business plan for seed funding (coffee cafe and internet)

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Please Visit: www.Enterslicellp.com

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Requests for Investor Ready Business plan with deck and projections in excel , Business valuation , SEED / Series A funding. Please email your questions / request to the Startup support department of Enterslice Value advisors LLP at [email protected]. For more information please visit our Website: www.enterslicellp.com

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Table of Contents

Page 1

1.0 Executive Summary ........................................................................................................................... 1

Chart: Highlights .............................................................................................................................. 2

1.1 Objectives ........................................................................................................................................ 2

1.2 Mission............................................................................................................................................. 2

1.3 Keys to Success ............................................................................................................................... 3

2.0 Company Summary ........................................................................................................................... 3

2.1 Company Ownership .................................................................................................................... 3

2.2 Startup Summary ........................................................................................................................... 3

Table: Startup .................................................................................................................................... 4

Chart: Startup ................................................................................................................................... 5

2.3 Company Locations and Facilities ............................................................................................... 5

3.0 Products and Services........................................................................................................................ 6

3.1 Product and Service Description ................................................................................................. 6

3.2 Competitive Comparison .............................................................................................................. 7

3.3 Sales Literature ............................................................................................................................... 8

3.4 Fulfillment ....................................................................................................................................... 8

3.5 Technology ...................................................................................................................................... 8

3.6 Future Products and Services ....................................................................................................... 8

4.0 Market Analysis Summary ............................................................................................................... 9

4.1 Market Segmentation .................................................................................................................... 9

Table: Market Analysis .................................................................................................................. 10

Chart: Market Analysis (Pie) ........................................................................................................ 11

4.2 Target Market Segment Strategy ............................................................................................... 11

4.2.1 Market Needs ........................................................................................................................ 11

4.2.2 Market Trends ....................................................................................................................... 11

4.2.3 Market Growth ...................................................................................................................... 12

4.3 Service Business Analysis ........................................................................................................... 12

4.3.1 Business Participants ............................................................................................................ 12

4.3.2 Distributing a Service ........................................................................................................... 12

4.3.3 Competition and Buying Patterns ...................................................................................... 12

4.3.4 Main Competitors ................................................................................................................. 13

Table of Contents

Page 2

5.0 Web Plan Summary ......................................................................................................................... 13

5.1 Website Marketing Strategy ....................................................................................................... 13

5.2 Development Requirements ....................................................................................................... 13

6.0 Strategy and Implementation Summary ...................................................................................... 14

6.1 SWOT Analysis ............................................................................................................................ 14

6.1.1 Strengths ................................................................................................................................. 14

6.1.2 Weaknesses ............................................................................................................................ 14

6.1.3 Opportunities......................................................................................................................... 14

6.1.4 Threats .................................................................................................................................... 14

6.2 Strategy Pyramid.......................................................................................................................... 14

6.3 Value Proposition......................................................................................................................... 14

6.4 Competitive Edge......................................................................................................................... 15

6.5 Marketing Strategy ...................................................................................................................... 15

6.5.1 Positioning Statement ........................................................................................................... 16

6.5.2 Pricing Strategy ..................................................................................................................... 16

6.5.3 Promotion Strategy ............................................................................................................... 16

6.5.4 Distribution Strategy ............................................................................................................ 16

6.5.5 Marketing Programs ............................................................................................................. 17

6.6 Sales Strategy ................................................................................................................................ 17

6.6.1 Sales Forecast ......................................................................................................................... 17

Table: Sales Forecast .................................................................................................................. 17

Chart: Sales Monthly ................................................................................................................. 18

Chart: Sales by Year ................................................................................................................... 19

6.6.2 Sales Programs ...................................................................................................................... 19

6.7 Strategic Alliances ........................................................................................................................ 19

6.8 Milestones ..................................................................................................................................... 20

Table: Milestones ............................................................................................................................ 20

Chart: Milestones ........................................................................................................................... 20

7.0 Management Summary ................................................................................................................... 21

7.1 Organizational Structure ............................................................................................................. 21

Org. Chart: Organizational Chart ................................................................................................ 21

Table of Contents

Page 3

7.2 Management Team ...................................................................................................................... 21

7.3 Management Team Gaps ............................................................................................................ 21

7.4 Personnel Plan .............................................................................................................................. 22

Table: Personnel ............................................................................................................................. 22

8.0 Financial Plan ................................................................................................................................... 22

8.1 Startup Funding ........................................................................................................................... 22

Table: Startup Funding.................................................................................................................. 22

8.2 Important Assumptions .............................................................................................................. 23

8.3 Key Financial Indicators.............................................................................................................. 24

Chart: Benchmarks ......................................................................................................................... 24

8.4 Break-even Analysis .................................................................................................................... 25

Table: Break-even Analysis .......................................................................................................... 25

Chart: Break-even Analysis .......................................................................................................... 25

8.5 Projected Profit and Loss ............................................................................................................ 26

Table: Profit and Loss .................................................................................................................... 26

Chart: Profit Monthly .................................................................................................................... 27

Chart: Profit Yearly ........................................................................................................................ 27

Chart: Gross Margin Monthly ...................................................................................................... 28

Chart: Gross Margin Yearly .......................................................................................................... 28

8.6 Projected Cash Flow .................................................................................................................... 29

Table: Cash Flow ............................................................................................................................ 29

Chart: Cash ...................................................................................................................................... 30

8.7 Projected Balance Sheet ............................................................................................................... 31

Table: Balance Sheet ....................................................................................................................... 31

8.8 Business Ratios ............................................................................................................................. 32

Table: Ratios .................................................................................................................................... 32

8.9 Long-term Plan ............................................................................................................................. 33

8.10 The Investment Offering ........................................................................................................... 33

Table: Investment Offering ........................................................................................................... 33

8.11 Valuation ..................................................................................................................................... 34

Table: Investment Analysis .......................................................................................................... 34

Table of Contents

Page 4

8.12 Use of Funds ............................................................................................................................... 35

Table: Use of Funds ....................................................................................................................... 35

8.13 Payback ........................................................................................................................................ 35

Table: Payback ................................................................................................................................ 35

Chart: Payback Period ................................................................................................................... 36

Table: Sales Forecast ................................................................................................................................ 1

Table: Personnel ....................................................................................................................................... 2

Table: Profit and Loss .............................................................................................................................. 3

Table: Cash Flow ...................................................................................................................................... 5

Table: Balance Sheet ................................................................................................................................. 7

Table of Contents

Page 1

Business plan for coffee cafe and internet

Page 1

1.0 Executive Summary

Enterslice LLP will provide a relaxing, Christian-focused, neighborhood-centered place with

freshly roasted coffee, specialty drinks, good books, and music. Enterslice LLP is the answer to an increasing demand. Our target market wants:

Neighborhood businesses in South Central Minneapolis Great coffee at a competitive price A comfortable place to socialize with others with similar interests

Inspirational Grounds' goal is to provide the community with a social, entertaining atmosphere where Christian neighbors can meet each other in a neutral, non-denominational setting.

Enterslice LLP is incorporated as an S corporation. This will shield the owner from issues of personal liability and double taxation.

This proposal is prepared to obtain financing in the amount of $80,000. The supplemental

financing is required to prepare the selected site, purchase equipment, and cover expenses during the first year of operation. The owner will invest $15,000 of her own into the business.

This financing will allow Enterslice LLP to successfully open and maintain operations. The large

initial capital investment will allow Enterslice LLP to provide its customers with an inviting

atmosphere and quality products. A unique, upscale and innovative environment is required to

provide customers with an atmosphere that will create socialization. Successful operation in

year one will provide Enterslice LLP with a customer base that will allow it to be self sufficient in year two.

Even with our conservative sales forecast, we will maintain a positive cash flow in all months,

repay the loan in 12 years, and have a positive net worth over $27,000 by year three. We

project that our net profits will increase from $12,000 to over $14,000 over the next three years.


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Chart: Highlights

1.1 Objectives

Inspirational Grounds' objectives for the first three years of operation include:

The creation of a unique, upscale, innovative spiritual environment that will differentiate

Enterslice LLPfrom local coffee shops. To make Enterslice LLPthe destination for quality coffee in a welcoming atmosphere for

people who are serious about their coffee and growing in their spirituality. The formation of an environment that will bring people with diverse backgrounds and

interests together in a common forum. To be an active and vocal member of the community, and to provide continual re-

investment through participation in community activities and financial contributions. Consistently providing excellent specialty beverages, bakery items, inspirational books, and

music.

1.2 Mission

As people are becoming more interested in their spiritual side, a neighborhood shop with

excellent freshly roasted coffee and non-denominational Christian books and tapes, is a

welcomed alternative and/or addition to the local church. Enterslice LLPis a specialty beverage

establishment focused on providing freshly roasted coffee beans, coffee/espresso drinks and

information to enhance our customers' spiritual experience. We also understand that coffee

drinkers interested in growing spiritually want a destination, not just a location;we provide

them with the best of both.

Our goal is to be the destination for Christian coffee drinkers seeking a non-secular

environment in the Twin Cities area. People of all ages and backgrounds will come to enjoy the

unique upscale, educational, motivational and innovative environment that Enterslice

LLPprovides.


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We believe it is important to remain an active member of the community and to impact our customers' lives in more ways than the selling of specialty drinks.

1.3 Keys to Success

The keys to the success for Enterslice LLPare:

The creation of a unique, innovative, upscale atmosphere that will differentiate Enterslice

LLPfrom other local coffee shops and future coffee shops. Fresh Coffee roasted on-site daily will give customers a unique experience as well as

excellent product. Selling beverages and products that are of the highest quality. The creation of an environment that won't intimidate the spiritual seeker. Enterslice LLPwill

position itself as an educational resource for individuals wishing to learn about the benefits

of growing spiritually. The establishment of Enterslice LLPas a community hub for socialization and entertainment. Encourage the two most important values in Christianity: love and service.

2.0 Company Summary

Inspirational Grounds, Minneapolis' South Central area, will offer great specialty beverages and

easy access to exciting spiritual information. Enterslice LLPsells quality products and provides

excellent customer service for coffee lovers and persons looking to enhance their spiritual

experience. We are looking to lease a retail store which we will use to market and merchandise

our products. The company took its name in July 2002, and organized as an S Corporation in

October, 2003.

Our book and music selection and helpful staff will appeal to the audience that is seeking to

grow and learn spiritually in this age of uncertainty. This invigorating aspect will attract younger

and elderly members alike who are gaining interest in their spiritual condition. The central

location will provide easy access from most points of origin throughout the Twin City area for

those who will recognize Enterslice LLPas a destination point, as well as provide local community residents with convenient access to freshly roasted coffee.

2.1 Company Ownership

Enterslice LLPis incorporated as an S corporation. This will shield the owner Regina Brown from issues of personal liability and double taxation. The Corporation was formed in October of 2003.

2.2 Startup Summary

Inspirational Grounds' start-up costs will cover coffee, espresso, and specialty drink making

equipment, micro-roasting equipment, training, site renovation and modification, capital for

operating expenses in the first year, and the inventory necessary to provide customers with the information needed to grow.

A large portion of our start-up requirements will go towards the purchase of specialty drink equipment from Espresso Services, Inc. Our long-term assets will include:

One espresso machine One micro-roasting system


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an Espresso grinder/doser water filtration system

Expensed equipment includes:

A Bulk grinder for drip coffee Single airpot brewer Smoothie blender Minor additional equipment

Additionally, we need funding for initial inventory, both for the coffee shop side of things and

the other specialty merchandise, books, and music. Music items will be purchased from

Provident Music, Diamante Music Group, and New Day Christian Distributors among others.

Books and other inspirational material will be purchased from Bridge-Logos Publishers, KCM,

Bethany House Distributors, and others.

The site Enterslice LLPchooses will require funds for renovation and modification. A single

estimated figure will be allocated for this purpose. The renovation/modification cost estimate will include the costs associated with preparing the site for opening business.

Current Assets, in the table below, includes furniture and fixtures.

Long-term assets, in addition to our major brewing, grinding, and roasting equipment, includes a POS System.

Table: Startup

Startup

Requirements

Startup Expenses Legal $1,500 Stationery etc. $800 Brochures/Mailings $1,000 Marketing Consultant $1,000 Insurance $500 Rent $2,000 Research and Development $1,500 Build Out Expenses $8,000 Initial Marketing $2,000 Training $1,500 Website development $50 Expensed Equipment $4,950 Other $5,000 Total Startup Expenses $29,800

Startup Assets Cash Required $30,600


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Other Current Assets $12,000 Long-term Assets $16,000 Total Assets $58,600

Total Requirements $88,400

Chart: Startup

2.3 Company Locations and Facilities

The site, Midtown Commons (Also known as the Sears Project), is located in South Central

Minneapolis. The initial space is approximately 2,000 square feet and has ample space for the

first three years of growth. The complex has ample parking and significant foot traffic from Allina Healthcare Office Facility. This area was chosen for various reasons, including:

Proximity to other areas within the Twin Cities; Central location easily accessed. Proximity to the Lyn/Lake and Uptown areas. High Visibility. Proximity to the many local churches in South Central Minneapolis. Diverse population within the community. Desire for South Central Businesses. Scarcity of other coffee houses in the area. Proximity to the light rail depot and 12th Precinct of the Minneapolis police.

All of these qualities are consistent with Inspirational Grounds' goal of providing a community hub for socialization and entertainment.


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3.0 Products and Services

Beverages and Baked Goods

Enterslice LLPsells quality freshly roasted coffee, specialty beverages, and beverage related

items to the discriminating coffee drinker. The beverages are made by trained staff members who know the products and make recommendations to customers.

The coffee varietals, teas, and other beverages items are supplied by Espresso Services, Inc

and delivered within 24 hours. The roasting of the green beans will take place on-site for the

freshest product possible. Owner will rely on customers and employees to shorten the communication and feedback loop in product and service offerings.

Enterslice LLPwill offer custom roasting services to our customers. Customers will be able to

order selected coffee varietals roasted to order for enjoyment in their homes or offices. These

custom roasted coffees will create a unique experience for our customer, and allow them to

further their specialty coffee knowledge.

Books and Music

Containing Christian, uplifting, and life-affirming messages will be sold to complete the ambiance and community centered feel of the store.

3.1 Product and Service Description

Enterslice LLPsells the entire array of coffee and espresso-based drinks,specialty drinks, and

bakery items, as well as music and books geared toward the spiritual reader.

Specialty Coffees The primary product of Enterslice LLPis the specialty coffee. Several unique blends will be micro

roasted for daily serving or specially roasted to order at our customers' request which will give

our customers the variety they seek. These coffee blends include: Columbia Supremo,

Tanzanian Peaberry, Jamaican Blue Mountain, Guatemalan Antigua, Costa Rican Tarrazu,

Sumatra Mandheling, and Ethiopian Yaefacheffe. Other blends and decaffeinated coffee will be offered as well.

Espresso & Coffee Drinks

The Straight Shot - The foundation of every espresso beverage; served in a demitasse, when consumed alone.

Espresso Macchiato - Espresso served in a demitasse with a small amount of foamed milk on

top

Espresso Con Panna - Variation of the Macchiato substituting whipped cream in place of the foamed milk.

Caffé Americano - A single or double shot of espresso is combined with hot water from the

espresso machine. This produces a smoother and fresher (as well as hotter) cup of coffee than conventional brewing.


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Cappuccino - Espresso mixed with foamed milk upon the pour; can be garnished with shaved chocolate.

Caffé Latte - Espresso mixed with steamed milk, and topped with foamed milk; can be garnished with shaved chocolate.

Mocha - Espresso, steamed milk, and chocolate syrup, usually topped with whipped cream and

chocolate shavings.

The Breve - An extra rich Caffe' Latte made with half & half instead of milk.

Café Au Lait - Drip coffee with steamed milk added and topped with foamed milk.

Flavor-Based Drinks Hot Chocolate and Steamers - These drinks are made like lattes and mochas without the

addition of coffee. Flavored syrups are added to steamed milk and may be topped with whipped cream at the customer's request.

Italian Sodas and Creamosas - An Italian soda is a combination of flavored syrup and high

quality carbonated mineral or soda water, served over ice. A creamosa is an Italian soda with

heavy cream or half & half added and gently stirred to making a swirled appearance in the drink.

Granita - An Italian style granular ice drink similar to a slushy but much more dense in consistency.Granita flavors are usually coffee or fruit based

Other specialty drinks include: Gourmet hot tea, iced Tea, Chai, smoothies, blended coffee and

tea-based drinks, and bottled soft drinks.

Books and Music

Books - The most popular titles will be stocked in limited supply. Such books as Woman, Thou

are Loosed by T.D. Jakes; In Pursuit of Purpose, by Dr. Myles Munroe; Prayers That Heal The

Heart, by Mark & Patti Virkler; A Fresh Word For Today, by Bob Gass; Run Baby Run, by Nicky Cruz; Morning By Morning, by Charles H. Spurgeon, and others.

Music - Enterslice LLPwill carry the finest in contemporary Christian music. Titles include Kirk

Franklin; Mary Mary; Set Free; Audio Adrenaline; Yolanda Adams, and more.

Bakery Items Enterslice LLPwill also offer its customers a variety of baked goods, including pastries, cookies,

and cakes. Bread for sandwiches and buns for soup will also be secured. Negotiations with

several local bakeries are now underway. Quality and consistency will be the determining

factors for this decision.

3.2 Competitive Comparison

Enterslice LLPwill be unique in the vicinity. Not only will Enterslice LLPdifferentiate itself from

the strictly-coffee cafes by providing its customers with a theme based on sound spiritual

principles, we will also be the first independently-owned, urban store to roast its own beans on-site, providing the customer with a unique experience in a welcoming environment.


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3.3 Sales Literature

Enterslice LLPwill use print advertising and sales programs to get the word out to customers.

Fliers will be distributed throughout the Twin City area to chambers of commerce, tourism

council offices, hotels, neighborhood stores and shops, churches, schools, and other areas one month before the grand opening.

Newspaper advertisements in Minneapolis and St. Paul, The Shepherd's Guide, and

neighborhood publications will be used to attract customers with grand opening offers, as well

as 1,000 door-to-door flyers offering a free 16 oz. drink.

See attached example flier.

3.4 Fulfillment

Enterslice LLPhas associated itself with the finest coffee supplier in the Twin Cities area,

Espresso Services, Inc. We will bring fine coffees from all over the world to South Central

Minneapolis, where residents, other Midtown tenants and passers-by can enjoy a freshly

roasted quality cup of coffee, an espresso or specialty drink in an inviting and friendly atmosphere.

3.5 Technology

The technology Enterslice LLPis dependant upon is the micro-roasting equipment it will use to roast the beans on-site. This equipment is serviced through the supplier;Espresso Services, Inc.

Enterslice LLPwill also use our website to advertise specials and events, and to post the monthly

menu and talent offerings. We will use email to communicate with customers wishing to sign-up

for email specials. Eventually, we would like to institute online ordering for roasted coffee and

specialty merchandise, but that plan is at least two years off.

The Point of Sale (POS) technology Enterslice LLPwill use allows for order taking when the lines

are long, keeps customer discount information, inventory, and revenue/profit information. The system has a battery back-up in case of power surges and temporary power losses.

The Inspirational Grounds' logo will be Federally Trademarked. Although the beverages will not

be protected in content, beverage names for specialty drinks reflecting the theme of the shop

will be protected under the Federal Trademark laws.

The security system Enterslice LLPuses will protect the contents of the store and reduce insurance premiums.

3.6 Future Products and Services

As Enterslice LLPgrows, more features will be added to the existing store. A key part of this is

the addition of live entertainment. This entertainment will be in the form of Jazz singers, poetry readings, Comedy for the King, motivational speakers, and Christian musical Artists.

Food items will be added to the menu of offerings. The soup will be made fresh daily, one kind

per week. The soups are: Chicken Noodle, Minestrone, Clam Chowder, Vegetable Beef,


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Vegetable, Chicken and Rice, and Wild rice. Sandwiches are made to order and include deli

favorites such as herbed turkey, egg salad, tuna salad, roast beef, corned beef, and turkey. A

variety of condiments will also be available. Enterslice LLPwill obtain deli meats from Costco. The salad sandwiches will be made fresh on-site.

Enterslice LLPwill establish itself as the destination for non-secular and motivational

entertainment. We also envision adding meeting rooms, hosting receptions, and adding small

devotional rooms for private reflection. The meeting rooms will be perfect for small business

and non-profit organizations with limited office space. Coffee and pastries will be served to

ensure a successful atmosphere for business. Enterslice LLPwill also be available for private

receptions, such as birthday parties, anniversaries, or showers. Customer provided catering will

go a long way to ensure the guests' parties are successful. The devotional rooms will be wired

for individual music selection, equipped with one-way TV cameras, and furnished with a comfortable chair and table.

These additions complete the vision for Inspirational Grounds, and provide its customers with a place for socialization, relaxation, and reflection.

4.0 Market Analysis Summary

Enterslice LLPis faced with the exciting challenge of being the first-mover in the Minneapolis/St.

Paul Christian coffee house and roaster market. The consistent popularity of coffee and

specialty drinks, combined with the ever growing and ever profitable Christian bookselling and

music market, is a winning concept and will produce overwhelming results. Our target market

includes coffee drinkers, spiritual seekers, Christians seeking fellowship (and snacks), and local neighborhood residents.

4.1 Market Segmentation

Census data, religous adherent research, and coffee consumption statistics were used to

determine market share for Inspirational Grounds. Recent census data shows that there are

38,860 persons in the 55407 zip code, and 1,126,944 persons in Hennepin county. Coffee

Research Institute data shows that 54% of the population drinks coffee daily, and 25% drink

coffee occasionally. The Glenmary Research Institute shows that 64.9% of the Minnesota

population are self-professed religous adherents. Minnesota ranks 5th in the nation for

percentage of population religiously affiliated. National statistics show that most persons do not

travel more than 20 minutes to eat or listen to entertainment; we are using a conservative 10%. The following is a breakdown of target customers:

55407 Market

AGE % of Population

15-19 7.1%

20-24 8.4%

25-44 35.8%

45-64 17.3%

TOTAL 68.6%

INCOME % of Population

15,000-24,999 16.5%

25,000-49,999 29.0%


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50,000-99,999 28.6%

TOTAL 74.1% 55407 market = (38,860 x 68.6% 15-64 year olds, x 74.1% in targeted income bracket, x 54% coffee drinkers) + (38,860 x 68.6% x 74.1% x 25% occasional coffee drinkers)

The formula takes the total 55407 population and then multiplies that number by the

percentages in order of importance, that figure is multiplied by the percent of persons who

drink coffee daily. The next formula is calculated the same except it uses the percentage of

person who drink coffee occasionally.

Hennepin County Market

AGE % of Population

15-19 6.5%

20-24 7.3%

25-44 33.1%

45-64 22.2%

TOTAL 69.1%

INCOME % of Population

15,000-24,999 10.8%

25,000-49,999 23.9%

50,000-99,999 37.6%

TOTAL 72.3% Hennepin County Market = ((1,126,944 - 38,860) x 69.1% x 72.3% x 64.9% x 54% x 10%) + ((1,126,944 - 38,860) x 69.1% x 72.3% x 64.9% x 25% x 10%))

The formula takes the total county population minus the 55407 population and then multiplies

that number by the percentages in order of importance, that figure is multiplied by the percent

of persons who drink coffee daily multiplied by the percentage of the population likely to travel

to Inspirational Grounds. The next formula is calculated the same except it uses the percentage of person who drink coffee occasionally.

Table: Market Analysis

Market Analysis

2016 2017 2018 2019 2020

Potential Customers Growth CAGR

Neighborhood Resident 1% 13,165 13,297 13,430 13,564 13,700 1.00% Religious Adherent - Henn County 1% 19,731 19,928 20,127 20,328 20,531 1.00%

Other 0% 10,000 10,000 10,000 10,000 10,000 0.00% Total 0.77% 42,896 43,225 43,557 43,892 44,231 0.77%


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Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

The customers will be between 15-64 years old. The income level is between $15,000 and

$99,000 annually. They live in the 55407 zip code, the proposed area for Inspirational Grounds.

The Hennepin county customer is between 15-64 with income levels ranging from $15-99K

annually. They live in the Hennepin county area and are self-professed religious adherents. A

limited number, estimated at about 10,000 will come from other areas out of curiosity or to see

a particular entertainer or poetry reading. A majority of the customers will be persons who enjoy a relaxing atmosphere, reading, reflection, and excellent coffee.

4.2.1 Market Needs

Current trends and historical sales data both indicate that the high demand for coffee will

remain constant over the next five years. The Christian book and music business is expected to

continue to grow as contemporary Christian artists rival secular music. In addition to the

increased sales in these areas, Generation X'ers are more religious than their parents,

according the GlenMary Research Institute.

The needs of this market are decidedly soft in nature. The soft needs of this market include, but

are not limited to, a general feeling of acceptance, a place of belonging, and non-judgmental atmosphere.

4.2.2 Market Trends

The specialty beverage market will continue to grow as younger people are opting for non-

alcoholic beverages and wholesome entertainment. Religious book retail sales grew 2.3% in

2002. In 2000 they represented 5.25% of all book sales resulting in $1.25 billion in revenue. In

2001, these sales grew 4.7% to $1.3 billion and market share grew to 5.5%. With the

increasing interest in spirituality, sales and market share will increase steadily.


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4.2.3 Market Growth

The Hennepin County area is expected to grow .8% annually. The 55407 zip code area is

expected to grow 1% annually. These estimates are based on most recent census data and projected growth rate for the the Minneapolis area.

4.3 Service Business Analysis

The retail coffee industry in the Twin Cities experienced rapid growth at the beginning of the

90's and is now moving into the mature stage of its life cycle. Many factors contribute to the

demand for excellent coffee and specialty beverages in Minneapolis. The climate in Minneapolis

is extremely conducive to coffee consumption; coffee consumption increases in colder months.

Current trends in the Midwest reflect the popularity of fresh, quality coffee and specialty drinks, Minneapolis/St. Paul boasts sophisticated coffee lovers.

The popularity of Christian entertainment is growing immensely as people are searching for

meaning during these uncertain times. Those who are familiar with Christian music and book

trends and sales are looking for authors and performers to keep up with the seemingly insatiable demand.

Due to competition, cafe owners must look for ways to differentiate their place of business from

others in order to achieve and maintain a competitive advantage. The founder of Enterslice

LLPrealizes the need for differentiation and strongly believes that combining freshly roasted

coffee, a cafe, spiritual books and music, and entertainment are the keys to success. The fact

that no other such cafes are established in the Twin Cities presents Enterslice LLPwith a chance to enter the window of opportunity and take hold of a very profitable niche market.

4.3.1 Business Participants

There are countless coffee wholesalers who could conceivably do business with Inspirational

Grounds. These wholesalers distribute coffee and espresso beans to restaurants and retailers.

Competition in this industry creates an even amount of bargaining power between buyers and

suppliers resulting in competitive pricing.

4.3.2 Distributing a Service

4.3.3 Competition and Buying Patterns

Enterslice LLPwill face competition on two fronts: coffee retailers and book & music stores. The

good news is that Enterslice LLPdoes not currently face any direct competition from other cafes

in the market. There are no independently operated Christian cafes in the Twin Cities. Christian based coffee houses are either located within, or owned by a church.

Heavy competition in the Twin Cities area creates an industry where cafes face the same costs.

There is a direct relationship between price and quality of coffee. Some fresh roasted coffee

retails from $12/lb while other more exotic beans may sell as high as $40/lb. Wholesalers sell

green (unroasted) beans to retailers at an average of 50-75% discount. For example; a pound

of Columbian Supremo beans wholesale for $3.06 and retails for $12.85. As in most industries, price decreases as volume increases.


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4.3.4 Main Competitors

The main competitor in the retail coffee segment is Dunn Bros, as they also sell freshly roasted

beans. In fact, the largest part of Dunn Bros' revenue is generated from the sale of the roasted

beans to the consumer. The difference is Dunn Bros. does not roast their beans on-site, nor do they have the ability to custom roast for their customers.

Dunn Bros. - Uptown

Local chain cafe that boasts freshly roasted beans. The bulk of these sales are in the form of

roasted beans sold to the consumer. The cafe caters to customers who want fresh beans and

brewed coffee. The atmosphere is homey, the prices are competitive, no entertainment is provided. They are known for good quality coffee. The stores are clean and well managed.

Vera's - Lynn/Lake

A nice specialty coffee cafe with an atmosphere that caters to the "Green Peace" crowd. They

have competitive prices, good quality coffee, and an excellent location. The cafe has three

rooms; one with tables and chairs, one with couches and over-stuffed chairs, the third "room"

is an outside patio. Vera's doesn't offer entertainment, on-site roasted coffee, or books and music.

Boathouse Coffee - 42nd & Cedar Ave South

Serves specialty coffee drinks, sandwiches, soft drinks, and ice cream. The street is busy, there

is not a lot of foot traffic, and there is no parking lot so the location doesn't allow for easy

access. The shop is clean and prices are competitive. The Boathouse Coffee Cafe has several tables, and a couch. It can accommodate about 25 patrons.

5.0 Web Plan Summary

Enterslice LLPwill use our website to advertise specials and events, and to post the monthly

menu. We will maintain a confidential email list to communicate with customers wishing to

sign-up for email specials. Our website is being developed by the owners, and will be hosted

with a professional hosting service which allows us to post our own changes as often as we wish.

Although we would eventually like to institute an on-line ordering system, we realize this

development may have to wait until the business is firmly established and has sufficient cash

for designing and maintaining these dynamic features. Online ordering will not only increase

sales geographically, but allow Enterslice LLPto utilize the full spectrum of its POS system's

capabilities.

5.1 Website Marketing Strategy

5.2 Development Requirements


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6.0 Strategy and Implementation Summary

Enterslice LLPuses a strategy of total market service. Our promise is in our uniqueness in the market and the products we sell, the people we attract, the atmosphere we create.

We will create an atmosphere that lures the "spiritual seeker." The "coffee lover" and others will

come because of the quality and the atmosphere. Ultimately, we aren't selling either products

or coffee. We are selling the experience. We want to be part of the community, part of their

lives, part of the search for meaning.

Strategic Assumptions:

1. Every person is a potential customer and all potential markets experience growth. 2. Marketing to the soft needs of the customer will produce sales of products.

6.1 SWOT Analysis

6.1.1 Strengths

6.1.2 Weaknesses

6.1.3 Opportunities

6.1.4 Threats

6.2 Strategy Pyramid

6.3 Value Proposition

Enterslice LLPwill position itself as an upscale coffee house, spiritual resource and

entertainment provider. It will serve on-site roasted, high quality coffee and espresso, as well

as specialty beverages at a competitive price. Due to the number of coffee shops in the

Minneapolis area, it is important that Enterslice LLPset competitive prices for the freshly roasted

coffee. Customers will see coffee as it roasts throughout the day, and they will be able to order coffee beans roasted to their specifications while they enjoy a beverage.


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6.4 Competitive Edge

The competitive advantage of Enterslice LLPis threefold:

Our uniqueness in the market - Enterslice LLPwill be the only spiritually centered coffee shop

in the Twin Cities metropolitan area which roasts its own beans daily, sells quality coffee and

espresso based beverages, and specialty drinks, along with inspirational music and books.

Enterslice LLPis upscale, not stuffy. Our community-based focus will be hard to duplicate, even

if products and service are similar.

Excellent Customer Service - Because competition in the specialty beverage market is high,

Enterslice LLPwill work to ensure that each customer is treated in the same respectful manner

as the next. Technology will play a key role in ensuring that our customers get that special one-

on-one feeling they might experience at a high-end retail store. Our Point of Sale system will

not just ring orders, but keep key data on customers' previous purchases in the area of freshly

roasted coffee. In this manner, sales staff will know about the customer's buying habits and

tastes, and will be able to make suggestions for purchases that will likely result in increased

sales and make the customer feel special.

Excellent service in a community focused environment will be a unique undertaking. We will

ensure that Enterslice LLPis a fun place for people to gather. Enterslice LLPwill employ the

principles that make Seattle's World Famous Pike Place Fish Market an invigorating experience

for customers. These principles are: Play, Make Their Day, Be there, and Choose Your Attitude.

We will ensure that each employee understands the fundamentals at the base of any successful service organization.

Quality - We are committed to serving only the best quality beans and beverages. Moreover,

the training the staff receives will ensure that the art of espresso making is understood. There

is more to a good espresso than the beans and the machine. At Inspirational Grounds, we

understand it, and will ensure our customers do as well.

It's the combination of these three elements that make up the competitive advantage of Inspirational Grounds.

6.5 Marketing Strategy

Inspirational Grounds' marketing strategy focuses on the key elements of the target markets'

soft needs, and the focus of the venture.

Soft Needs:

Spiritual Growth A place of belonging Learning & communication

Venture Focus:

On-Site Roasted Coffee Community Involvement


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6.5.1 Positioning Statement

For the Christian who needs a place to seek, have fun, relax, and enjoy quality beverages,

Enterslice LLPis a place to feel welcome, special, informed, and energized. Enterslice LLPmeets

the needs of this market. Unlike the other coffee shops in the metro area, Enterslice LLPhas character and a purpose.

For the neighborhood, Enterslice LLPbrings a positive message with a community centered

focus. This is a place where all are welcomed and embraced with a warm greeting and hot

coffee. The look and feel of the shop will ensure that anyone who walks through the door feels right at home. We want our customers to learn about coffee, and experience quality first hand.

6.5.2 Pricing Strategy

Pricing in this industry is very competitive. The price of freshly brewed coffee and specialty

beverages doesn't vary by more than a few cents between the corner coffee shop and the large chains.

The price of roasted coffee beans can vary. Larger chains, having the benefit of volume, can

charge slightly lower prices per pound. Enterslice LLPwill charge a slightly higher price as our

coffees are freshly roasted on-site daily. Enterslice LLPwill roast its coffee to maximize the

flavor of the specific bean. We will also roast coffee to the customer's specifications. This

strategy of bringing the customer in to the whole coffee experience, gives the customer an

additional service, for which a slightly higher price will not be deemed excessive.

6.5.3 Promotion Strategy

Enterslice LLPwill use several ways to reach new customers. We will leverage schools, churches, community organizations, print ad, internet advertising and word of mouth.

1. Advertising--We'll be developing our core positioning message: "On-Site Roasted Coffee,

Made to Order." to differentiate our service from the competition.

2. Postcards-- Enterslice LLPwill employ targeted mailings to our 55407 customer base. These postcards will announce Grand Opening Specials.

3. Internet Advertising--As customers come in, they will be asked if they wish to sign up on our internet mailing list. Special promotions will be available only through Internet "coupons."

4. Media--Enterslice LLPwill work with local media on several different "story of interest"

venues. The Homework Happy Hour is one example that would gain media attention at no cost

to Inspirational Grounds.

6.5.4 Distribution Strategy


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6.5.5 Marketing Programs

The programs Enterslice LLPwill initiate are depicted on the following graphs. These programs

support the soft needs and product offerings listed in the Marketing Strategy section, and have been transliterated into "Vision Focus" and "Customer Focus" programs.

Vison Focus

1. Community Involvment o Community Reinvestment o MCDA Hiring Program

2. Spiritual Information o Product Offerings o Speakers and Entertainment

3. Welcoming Environment o Vision Communication

Customer Focus

1. Roasting Expertise o Micro Roasting Program

2. Custom Offerings o POS System

3. Excellent Training o EST Training Programs o Encourage F.I.S.H. Philosophy

6.6 Sales Strategy

The trained baristas at Enterslice LLPwill handle the sales transactions. To speed up the

customer service, at least two employees will be servicing clients--while one employee prepares

the customer's order, the other one will take care of the sales transaction. All sales data logged

on the computerized point-of-sale terminal will later be analyzed for marketing, Cost of Sale, and volume purposes.

In order to build up its client base, Enterslice LLPwill use banners, fliers, postcards and other

advertising, utilize customer referrals and cross-promotions with other businesses in the

community. At the same time, we will use customer retention programs like drink punch-cards to make sure the customers are coming back and spending more at the coffee bar.

6.6.1 Sales Forecast

Enterslice LLPis taking a modest approach to forecasting. Enterslice LLPis forecasting an 8%

average growth which is in line with industry estimates. With our unique product and service

offerings, along with our aggressive marketing strategies, the sales forecasts are actually on the conservative side.

Table: Sales Forecast


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Sales Forecast

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Sales Fresh Brewed Coffee $41,079 $44,365 $47,914 $51,747 $55,887 Espresso Based Beverages $53,507 $57,788 $62,411 $67,404 $72,796 Specialty Drinks $34,725 $37,503 $40,503 $43,743 $47,243 Pastries/Desserts $14,458 $15,615 $16,864 $18,213 $19,670 Music/CDs $11,604 $12,765 $14,041 $15,446 $16,990 Books $11,604 $12,765 $14,041 $15,446 $16,990 Fresh Roasted Coffee $19,341 $21,275 $23,402 $25,743 $28,317 Misc Candies/Products $17,121 $17,977 $18,876 $19,820 $20,811 Total Sales $203,440 $220,053 $238,054 $257,561 $278,704

Direct Cost of Sales FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Fresh Brewed Coffee $1,370 $1,397 $1,425 $1,454 $1,483 Espresso Based Beverages $3,855 $3,933 $4,011 $4,091 $4,173 Specialty Drinks $7,216 $7,289 $7,361 $7,435 $7,509 Fresh Roasted Coffee $5,809 $5,867 $5,925 $5,985 $6,044 Pastries/Desserts $7,229 $7,807 $8,432 $0 $0 Candies, etc. $8,561 $8,989 $9,438 $0 $0 Books/Music $11,617 $11,733 $11,851 $11,969 $12,089 Subtotal Direct Cost of Sales $45,657 $47,014 $48,444 $30,934 $31,299

Chart: Sales Monthly


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Chart: Sales by Year

6.6.2 Sales Programs

Internet Coupons - As customers come into the store, they will asked if they'd like to put their

name on the internet mailing list. Once added, these customers will receive special "internet only" solicitations for discounts and specials, as well as a calendar of events.

Community Based Programs - Enterslice LLPwill partner with community organizations, schools,

and churches to provide unique offerings which strengthen the community and provide sales for

the store. The Homework Happy Hour is a prime example of leveraging community needs with

sound sales techniques and business practices.

Direct Mailing - Enterslice LLPwill periodically mail special product offerings to people in the

55407 zip code. This promotion will also be used to announce the Grand Opening of Inspirational Grounds.

6.7 Strategic Alliances

Enterslice LLPhas aligned itself with key players in the industry: Espresso Services, Inc. located

in Minneapolis, Minnesota, and the specialty Coffee Association of America. Both of these

organizations are nationally and internationally known for their knowledge of, and expertise in,

the specialty beverage industry.

Enterslice LLPhas also formed key alliances with non-competing experts in Restaurant and

Retail markets.

Finally, Enterslice LLPhas established itself within the community through developing

relationships with five of the surrounding Neighborhood Associations, key developers and planners of the Midtown Exchange project and various City Officials and city Counsel Members.

These alliances will serve to be conducive to the company's success and marketability.


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6.8 Milestones

The accompanying table lists important program milestones up to the date of opening. Further

milestones, with dates and budgets for each, are currently being developed to line up our live-

performance events and to meet our marketing and sales goals. These post-opening milestones are dependent on receiving adequate funds for opening.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department Accounting Plan 30-09-2003 15-10-2003 $1,500 ABC Department Personnel Plan 01-10-2003 01-11-2003 $500 ABC Department Technology Systems 01-10-2003 01-11-2003 $1,500 ABC Department Communication Systems 01-10-2003 01-11-2003 $1,500 ABC Department Site Selection 01-06-2003 01-02-2004 $1,500 Regina Brown Owner Business Plan 01-07-2002 04-02-2004 $500 Regina Brown Owner Shop Design 15-09-2003 01-10-2004 $2,500 Regina Brown Owner Secure Start-Up Funding 01-05-2003 31-12-2004 $150 Albert Brown Manager Grand Opening Materials 01-01-2005 15-01-2005 $500 ABC Department Opening Inventory 05-01-2005 01-03-2005 $2,500 ABC Department

Totals $12,650

Chart: Milestones


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7.0 Management Summary

Enterslice LLPis owned by Regina Brown, and operated by Albert Brown. The company, being

small, requires a simple organization structure. Implementation requires the owner, Regina

Brown, to make decisions on the mission and vision, while Albert Brown makes operational

decisions. Major decisions affecting the execution of the plan are made jointly by the owner and

operations manager.

7.1 Organizational Structure

Org. Chart: Organizational Chart

7.2 Management Team

Regina Brown, owner and operator, has extensive start-up experience within the corporate

sector and has successfully managed key areas for Fortune 500 companies. She has an

entrepreneurial spirit which has made her corporate ventures successful. Her people savvy, and

ability to turn vision into strategy, and strategy into tactics, will be key elements of success for

Inspirational Grounds. She has successfully managed million dollar budgets. Currently, Regina

is starting up a new venture within Wells Fargo Home Mortgage. This is her third start-up for that organization.

Albert Brown has start-up experience as well as restaurant management experience. Most

recently Albert owned and operated RB Mortgage Company. Albert received a bachelor's degree

from Cheney University in Cheney, PA, a Juris Doctorate from Lasalle University, and is

currently pursuing a Masters in Divinity at Bethel Seminary in St. Paul, MN. Albert has held several management positions within the restaurant industry.

7.3 Management Team Gaps


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7.4 Personnel Plan

The personnel plan is included in the following table. It shows the owner's and operations

manager's salaries, followed by 5 part-time salaries for espresso servers. Part time employees

will collectively work 19.5 hours daily with an hourly salary of $8.00. Enterslice LLPassumes a

5% annual increase in barista salaries. These employees will share any tips received while they

are on duty. The owner will receive no payments or dividends until at least the fourth year of the business.

Table: Personnel

Personnel Plan

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Albert Brown - Operations Manager $18,000 $18,000 $25,000 $0 $0 Owner $0 $0 $0 $0 $0 Baristas $56,160 $58,968 $61,916 $0 $0 Total People 6 6 7 0 0

Total Payroll $74,160 $76,968 $86,916 $0 $0

8.0 Financial Plan

Enterslice LLPis basing projected sales on the market research, industry analysis and proximity of other coffee houses in the area. We are looking to obtain a modest .1% of the market share.

The cost of goods sold is based on the price list of Espresso Services, Inc., and is consistent

with costs in the coffee and espresso industry. The cost of the bakery items and candies is 50%

of the selling price.

Enterslice LLPwill use its POS System to keep cash flow and sales goals on track, and to

indicate which marketing efforts are worth the investment. We expect sales to easily exceed the

break-even point from the first month onward. The following sections outline our projected Profit and loss, Cash Flow, and Balance Sheet.

8.1 Startup Funding

Table: Startup Funding

Startup Funding Startup Expenses to Fund $29,800 Startup Assets to Fund $58,600 Total Funding Required $88,400


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Assets Non-cash Assets from Startup $28,000 Cash Requirements from Startup $30,600 Additional Cash Raised $6,600 Cash Balance on Starting Date $37,200 Total Assets $65,200

Liabilities and Capital

Liabilities Current Borrowing $0 Long-term Liabilities $80,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $80,000

Capital

Planned Investment Owner Investment $15,000 Investor 2 $0 Other $0 Additional Investment Requirement $0 Total Planned Investment $15,000

Loss at Startup (Startup Expenses) ($29,800) Total Capital ($14,800)

Total Capital and Liabilities $65,200

Total Funding $95,000

8.2 Important Assumptions

We do not sell anything on credit. The personnel burden is very low because part-time workers

receive no benefits. The long-term interest rate is extraordinarily low because of the MCDA business program which loans money to start-up ventures at a 2% annual interest rate.

Enterslice LLPwill obtain employees through MCDA's community reinvestment programs, which

further establishes our commitment to the community, and raises community awareness of our


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presence and purpose. We will also look to local seminaries to involve their students in a internship capacity.

8.3 Key Financial Indicators

Chart: Benchmarks


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8.4 Break-even Analysis

For our break-even analysis, we assume fixed costs of approximately $11,650 per month, which includes our full payroll, rent, and utilities, and an estimation of other running costs.

The chart shows that we need to sell about $15,000 per month to break-even, according to

these assumptions. Our conservative projections will exceed the break-even point even in the first month of business.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $15,017

Assumptions: Average Percent Variable Cost 22% Estimated Monthly Fixed Cost $11,646

Chart: Break-even Analysis


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8.5 Projected Profit and Loss

Projected profit and loss are depicted in the table below. Payroll expenses reflect the annual

salaries of operations manager and 5 part-time baristas. Rental Expense is based on leasing 2,000 square feet at $12.50 per square foot.

We project sales and marketing expenses at $12,000 for the first year. Enterslice LLPwill

depend on curiosity, established community involvement and media human interest stories to

spread the word, in addition to the tradition sales and marketing tactics.

Table: Profit and Loss

Pro Forma Profit and Loss

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Sales $203,440 $220,053 $238,054 $257,561 $278,704 Direct Cost of Sales $45,657 $47,014 $48,444 $30,934 $31,299 Other $0 $0 $0 $0 $0 Total Cost of Sales $45,657 $47,014 $48,444 $30,934 $31,299

Gross Margin $157,783 $173,038 $189,610 $226,627 $247,406 Gross Margin % 77.56% 78.63% 79.65% 87.99% 88.77%

Expenses Payroll $74,160 $76,968 $86,916 $0 $0 Marketing/Promotion $12,000 $15,000 $18,000 $0 $0 Depreciation $2,004 $2,000 $2,000 $0 $0 Leased Equipment $3,000 $3,000 $3,000 $0 $0 Utilities $4,000 $4,700 $5,800 $0 $0 Insurance $1,800 $1,900 $2,000 $0 $0 Rent $28,380 $31,691 $33,100 $0 $0 Website Hosting and Maintenance $300 $325 $350 $0 $0 Payroll Taxes $11,113 $11,545 $13,037 $0 $0 Other $3,000 $4,000 $4,500 $0 $0

Total Operating Expenses $139,757 $151,129 $168,703 $0 $0

Profit Before Interest and Taxes $18,026 $21,909 $20,906 $226,627 $247,406 EBITDA $20,030 $23,909 $22,906 $226,627 $247,406 Interest Expense $1,528 $1,400 $1,267 $1,200 $1,200 Taxes Incurred $4,124 $5,127 $4,910 $56,357 $61,551

Net Profit $12,373 $15,382 $14,730 $169,070 $184,654 Net Profit/Sales 6.08% 6.99% 6.19% 65.64% 66.25%


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Chart: Profit Monthly

Chart: Profit Yearly


Page 28

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly


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8.6 Projected Cash Flow

We will be a medium risk concern with steady cash flows. Sales are in cash, giving Enterslice

LLPan excellent cash structure. Solid product offerings and intelligent marketing will secure a cash balance of close to $48,000 by December 2005.

Table: Cash Flow

Pro Forma Cash Flow

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Cash Received

Cash from Operations Cash Sales $203,440 $220,053 $238,054 $257,561 $278,704 Subtotal Cash from Operations $203,440 $220,053 $238,054 $257,561 $278,704

Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0 New Current Borrowing $0 $0 $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 Sales of Other Current Assets $0 $0 $0 $0 $0 Sales of Long-term Assets $0 $0 $0 $0 $0 New Investment Received $0 $0 $0 $0 $0 Subtotal Cash Received $203,440 $220,053 $238,054 $257,561 $278,704

Expenditures FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Expenditures from Operations Cash Spending $74,160 $76,968 $86,916 $0 $0 Bill Payments $105,220 $125,054 $133,693 $92,265 $93,593 Subtotal Spent on Operations $179,380 $202,022 $220,609 $92,265 $93,593

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $6,660 $6,660 $6,660 $0 $0

Purchase Other Current Assets $0 $4,000 $4,000 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0


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Subtotal Cash Spent $186,040 $212,682 $231,269 $92,265 $93,593

Net Cash Flow $17,400 $7,371 $6,785 $165,296 $185,111 Cash Balance $54,600 $61,971 $68,756 $234,052 $419,163

Chart: Cash


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8.7 Projected Balance Sheet

The following table shows our projected assets and liabilities over the next three years. We

anticipate a steadily increasing net worth, as we pay off our loan and sales show modest increases. The Balance Sheet also reflects new current asset purchases in years 2 and 3.

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Assets

Current Assets Cash $54,600 $61,971 $68,756 $234,052 $419,163 Other Current Assets $12,000 $16,000 $20,000 $20,000 $20,000 Total Current Assets $66,600 $77,971 $88,756 $254,052 $439,163

Long-term Assets Long-term Assets $16,000 $16,000 $16,000 $16,000 $16,000 Accumulated Depreciation $2,004 $4,004 $6,004 $6,004 $6,004 Total Long-term Assets $13,996 $11,996 $9,996 $9,996 $9,996 Total Assets $80,596 $89,967 $98,752 $264,048 $449,159

Liabilities and Capital FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Current Liabilities Accounts Payable $9,683 $10,332 $11,047 $7,273 $7,730 Current Borrowing $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 Subtotal Current Liabilities $9,683 $10,332 $11,047 $7,273 $7,730

Long-term Liabilities $73,340 $66,680 $60,020 $60,020 $60,020 Total Liabilities $83,023 $77,012 $71,067 $67,293 $67,750

Paid-in Capital $15,000 $15,000 $15,000 $15,000 $15,000 Retained Earnings ($29,800) ($17,427) ($2,045) $12,685 $181,755 Earnings $12,373 $15,382 $14,730 $169,070 $184,654 Total Capital ($2,427) $12,955 $27,685 $196,755 $381,409 Total Liabilities and Capital $80,596 $89,967 $98,752 $264,048 $449,159

Net Worth ($2,427) $12,955 $27,685 $196,755 $381,409


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8.8 Business Ratios

The following table outlines some of the more important ratios from the Coffee Shop industry.

The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5812.

Our business will be a little different from the standard coffee shop, in that we will also sell

books and music. One of the major differences between us and the rest of the industry is our

asset structure - most of our assets are short-term, rather than long-term, in part because of our extra inventory, but also because we will lease, rather than own, our space.

Table: Ratios

Ratio Analysis

FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Industry Profile

Sales Growth n.a. 8.17% 8.18% 8.19% 8.21% 5.24%

Percent of Total Assets Other Current Assets 14.89% 17.78% 20.25% 7.57% 4.45% 32.59% Total Current Assets 82.63% 86.67% 89.88% 96.21% 97.77% 41.88% Long-term Assets 17.37% 13.33% 10.12% 3.79% 2.23% 58.12% Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 12.01% 11.48% 11.19% 2.75% 1.72% 21.75% Long-term Liabilities 91.00% 74.12% 60.78% 22.73% 13.36% 29.17% Total Liabilities 103.01% 85.60% 71.97% 25.49% 15.08% 50.92% Net Worth -3.01% 14.40% 28.03% 74.51% 84.92% 49.08%

Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Gross Margin 77.56% 78.63% 79.65% 87.99% 88.77% 55.74% Selling, General & Administrative Expenses 71.48% 71.64% 73.46% 22.35% 22.52% 37.46%

Advertising Expenses 0.99% 0.91% 0.84% #REF! #REF! 2.06% Profit Before Interest and Taxes 8.86% 9.96% 8.78% 87.99% 88.77% 1.50%

Main Ratios Current 6.88 7.55 8.03 34.93 56.81 0.81 Quick 6.88 7.55 8.03 34.93 56.81 0.51 Total Debt to Total Assets 103.01% 85.60% 71.97% 25.49% 15.08% 53.68% Pre-tax Return on Net Worth -679.90% 158.31% 70.94% 114.57% 64.55% 2.39% Pre-tax Return on Assets 20.47% 22.80% 19.89% 85.37% 54.81% 5.16%

Additional Ratios FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Net Profit Margin 6.08% 6.99% 6.19% 65.64% 66.25% n.a


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Return on Equity 0.00% 118.73% 53.20% 85.93% 48.41% n.a

Activity Ratios Accounts Payable Turnover 11.87 12.17 12.17 12.17 12.17 n.a Payment Days 27 29 29 38 29 n.a Total Asset Turnover 2.52 2.45 2.41 0.98 0.62 n.a

Debt Ratios Debt to Net Worth 0.00 5.94 2.57 0.34 0.18 n.a Current Liab. to Liab. 0.12 0.13 0.16 0.11 0.11 n.a

Liquidity Ratios Net Working Capital $56,917 $67,639 $77,709 $246,779 $431,433 n.a Interest Coverage 11.80 15.65 16.50 188.79 206.10 n.a

Additional Ratios Assets to Sales 0.40 0.41 0.41 1.03 1.61 n.a Current Debt/Total Assets 12% 11% 11% 3% 2% n.a Acid Test 6.88 7.55 8.03 34.93 56.81 n.a Sales/Net Worth 0.00 16.99 8.60 1.31 0.73 n.a Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a

8.9 Long-term Plan

8.10 The Investment Offering

Table: Investment Offering

Investment Offering Seed Round 1 Round 2 Exit

Proposed Year: 1 2 3 7

Valuation, Investment, Shares

Investment Amount $0 $0 $0

Equity Share Offering Percentage 0.00% 0.00% 0.00%

Valuation $0 $0 $0 $0

Investor Exit Payout $0 $0 $0

Investor Years Until Exit 6 5 4


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Investor IRR 0.00% 0.00% 0.00%

Share Ownership Year 1 Year 2 Year 3 Year 7

Founders' Shares 0 0 0 0

Stock Split Multiple 0 0 0

Stock Options Issued 0 0 0 0

Investor Shares Issued 0 0 0

Price per share $0.00 $0.00 $0.00 $0.00

Options Holders' Shares 0 0 0 0

Year 1 Investors' Shares 0 0 0 0

Year 2 Investors' Shares 0 0 0

Year 3 Investors' Shares 0 0

Total Shares Outstanding 0 0 0 0

Equity Ownership Percentage Year 1 Year 2 Year 3 Year 7

Founders' Equity 0.00% 0.00% 0.00% 0.00%

Option Holders' Equity 0.00% 0.00% 0.00% 0.00%

Year 1 Investors' Equity 0.00% 0.00% 0.00% 0.00%

Year 2 Investors' Equity 0.00% 0.00% 0.00%

Year 3 Investors' Equity 0.00% 0.00%

Total Equity 0.00% 0.00% 0.00% 0.00%

Investors' Equity 0.00% 0.00% 0.00% 0.00%

Founders' & Employees' Equity 0.00% 0.00% 0.00% 0.00%

8.11 Valuation

Table: Investment Analysis

Investment Analysis

Start FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Initial Investment Investment $15,000 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 Ending Valuation $0 $0 $0 $0 $0 $647,500 Combination as Income Stream ($15,000) $0 $0 $0 $0 $647,500


Page 35

Percent Equity Acquired 35%

Net Present Value (NPV) $351,861

Internal Rate of Return (IRR) 112%

Assumptions

Discount Rate 10.00%

Valuation Earnings Multiple 10 10 10 10 10

Valuation Sales Multiple 2 2 2 2 2

Investment (calculated) $15,000 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0

Calculated Earnings-based Valuation $120,000 $150,000 $150,000 $1,690,000 $1,850,000

Calculated Sales-based Valuation $410,000 $440,000 $480,000 $520,000 $560,000

Calculated Average Valuation $265,000 $295,000 $315,000 $1,105,000 $1,205,000

8.12 Use of Funds

Table: Use of Funds

Use of Funds

Use Amount Name $0 Name $0 Name $0 Name $0 Total $0

8.13 Payback

Table: Payback

Payback


Page 36

Projected Payback Calculation

Investment FY 2017 FY 2018 FY 2019 FY 2020 FY 2021

Investment $500,000

Cash Returns by Year $100,000 $100,000 $100,000 $100,000 $100,000

Combination as Income Stream ($500,000) $100,000 $100,000 $100,000 $100,000 $100,000 Cumulative Net Cash Flow to Investors ($500,000) ($400,000) ($300,000) ($200,000) ($100,000) $0

Payback Period 5 years

Chart: Payback Period

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales Fresh Brewed Coffee 0% $3,239 $3,271 $3,304 $3,337 $3,371 $3,404 $3,438 $3,473 $3,507 $3,542 $3,578 $3,614 Espresso Based Beverages 0% $4,219 $4,261 $4,304 $4,347 $4,390 $4,434 $4,479 $4,523 $4,569 $4,614 $4,660 $4,707 Specialty Drinks 0% $2,738 $2,765 $2,793 $2,821 $2,849 $2,878 $2,906 $2,936 $2,965 $2,995 $3,024 $3,055 Pastries/Desserts 0% $1,140 $1,151 $1,163 $1,175 $1,186 $1,198 $1,210 $1,222 $1,234 $1,247 $1,259 $1,272 Music/CDs 0% $915 $924 $933 $943 $952 $962 $971 $981 $991 $1,001 $1,011 $1,021 Books 0% $915 $924 $933 $943 $952 $962 $971 $981 $991 $1,001 $1,011 $1,021 Fresh Roasted Coffee 0% $1,525 $1,540 $1,556 $1,571 $1,587 $1,603 $1,619 $1,635 $1,651 $1,668 $1,685 $1,701 Misc Candies/Products 0% $1,350 $1,364 $1,377 $1,391 $1,405 $1,419 $1,433 $1,447 $1,462 $1,476 $1,491 $1,506 Total Sales $16,041 $16,201 $16,363 $16,527 $16,692 $16,859 $17,028 $17,198 $17,370 $17,544 $17,719 $17,896

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

Fresh Brewed Coffee $108 $109 $110 $111 $112 $114 $115 $116 $117 $118 $119 $120

Espresso Based Beverages $304 $307 $310 $313 $316 $320 $323 $326 $329 $332 $336 $339

Specialty Drinks $569 $575 $580 $586 $592 $598 $604 $610 $616 $622 $629 $635

Fresh Roasted Coffee $458 $463 $467 $472 $477 $481 $486 $491 $496 $501 $506 $511 Pastries/Desserts 50% $570 $576 $581 $587 $593 $599 $605 $611 $617 $623 $630 $636 Candies, etc. 50% $675 $682 $689 $695 $702 $709 $717 $724 $731 $738 $746 $753 Books/Music $916 $925 $934 $944 $953 $963 $972 $982 $992 $1,002 $1,012 $1,022

Subtotal Direct Cost of Sales $3,600 $3,636 $3,672 $3,709 $3,746 $3,784 $3,821 $3,860 $3,898 $3,937 $3,977 $4,016

Appendix

Page 2

Table: Personnel

Personnel Plan

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Albert Brown - Operations Manager 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 Owner 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Baristas 0% $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 $4,680 Total People 6 6 6 6 6 6 6 6 6 6 6 6

Total Payroll $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180

Appendix

Page 3

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $16,041 $16,201 $16,363 $16,527 $16,692 $16,859 $17,028 $17,198 $17,370 $17,544 $17,719 $17,896

Direct Cost of Sales $3,600 $3,636 $3,672 $3,709 $3,746 $3,784 $3,821 $3,860 $3,898 $3,937 $3,977 $4,016

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

Total Cost of Sales $3,600 $3,636 $3,672 $3,709 $3,746 $3,784 $3,821 $3,860 $3,898 $3,937 $3,977 $4,016

Gross Margin $12,441 $12,565 $12,691 $12,818 $12,946 $13,076 $13,206 $13,338 $13,472 $13,607 $13,743 $13,880

Gross Margin % 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56% 77.56%

Expenses

Payroll $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180

Marketing/Promotion $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Depreciation $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167 $167

Leased Equipment $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Utilities $300 $300 $300 $300 $300 $300 $300 $300 $400 $400 $400 $400

Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Rent $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 $2,365 Website Hosting and Maintenance 0% $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25 $25

Payroll Taxes 15% $927 $927 $927 $927 $927 $927 $927 $927 $916 $927 $927 $927 Other $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250

Total Operating Expenses $11,614 $11,614 $11,614 $11,614 $11,614 $11,614 $11,614 $11,614 $11,703 $11,714 $11,714 $11,714

Appendix

Page 4

Profit Before Interest and Taxes $827 $951 $1,077 $1,204 $1,332 $1,462 $1,592 $1,724 $1,769 $1,893 $2,029 $2,166

EBITDA $994 $1,118 $1,244 $1,371 $1,499 $1,629 $1,759 $1,891 $1,936 $2,060 $2,196 $2,333

Interest Expense $132 $131 $131 $130 $129 $128 $127 $126 $125 $124 $123 $122

Taxes Incurred $174 $205 $237 $269 $301 $333 $366 $400 $411 $442 $476 $511

Net Profit $521 $615 $710 $806 $903 $1,000 $1,099 $1,199 $1,233 $1,326 $1,429 $1,533

Net Profit/Sales 3.25% 3.80% 4.34% 4.88% 5.41% 5.93% 6.45% 6.97% 7.10% 7.56% 8.07% 8.57%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $16,041 $16,201 $16,363 $16,527 $16,692 $16,859 $17,028 $17,198 $17,370 $17,544 $17,719 $17,896

Subtotal Cash from Operations $16,041 $16,201 $16,363 $16,527 $16,692 $16,859 $17,028 $17,198 $17,370 $17,544 $17,719 $17,896

Additional Cash Received Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $16,041 $16,201 $16,363 $16,527 $16,692 $16,859 $17,028 $17,198 $17,370 $17,544 $17,719 $17,896

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

Expenditures from Operations

Cash Spending $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180 $6,180

Bill Payments $306 $9,175 $9,242 $9,309 $9,377 $9,445 $9,514 $9,584 $9,657 $9,793 $9,873 $9,946

Subtotal Spent on Operations $6,486 $15,355 $15,422 $15,489 $15,557 $15,625 $15,694 $15,764 $15,837 $15,973 $16,053 $16,126

Appendix

Page 6

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $555 $555 $555 $555 $555 $555 $555 $555 $555 $555 $555 $555

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $7,041 $15,910 $15,977 $16,044 $16,112 $16,180 $16,249 $16,319 $16,392 $16,528 $16,608 $16,681

Net Cash Flow $9,000 $291 $387 $483 $581 $679 $779 $879 $978 $1,016 $1,111 $1,216

Cash Balance $46,200 $46,491 $46,878 $47,361 $47,942 $48,621 $49,400 $50,279 $51,257 $52,273 $53,384 $54,600

Appendix

Page 7

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets Cash $37,200 $46,200 $46,491 $46,878 $47,361 $47,942 $48,621 $49,400 $50,279 $51,257 $52,273 $53,384 $54,600 Other Current Assets $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 Total Current Assets $49,200 $58,200 $58,491 $58,878 $59,361 $59,942 $60,621 $61,400 $62,279 $63,257 $64,273 $65,384 $66,600

Long-term Assets Long-term Assets $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 Accumulated Depreciation $0 $167 $334 $501 $668 $835 $1,002 $1,169 $1,336 $1,503 $1,670 $1,837 $2,004 Total Long-term Assets $16,000 $15,833 $15,666 $15,499 $15,332 $15,165 $14,998 $14,831 $14,664 $14,497 $14,330 $14,163 $13,996 Total Assets $65,200 $74,033 $74,157 $74,377 $74,693 $75,107 $75,619 $76,231 $76,943 $77,754 $78,603 $79,547 $80,596

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

Current Liabilities Accounts Payable $0 $8,867 $8,931 $8,996 $9,062 $9,128 $9,195 $9,262 $9,331 $9,464 $9,541 $9,612 $9,683 Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Current Liabilities $0 $8,867 $8,931 $8,996 $9,062 $9,128 $9,195 $9,262 $9,331 $9,464 $9,541 $9,612 $9,683

Long-term Liabilities $80,000 $79,445 $78,890 $78,335 $77,780 $77,225 $76,670 $76,115 $75,560 $75,005 $74,450 $73,895 $73,340 Total Liabilities $80,000 $88,312 $87,821 $87,331 $86,842 $86,353 $85,865 $85,377 $84,891 $84,469 $83,991 $83,507 $83,023

Paid-in Capital $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 Retained Earnings ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) ($29,800) Earnings $0 $521 $1,136 $1,846 $2,652 $3,554 $4,554 $5,654 $6,852 $8,085 $9,412 $10,841 $12,373 Total Capital ($14,800) ($14,279) ($13,664) ($12,954) ($12,148) ($11,246) ($10,246) ($9,146) ($7,948) ($6,715) ($5,388) ($3,959) ($2,427) Total Liabilities and Capital $65,200 $74,033 $74,157 $74,377 $74,693 $75,107 $75,619 $76,231 $76,943 $77,754 $78,603 $79,547 $80,596

Appendix

Page 8

Net Worth ($14,800) ($14,279) ($13,664) ($12,954) ($12,148) ($11,246) ($10,246) ($9,146) ($7,948) ($6,715) ($5,388) ($3,959) ($2,427)

business plan for seed funding (coffee cafe and internet)

Entertainment & Humor