business plan - campus koozies (1)

3200 Coldspring RoadIndianapolis, IN 46222

(219)-241-9717(260)-635-5505 (765)-918-4596 (765)-592-4690

[email protected]

[email protected] [email protected] [email protected]

Campus KooziesNyan Lyih, Marty Pochop, David Duane, Tyler Knoblett,

Table of ContentsI. Executive Summary..............................................................2

HighlightsObjectivesMission StatementKeys to Success

II. Description of Business........................................................3Company Ownership/Legal EntityLocationInteriorHours of OperationProducts and ServicesSuppliersServiceManufacturingManagementFinancial ManagementStart-Up/Acquisition Summary

III. Marketing.............................................................................3Market AnalysisMarket SegmentationCompetitionPricing

IV. Appendix...............................................................................3Start-Up ExpensesDetermining Start-Up CapitalCash FlowIncome Projection StatementProfit and Loss StatementBalance SheetSales ForecastMilestonesBreak-Even AnalysisMiscellaneous Documents

Executive SummaryOur company is Campus Koozies. Our product is a blue Koozie that will have a

Marian University logo. We believe that our product is more profitable and the

most exciting out of all the products in our class because it is unique, meaning that

it is currently not available in the bookstore or anywhere else on campus. Also

there will be a need for our product at sporting events, especially when the weather

turns cold. We will have two different options for our Koozies: hard foam and soft

collapsible foam. Our Koozies are most profitable because we are selling them at a

good, profitable price ($5), but the price isn’t too expensive to where no one will

buy them. We will make a good profit off of them because they are inexpensive to

make and we can still make a profit off of them at a low price point. Also they

display school spirit and pride.

HighlightsWe have fixed costs including shipping, credit card reader, table cloth, and advertising. Our variable costs include interest and the Koozies that we are purchasing from our online supplier, 24hourwristbands.com. A bank will be set up in order to maintain our finances. With the credit card reader, we will have to pay an interest of 2.75% to the company that owns it.

CAMPUS KOOZIES - [SELECT DATE] 3

The consumer sentiment graph shows that consumers are more willing to spend their money which means that our product will most likely be able to sell. The chances of our sales will increase based on the graph above.

ObjectivesWe look to, first, sell out of our initial order of 500 Koozies by the end of the semester. This will help us pay back the investors and also help us start making profit that we can keep. When we sell out of all of the Koozies we order, we are going to order another 500 Koozies to keep the profit coming in.

Mission StatementWe look to be the sole provider of Marian customized Koozies on Marian University campus. Our goal is for all Marian students, past and present, to support Marian in a fun, inexpensive way. Supporters of Marian University who go out to watch sporting events in crowded scenes should definitely buy our product; with all the sweat going around they could at least stop the drip of their drinks and show pride in Marian University.

Keys to SuccessOur product is inexpensive and also adds value. With the Marian knight logo, our customers can show support to the Marian sports team during games and events while drinking their beverages. Not only can they show pride in the Marian teams but also have it for keepsake. Because our product only cost five dollars, anyone can buy it. Even if customers aren’t willing to buy our Koozies for five dollars, we can still lower the price and still gain a good amount of profit from the sales.

Description of BusinessOur product is a blue can cooler with the Marian University logo printed on the front of the product. Because our product is inexpensive, only five dollars, other companies that sell the same product at a much higher price will be at a disadvantage. Our product is unique because it brings in pride and support for Marian University. It is very convenient to have our Koozie during winter because with the product, our customer don’t have to deal with the cold drip of their drinks while watching Marian events and games. The product can also be displayed as a


keepsake for alumni or parents to put it up in order to remember Marian University.

Company Ownership/Legal EntityWe are a merchandizing company because we are selling products to our customers. We are the sole provider of the Marian Koozie, meaning that no one on campus sells our product including the bookstore. We are a sole proprietorship because we are the owner and our business is only run by us. We are legally accountable for anything that goes on in our business. There is no other company that is involved in our product. We do not need to have a license because we will be protected by Marian University. We are a new independent business that is run by four people.

Location Our first location will be at SOAR which will be on July 16-17 of 2015. We

will set up our table with a banner which will be our station for students and parents to stop by and purchase our Koozies. We will use our product to show pride and support for Marian University during the freshman orientations.

Our second location will be the tailgate which will occur on the 12th of September. We will set up our station just like we did during SOAR. We will have a banner to attract customers to buy our product. With all the drinks and beverages that is provided during the event, our product have a good chance of selling since it is made to hold drinks to keep your hands from getting wet.

Our third location will be sporting events including football, basketball, volleyball, etc. We will that our product will be very popular during basketball season because it occurs in the winter. Because it is cold, people are reluctant to hold their drinks while watching the games which puts our company at an advantage.


InteriorWe will need permission from the sports director in order to set up our table at sporting events. Our product will definitely work well because it is simple and inexpensive. With the cost of only five dollars, anyone will be able to afford our product. We will display our product by the admission to get into the sporting events in order to stand out. With the banner that we are using, it will attract more customers making our product more visible to see. We expect to have an advantage over our competitors because people get thirsty during sporting events and in order to satisfy their needs they bring drinks. Since our product is made for beverages, it will be attractive to the people who aren’t comfortable with holding their drinks while it is dripping.

Hours of Operation Marty, David and Tyler will set up and sell at the SOAR because they will

arrive a few weeks before school starts. The three will be there until all the freshman have signed up for the fall semester of 2015.

Nyan and Marty will set up and sell at the tailgate because Tyler and David are on the football team meaning that they will be unable to attend and sell our product. We will be set up for about an hour.

David and Tyler will sell our product during sporting events except for football because they are on the team. For the football games, Nyan and Marty will advertise and sell the product at the admission to get into the sporting games. We will set up our table and our banner for about an hour, 30 minutes during the admission and 30 minutes during half time.

Depending on who is selling at sporting events, those will be the ones that get the profit.


Products Our product is most demanded during the winter season. During cold

weather, people are unwilling to hold their freezing drinks while watching the game for an hour or so. With the Koozies, their hands will be more comfortable and the games will be more enjoyable.

We will be selling two products: soft/collapsible and hard foam. Our products will have deals. People who purchase four will get the fifth one

free. The deals will cut our profit but attract more customers. Our products only cost five dollars which puts us an advantage over our

competitors because we can lower our price and still make a good amount of profit. If we are unable to sell all our products at the price of five dollars we will lower the price which will bring in more sales for our company.

Our product isn’t as complicated which makes it easy to understand and not confusing.

Suppliers Our supplier is 24hourwristbands. Our supplier’s phone number: 1-877-508-4569 Their service is available from 8 am to 10 pm It will cost us $535 to purchase 500 Koozies which includes the shipping

fees.

ServiceOur products have deals for our customers. The more they purchase, the more rewarding it is for them. We are a friendly company that offers our customers luxury items that will show pride and support for Marian University. We create bonds with our customers through the service of selling our Koozies during the sporting events when everyone is hype and showing their pride as Marian Knights. We are not planning to simply sell our products but also get to know our customers and who they are.


Manufacturing24hourwristbands will manufacture the products. We will serve as the middle man and directly sell our product to our customers. We will order our products online and 24hourwristbands will send them to our company which will be packaged. The order will take a number of days for it to arrive which is why we will order them before the SOAR date so that we are ready to sell our products when the date arrives. 24hourwristbands will charge us shipping fees for transporting the products to us which will cost $69.00. We will set up a table with a banner which will be considered as one of the stations during SOAR. The students and parents who come during SOAR are free to try our products before purchasing it. We will offer deals to make it more attractive to our customers. We will sell our product by convincing them that our Koozies show pride and support for Marian University. We will use the same method throughout our locations to sell including the tailgate and sporting events.

Management All of us are in some sort of involvement with Marian University besides the

education. Tyler and David are on the football team. Marty is part of the tennis team. And Nyan is involved with the 21st Century Scholarship. These extracurricular activities makes us hardworking and dedicated students who are willing to push ourselves to success. With the determination that we have, we will try our best to sell our products.

Our products will be available during SOAR, tailgate and sporting events. We will be on working at the maximum of an hour per game during the sporting events but we will available throughout the tailgating and SOAR. There will be no one else managing our products besides the four of us.

We are a new business that is not partnered with other companies. We are only selling two products which is the soft/collapsible and hard foam Koozies.

We are given the permission by Marian University to sell our products. The products will be sold on the campus and nowhere else.

The table below shows our SWOT analysis.


Strengths Communication skills, teamwork, dedication

Weaknesses

Busy with extracurricular activities, inexperienced in the real business world

Opportunities

Sole provider of Koozies on Marian Campus, Adds value with Marian logo, inexpensive product

Threats Our competitors including online and outside companies (Dick's, etc) that sell the same product, other products and services, luxury item, not a necessity

Financial Management First, we will need the loan from our investors which is $723. Since we

already have a table to set up, we will just need the table cloth and banner to set up our station. We will need to order our supplies of five hundred Koozies which will cost about $535. The order will take about a week so we will do it a couple weeks before school starts.

Our hours of operation will happen in the fall of 2015 and that is when we will be profitable. We will be most profitable during sporting events including football, basketball and volleyball. Our most vital location is the tailgating which we expect to make the most money from.

We will set up a bank account to put all our revenue in. With the free credit card reader, we will have to pay an interest of 2.75% to the company that owns it. All the money will be stored in the bank account that we create. We will not have to pay any fees because Marian University will cover that for us.

Even if we aren’t able to sell our Koozies at $5, with a 70% profit margin, we can lower our price and still make good profit. For example, if we lowered our price to $2, we would still be over 50% in profit margin.


Start-Up/Acquisition SummaryTo summarize our start up, once we get our loan approved, we will make the necessary purchases (flyers, banner, table cloth, product, credit card reader, etc) to start our business on campus. We will set up a bank account to manage our finances. After acquiring all our equipment and supplies, we will set up our station at the SOAR events which will be our first location of sales. The table below is our Gant chart showing our schedule for our business. First, we will order 500 Koozies. If we are able to successfully sell them during SOAR in the Ruth Lily center then we will order 500 more. Then we will set up flyers and posters to advertise our product. Afterwards, we will set up our table and banner at the tailgate to sell our Koozies. We look forward to selling a lot during sports events because that is where our product are most attractive.

GANTT CHART

Tasks 1-Jun 18-Jun 16-Jul 12-Aug24-

Aug 12-SepFirst Order Make first order of 500 Koozies

First SOAR day

Set up in Ruth Lilly center

Second SOAR day

Set up in Ruth Lilly center

Meeting about sell/ re-order

Decide if 2nd order is needed

School Starts Flyers posted

First football game

Sale at tailgate and set up by the entrance


MarketingOur target market for our product is students on campus, parents of students, and also alumni. What we believe they want is a product that is easy to use, shows school spirit, and is inexpensive all in one. We know what they want is a product, no more than $5, that is sturdy enough to hold all types of drinks in all kinds of weather. We also know, based on survey results, that they want the product to be blue with the Marian logo. Our consumers expect to have options with our product, meaning that they want to be able to choose between a hard foam and a soft collapsible foam Koozie.

Market AnalysisWe believe that people who participate in the tailgate at sporting events are our main target market. Also students that go to SOAR will be potential consumers. Combining these two groups together, we believe that we have a consumer population of 1,200-1,500 people. We will have our table set up at sporting events right inside the gate where people walk into the games. We will be the first thing they see. The way that people will know who we are is through our banner that will be hanging from our table. The reason why we know we can make a good profit is because of our survey results. We found that about 57% of the student population would buy our product and of the 57%, half of the people who said they would buy one said that they would buy more than one. Koozies haven’t been sold on Marian’s campus before; so bringing something new to the campus we believe will generate more sales. With time, our market will expand to more and more people because Marian keeps growing and getting larger and larger.

Market SegmentationOur target market is not segmented because our products are so cheap that everyone in each economic class is able to afford it. Our target market is segmented in that we are reaching out to people that do not attend sporting events. Predominately, we are looking to sell our product to people who attend football and basketball games. For the Koozie market, there are many business who offer the same two styles that we offer: soft-collapsible and hard-foam Koozies. Examples include Dick’s Sporting Goods, 24hourwristbands.com, and others as


well. Our competitor’s prices, however, are more expensive than the products that we offer. Our market segmentation is governed by the division of who attends sporting events and who does not. We believe that the segment of our market that we will obtain most of our sales is sporting events, around 75%. We believe that around 15% of our sales will happen at the SOAR days over the summer because there are a lot less SOAR days than there are sporting events throughout the year. We believe that of the 75% of the sales we think we will have at sporting events, 45% of those sales will actually happen for us.

The chart above represents rankings based on koozie sales in the current market.


Competition Currently, Dick’s Sporting Goods sells customized Koozies at a similar

price that we do, $5. However, they don’t have Marian customized Koozies. Also, 24hourwristbands.com offers Koozies, but their price is four times the price of ours: $20 for Koozie. Another online vendor of Koozies is www.discountmugs.com which offers similar products for similar prices. There are numerous other online vendors (www.alibaba.com, www.theknot.com, etc.) that offer similar products at similar prices.

These companies’ strengths include the following: are established, know explicitly who their target market is, they have more experience selling Koozies than we do, and they have more developed marketing strategies than we do at the moment.

The weaknesses that all of these companies have include the following: they don’t have the setup at sporting events at Marian that we have and their mobility is limited meaning that if they wanted to move to a more ideal location they would have to purchase another location to sell their products.

What we can learn from our competitors’ ways of operating is how much more marketing we need to do to get our name out there to our market i.e. commercials, number of flyers/posters to put up, etc. We can also learn from our competitors how to use persuasive tactics to persuade our customers to buy our products. Also we can learn from our competitors how to know what our price point should be for our products.

Our indirect competitors would include online vendors Dick’s Sporting Goods because they are selling similar products that we are selling and marketing to our customers but they are not in our location here on Marian University’s campus.

The way we are going to develop our marketing strategies and our products is that we are going to, eventually, imprint different aspects of Marian onto the Koozies (School of Osteopathic Medicine, MU Football, MU Basketball, etc.).


http://www.theknot.com/

http://www.alibaba.com/

http://www.discountmugs.com/

Pricing We decided on the price point of $5 based on our survey. In our first survey

we asked students of Marian University if they would pay $7 for a Koozie. The majority of our responses said that they would not pay $7; this is how we got to $5 as our price point. In our second survey we asked if people would pay $5 for our products and the majority of our answers (65%) said that they would pay $5 for a Koozie.

Based on our competition, we are pricing our products below what their prices are. For example, 24hourkoozies.com offers one Koozie for $20. We found that we would generate a lot more sales if we put our price point drastically lower than our competitors.

Our price matches one of our competitors that we know of (Dick’s Sporting Goods). Compared to the online vendors (24hourwristbands, www.alibaba.com) our price is significantly lower than their price point.

We will keep checking our vendor’s price for how much they are selling the Koozies to us for. If this price increases we will have to increase our price to ensure that we still make a profit. If for some reason the price of how much we pay our vendor lowers, we could steadily increase our price to make even more of a profit.

To keep our customers excited and coming back for more Koozies, we are going to create more customizations on the Koozies that support more and more clubs, teams, and different aspects of the school on them. This will ensure more sales and provide us with newer customers that don’t already own a Campus Koozie.

Advertising and Promotion The ways that we intend to advertise our business include the following:

posters/flyers, social media (set up accounts on numerous social media accounts to get our name out there), a banner for our set-up at sporting events, and email info sent to the students of Marian University.

We believe that with the people in our target market and the age range that those people are, social media advertising would be our most successful route to get our name out there to our target market here on campus and also to people located off campus.


http://www.alibaba.com/

As far as our advertising budget goes, we have carefully calculated the price of how much the flyers, posters, and banner will cost from vistaprint.com. With social media sites, we don’t have to pay to set up accounts; so that is free.

We have thought of when we make sales, we are going to ask the people we sell to how they heard about us. We feel that this will help us figure out how successful our marketing tactics are and if we need to add more efforts to the marketing aspect of our business.

We have developed multiple designs for flyers/posters that we will interchange as the semester goes on so that our target market doesn’t see the same design every day and eventually stop noticing our flyers/posters here on campus.

We will sell our product out of the box that they come in from our vendor, 24hourwristbands.com. The reason for this is that our product doesn’t require packaging when we give our products to our customers. Our products are not fragile; so they don’t require packaging. The research that we have done in regards to packaging for our product suggests that, typically, when Koozies are sold they are not packaged when they are handed from vendor to customer. This is how we have decided not to package our products.

Strategy and Implementation Our strategy for success begins with the loan from the investors. We will use

this loan to purchase our products (250 soft-collapsible and 250 hard foam Koozies) from our vendor and also all of our marketing/advertising tools (flyers, banner, posters, etc.). We will then begin set up of our station at the SOAR days over the summer. The dates of these SOAR days are June 18 and July 16. Following the two SOAR days that we are going to work over the summer, we are going to decide if another order of 500 Koozies will be necessary before the school year begins. Then at the first football game we will set up our station which will be conveniently placed right inside the gates to the football game. This is how our schedule will go for the remainder of the semester. We are going to set up our table at each football and basketball game.


Our main objective is to break even to pay back our investors. Once we break even, our main objective is to make as much profit as possible by selling out of our remaining inventory. Another objective of ours is to keep our price point where it is. However, the good thing about our profit margin is that our product is so cheap to make that if we had to lower the price of our product to $2 or $3, we could still have a profit margin of over 50%. The time frame of our sales will happen between the dates of August 24 (the first day of school) and December 11 which is the last day of the semester.

A planning mechanism that we have adopted for our business is a Gantt chart that plans out our semester. We have all of the dates of upcoming sporting events next semester on it, as well as the SOAR days that occur over the summer. The Gantt chart helps us plan, day by day, who is working the table at certain sporting events and who is walking through the tailgate events on game days.


AppendixStart-Up Expenses

Business Licenses FreeIncorporation Expenses FreeDeposits

Bank Account

Rent FreeInterior Modifications NoneEquipment/Machinery Required:

Table Cloth $5Item 2

Item 3

Total Equipment/Machinery $5Insurance Free from Marian

UniversityStationery/Business Cards NoneBrochures NonePre-Opening Advertising $100Opening Inventory $535Other (list):

Item 1

Item 2

TOTAL STARTUP EXPENSES $


Determining Start-Up Capital1. Begin by filling in the figures for the various types of expenses in the cash flow table on the following page.

2. Start your first month in the table that follows with starting cash of $0, and consolidate your “cash out” expenses from your cash flow table under the three main headings of rent, payroll and other (including the amount of unpaid start-up costs in “other” in month 1).

3. Continue the monthly projections in the table that follows until the ending balances are consistently positive.

4. Find the largest negative balance—this is the amount needed for start-up capital in order for the business to survive until the break-even point when all expenses will be covered by income.

5. Continue by inserting the amount of needed start-up capital into the cash flow table as the starting cash for Month 1.

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8Starting cash $0.00Cash In:

Cash Sales Paid

Receivables

Total Cash In

Cash Out:

Rent

Payroll

Other

Total Cash Out

Ending Balance

CHANGE (CASH FLOW)


Cash FlowMonth 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Starting cashCash In:

Cash SalesReceivables

Total Cash Intake

Cash Out (expenses):

RentUtilitiesPayroll (incl. taxes)BenefitsLoan PaymentsTravelInsuranceAdvertisingProfessional feesOffice suppliesPostageTelephoneInternetBank fees

Total Cash Outgo

ENDING BALANCE


Income Projection StatementThe Income Projection Statement is another management tool to preview the amount of income generated each month based on reasonable predictions of the monthly level of sales and costs/expenses. As the monthly projections are developed and entered, these figures serve as goals to control operating expenses. As actual results occur, a comparison with the predicted amounts should produce warning bells if costs are getting out of line so that steps can be taken to correct problems.

The Industrial Percentage (Ind. %) is calculated by multiplying costs/expenses by 100% and dividing the result by total net sales. It indicates the total sales that are standard for a particular industry. You may be able to get this information from trade associations, accountants, banks, or reference libraries. Industry figures are a useful benchmark against which to compare the costs/expenses of your own business. Compare your annual percentage with the figure indicated in the industry percentage column.

The following is an explanation for some of the terms used in the table that follows:

Total Net Sales (Revenue): This figure is your total estimated sales per month. Be as realistic as possible, taking into consideration seasonal trends, returns, allowances, and markdowns.

Cost of Sales: To be realistic, this figure must include all the costs involved in making a sale. For example, where inventory is concerned, include the cost of transportation and shipping. Any direct labor cost should also be included.

Gross Profit: Subtract the cost of sales from the total net sales.

Gross Profit Margin: This is calculated by dividing gross profits by total net sales.

Controllable Expenses: Salaries (base plus overtime), payroll expenses (including paid vacations, sick leave, health insurance, unemployment insurance and social security taxes), cost of outside services (including subcontracts, overflow work and special or one-time services), supplies (including all items and services purchased for use in the business), utilities (water, heat, light, trash collection, etc.), repair and maintenance (including both regular and periodic expenses, such as painting), advertising, travel and auto (including business use of personal car, parking, and business trips), accounting and legal (the cost of outside professional services).

Fixed Expenses: Rent (only for real estate used in business), depreciation (the amortization of capital assets), insurance (fire, liability on property or products, workers’ compensation, theft, etc.), loan repayments (include the interest and principal payments on outstanding loans to the business), miscellaneous (unspecified, small expenditures not included under other accounts or headings).

Net Profit/Loss (Before Taxes): Subtract total expenses from gross profit.

Taxes: Inventory, sales, excise, real estate, federal, state, etc.

Net Profit/Loss (After Taxes): Subtract taxes from net profit before taxes.

Annual Total: Add all monthly figures across the table for each sales and expense item.

Annual Percentage: Multiply the annual total by 100% and divide the result by the total net sales figure. Compare to industry percentage in first column.


Ind. % Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.Annual Total

Annual %

Est. Net Sales

Cost Of Sales

Gross Profit

Controllable Expenses:

Salaries/Wages

Payroll Expenses

Legal/Accounting

Advertising

Travel/Auto

Dues/Subs.

Utilities

Misc.

Total Controllable Exp.

Fixed Expenses:

Rent

Depreciation

Insurance

Permits/Licenses

Loan Payments

Misc.

Total Fixed Expenses

Total Expenses

Net Profit/Loss Before TaxesTaxes

NET PROFIT/LOSS AFTER TAXES


Profit and Loss StatementThis table essentially contains the same basic information as the income projection statement. Established businesses use this form of statement to give comparisons from one period to another. Many lenders may require profit and loss statements for the past three years of operations.

Instead of comparing actual income and expenses to an industrial average, this form of the profit and loss statement compares each income and expense item to the amount that was budgeted for it. Most computerized bookkeeping systems can generate a profit and loss statement for the period(s) required, with or without budget comparison.

Profit and Loss, Budget vs. Actual: ([Starting Month, Year]—[Ending Month, Year])

[Starting Month, Year]—[Ending Month, Year] Budget Amount over Budget

Income:

Sales

Other

Total Income

Expenses:

Salaries/Wages

Payroll Expenses

Legal/Accounting

Advertising

Travel/Auto

Dues/Subs.

Utilities

Rent

Depreciation

Permits/Licenses

Loan Repayments

Misc.

Total Expenses

NET PROFIT/LOSS


Balance SheetFollowing are guidelines for what to include in the balance sheet: (For use in established businesses)

Assets: Anything of value that is owned or is legally due to a business. Total assets include all net values; the amounts that result from subtracting depreciation and amortization from the original cost when the asset was first acquired.

Current Assets:

Cash—Money in the bank or resources that can be converted into cash within 12 months of the date of the balance sheet.

Petty Cash—A fund of cash for small, miscellaneous expenditures.

Accounts Receivable—Amounts due from clients for merchandise or services.

Inventory—Raw materials on hand, work-in-progress, and all finished goods (either manufactured or purchased for resale).

Short-term Investments—Interest or dividend-yielding holdings expected to be converted to cash within a year; stocks, bonds, certificates of deposit and time-deposit savings accounts. These should be shown at either their cost or current market value, whichever is less. Short-term investments may also be called “temporary investments” or “marketable securities.”

Prepaid Expense—Goods, benefits or services that a business pays or rents in advance, such as office supplies, insurance or workspace.

Long-term Investments—Holdings that a business intends to retain for at least a year. Also known as long-term assets, these are usually interest or dividend paying stocks, bonds or savings accounts.

Fixed Assets—This term includes all resources that a business owns or acquires for use in its operations that are not intended for resale. They may be leased rather than owned and, depending upon the leasing arrangements, may have to be included both as an asset for the value and as a liability. Fixed assets include land (the original purchase price should be listed, without allowance for market value), buildings, improvements, equipment, furniture, vehicles.

Liabilities:

Current Liabilities: Include all debts, monetary obligations, and claims payable within 12 months.

Accounts Payable—Amounts due to suppliers for goods and services purchased for the business.

Notes Payable—The balance of the principal due on short-term debt, funds borrowed for the business. Also includes the current amount due on notes whose terms exceed 12 months.

Interest Payable—Accrued amounts due on both short and long-term borrowed capital and credit extended to the business.

Taxes Payable—Amounts incurred during the accounting period covered by the balance sheet.

Payroll Accrual—Salaries and wages owed during the period covered by the balance sheet.

Long-term Liabilities—Notes, contract payments, or mortgage payments due over a period exceeding 12 months. These should be listed by outstanding balance less the current position due.

Net Worth—Also called owner’s equity. This is the amount of the claim of the owner(s) on the assets of the business. In a proprietorship or partnership, this equity is each owner’s original investment plus any earnings after withdrawals.

Most computerized bookkeeping systems can generate a balance sheet for the period(s) required.

Note: Total assets will always equal total liabilities plus total net worth. That is, the bottom-line figures for total assets and total liabilities will always be the same.


AssetsCurrent Assets:

Cash:

Petty Cash

Accounts Receivable

Inventory

Short-Term InvestmentPrepaid Expense

Long-Term Investment

Fixed Assets:

Land

Buildings

Improvements

Equipment

Furniture

Automobiles/Vehicles

Other Assets:

Item 1

Item 2

Item 3

LiabilitiesCurrent Liabilities:

Accounts Payable

Notes Payable

Interest Payable

Taxes Payable:

Federal Income Tax

State Income Tax

Self-Employment Tax

Sales Tax (SBE)

Property Tax

Payroll Accrual

Long-Term Liabilities

Notes Payable

NET WORTH/OWNER’S EQUITY/RETAINED EARNINGS

Total Assets: Total Liabilities:

Sales ForecastThis information can be shown in chart or table form, either by months, quarters or years, to illustrate the anticipated growth of sales and the accompanying cost of sales.

MilestonesThis is a list of objectives that your business may be striving to reach, by start and completion dates, and by budget. It can also be presented in a table or chart.

Break-Even AnalysisUse this section to evaluate your business profitability. You can measure how close you are to achieving that break-even point when your expenses are covered by the amount of your sales and are on the brink of profitability.

A break-even analysis can tell you what sales volume you are going to need in order to generate a profit. It can also be used as a guide in setting prices.


There are three basic ways to increase the profits of your business: generate more sales, raise prices, and/or lower costs. All can impact your business: if you raise prices, you may no longer be competitive; if you generate more sales, you may need added personnel to service those sales which would increase your costs. Lowering the fixed costs your business must pay each month will have a greater impact on the profit margin than changing variable costs.

Fixed costs: Rent, insurance, salaries, etc.

Variable costs: The cost at which you buy products, supplies, etc.

Contribution Margin: This is the selling price minus the variable costs. It measures the dollars available to pay the fixed costs and make a profit.

Contribution Margin Ratio: This is the amount of total sales minus the variable costs, divided by the total sales. It measures the percentage of each sales dollar to pay fixed costs and make a profit.

Break-even Point: This is the amount when the total sales equals the total expenses. It represents the minimum sales dollar you need to reach before you make a profit.

Break-even Point in Units: For applicable businesses, this is the total of fixes costs divided by the unit selling price minus the variable costs per unit. It tells you how many units you need to sell before you make a profit.

Break-even Point in Dollars: This is the total amount of fixed costs divided by the contribution margin ratio. It is a method of calculating the minimum sales dollar to reach before you make a profit.

Note: If the sales dollars are below the break-even point, your business is losing money.

Miscellaneous DocumentsIn order to back up the statements you may have made in your business plan, you may need to include any or all of the following documents in your appendix:

Personal resumes

Personal financial statements

Credit reports, business and personal

Copies of leases

Letter of reference

Contracts

Legal documents

Personal and business tax returns

Miscellaneous relevant documents.

Photographs
