Business Analysis Publishing Business Plan

We want to finance growth mainly through free cash flow. We recognize that this means we will have to grow more slowly than we might like. We think that this strategy of more conservative financial management makes sense since we are not trying to create a conglomerate financial company, rather one that focuses on what we believe to be our core competencies and interests. We believe in financing opportunities that add value to our company from a cost/benefit analysis perspective. However, we will not blindly invest our resources in endeavors that do not have a high likelihood of bearing fruit in the future.

7.1 Important Assumptions

Our most important assumption is regarding the arrangement we have obtained with Vista whereby we are in essence being subsidized 100% for the first year. Vista, nonetheless, currently charges regular paying customers $100/month or $599/year.

7.2 Key Financial Indicators

We foresee steadily rising service revenues starting in June of 2001. Our initial objectives for client retention should lend itself directly to our sales forecasts. It is important to note that these goals as stated are extremely subjective to change once we begin operating and acquire a better feel for our market.

7.3 Break-even Analysis

By the beginning of the second year, assuming that we pay the costs related to Vista’s services, and assuming 10 analysts on the payroll, the Break-even Analysis below shows what is needed in sales to break even.

7.4 Projected Profit and Loss

The Wonderkind should be a profitable entity following the first year. This is possible because of our minimal start-up expenses and projections for consistent sales growth. Also, our arrangement with Vista for a full year’s worth of service free of charge is a substantial financial subsidy. The primary expenses incurred will be marketing and payroll. Marketing expenses will include printing fees for brochures to be distributed and other promotional initiatives.

The following table shows the Projected Profit and Loss for The Wonderkind.

7.5 Projected Cash Flow

The following chart and table show the Projected Cash Flow for The Wonderkind.

7.6 Business Ratios

The Industry standard ratios are for the Other Management Consulting service industry, NAICS code 541618. A quick comparison between the industry standards and Wonderkind shows that our company is in a class all by itself. Therefore, some explanation is necessary. First of all, because it is primarily an Internet company, all sales will be on credit. This means that the company has a very high amount of accounts receivable. In addition, the company has a very high gross margin for the same reasons. Furthermore, because it is a service company utilizing currently owned assets, the company has few long-term assets. We expect the company to have a decreasing net worth as the sales growth slows down, however it may seem abnormally high for some time.

7.7 Projected Balance Sheet

The table below is the Project Balance Sheet.