Cindy Olson

Olson Interiors

December 2010 Mgt. 643

Confidentiality Agreement The undersigned reader acknowledges that the information provided by Cindy Olson in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Cindy Olson.

___________________ Signature

Cindy Olson

This is a business plan. It does not imply an offering of securities.

Table of Contents

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 Start-up Summary..............................................................................................................................4 Table: Start-up.....................................................................................................................................4 Chart: Start-up......................................................................................................................................5 3.0 Services..................................................................................................................................................5 4.0 Market Analysis Summary....................................................................................................................6 4.1 Market Segmentation ........................................................................................................................6 Table: Market Analysis........................................................................................................................6 Chart: Market Analysis (Pie)...............................................................................................................7 4.2 Target Market Segment Strategy.......................................................................................................7 4.3 Service Business Analysis.................................................................................................................7 4.3.1 Competition and Buying Patterns...............................................................................................7 5.0 Web Plan Summary...............................................................................................................................8 5.1 Website Marketing Strategy..............................................................................................................8 5.2 Development Requirements ..............................................................................................................8 6.0 Strategy and Implementation Summary.................................................................................................9 6.1 SWOT Analysis.................................................................................................................................9 6.1.1 Strengths...................................................................................................................................10 6.1.2 Weaknesses...............................................................................................................................10 6.1.3 Opportunities.............................................................................................................................10 6.1.4 Threats.......................................................................................................................................10 6.2 Competitive Edge.............................................................................................................................11 6.3 Marketing Strategy...........................................................................................................................11 6.4 Sales Strategy...................................................................................................................................11 6.4.1 Sales Forecast............................................................................................................................11 Table: Sales Forecast.....................................................................................................................12 Chart: Sales Monthly.....................................................................................................................13 Chart: Sales by Year......................................................................................................................13 6.5 Milestones........................................................................................................................................13 Table: Milestones...............................................................................................................................14 7.0 Management Summary........................................................................................................................15 7.1 Personnel Plan .................................................................................................................................15 8.0 Financial Plan.......................................................................................................................................15 8.1 Start-up Funding..............................................................................................................................15 8.2 Important Assumptions....................................................................................................................16 8.3 Break-even Analysis........................................................................................................................16 8.4 Projected Profit and Loss.................................................................................................................17 8.5 Projected Cash Flow........................................................................................................................20 8.6 Projected Balance Sheet...................................................................................................................21 Page 1

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8.7 Business Ratios................................................................................................................................22 7

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1.0 Executive Summary Olson Interiors is providing the right service at the right time. There are several options available to fit any budget. Here is a snapshot at what Olson Interiors has to offer. The Product Package A: A consultation/walk through, in person or through the Internet. Olson Interiors will walk through your entire space, make suggestions, and then teach you how your space should be staged and presented to bring on the quickest and most profitable home sale. This option can be done in person or over the Internet, where customers will need to upload pictures of the proposed staging area. Pricing: $50.00 Internet only, $75.00 for on site visit. Package B: A basic cleaning and accessory staging option. With this option, the owner will use her expertise to stage every room in the house, using decorative accessories such as pillows, candles, pictures, and small furniture items. The home will be decorated to appeal to the five senses. A wow factor will be included with every presentation. Pricing: Approximately $200.00 for each 30 days of rental. Package C: An extensive cleaning and staging option. This option will include the use of basic accessories (see above), in addition to window treatments and bedding such as comforters and bedspreads that are more costly than basic accessories. Pricing: Approximately $500.00 for each 30 days of rental. Package D: A custom option that will fit the needs of the customer will also be offered . The basic consultation fee of $75.00 will be put into place. The business owner will create two estimates and storyboards for the customers to choose between. Custom options may include: paint, window treatments, furniture, lighting fixtures, and accessories. Pricing is likely to range from $2,000 to $5,000, depending on the needs of the individual clients.

Marketing The owner has an extensive marketing background and will use and implement detailed marketing strategies that are outlined extensively in this plan. Business cards and flyers will be placed in realtor offices. Placemat marketing will also be used in addition to embedded marketing where staging materials will be used in exchange for advertising. Key partners for the embedded marketing will be Target, Big Lots and Pier One. Financial Requirements Olson Interiors will need to borrow approximately 8,000 to fund start up requirements and actions listed in the milestone worksheet. The entire strategy for Olson Interiors is to be "mean and lean." Day-to-day operations will be managed out of a home office, which will keep funding requirements to a minimum. Page 1

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Chart: Highlights

1.1 Objectives Olson Interiors is a new start-up with the customer in mind. Olson Interiors will target customers who are trying to sell their homes in this challenging market. Olson Interiors will supply customers with several staging options. Service options will include: a consultation/walk through, in person or through the Internet; a basic cleaning and accessory staging option; an extensive cleaning and staging option that will include the use of window treatments and bedding; and a custom option that will fit the needs of the customer. This business plan makes sense during our challenging economy where there is a heavy supply of homes for sale in the market. The business owner, Cindy Olson, will contact realtors and will use website marketing as primary techniques to market the business. Olson Interiors plans to earn 50,000 in net sales for its first year of operation.

1.2 Mission The mission of Olson Interiors is to take the stress out of selling a home. Olson Interiors will provide several service options to meet the needs of its customers. Olson Interiors will always provide outstanding customer service and will work hard to provide a home that is staged beautifully that will appeal to the buyer's five senses. Olson Interiors is dedicated in providing the highest Page 2

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quality standards and will meet execution deadlines consistently. Custom work will be implemented exactly as planned with a planned budget.

1.3 Keys to Success To provide excellent customer service where customers are made comfortable and their input is taken before, during, and after the staging process. To ensure that the customer is satisfied, where positive word of mouth will develop the business. Any customer who makes a referral will be sent a gift certificate to a local restaurant. To provide professional and reliable service at all times.

2.0 Company Summary Olson Interiors is a home staging business located in Munger, Michigan. The companys mission is to alleviate the stress that home sellers are experiencing during a very competitive housing market. The target market will consist of customers from Bay, Midland, and Saginaw Counties. This should provide for a substantially large market with many customers living in the tri-city area. Here is a population summary taken from the 2006-2008 census. Bay County - Population 25 years and over:74,403 Midland County - Population 25 years and over: 54,799 Saginaw County - Population 25 years and over: 133,299 Tuscola County - Population 25 years and over: 38,297 Source: American Fact Finder, www.factfinder.census.gov 2.1 Company Ownership Olson Interiors will operate as Limited Liability Company. LLCs have many advantages including: limited liability, more flexibility than C corps., double taxation is avoided, and organization is routine with the creation of the articles of organization and an operating agreement. The business owner will use legalzoom.com to open the LLC. Implementation costs are only ninety dollars. With a LLC, a basket of options is available from members to choose from. The business owner will choose the limited liability option in addition to the member management option. According to legazoom.com, LLC's are becoming very popular among entrepreneurs. LLC's are effective because:" A limited liability company, or LLC, is a business entity created under state laws which has the characteristics of both a corporation and a partnership.Legalzoom.com also provides the following information regarding LLCs listed below: LLCs are easy to set up and maintain. Members are typically not liable for the debts of the LLC. Income and losses can be passed through to members as in a sole proprietorship or partnership. LLCs do not have the same corporate formalities as a corporation. Page 3

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An LLC has a flexible management and ownership structure.

All Legalzoom LLC packages include a custom operating agreement with provisions that safeguard your personal assets against liability." Complete Source: http://www.legalzoom.com/limited-liability-company/limited-liability-companyoverview.html. 2.2 Start-up Summary The business owner, Cindy Olson, will handle the day-to-day operations of the business and will collaborate with her husband, Mike Olson, for small building and painting projects as needed. Estimated start-up costs are $12,900. This includes costs for legal, marketing (flyers and business cards at overnightprints.com), a $5,000 dollar storage building to be placed on the Olson property, and an initial purchase of $2,000 in home staging accessories. Table: Start-up Start-up Requirements Start-up Expenses Legal Website Marketing Total Start-up Expenses Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets Total Requirements $90 $10 $300 $400 $5,000 $500 $7,000 $12,500 $12,900

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Chart: Start-up

3.0 Services Olson Interiors provides several staging options to meet the needs of individual customers. Here are the packages from which customers may choose. The Product Package A: A consultation/walk through, in person or through the Internet. Olson Interiors will walk through your entire space, make suggestions, and then teach you how your space should be staged and presented to bring on the quickest and most profitable home sale. This option can be done in person or over the Internet, where customers will need to upload pictures of the proposed staging area. Pricing: $50.00 Internet only, $75.00 for on site visit. Package B: A basic cleaning and accessory staging option. With this option, the owner will use her expertise to stage every room in the house, using decorative accessories such as pillows, candles, pictures, and small furniture items. The home will be decorated to appeal to the five senses. A wow factor will be included with every presentation. Pricing: Approximately $200.00 for each 30 days of rental. Package C: An extensive cleaning and staging option. This option will include the use of basic accessories (see above), in addition to window treatments and bedding such as comforters and bedspreads that are more costly than basic accessories. Pricing: Approximately $500.00 for each 30 days of rental. Package D: A custom option that will fit the needs of the customer will also be offered . The basic consultation fee of $75.00 will be put into place. The business owner will create two estimates and storyboards for the customers to choose between. Custom options may include: paint, window Page 5

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treatments, furniture, lighting fixtures, and accessories. Pricing is likely to range from $2,000 to $5,000, depending on the needs of the individual clients.

4.0 Market Analysis Summary According to NAICS http://www.naics.com/Service-CustomLists.html, the interior design business is a seven million dollar industry, making Olson Interiors a feasible business opportunity. The target customer is made up of persons living in Bay, Saginaw, Tuscola and Midland counties; the total population for these four counties is approximately 300,000. Out of this number, approximately 3,000 customers are trying to sell their homes (November 2010), giving Olson Interiors a good customer base to begin targeting. 4.1 Market Segmentation Market segmentation will be based on geographic location. Customers from Bay, Midland, and Tuscola Counties will be targeted. The business owner will work with area realtors to locate and then contact interested clients. The business owner will also create flyers to be left in realtor offices. The business owner will also work to get lists of foreclosed homes and will approach bankers and lenders as appropriate. Here is a review of the population data from the four counties: Bay County - Population 25 years and over:74,403 Midland County - Population 25 years and over: 54,799 Saginaw County - Population 25 years and over: 133,299 Tuscola County - Population 25 years and over: 38,297

Source: American Fact Finder, www.factfinder.census.gov Table: Market Analysis Market Analysis 2011 Potential Customers Tuscola County Bay County Midland County Saginaw County Total Growth 10% 10% 10% 10% 10.0% 550 750 850 850 3,000 605 825 935 935 3,300 666 908 1,029 1,029 3,632 733 999 1,132 1,132 3,996 806 1,099 1,245 1,245 4,395 2012 2013 2014 2015

Note: To grow the business as planned. The business owner will also work with business owners who Page 6

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need assistance with merchandising and display. This may be a very effective option when the economy starts to turn with additional businesses entering the marketplace. Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy Olson Interiors is in a perfect position to establish its business during this historic home sales slump. Olson Interiors will provide alternatives for homeowners who have tried to sell their homes and have failed. More specifically, the specific target customer will be a middle aged, working female who is too busy to stage a home properly. Olson Interiors will take the stress out of home staging and will work closely with clients to ensure that all customer needs and expectations are met and exceeded. 4.3 Service Business Analysis Olson Interiors will provide a unique service for a variety of customers. A basic staging option will be provided for $200.00 a month. However, some customers may choose more services for a custom staging option. The business owner has researched the competition. There are interior designers in the area, but there are very few stagers. Moreover, the business owner has an extensive background in merchandising including a marketing degree from Ferris, and over ten years of experience in the retail business. The owner is currently a marketing instructor at the Tuscola Technology Center in Caro, MI. 4.3.1 Competition and Buying Patterns Here is a summary of some of the competition: Beautiful Home Design And Staging is a private company categorized under Design Services Page 7

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and located in Davison, MI. Current estimates show this company has an annual revenue of 56,000 and employs a staff of approximately 1. Premier Home Staging is a private company categorized under Interior Designer and located in Saginaw, MI. Current estimates show this company has an annual revenue of 83,000 and employs a staff of approximately 2. Allure Home Staging is a professional home staging company based in Plymouth, Michigan owned by Celeste Greenwald and Mary Jo Hahn. Some of the services Allure provides are: home-staging consultations, premium photos, furniture rental for vacant properties, staging for events/parties, and staging for business offices . Bella Home Staging & Decorating is a private company categorized under Interior Decorators and Designers Workroom and located in Grand Haven, MI. Current estimates show this company has an annual revenue of 45,000 and employs a staff of approximately 1. Sensible Home Staging Inc is a private company categorized under Home Builders and located in Brighton, MI. Current estimates show this company has an annual revenue of 100,000 and employs a staff of approximately 2. The information stated above was taken directly from Manta (http://www.manta.com/). 5.0 Web Plan Summary The website will be used to drive the business and will utilize the following components: Pictures of previously staged homes will be placed to show examples for customers. Customers will have a place to provide feedback about their experience with Olson Interiors. Marketing partners will be advertised on the site. Contact information and a link to Facebook will be provided. A complete list of all of Olson Interiors service options will be included on the company website. Customers wishing to use the web service consultation package will have a place to upload their pictures on the site. In summation, the company website will be a place for interaction as well as information. 5.1 Website Marketing Strategy The company website will be included on all marketing materials including flyers, business cards and advertisements. Website marketing is critical to the success of Olson Interiors and may be used for transaction purposes in addition to communication/marketing purposes. 5.2 Development Requirements The business owner will develop a website through Yahoo Small Business. Here are some of the features and benefits that Olson Interiors will take advantage of through Yahoo. The following information was taken directly from (http://small business.yahoo.com/). Plans start at just $7.46 for the first three months and $9.95 thereafter.

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Features and Benefits Use Business Email Domain name Custom email addresses Antivirus and spam protection

Get a Web Site Domain name Business email Easy-to-use web site tools Site-performance tracking 24-hour support

Sell Online Domain name Business email Web site Easy store-building tools Customizable shopping cart Process credit cards/PayPal Detailed sales reporting

This is a good choice for the business owner who has very little background with website development. This should also allow for fast searches on the web. 6.0 Strategy and Implementation Summary Olson Interiors will be successful. It is offering an outstanding service with a variety of options to fit any budget. Moreover, it is the right time to enter the market with many homeowners frustrated with sluggish home sales. 6.1 SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Olson Interiors.

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6.1.1 Strengths 1. The business owner, Cindy Olson, is a marketing teacher and completely understands customer service and will create friendly partnerships between customers and suppliers. 2. The business owner, Cindy Olson, has an extensive merchandising background including: a retail marketing degree from Ferris State University, over ten years of experience in retail management, and over seven years experience as a marketing instructor. Cindy Olson also has a solid foundation of business and has a 3.95 in Saginaw Valley State University's MBA program. 3. Limited partner, Mike Olson, is very skilled at painting and remodeling and his expertise will be utilized as needed. Mike has a flexible schedule and will provide his services free under most circumstances. 4. Due to the state of the economy, many homeowners are desperate for help when it comes to selling their homes, making it an almost perfect time to launch Olson Interiors. 6.1.2 Weaknesses A primary weakness for this company may be reaching out to customers. In some cases, realtors could be reluctant to inform their clients about the services that Olson Interiors will offer. Olson Interiors must be very aggressive in establishing itself and will cold call on potential clients, in addition to advertising through realtor establishments. Moreover, Olson Interiors will also use foreclosed home listings to contact financial institutions in order to build the client list. The economy itself is also a weakness. The benefit for clients will be that customers will sell their homes much quicker; however, some customers may be hard to convince during our challenging economy that spending the extra money on staging is the right choice. 6.1.3 Opportunities Using social networking such as Facebook will be a huge opportunity for Olson Interiors. Moreover, Olson Interiors will also use the Internet to connect with new and existing clients. Some customers may choose option A where they can simply upload pictures and then the business owner will send back her recommendations for staging. This could be a huge opportunity for the business where Olson Interiors can reach customers beyond its target market location. 6.1.4 Threats The economy is certainly a threat where creating a new business is riskier than ever. Moreover, the Internet may also be considered a threat where customers can search for interior design ideas free at a variety of sites. Olson Interiors will provide legendary customer service to compete with free Internet sites. Another threat might be managing the labor that it will take to run the business. Cindy Olson will consider employing Tech Center Marketing students for special projects. The students will work for minimum wage and could be hired on an hourly basis. Contracting costs for students have been set aside under the additional costs of sales heading in the income statement. Page 10

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6.2 Competitive Edge The competitive edge of Olson Interiors is the expertise and knowledge that the business owner possesses. Cindy Olson has an extensive background in merchandising, and will set up each staging opportunity as one would any good set. The staged area will appeal to the five senses and be inviting to a variety of homeowners. Moreover, the business owner is very passionate about design and customer service. Cindy Olson will put customers at ease and include them in the design process. For package D, the customers will choose from two options. The staging options will be presented in a formal meeting complete with swatches and sketches. 6.3 Marketing Strategy Olson Interiors will use the following marketing strategies: Flyers and business cards will be placed in realtor offices around the four county areas. Placemat marketing. Embedded marketing and advertising: Big Lots, Target and Pier One will be primary partners. Social networking - A presence will be made on Facebook. Internet marketing - Olson Interiors will use the Internet to contact new and existing customers. 6.4 Sales Strategy The business owner will work to develop relationships with area realtors to find new and interested clients. The business owner is also considering several other marketing techniques including: a Website, embedded marketing, placemat marketing, and flyers. 6.4.1 Sales Forecast The sales forecast is divided out by packages. The Product Package A: A consultation/walk through, in person or through the Internet. Olson Interiors will walk through your entire space, make suggestions, and then teach you how your space should be staged and presented to bring on the quickest and most profitable home sale. This option can be done in person or over the Internet, where customers will need to upload pictures of the proposed staging area. Pricing: $50.00 Internet only, $75.00 for on site visit. Package B: A basic cleaning and accessory staging option. With this option, the owner will use her expertise to stage every room in the house, using decorative accessories such as pillows, candles, pictures, and small furniture items. The home will be decorated to appeal to the five senses. A wow factor will be included with every presentation. Pricing: Approximately $200.00 for each 30 days of rental. Page 11

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Package C: An extensive cleaning and staging option. This option will include the use of basic accessories (see above), in addition to window treatments and bedding such as comforters and bedspreads that are more costly than basic accessories. Pricing: Approximately $500.00 for each 30 days of rental. Package D: A custom option that will fit the needs of the customer will also be offered . The basic consultation fee of $75.00 will be put into place. The business owner will create two estimates and storyboards for the customers to choose from. Custom options may include: paint, window treatments, furniture, lighting fixtures, and accessories. Pricing is likely to range from $2,000 to $5,000, depending on the needs of the individual clients. Moreover, the cost of sales is estimated conservatively since the business owner will be using embedded marketing and advertising to keep costs low. Big Lots, Target, and Pier One will be contacted for partnership. When products for these companies are used for staging, the business owner will create identification labels for company owned products placed in staging areas. Finally, the business owner is predicting a 10% growth rate for 2012 and a 5% growth rate for 2013. The business owner is also qualified in retail merchandising techniques, and will extend services to businesses to supplement sales.

Table: Sales Forecast Sales Forecast 2011 Sales Package A Package B Package C Package D Total Sales Direct Cost of Sales basic accessories window treatments and bedding furniture and paint Subtotal Direct Cost of Sales $6,908 $9,115 $17,020 $27,000 $60,043 2011 $1,350 $5,150 $3,200 $9,700 2012 $5,500 $10,200 $19,000 $30,000 $64,700 2012 $1,500 $6,000 $3,500 $11,000 2013 $6,000 $11,000 $20,000 $32,000 $69,000 2013 $1,700 $6,500 $4,000 $12,200

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Chart: Sales Monthly

Chart: Sales by Year

6.5 Milestones With the business opening in January 2011, there is plenty of work to be done. Day-to-day operations will take place out of the business owner's home office where she will take advantage of Page 13

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high speed Internet and cell phone as her primary vehicles for contacting customers. Here is a look at everything that needs to be completed before opening in January. Creating a website through Yahoo Small Business - Initial cost is 9.95 and approximately $7.50 a month thereafter. Creating flyers and business cards through overnightprints.com: 1,000 brochures will cost $189.95; 5,000 business cards will cost approximately $100.00. Create an LLC through legalzoom.com for $90.00. Become an allied member of ASID - "Allied members receive the resources of a professional society as they continue to develop their interior design career. Eligible individuals are practicing interior designers who have completed 40 semester or 60 quarter credit hours in interior design education from an accredited institution (university, college or technical school). Continuing education course work/hours do not count toward meeting the education requirement for membership." (http://www.asid.org/members/). Initial membership is $100.00 and then approximately $300.00 a year thereafter. Create a Facebook page - free of charge. Network with realtors and initial suppliers for embedded marketing. Partner with TTC (Tuscola Tech Center, Caro) Graphics program to create a one-inch placemat ad for an initial $150.00. Contact realtors and partners for embedded marketing - $600.00 for gas and phone calls.

Table: Milestones Milestones Milestone Create Website Business Cards and flyers Create LLC Join ASID Facebook presence placemat marketing Contact realtors Contact Pier One Contact Target Contact Big Lots Totals Start Date 11/14/2010 11/28/2010 11/28/2010 11/28/2010 11/28/2010 11/28/2010 11/28/2010 11/14/2010 11/14/2010 11/14/2010 End Date 12/28/2010 12/28/2010 12/28/2010 12/28/2010 12/28/2010 12/28/2010 12/28/2010 12/14/2010 12/14/2010 12/14/2010 Budget $10 $300 $90 $100 $0 $150 $300 $100 $100 $100 $1,250 Manager CO CO CO CO CO CO CO CO CO CO

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7.0 Management Summary At this point, Cindy Olson will manage all aspects of the business. Cindy Olson has a strong marketing and management background including over 10 years of retail management experience. Cindy Olson is also an MBA student at SVSU and a marketing instructor at the Tuscola Technology Center in Caro, Michigan. Cindy Olson has a passion for merchandising and design and is currently in charge of all of the display windows at the Tuscola Technology Center in Caro. Furthermore, Mike Olson will be contracted occasionally to complete larger projects such as painting and carpentry. Mike Olson will not manage any of the day-to-day operations of the business. Cindy Olson will remain in charge at all times. Tuscola Technology Center Marketing Students may also be contracted on an hourly basis to help with labor. Contracted costs for the students have been included in the additional costs of sales section in the income statement. 7.1 Personnel Plan The owner is taking a very low salary since she is currently working as a teacher at the Tuscola Technology Center in Caro, Michigan. Therefore, the majority of the profits can be put back into the business for the first three years of operation. If demand exceeds the owner's forecast, the hiring of a part-time employee will be a viable option.

8.0 Financial Plan 8.1 Start-up Funding The start up costs will consist primarily of equipment and materials to start the staging business in addition to a storage facility to be built on the Olson property. Sufficient cash will be available at start up to fund additional accessories when the business owner is making contacts with suppliers to use their materials in exchange for advertising. In other words, if the owners attempts to include embedded marketing fail at the onset, cash will be used to purchase accessories and other staging materials. Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised

$400 $12,500 $12,900 $7,500 $5,000 $0 Page 15

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Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Cindy Olson Mike Olson Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital Total Capital and Liabilities Total Funding 8.2 Important Assumptions

$5,000 $12,500

$2,000 $5,000 $0 $0 $7,000

$900 $5,000 $0 $5,900 ($400) $5,500 $12,500 $12,900

Cash and a low interest rate credit card will be used to manage the business. Staging accessories will be the main expense for the business. All the labor will be supplied by Cindy and Mike Olson. 8.3 Break-even Analysis With the mean and lean strategy, break even should be achievable. Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $1,545 16% $1,293 Page 16

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8.4 Projected Profit and Loss The strategy for Olson Interiors is mean and lean. The owner and her partner, Mike Olson, are collecting only small salaries so that the majority of the profits can be put back into the business. Cindy and Mike both have decent paying jobs where they can afford to collect only a meager salary from this business at the onset. Moreover, this is a service business with out a brick and mortar site. Day- to-day operations will take place out of the Olson household where Cindy Olson will utilize her own computer workstation to handle email, telephone calls and web marketing. Olson Interiors will provide a wow factor" every time so a small amount of money has been allocated for additional costs of sales. As the business grows, the hiring of a part-time employee will be considered to handle some of the more taxing physical labor. Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % 2011 $60,043 $9,807 $3,149 $12,956 $47,087 78.42% 2012 $64,700 $11,000 $3,000 $14,000 $50,700 78.36% 2013 $69,000 $12,200 $3,000 $15,200 $53,800 77.97% Page 17

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Expenses Payroll Marketing/Promotion Depreciation Payroll Taxes printing travel expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$7,000 $1,475 $996 $1,243 $1,200 $3,600 $15,514 $31,573 $32,569 $825 $9,224 $21,523 35.85%

$9,000 $1,500 $2,000 $1,500 $1,500 $4,000 $19,500 $31,200 $33,200 $1,067 $9,040 $21,093 32.60%

$13,000 $1,500 $3,000 $1,700 $2,000 $5,000 $26,200 $27,600 $30,600 $1,301 $7,890 $18,409 26.68%

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8.5 Projected Cash Flow As for mentioned, the mean and lean strategy will also provide for adequate cash flow. The business owner is also able to supplement with her own personal savings whenever necessary. Pro Forma Cash Flow 2011 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations $60,043 $60,043 $0 $660 $0 $1,656 $0 $0 $0 $62,359 2011 $7,000 $29,698 $36,698 $64,700 $64,700 $0 $700 $0 $2,000 $0 $0 $0 $67,400 2012 $9,000 $30,753 $39,753 $69,000 $69,000 $0 $640 $0 $1,344 $0 $0 $0 $70,984 2013 $13,000 $34,427 $47,427 Page 20 2012 2013

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Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$0 $0 $0 $0 $0 $0 $0 $36,698 $25,661 $30,661

$0 $0 $0 $0 $0 $0 $0 $39,753 $27,647 $58,309

$0 $0 $0 $0 $0 $0 $0 $47,427 $23,557 $81,865

8.6 Projected Balance Sheet The following table presents the balance sheet for Olson Interiors. Pro Forma Balance Sheet 2011 Assets Current Assets Cash Other Current Assets Total Current Assets $30,661 $500 $31,161 $58,309 $500 $58,809 $81,865 $500 $82,365 Page 21 2012 2013

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Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth 8.7 Business Ratios

$7,000 $996 $6,004 $37,165 2011 $826 $2,660 $0 $3,486 $6,656 $10,142 $5,900 ($400) $21,523 $27,023 $37,165 $27,023

$7,000 $2,996 $4,004 $62,813 2012 $2,680 $3,360 $0 $6,040 $8,656 $14,696 $5,900 $21,123 $21,093 $48,117 $62,813 $48,117

$7,000 $5,996 $1,004 $83,369 2013 $2,843 $4,000 $0 $6,843 $10,000 $16,843 $5,900 $42,217 $18,409 $66,526 $83,369 $66,526

Industry profile ratio were based on the sic code for Interior Design which was the closest match. Ratio Analysis 2011 Sales Growth Percent of Total Assets Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth n.a. 1.35% 83.85% 16.15% 100.00% 9.38% 17.91% 27.29% 72.71% 2012 7.76% 0.80% 93.63% 6.37% 100.00% 9.62% 13.78% 23.40% 76.60% 2013 6.65% 0.60% 98.80% 1.20% 100.00% 8.21% 11.99% 20.20% 79.80% Industry Profile 13.07% 53.58% 70.11% 29.89% 100.00% 37.94% 54.53% 92.47% 7.53% Page 22

Olson Interiors

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

100.00% 78.42% 42.58% 2.46% 52.58% 8.94 8.94 27.29% 113.78% 82.73% 2011 35.85% 79.65% 36.96 27 1.62 0.38 0.34 $27,675 38.25 0.62 9% 8.94 2.22 0.00

100.00% 78.36% 45.76% 2.32% 48.22% 9.74 9.74 23.40% 62.63% 47.97% 2012 32.60% 43.84% 12.17 20 1.03 0.31 0.41 $52,769 29.25 0.97 10% 9.74 1.34 0.00

100.00% 77.97% 51.29% 2.17% 40.00% 12.04 12.04 20.20% 39.53% 31.55% 2013 26.68% 27.67% 12.17 29 0.83 0.25 0.41 $75,522 21.22 1.21 8% 12.04 1.04 0.00

100.00% 59.56% 28.35% 1.21% 8.19% 1.24 1.18 92.47% 696.33% 52.41% n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a

Page 23

Appendix Sales Forecast Jan Sales Package A Package B Package C Package D Total Sales Direct Cost of Sales basic accessories window treatments and bedding furniture and paint Subtotal Direct Cost of Sales $200 $115 $500 $0 $815 Jan $100 $200 $0 $300 Feb $2,158 $400 $2,020 $2,000 $6,578 Feb $100 $400 $300 $800 Mar $300 $600 $1,000 $2,000 $3,900 Mar $100 $400 $300 $800 Apr $300 $600 $1,500 $2,000 $4,400 Apr $100 $400 $300 $800 May $450 $800 $1,500 $2,000 $4,750 May $150 $450 $300 $900 Jun $500 $1,000 $2,000 $4,000 $7,500 Jun $100 $600 $300 $1,000 Jul $700 $1,200 $2,500 $4,500 $8,900 Jul $150 $600 $500 $1,250 Aug $700 $1,200 $2,000 $4,000 $7,900 Aug $150 $600 $300 $1,050 Sep $500 $1,000 $1,500 $3,500 $6,500 Sep $100 $500 $300 $900 Oct $500 $1,000 $1,000 $2,000 $4,500 Oct $100 $400 $300 $800 Nov $400 $800 $1,000 $1,000 $3,200 Nov $100 $400 $300 $800 Dec $200 $400 $500 $0 $1,100 Dec $100 $200 $107 $407

Page 1

Appendix Personnel Plan Cindy Olson Mike Olson Total People Total Payroll Jan $400 $100 2 $500 Feb $400 $100 2 $500 Mar $400 $100 2 $500 Apr $400 $100 2 $500 May $400 $100 2 $500 Jun $400 $100 2 $500 Jul $400 $100 2 $500 Aug $400 $100 2 $500 Sep $400 $100 2 $500 Oct $400 $100 2 $500 Nov Dec $400 $1,000 $100 $500 2 2 $500 $1,500

Page 2

Appendix Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov $815 $6,578 $3,900 $4,400 $4,750 $7,500 $8,900 $7,900 $6,500 $4,500 $3,200 $300 $800 $800 $800 $900 $1,000 $1,250 $1,050 $900 $800 $800 $200 $200 $200 $200 $300 $350 $400 $400 $350 $300 $49 $500 $1,000 $1,000 $1,000 $1,200 $1,350 $1,650 $1,450 $1,250 $1,100 $849 $315 38.65% $5,578 $2,900 $3,400 $3,550 $6,150 $7,250 $6,450 $5,250 $3,400 $2,351 84.80 74.36 77.27 74.74 82.00 81.46 81.65 80.77 75.56 73.47 % % % % % % % % % % Dec $1,100 $407 $200 $607 $493 44.82%

Expenses Payroll Marketing/Promotion Depreciation Payroll Taxes printing travel expenses Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

15 % 0%

$500 $400 $83 $100 $100 $300 $1,483

$500 $150 $83 $100 $100 $300 $1,233

$500 $20 $83 $100 $100 $300 $1,103 $1,797 $1,880 $63 $520

$500 $20 $83 $100 $100 $400 $1,203 $2,197 $2,280 $65 $640

$500 $20 $83 $100 $100 $400 $1,203 $2,347 $2,430 $66 $684

$500 $235 $83 $100 $100 $400 $1,418 $4,732 $4,815 $68 $1,399

$500 $20 $83 $100 $100 $400 $1,203 $6,047 $6,130 $70 $1,793

$500 $150 $83 $100 $100 $350 $1,283 $5,167 $5,250 $71 $1,529

$500 $20 $83 $100 $100 $350 $1,153 $4,097 $4,180 $73 $1,207

$500 $20 $83 $100 $100 $200 $1,003 $2,397 $2,480 $74 $697

$500 $20 $83 $100 $100 $100 $903 $1,448 $1,531 $76 $412 $960 30.01 %

$1,500 $400 $83 $143 $100 $100 $2,326 ($1,833) ($1,750) $78 ($573) ($1,337) 121.59 % Page 3

($1,168) $4,345 ($1,085) $4,428 $60 $62 ($368) $1,285

($860) $2,998 $1,214 $1,493 $1,596 $3,265 $4,184 $3,567 $2,817 $1,626 45.58 31.12 33.92 33.61 43.53 47.01 45.15 43.34 36.13 105.47 % % % % % % % % % %

Appendix

Page 4

Appendix Pro Forma Cash Flow Jan Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Longterm Assets New Investment Received Subtotal Cash Received Expenditures Expenditures Page 5 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$815 $815

$6,578 $6,578

$3,900 $3,900

$4,400 $4,400

$4,750 $4,750

$7,500 $7,500

$8,900 $8,900

$7,900 $7,900

$6,500 $6,500

$4,500 $4,500

$3,200 $3,200

$1,100 $1,100

0.00%

$0 $55 $0 $138 $0 $0 $0 $1,008 Jan

$0 $55 $0 $138 $0 $0 $0 $6,771 Feb

$0 $55 $0 $138 $0 $0 $0 $4,093 Mar

$0 $55 $0 $138 $0 $0 $0 $4,593 Apr

$0 $55 $0 $138 $0 $0 $0 $4,943 May

$0 $55 $0 $138 $0 $0 $0 $7,693 Jun

$0 $55 $0 $138 $0 $0 $0 $9,093 Jul

$0 $55 $0 $138 $0 $0 $0 $8,093 Aug

$0 $55 $0 $138 $0 $0 $0 $6,693 Sep

$0 $55 $0 $138 $0 $0 $0 $4,693 Oct

$0 $55 $0 $138 $0 $0 $0 $3,393 Nov

$0 $55 $0 $138 $0 $0 $0 $1,293 Dec

Appendix from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Longterm Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $500 $36 $536 $500 $1,155 $1,655 $500 $2,967 $3,467 $500 $2,111 $2,611 $500 $2,333 $2,833 $500 $2,607 $3,107 $500 $3,668 $4,168 $500 $4,120 $4,620 $500 $3,728 $4,228 $500 $3,073 $3,573 $500 $2,270 $2,770 $1,500 $1,630 $3,130

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0

$0 $0 $0 $536 $472 $5,472

$0 $0 $0 $1,655 $5,116 $10,58 8

$0 $0 $0 $3,467 $626 $11,21 4

$0 $0 $0 $2,611 $1,982 $13,19 6

$0 $0 $0 $2,833 $2,110 $15,30 6

$0 $0 $0 $3,107 $4,586 $19,89 3

$0 $0 $0 $4,168 $4,925 $24,81 8

$0 $0 $0 $4,620 $3,473 $28,29 1

$0 $0 $0 $4,228 $2,465 $30,75 5

$0 $0 $0 $3,573 $1,120 $31,87 5

$0 $0 $0 $2,770 $623 $32,49 8

$0 $0 $0 $3,130 ($1,837 ) $30,661

Page 6

Appendix Pro Forma Balance Sheet Jan Assets Current Assets Cash Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Longterm Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Starting Balances Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$5,000 $500 $5,500

$5,472 $500 $5,972

$10,58 8 $500 $11,08 8

$11,21 4 $500 $11,71 4

$13,19 6 $500 $13,69 6

$15,30 6 $500 $15,80 6

$19,89 3 $500 $20,39 3

$24,81 8 $500 $25,31 8

$28,29 1 $500 $28,79 1

$30,75 5 $500 $31,25 5

$31,87 5 $500 $32,37 5

$32,49 8 $500 $32,99 8

$30,66 1 $500 $31,16 1

$7,000 $0 $7,000 $12,500

$7,000 $83 $6,917 $12,88 9 Jan

$7,000 $166 $6,834 $17,92 2 Feb

$7,000 $249 $6,751 $18,46 5 Mar

$7,000 $332 $6,668 $20,36 4 Apr

$7,000 $415 $6,585 $22,39 1 May

$7,000 $498 $6,502 $26,89 5 Jun

$7,000 $581 $6,419 $31,73 7 Jul

$7,000 $664 $6,336 $35,12 7 Aug

$7,000 $747 $6,253 $37,50 8 Sep

$7,000 $830 $6,170 $38,54 5 Oct

$7,000 $913 $6,087 $39,08 5 Nov

$7,000 $996 $6,004 $37,16 5 Dec

$0 $2,000

$1,055 $2,055

$2,897 $2,110

$2,033 $2,165

$2,247 $2,220

$2,485 $2,275

$3,530 $2,330

$3,995 $2,385

$3,625 $2,440

$2,997 $2,495

$2,215 $2,550

$1,601 $2,605

$826 $2,660 Page 7

Appendix Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $2,000 $0 $3,110 $0 $5,007 $0 $4,198 $0 $4,467 $0 $4,760 $0 $5,860 $0 $6,380 $0 $6,065 $0 $5,492 $0 $4,765 $0 $4,206 $0 $3,486

$5,000 $7,000 $5,900 ($400) $0 $5,500 $12,500

$5,138 $8,248 $5,900 ($400) ($860) $4,640 $12,88 9 $4,640

$5,276 $10,28 3 $5,900 ($400) $2,139 $7,639 $17,92 2 $7,639

$5,414 $9,612 $5,900 ($400) $3,353 $8,853 $18,46 5 $8,853

$5,552 $10,01 9 $5,900 ($400) $4,845 $10,34 5 $20,36 4 $10,34 5

$5,690 $10,45 0 $5,900 ($400) $6,442 $11,94 2 $22,39 1 $11,94 2

$5,828 $11,68 8 $5,900 ($400) $9,706 $15,20 6 $26,89 5 $15,20 6

$5,966 $12,34 6 $5,900 ($400) $13,89 1 $19,39 1 $31,73 7 $19,39 1

$6,104 $12,16 9 $5,900 ($400) $17,45 8 $22,95 8 $35,12 7 $22,95 8

$6,242 $11,73 4 $5,900 ($400) $20,27 5 $25,77 5 $37,50 8 $25,77 5

$6,380 $11,14 5 $5,900 ($400) $21,90 0 $27,40 0 $38,54 5 $27,40 0

$6,518 $10,72 4 $5,900 ($400) $22,86 1 $28,36 1 $39,08 5 $28,36 1

$6,656 $10,14 2 $5,900 ($400) $21,52 3 $27,02 3 $37,16 5 $27,02 3

$5,500

Page 8