pasta italian restaurant business plan

8/3/2019 Pasta Italian Restaurant Business Plan

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Table of Contents

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

Chart: Highlights ..................................................................................................................................1

1.1 Objectives .......................................................................................................................................... 11.2 Mission ...............................................................................................................................................2

1.3 Keys to Success ..................................................................................................................................2

2.0 Company Summary ............................................................................................................................... 22.1 Company Ownership ......................................................................................................................... 2

2.2 Start-up Summary .............................................................................................................................. 2

Table: Start-up Funding ....................................................................................................................... 3Chart: Start-up ......................................................................................................................................4

Table: Start-up ..................................................................................................................................... 4

...................................................................................................................................................................... 44.0 Market Analysis Summary .................................................................................................................... 5

4.1 Market Segmentation ......................................................................................................................... 5

Table: Market Analysis ........................................................................................................................6Chart: Market Analysis (Pie) ............................................................................................................... 6

4.2 Service Business Analysis ................................................................................................................. 7

4.2.1 Competition and Buying Patterns ............................................................................................... 75.0 Strategy and Implementation Summary .................................................................................................7

5.1 Competitive Edge ...............................................................................................................................8

5.2 Milestones .......................................................................................................................................... 8

Table: Milestones .................................................................................................................................8

5.3 Marketing Strategy .............................................................................................................................8

5.4 Sales Strategy .....................................................................................................................................85.4.1 Sales Forecast ..............................................................................................................................9

Table: Sales Forecast ....................................................................................................................... 9

Chart: Sales Monthly ....................................................................................................................... 9


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Table of Contents

Table: Profit and Loss ........................................................................................................................ 15

................................................................................................................................................................ 157.4 Projected Cash Flow ........................................................................................................................ 16

Table: Cash Flow ............................................................................................................................... 16

Chart: Cash .........................................................................................................................................177.5 Projected Balance Sheet ...................................................................................................................18

Table: Balance Sheet ..........................................................................................................................18

7.6 Business Ratios ................................................................................................................................ 18

Table: Ratios ...................................................................................................................................... 19Table: Sales Forecast ................................................................................................................................... 1

...................................................................................................................................................................... 1

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

...................................................................................................................................................................... 2

Table: General Assumptions ........................................................................................................................3

...................................................................................................................................................................... 3

Table: Profit and Loss ..................................................................................................................................4

...................................................................................................................................................................... 4Table: Cash Flow ......................................................................................................................................... 5

...................................................................................................................................................................... 6Table: Balance Sheet ....................................................................................................................................7


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Sigmund's Gourmet Pasta

1.0 Executive Summary

Sigmund's Gourmet Pasta will be the leading gourmet pasta restaurant in Eugene, OR with arapidly developing consumer brand and growing customer base. The signature line of

innovative, premium, pasta dishes include pesto with smoked salmon, pancetta and peas

linguini in an alfredo sauce, and fresh mussels and clams in a marinara sauce. Sigmund'sGourmet Pasta also serves distinctive salads, desserts, and beverages.

Sigmund's Gourmet Pasta will reinvent the pasta experience for individuals, families, and take-away customers with discretionary income by selling high quality, innovative products at a

reasonable price, designing tasteful, convenient locations, and providing industry benchmarkcustomer service.

Sigmund's first restaurant will be financed through a combination of direct owner investmentand long-term loans, guaranteed by the owner's collateral.

Chart: Highlights

Sales

Gross Margin

Net Profit$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

Highlights


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Pursue disciplined restaurant growth.

Provide superior customer service.

Leverage the experience, intelligence, and skills of our sophisticated advisory board.

1.2 Mission

Sigmund's Gourmet Pasta's mission is to provide the customer the finest pasta meal and dining

experience. We exist to attract and maintain customers. When we adhere to this maxim,

everything else will fall into place. Our services will exceed the expectations of our customers.

1.3 Keys to Success

Location, Location, Location.

Sigmund's site selection criteria are critical to success. Arthur Johnson, former VP Real Estate,Starbucks, helped us identify the following site selection criteria:

Daytime and evening populations.

Shopping patterns.

Car counts. Household income levels.

2.0 Company Summary

Sigmund's Gourmet Pasta is a gourmet pasta restaurant started in Eugene, OR. Sigmund's

serves individuals, families, and take-away customers with fresh, creative, attractive pastadishes, salads and desserts. Sigmund's uses homemade pasta, fresh vegetables, and premium

meats and cheeses.

The Eugene store in the Valley River Shopping Center will be the concept store on which all

future stores will be based.


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Please note that the following items which are considered assets to be used for more than ayear will labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line

depreciation method.

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $2,100Start-up Assets to Fund $162,900Total Funding Required $165,000

Assets

Non-cash Assets from Start-up $75,000Cash Requirements from Start-up $87,900Additional Cash Raised $0Cash Balance on Starting Date $87,900Total Assets $162,900

Liabilities and Capital

Liabilities

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

Capital

Planned Investment

Kevin Lewis $85,000Other $0

Additional Investment Requirement $0Total Planned Investment $85,000

Loss at Start-up (Start-up Expenses) ($2,100)Total Capital $82,900


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Chart: Start-up

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Expenses Assets Investment Loans

Start-up

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $1,000Stationery etc. $100Menus $1,000Insurance $0


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3.0 ServicesSigmund's has created gourmet pastas and salads that are differentiated and superior to

competitors. Customers can taste the quality and freshness of the product in every bite. Thefollowing are some characteristics of the product:

1. Sigmund's dough is made with Italian semolina flour.

2. Cheeses are all imported.3. Vegetables are organic and fresh with three shipments a week.

4. Meats are all top-shelf varieties, organic when possible.

At Sigmund's, food is not the only product. Sigmund's prides themselves on providing service

that is on par with fine dining. This is accomplished through an extensive training program andonly hiring experienced employees.

At A Glance--The Protype Sigmund's Store:

Location: an upscale mall, suburban neighborhood, or urban retail district.

Design: bright, hip, and clean.

Size: 1,200-1,700 square feet.

Employees: six to seven full time.

Seating: 35-45.

Types of transactions: 80% dine in, 20% take away.

4.0 Market Analysis Summary

The market can be divided into three target markets, individuals, families and take-awaybusiness. Please see the next session for an intricate analysis of the different segments.

Sigmund's expansion strategy is to further penetrate the existing markets by opening an

additional store (or stores) in Eugene in 2004. This clustering approach enables Sigmund'sGourmet Pasta to increase brand awareness and improve operating and marketing efficiencies


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Sigmund's customers are hungry individuals between the ages of 25 and 50, making up 53% ofEugene (Eugene Chamber of Commerce). Age is not the most defined demographic of this

customer base; all age groups enjoy pasta. The most defined characteristic of the targetmarket is income. Gourmet pasta stores have been very successful in high rent, mixed-use

urban areas, such as Northwest 23rd in Portland. These areas have a large day and nightpopulation consisting of business people and families who have household disposable incomes

over $40,000. Combining several key demographic factors, Sigmund's arrives at a profile of theprimary customer as follows:

Sophisticated families who live nearby.

Young professionals who work close to the location.

Shoppers who patronize the high rent stores.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Individuals 8% 12,457 13,454 14,530 15,692 16,947 8.00%Families 9% 8,974 9,782 10,662 11,622 12,668 9.00%

Take away 10% 24,574 27,031 29,734 32,707 35,978 10.00%Total 9.27% 46,005 50,267 54,926 60,021 65,593 9.27%

Chart: Market Analysis (Pie)

Market Analysis (Pie)


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4.2 Service Business Analysis

In 1999, global pasta sales reached $8 billion. Pasta sales are estimated to grow by at least10% for the next five years. The big four, Pastabilities, PastaFresh, Pasta Works, and Pasta

Perfect contribute $2 billion in combined 2000 revenues. The rest of the market is primarily

made up of independent restaurants. Though the barrier to entry into the pasta market is low,due to insufficient capitalization, most entrants fail within their first six months.

4.2.1 Competition and Buying Patterns

National Competition

Pastabilities. This restaurant offers consumers their choice of noodles, sauces, and

ingredients, allowing the customer to assemble their dish as they wish. Food quality isaverage.

PastaFresh. This company has a limited selection but the dishes are assembled with high-

quality ingredients. The price point is high, but the food is quite good.

Pasta Works. This company offers pasta that is reasonably fresh, reasonably innovative

and at a lower price point. The company was sold a few years ago, and consequently thedirection of management has been stagnant lately and has resulted in excessive employee

turnover.

Perfect Pasta. This company had medium-priced pasta dishes that use average

ingredients, no creativity, and less than average store atmosphere. Sigmund's is not sure

how this company has been able to grow in size as their whole product is mediocre at best.

Local Competition


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5.1 Competitive Edge

Sigmund's competitive edge is quite simple - superior product and superior service.

Product: the product will have the freshest ingredients including homemade pasta,

imported cheeses, organic vegetables and top-shelf meats. The product will also be

developed to enhance presentation, everything will be aesthetically pleasing.

Service: customer service will be the priority. All employees will ensure that the customers

are having the most pleasant dining experience. All employees will go through an extensivetraining program and only experienced people will be hired.

5.2 Milestones

Sigmund's will have several milestones:

1. Business plan completion. This will be done as a roadmap for the organization. This will bean indispensable tool for the ongoing performance and improvement of the company. The

business plan will be also used for raising capital.

2. Set up of the restaurant.3. Opening of the second store.4. Profitability.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business plan completion 1/1/2001 2/1/2001 $0 Kevin MarketingSet up of the restaurant 1/1/2001 3/1/2001 $162,900 All DepartmentProfitability 11/1/2001 11/31/2001 $0 Kevin DepartmentOpening of the second store 6/1/2004 6/30/2004 $100,000 Kevin and Erika DepartmentTotals $262,900


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5.4.1 Sales Forecast

The first two months will be used to get the restaurant up and running. By month three thingswill get a bit busier. Sales will gradually increase, and by the end of the first year we will berunning at 2/3 capacity. We will approach full capacity in year two (full capacity for a restaurant

being 90% full), and the introduction of new, higher price-point items in the third year accountsfor that year's increase.

Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

Sales

Individuals $103,710 $262,527 $286,024Families $150,304 $380,474 $414,528Take away $25,401 $64,300 $70,055Total Sales $279,415 $707,301 $770,608

Direct Cost of Sales Year 1 Year 2 Year 3Individuals $46,669 $118,137 $128,711Families $67,637 $171,213 $186,538Take away $11,431 $28,935 $31,525

Subtotal Direct Cost of Sales $125,737 $318,286 $346,773

Chart: Sales Monthly

$28 000

$32,000

$36,000

$40,000

Sales Monthly


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Chart: Sales by Year

Individuals

Families

Take away

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000


Sales by Year

6.0 Management Summary

Kevin Lewis, President, CPA

Duties: strategic development, back-office administration, financial analysis, internalcontrol, server, and line cook.

Education: BS general science and BS accounting, University of Oregon. Restaurant experience: two years as a server and busser.

Business experience: staff accountant (Arthur Andersen) and controller (Hollywood Video).


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Advisory Board

John Stevens, VP Food Starbucks Coffee Co., Inc. Arthur Johnson, Former VP Real Estate Starbucks Coffee Co., Inc.

Donald Davis, franchise owner of Sheraton Hotel and Tony Roma's.

Jerry Slippery, CPA, Partner, Arthur Anderson.

6.1 Personnel Plan

Kevin, Darryl, and Erika will all be working full time. In addition to this management team,there will be four other full-time employees brought on board during the end of the third month

for the first store. The second store will see the hiring of five additional employees.

Table: Personnel

Personnel Plan


Kevin $30,000 $37,800 $39,690Erika $30,000 $37,800 $39,690Darryl $62,000 $75,600 $79,380

Full time employee $11,480 $13,440 $13,440Full time employee $11,480 $13,440 $13,440Full time employee $11,480 $13,440 $13,440Full time employee $10,472 $13,440 $13,440Full time employee $0 $13,440 $13,440Full time employee $0 $13,440 $13,440Full time employee $0 $13,440 $13,440Full time employee $0 $13,440 $13,440Full time employee $0 $13,440 $13,440Total People 7 12 12

Total Payroll $166,912 $272,160 $279,720

7.0 Financial Plan


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7.2 Break-even Analysis

The following topic and table shows our Break-even Analysis.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $31,017

Assumptions:

Average Percent Variable Cost 45%Estimated Monthly Fixed Cost $17,059

Chart: Break-even Analysis

$0

$3,000

$6,000

$9,000

$12,000

($3,000)

($6,000)

($9,000)

Break-even Analysis


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7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Chart: Profit Monthly

$0

$2,000

$4,000

($2,000)

($4,000)

($6,000)

($8,000)

($10,000)

($12,000)

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Profit Monthly

Chart: Profit Yearly

Profit Yearly


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Chart: Gross Margin Monthly

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Gross Margin Monthly

Chart: Gross Margin Yearly

Gross Margin Yearly


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Table: Profit and Loss

Pro Forma Profit and Loss


Sales $279,415 $707,301 $770,608Direct Cost of Sales $125,737 $318,286 $346,773Other Production Expenses $0 $0 $0Total Cost of Sales $125,737 $318,286 $346,773

Gross Margin $153,678 $389,016 $423,834Gross Margin % 55.00% 55.00% 55.00%

Expenses

Payroll $166,912 $272,160 $279,720Sales and Marketing and Other Expenses $2,400 $2,400 $2,400Depreciation $15,000 $15,000 $15,000Leased Equipment $0 $0 $0Utilities $0 $0 $0Insurance $2,400 $3,600 $3,600Rent $18,000 $36,000 $36,000Payroll Taxes $0 $0 $0Other $0 $0 $0

Total Operating Expenses $204,712 $329,160 $336,720

Profit Before Interest and Taxes ($51,034) $59,856 $87,114EBITDA ($36,034) $74,856 $102,114

Interest Expense $8,000 $8,000 $8,000Taxes Incurred $0 $15,557 $23,734

Net Profit ($59,034) $36,299 $55,380Net Profit/Sales -21.13% 5.13% 7.19%


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7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from OperationsCash Sales $279,415 $707,301 $770,608Subtotal Cash from Operations $279,415 $707,301 $770,608

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0Subtotal Cash Received $279,415 $707,301 $770,608

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $166,912 $272,160 $279,720Bill Payments $136,690 $372,140 $417,494Subtotal Spent on Operations $303,602 $644,300 $697,214

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0


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Chart: Cash

Net Cash Flow

Cash Balance

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

($10,000)

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Cash


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7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current AssetsCash $63,713 $126,714 $200,107Other Current Assets $0 $0 $0Total Current Assets $63,713 $126,714 $200,107

Long-term Assets

Long-term Assets $75,000 $75,000 $75,000Accumulated Depreciation $15,000 $30,000 $45,000Total Long-term Assets $60,000 $45,000 $30,000Total Assets $123,713 $171,714 $230,107

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $19,846 $31,549 $34,562Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $19,846 $31,549 $34,562

Long-term Liabilities $80,000 $80,000 $80,000Total Liabilities $99,846 $111,549 $114,562

Paid-in Capital $85,000 $85,000 $85,000Retained Earnings ($2,100) ($61,134) ($24,835)Earnings ($59,034) $36,299 $55,380Total Capital $23,866 $60,165 $115,545Total Liabilities and Capital $123,713 $171,714 $230,107


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Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profile

Sales Growth n.a. 153.14% 8.95% 7.60%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 35.60%Total Current Assets 51.50% 73.79% 86.96% 43.70%Long-term Assets 48.50% 26.21% 13.04% 56.30%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 16.04% 18.37% 15.02% 32.70%Long-term Liabilities 64.67% 46.59% 34.77% 28.50%Total Liabilities 80.71% 64.96% 49.79% 61.20%Net Worth 19.29% 35.04% 50.21% 38.80%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%Gross Margin 55.00% 55.00% 55.00% 60.50%Selling, General & Administrative Expenses 91.28% 55.14% 51.74% 39.80%Advertising Expenses 0.43% 0.17% 0.16% 3.20%Profit Before Interest and Taxes -18.26% 8.46% 11.30% 0.70%

Main Ratios

Current 3.21 4.02 5.79 0.98Quick 3.21 4.02 5.79 0.65Total Debt to Total Assets 80.71% 64.96% 49.79% 61.20%Pre-tax Return on Net Worth -247.35% 86.19% 68.47% 1.70%Pre-tax Return on Assets -47.72% 30.20% 34.38% 4.30%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -21.13% 5.13% 7.19% n.aReturn on Equity -247.35% 60.33% 47.93% n.a

Activity Ratios

Accounts Payable Turnover 7.89 12.17 12.17 n.aPayment Days 27 24 29 n.aTotal Asset Turnover 2 26 4 12 3 35 n a


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Appendix

Table: Sales Forecast

Sales Forecast

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

Sales

Individuals 0% $0 $0 $3,895 $6,813 $7,906 $9,286 $10,057 $10,664 $12,044 $13,424 $14,804 $14,817Families 0% $0 $0 $5,645 $9,874 $11,458 $13,458 $14,575 $15,455 $17,455 $19,455 $21,455 $21,474 Take away 0% $0 $0 $954 $1,669 $1,936 $2,274 $2,463 $2,612 $2,950 $3,288 $3,626 $3,629 Total Sales $0 $0 $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Individuals $0 $0 $1,753 $3,066 $3,558 $4,179 $4,526 $4,799 $5,420 $6,041 $6,662 $6,668

Families $0 $0 $2,540 $4,443 $5,156 $6,056 $6,559 $6,955 $7,855 $8,755 $9,655 $9,663

Take away $0 $0 $429 $751 $871 $1,023 $1,108 $1,175 $1,327 $1,480 $1,632 $1,633

Subtotal Direct Cost of Sales $0 $0 $4,722 $8,260 $9,585 $11,258 $12,193 $12,929 $14,602 $16,275 $17,948 $17,964

Page 1


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Appendix

Table: Personnel

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month10

Month11

Month12

Kevin 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Erika 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Darryl 0% $3,500 $3,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500 $5,500Full time employee 0% $0 $280 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120Full time employee 0% $0 $280 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120Full time employee 0% $0 $280 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120 $ 1,120Full time employee 0% $0 $280 $112 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120Full time employee 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Full time employee 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Full time employee 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Full time employee 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Full time employee 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 3 7 7 7 7 7 7 7 7 7 7 7

Total Payroll $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980

Page 2


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Appendix

Table: General Assumptions

General Assumptions


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

Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term InterestRate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 3 0.00% 30.00% 30.00% 30.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Page 3


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Appendix

Table: Profit and Loss

Pro Forma Profit andLoss


Sales $0 $0 $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920

Direct Cost of Sales $0 $0 $4,722 $8,260 $9,585 $11,258 $12,193 $12,929 $14,602 $16,275 $17,948 $17,964

Other ProductionExpenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $0 $0 $4,722 $8,260 $9,585 $ 11,258 $ 12,193 $ 12,929 $ 14,602 $ 16,275 $ 17,948 $ 17,964

Gross Margin $0 $0 $5,772 $10,096 $11,715 $13,760 $14,902 $15,802 $17,847 $19,892 $21,937 $21,956

Gross Margin % 0.00% 0.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00%

Expenses

Payroll $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980

Sales and Marketing andOther Expenses

$200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Depreciation $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,250

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Payroll Taxes 15% $0 $0 $0 $ 0 $0 $0 $ 0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total OperatingExpenses

$11,650 $12,770 $17,122 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130 $18,130

Profit Before Interest andTaxes

($11,650) ($12,770) ($11,350) ($8,034) ($6,415) ($4,370) ($3,228) ($2,328) ($283) $1,762 $3,807 $3,826

EBITDA ($10,400) ($11,520) ($10,100) ($6,784) ($5,165) ($3,120) ($1,978) ($1,078) $967 $3,012 $5,057 $5,076

Interest Expense $667 $667 $667 $ 667 $ 667 $ 667 $667 $ 667 $ 667 $ 667 $ 667 $ 667

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

Net Profit ($12,317) ($13,437) ($12,017) ($8,701) ($7,081) ($5,037) ($3,894) ($2,995) ($950) $1,095 $3,140 $3,159

Net Profit/Sales 0.00% 0.00% -114.51% -47.40% -33.25% -20.13% -14.37% -10.42% -2.93% 3.03% 7.87% 7.91%

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Appendix

Table: Cash Flow

Pro Forma Cash Flow


Month11

Month12

Cash Received

Cash from Operations

Cash Sales $0 $0 $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920

Subtota l Cash from Operations $0 $0 $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New 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 $0 $0 $10,494 $18,356 $21,300 $25,018 $27,095 $28,731 $32,449 $36,167 $39,885 $39,920

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month10

Month11

Month12

Expenditures from Operations

Cash Spending $8,500 $9,620 $13,972 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980 $14,980

Bill Payments $86 $2,567 $2,724 $7,407 $10,871 $12,208 $13,856 $14,784 $15,551 $17,224 $18,898 $20,515

Subtotal Spent on Operations $8,586 $12,187 $16,696 $22,387 $25,851 $27,188 $28,836 $29,764 $30,531 $32,204 $33,878 $35,495

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 CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities PrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities PrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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 $8,586 $12,187 $16,696 $22,387 $25,851 $27,188 $28,836 $29,764 $30,531 $32,204 $33,878 $35,495

Net Cash Flow ($8,586) ($12,187) ($6,202) ($4,031) ($4,551) ($2,169) ($1,741) ($1,033) $1,918 $3,962 $6,007 $4,425

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Appendix

Cash Balance $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713

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Appendix

Table: Balance Sheet

Pro Forma Balance Sheet


Month11

Month12

Assets StartingBalances

Current Assets

Cash $87,900 $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $87,900 $79,314 $67,128 $60,926 $56,895 $52,344 $50,175 $48,434 $47,401 $49,318 $53,281 $59,288 $63,713

Long-term Assets

Long-term Assets $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000Accumulated Depreciation $0 $1,250 $2,500 $3,750 $5,000 $6,250 $7,500 $8,750 $10,000 $11,250 $12,500 $13,750 $15,000

Total Long-term Assets $75,000 $73,750 $72,500 $71,250 $70,000 $68,750 $67,500 $66,250 $65,000 $63,750 $62,500 $61,250 $60,000 Total Assets $162,900 $153,064 $139,628 $132,176 $126,895 $121,094 $117,675 $114,684 $112,401 $113,068 $115,781 $120,538 $123,713

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month10

Month11

Month12

Current LiabilitiesAccounts Payable $0 $2,481 $2,481 $7,046 $10,466 $11,747 $13,364 $14,267 $14,979 $16,596 $18,214 $19,831 $19,846Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $2,481 $2,481 $7,046 $10,466 $11,747 $13,364 $14,267 $14,979 $16,596 $18,214 $19,831 $19,846

Long-term Liabilities $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 Total Liabilities $80,000 $82,481 $82,481 $87,046 $90,466 $91,747 $93,364 $94,267 $94,979 $96,596 $98,214 $99,831 $99,846

Paid- in Capital $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000 $85,000Retained Earnings ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100) ($2,100)Earnings $0 ($12,317) ($25,753) ($37,770) ($46,471) ($53,553) ($58,589) ($62,484) ($65,478) ($66,428) ($65,333) ($62,193) ($59,034)

Tota l Capita l $82,900 $70,583 $57,147 $45,130 $36,429 $29,347 $24,311 $20,416 $17,422 $16,472 $17,567 $20,707 $23,866 Total Liabilities and Capital $162,900 $153,064 $139,628 $132,176 $126,895 $121,094 $117,675 $114,684 $112,401 $113,068 $115,781 $120,538 $123,713

Net Worth $82,900 $70,583 $57,147 $45,130 $36,429 $29,347 $24,311 $20,416 $17,422 $16,472 $17,567 $20,707 $23,866

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