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Table of Contents
Table of Contents
Page 2
BikeArt
BikeArt will leverage its competitive advantage of existing in a niche market by being the only
retailer that exclusively deals with bicycle artwork. Since the mall gets lots of foot traffic all day,
it is like having your own show room in the middle of the hallway of a crowded mall.
Page 1
BikeArt
Success
The company plans to grow slowly and establish a sustainable level of sales and cash flow
before seeking to expand. Once this is done, BikeArt will seek to set up other kiosks in Salem,
Corvallis, and Portland. This expansion is estimated to occur sometime after year three.
The Break-even Analysis indicates $15,212 is needed in monthly revenue to reach the breakeven point. Pricing of BikeArt's products will be based on a desired net margin of 12%. Because
BikeArt's products will be locally created works of art, prices are estimated to range from $40 to
$500 per piece.
The business is forecasted to reach profitability by month nine and will have revenues of
$147,000 and profits of $35,500 by the end of year two.
1.1 Mission
BikeArt's mission is to provide the customer with functional items and art work made out of
recycled bicycle parts. 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.
1.2 Objectives
The objectives for the first three years of operation include:
To create a product-based kiosk whose primary goal is to exceed customer's expectations.
The increase in the number of products sold by 20% each year.
To develop a sustainable retail outlet that sells artwork and functional items made out of
recycled parts.
Page 2
BikeArt
Chart: Highlights
Wheeled kiosk.
Cash register.
Computer system with printer and Internet connection.
Desk, chair, and file cabinet.
Legal fees associated with business formation and contract review.
Page 3
BikeArt
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Insurance
Rent
Other
Total Start-up Expenses
$300
$0
$0
$0
$300
Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets
$41,600
$0
$0
$3,100
$44,700
Total Requirements
$45,000
Page 4
BikeArt
$300
$44,700
$45,000
Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets
$3,100
$41,600
$0
$41,600
$44,700
$0
$20,000
$0
$0
$20,000
Capital
Planned Investment
Steve
Other
Additional Investment Requirement
Total Planned Investment
$25,000
$0
$0
$25,000
($300)
$24,700
$44,700
Total Funding
$45,000
Page 5
BikeArt
Chart: Start-up
3.0 Products
BikeArt will sell artwork manufactured from recycled bicycle parts. The art work will be made
by three local artists, one of which is Steve's wife Shoodnt. Some of the featured products are:
wall clocks, picture frames, chairs, tables, mobiles, wind chimes, book ends, kitchen utensil
holders, and many other products.
4.0 Market Analysis Summary
BikeArt's customers can be broadly classified from coming from two different groups, those that
appreciate industrial design artwork, and those who are bicycle enthusiasts and value anything
having to do with cycling.
Being based in Eugene is very fortuitous for BikeArt. Eugene is a progressive city which tends
to favor more industrial tastes compared with more conservative towns. Eugene is also a
bicycling mecca, known nationwide for its affinity for cycling. Having such a high concentration
of cycling enthusiasts provides a large population base of prospective customers.
Page 6
BikeArt
Market Analysis
Potential Customers
Growth
8%
10%
9.39%
Year 1
Year 2
Year 3
Year 4
Year 5
5,644
12,545
18,189
6,096
13,800
19,896
6,584
15,180
21,764
7,111
16,698
23,809
7,680
18,368
26,048
CAGR
8.00%
10.00%
9.39%
Page 7
BikeArt
Other retailers in the mall. For people that are shopping at BikeArt for gifts for other
people, they are also likely to visit other retailers in the mall. While the other retailers are
not direct competitors, their products will act as a substitute product.
Art galleries. These retailers specifically sell different types of artwork. While some might
specialize or carry a theme of industrial art, none of them sell bicycle-specific art. People
that are looking for a wide range of art work are more likely to go to these retailers.
Bicycle retailers. Some bicycle shops do carry gifts for cycling enthusiasts. Sometimes
this gift section will be art work based on bicycles. Some of BikeArt's artists also sell to
bicycle shops so they might have identical pieces. The bicycle retailers do not however,
have the same selection as BikeArt. As BikeArt grows, they will be able to leverage their
vendors to make BikeArt the exclusive dealer for their bicycle art.
Page 8
BikeArt
Page 9
BikeArt
Sales Forecast
Year 1
Year 2
Year 3
$58,229
$87,531
$145,760
$115,475
$178,745
$294,220
$126,547
$189,785
$316,332
Year 1
$29,115
$43,766
$72,880
Year 2
$57,738
$89,373
$147,110
Year 3
$63,274
$94,893
$158,166
Sales
Industrial art collectors
Bicycling enthusiasts
Total Sales
Direct Cost of Sales
Industrial art collectors
Bicycling enthusiasts
Subtotal Direct Cost of Sales
5.3 Milestones
BikeArt will have several milestones early on:
1. Business plan completion. This will be done as a road map for the organization. While we
do not need a business plan to raise capital, it will be an indispensable tool for the ongoing
performance and improvement of the company.
2. Set up the kiosk.
3. First turnover of inventory.
4. Revenue exceeding $25,000.
Table: Milestones
Milestones
Milestone
Business plan completion
Set up the kiosk
First turnover of inventory
Totals
Start Date
1/1/2001
1/1/2001
1/1/2001
End Date
2/1/2001
2/1/2001
******
Budget
$0
$0
$0
$0
Manager
ABC
ABC
ABC
Department
Marketing
Department
Department
Page 10
BikeArt
Personnel Plan
Year 1
Year 2
Year 3
Steve
Part-time employee
Part-time employee
Part-time employee
Total People
$36,000
$10,100
$10,100
$10,100
4
$40,000
$10,800
$10,800
$10,800
4
$44,000
$10,800
$10,800
$10,800
4
Total Payroll
$66,300
$72,400
$76,400
General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other
Year 1
Year 2
Year 3
1
10.00%
10.00%
25.42%
0
2
10.00%
10.00%
25.00%
0
3
10.00%
10.00%
25.42%
0
Page 11
BikeArt
Break-even Analysis
Monthly Revenue Break-even
$15,212
Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost
50%
$7,606
Page 12
BikeArt
Year 2
Year 3
$145,760
$72,880
$0
$72,880
$294,220
$147,110
$0
$147,110
$316,332
$158,166
$0
$158,166
$72,880
50.00%
$147,110
50.00%
$158,166
50.00%
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
$66,300
$0
$624
$0
$1,200
$1,200
$12,000
$9,945
$0
$72,400
$0
$624
$0
$1,200
$1,200
$12,000
$10,860
$0
$76,400
$0
$624
$0
$1,200
$1,200
$12,000
$11,460
$0
$91,269
$98,284
$102,884
($18,389)
($17,765)
$1,745
$0
$48,826
$49,450
$1,258
$11,892
$55,282
$55,906
$703
$13,872
Net Profit
Net Profit/Sales
($20,134)
-13.81%
$35,676
12.13%
$40,706
12.87%
Sales
Direct Cost of Sales
Other
Total Cost of Sales
Gross Margin
Gross Margin %
Expenses
Page 13
BikeArt
Chart: Cash
Page 14
BikeArt
Year 2
Year 3
$145,760
$145,760
$294,220
$294,220
$316,332
$316,332
$0
$0
$0
$0
$0
$0
$0
$145,760
$0
$0
$0
$0
$0
$0
$0
$294,220
$0
$0
$0
$0
$0
$0
$0
$316,332
Year 1
Year 2
Year 3
$66,300
$97,938
$164,238
$72,400
$197,290
$269,690
$76,400
$188,085
$264,485
$0
$0
$0
$4,783
$0
$0
$0
$169,021
$0
$0
$0
$5,270
$0
$0
$0
$274,960
$0
$0
$0
$5,825
$0
$0
$0
$270,309
($23,261)
$18,339
$19,260
$37,600
$46,023
$83,622
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
Additional Cash Spent
Page 15
BikeArt
Year 2
Year 3
$18,339
$12,204
$0
$30,543
$37,600
$27,220
$0
$64,819
$83,622
$15,588
$0
$99,210
$3,100
$624
$2,476
$33,019
$3,100
$1,248
$1,852
$66,671
$3,100
$1,872
$1,228
$100,438
Year 1
Year 2
Year 3
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
$13,236
$0
$0
$13,236
$16,482
$0
$0
$16,482
$15,367
$0
$0
$15,367
Long-term Liabilities
Total Liabilities
$15,217
$28,453
$9,947
$26,430
$4,123
$19,490
$25,000
($300)
($20,134)
$4,566
$33,019
$25,000
($20,434)
$35,676
$40,242
$66,671
$25,000
$15,242
$40,706
$80,948
$100,438
$4,566
$40,242
$80,948
Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth
Page 16
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
$0
$0
$0
$1,245
$2,245
$3,490
$1,854
$3,258
$5,112
$2,354
$4,214
$6,568
$2,987
$5,214
$8,201
$4,254
$7,245
$11,499
$5,385
$8,457
$13,842
$6,458
$9,365
$15,823
$7,548
$10,255
$17,803
$8,254
$11,547
$19,801
$8,745
$12,687
$21,432
$9,145
$13,044
$22,189
Sales
Industrial art collectors
Bicycling enthusiasts
Total Sales
Direct Cost of Sales
0%
0%
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$0
$623
$927
$1,177
$1,494
$2,127
$2,693
$3,229
$3,774
$4,127
$4,373
$4,573
Bicycling enthusiasts
$0
$1,123
$1,629
$2,107
$2,607
$3,623
$4,229
$4,683
$5,128
$5,774
$6,344
$6,522
$0
$1,745
$2,556
$3,284
$4,101
$5,750
$6,921
$7,912
$8,902
$9,901
$10,716
$11,095
Page 1
Appendix
Table: Personnel
Personnel Plan
Steve
Part-time employee
Part-time employee
Part-time employee
Total People
Total Payroll
0%
0%
0%
0%
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$3,000
$200
$200
$200
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,000
$900
$900
$900
4
$3,600
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
Page 2
Appendix
Table: General Assumptions
General Assumptions
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
10
11
12
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
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%
Plan Month
Other
Month 12
Page 3
Appendix
Table: Profit and Loss
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Sales
$0
$3,490
$5,112
$6,568
$8,201
$11,499
$13,842
$15,823
$17,803
$19,801
$21,432
$22,189
$0
$1,745
$2,556
$3,284
$4,101
$5,750
$6,921
$7,912
$8,902
$9,901
$10,716
$11,095
Other
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1,745
$2,556
$3,284
$4,101
$5,750
$6,921
$7,912
$8,902
$9,901
$10,716
$11,095
Gross Margin
Gross Margin %
$0
$1,745
$2,556
$3,284
$4,101
$5,750
$6,921
$7,912
$8,902
$9,901
$10,716
$11,095
0.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
$3,600
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$52
$52
$52
$52
$52
$52
$52
$52
$52
$52
$52
$52
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Leased Equipment
Utilities
Insurance
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$100
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$1,000
$540
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$855
$0
$5,392
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
$7,807
($5,392)
($6,062)
($5,251)
($4,523)
($3,707)
($2,058)
($886)
$105
$1,095
$2,094
$2,909
$3,288
EBITDA
($5,340)
($6,010)
($5,199)
($4,471)
($3,655)
($2,006)
($834)
$157
$1,147
$2,146
$2,961
$3,340
$163
$160
$157
$154
$151
$147
$144
$141
$137
$134
$130
$127
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Rent
Payroll Taxes
Other
Total Operating Expenses
Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales
15%
($5,555)
($6,222)
($5,408)
($4,677)
($3,857)
($2,205)
($1,030)
($36)
$957
$1,960
$2,779
$3,161
0.00%
-178.29%
-105.79%
-71.21%
-47.03%
-19.17%
-7.44%
-0.23%
5.38%
9.90%
12.97%
14.24%
Page 4
Appendix
Table: Cash Flow
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Cash Sales
$0
$3,490
$5,112
$6,568
$8,201
$11,499
$13,842
$15,823
$17,803
$19,801
$21,432
$22,189
$0
$3,490
$5,112
$6,568
$8,201
$11,499
$13,842
$15,823
$17,803
$19,801
$21,432
$22,189
$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
$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
$3,490
$5,112
$6,568
$8,201
$11,499
$13,842
$15,823
$17,803
$19,801
$21,432
$22,189
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$3,600
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$5,700
$63
$2,036
$5,872
$5,681
$6,324
$7,290
$9,787
$10,435
$11,229
$12,216
$13,208
$13,795
$3,663
$7,736
$11,572
$11,381
$12,024
$12,990
$15,487
$16,135
$16,929
$17,916
$18,908
$19,495
$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
$381
$384
$387
$390
$393
$397
$400
$403
$407
$410
$414
$417
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$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
$4,044
$8,120
$11,959
$11,771
$12,417
$13,386
$15,887
$16,538
$17,336
$18,326
$19,322
$19,912
($4,044)
($4,630)
($6,847)
($5,203)
($4,216)
($1,887)
($2,045)
($715)
$467
$1,475
$2,110
$2,277
Cash Balance
$37,556
$32,926
$26,079
$20,875
$16,659
$14,772
$12,727
$12,011
$12,478
$13,952
$16,062
$18,339
Cash Received
Cash from Operations
Expenditures
0.00%
Page 5
Appendix
Page 6
Appendix
Table: Balance Sheet
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$41,600
$0
$0
$41,600
$37,556
$0
$0
$37,556
$32,926
$1,920
$0
$34,846
$26,079
$2,812
$0
$28,891
$20,875
$3,612
$0
$24,488
$16,659
$4,511
$0
$21,170
$14,772
$6,324
$0
$21,096
$12,727
$7,613
$0
$20,340
$12,011
$8,703
$0
$20,714
$12,478
$9,792
$0
$22,270
$13,952
$10,891
$0
$24,843
$16,062
$11,788
$0
$27,850
$18,339
$12,204
$0
$30,543
$3,100
$0
$3,100
$44,700
$3,100
$52
$3,048
$40,604
$3,100
$104
$2,996
$37,842
$3,100
$156
$2,944
$31,835
$3,100
$208
$2,892
$27,380
$3,100
$260
$2,840
$24,010
$3,100
$312
$2,788
$23,884
$3,100
$364
$2,736
$23,076
$3,100
$416
$2,684
$23,398
$3,100
$468
$2,632
$24,902
$3,100
$520
$2,580
$27,423
$3,100
$572
$2,528
$30,378
$3,100
$624
$2,476
$33,019
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
$0
$0
$0
$0
$1,840
$0
$0
$1,840
$5,684
$0
$0
$5,684
$5,472
$0
$0
$5,472
$6,084
$0
$0
$6,084
$6,964
$0
$0
$6,964
$9,440
$0
$0
$9,440
$10,062
$0
$0
$10,062
$10,823
$0
$0
$10,823
$11,777
$0
$0
$11,777
$12,749
$0
$0
$12,749
$13,338
$0
$0
$13,338
$13,236
$0
$0
$13,236
Long-term Liabilities
Total Liabilities
$20,000
$20,000
$19,619
$21,460
$19,236
$24,920
$18,849
$24,320
$18,459
$24,543
$18,065
$25,029
$17,668
$27,109
$17,268
$27,330
$16,865
$27,688
$16,458
$28,235
$16,048
$28,796
$15,634
$28,972
$15,217
$28,453
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
$25,000
($300)
$0
$24,700
$44,700
$25,000
($300)
($5,555)
$19,145
$40,604
$25,000
($300)
($11,778)
$12,922
$37,842
$25,000
($300)
($17,186)
$7,514
$31,835
$25,000
($300)
($21,863)
$2,837
$27,380
$25,000
($300)
($25,720)
($1,020)
$24,010
$25,000
($300)
($27,924)
($3,224)
$23,884
$25,000
($300)
($28,954)
($4,254)
$23,076
$25,000
($300)
($28,990)
($4,290)
$23,398
$25,000
($300)
($28,033)
($3,333)
$24,902
$25,000
($300)
($26,073)
($1,373)
$27,423
$25,000
($300)
($23,295)
$1,405
$30,378
$25,000
($300)
($20,134)
$4,566
$33,019
Net Worth
$24,700
$19,145
$12,922
$7,514
$2,837
($1,020)
($3,224)
($4,254)
($4,290)
($3,333)
($1,373)
$1,405
$4,566
Assets
Starting Balances
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
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
Page 7