550 $163,260 $1_0_._ . %,._ , _.70...26%J 0.43% :- ; ? ! :.70_( _0,72_)6; 70,74._. $370,800 $408,330 . 70.79% ..:70.81% . 70,_B_. ::S:70.. TL_X_- :.::T0.37_ !:...: 70;28_ Operatln_l expenses: Marke_r_l $16,667 I $16,687 $16,687 J $16,667 $16,667 $16,687 $16,667 $16,667' $16,667 $16,6871 $16,667 $16.687] $200,000 $500,O00 $500,000 Website Maintenance S.500I $500 $500 I $500 $500 $500 $500 $500: $500 $500 I $500 s.sooJ $6,000 $6,000 $8,000 Website Host_r_l $600 $600 $600 I $600 $600 $600 $800 $800 i $800 $8001 $800 S8ooI $8,400 $9,000 $10,000 Te_ephone/ISP Servto_ $600 $600 $600 ] $600 $600 $600 $600 $6001 $600 $600 I $600 S6ool $7,200 $7,500 $6,000 Office Equipmerd/Fumishin_ls $0 $0 I $0 $0 $0 $0 $0 SOl $0 ' $0 $2,000 $3,000 Office Supplles _o j $50 $50 l $50 $50 $50 $50 :::-:: ! $50 $50 1 $50 ' $600 $70o $600 Business Insurance 5200 I $200 $200 I $200 $200 $200 $200 52oo I $200 $200 I $200 52oo I $2,400 $2,5O0 $2,500 _=o_n_.e_ai $2,oool $2,0001 $2,000 $2,000 $2,000 $2,000 $2.0001 $2,000 $2,0001 $2,000 $2.0001 $24,000 $26,000 $28,000 Trav_ M_=_,an_, PayrollBurden DepmclaUon S30ol $2,00o =5oo! $500 $500 $500 $500 $500 $600 _oo! $500 $5001 $500 =oo I ! $300 $3O01 $300 $300 $3OO $3OO s3ool $3O0 $30O I $300 S3ool $3,600 =8,0oo $6,000 $7,000 $4,000 $4,500 $39.51 $39,5 1 $3.,5339,5 ' $39,53 $3.,53 $ $5,930I $5,930 $0 $5,930I $0 I $5,930 $0 $5,930 $0 $5,930' $0 $5,930 $0 $39.5 1 $39,5 1 $3.,53 $39,5 $5.9301 $5,930 $0 $5,930 I _0 I $5,930 SO $5.930 I $4..,400 =.,900= 5,100 $71,160 i $0 $84,735 $0 $67,765 $0 u_,ues Health $5ool $6,5O0 $500 $6,500 $5o0 1 $6,500 $500 _)6,500 $500 $6,500 $500 i $61500 $60o $6,500 $5001 $6°5001 $500 $5,500 $500 1 $268 I $1,5001 $6,5001 $300 $6,500 =_o I $6.5001 $6,000 $3,216 $18,000 $78,000 $6,000 $78,000 $6,000 $60,000 WodoTtan,s Comp Rent _nsurance co_-_c=su_, ProfltBefomlntemstandTecees Intemst_Short-term Interest Expenseon_term L Tm_sIncurred $1,5001$1,500 $268 I I $268 $268 $1,5001 I $268 $1,500 $268 $1,500 _'HH ] $1.500, I $268 $1,500 $288 I $1.500' $268 $1,500 $268 $1,500 _:_BI $1.5001 $3,300 $20,000 $3,500 $20,000 $60o $600 , $60o $600 $600 _ I I I $600 =6oo! _0 $600 _0 1 =Boo! $7,200 $10,000 $15,000 mePro_ • "__',, , ,..... S_3,727 J:Ssr:_:_ ,seo;_r_ -!s_oe_4 _,,36,_72, $_J $58,302 $87,012 $106,_$_ I $144,4325(3 $181,962 $219.42 $268,822 .$294,3521$331,882 $0 $0 _ , $0 $0 ' ' $0 $0 I $0 $0 $0 ' $0 $14,576 I $21,753 $26,726I $36,108 $45,491 $54.673 I $64,206 $73,588J $62,971 ; _,,_I ,=8._s_, _o._o_I ,:_._r_,a>._e_=_s._ _._ , I s_,e_;, 52207644,m2 _ 42:i3% _._ I : s_77,0_ 5365_0-tm33_s_.j.s2,.!_i ! $406,942 $0 $444.472I $2,901,'984' $7,339,685 $10,489,235 $0 $0 $0 $0 I $0 ' $13 $0 $0 $92,353 I $101,736 $111,118I $725,496 $1,834,766 $2,622,309 4_.e_, .=-_ I 4s_,I _o.3_% _4_ i :_,29_t._ sr,ees_ _._ Copyright 1999- Home Improvement Search Pnce (Confidential) - Page20 k._ AdvertlIk_Iri_ome _rt_r,!erF. Price __.___.ch - _P,_ F_or,_,_____ t189,000 $2r_00 .t._-_l, llnO $_1000 1_,I'_0001 * 87',_0 J ¢'_400 1 ¢'_';_In0 1 ¢A_'_00 1 *S'I2',_00 I *8151000 I ¢,iL_'Cm_n _¢F___000 $854_400 i I T81715C}1_ TS20'r0D0 ! $22,_00 I _)4_800 82,_,000 _61X5_200 1_'708,600 _5_203_8(X) J 112_096_000 118,832,000 I $27,500 $30,000_ Sl_,0(:X} '225,000 I 240,000 = $250p_rlTiO. TSl0"_000 t T/Z--_-:._'._i_:_,._.._'_ .:._...::: :.::. "'-:;!i._'._ ---_'- "_:._;_:.!_. _ _:'L__-_'_?-_ •? ,;"':._":_---'_:_-:.::_-'-_--'_';:*_"_--_;_100:ii_'"Z'=-_-----nat_AdverUsinfl income' Supp11erFee=S280permo. $5O,7OO $250.00 868,040 1500.00 $75,800I I00,720I $105,840I $_20,960I $750.00J 11,000.00/ $1,250.00 $1500.00| 1 $_Sa,080 $1,750.00 ! $0 $0 $_00,560 $2,750.00 $2_,880 I $1,_1,_40 I $3,828,OO0 84,98e,600 I $3,000.00J 119,500.00J $22500.00| $24,000.00 $151,200! $_86,320I $_81,440 $2,000.00 $2,250.00| $2,500.00 i_.......... '" ' " " ' "* ' ,I: _,'.-,,:I-,fI._._-|.....III_'..: , 'I ,l_r.:,..-+l...:,.Ielr..I., ..I.1. .:,_iI :I..I_ "_ ;_I" .,.1 I O_I : I nov:...I :_I_..i I..._i;_,.].;.: :. .IIOl.',..: .I: _:: ._I .,:.: I nSO0,O00 1_800,000 2_000,000 2,400_000 2n800_000 3,200_000 3_600 000 4 000000 4,400,000 4_800,000 5,200_000 5n600,000 41,300,000 96_000,000 132,000_000 13_500 mere I_'-'"_''I,T_-_'_P--, .o .oo"--°'°°°/ ..oo. "--°'=1 .o.,,o"--"=l ooo."--_'°°°1 o1,.o,o o=. "--'=1. o.ooo "---'°°°t "---°=1"--:'=1 "--'°=1 .o "---_'=1 "---'5°°1 ."--=°1 ..o.,. ,. ..o..o . .. o o t--_"=/'--:°°°1 ] $189,oool_,_ool 181200,8,000 I 211600 25_200 28,800 32,400 36000 39600 43,200 46,800 50,400 371,700 864,000 $1,188_000 $2_,oooI 8302,4001 352,e001 8 $403,2001 _,_001 _._0_,0001 $5_,4001 860_,8001 S885,2001 705,6001s,203,e001 $ $ Sl2,09e,OOOl $1e,832,000 i _'_/S,S001 _@_i0001 _2,-T00t . $?aS,O00.1 .Is,,aM,II00t_a_l;_001 $t8,_'2,0001 ,I, $191_00,|, estimation _.,__X___ , _s_m__.-UO0.1 _ 111_,4_10..|.a_,800I...:_WI8,200|-. 1471,1001 :tt_4i0001 . Sales results 81"obased on very conservative figures. Our planestimateshateachvisitor t tothesite view• mlnlumum pages. will of3 Eaoh pagewillcontain advertisements, 3 thisequals9 advertisments viewed bythevisitor t 114.00 a perthousand Impressions (CPM). Supplier feesamcalculated st$250.00permonth persupplier based onestimates fsigning o up120suppliers bytheendof 2000, 40suppliers ytheendof2001,end300suppliers 2 b bytheendof 2002. Copydgl_ 1999. Home Impro_unent Search Price (Confidential)Page 21 ,Home hnpmvement Prlco 9om,ch. F_o-Foms ...-;'::_.-;/_.:..! _Amh Flow ,feWL_ .._., _ob :....:...:_Mw':_ ,.. _.: tW:._i:._._.:, tMa_::.:_:._,_ ,fun.-.. -4 ._ _k4 ;;,.. .:i::Aul_'_.. ,-?_]94m ......-.:. _:t. :... :. i Nov' -:.._:..._:._ Oec._._,--_._l_ _-'_/_._001_ ._:_:_._00_ $43,772 $85r304 $80_222 $108r369 $136,517 S164,664 S192,_62 S220,727 $248,874 $277,022 $305_169 $333,317 $2_178_816 $5,504_299 I $7.869_326 $0 $89_583 $0 $0 $0 $0 $0 $16_440 $0 S0 $0 $0 $0 S11t197 $0 $0 $0 $0 $0 $21_683 $0 $0 $0 S0 $0 $2"[,683 $0 $0 $0 $0 $0 S21,683 $0 $0 $0 $0 $0 $21,814 $0 $0 $0 $0 $0 $21_755 $0 $0 $0 $0 $0 $21,883 $0 $0 $0 $0 $0 $21,583 $0 $0 $0 S0 $0 S21,883 $0 S0 $0 $0 $0 $21,683 $0 $0 $0 $0 S0 $312_571 $0 $0 $0 $0 ! :.._'_:_o__'_;_ -'i:%_._'_:.., Net Profit Plus: Depredation Changein Accounts Payab(e CurrentBorrowing(repayment) Increase(decrease) OtherLiabilities Long-termBorrowing(repayment} CapitalInput L.e_: _,.,.,; _--: • .:...!:%. . . .... ... Changein Accounts Receivabta Changein Inventory Changein OtherShort-tom1 Assets CapitalExpenditure D,vmnds NetCa_mmv CashBalance $0 S407,607 , $0 $0 $0 $(3 $0 $252_561 $0 $0 $(3 $0 :.::./_00_ S680,873 $0 $0 $0 :. ,.... ..:Jm ..... _ ......... IM_,;.. .... I_r.::...:.":. _ :_!:_:_ $143_625 $113_578 S30_736 $43_674 $59=513 $0 $0 $0 $0 S0 $0 $0 $0 S0 $0 S0 S0 $0 S0 $0 .;,.....;...:.! ; ... '. #ben '...:_..1B_ _ ... 0_. . .i _: .:..:.-._De¢. :.:--:.:._ ..._.......200_:-_: .:._0_J $59_513 $59_513 $59_513 $59_513 S59_513 $59r513 $59_513 $807r713 $1_035t628 $0 $0 S0 $0 $0 S0 $0 $0 $0 S0 $0 $0 $0 S0 $0 $0 S0 $0 S0 $0 $0 $0 S0 $0 S0 $0 $0 _ • ,. '_..... !i SO SO SO $0 i SO SO SO $0 SO I . ._ SO $0 SO $0 SO .!,,St4&_m.-;Im_rra_ .:_ .:.les;._re lge,ssT..$_,u,_4 Z_s4,_,: ..$_e2,gel)..¢z_,o4_ ].. .' ¢zsr,_mi ..:¢a_r_,!S_.em,,zs._ta ._._A4_._ $1,189,730 $1,157,896 $1,218,580 $1,304,957 i$1,403,644 $1,530,479 $1,685,442 $1,868,412 152,079,456 $2,318,648 $2,585,988 $2,881,475 $2,881,475 $7,757_753 $15,198_767 Cuh $3.000,000 $2,500,000 _;2,OO0r000 An_ty_le $1,500,000 $1,non,o00 $600.000 S0 -$500,000 • • Cash Flow Cash Balance Copyright1999. Home In'o'o'_ment riceSearch(Coflflden'0al) P Page22 Homo I1_ I1_ Illrch. _ BIImcoIIIllllt A_]_-_.:.,._'_,_;::__..::_:._b_,:':.,... i.'_._;=..;;.,._,;.;._-,_:::,:_:_., .'-._._,_'_;!_!!:_-J -4!,i... '.... :.:]-..._,.] ..... • •._, ,:.._-_: ...... ::-i ._. :: .:"_ "._ "..."...' -., ....: .... .-, " :,':._:. ".:..'-" '..";.. ------__,:;_ Cash Accounts Receivable Inventory Other Shod-tarm _t_ Total Short-term A_,_,_t_ :... ...: r._ ,:.. . .- ,]_. "-:_:.]._V"-'.:'_[.'-< '_';.<=i:._,,| .:.[__,_";::_-_i_;:-'?:'.:',_..._3::_::._'.'.'_::._'_-::'_ :..,..:?'No,_. ;: . _Oe=.::_:]:.-..:_,.".-.:_ i .:...: ii_,:.__ $2_5851790 $748_200 $0 $0 $3,333,990 $0 $0 $0 _1_0 $2_881,314 $807_713 $0 $0 $3,689,027 $0 $(3 $0 $2_881n314 $807a713 $0 $0 j _F1,689,027 $0 $0 $0 I ,,. .. . ...... _,_ _ ..,;'_:,.,;.,...,:-.:_:,..-....-,_:..:,_t ;:::._..,'.-_:.; ,..:_.;.] Mar......::,.. !Fed> i.,.t_,-. $1p_00r000:$1_189_724 I0 $143t625 _0 $0 $0 S0 $1r157,848 $257_203 $0 $0 $1r218n484 $287t938 $0 S0 $1,506,4. _'_ $(3 $0 $0 ,..;:.)::_ Nlae/.:._:._:..',2_:i'.:. .::..-.i_': .. Jet $1_403_459 $391_125 $0 $0 $1,794,$84 $(3 $0 $0 $1, _794..__K__,1. I__,_W._. $1_530r248 $450_638 S0 $0 $1,980,386 $5' $0 $0 .. • : [_..vd--: .__ ...... $1_868_101 $569_863 $0 $0 $2,437,764 $0 $0 $0 $2,AI37._'14 .. • .. ._ Oct... _:,,!_:_:_"_ _:_..-.._::,_: $7r757r516 $1,843_340 $0 $0 $15_196,371 $2r524,214 $0 $0 $17,720,886 $(3 $(3 $0 $1r304_817 $331_613 $0 $0 $1,636,429 '$() $0 $0 $1_685,167 $510,150 $0 $0 $2,195,317 $0 $0 $0 $2.t!16_17 $2_079,183 $829_175 S0 $0 $2,708_368 $0 $(3 $0 $2,'/_,3ll $2_318_413 $688_888 $0 $0 $3,007,100 $0 $0 $0 $3,007,100 IM,__'A__.__onP_ $'_.___3._'_4._ $1,4'L_.-_.9 $0 $(3 $0 , . .... • $1.__m.K__.] $0 $0 $0 $0 $0 $0 i $9,600_856 $0 $0 $0 CapitalAssets Accumulated Depreciation Total Long-term Assets Tollal___m_..._ ,.. ,., $._._,__?._#___. [.$1jCt__._m_ i _;_,___j__.4_,,_.! [i,_._m_.4_m l .1[13,88e.027.1 :_l.(10_027 1$;0_,lffi6'::$'lT;;P20,_8 L_aml ,P_a,,a ...... $0 : $0 SO $0 $0 SO. $3a475:000 ,t__,'_rS,001_, $0 ,_ .. $8'9_623 $0 $0 $89a623 $0 _¢M.m__ _ $106,063 S0 $0 $106,063 $0 $101_1 ; $3_475a000 _ $117r260 $(3 $0 $117r260 $0 $117,200: $3_475r000 {$2,275,000) $189 162 , : ..: . AF ,, ...M_r $138_943 $0 $0 $138_943 $0 . $138,943 $3a475_000 {$2,275,000) $297r486 .-$,1.4r/.4_. $1,497,486 $160r628 $0 $(3 $160_626 SO $1_0,628 $3_475_000 ($2,275,000) $433r958 :., .... _ $'182a309 SO $0 $182n309 $0 $182,309 $3t475:000 _2,275.000) $598u577 ,_ • ,,,_' $225=807 $0 $0 $225a807 $0 ,_!28,1107 $3_475r000 ($2,275,000) $1 011 957 _211.01t'/ $0 Sip $247=490 $0 $0 $247u490 $0 _t_l,llO $3_475;000 ($2,275,000) $1_260n869 $2.4_M_ _ $269_173 $0 $0 $269,173 $(3 _,173 $3_475_000 ($2,275,000) $1_537_928 _,.'_7,_ Nov:. ' "o_ " ,. $290_956 $0 $0 $290_856 $0 5"290,886 $3u475r000 ($2,275,000) $1,843_134 .I_04_,134 $312=539 $0 $0 $312_539 $0 _12,E30: $3r475:000 ($2,275,000) $2_176_488 /_FS,,WS! - . . :. ' '_ ..... . '_ : $972r872 $0 S0 $972,872 $0 $_t2,8"t2 $3:475_000 $5,405,787 $7t866_926 b"_l,7ai_r_T_l_ $15_747a713 Accounts Payable Short-tarm Notes Other Short-term Liabilities Subtotal Short-term Liabilities Long-term Liabilities Tolnii :_ibx:, Paid in Cai:dtal Retained Earnings Earnings Total/'__,_ NetWorth $204,124 $0 $204,124 $0 t_N)4,124 $3:475:000 ($2.275,000) $791,193 .$1.11_1.11_ $1,991,193 ' $312=539 $0 30 $312_539 $0 1312,8,1t $3n475a000 ($2.275,000) $2n176_488 _ $_;20;069 $0 $0 $720_069 $(3 11_t'JN),080 $3r475:000 ($98,512) $5_504u299 $8,_10._1r{., $8_880_787 $3,475r000 (_;2,275,000)f$2.275,000) $43,727 $108,986 To_,",,,_--m_e_" ,, ,, , .--,,p_ • • • _____m_,nm3-. t_--,-'_7 ..$1_!em $,L___,sO j_,4'lU_'. $1,243,727 i $1.--'-_-P-.-'-m- $'_.mlr_ m- ! $1,308,986 $t,eos,4ssi.t'l,lse_ $1,389,162 $,l._o__,_wm_.. $1.71__1.,/, $t._4,u4 :$1.eam.au. ¢,_..l_,Sl"t : Ss,4sT.714 S2,'to_Am t_o'/,'too i Ss, aceeo Ss.ue0o_.i _ s $1,798,577 $2,211,957 $2,460_889 $2_737_928 $3,043r134 $3_376n488 $3_376a488 l_,Wo,mm.._7,_o;m_ $1,200,000 $1,633,958 Copyright 1999 - Home Improveme_ Price Search (Confi0enl_el) - Page 23 !Home Inqxovlmwnt _ Short-term Intorest ate% R Long-term Interest ate% R Payment DaysEstimator Collec_on DaysEsffmator Inventory Turnover stimator E Tax Rate% Expenses Cash% In SalesonCredit% Personnel Burden % Ikmn_ GeneralA_ 10.00% 10.00% 30 45 6.00 25.00% 1000% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00%: 10.00%! 30= 45_ 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 26.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00%: 75.00%; 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% 10.00% 10.00% 30 45 6.00 25.00% 10.00% 75.00% 15.00% Home Improvement _ owner/President OwnerMce President COO General Mana_lerlClO CFO Office Mana_ler Sales Person I Sales Pemon 2 SecretarylReceptlon Construction Professional Seamh - Personnel Plan [ I i i : : = ,IJan.: , |Feb ,- IMm":., _ ; _.833 J $5,833 $5,833 i _;5,833 [ $5,833 $5,833 i $5,833 I $5,833 $5,833 $5,833 I $5,833 $5,833 $3,100 $5,000 $3,000 $2,100 $0 J I J I I $3,100 $3,000 $3,000 $2,100 $0 ' ' ' $5,_o$5,_0$5,_ $5000 i $5000 $5,000 $5,0005,000 $ $5000] $5,000 $5,000 $80,_$82,__,_ $5,_0 i $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100; so i _ J [ $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100 $0 s3.100 I $3.000 I $3.000 [ $2.100[ ' $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100 $0 $3,100 $3,000 $3,000 $2,100 $0 $37,200 $36,000 $36,000 $25,200 $0 I ] ] I J $38,000 $37,000 $37,000 $25,400 $35,000 Apt' :May , $5,8i3' $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 $5,833 Ju. . = $5,833 $5,833 $5,833 $5,833 Jul , Aw $5,833 $5,833 $5,833 $5,833 So _5.833] $5.8331 $5.833] $5.833 ] $5,833 $5,833 $5,833 $5,833 Oct' , ..... $5,833 $5,833 $5,833 $5,833 I._ $5,833 $5,833 $5,833 $5,833 0_ ,., $5,833 $5,833 $5,833 $5,833 =O_t $70,000 $70,000 $70,000 $70,000 I [ J [ ,, , $75,000 $75,000 $72,500 $72,500 _=o01 _=o_ _._ $80,000 $80,000 $75,000 $75,000 $38,500 $37,500 $37,500 $25,600 $35,500 T=.,_ Payroll Burden s=._j .,,6= m._-_.,,m. m,mlm,ml.,,m ,.,_ $5,930 [ $5,930 $5,930 $5,930 $5,930 $5,9301 $5,930 $5,930 m,mI m,m m,mi.,,m i,s..,,m,.ts_,_._ s_,= $5.930 J $5,930 $5,930 $5,930 $71,160 J $84,735 $87,765 Tot= P_/ron F.xpo.d,=m I USAeS ,_ t m,.dm urv_ r,tr_mi _5._ 1 r_5,=s s_s,4s3.u.s,_ i m,_s _s_ i _s_m isr_,mo[sm._,siscr_,m Copyright 999 - HomeImprovement dceSearch(Confidential)Page 24 1 P Home Improvement _:_ Gross Matin Net Profit Maroin Return on Assets Return on Equity Price Search - Ratio Analysis _.i_;._ _:_.:::.,_ !_.i-,._.::_._.._i_i!_ ._..;. : - .... ..._,.,,_.RMA_ _..' ..... i_i.?.i ,2Q00_ _:._._:_.:_: 200!. _ 70.72% 70.37% 70.28% 0 40.31% 44.67% 46.63% 0 59.00% 57.33% 44.39% 0 64.46% 61.98% 46.97% 0 AcTiv_ RaUos AR Turnover Collection Days Inventory Turnover Accts Payable Turnover Total Asset Turnover Debt Ratios, , , [)e'b't'toNet Worth Short-term Liab. to Liab. Liquidity.Ratios Current Ratio Quick Ratio NetWorkin_l Capital Interest Coverage Additional Ratios Assets to Sales Debt/Assets Current Debt/Total Assets Acid Test Asset Turnover Sales/Net Worth 2000_ 5.'0'1' " 36 0 7.71 1.46 2000 0.09' ' 1 ' 2001 5.01 52 0 7.71 1.281 2001 0.08 1 2O02 RMA 5.01 63 0 7.71 0.95 '0 0 0 0 0 2002 RMA 0.06 0 1 0 2000 2001; 2002.,RM.A 11.8 13.33 18.21 0 $12 $13 $18 0 $3,376,488 $8,880,787 $16,747,713 0 0 0 0 0 2000 68% 8% 8% 9.22 1.46 1.6 2001; 78% 8% 8% 10.77 1.28 1.39 2002:RMA 105% C 5% C 5% C 15.62 C 0.95 C 1.01 C Copyright 999- HomeImprovement 1 PriceSearch(Confidential) Page25 -