Specialty Clothing Retail Business Plan Chicano StylezThis sample business plan can be edited directly in Business Plan

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Page 1 2 3 4 5 6 7 8 Executive Summary Chicano Stylez (CS) is a dazzling clothing and accessories store aimed at the growing Chicano/Hispanic population in Eugene, Oregon. We are here to provide unique products from Los Angeles to South America. It is the goal of CS to become Oregon's top cultural retail store. We hope to obtain both high profits and a reputation for great customer satisfaction by offering a large variety of high quality and rare products to our customers.

Located in downtown Eugene, we provide a central location for the growing Hispanic community. We believe it is important to create an atmosphere of acceptance and community care, as well as a place where individuals can identify and bond with aspects of their culture. Our company takes pride in giving back to the community by offering free services to children, such as story nights, art lessons, and lessons in music appreciation.

Chicano Stylez encourages a creative work environment for it's employees, as well as a deep respect for diversity. In addition to this, we offer employee goals such as profit sharing with company growth.

1.1 Objectives 1.To make Chicano Stylez the number one cultural retail store in Oregon. 2.To receive a modest profit margin within the first year. 3.To have a customer base of 5,000 by the end of year one. 4.To achieve a positive net profit by year two. 1.2 Keys to Success In order for Chicano Stylez to succeed we must:

Offer high-quality products Provide excellent customer service Be a helpful and respected member of the community Create continued customer loyalty, resulting in repeat purchasesCompany Summary Chicano Stylez is a contemporary retail clothing outlet designed to attract the Chicano/Hispanic population. In addition, CS will provide styles to the population of Eugene who wishes to dress and accessorize in the latest, hip fashions.

The store will remain involved with the community through our outreach program, to be described in later sections. We encourage diversity, and do not wish to only target the Hispanic market; we want ALL of Eugene to come to our store.

2.1 Company Ownership This will be a simple sole proprietorship owned by Sandra Adams. We intend to wait until the business grows before we incorporate, if at all.

2.2 Start-up Summary Assets will make up 80% of start-up costs.

The start-up expenses are fairly low in comparison. Start-up costs focus on inventory for my clothing and accessories which are extremely important. Expenses include:

Pricing tools Cash register Advertising and design of brochures Legal fees for security Consulting fees to help with merchandising and layout of the store to obtain maximum benefit Start-up costs will be financed by the owner and a combination of investors

Start-up

Requirements

Start-up Expenses Legal 1,000 Stationery etc. 2,000 Brochures 500 Consultants 2,500 Insurance 300 Rent 1,000 Research and development 500 Expensed equipment 3,500 Other 1,000 Total Start-up Expenses 12,300

Start-up Assets Cash Required 20,000 Start-up Inventory 8,000 Other Current Assets 27,000 Long-term Assets 0 Total Assets 55,000

Total Requirements 67,300

Start-up Funding

Start-up Expenses to Fund 12,300 Start-up Assets to Fund 55,000 Total Funding Required 67,300

Assets Non-cash Assets from Start-up 35,000 Cash Requirements from Start-up 20,000 Additional Cash Raised 0 Cash Balance on Starting Date 20,000 Total Assets 55,000

Liabilities and Capital

Liabilities Current Borrowing 0 Long-term Liabilities 12,000 Accounts Payable (Outstanding Bills) 10,000 Other Current Liabilities (interest-free) 0 Total Liabilities 22,000

Capital

Planned Investment Investor 1 20,000 Investor 2 15,000 Other 10,300 Additional Investment Requirement 0 Total Planned Investment 45,300

Loss at Start-up (Start-up Expenses) (12,300) Total Capital 33,000

Total Capital and Liabilities 55,000

Total Funding 67,300 2.3 Company Locations and Facilities Located in downtown Eugene, we provide a central location for the growing Hispanic community. We believe it is important to create an atmosphere of acceptance and community care, as well as a place where individuals can identify and bond with all aspects of their culture. Products Product descriptions, beyond general categories of clothing and accessories, have been omitted from this sample plan because they were considered proprietary and wouldn't be useful to anybody else.

3.1 Competitive Comparison Chicano Stylez has many advantages over its leading competitors.

1.New inventory from the hottest and most renowned Latin-American markets.

2.Literature, art, and music are an essential part of our store's atmosphere. We offer these cultural aspects, at no cost, to all children. 3.In addition to Latin-American products, we offer clothing and accessories from swap meets and cultural sub-communities, like Olvera Street in Los Angeles. Our aim is to bond with the high Chicano population in Eugene, by offering products that combine both the Latin and American cultures. 4.Ambiance of creativity, uniqueness, and a sense of comfort that comes with both recognition of our products. 5.Friendly staff who foster a respect and appreciation for diversity. Market Analysis Summary The primary target customers of Chicano Stylez are the adult Chicano/Hispanic. CS offers clothing and accessories from the top Latin markets of the world, therefore we assume they are most appealing to people from or familiar with this culture. We believe that the Chicano/Hispanic customers will increasingly grow as the population in Oregon does.

The secondary target customers of CS are teenagers. We offer unique products to this area, and expect an increasing interest amongst young people who generally like to experience new things. CS also drives to be very competitive with prices and on top of the latest styles around the world. Teenagers tend to keep up with the latest fads, therefore, we expect to see a steady increase in this customer segment.

The last target customers of CS is listed as Other. We expect to see a wide variety of people interested in something new and different, from business people to international students. CS believes that we offer great customer service and an overall welcoming, warm, and educating atmosphere, which will keep a variety of customers coming back.

4.1 Market Segmentation The Chicano/Hispanic population in the Whittaker Eugene area is dominant, therefore leading to a high percentage of our expected customers.

CS offers a wide variety of items from Latin markets around the world. Teenagers are amongst the largest group of trend setters and consumers in today's market. CS feels that by offering a unique product to the Eugene area, many teenagers will be attracted, therefore leading to the second highest percentage of our customer based population.

The last area of potential customers is labeled as Other. Chicano Stylez offers a high-quality product that is new to many different types of people, both young and old. Our cultural ambiance will attract many interested shoppers, and our customer service will keep people both coming back, and spreading the word to others. This last segment is quite diverse, however we do not expect it to be overwhelming in numbers.

Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR

Chicano/Hispanic 21-35 yrs. old 10% 2,000 2,200 2,420 2,662 2,928 10.00% Teenagers 6% 900 954 1,011 1,072 1,136 5.99% Other 4% 300 312 324 337 350 3.93% Total 8.37% 3,200 3,466 3,755 4,071 4,414 8.37% 4.2 Target Market Segment Strategy Chicano Stylez has three major trends that help its potential success tremendously.

1.Within the last two to three years there has been world-wide media attention regarding the "Latin Explosion." 2.The population increase in the city of Eugene over the past ten years has been exponential. 3.The downtown Eugene Whittaker area envelops a high population of the Hispanic/Chicano population, as well as other small stores, restaurants, and a latino center for career and social help. According to the latest studies, Latin American awareness has increased dramatically, a well as an interest in this cultural lifestyle, clothing, religion, etc.

The three market segments each have their own specific needs, CS intends to target each segment's needs individually.

Chicano/Hispanic 21-35 years old: CS provides the population with a variety of products expressing the Latin culture.

Teenagers: Young people strive on uniqueness and trendiness, which we offer in the latest styles from around the top Latin markets.

Other: The Hispanic culture is amongst the fastest growing sub-culture in the United States today. People of all races are drawn to elements of the Hispanic culture and it's peoples.

4.3 Main Competitors Our competitors share our Whittaker community population. La Tiendita/Taco Loco, Carneceria Lupita, and La Fiesta offer a variety of products, however none of these retailers offers free education to children, or such a wide variety of products from the top Latin-American markets.

La Tiendita located in Taco Loco combines the atmosphere of a restaurant with shopping. They do not promote their retail products as much as they do their restaurant, which is their biggest weakness.

Carneceria Lupita is a meat store primarily, although it offers several food products from different countries as well as in bulk quantity. In addition to selling meat, they sell spices, candles, some clothing, and other accessories. The biggest weakness for this store is the small size in which it has to operate.

La Fiesta is located in the restaurant Las Brasas which adds to its flow of customers. La Fiesta offers some clothing and accessories, but the bulk of the success of the store stems from its focus on video rental and selling jewelry. One of the greatest weaknesses of this retailer is that it has a small operating space and no real defined product. Strategy and Implementation Summary The following sections will outline the marketing and sales strategy for CS.

5.1 Value Proposition Chicano Stylez offers customers high quality clothing, unique and diverse products, a cultural community center, and educational services for children.

5.2 Competitive Edge The following components make up the competitive edge for CS.

Location Unique and high quality products and services Cultural atmosphere Loyalty amongst customers 5.3 Marketing Strategy Our marketing strategy will focus on pricing, promotion, distribution, sales strategy, and forecast.

We are focusing our market on the Hispanic/Chicano population of downtown Eugene. Our strategy will embrace these customers as a community with respect and esteem. To do this, our marketing resources are centered around customer loyalty and satisfaction. Our strategy also embraces the idea of consistency.

The marketing budget will not exceed 5,000 a year. Our marketing promotions will remain true to our company objectives and mission statement. Positioning Statement:

We target people who look for a high quality and unique product as well as a cultural atmosphere. Unlike other Latin based retailers, we offer community involvement.

Pricing Strategy:

CS is a store for continued customer purchase and loyalty. It is crucial to maintain a consistent pricing strategy. We will not exceed a competitor's price by more than 5-10%, and will always honor a competitor's price when dealing with a customer. Promotion Strategy:

CS will maintain an advertising plan that will consist of a radio advertisement on the local spanish station and a display in the phone book. Publicity is the essential strategy for CS. We aim to involve the community through public relations and utilizing different forms of media to get our name out. Marketing programs:

Our most important marketing programs are:

Publicity: Through media, get our story and mission statement out in the community. Sales promotion: Have a prominent booth at the park to collectively speak to the community and offer our products for free. Sales Strategy:

Encourage employees to sell by giving bonuses based on performance. Have a large base knowledge of products so that we can sell quality to the customers. Display sample items and have a great return policy to build trust and loyalty to increase customer base. 5.4 Sales Forecast We expect sales to increase at a steady rate of approximately 2-5% for the first year. It will begin slow as we open, but will quickly pick up as our customer base increases. In December it will jump to 9% due to the holidays.

CS would like to see an increase of 20% for the year 2002, and an increase of 30% for the year 2003. We feel that we can accomplish this steady goal and maintain this amount of sales.

Sales Forecast Year 1 Year 2 Year 3 Sales Clothing and Accesories 90,200 108,240 140,712 Other 0 0 0 Total Sales 90,200 108,240 140,712

Direct Cost of Sales Year 1 Year 2 Year 3 Clothing and Accesories 22,550 27,060 35,178 Other 0 0 0 Subtotal Direct Cost of Sales 22,550 27,060 35,178 Management Summary The founder of Chicano Stylez, Sandra Adams, believes that employee relationships are of utmost importance to the success of the business. Within this relationship should lie a high respect for creativity and growth. Pay will be constantly evaluated and based on performance and quality of work performed. It is a high priority to expand on each other's strengths and continue to build.

Organizational Structure:

CS does not separate into departments. The owner, Sandra Adams is the one lead manager who relates all of the decisions to the initial goal of the company. Employees are encouraged to work within their creative and physical boundaries. An evaluation and possible promotion or bonus will be given every 6 months.

Management Team:

Sandra Adams received her degree in the area of Spanish and cultural learning. She has been a member of a highly dominated Hispanic community in Los Angeles for the greater part of her life, and realizes the importance of a cultural community bond. Adams seeks to use her knowledge and personal vision for the Eugene area to create an atmosphere of equality, awareness, and respect.

Personnel Plan Year 1 Year 2 Year 3 Manager 23,600 24,780 26,019 Employee 12,000 12,600 13,230 Total People 0 0 0

Total Payroll 35,600 37,380 39,249 Financial Plan The following sections outline the financial plan for Chicano Stylez.

7.1 Important Assumptions The table below highlights the important assumptions for the company.

General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 25.42% 25.00% 25.42%

Other 0 0 0 7.2 Projected Profit and Loss The table below provides the expected profit and loss for the company.

Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales 90,200 108,240 140,712 Direct Cost of Sales 22,550 27,060 35,178 Other 0 0 0 Total Cost of Sales 22,550 27,060 35,178

Gross Margin 67,650 81,180 105,534 Gross Margin % 75.00% 75.00% 75.00%

Expenses Payroll 35,600 37,380 39,249 Sales and Marketing and Other Expenses 14,400 16,500 16,900 Depreciation 0 0 0 Leased Equipment 2,400 2,000 1,500 Utilities 3,600 3,800 4,000

Insurance 3,600 3,600 3,600 Rent 12,000 13,000 14,000 Payroll Taxes 0 0 0 Other 0 0 0

Total Operating Expenses 71,600 76,280 79,249

Profit Before Interest and Taxes (3,950) 4,900 26,285 EBITDA (3,950) 4,900 26,285 Interest Expense 1,070 840 600 Taxes Incurred 0 1,015 6,528

Net Profit (5,020) 3,045 19,157 Net Profit/Sales -5.57% 2.81% 13.61% 7.3 Break-even Analysis The chart and table below indicate the Break-even Analysis for CS.

Break-even Analysis

Monthly Revenue Break-even 7,956

Assumptions: Average Percent Variable Cost 25%

Estimated Monthly Fixed Cost 5,967 7.4 Projected Cash Flow The cash flow statement can be found in the chart and table below.

Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received

Cash from Operations Cash Sales 90,200 108,240 140,712 Subtotal Cash from Operations 90,200 108,240 140,712

Additional Cash Received Sales Tax, VAT, HST/GST Received 0 0 0 New Current Borrowing 0 0 0 New Other Liabilities (interest-free) 0 0 0 New Long-term Liabilities 0 0 0 Sales of Other Current Assets 0 0 0 Sales of Long-term Assets 0 0 0 New Investment Received 0 0 0 Subtotal Cash Received 90,200 108,240 140,712

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations Cash Spending 35,600 37,380 39,249 Bill Payments 55,718 68,977 81,568 Subtotal Spent on Operations 91,318 106,357 120,817

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out 0 0 0 Principal Repayment of Current Borrowing 0 0 0 Other Liabilities Principal Repayment 0 0 0 Long-term Liabilities Principal Repayment 2,400 2,400 2,400 Purchase Other Current Assets 0 0 0 Purchase Long-term Assets 0 0 0 Dividends 0 0 0 Subtotal Cash Spent 93,718 108,757 123,217

Net Cash Flow (3,518) (517) 17,495 Cash Balance 16,482 15,966 33,461 7.5 Projected Balance Sheet The Balance Sheet is found in the following table.

Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets

Current Assets

Cash 16,482 15,966 33,461 Inventory 3,080 3,696 4,805 Other Current Assets 27,000 27,000 27,000 Total Current Assets 46,562 46,662 65,266

Long-term Assets Long-term Assets 0 0 0 Accumulated Depreciation 0 0 0 Total Long-term Assets 0 0 0 Total Assets 46,562 46,662 65,266

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities Accounts Payable 8,982 8,437 10,284 Current Borrowing 0 0 0 Other Current Liabilities 0 0 0 Subtotal Current Liabilities 8,982 8,437 10,284

Long-term Liabilities 9,600 7,200 4,800 Total Liabilities 18,582 15,637 15,084

Paid-in Capital 45,300 45,300 45,300 Retained Earnings (12,300) (17,320) (14,275) Earnings (5,020) 3,045 19,157

Total Capital 27,980 31,025 50,182 Total Liabilities and Capital 46,562 46,662 65,266

Net Worth 27,980 31,025 50,182 7.6 Business Ratios The following table contains important ratios from the retail clothing industry, Code 5999, as determined by the Standard Industry Classification (SIC) Index.

Ratio Analysis Year 1 Year 2 Year 3 Industry Profile Sales Growth 0.00% 20.00% 30.00% 6.30%

Percent of Total Assets Inventory 6.61% 7.92% 7.36% 39.30% Other Current Assets 57.99% 57.86% 41.37% 23.90% Total Current Assets 100.00% 100.00% 100.00% 80.10% Long-term Assets 0.00% 0.00% 0.00% 19.90% Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 19.29% 18.08% 15.76% 46.00% Long-term Liabilities 20.62% 15.43% 7.35% 14.00% Total Liabilities 39.91% 33.51% 23.11% 60.00% Net Worth 60.09% 66.49% 76.89% 40.00%

Percent of Sales Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 75.00% 75.00% 75.00% 34.10% Selling, General & Administrative Expenses 95.57% 56.75% 49.76% 19.80% Advertising Expenses 7.22% 6.88% 5.45% 2.60% Profit Before Interest and Taxes -4.38% 4.53% 18.68% 1.10%

Main Ratios Current 5.18 5.53 6.35 1.77 Quick 4.84 5.09 5.88 0.67 Total Debt to Total Assets 39.91% 33.51% 23.11% 60.00% Pre-tax Return on Net Worth -17.94% 13.09% 51.18% 2.60% Pre-tax Return on Assets -10.78% 8.70% 39.35% 6.50%

Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin -5.57% 2.81% 13.61% n.a Return on Equity -17.94% 9.81% 38.17% n.a

Activity Ratios Inventory Turnover 7.55 7.99 8.28 n.a Accounts Payable Turnover 6.09 8.11 8.11 n.a Payment Days 47 46 41 n.a Total Asset Turnover 1.94 2.32 2.16 n.a

Debt Ratios Debt to Net Worth 0.66 0.50 0.30 n.a Current Liab. to Liab. 0.48 0.54 0.68 n.a

Liquidity Ratios Net Working Capital 37,580 38,225 54,982 n.a Interest Coverage -3.69 5.83 43.81 n.a

Additional Ratios Assets to Sales 0.52 0.43 0.46 n.a Current Debt/Total Assets 19% 18% 16% n.a Acid Test 4.84 5.09 5.88 n.a Sales/Net Worth 3.22 3.49 2.80 n.a Dividend Payout 0.00 0.00 0.00 n.a Appendix 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 Clothing and Accesories 25% 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200 Other 0% 0 0 0 0 0 0 0 0 0 0 0 0 Total Sales 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200

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 Clothing and Accesories 1,250 1,500 1,625 1,625 1,750 1,750 1,875 1,875 2,000 2,125 2,375 2,800 Other 0 0 0 0 0 0 0 0 0 0 0 0

Subtotal Direct Cost of Sales 1,250 1,500 1,625 1,625 1,750 1,750 1,875 1,875 2,000 2,125 2,375 2,800 Personnel Plan Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Manager 0% 1,000 1,000 1,500 1,500 1,700 2,000 2,000 2,000 2,500 2,550 2,850 3,000 Employee 0% 800 800 850 850 900 900 900 1,000 1,000 1,000 1,500 1,500 Total People 2 0 0 0 0 0 0 0 0 0 0 0

Total Payroll 1,800 1,800 2,350 2,350 2,600 2,900 2,900 3,000 3,500 3,550 4,350 4,500 General Assumptions Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 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 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% Tax Rate 30.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% Other 0 0 0 0 0 0 0 0 0 0 0 0 Pro Forma Profit and Loss 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 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200 Direct Cost of Sales 1,250 1,500 1,625 1,625 1,750 1,750 1,875 1,875 2,000 2,125 2,375 2,800

Other 0 0 0 0 0 0 0 0 0 0 0 0 Total Cost of Sales 1,250 1,500 1,625 1,625 1,750 1,750 1,875 1,875 2,000 2,125 2,375 2,800

Gross Margin 3,750 4,500 4,875 4,875 5,250 5,250 5,625 5,625 6,000 6,375 7,125 8,400 Gross Margin % 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00%

Expenses Payroll 1,800 1,800 2,350 2,350 2,600 2,900 2,900 3,000 3,500 3,550 4,350 4,500 Sales and Marketing and Other Expenses 1,300 1,300 900 1,300 1,300 1,100 1,300 1,100 1,300 1,300 900 1,300 Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 Leased Equipment 200 200 200 200 200 200 200 200 200 200 200 200 Utilities 300 300 300 300 300 300 300 300 300 300 300 300 Insurance 300 300 300 300 300 300 300 300 300 300 300 300 Rent 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Payroll Taxes 15% 0 0 0 0 0 0 0 0 0 0 0 0 Other 0 0 0 0 0 0 0 0 0 0 0 0

Total Operating Expenses 4,900 4,900 5,050 5,450 5,700 5,800 6,000 5,900 6,600 6,650 7,050 7,600

Profit Before Interest and Taxes (1,150) (400) (175) (575) (450) (550) (375) (275) (600) (275) 75 800 EBITDA (1,150) (400) (175) (575) (450) (550) (375) (275) (600) (275) 75 800

Interest Expense 98 97 95 93 92 90 88 87 85 83 82 80 Taxes Incurred 0 0 0 0 0 0 0 0 0 0 0 0

Net Profit (1,248) (497) (270) (668) (542) (640) (463) (362) (685) (358) (7) 720 Net Profit/Sales -24.97% -8.28% -4.15% -10.28% -7.74% -9.14% -6.18% -4.82% -8.56% -4.22% 0.07% 6.43% Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash Received

Cash from Operations Cash Sales 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200 Subtotal Cash from Operations 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200

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 5,000 6,000 6,500 6,500 7,000 7,000 7,500 7,500 8,000 8,500 9,500 11,200

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

Expenditures from Operations Cash Spending 1,800 1,800 2,350 2,350 2,600 2,900 2,900 3,000 3,500 3,550 4,350 4,500 Bill Payments 6,667 3,928 4,309 2,982 3,007 4,086 4,799 4,986 5,020 5,107 5,388 5,438 Subtotal Spent on Operations 8,467 5,728 6,659 5,332 5,607 6,986 7,699 7,986 8,520 8,657 9,738 9,938

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 200 200 200 200 200 200 200 200 200 200 200 200 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 8,667 5,928 6,859 5,532 5,807 7,186 7,899 8,186 8,720 8,857 9,938 10,138

Net Cash Flow (3,667) 72 (359) 968 1,193 (186) (399) (686) (720) (357) (438) 1,062 Cash Balance 16,333 16,405 16,047 17,014 18,207 18,021 17,622 16,936 16,216 15,859 15,421 16,482 Pro Forma Balance Sheet

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

Current Assets Cash 20,000 16,333 16,405 16,047 17,014 18,207 18,021 17,622 16,936 16,216 15,859 15,421 16,482 Inventory 8,000 6,750 5,250 3,625 2,000 1,925 1,925 2,063 2,063 2,200 2,338 2,613 3,080 Other Current Assets 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 27,000 Total Current Assets 55,000 50,083 48,655 46,672 46,014 47,132 46,946 46,685 45,999 45,416 45,196 45,033 46,562

Long-term Assets Long-term Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 Accumulated Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Long-term Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 Total Assets 55,000 50,083 48,655 46,672 46,014 47,132 46,946 46,685 45,999 45,416 45,196 45,033 46,562

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

Current Liabilities Accounts Payable 10,000 6,532 5,800 4,287 4,498 6,357 7,011 7,413 7,289 7,591 7,930 7,973 8,982 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 10,000 6,532 5,800 4,287 4,498 6,357 7,011 7,413 7,289 7,591 7,930 7,973 8,982

Long-term Liabilities 12,000 11,800 11,600 11,400 11,200 11,000 10,800 10,600 10,400 10,200 10,000 9,800 9,600 Total Liabilities 22,000 18,332 17,400 15,687 15,698 17,357 17,811 18,013 17,689 17,791 17,930 17,773 18,582

Paid-in Capital 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 45,300 Retained Earnings (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) (12,300) Earnings 0 (1,248) (1,745) (2,015) (2,683) (3,225) (3,865) (4,328) (4,690) (5,375) (5,733) (5,740) (5,020) Total Capital 33,000 31,752 31,255 30,985 30,317 29,775 29,135 28,672 28,310 27,625 27,267 27,260 27,980 Total Liabilities and Capital 55,000 50,083 48,655 46,672 46,014 47,132 46,946 46,685 45,999 45,416 45,196 45,033 46,562

Net Worth 33,000 31,752 31,255 30,985 30,317 29,775 29,135 28,672 28,310 27,625 27,267 27,260 27,980