Fishing Equipment Business Plan

Financial Plan

The financial plan will require outside sources of funds. It is hoped that this amount can be obtained from the SBA. Seacliff has already succeeded in attracting significant private funding through the sale of common stock. This source of funds is still attractive due to the exciting features of the patent. It is assumed that the necessary funding will be found, and that it will be repaid in the first year.

7.1 Break-even Analysis

In the first year of operations, monthly expenses are projected to include interest expenses on initial borrowing. Although some sales will certainly come via Seacliff's website at close to the suggested retail price of $129.95, for purposes of determining the break-even point we have assumed that all kits will be sold through the full distribution channel (representative, wholesaler, retailer).

The break-even chart shows the number kits needed to be sold each month to cover all variable and fixed costs. If we capitalize start-up costs (see section 2.2, Start-up Summary) and amortize them over five years and then added this to monthly fixed costs the break-even point would increase kits per month sold.

7.2 Important Assumptions

Although there is likely to be sales of replacement items from the kits, such as barbs, epoxy, etc. (see price list in the appendix) these items have been ignored in this business plan for projection purposes. The following table outlines the basic assumptions of Seacliff.

**appendix were not available for this sample plan.

7.3 Business Ratios

The following table outlines the important ratios of the sports and athletic goods manufacturing industry, as described in the Standard Industry Classification (SIC) Index, 3949.

7.4 Projected Profit and Loss

Because virtually all aspects of the production of the kits are being subcontracted, the ongoing monthly expenses are relatively small.

• Advertising and Promotion: The main focus is to try to get as much free publicity as possible. Once a licensee has been located to market the Supreme, sales of the kits will benefit from the advertising and promotional efforts of the licensee. However, some point-of-sale advertising is likely to be needed (assume $500 monthly). An extra $400 will be needed to join the ASA in January 2001, and to participate in the ASA trade show in July will require an additional $2,500.
• Travel: Travel to trade shows, with the connected hotel and meal expenses, we estimate at $600 monthly.
• Miscellaneous: We will allot $200 per month to cover any unexpected expenses.
• Depreciation: The only fixed assets that will be depreciated are minor pieces of office equipment which will be depreciated over three years at $75 per month. The larger fixed asset (patent number 6,038,806) of $480,000 will not depreciate.
• Utilities: Utilities are basically telephone, heat, and Internet connection. Assume $200 monthly in year one, increasing to $300 in years two and three.
• Insurance: Standard business liability insurance should be arranged. Assume $1,200 yearly.
• Rent: Free office space is available in premises owned by a family member.
• Consultants: A provision is being made to cover periodic review and updating of the business plan. Assume $2,400 annually.

7.5 Projected Cash Flow

The initial borrowing will be repaid monthly, beginning in the third month.

7.6 Projected Balance Sheet

The annual figures for the Pprojected Balance Sheet are presented below. First year monthlies are available in the appendix.