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InteliChild.com

Executive Summary

Introduction
InteliChild.com offers bright children an entertaining place to interact with each other, the Web, educators, and the world in general. It generates traffic first, valuation for investors, and eventually commerce and profits. It is a healthy place for kids to play, for parents and schools to buy, and a creative and fair work environment for employees.

The InteliChild.com e-commerce project is the natural evolution for the InteliChild.com Internet presence. The site will market and sell selected toys, books, and software products. It will also produce Web products and Web applications that will increase market share, promote name recognition, and maximize efficiency.

The Company
The present InteliChild.com is a start-up company with four full-time employees. The company was incorporated as a California C corporation owned by its principal founders, at 25% ownership each. (Name Omitted) Capital partners acquired 50% of the company. The company has a single office. The initial website is at www.citruscoolkids.com.

Our key competitive advantage is the in-house knowledge base we have developed. Our competitor spends five to 10 times the amount of money we do outsourcing to expensive companies for services we perform in-house. The same will take place with the InteliChild.com website. We already have the SQL™ server and ColdFusion™ programming expertise, and we will be adding the Flash™ integration of these skills.

Products and Services
InteliChild will be offering a steadily increasing mix of three lines of products:

  • Toys and Games: carefully selected toys and games that appeal to the target market, the parents of the target market, and educators.
  • Books: there should be a selection of books that appeal specifically to the parents and educators of the target market, so that these interested adults can go to this site and order books about their children. In addition, of course there is also a selection of books to be ordered by and for the kids to read.
  • Software: carefully selected software to appeal to the target market and target parents and educators.

The Internet reinvents itself every three months, or even faster. Therefore, our strategy for future development is to remain positioned with enough flexibility to adapt new technologies, and adapt to changes quickly.

The Market
The InteliChild.com market has been expanding exponentially with the advances of technology in the teaching sectors and the acceptance of technology as a teaching aid. The critical component to our entrance into the market will be approval and support from the school communities – including teachers, the PTA, and special education programs.

Our primary target markets include these four areas:

  1. The kids themselves.
  2. Parents.
  3. Educational institutions for children of the upper class.
  4. Self-teaching families.

While we have plans to expand into international territory, our initial launch will target our most important market – the American upper class. We know that most of our clients drive BMW’s and have very good taste – they spend money on their children because they can appreciate the technology that we have created. They also generally have high bandwidth connections, and are impressed by first-class design.

Financial Considerations
Our start-up costs are high because of our commitment to dominate the Internet market place.

The Break-even Analysis indicates we reach steady-state break-even in this first year.

The sales forecast is based on increasing website traffic and increasing sales per unique user session. Sales are projected to rise exponentially from Year 1 to Year 3. The forecast obviously depends on traffic increase. We plan to lose money for at least three years while we build traffic and develop our position for the long-term future.

Childrens website business plan, executive summary chart image

Objectives

  • Traffic, as measured in unique user sessions: 100,000 unique user sessions in June, Year 1; 450,000 in December, Year 1; 3.5 million in Year 2; and 5 million in Year 3.
  • Sell-through, as measured in dollar sales per unique visit: a high of $0.58 per unique visit in December of Year 1; increasing to $0.83 in Year 2; and $0.92 in Year 3.
  • Valuation, as measured in ability to bring in additional investment at economically feasible valuations. We need to attract moderate investment this year, and an additional large infusion in Year 2, with valuation performance that yields attractive internal rate of return (IRR) to investors. The financial section indicates IRR of more than 100% for all investors, with larger IRR for seed, declining slightly for first round and then second round.
  • Acquisition or Initial public offering (IPO) in Year 4, with a valuation of more than $20 million. This assumes of course the market valuations based on sales and earnings, which are relatively high as this plan is written.

Mission

InteliChild.com offers bright children an entertaining place to interact with each other, the Web, educators, and the world in general. It generates traffic first, valuation for investors, and eventually commerce and profits. It is a healthy place for kids to play, for parents and schools to buy, and a creative and fair work environment for employees.

Keys to Success

  1. We must retain the customers. The website has to be easy to use and quickly viewable. User satisfaction is an ultimate priority.
  2. The project will succeed if it can capitalize on the traffic that InteliChild.com produces, and turn the user sessions into dollars through the commerce site.
  3. The sales process must be easy to administer and flexible enough to accommodate the needs of InteliChild, which is not ready to take on more employees to do so.
  4. The e-commerce project should further establish InteliChild.com presence as a technology leader, not only returning traffic but actually bringing in new traffic.
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Company Summary

The present InteliChild.com is a start-up company with four full time employees. We are a high-powered team of creative individuals. The company creates an Internet environment attractive to bright kids, and is planning to sell toys, books, and software to those kids, their parents, and schools. Our products will be the best reviewed in our niche.

Start-up Summary

Our start-up costs reflect of our commitment to dominate the Internet market place.

Our development costs are high, but because we are now located in Oregon instead of the Silicon Valley, our human resources costs are not as high as they might be – particularly for the talented programmers that we need. Marketing expenses are also high, but spending on the costly development of this site without promoting it appropriately would make it difficult to gather together the traffic necessary to make this a success.

Our location leverages our partner potential, even though we are paying a premium for space and for talent due to development costs.

Childrens website business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $33,750
Start-up Assets to Fund $499,000
Total Funding Required $532,750
Assets
Non-cash Assets from Start-up $5,000
Cash Requirements from Start-up $494,000
Additional Cash Raised $0
Cash Balance on Starting Date $494,000
Total Assets $499,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Owner $0
Investor $0
Additional Investment Requirement $532,750
Total Planned Investment $532,750
Loss at Start-up (Start-up Expenses) ($33,750)
Total Capital $499,000
Total Capital and Liabilities $499,000
Total Funding $532,750
Start-up
Requirements
Start-up Expenses
Legal $1,000
Software $2,500
Design Work $5,000
Programming $15,000
Insurance $250
Rent $500
Research and Development $1,000
Hosting Setup $3,500
Other $5,000
Total Start-up Expenses $33,750
Start-up Assets
Cash Required $494,000
Start-up Inventory $0
Other Current Assets $5,000
Long-term Assets $0
Total Assets $499,000
Total Requirements $532,750

Company Ownership

The company was incorporated as a California C corporation owned by its principal founders, at 25% ownership each.  (Name Omitted) Capital partners acquired 50% of the company.

Company Locations and Facilities

The company has a single office. Its important website and Internet infrastructure situation is explained in detail later in this plan. The initial website is at www.citruscoolkids.com.

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Products

InteliChild will be offering a steadily increasing mix of three lines of products:

  1. Toys and Games: carefully selected toys and games that appeal to the target market, the parents of the target market, and educators.
  2. Books: there should be a selection of books that appeal specifically to the parents and educators of the target market, so that these interested adults can go to this site and order books about their children.  In addition, of course there is also a selection of books to be ordered by and for the kids to read.
  3. Software: carefully selected software to appeal to the target market and target parents and educators.

Product Description

In the original plan this is a detailed description of the specific toys and games, books, and software that are included on the website.  This level of detail was considered proprietary and was removed from the plan for purposes of illustration.  If you are using this sample plan as an example, then insert here a detailed list of your own products for your own plan.

Competitive Comparison

In the original plan this is a detailed description of and analysis of other channels and sources from which the target market and parents and educators can purchase toys, games, books, and software.  It describes in general some kinds of toy shops, and then specifically some catalog and web businesses that appeal to this audience.

This level of detail was considered proprietary and was removed from the plan for purposes of illustration.  If you are using this sample plan as an example, then insert here a detailed description of your competitors for your plan.

Sales Literature

Our answer to sales literature is the web.  Within six months we should also have a printed catalog that we can send to people to go along with the Web purchasing process, because some buyers will want to refer to a hard-copy catalog. 

Sourcing

In the real plan this section referred in detail to distributors and products they carried.  This detail was considered proprietary and strategic, and was omitted from the sample plan for purposes of illustration. If you are using this plan as an example, then in this section you should have detailed discussion of how the products to be sold can be purchased from manufacturers and distributors.

Technology

The InteliChild.com e-commerce site will be built on a three-tier structure. Driven by SQL™ servers and an IIS™ Web server backed with bandwidth, the site will be coded mostly in ColdFusion™ and ASP™. We will be taking our registration databases live to be able to email updates on products and the website to customers. We will offer customers the option to take themselves out of the list.

The information architecture will be based on four fundamental arenas – the free valuable information arena, the product detail arena, the final purchasing arena, and the purchase administration area.

The purchase arena will require a Verisign™ certificate and a Cybercash™ connection. That will begin immediately because dealing with Cybercash™ can sometimes be a lengthy process.

The administrative arena will be hosted on mirror servers that query to the live databases for migration into local databases. This server is hidden from Internet traffic and kept under high security even within the company.

The entire set-up will be somewhat costly. We will need five servers, two for in-house reasons, and three for Web hosting reasons. Two of the Web host servers will be serving traffic through ColdFusion™ and ASP™ in cluster, and the third will be a dedicated SQL™ server.

Future Products

The Internet reinvents itself every three months, or even faster. Our strategy for future development is to remain positioned with enough flexibility to adapt new technologies, and adapt to changes quickly.

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Market Analysis Summary

The InteliChild.com market has been expanding exponentially with the advances of technology in the teaching sectors and the acceptance of technology as a teaching aid. The critical component to our entrance into the market will be approval and support from the school communities – including teachers, the PTA, and special education programs.

Market Segmentation

Our primary target markets include these four areas:

  1. The kids themselves. We include ages 5-9 and ages 10-14 in our market statistics because these are the breakdowns available at www.census.gov, and we include only 10% of the total in each category.
  2. Parents. We include 10% of the parents, assuming that leads to an average combined income above $100,000. Most of these people live in suburban areas, but the urban upper class is also a major component. [Editor note: details for this sample plan are not necessarily correct.]
  3. Educational institutions for the children of the upper class. This includes day care and private schools. Penetrating this market is excellent because it generates leads to our other targets. We include 107,000 schools in the U.S. in our table.
  4. Self-teaching families. There is an excellent group of established customers who teach their children from home. The site will benefit greatly from the time available from this target group.
Childrens website business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
U.S. Kids 5-9 2% 1,994,000 2,033,880 2,074,558 2,116,049 2,158,370 2.00%
U.S. Kids 1-14 2% 1,961,200 2,000,424 2,040,432 2,081,241 2,122,866 2.00%
U.S.Parents 2% 12,000,000 12,240,000 12,484,800 12,734,496 12,989,186 2.00%
U.S.Schools 1% 107,000 108,070 109,151 110,243 111,345 1.00%
Home School Families 40% 5,000 7,000 9,800 13,720 19,208 40.00%
Non-U.S.Parents 4% 24,000,000 24,960,000 25,958,400 26,996,736 28,076,605 4.00%
Non-U.S.Schools 0% 225,000 225,000 225,000 225,000 225,000 0.00%
Total 3.20% 40,292,200 41,574,374 42,902,141 44,277,485 45,702,580 3.20%

Target Market Segment Strategy

While we have plans to expand into international territory, our initial launch will target our most important market – the American upper class. We know that most of our clients drive BMW’s and have very good taste – they spend money on their children because they can appreciate the technology that we have created. They also generally have high bandwidth connections, and are impressed by first-class design.

The market for intelligent technological teaching devices is growing exponentially. The key factors driving this growth are the increase in salaries in the technology sectors, the double-income household and the loss of leisure time. Hardworking parents are dedicated to giving their children every educational opportunity possible. Our target market’s behavioral patterns are changing dramatically as well – research used to happen in many places; now increasingly it happens on the Internet.

Market Growth

The macro-environment is the real reason for the urgency of the InteliChild.com e-commerce project. All trends in our market indicate that strong a Web presence will not be a frivolous extra for the company, but rather, an absolute necessity. As mentioned before, the double-income family in the technological sector is doing their research on the Internet. In order to survive, InteliChild.com must be present as a destination for these search results.

Market Needs

The InteliChild.com website will have to reflect its product line – simultaneously fun, easy to use and informative. In order to gain recognition for our site efforts, we are going to have to put together a site that is worthy of attention. The design work should promote the feeling of superior quality. The InteliChild.com attitude will match the company’s inherent value drive – parents and educators will feel guilty not buying into these products.

Industry Analysis

The website industry is exploding. Growth is absurd, amazing. We don’t have business reasons to detail this situation in this plan, our readers are aware of it.

Competition and Buying Patterns

This is sample text describing factors in competition for website use by bright children ages 8-14, for sales to their parents and schools. It details information available about the importance of factors such as pricing, shipment, quality, presentation, etc.

Main Competitors

Our competition is the market leader – and their success is a symbol of our potential market. We were pleased to see their Web division spin-off to its own company that went public with a tremendous initial offering. The market is too large for them to cover entirely, and as a second-best in dollar market share, with better reviews from the critical industry leaders, InteliChild.com stands in a position to expand our business significantly.

Industry Participants

This is sample text describing the different companies addressing the same target market. The real plan included details on which companies sell products (toys, books, or games) into this market. It includes who owns them, how much market share they get (according to available information sources), and what we know about their assorted business models.

Distribution Patterns

This is sample text describing the different websites addressing the same target market. The real plan included details identifying these websites, who owns them, how much traffic they get (according to available information sources), and their assorted business models.

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Web Plan Summary

The primary InteliChild.com strategy is to build an impressive destination website. The marketing of the site will be built around the core value that the site will offer. Although our competition has built a simple store for ordering the product, the InteliChild.com site will be reviewed by Web award companies as a great destination. We will build our revenue and market share around this traffic.

Our business model is based on the sales of our products over the website. Because the site is also intended to increase brand equity and awareness, we are building for high traffic. Our model requires giving users an excellent free experience and to develop trust to increase sell-through. We plan to lose money for at least three years while we build traffic and develop our position for the long-term future.

The traffic forecast is based on increasing sessions, increasing page views per session, and increasing orders per session.  The bottom line called “sell-through” is the overall dollars in order per user session, an important indicator that should be increasing over time.

Website Marketing Strategy

Our first class design and product quality are critical to our positioning as a dot-com company – we should be the best reviewed website in our category, and that will become the key to future sales. In the past, our design work and marketing has not matched our better-funded competitor. However, the core experience for the children has always been better, and with a new design team and a round of financing, the InteliChild.com company is ready to grow with the market. InteliChild.com will distinguish itself from its competitor as a full learning center, rather than just a store front.

Development Requirements

Of course the development needs to match the overall business strategy as explained in the rest of the plan.  This has to be an excellent site or we just haven’t implemented.  That involves both front-end and back-end strategies, as explained in the following topics.

Front End
Because InteliChild.com’s target customers are all affluent, we have the luxury of using the latest technologies to impress the visitors with excellent design and animation. We plan to release the site entirely in Shockwave™ format as almost 90% of our visitors will already have it installed.

We will carry on the colorful and extremely well branded design of our company literature and logo – the decisions on basic aesthetics will not get in the way. The site will have a colorful and intelligent design, taking the ad campaign and product art into an interactive medium on the Web.

Back End
The InteliChild.com e-commerce site will be built on a three-tier structure. Driven by SQL™ servers and an IIS™ Web server backed with bandwidth, the site will be coded mostly in ColdFusion™ and ASP™. We will be taking our registration databases live to be able to email updates on products and the website to customers. We will offer customers the option to take themselves out of the list.

The purchase arena will require a Verisign™ certificate and a Cybercash™ connection. That will begin immediately because dealing with Cybercash™ can sometimes be a lengthy process.

The administrative arena will be hosted on mirror servers that query to the live databases for migration into local databases. This server is hidden from Internet traffic and kept under high security even within the company.

The entire set-up will be somewhat costly. We will need five servers, two for in-house reasons, and three for Web hosting reasons. Two of the Web host servers will be serving traffic through ColdFusion™ and ASP™ in cluster, and the third will be a dedicated SQL™ server.

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Strategy and Implementation Summary

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Strategy Pyramid

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Competitive Edge

Our key competitive advantage is the in-house knowledge base we have developed. Our competitor spends five to 10 times the amount of money we do out-sourcing to expensive companies for services we perform in-house. The same will take place with the InteliChild.com website. We already have the SQL™ server and ColdFusion™ programming expertise, and we will be adding the Flash™ integration of these skills.

Sales Strategy

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Sales Forecast

The sales forecast in the following table and charts is based on increasing website traffic and increasing sales per unique user session. Sales are projected to rise exponentially from 2000 through 2002. The forecast obviously depends on traffic increase.

Childrens website business plan, strategy and implementation summary chart image

Childrens website business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Toys and Games 17,622 61,250 112,500
Books 4,619 17,500 50,000
Software 3,604 17,500 50,000
Total Unit Sales 25,845 96,250 212,500
Unit Prices Year 1 Year 2 Year 3
Toys and Games $30.00 $30.00 $30.00
Books $20.00 $20.00 $30.00
Software $40.00 $40.00 $30.00
Sales
Toys and Games $528,660 $1,837,500 $3,375,000
Books $92,380 $350,000 $1,500,000
Software $144,160 $700,000 $1,500,000
Total Sales $765,200 $2,887,500 $6,375,000
Direct Unit Costs Year 1 Year 2 Year 3
Toys and Games $12.00 $12.00 $12.00
Books $8.00 $8.00 $8.00
Software $16.00 $16.00 $16.00
Direct Cost of Sales
Toys and Games $211,464 $735,000 $1,350,000
Books $36,952 $140,000 $400,000
Software $57,664 $280,000 $800,000
Subtotal Direct Cost of Sales $306,080 $1,155,000 $2,550,000

Sales Programs

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Marketing Strategy

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Distribution Strategy

This is sample text only. The original was very proprietary, describing the company strategy in detail.

Marketing Programs

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Positioning Statement

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Pricing Strategy

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Promotion Strategy

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Strategic Alliances

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Value Proposition

This is sample text only. The original was very proprietary, describing the company strategy in detail. This is sample text only.

Milestones

The milestones graphic illustrates key implementation activities. The most important milestone to reach will be the design templates. During that time we will be putting together the back-end phases, and both milestones should be achieved at the same time. After that point, integration can begin between the back-end and the front-end phases. Our next milestone will be the beta release, followed by the full launch two weeks later.

Childrens website business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Design Template 1/1/2000 3/1/2000 $2,500 Terry Front End
Back-end Phase 1 1/1/2000 4/1/2000 $10,000 Sonny Back End
Integration 1/1/2000 5/1/2000 $500 Leslie Management
Beta Phase 1 3/1/2000 6/1/2000 $1,000 Leslie Management
Back-end Phase 2 5/1/2000 5/15/2000 $5,000 Sonny Back End
Front-end Phase 2 5/1/2000 5/15/2000 $2,500 Terry Front End
Launch 5/1/2000 12/1/2000 $0 Leslie Management
Redesign 12/1/2000 4/1/2001 $35,000 Leslie Management
Totals $56,500

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Management Summary

Our producer, Sonny Cieliblu, will head the InteliChild.com project. This full-time position will oversee all activities for the project. Sonny interfaces with each partner and staff member. This places Sonny in the role of administrator and coordinator of development and marketing activities, but also requires him to implement training and individual development activities for each partner. We all recognize the challenge Sonny faces as an employee, coach, and supervisor.

More sample text here, not useful for purposes of example, describing the people involved and the management structure.

Organizational Structure

We need an agile organizational structure that recognizes the need for a smooth flow of ideas and implementation between sales, marketing, and website development.  We can’t allow the team to think as if these were separate functions.

On the surface, however, we have the president dealing with three direct reports: admin/finance, sales/marketing, and web development.  In fact we are not going to manage with a strict hierarchy, because we need to emphasize the team.  Still, particularly as we grow in size, structure is necessary.  We will want to preserve decision-making power, and the ability to act, rather than trying to do everything by consensus.

Management Team

Person 1: More sample text here, not useful for purposes of example, describing the people involved and the management structure. 

Person 2: More sample text here, not useful for purposes of example, describing the people involved and the management structure. 

Person 3: More sample text here, not useful for purposes of example, describing the people involved and the management structure. 

Person 4: More sample text here, not useful for purposes of example, describing the people involved and the management structure.

Management Team Gaps

We agree that the most obvious weakness at this point is the lack of seasoned professional management with experience.  This is what the investors call the “gray haired factor.”  We will be looking to add more experience to the team as we build our administrative and financial capabilities.

Personnel Plan

The following personnel plan details our plans for the ramp-up. We start with the four key founders; by the end of 2000 we should have 14 people, and 18 by the end of 2002.

Personnel Plan
Year 1 Year 2 Year 3
Production Personnel
VP Support $33,000 $75,000 $90,000
Support Engineers $27,000 $65,000 $90,000
Support Technicians $21,000 $60,000 $75,000
Other $0 $25,000 $50,000
Subtotal $81,000 $225,000 $305,000
Sales and Marketing Personnel
VP Sales & Marketing $60,000 $75,000 $90,000
Business Development $31,500 $60,000 $75,000
Sales Systems $30,000 $60,000 $75,000
Sales Technicians $40,600 $90,000 $120,000
Other $12,000 $30,000 $100,000
Subtotal $174,100 $315,000 $460,000
General and Administrative Personnel
CEO $60,000 $75,000 $75,000
CFO $60,000 $75,000 $75,000
General Admin $42,700 $90,000 $120,000
Other $14,000 $50,000 $100,000
Subtotal $176,700 $290,000 $370,000
Other Personnel
CTO $60,000 $75,000 $75,000
Devel Systems $39,800 $62,000 $90,000
Devel Engineers $22,500 $75,000 $100,000
Other $0 $50,000 $75,000
Subtotal $122,300 $262,000 $340,000
Total People 18 18 18
Total Payroll $554,100 $1,092,000 $1,475,000

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Financial Plan

This is an Internet venture that, of course, depends on the developing financial prospects of the growing Internet world. To make it work financially, we need to increase valuation on schedule to bring in substantial additional capital. The following table defines the investment offering for investors. Specifically:

  1. The exit strategy is acquisition in 2003, valuing the company at more than $20 million.
  2. Equity plan and valuations at time of exit are detailed in the section that follows, “Exit Strategy.” The plan assumes an ending valuation of $20 million based on market trends, with IRR of more than 100% for all investors.

Important Assumptions

The general assumptions are listed in the following table. Obviously these are detailed financial assumptions, trivial compared to the underlying critical assumptions, which include:

  1. Continued growth of Internet usage. We accept published forecasts that say 4% of the world’s population presently uses the Internet, and that will grow to 11% by 2005. That’s strong growth.
  2. No e-commerce disaster scenarios. We’ll have no huge problems with credit card authorization, shipping, etc.
  3. Continued support of financial markets, which means continued rise in valuations of Internet companies, even Internet companies losing money. The increase in valuation is critical to our financial strategy.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 0.00% 0.00% 0.00%
Other 0 0 0

Key Financial Indicators

The following benchmarks chart indicates a very ambitious increase in sales and matching increases in operating expenses. We expect to improve ratios of inventory, payable days, and collection days.

One of the more important assumptions is that we can increase sales at a very high rate without corresponding increase in operating expenses.  This is because of the leverage available in use of Internet technology as our main marketing and sales channel.

Childrens website business plan, financial plan chart image

Break-even Analysis

The break-even analysis is a good financial indicator.  The following table and chart show break-even based on sales level per month and a high monthly fixed cost.  Given those assumptions, we reach steady-state break-even by the end of this first year.

Childrens website business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 8,948
Monthly Revenue Break-even $264,916
Assumptions:
Average Per-Unit Revenue $29.61
Average Per-Unit Variable Cost $11.84
Estimated Monthly Fixed Cost $158,950

Projected Profit and Loss

Despite the present trend towards investors encouraging losses for website businesses, we believe that we can turn a profit by the third year.  We also intend to reduce losses significantly in the second year, as shown by the following table. Nevertheless, the investment in on-line and off-line advertising is substantial, and the traffic justifies the loss.

Childrens website business plan, financial plan chart image

Childrens website business plan, financial plan chart image

Childrens website business plan, financial plan chart image

Childrens website business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $765,200 $2,887,500 $6,375,000
Direct Cost of Sales $306,080 $1,155,000 $2,550,000
Production Payroll $81,000 $225,000 $305,000
Fulfillment $45,845 $0 $0
Total Cost of Sales $432,925 $1,380,000 $2,855,000
Gross Margin $332,275 $1,507,500 $3,520,000
Gross Margin % 43.42% 52.21% 55.22%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $174,100 $315,000 $460,000
Online Advertising $640,880 $0 $0
Other Advertising $444,400 $0 $0
Collaterals $42,000 $0 $0
Events $20,000 $0 $0
Public Relations $27,000 $0 $0
Website Infrastructure $90,000 $0 $0
Other Sales and Marketing Expenses $12,000 $0 $0
Total Sales and Marketing Expenses $1,450,380 $315,000 $460,000
Sales and Marketing % 189.54% 10.91% 7.22%
General and Administrative Expenses
General and Administrative Payroll $176,700 $290,000 $370,000
Marketing/Promotion $0 $0 $0
Depreciation $2,000 $0 $0
Leased Equipment $9,000 $0 $0
Utilities $2,400 $0 $0
Insurance $500 $0 $0
Rent $42,000 $0 $0
Payroll Taxes $83,115 $163,800 $221,250
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $315,715 $453,800 $591,250
General and Administrative % 41.26% 15.72% 9.27%
Other Expenses:
Other Payroll $122,300 $262,000 $340,000
Consultants $0 $0 $0
Software & Equipment $19,000 $0 $0
Total Other Expenses $141,300 $262,000 $340,000
Other % 18.47% 9.07% 5.33%
Total Operating Expenses $1,907,395 $1,030,800 $1,391,250
Profit Before Interest and Taxes ($1,575,120) $476,700 $2,128,750
EBITDA ($1,573,120) $476,700 $2,128,750
Interest Expense $6,667 $32,750 $32,750
Taxes Incurred $0 $0 $0
Net Profit ($1,581,787) $443,950 $2,096,000
Net Profit/Sales -206.72% 15.37% 32.88%

Projected Cash Flow

As is to be expected in this kind of venture, the cash flow is supported mainly by new capital from new investment in the company. We’ve scheduled additional rounds of financing to make that realistic.

Childrens website business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $688,680 $2,598,750 $5,737,500
Cash from Receivables $30,364 $160,735 $427,137
Subtotal Cash from Operations $719,044 $2,759,485 $6,164,637
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $15,000 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $400,000 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $750,000 $0 $0
Subtotal Cash Received $1,869,044 $2,774,485 $6,164,637
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $554,100 $1,092,000 $1,475,000
Bill Payments $1,543,999 $1,864,092 $2,814,373
Subtotal Spent on Operations $2,098,099 $2,956,092 $4,289,373
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $15,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $80,000 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $2,178,099 $2,956,092 $4,304,373
Net Cash Flow ($309,055) ($181,607) $1,860,264
Cash Balance $184,945 $3,338 $1,863,603

Projected Balance Sheet

The balance sheet shows our projected financial position during the next three years. Obviously the key variable during this period, overall valuation, isn’t shown.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $184,945 $3,338 $1,863,603
Accounts Receivable $46,156 $174,171 $384,534
Inventory $122,342 $399,522 $516,071
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $358,443 $582,032 $2,769,209
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $2,000 $2,000 $2,000
Total Long-term Assets ($2,000) ($2,000) ($2,000)
Total Assets $356,443 $580,032 $2,767,209
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $369,230 $133,868 $240,045
Current Borrowing $0 $15,000 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $369,230 $148,868 $240,045
Long-term Liabilities $320,000 $320,000 $320,000
Total Liabilities $689,230 $468,868 $560,045
Paid-in Capital $1,282,750 $1,282,750 $1,282,750
Retained Earnings ($33,750) ($1,615,537) ($1,171,587)
Earnings ($1,581,787) $443,950 $2,096,000
Total Capital ($332,787) $111,163 $2,207,163
Total Liabilities and Capital $356,443 $580,032 $2,767,209
Net Worth ($332,787) $111,163 $2,207,163

Business Ratios

Our ratios, as projected here, are typical of the kind of growth company we project.  The comparisons are based on NAICS code 454111, Electronic Shopping.  We do expect our gross margin and sales per employee to be much higher than standard retail.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 277.35% 120.78% 7.56%
Percent of Total Assets
Accounts Receivable 12.95% 30.03% 13.90% 12.42%
Inventory 34.32% 68.88% 18.65% 38.62%
Other Current Assets 1.40% 0.86% 0.18% 26.81%
Total Current Assets 100.56% 100.34% 100.07% 77.85%
Long-term Assets -0.56% -0.34% -0.07% 22.15%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 103.59% 25.67% 8.67% 39.14%
Long-term Liabilities 89.78% 55.17% 11.56% 17.10%
Total Liabilities 193.36% 80.83% 20.24% 56.24%
Net Worth -93.36% 19.17% 79.76% 43.76%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 43.42% 52.21% 55.22% 35.35%
Selling, General & Administrative Expenses 250.14% 36.83% 22.34% 14.05%
Advertising Expenses 83.75% 0.00% 0.00% 4.21%
Profit Before Interest and Taxes -205.84% 16.51% 33.39% 1.42%
Main Ratios
Current 0.97 3.91 11.54 1.71
Quick 0.64 1.23 9.39 0.59
Total Debt to Total Assets 193.36% 80.83% 20.24% 64.96%
Pre-tax Return on Net Worth 475.32% 399.37% 94.96% 3.46%
Pre-tax Return on Assets -443.77% 76.54% 75.74% 9.88%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -206.72% 15.37% 32.88% n.a
Return on Equity 0.00% 399.37% 94.96% n.a
Activity Ratios
Accounts Receivable Turnover 1.66 1.66 1.66 n.a
Collection Days 49 139 160 n.a
Inventory Turnover 10.91 4.43 5.57 n.a
Accounts Payable Turnover 5.18 12.17 12.17 n.a
Payment Days 27 56 23 n.a
Total Asset Turnover 2.15 4.98 2.30 n.a
Debt Ratios
Debt to Net Worth 0.00 4.22 0.25 n.a
Current Liab. to Liab. 0.54 0.32 0.43 n.a
Liquidity Ratios
Net Working Capital ($10,787) $433,163 $2,529,163 n.a
Interest Coverage -236.27 14.56 65.00 n.a
Additional Ratios
Assets to Sales 0.47 0.20 0.43 n.a
Current Debt/Total Assets 104% 26% 9% n.a
Acid Test 0.51 0.06 7.78 n.a
Sales/Net Worth 0.00 25.98 2.89 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Exit Strategy

Details of the exit strategy are included in two following tables:

  1. The Investment Analysis table details how we expect valuation to proceed over time, linked in to the planned rounds of financing.
  2. The table included here shows how we plan to distribute equity and shares over time, and planned ending valuation of $23 million and investment yield for three rounds of investment.

Equity Shares and Investment Return

Round Amount ($000) Shares Per share Year 2003 Value IRR %
Seed $500K 1.5 million $0.33 1999 $8.4 million 157 %
Round 1 $750K 750K $1.00 2000 $4.2 million 138%
Round 2 $2 million 800K $2.50 2001 $4.5 million 126%

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Appendix

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
Unit Sales
Toys and Games 0% 0 0 0 79 213 295 610 1,358 1,957 3,043 4,314 5,753
Books 0% 0 0 0 0 0 0 0 272 326 761 863 2,397
Software 0% 0 0 0 0 0 0 0 0 326 761 1,079 1,438
Total Unit Sales 0 0 0 79 213 295 610 1,630 2,609 4,565 6,256 9,588
Unit Prices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Toys and Games $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00 $30.00
Books $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00 $20.00
Software $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00
Sales
Toys and Games $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $40,740 $58,710 $91,290 $129,420 $172,590
Books $0 $0 $0 $0 $0 $0 $0 $5,440 $6,520 $15,220 $17,260 $47,940
Software $0 $0 $0 $0 $0 $0 $0 $0 $13,040 $30,440 $43,160 $57,520
Total Sales $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $46,180 $78,270 $136,950 $189,840 $278,050
Direct Unit Costs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Toys and Games 0.00% $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00 $12.00
Books 0.00% $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
Software 0.00% $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00 $16.00
Direct Cost of Sales
Toys and Games $0 $0 $0 $948 $2,556 $3,540 $7,320 $16,296 $23,484 $36,516 $51,768 $69,036
Books $0 $0 $0 $0 $0 $0 $0 $2,176 $2,608 $6,088 $6,904 $19,176
Software $0 $0 $0 $0 $0 $0 $0 $0 $5,216 $12,176 $17,264 $23,008
Subtotal Direct Cost of Sales $0 $0 $0 $948 $2,556 $3,540 $7,320 $18,472 $31,308 $54,780 $75,936 $111,220
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Production Personnel
VP Support $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $4,000 $4,000 $4,000
Support Engineers $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Support Technicians $0 $0 $0 $0 $0 $0 $0 $3,000 $3,000 $3,000 $6,000 $6,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $6,500 $6,500 $6,500 $6,500 $9,500 $9,500 $10,000 $13,000 $13,000
Sales and Marketing Personnel
VP Sales & Marketing $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Business Development $0 $0 $0 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Sales Systems $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sales Technicians $0 $0 $2,500 $2,500 $2,500 $2,500 $2,500 $3,000 $3,900 $5,200 $6,800 $9,200
Other $0 $0 $0 $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Subtotal $5,000 $5,000 $10,500 $14,000 $14,000 $14,000 $16,000 $16,500 $17,400 $18,700 $20,300 $22,700
General and Administrative Personnel
CEO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
CFO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
General Admin $0 $0 $0 $0 $0 $3,000 $3,300 $4,300 $5,500 $6,700 $7,900 $12,000
Other $0 $0 $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Subtotal $10,000 $10,000 $10,000 $10,000 $10,000 $15,000 $15,300 $16,300 $17,500 $18,700 $19,900 $24,000
Other Personnel
CTO $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Devel Systems $0 $0 $0 $0 $0 $0 $4,000 $4,400 $5,100 $6,400 $7,900 $12,000
Devel Engineers $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $4,500 $6,000 $9,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000
Total People 4 4 5 6 6 7 9 11 13 15 17 18
Total Payroll $20,000 $20,000 $25,500 $35,500 $35,500 $40,500 $46,800 $51,700 $57,500 $63,300 $72,100 $85,700

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $0 $2,370 $6,390 $8,850 $18,300 $46,180 $78,270 $136,950 $189,840 $278,050
Direct Cost of Sales $0 $0 $0 $948 $2,556 $3,540 $7,320 $18,472 $31,308 $54,780 $75,936 $111,220
Production Payroll $0 $0 $0 $6,500 $6,500 $6,500 $6,500 $9,500 $9,500 $10,000 $13,000 $13,000
Fulfillment $0 $0 $2,000 $2,079 $2,213 $2,295 $2,610 $3,630 $4,610 $6,565 $8,255 $11,588
Total Cost of Sales $0 $0 $2,000 $9,527 $11,269 $12,335 $16,430 $31,602 $45,418 $71,345 $97,191 $135,808
Gross Margin $0 $0 ($2,000) ($7,157) ($4,879) ($3,485) $1,870 $14,578 $32,852 $65,605 $92,649 $142,242
Gross Margin % 0.00% 0.00% 0.00% -301.98% -76.35% -39.38% 10.22% 31.57% 41.97% 47.90% 48.80% 51.16%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $5,000 $5,000 $10,500 $14,000 $14,000 $14,000 $16,000 $16,500 $17,400 $18,700 $20,300 $22,700
Online Advertising $5,000 $17,900 $22,000 $26,100 $29,535 $36,735 $46,335 $63,135 $81,135 $95,535 $105,135 $112,335
Other Advertising $0 $0 $11,535 $23,535 $34,435 $39,835 $44,335 $50,735 $54,235 $58,335 $61,885 $65,535
Collaterals $2,000 $0 $0 $10,000 $0 $0 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Events $0 $0 $0 $10,000 $0 $0 $10,000 $0 $0 $0 $0 $0
Public Relations $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Website Infrastructure $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000
Other Sales and Marketing Expenses $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Total Sales and Marketing Expenses $16,000 $26,900 $48,035 $90,635 $84,970 $97,570 $137,670 $151,370 $173,770 $193,570 $208,320 $221,570
Sales and Marketing % 0.00% 0.00% 0.00% 3824.26% 1329.73% 1102.49% 752.30% 327.78% 222.01% 141.34% 109.73% 79.69%
General and Administrative Expenses
General and Administrative Payroll $10,000 $10,000 $10,000 $10,000 $10,000 $15,000 $15,300 $16,300 $17,500 $18,700 $19,900 $24,000
Marketing/Promotion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000
Leased Equipment $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Payroll Taxes 15% $3,000 $3,000 $3,825 $5,325 $5,325 $6,075 $7,020 $7,755 $8,625 $9,495 $10,815 $12,855
Other General and Administrative Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total General and Administrative Expenses $16,450 $15,950 $16,775 $18,275 $18,275 $24,025 $28,270 $30,005 $32,075 $34,145 $36,665 $44,805
General and Administrative % 0.00% 0.00% 0.00% 771.10% 285.99% 271.47% 154.48% 64.97% 40.98% 24.93% 19.31% 16.11%
Other Expenses:
Other Payroll $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000
Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Software & Equipment $2,000 $2,000 $2,000 $10,000 $2,000 $1,000 $0 $0 $0 $0 $0 $0
Total Other Expenses $7,000 $7,000 $7,000 $15,000 $7,000 $6,000 $9,000 $9,400 $13,100 $15,900 $18,900 $26,000
Other % 0.00% 0.00% 0.00% 632.91% 109.55% 67.80% 49.18% 20.36% 16.74% 11.61% 9.96% 9.35%
Total Operating Expenses $39,450 $49,850 $71,810 $123,910 $110,245 $127,595 $174,940 $190,775 $218,945 $243,615 $263,885 $292,375
Profit Before Interest and Taxes ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($186,093) ($178,010) ($171,236) ($150,133)
EBITDA ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($186,093) ($178,010) ($171,236) ($148,133)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $1,500 $1,333 $1,167 $2,667
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($39,450) ($49,850) ($73,810) ($131,067) ($115,124) ($131,080) ($173,070) ($176,197) ($187,593) ($179,343) ($172,403) ($152,800)
Net Profit/Sales 0.00% 0.00% 0.00% -5530.25% -1801.63% -1481.13% -945.74% -381.54% -239.67% -130.96% -90.81% -54.95%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $0 $2,133 $5,751 $7,965 $16,470 $41,562 $70,443 $123,255 $170,856 $250,245
Cash from Receivables $0 $0 $0 $0 $8 $250 $647 $917 $1,923 $4,725 $8,023 $13,871
Subtotal Cash from Operations $0 $0 $0 $2,133 $5,759 $8,215 $17,117 $42,479 $72,366 $127,980 $178,879 $264,116
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $200,000 $0 $0 $200,000
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $500,000 $0 $0 $0 $250,000 $0 $0 $0
Subtotal Cash Received $0 $0 $0 $2,133 $505,759 $8,215 $17,117 $42,479 $522,366 $127,980 $178,879 $464,116
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $20,000 $20,000 $25,500 $35,500 $35,500 $40,500 $46,800 $51,700 $57,500 $63,300 $72,100 $85,700
Bill Payments $648 $19,797 $30,465 $49,999 $98,607 $88,207 $102,120 $149,869 $184,262 $224,360 $279,966 $315,699
Subtotal Spent on Operations $20,648 $39,797 $55,965 $85,499 $134,107 $128,707 $148,920 $201,569 $241,762 $287,660 $352,066 $401,399
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $20,000 $20,000 $20,000 $20,000
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $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
Subtotal Cash Spent $20,648 $39,797 $55,965 $85,499 $134,107 $128,707 $148,920 $201,569 $261,762 $307,660 $372,066 $421,399
Net Cash Flow ($20,648) ($39,797) ($55,965) ($83,366) $371,652 ($120,492) ($131,802) ($159,090) $260,604 ($179,680) ($193,187) $42,717
Cash Balance $473,352 $433,555 $377,590 $294,224 $665,876 $545,384 $413,582 $254,492 $515,096 $335,415 $142,228 $184,945

Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances
Current Assets
Cash $494,000 $473,352 $433,555 $377,590 $294,224 $665,876 $545,384 $413,582 $254,492 $515,096 $335,415 $142,228 $184,945
Accounts Receivable $0 $0 $0 $0 $237 $868 $1,503 $2,686 $6,387 $12,291 $21,261 $32,223 $46,156
Inventory $0 $0 $0 $0 $1,043 $2,812 $3,894 $8,052 $20,319 $34,439 $60,258 $83,530 $122,342
Other Current Assets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Current Assets $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $358,443
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($2,000)
Total Assets $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $356,443
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $215,067 $269,519 $302,967 $369,230
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $215,067 $269,519 $302,967 $369,230
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $180,000 $160,000 $140,000 $320,000
Total Liabilities $0 $18,802 $28,855 $46,700 $95,680 $84,857 $97,162 $143,770 $176,846 $395,067 $429,519 $442,967 $689,230
Paid-in Capital $532,750 $532,750 $532,750 $532,750 $532,750 $1,032,750 $1,032,750 $1,032,750 $1,032,750 $1,282,750 $1,282,750 $1,282,750 $1,282,750
Retained Earnings ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750) ($33,750)
Earnings $0 ($39,450) ($89,300) ($163,110) ($294,177) ($409,301) ($540,381) ($713,451) ($889,648) ($1,077,241) ($1,256,584) ($1,428,987) ($1,581,787)
Total Capital $499,000 $459,550 $409,700 $335,890 $204,823 $589,699 $458,619 $285,549 $109,352 $171,759 ($7,584) ($179,987) ($332,787)
Total Liabilities and Capital $499,000 $478,352 $438,555 $382,590 $300,503 $674,556 $555,781 $429,319 $286,198 $566,826 $421,934 $262,980 $356,443
Net Worth $499,000 $459,550 $409,700 $335,890 $204,823 $589,699 $458,619 $285,549 $109,352 $171,759 ($7,584) ($179,987) ($332,787)
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 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% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

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