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Gaian Adventure Fabric and Notions

Gaian Adventure Fabrics will be a small company, starting out with a retail location and a virtual store online.

2.1 Company Ownership

Gaian Adventure Fabric and Notions is a sole proprietorship owned by Martha Thimble.

2.1.1 Start-up Summary

Gaian Adventure Fabric and Notions will incur the following start-up costs:

  • Computer system with printer, CD-RW, Microsoft Office, QuickBook Pro, and scanner.
  • Phone line with DSL Internet connection.
  • Desk, chair, and file cabinet.
  • Rack to hold bolts of fabric.
  • Shelving to organize all of the notions.
  • Large table for cutting fabric.
  • Hand rotary fabric cutter, electric rotary fabric cutter, cutting boards.
  • Inventory.

Please note that the following items which are considered assets to be used for more than a year will labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line depreciation method.

Ecommerce fabric store business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $500
Stationery etc. $100
Inventory $10,000
Web site development $3,000
Total Start-up Expenses $13,600
Start-up Assets
Cash Required $20,900
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $3,500
Total Assets $24,400
Total Requirements $38,000
Start-up Funding
Start-up Expenses to Fund $13,600
Start-up Assets to Fund $24,400
Total Funding Required $38,000
Assets
Non-cash Assets from Start-up $3,500
Cash Requirements from Start-up $20,900
Additional Cash Raised $0
Cash Balance on Starting Date $20,900
Total Assets $24,400
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
Martha $38,000
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $38,000
Loss at Start-up (Start-up Expenses) ($13,600)
Total Capital $24,400
Total Capital and Liabilities $24,400
Total Funding $38,000

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Gaian Adventure Fabric and Notions will sell a variety of outdoor fabrics and notions for outdoor applications.  These products include:

  • Fleece including Malden Mills 100, 200, 300, power stretch, wind bloc, and thermal stretch.
  • Coated nylons including ripstop, taffeta, oxford-poly, oxford-nitrile, packcloth-poly, packcloth-PVC, 1000 denier Cordura, 500 denier Cordura, and ballistic.
  • Breathable fabrics including no-seeum netting, sport mesh, micromesh, leno mesh, supplex, and taslan.
  • Waterproof breathables including 3-layer Gore-Tex, 2-layer Gore-Tex, Sympatex, and Ultrex.
  • Notions including Nikwax waterproofing, hook and loop, nylon and polypropylene webbing, grosgraine ribbon, poly herringbone, zipper tape and fixed length zippers, thread, assorted plastic Fastex brand hardware, as well as various patterns.
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Gaian Adventure Fabric and Notions’ market can be broken down into three different segments, walk-in customers, Internet customers, and Internet customers from large companies.  Each of these segments will be addressed individually.

4.1 Market Segmentation

Gaian Adventure Fabric and Notions customers can be broken down into three groups:

  • Walk-in local customers: these customers live locally and have come into the shop to pick up the necessary products for a project.
  • Internet individual customers: these are individuals that are in need of supplies for projects.  This group of customers can be further broken down into orders from the USA and international orders.  International orders will be a decent percentage of the overall individual customers because American fabrics and notions are generally superior to European alternatives and the convenience of ordering Gaian Adventure’s products is enhanced with Internet accessibility.
  • Internet-based company orders: some orders will be from people within larger fabric manufacturers such as DuPont’s Cordura department, Gore-Tex, and Malden Mills.  Although people (typically in the prototype divisions) work for the manufacturer of the fabrics, it is often difficult for them to get small amount of the fabric for prototyping.  So oddly enough, some orders will be from Gore-Tex employees purchasing Gore-Tex from Gaian Adventure Fabric and Notions.
Ecommerce fabric store business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Walk-ins 9% 3,654 3,983 4,341 4,732 5,158 9.00%
Internet individuals 12% 26,545 29,730 33,298 37,294 41,769 12.00%
Internet company customers 8% 1,245 1,345 1,453 1,569 1,695 8.02%
Total 11.51% 31,444 35,058 39,092 43,595 48,622 11.51%

4.2 Target Market Segment Strategy

Gaian Adventure Fabric and Notions intends to target the different groups in the following ways:

  • Walk-in customers: they will be targeted in two different ways.  The first way is through advertisements in the yellow pages.  This way a local person can just find Gaian Adventure Fabric and Notions by searching under fabrics in the yellow pages.  The other method will be through informal strategic relationships with local outdoor stores as well as with local sewing machine stores.  This will be useful as a lot of people that use sewing machines frequent the sewing machine shops, whether for supplies or classes, and will typically ask them for information.
  • Internet customers: these customers will be targeted by submitting Gaian’s website to multiple search engines.  This is useful when an Internet customer is interested in getting supplies, all they have to do is type in a variety of terms into a search engine and the website will appear at the top of the list.  Gaian Adventure Fabric and Notions recognizes that different search engines have different ways of searching, so the submissions will be tailored to each specific search engine.
  • Internet-based company orders: Internet customers as the method will be the same. The reality is that the Internet-based company orders just happens, it is not really planned or targeted, but a fact a life, albeit a weird and unexpected one.

4.3 Industry Analysis

The outdoor fabric industry for consumers was for years a small industry that served local needs. Within the last five to seven years there has been the emergence of a couple of mail order companies. Most of the mail order companies have eventually migrated to the Web to enjoy the cost savings. Although they have websites, these sites are nothing special and are not that comprehensive.

4.3.1 Competition and Buying Patterns

Gaian Adventure Fabric and Notions faces competition from several sources:

  • Mail order companies. These companies, for whatever reason, have not yet made it to the Internet and therefore are not that significant of a worry.  They typically will print a catalog or some sort of flier and mail it out.  The company will accept orders either over the phone or via mail/fax.  By virtue of the fact that these companies have yet to migrate to the Web indicates a fairly stagnant management team/business direction, therefore these competitors are not of great concern.
  • Internet retailers. These companies are similar to Gaian Adventure Fabric and Notions in that they offer their products to basically anyone using the efficiencies of the internet.  There are approximately four Internet retailers.  None of these sites are close in terms of product offerings compared to Gaian Adventure Fabric and Notions.
  • Retail outlets. These stores take the form of either dedicated fabric stores like Gaian Adventure Fabric and Notions’ brick and mortar store front, or outdoor retailers such as R.E.I. that carries a LIMITED selection of hardware, notions and fabric.  These retail outlets typically serve the local area and not much beyond this. 

People will often go to a retail outlet if there is one available.  In the Eugene area where Gaian Adventure Fabric and Notions is located there are a few stores that have a limited selection.  There is a retailer about 45 minutes away in Corvallis, OR that has a good selection but no website. 

As the time value of money has increased in the last few years as Americans work harder and longer hours, people are more willing to shop via the Internet, allowing them to shop at whatever time is convenient for them and to be able to view an extensive catalog. For this reason the brick and mortar sales will pale in comparison to the Internet sales. 

 

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Gaian Adventure Fabric and Notions strategy will first recognize that the brick and mortar end of the business will be relatively insignificant to the e-commerce portion.  This is primarily the case because people that consume outdoor fabrics and notions are pretty widespread, there will not be a huge local crowd.  Add the geographic completeness that the Internet offers and you have a huge audience. 

Gaian Adventure Fabric and Notions’ strategy for the Internet orders, the bulk of the business, will be to build as robust of a website as possible.  The site will be robust by having a large product offering, ease of navigation, and ease of purchasing.  The site will be changed frequently to encourage customers to visit often and products will be emphasized to try to pull the customer in.  Specials will be offered and rotated frequently to encourage repeat visits. 

Gaian Adventure Fabric and Notions will use WebTrends Web traffic monitoring software to gain insight regarding their Web customers.  This information will be indispensable for the future modification of products and services to appeal to the customer’s needs.

5.1 Competitive Edge

Gaian Adventure Fabric and Notions’ competitive edge will be their focus on e-commerce.  The brick and mortar side will be serviced by having the same product offerings that the website has as well as having someone in the store to help out with any questions/needs that a customer may have.  This however, is just one small aspect of the overall business.  The foundation of the business is the e-commerce site.  This is the foundation because it is the most cost effective way of operating as a retailer, it serves the largest geographical region, the world, and the site can be serviced from anywhere at any time of the day. 

Currently, there is not an excellent website that sells outdoor fabrics and notions.  You can find some of the products on the Web, but not an extensive selection. 

Gaian Adventure Fabric and Notions will focus on the website as they recognize this is where the highest margins are and the largest target market.  The website as the primary focus will allow Gaian Adventure Fabric and Notions to rapidly gain market share as they will redefine anything on their site to meet the need’s of the customers. 

5.2 Sales Strategy

The sales strategy will differ between the brick and mortar side and the e-commerce side.  For the brick and mortar side, Gaian will attempt to offer superior customer support when customers visit the showroom.  What is meant by this is, when a customer comes in they will be immediately approached and asked if they need help. This is useful for the customer as there are so many small things that Gaian sells that it is impossible to display everything.  The employee will try to elicit what kind of project that they are working on for two reasons 1) to determine what they can offer as an additional accessory for the project, “upselling,” and 2) so they can offer advice on ways to complete the project or things to keep an eye out for.  While this kind of advice occurs occasionally at some stores at the request of the customer, it will be offered by the employee without the customer’s request.   This will give the customer the impression that Gaian is being truly helpful. 

For the e-commerce side, Gaian will make the website as easy as possible for the customer to navigate as well as purchase something.  This is important because Gaian will try to avoid the possibility that the customer 1) cannot find what they are looking for, and 2) that they will put something in their basket to be purchased but leave without purchasing it.  Gaian will also be having meaningful weekly specials to reward customers with great deals who check with the website frequently.  Making the customer’s experience with the site as pleasant as possible will encourage people to buy things.

5.2.1 Sales Forecast

The first month will be used to set up the store front as well as set up the website. There will be no sales activity.  The first three months will have some sales activity but it will be fairly slow. Month four will see some decent activity as people begin to become aware of Gaian Adventure Fabric and Notions. Sales will be great enough to reach profitability by month nine.

Ecommerce fabric store business plan, strategy and implementation summary chart image

Ecommerce fabric store business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Walk-ins $14,122 $21,509 $24,112
internet individual customers $108,630 $165,455 $185,475
internet company orders $6,518 $9,927 $11,129
Total Sales $129,270 $196,891 $220,715
Direct Cost of Sales Year 1 Year 2 Year 3
Walk-ins $12,224 $9,679 $10,850
internet individual customers $48,884 $74,455 $83,464
internet company orders $2,933 $4,467 $5,008
Subtotal Direct Cost of Sales $64,040 $88,601 $99,322

5.3 Milestones

Gaian Adventure Fabric and Notions will have several milestones early on:

  1. Business plan completion.  This will be done as a roadmap for the organization.  This will be an indispensable tool for the ongoing performance and improvement of the company.
  2. Office set up and website launching.
  3. Profitability.
  4. Revenues exceeding $75,000.
Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 $0 ABC Marketing
Office setup and website launching 1/1/2001 2/1/2001 $0 ABC Department
Profitability 1/1/2001 9/31/2001 $0 ABC Department
Revenues exceeding $75,000 1/1/2001 4/31/2002 $0 ABC Department
Totals $0

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The information normally contained in the Web plan summary can be found in several previous sections.

6.1 Website Marketing Strategy

The marketing strategy for the website as stated early in the plan will be precise submissions to all of the popular search engines so that Gaian Adventure Fabric and Notions is on the top of a list in a relevant search.

6.2 Development Requirements

The developmental requirements for the website will be tapping into the computer science department at the University of Oregon through a networking contact and finding an undergraduate or graduate student who is willing to construct the entire website at a below market rate.  This should be fairly easy to do.

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Martha Thimble is the founder and owner of Gaian Adventure Fabric and Notions.  Educationally, Martha has a B.A. in marketing from the University of Portland.  While at Portland Martha worked part time in an R.E.I. store.  This experience was instrumental in providing insight into the outdoor recreation market.  Upon graduation Martha accepted a position to manage the Eugene R.E.I store which she happily accepted. 

While at R.E.I Martha began to pick up sewing, specifically working with outdoor type gear.  She began to teach herself as well as getting taught pointers from the R.E.I. repair person.  This person was an independent contractor who had some equipment set up at the store who did outdoor gear repairs.

Martha stayed at this position for three years gaining incredible insight for managing a store.  Toward the end of her three years she was beginning to get a bit antsy at the store since she was no longer challenged much.  After some careful soul searching she recognized what she needed was to be her own boss, to open her own store.

7.1 Personnel Plan

The first four months of business will be using only Martha. By month five, Martha will hire one person to work full time. This employee will be used for order fulfillment as well as helping walk-in customers.

Personnel Plan
Year 1 Year 2 Year 3
Martha $36,000 $36,000 $36,000
Employee 1 $12,800 $19,200 $19,200
Total People 2 2 2
Total Payroll $48,800 $55,200 $55,200

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The following sections will outline important financial information.

8.1 Break-even Analysis

The following table and chart show our Break-even Analysis for the first year.

Ecommerce fabric store business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $11,761
Assumptions:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $5,935

8.2 Projected Profit and Loss

The following table will indicate projected profit and loss.

Ecommerce fabric store business plan, financial plan chart image

Ecommerce fabric store business plan, financial plan chart image

Ecommerce fabric store business plan, financial plan chart image

Ecommerce fabric store business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $129,270 $196,891 $220,715
Direct Cost of Sales $64,040 $88,601 $99,322
Other Production Expenses $0 $0 $0
Total Cost of Sales $64,040 $88,601 $99,322
Gross Margin $65,229 $108,290 $121,393
Gross Margin % 50.46% 55.00% 55.00%
Expenses
Payroll $48,800 $55,200 $55,200
Sales and Marketing and Other Expenses $600 $600 $600
Depreciation $0 $0 $0
Leased Equipment $696 $696 $696
Phone line + DSL + web site maintenance $3,000 $3,000 $3,000
Insurance $1,800 $1,800 $1,800
Rent $9,000 $9,000 $9,000
Payroll Taxes $7,320 $8,280 $8,280
Other $0 $0 $0
Total Operating Expenses $71,216 $78,576 $78,576
Profit Before Interest and Taxes ($5,987) $29,714 $42,817
EBITDA ($5,987) $29,714 $42,817
Interest Expense $0 $0 $0
Taxes Incurred $0 $8,914 $12,845
Net Profit ($5,987) $20,800 $29,972
Net Profit/Sales -4.63% 10.56% 13.58%

8.3 Important Assumptions

The following table details important financial assumptions.

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 30.00% 30.00% 30.00%
Other 0 0 0

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Ecommerce fabric store business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $129,270 $196,891 $220,715
Subtotal Cash from Operations $129,270 $196,891 $220,715
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $129,270 $196,891 $220,715
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $48,800 $55,200 $55,200
Bill Payments $84,738 $128,492 $136,505
Subtotal Spent on Operations $133,538 $183,692 $191,705
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $133,538 $183,692 $191,705
Net Cash Flow ($4,269) $13,199 $29,010
Cash Balance $16,631 $29,830 $58,840

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $16,631 $29,830 $58,840
Inventory $11,701 $16,188 $18,147
Other Current Assets $0 $0 $0
Total Current Assets $28,332 $46,018 $76,987
Long-term Assets
Long-term Assets $3,500 $3,500 $3,500
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $3,500 $3,500 $3,500
Total Assets $31,832 $49,518 $80,487
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $13,419 $10,305 $11,302
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $13,419 $10,305 $11,302
Long-term Liabilities $0 $0 $0
Total Liabilities $13,419 $10,305 $11,302
Paid-in Capital $38,000 $38,000 $38,000
Retained Earnings ($13,600) ($19,587) $1,213
Earnings ($5,987) $20,800 $29,972
Total Capital $18,413 $39,213 $69,186
Total Liabilities and Capital $31,832 $49,518 $80,487
Net Worth $18,413 $39,213 $69,186

8.6 Business Ratios

The following table outlines some of the more important ratios from the Sewing, Needlework and Piece Goods industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 5131.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 52.31% 12.10% 10.40%
Percent of Total Assets
Inventory 36.76% 32.69% 22.55% 36.20%
Other Current Assets 0.00% 0.00% 0.00% 26.40%
Total Current Assets 89.00% 92.93% 95.65% 88.50%
Long-term Assets 11.00% 7.07% 4.35% 11.50%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 42.15% 20.81% 14.04% 42.20%
Long-term Liabilities 0.00% 0.00% 0.00% 8.80%
Total Liabilities 42.15% 20.81% 14.04% 51.00%
Net Worth 57.85% 79.19% 85.96% 49.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.46% 55.00% 55.00% 24.50%
Selling, General & Administrative Expenses 55.09% 44.44% 41.42% 15.40%
Advertising Expenses 0.46% 0.30% 0.27% 0.90%
Profit Before Interest and Taxes -4.63% 15.09% 19.40% 1.70%
Main Ratios
Current 2.11 4.47 6.81 2.14
Quick 1.24 2.89 5.21 0.94
Total Debt to Total Assets 42.15% 20.81% 14.04% 51.00%
Pre-tax Return on Net Worth -32.51% 75.78% 61.89% 4.30%
Pre-tax Return on Assets -18.81% 60.01% 53.20% 8.90%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -4.63% 10.56% 13.58% n.a
Return on Equity -32.51% 53.04% 43.32% n.a
Activity Ratios
Inventory Turnover 10.91 6.35 5.79 n.a
Accounts Payable Turnover 7.31 12.17 12.17 n.a
Payment Days 27 35 29 n.a
Total Asset Turnover 4.06 3.98 2.74 n.a
Debt Ratios
Debt to Net Worth 0.73 0.26 0.16 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $14,913 $35,713 $65,686 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.25 0.25 0.36 n.a
Current Debt/Total Assets 42% 21% 14% n.a
Acid Test 1.24 2.89 5.21 n.a
Sales/Net Worth 7.02 5.02 3.19 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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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
Sales
Walk-ins 0% $0 $565 $634 $778 $943 $1,111 $1,202 $1,360 $1,619 $1,750 $2,010 $2,151
internet individual customers 0% $0 $4,345 $4,878 $5,985 $7,254 $8,547 $9,245 $10,458 $12,457 $13,458 $15,458 $16,545
internet company orders 0% $0 $261 $293 $359 $435 $513 $555 $627 $747 $807 $927 $993
Total Sales $0 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Walk-ins $0 $73 $436 $585 $675 $765 $945 $1,035 $1,305 $1,575 $2,085 $2,745
internet individual customers $0 $1,955 $2,195 $2,693 $3,264 $3,846 $4,160 $4,706 $5,606 $6,056 $6,956 $7,445
internet company orders $0 $117 $132 $162 $196 $231 $250 $282 $336 $363 $417 $447
Subtotal Direct Cost of Sales $0 $2,145 $2,763 $3,440 $4,135 $4,842 $5,355 $6,023 $7,247 $7,994 $9,458 $10,637
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
Martha 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Employee 1 0% $0 $0 $0 $0 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Total People 1 1 1 1 2 0 2 2 2 2 2 2
Total Payroll $3,000 $3,000 $3,000 $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600

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

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 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
Direct Cost of Sales $0 $2,145 $2,763 $3,440 $4,135 $4,842 $5,355 $6,023 $7,247 $7,994 $9,458 $10,637
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $2,145 $2,763 $3,440 $4,135 $4,842 $5,355 $6,023 $7,247 $7,994 $9,458 $10,637
Gross Margin $0 $3,025 $3,042 $3,682 $4,497 $5,329 $5,647 $6,422 $7,577 $8,021 $8,937 $9,052
Gross Margin % 0.00% 58.51% 52.40% 51.70% 52.10% 52.39% 51.33% 51.60% 51.11% 50.08% 48.58% 45.97%
Expenses
Payroll $3,000 $3,000 $3,000 $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600
Sales and Marketing and Other Expenses $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Leased Equipment $58 $58 $58 $58 $58 $58 $58 $58 $58 $58 $58 $58
Phone line + DSL + web site maintenance $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Rent $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Payroll Taxes 15% $450 $450 $450 $450 $690 $690 $690 $690 $690 $690 $690 $690
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $4,708 $4,708 $4,708 $4,708 $6,548 $6,548 $6,548 $6,548 $6,548 $6,548 $6,548 $6,548
Profit Before Interest and Taxes ($4,708) ($1,683) ($1,666) ($1,026) ($2,051) ($1,219) ($901) ($126) $1,029 $1,473 $2,389 $2,504
EBITDA ($4,708) ($1,683) ($1,666) ($1,026) ($2,051) ($1,219) ($901) ($126) $1,029 $1,473 $2,389 $2,504
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($4,708) ($1,683) ($1,666) ($1,026) ($2,051) ($1,219) ($901) ($126) $1,029 $1,473 $2,389 $2,504
Net Profit/Sales 0.00% -32.55% -28.70% -14.40% -23.76% -11.99% -8.19% -1.02% 6.94% 9.19% 12.98% 12.72%

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 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
Subtotal Cash from Operations $0 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
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 $0 $0 $0 $0
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 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $5,171 $5,805 $7,122 $8,632 $10,171 $11,002 $12,445 $14,824 $16,015 $18,395 $19,689
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 $3,000 $3,000 $3,000 $3,000 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600 $4,600
Bill Payments $57 $1,858 $6,178 $5,175 $5,924 $6,872 $7,577 $7,895 $8,768 $10,548 $10,840 $13,046
Subtotal Spent on Operations $3,057 $4,858 $9,178 $8,175 $10,524 $11,472 $12,177 $12,495 $13,368 $15,148 $15,440 $17,646
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 $0 $0 $0 $0
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 $3,057 $4,858 $9,178 $8,175 $10,524 $11,472 $12,177 $12,495 $13,368 $15,148 $15,440 $17,646
Net Cash Flow ($3,057) $312 ($3,373) ($1,053) ($1,892) ($1,301) ($1,176) ($50) $1,456 $867 $2,955 $2,043
Cash Balance $17,843 $18,155 $14,782 $13,730 $11,838 $10,537 $9,361 $9,311 $10,766 $11,633 $14,588 $16,631
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 $20,900 $17,843 $18,155 $14,782 $13,730 $11,838 $10,537 $9,361 $9,311 $10,766 $11,633 $14,588 $16,631
Inventory $0 $0 $2,360 $3,039 $3,784 $4,549 $5,326 $5,890 $6,626 $7,972 $8,794 $10,404 $11,701
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $20,900 $17,843 $20,515 $17,821 $17,514 $16,386 $15,863 $15,251 $15,937 $18,738 $20,427 $24,993 $28,332
Long-term Assets
Long-term Assets $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Total Assets $24,400 $21,343 $24,015 $21,321 $21,014 $19,886 $19,363 $18,751 $19,437 $22,238 $23,927 $28,493 $31,832
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 $1,651 $6,006 $4,978 $5,696 $6,620 $7,315 $7,605 $8,417 $10,190 $10,406 $12,583 $13,419
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 $1,651 $6,006 $4,978 $5,696 $6,620 $7,315 $7,605 $8,417 $10,190 $10,406 $12,583 $13,419
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,651 $6,006 $4,978 $5,696 $6,620 $7,315 $7,605 $8,417 $10,190 $10,406 $12,583 $13,419
Paid-in Capital $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000 $38,000
Retained Earnings ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600) ($13,600)
Earnings $0 ($4,708) ($6,391) ($8,057) ($9,083) ($11,133) ($12,352) ($13,254) ($13,380) ($12,351) ($10,879) ($8,490) ($5,987)
Total Capital $24,400 $19,692 $18,009 $16,343 $15,317 $13,267 $12,048 $11,146 $11,020 $12,049 $13,521 $15,910 $18,413
Total Liabilities and Capital $24,400 $21,343 $24,015 $21,321 $21,014 $19,886 $19,363 $18,751 $19,437 $22,238 $23,927 $28,493 $31,832
Net Worth $24,400 $19,692 $18,009 $16,343 $15,317 $13,267 $12,048 $11,146 $11,020 $12,049 $13,521 $15,910 $18,413

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