Gifts, Novelties, Souvenir Business Plan

Financial Plan

The initial funding from investors (ABC Company and XYZ Company) will enable us to renovate the space and buy initial inventory. With heavy marketing and outreach to customers who work outside the Avant-garde Building, we expect to pass the break-even point early in the second year of this plan.

We will keep costs to a minimum: 2 full-time employees will run the shop, while advisors and directors from AMC Company will oversee operations under their existing duties at PT. ABC Company. We will begin paying dividends to these investors in the second year.

Please note that all tables and charts show data in 1,000's of Indonesian Rupiah (Rp.).

8.1 Start-up Funding

Approximately Rp. 166,597,000 will be needed from the shareholders for these purposes. Some of the funding is priority as it's crucially important to go on to the next step of development. The remainder of the start-up capital required, for the continuation of operations, will be provided by the end of the project. We will start paying dividends to the investors in year two of operations (see Cash Flow table for details).

8.2 Important Assumptions

• We assume that we at least secured our purchase of merchandise in the first two years of operation.
• All employees except Store Staff are working under Interim Management Team.
• The Avant-Garde Shop assumes a medium growth in the beginning, without major recession.
• The Avant-Garde Shop assumes of course that there are no unforeseen significant increase of the retail space.

8.3 Key Financial Indicators

The key indicators of financial success are all positive in our plan: increasing sales, increasing control over costs, and increasing profit margins.

8.4 Break-even Analysis

Our break-even analysis is summarized by the following chart and table (all numbers in 1,000's of Rupiah). At a 28% variable (direct) cost of goods, we will break-even when monthly sales hit Rp. 8,022,000. We will reach the break-even point early in our second year.

8.5 Projected Profit and Loss

The following chart and table indicates projected profit and loss. Our rent is the highest operating expense, at Rp. 28,000,000 per month, because of the high cost per square meter inside the Avant-Garde Building.

8.6 Projected Cash Flow

Cash flow projections are critical to our success. The following table shows cash flow for the first three years, and the chart illustrates monthly cash flow in the first year. Monthly cash flow projections are included in the appendix. This table shows our planned dividends paid out to investors in the second and third years.

8.7 Projected Balance Sheet

The table shows the annual balance sheet results. After the first year, when we establish profitability, we project a steady growth in net worth despite dividend payments to initial investors. Detailed monthly projections are in the appendix.

8.8 Business Ratios

The following table outlines some of the more important ratios from the Gift, Novelty, and Souvenir Shop industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5947.