ExpectingU.com projects the gross margin to be at approximately 65% percent. Sales projections for Year 1 are over $1,000,000. A monthly breakdown of the cash-flow analysis, balance sheet, business ratio, break-even analysis, and other financial details are shown in the appendix. Annual projections will be highlighted in the following sub-topics.
The company owner, Mary Lenton, will use personal funds to finance the start of this business. Since a home office is already established and there is a large area in the basement available for inventory storage, the primary start-up costs are associated with website store design, starting inventory, and licensing approval.
The following table and charts show the projected profit and loss. Monthly projections are included in the appendix.
We must track our eBay and PayPal fees to make sure they are projected appropriately in the Other Cost of Goods section in the Profit and Loss statement. As we gain experience with what the average cost is for Item Fees, Final Value Fees, and PayPal fees, we may need to change the Profit and Loss table to reflect the correct cost. At this point we have placed high estimates to make sure that we are realistic about the cost of doing business on eBay.
The fees are based on the following:
eBay fees (only apply to eBay store sales):
Insertion fee of $.35 per item, plus Final Fee at 5.25% of total sale price on each sale
PayPal fees (apply to all sales):
First two months: Standard rate of $0.30 per sale, plus 2.9% of total sale price on each sale
Afterwards: Merchant rate of $0.30 per sale, plus 2.5% of total sale price on each sale*
These fees are very conservative, assuming that each unit sale is one complete sale. It is likely that at least 1/5 of our sales in the heavy sales months will be for multiple shirts, since pregnant couples often know other pregnant couples and buy each other gifts.
We will also be spending marketing dollars to promote our products with eBay's promotion tools. We want to make sure that we have enough money to buy some search placements as well as buying "bolded" listings in the eBay search results. As we sell more items we will adjust the marketing expenses either lower or higher -- depending on what is working for us.
*Obtaining the lower merchant rate requires qualifying, both in terms of account in good standing and dollar amount of sales in previous month. Based on our research, we don't expect any problems meeting either of those goals early in our plan.
The monthly cash flow is shown in the illustration, with one bar representing cash flow per month and the other representing the monthly balance. The annual cash flow figures are included in the following table.
The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. Industry profile ratios based on the North American Industry Classification (NAICS) and Standard Industrial Classification (SIC) data for the Maternity Wear industry.