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E-commerce Start-up Business Plan

Company Summary

The vision behind the company is to provide a return service that is safe, convenient, and easy to use.

2.1 Start-up Summary is currently looking for early-stage funding and strategic partnerships to execute the program. The company plans to raise up to $2.6 million in two rounds of financing during Year 1, along with securing access to additional $1.4 million for the cash flow purposes, before making its program fully available to online merchants and consumers. The preliminary rollout timing is set for Thanksgiving this year. Based on conservative financial projections, the company will become profitable from early Year 2. The dual-pricing strategy generates solid net income and nearly eliminates the downside risks. By Year 5-end , the $4 million investment will produce $150 million in cash flows, all internally generated. The company can go public as early as Year 2. Should an IPO be undertaken at Year 3-end, the financial standing of the company should support a market capitalization of more than $1.4 billion.

The table below outlines the start-up expenses.

Start-up Expenses
Legal $200
Stationery etc. $50
Brochures $450
Consultants $0
Insurance $100
Rent $500
Research and development $400
Expensed equipment $1,100
Other $200
Total Start-up Expenses $3,000
Start-up Assets
Cash Required $47,000
Other Current Assets $0
Long-term Assets $0
Total Assets $47,000
Total Requirements $50,000
Start-up Funding
Start-up Expenses to Fund $3,000
Start-up Assets to Fund $47,000
Total Funding Required $50,000
Non-cash Assets from Start-up $0
Cash Requirements from Start-up $47,000
Additional Cash Raised $0
Cash Balance on Starting Date $47,000
Total Assets $47,000
Liabilities and Capital
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Planned Investment
Co-owner $25,000
Co-owner $25,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $50,000
Loss at Start-up (Start-up Expenses) ($3,000)
Total Capital $47,000
Total Capital and Liabilities $47,000
Total Funding $50,000

2.2 Future Financial Predictions

The company anticipates to start approaching potential investors in February of this year. The first round of finance needs is estimated at approximately $600,000. The funds will be used to develop the core of the proprietary software program, begin designing the website, test-market the service, and set up corporate headquarters. Also, recruitment of the key sales representatives will begin and major strategic alliances initiated.

The second round of financing is estimated at $2 million and should take place in the Summer Year 1. The funds will be used to fully cover the software, systems and website development; test-run and fine-tune the operational process; provide necessary staffing; and start the industrial marketing campaign. The company plans to offer its services right before Thanksgiving of this year. As part of the promotion, and to simplify accounting for revenues, services for the remainder of Year 1 will be offered free of charge and no revenues will be recorded during that year.

According to the financial statements, the company will need to raise $2.6 million during the two rounds of financing. At the same time, the company may need to have access to additional $1.4 million to support adequate cash flows during the early stages.

An exit strategy for the primary investors will be the initial public offering. The company may go public as early as Year 2. According to the financial statements, however, the company is capable of supporting growth internally, as well as generating sizable cash flows. It may be prudent to go public at Year 3-end when the company will have substantial revenues that should support a market valuation of more than $1.4 billion. The funds raised during the IPO will be used to further strengthen the market leader position, raise entry barriers through continuing brand-building programs, establish a more bureaucratic corporate structure, fund expansion initiatives, and to retire any financial obligations created during the first two rounds of financing.

The company has no immediate plans for acquisitions. Neither has it a preferred list of potential acquirers. Although all reasonable offers will be considered, the company plans to utilize the first-mover advantage to establish itself as the market leader and to remain a stand-along corporation for the foreseeable future.

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