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Rosafarbenes Nilpferd & Sons Engineering, Inc.

Executive Summary

Rosafarbenes Nilpferd & Sons Engineering, Inc. (RNSE) has established a strong foothold in a niche technology market for Product Category One* devices. The potential market demand of 180 million units far outstrips the capacity of present suppliers and is growing at a rate of 22% annually. RNSE’s success in taking advantage of this boom market is evidenced by its recent growth in sales and profitability. Sales are projected to grow from the first quarter of Year 1 total of $280,000 to $1,600,000 by the end of the first year, and to exceed $14 million by the end of the third year of operations. A similar growth pattern will cause before tax profits to rise significantly by the end of Year 1 and continue increasing through the end of Year 3. These results will be achieved without large additions to fixed assets. A relatively small banking facility will be needed in the form of a line of credit of $150,000-$200,000 to support the necessary growth in current assets, half of which will represent prime corporate receivables.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

Electronic engineering business plan, executive summary chart image

1.1 Objectives

While working to develop Rosafarbenes Nilpferd & Sons Engineering’s image as the premier maker of Product Category One devices with the latest cutting-edge technology, the measurable objectives are:

  1. Complete work to make RNSE’s products compatible with at least five of the most popular first-tier operating systems (by end Month 5, Year 1), and at least three others within one year. 
  2. Complete a thorough website redesign and get out a quality mailer to 300 Value Added Resellers (VARs) (by end Month 6, Year 1). 
  3. On the basis of a professional media analysis, arrange an effective advertising campaign in trade publications designed to target the telecommunications, industrial automation, and instrumentation sectors (by end Month 7, Year 1). 
  4. Through networking and partnering with operating system developers, technology manufacturers, and other industry players, arrange at least five banners/links on a reciprocal basis with key market-related websites.

1.2 Mission

Rosafarbenes Nilpferd & Sons Engineering’s mission is to develop cutting-edge Product Category 1 solutions for appliance and equipment makers who, due to the fast pace of technology, are under pressure to get their products to the market quickly. RNSE achieves this by maintaining a small “think tank” style technical team, outsourcing the manufacturing, and keeping a marketing offering which caters to the more demanding Product Category One requirements, leaving the simpler high-volume and price-sensitive market needs to the competition.

Note: Proprietary and confidential information has been disguised or omitted from this sample plan.

1.3 Keys to Success

The demand and growth potential is so overwhelming that success in selling Product Category 1 devices is virtually assured provided a few key aspects are kept in mind:

  1. There is no problem in contract manufacturing the devices, provided a ready stock of components is available. Careful planning in ordering sensitive components is essential, and sufficient financing must be in place to support long inventory periods. 
  2. Avoid time-consuming inquiries originating from outside the chosen market targets. Everyone is interested in Technology 1. It is important to weed through the inquiries and respond to those that fall within sales and marketing parameters (needs between 100 and several thousand units, designed for use with high-ticket sophisticated equipment). 
  3. Move quickly to build a brand awareness for cutting-edge reliability. The market need for Product Category 1 devices is potentially so large that more competitors can be expected. It will be more difficult to build an image later.
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Company Summary

Rosafarbenes Nilpferd & Sons Engineering solely owned by Becket Nilpferd, has been in the high-tech business since 1992. To capitalize on the growing demand for the Product Category 1 devices, the company recently shifted from offering consulting services to the development of the Technology 1 hardware and software.  Its first prototype has been vastly popular with its clients and the company soon will start shipping the improved version of its device. The company positions itself as a developer of high-end devices and selectively targets telecommunications companies, as well as smaller industrial automation and instrumentation companies, that have strong demand for the high performance Product Category 1 devices.

2.1 Company History

Rosafarbenes Nilpferd & Sons Engineering was solely service-based for seven years, but as the market for Technology 2 systems began to appear, RNSE shifted its emphasis from consulting to the development of Technology 2 hardware and software. This explains why the Past Performance Table does not show inventory or accounts receivable in years 1997 and 1998. Consulting revenue dropped in 1998 as RNSE limited its consulting activities and began ramping up to produce its first product line which was introduced in 1999. Since then, earnings have increased dramatically from approximately $4,000 in 1998 to nearly $80,000 in 1999 which grew to over $110,000 in the first quarter of 2000.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

Electronic engineering business plan, company summary chart image

Past Performance
1997 1998 1999
Sales $161,595 $76,746 $332,759
Gross Margin $161,595 $73,856 $232,589
Gross Margin % 100.00% 96.23% 69.90%
Operating Expenses $153,147 $69,962 $153,974
Collection Period (days) 0 0 0
Inventory Turnover 0.00 0.00 1.00
Balance Sheet
1997 1998 1999
Current Assets
Cash ($836) $24,403 ($1,280)
Accounts Receivable $0 $0 $22,359
Inventory $0 $0 $99,447
Other Current Assets $0 $0 $0
Total Current Assets ($836) $24,403 $120,526
Long-term Assets
Long-term Assets $16,647 $18,304 $18,304
Accumulated Depreciation $11,875 $16,476 $13,478
Total Long-term Assets $4,772 $1,828 $4,826
Total Assets $3,936 $26,231 $125,352
Current Liabilities
Accounts Payable $0 $0 $15,777
Current Borrowing $9,261 $25,000 $14,866
Other Current Liabilities (interest free) $0 $2,662 $17,525
Total Current Liabilities $9,261 $27,662 $48,168
Long-term Liabilities $12,000 $12,000 $12,000
Total Liabilities $21,261 $39,662 $60,168
Paid-in Capital $2,910 $2,910 $2,910
Retained Earnings ($20,235) ($20,235) ($16,341)
Earnings $0 $3,894 $78,615
Total Capital ($17,325) ($13,431) $65,184
Total Capital and Liabilities $3,936 $26,231 $125,352
Other Inputs
Payment Days 0 0 0
Sales on Credit $0 $0 $0
Receivables Turnover 0.00 0.00 0.00

2.2 Company Ownership

Rosafarbenes Nilpferd & Sons Engineering was incorporated as a “C” corporation in the state of Freedonia in 1992.  Becket Nilpferd is the founder, owner, and sole stockholder.  The company is not publicly traded at the time of this writing.

Note: Proprietary and confidential information has been disguised or omitted from this sample plan.

2.3 Company Locations and Facilities

Rosafarbenes Nilpferd & Sons Engineering presently operates from two large offices located in Fezzaewyg, Freedonia.  All manufacturing is out-sourced to contract manufacturers.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

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Products

Rosafarbenes Nilpferd & Sons Engineering’s products are off-the-shelf ready platforms containing all the necessary infrastructure for Technology 1, so that appliance makers can immediately focus just on their own specific product applications.

3.1 Product Description

Rosafarbenes Nilpferd & Sons Engineering occupies an important segment of the “Technology 2 system” market.  A Technology 2 system is any system that is physically incorporated into a product that performs a dedicated function or specific application.  Consumer examples include kitchen appliances and home entertainment systems, whereas commercial examples are point-of-sale terminals, industrial process controls, etc.  The button you press which toggles back and forth between total miles travelled and the trip mileage is an example of the many Technology 2 systems found in new cars.

RNSE specializes in the segment of the Technology 2 system market that relates to Technology 1.  One example is the odometer as an ultra simple Technology 2 system that does not normally require communication.  However, one can imagine a company with a large fleet of vehicles wanting accurate, up-to-date information concerning mileage for purposes of scheduling servicing, or checking routing distances.  The Technology 2 device that would be needed here would require Technology 1.  The “net” in this case would be a small, simple, closed net that would be comprised of the Technology 2 devices (called “smart” devices) connected to the vehicles’ odometer (satellites) and one central terminal (the server) located at company headquarters.  There is a whole array of means to connect the satellites and the server.  A wire would obviously be inappropriate here.  A digital radio wave would be the likely choice.  Each individual odometer device would have a discrete identifier, and would communicate to the server.  Each would have the potential to communicate to and from anywhere on in the world.  However, in our example, it being a closed system, the rest of the world would not be permitted to gain access to these identifiers.

RNSE makes these Technology 1 devices.  The basic device (here called Product Wrasse), about the size of a credit card, is comprised of:

  1. A central processing unit (CPU).  This is a very powerful chip supplied by Technology Manufacturer 1 which represents the computing brain. 
  2. FLASH chip.  This is memory capacity that does not die when power is turned off. 
  3. SDRAM chip.  Normal memory capacity. 
  4. A Controller.  This governs the data flow from the satellites to the server. 
  5. RNSE’s proprietary Product Blennie.
  6. Other elements like voltage regulators, electrical conduits to connect chips and external hook-ups.

The Product Wrasse, described above, would be bought by original equipment manufacturers (OEMs) to incorporate into their appliance (such as an odometer).  The unit might also be bought by an “integrator” who takes a basic odometer, plus the Product Wrasse, and adds some software to end up with a “smart” odometer which the market integrator then tries to sell to companies with fleets of vehicles that might have good need for this specialized product.  RNSE would configure the Product Wrasse so that it is compatible with the operating system used in the appliance, and would build in whatever FLASH and SDRAM capacity are needed for the designed purpose of the smart odometer.

RNSE’s third product is an add-on to the basic Product Wrasse and is called the Product Damselfish.  Going back to the odometer example: If the company with the fleet of vehicles would like to be able, once a certain mileage had been reached, to tell the driver: “Time for an oil change,” then the Technology 2 device would need to have audio capability.  Some applications might even need a video screen and a keyboard (like an ATM) for user interface.  These capabilities are available through Product Damselfish.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

3.2 Competitive Comparison

OEMs who want to benefit from the trend toward Product Category One their products, typically outsource their needs.  This allows the OEMs to concentrate on the design and application of their specific appliance without having to worry about the Product Category One aspect.  Outsourcing this part saves the OEM in development costs, and more importantly, saves time in getting the appliance to the market.

The attached table is a schematic of the main recipients of this outsourcing and the major features of the Product Category One devices offered by each. 

  1. Outsource Provider 1.  The processor used is somewhat slower and parts costs are higher than with Technology Manufacturer 1’s CPU chip.  This company, by virtue of its parent being a contract manufacturer-assembler of smart devices, is primarily hardware-focused.  It would not be easy for Outsource Provider 1 to switch from Technology Manufacturer 2’s chip to Technology Manufacturer 1’s. 
  2. Outsource Provider 2.  This company seems to be market-segmenting to concentrate more on the multi-media market represented mainly by ATMs and kiosks (such as betting kiosks) which require a keyboard and a screen for user interface. 
  3. Outsource Provider 3.  This company moved in the wrong direction from the start by using their own proprietary software which is built into their devices.  This puts them at a real disadvantage.  Their devices are the slowest, and the least flexible, but still fine for certain non-demanding purposes.  The company has done some work for the HVAC market.  Their lower price reflects their limitations. 
  4. Outsource Provider 4.  This company, located in Vancouver, in close proximity to Software Manufacturer 1, is primarily a software company made up probably of ex-Software Manufacturer 1 people.  This explains their emphasis on the Technology 2 software.  Despite Software Manufacturer 1’s operating system dominance in one market, the Technology 2 market is different.  There are many widely-used Technology 2 operating systems.  This company buys their hardware from Outsource Provider 1. 
  5. Outsource Provider 5.  Outsource Provider 5 is a European-based company.  Its products are distributed and supported in America by a separate corporation in California.  This extra layer may explain the added price.  Specs are similar to those of Outsource Provider 1. 
  6. Rosafarbenes Nilpferd & Sons Engineering.  RNSE has made a considered effort to offer the fastest CPU chip and to build in the widest range of capacity (from low amounts of FLASH and SDRAM up to high amounts).  RNSE tries to make its units compatible with all the major top-tier Technology 2 world operating systems and will work with the second- and third-tiers as well.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

Chip Type and Speed Max.  Flash Memory Max.  SDRAM Size COM Speed I/O Cards Price
OP 1 Technology Manufacturer 2 800 32 MB 64 MB 3.55″ X 3.775″ 100 MB per sec Y $350-$565
OP 2 Fast 206 mhz Technology Manufacturer 1 32 MB 32 MB 4″ X 6″ 10 MB per sec N $325
OP 3 Slow Technology Manufacturer 3 1 MB 256 KB 1.54″ X 1.93″ 10 MB per sec N $149
OP 4 Fast 206 mhz Technology Manufacturer 1 32 MB 32 MB 2.5″ X 2.25″ 100 MB per sec Y $350
OP 5 Technology Manufacturer 2 800 8 MB 64 MB 2.13″ X 3.94″ 100 MB per sec Y $440
RNSE Fast 206 mhz Technology Manufacturer 1 32 MB 64 MB 1.4″ X 2.4″  100 MB per sec Y $350-$650

3.3 Sales Literature

See the appendices for product data sheets.

** Appendix materials omitted in this sample plan.

3.4 Sourcing

The chips and other basic building blocks used in Rosafarbenes Nilpferd & Sons Engineering’s Product Category One platforms can be purchased from a number of large distributors.  Sourcing is not a problem, but order scheduling must be given careful attention.  Shortages can occur, making it necessary to order well in advance and to stockpile in order to make certain that sales does not outstrip production.

3.5 Technology

Technology is moving at a rapid pace.  The first commercial computer in the early 1970’s had a speed, measured in megahertz, of only 0.1 Mhz.  Now computers are on the market that race at 1,000 Mhz.  Although the speed may still increase, a bigger area for growth involves Technology 2 systems, (rather than personal computers) and especially the Technology 1 use of those Technology 2 systems.  In a speech by Hewlett Packard CEO, Carly Fiolani, aired on television 4/18/2000, in the future nearly….”every appliance, yes, even the toaster, will be connected to the Internet.” Ms.  Fiolani’s vision includes an “Information Utility” which, in her opinion, would work in a similar manner to the gas company, the electric or the water and sewer utility.  For all of the 20th century, manufacturers have produced their appliances under a certain protocol of “assumed power.” They have taken it for granted that every consumer has a Power Service Provider (PSP) that supplies 110 AC to wall sockets all through the house.  The appliance makers simply include a power cord and an appropriately sized plug.  The consumer merely plugs the unit in and pays for whatever power he actually uses.  The emerging technology now refers to another protocol of “assumed communication.”

In the future, appliance makers will assume that everyone has an “Information Service Provider,” and will build in Technology 1 right into every Technology 2 component that goes into each appliance.  The consumer will expect it, just as he or she expects a 110AC power cord.  He will plug in the appliance and register it with that Information Utility referred to by Ms.  Fiolani.  Let’s say the appliance is a VCR.  Until now, we have had to program the VCR ourselves before we leave the house if we want it to record a program on TV that will air while we’re away.  We also have to hope we did it right and actually record the last round of the Masters Golf Tournament (and not end up with several hours of some home shopping channel).  However, with the new protocol, we will be able, from wherever we are, to simply contact our Information Utility (which will have all our appliance records) and say: “Record the Masters for me today.” It will all be arranged remotely by the service provider and it will be included in our monthly bill.  From any remote location, we’ll be able to turn our house lights on, turn down the heat, lock or unlock the house, turn off the hot water heater, sprinkle the lawn, etc.  According to Forrester Research, Inc.  of Cambridge, Ma., by the year 2002 7% of U.S. homes will have security systems, lights, heat, and appliances that can tap the Internet.  This will be a $1 billion market alone. 

Product Category One appliances are not going to be reserved for simple on/off features.  Now available on the market are many very sophisticated appliances such as a printer, a sewing machine with computerized embroidery capability, or data stream music.  At the moment these are PC-dependent.  Take a high-tech sewing machine like a Pfaff Model 7570.  This machine with its Technology 2 system can perform complex sequences of operations including executing pre-programmed patterns and monograms and fonts.  The difficult operations which are very user-interface intensive can be performed by the general-purpose PC into which the sewing machine (like a printer peripheral) is plugged instead of by the sewing machine’s Technology 2 system.  If this user-interface capability had to be built into the Technology 2 system of the sewing machine, the cost of that machine would skyrocket.  Likewise, the MP3 player (data stream music) is extremely CPU-intensive.  At the moment the encoding takes place on the general-purpose PC which allows the music player to have much lower requirements for CPU and memory.  These devices are essentially one step removed from the Internet.  Technology is moving quickly to remove the PC intermediary thus making the devices able to communicate directly with a content provider.  Those capabilities of the general-purpose PC will be replaced by the Internet itself thus making the appliances more flexible, more portable, and less expensive.  PCs themselves will metamorphose into very light-weight, very inexpensive units without hard disks and without extensive memory.  All these aspects will be provided by the Internet itself.

Need to use “Winword”? Just log onto the Internet and download the program or any other software you want.  And, it will always be the latest version.

Need file capacity? That too, can be provided by the Internet.  A user can move around the globe and access his/her files from a very portable laptop.  If the laptop is lost or damaged there will not be a crisis.  Simply buy another (for maybe $100).  All your files are safe, located elsewhere. 

Forrester Research predicts that by 2002 43% of all “smart” products will be non-PC devices.  According to International Data Corporation of Framingham, MA. by the year 2004 such appliances will exceed PCs. 

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Market Analysis Summary

The market for Product Category One devices is keyed to the production of Technology 2 microprocessors.  Over 180 million 32-bit microprocessors are being delivered annually.  Conservative estimates have the market growing at 22% annually.  Some estimates are much higher.  Market trends indicate that most, if not all, of these microprocessors will be wanting Technology 1.  At the present time, the number of makers of off-the-shelf Product Category One devices is limited and unlikely to be able to fill the demand.

4.1 Market Segmentation

Statistics related to Product Category One devices are very difficult to find, and when found, usually outdated.  A number of industry newsletters (Technology 2 Processor Watch, Microprocessor Report, Technology 2 Systems Programming) will give dollar figures from time to time for the total embedded market.  In 1999 the market was quoted to be $3.5 billion and expected to grow to $9 billion by 2003.  The Product Category One devices sold by RNSE are connected to this total Technology 2 product market.  The more products that are produced, the greater the demand for Technology 1.  According to Jim Turley, Editor-in-chief of Technology 2 Processor Watch…  “in 1997, more than 180 million Technology 2 32-bit microprocessors were shipped.  This does not include the 32-bit microprocessors placed in the 80 million PCs, the three million MACs, or the approximately one million work stations.” Mr. Turley’s article goes on to state that if the low-end 4-bit and 8-bit microprocessors were included, the totals would be more than doubled.  He estimates that there now exist about 35 low-end microprocessors in every middle-class North American home.  It is, however, the 32-bit sector that is growing fastest.  It is this sector that is most meaningful in projecting the market for RNSE’s products.  Of this total of 180 million 32-bit microprocessor units, the market research firm of Information Architects, claims that the market is broken up roughly into thirds:

  • Office Automation (34%).  This included laser printers, faxes, feature phones, etc. 
  • Consumer (33%).  Includes video games, portable games, CD players, and high-end audio visual equipment. 
  • Communications (28%).  Includes network hubs, routers, switches, telephone infrastructure equipment. 
  • Automotive (3%). 
  • Military (1%). 
  • Other (1%).

Since the total dollar market is predicted to grow from $3.5 billion to $9 billion in the five years 1999-2003, we will assume a 22% annual growth rate over the next three years.  Although the 180 million shipped 32-bit microprocessor data was for 1997, we have not made any growth assumptions for the period 1997-1999, but will apply the 22% annual growth during the next three years to the 1997 data.  It is however highly likely that the market has grown substantially over that period 1997-1999.

In addition to the new Technology 2 microprocessors, there are hundreds of millions of older 4-bit, 8-bit and 16-bit boards that have already been sold.  These too, although ignored in the market study, represent a potential demand for Product Category One devices retrofitted into many of those microprocessors.

The 33% consumer share of the market is characterized by high production runs and price-sensitivity.  VCRs and MP3 players are good examples of products in this consumer market segment.  Similar comments can be made concerning the office automation market segment as well.

The third large sector of the market, telecommunications (28%) does not appear to be as price sensitive nor are production runs as large.  It is this sector that has so far accounted for the majority of Rosafarbenes Nilpferd & Sons Engineering’s sales.

The other category, representing only 1% of the total, probably includes various industrial automation products as well as testing and instrumentation.  These fields, although small in relation to the three major categories, still accounts for over two million microprocessors placed in high-ticket equipment, nearly all of which will need Internet connectivity.

The chart and table below summarize estimated domestic market potential for the RNSE’s products.  As stated above, RNSE will selectively focus on the telecommunications and other customer segments.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

Sbp, electronic engineering business plan, market analysis summary chart image

Market Analysis
2000 2001 2002 2003 2004
Potential Customers Growth CAGR
Office Automation 22% 61 75 92 112 137 22.32%
Consumer 22% 59 72 88 107 131 21.86%
Telecommunications 22% 50 61 74 90 110 21.55%
Automotive 22% 5 7 9 11 13 24.56%
Military 22% 2 2 2 2 2 2.67%
Other 22% 2 2 2 2 2 2.67%
Total 21.71% 180 219 267 324 395 21.71%

4.2 Target Market Segment Strategy

Rosafarbenes Nilpferd & Sons Engineering plans to concentrate on the telecommunications segment of the market (28% of total market) as well as the industrial automation and testing and instrumentation segments (1% of total) as these sectors are most likely to have more demanding requirements which are suited to RNSE’s premier, cutting-edge of technology architecture.  These sectors are most likely to be installing the Product Category 1 devices into high-ticket item instruments and appliances, thus making these clients less price-sensitive in relation to the high-volume consumer (MP3 players, Palm Pilots, etc).  VARs and OEMs (Fortune 500 as well as venture capital start-ups) connected with these market sectors are the most attractive target customers for RNSE.

4.2.1 Market Needs

The market, whether it is a maker of telecommunication switches, industrial automation equipment, or a VAR with a time and money-saving idea for a specific industry, wants to concentrate on its special product and bring it to the market place as soon as possible–hopefully ahead of the competition.  They want to out-source the Technology 1 need because they know that trying to engineer it themselves would be more expensive and slow down the launch of their end product by six to nine months.  Some Technology 1 needs, for example, an inexpensive 4-bit microprocessor lodged in a thermostat, can be satisfied without spending $350-650 for a Rosafarbenes Nilpferd & Sons Engineering Product Wrasse.  This need would be satisfied by one of the low-end devices (like Outsource Provider 3).  RNSE needs to focus on the customers with the more demanding requirements for Product Category One.

The market trend is to add Technology 1  to just about everything, leading eventually to a view of the future well-expressed by the CEO of Hewlett-Packard (see the section on Technology).  The trend is moving so quickly that the market is having problems keeping pace with the demand.  Reports of component shortages among chip makers have been in the business news.  For the foreseeable future, we can expect Technology 1 products to be a sellers’ market.

4.2.3 Market Growth

The market for 32-bit microprocessors totalled $3.5 billion in 1999 and is expected to grow to $9 billion by 2003.  This amounts to a 22% annual growth rate (see the section on Market Segmentation).  In 1997 180 million 32-bit microprocessors were delivered, not counting those that were used in computers and work stations.  A 22% growth rate comes to an additional 40 million annually.  Nearly all of these (180 million plus 40 million annually) will need Technology 1.  The total unit sales projected for Rosafarbenes Nilpferd & Sons Engineering in the third year will amount to only .00014 of that.  In the absence of more specific market data, we have projected market growth at 22% for every segment of the Technology 1 market, although it is likely that some segments will grow faster than 22% annually and others perhaps less.

4.3 Industry Analysis

The industry encompassing Technology 2 microprocessors, the operating systems housed in them, the makers of components used to build them, and the people developing software to make special applications possible is quickly mushrooming into one of the world’s largest industries.  To be successful in marketing a Product Category One device it is essential to understand the patterns and major players in the industry.

4.3.1 Competition and Buying Patterns

Currently, demand for the Product Category One devices outstrips supply.  With the trend of adding Technology 1 to almost any appliance, demand will continue to grow.  The variety of offered platforms and configurations of such devices lead to the market fragmentation where no incumbent company holds a major market share.  For low-end devices, pricing is one of the major factors.  However, for high-end devices, such as the products supplied by Rosafarbenes Nilpferd & Sons Engineering, high technical specification and flexibility with major operation systems are more important.

4.3.2 Main Competitors

The main competitors for Rosafarbenes Nilpferd & Sons Engineering’s products are listed in the section on Competitive Comparison.  The listed competition is unlikely to even come close to satisfying a small portion of the demand for Product Category One devices indicated by market research.  One hundred, eighty million 32-bit microprocessors being delivered annually with a projected growth rate of 22% is a huge market for Technology 1, not to mention the billions of microprocessors already delivered in stock configuration.  Obviously, much of the Technology 1 will be done by internal engineering.  But this option has serious drawbacks for the company trying to develop this feature on its own.  First, its engineers have to examine hardware and software options, which, given the number to choose from, could take months.

  • Will the component support the input/output (I/O) requirements needed by the product?
  • Do separate add-on components need to be designed and manufactured?
  • Which operating system vendors support the component?
  • Does the hardware vendor support the operating system (O/S) vendor?
  • What about integration of the hardware and software?

After months of evaluation, and spending $25,000 on a leading real-time operating system (plus another $10,000-$20,000 buying and building hardware), more months will pass building, debugging, and integrating the operating system with the software.  More time is spent writing the application.  An engineer (who is an expert in the chosen operating system) will need to be hired, and each year another $5,000 will need to be spent in O/S upgrades and software.  Keeping up with protocols and standards will also take time away from development efforts.  In the end, hundreds of thousands of dollars can easily have been spent just on the task of adding Technology 1 to the product internally.  The end product, now including Technology 1, will have been delayed getting to market by six to nine months.  This delay to market aspect is the strongest deterrent to attempting to engineer one’s own Product Category One device.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

4.3.3 Industry Participants

There are several major components in the industry:

Microprocessor Manufacturers
The sheer variety and quantity of microprocessors is huge in relation to desktop computers.  There are only a few choices with desktop computers as Technology Manufacturer 1’s MMMM architecture increasingly dominates.  But with microprocessors there are NNNN, PPPP, QQQQ, MMMM, and RRRR which represent only a tiny fraction of the total volume of microprocessors shipped each year.  Even if we restrict the count to only 32-bit chips, there are more than 100 different microprocessors currently on sale.  This does not take count of the all the different speed grades or packaging options.  These 100 different microprocessors represent more than a dozen instruction-set architectures and more than 30 different vendors worldwide.  Some of these manufacturers have large sales forces and large marketing budgets.  The ability to attract the attention of one of these large manufacturers is key to marketing Product Category One devices.  If the Product Category One device uses an Technology Manufacturer 1 chip, Technology Manufacturer 1 has a vested interest in pushing its CPU customers to use that particular device.

Operating Systems
Microprocessors must have an operating system in order to function.  Again, unlike the desktop market where DDDD dominates, there are many competing operating systems.  So many in fact that they are graded as “First Tier,” “Second Tier,” etc.  When a manufacturer of an automated milling machine chooses an Product Category One device, he will want one that is compatible with his chosen Technology 2’s operating system.  In fact, the first time he hears about a particular Product Category One device it is likely to be through the salesman who sold him his operating system.  If the operating system is GGGG, marketed by Software Manufacturer 2, for example, the salesman will recommend only Technology 1 devices that are compatible with GGGG.

Market Integrators
Market Integrators are often referred to as value added resellers (VARs).  There are countless VARs who develop special applications which are usually industry-specific.  For example, Reseller 1 is a VAR engaged in software related to building maintenance.  This involves Product Category One thermostats and other building maintenance connected equipment in large office buildings.  These VARs are heavy users of Product Category One devices.

OEMs
Original Equipment Manufacturers have quickly recognized the importance of adding the power of the Internet to their equipment, for example, the manufacturer of an automatic scale for use in a production line.  The scale will weigh every packet of tea passing along the belt to check that the weight is within certain tolerances.  If not, the packet is removed from the line by compressed air.  By adding Technology 1 to the scale, the scale’s activity no longer needs to be visually monitored by a human in the production hall, but can be remotely monitored from a central location.  This is especially interesting for a factory with a dozen production lines.  The same evolution is having an impact on almost every type of equipment.  The OEMs are important customers for Product Category One devices as the device adds very little cost relative to the ticket price of the equipment.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

4.3.4 Distribution Patterns

There are large established distributors of microprocessor chips, and other components.  It is possible that one, or all, of these distributors may consider offering an Product Category One device soon with a few limited configurations.  However, the main distribution channel for RNSE’s products is direct.  The buyer may have heard about RNSE through an Technology Manufacturer 1 salesman, or through an operating system salesperson, but the sale would be handled directly.  Most inquiries come initially via telephone or email over RNSE’s website.

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Strategy and Implementation Summary

Rosafarbenes Nilpferd & Sons Engineering’s marketing strategy will be to concentrate on the large telecommunication sector of the market (28% of 180 million units annually), as well as the smaller industrial automation, and the instrumentation sectors.  In keeping with RNSE’s trim organizational structure, growth in sales will be closely keyed to success in its partnering relationships with Technology Manufacturer 1 (its main component maker), developers of operating systems, as well as with suitable VARs.  It will be necessary to augment sales staff.  This “push” marketing will be supported by some “pull” marketing in the form of advertising in specialized trade publications.  At the moment supplying Product Category One devices is a sellers’ market, however, with demand projected to outstrip supply, more makers of these devices are likely to spring up.  It is important for RNSE to leverage its present ground-floor position in the supply of Technology 1 devices by building a market image that will make it difficult for later entrants to make in-roads into RNSE’s target market sectors.

5.1 Competitive Edge

Rosafarbenes Nilpferd & Sons Engineering’s competitive edge stems from the high technical specifications of its products.  The company develops top-of-the-line Product Category One devices that can work with all the major operating systems available in the market.  Further, RNSE has developed a very favorable partnership with Technology Manufacturer 1, who not only provides the chips but is also interested in promoting RNSE’s products.  Moreover, RNSE’s compatibility with all the first- and second-tier operating systems provides a unique opportunity to capture the market share.

5.2 Marketing Strategy

Rosafarbenes Nilpferd & Sons Engineering will concentrate on the more demanding sectors of the market and, in doing so, build an image for the highest cutting-edge technology among the various makers of Product Category One devices.  Pricing on the high side is consistent with that image, and alignment with Technology Manufacturer 1 (the premier CPU maker), and the first-tier developers of operating systems will further enlarge that image.  In addition, an investment should be made in image-bolstering advertising in targeted trade publications serving the chosen market segments.

5.2.1 Positioning Statement

Rosafarbenes Nilpferd & Sons Engineering’s positioning statement is to stay on the cutting edge of Product Category One device technology by constantly improving its products ahead of the competition with such features as the Product Blennie for Technology Manufacturer 1’s product.  RNSE will target customers in the demanding telecommunications, industrial automation, and instrumentation sectors rather than to market-segment a narrower field with lower Technology 1 requirements which tend to be more price-sensitive.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

5.2.2 Pricing Strategy

For projection purposes, pricing has been based on production costs at 40% of sales price, which is in line with the historical COGS of 38% for the first quarter 2000.  This pricing scheme seems to put Rosafarbenes Nilpferd & Sons Engineering’s products on the high end of the ball park with the competition (see the section on Competitive Comparison), which is consistent with the image RNSE wants to build for its products.  Product Category One devices are not yet perceived as “all-the-same” commodities, with price being the only deciding feature.  In line with RNSE’s positioning statement, RNSE’s market sectors are the more demanding ones (telecommunications, industrial automation, and instrumentation).  These customers are installing RNSE’s devices into sophisticated, expensive equipment, and are more likely to make a choice based on which Product Category One device has the highest technical specifications and flexibility in respect to operating system compatibility, choices in configuration, etc., rather than price.

5.2.3 Promotion Strategy

Although Rosafarbenes Nilpferd & Sons Engineering does have sales positions in the personnel plan, RNSE’s promotion strategy will stress “partnering” as its main means of getting the word out concerning its products.  The importance of partnering with major industry players (see the section on Industry Participants) is explained below:

Partnering with Technology Manufacturer 1
Technology Manufacturer 1 has a large sales force and is the industry leader with its CPU chips.  All of RNSE’s products contain this chip, which is a good foundation for Technology Manufacturer 1 wanting to promote RNSE’s products wherever possible over other Technology 1 devices that use Technology Manufacturer 2’s chip.  RNSE is already working directly with several direct-sales people from Technology Manufacturer 1 who are referring high volume Fortune 100 customer’s to RNSE.  In addition, RNSE is receiving calls from Technology Manufacturer 1 reps who have lower volume opportunities.  RNSE will be placed on Technology Manufacturer 1’s website as a member of its third party program.  This is expected to result in increased volume of inquiries to RNSE’s website, and help build the desired image.

RNSE has awakened a great deal of special interest in Technology Manufacturer 1 by developing a Product Blennie for their product.  Technology Manufacturer 1 visited RNSE recently and expressed interest in using some of RNSE’s products internally, or in some sort of joint-venture.

Partnering with Real Time Operating System (RTOS) Developers
As mentioned elsewhere in this plan, compatibility with existing operating systems is key to Product Category One device sales.  The following is a list of most of the first- and second-tier operating systems:

O/S Vendor Compatibility with RNSE Products

  • CCCC software completed. 
  • DDDD ready by end May. 
  • EEEE ready by end May. 
  • FFFF being done by FFFF. 
  • GGGG ready by end May. 
  • HHHH ready within one year. 
  • IIII ready within one year. 
  • JJJJ ready within one year.

Some of these top echelon O/S developers have hundreds of salespersons which translates into sizeable promotional activity, as virtually all customers for operating systems have Technology 1 in their plans.  Partnering with the first tier O/S developers will also serve to build that all-important image for RNSE products.

Partnering with Market Integrators
Market Integrators are heavy users of Product Category One devices.  Hundreds of these VARs have sprung up who have developed software, and attached hardware designed to address problems, or save time and money for a specific industry.  Most, if not all, of these VARs utilize Technology 1 as part of their value added offering.  Special instrumentation or monitoring devices which attach to hospital beds that can sense wet sheets or patient body temperature are good examples.  These devices all require satellites units located at each bed have a Technology 1 device like RNSE’s Product Wrasse.  Considering the number of hospital beds alone, it is easy to see why the VARs represent prime customers for Product Category One devices.  These VARs may first hear about RNSE’s products through one of the operating system developers or via a search through the Web.  In addition, RNSE plans to get out a direct mailing to a list of 300 VARs.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

5.2.4 Distribution Strategy

There are no immediate plans to wholesale Rosafarbenes Nilpferd & Sons Engineering’s products.  There might be opportunities to distribute some Technology 1 devices to one of the major component wholesalers, but this could only be possible in limited configurations.  All sales are expected to be direct sales.  This should be qualified as many major customers out-source their manufacturing.  XYXY, for example, is a customer of RNSE, but they subcontract to SRSR who actually purchases the enabling devices from RNSE.  In the case of VARs, they would purchase from RNSE and install them in the equipment being sold to someone else.  The target market customers addressed in RNSE’s positioning statement should have unit requirements of 100-10,000.  With annual sales volume projected reaching 30,000 in the third year, direct sales should not be a problem logistically.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

5.2.5 Marketing Programs

The most important element in Rosafarbenes Nilpferd & Sons Engineering’s marketing game plan is to complete programming of its products to be compatible with the top tier operating systems (see the section on Promotion Strategy).  Completion is planned for the end of May 2000.  As soon as this has been done, partnering activity with those operating systems developers can begin in earnest.  Informational releases via email to O/S sales forces containing data specifications should be encouraged.  Opportunities to speak at O/S developers’ sales meetings should be sought.  This will be coordinated by the new sales manager position.

In conjunction with the above activities, a direct mailing to VARs should be undertaken.  An up-to-date list of 300 VARs can be obtained through Software Manufacturer 1.  A budget of $1,000 has been provided for in the cash flow projections.

Since many first impressions of RNSE’s products are made by a visit to its website, it is important to give RNSE’s website a face lift.  The Cyber Design Group as well as other professional website designers are being considered.  A budget of $15,000 has been provided for in the projections.  This is the shop window first seen by potential Technology 1 device customers.  The website design must put the desired image at the top of its priorities.  Included in this budget are some ad agency costs, as most Web designers are really technicians who have little knowledge of the art of image building.  The website technician and the advertising specialist need to work together to get the right result.

To help increase awareness of and build the desired image for RNSE’s products, advertising should be done in targeted trade publications.  A media specialist should be consulted to help in selection.  In keeping with RNSE’s positioning statement, trade publications which reach OEMs in the telecommunication, industrial automation, and testing and instrumentation sectors of the market should be favored.  It is important to provide an adequate budget to make certain of attracting notice.  A media specialist can examine the “noise level” (the amount of competing ads) to suggest how much needs to be spent to break through the noise level and be heard.  Until a proper media analysis can be done, a budget will be initially set for year 2000 at $50,000 growing to $250,000 in year 2002. 

5.3 Sales Strategy

The general sales strategy is to concentrate efforts on those sectors of the more demanding 32-bit microprocessor market that have volume needs of 100 to several thousand.  Despite the dramatic increase in visits to Rosafarbenes Nilpferd & Sons Engineering’s website, a more proactive policy needs to be taken by directly approaching heavy users of Product Category One devices. Calls must be made on selected VARs, and OEMs who fit the parameters set by RNSE’s marketing strategy.  Referrals from RNSE’s partnering program (operating system partners, Technology Manufacturer 1, and other industry players) will be stressed. RNSE plans to add a sales manager as well as other sales personnel (see the section on Personnel Plan).

5.3.1 Sales Forecast

Over 400 units of Rosafarbenes Nilpferd & Sons Engineering’s first generation product were sold in the first quarter of 2000 without any dedicated sales staff other than the owner and an administrative assistant.  In keeping with RNSE’s need to stay on the cutting edge of technology, a faster, smarter, smaller improved product is now ready which should easily succeed in reaching the company’s sales goal of 1040 units by the end of the year, increasing to 3000 and 9000 in the second and third year respectively.  This is not an unrealistic achievement considering the market demand for this product, as evidenced by RNSE’s actual sales growth in the past year and the growth in visits to RNSE’s website which have grown from a few thousand a year ago to over 30,000 website visits monthly as of May 2000.  With sales prices set at 2.5 times variable costs, gross profits are expected to reach nearly $1 million in the first year and nearly $9 million in the third year.

The sales projections forecast three RNSE products, made up of a main product (Product Wrasse) and two other products (Product Parrotfish and Product Damselfish) each of which constitute the main product with several add-ons (see the section on Product Description). 

Within these three products, customers have several choices in the configuration in respect to the amount of FLASH (from 1 Mb up to 32 Mb) as well as SDRAM (8 Mb up to 64 Mb).  Depending on the configuration options, the costs of materials range as follows:

  • Product Wrasse: $132.10 up to $193.85. 
  • Product Parrotfish: $210.60 up to $272.35. 
  • Product Damselfish: $150.10 up to $211.85.

To simplify projections, we will assume only one configuration for all three products.  This configuration is with 32 MB DRAM and 4 MB of FLASH.  The costing then will have the following breakdown for the basic product, the Product Wrasse:

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

The Product Parrotfish starts with the basic Product Wrasse ($165.85) and adds Technology 1 components ($27.00), a modem module ($35.00) and several other minor parts ($16.50), bringing the cost up to $244.35.

The Product Damselfish starts with the basic Product Wrasse ($165.85) and adds an audio interface ($10.00), Technology 2 components and connectors ($10.00), bringing the cost up to $183.85.

See the section on Pricing Strategy for explanation of pricing policy.

Sales Forecast
2000 2001 2002
Unit Sales
Product Wrasse 1,040 3,000 10,000
Product Parrotfish 1,040 3,000 10,000
Product Damselfish 1,040 3,000 10,000
Other 38 0 0
Total Unit Sales 3,158 9,000 30,000
Unit Prices 2000 2001 2002
Product Wrasse $412.00 $412.00 $412.00
Product Parrotfish $610.00 $610.00 $610.00
Product Damselfish $457.00 $457.00 $457.00
Other $1,995.00 $1,995.00 $1,995.00
Sales
Product Wrasse $428,480 $1,236,000 $4,120,000
Product Parrotfish $634,400 $1,830,000 $6,100,000
Product Damselfish $475,280 $1,371,000 $4,570,000
Other $75,810 $0 $0
Total Sales $1,613,970 $4,437,000 $14,790,000
Direct Unit Costs 2000 2001 2002
Product Wrasse $165.85 $165.85 $165.85
Product Parrotfish $244.35 $244.35 $244.35
Product Damselfish $183.85 $183.85 $183.85
Other $630.00 $630.00 $630.00
Direct Cost of Sales
Product Wrasse $172,484 $497,550 $1,658,500
Product Parrotfish $254,124 $733,050 $2,443,500
Product Damselfish $191,204 $551,550 $1,838,500
Other $23,940 $0 $0
Subtotal Direct Cost of Sales $641,752 $1,782,150 $5,940,500

5.3.2 Sales Programs

The most important sales program is the program based on “partnering” (see the section on Promotion Strategy).  By constantly being in touch with the activities of Technology Manufacturer 1, and the operating system developers, and by developing relationships with their extensive sales teams, referrals can be expected to VARs and OEMs who fit the parameters set in the marketing strategy.

Once a solid sales prospect has been identified in this manner, more specific action can be taken directly with the prospect.  This action would include more technical discussions between Rosafarbenes Nilpferd & Sons Engineering and the prospect’s engineers.  “Starter Kits” can be arranged which make it very easy for the prospect to integrate hardware and software between the Technology 1 devices and the appliance.  Once a starter kit has been sold, telephone follow-up is necessary to convert the original opening into a substantial sale of 100 or more units.

5.4 Strategic Alliances

As already explained (see the section on Promotion Strategy), strategic alliances between Rosafarbenes Nilpferd & Sons Engineering and Technology Manufacturer 1, the chip manufacturer, and the top tier operating system developers like WWWW, XXXX, or LLLL are essential to success in selling large quantities of enabling devices.  Partnering leads to referrals which can be filtered as to needs, and many referrals can be expected to transform into completed sales. 

The prospects for a deeper strategic alliance with Technology Manufacturer 1 is possible as a result of Technology Manufacturer 1’s recent visit to RNSE.  Technology Manufacturer 1 is especially interested in RNSE’s development of a Product Blennie for the Technology Manufacturer 1 product.  Technology Manufacturer 1 expressed an interest in working together to exploit the product.

5.5 Milestones

The attached table lists the major milestones in the first year that are key to the success of the company’s overall market strategy.

Milestones
Milestone Start Date End Date Budget Manager Department
Mailing to 300 VARs 7/1/2000 7/1/2000 $1,000 B. Nilpferd Admin
Website Design 8/1/2000 8/1/2000 $15,000 B.Nilpferd Marketing
Trade Journal Ads 9/1/2000 9/1/2000 $50,000 B.Nilpferd Marketing
Five Major O/S Programming 6/1/2000 6/1/2000 $0 B.Nilpferd Technical
Second Tier O/S Programming 12/31/2000 12/31/2000 $0 B.Nilpferd Technical
Partnering Banners/Links 12/31/2000 12/31/2000 $0 B. Nilpferd Marketing
Totals $66,000

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Management Summary

The management of Rosafarbenes Nilpferd & Sons Engineering is led by the owner/founder, Becket Nilpferd, who has extensive technical experience in consulting to the industry.  A profitable track record indicates the presence of business acumen.  Important additions to sales and marketing staff should round out the needs of the company to achieve the projected goals set by the sales and marketing strategy.

6.1 Organizational Structure

Rosafarbenes Nilpferd & Sons Engineering plans to increase the number of employees to five in the second year and to ten by the third year.  Half of these with be sales staff reporting to a sales manager who reports to the owner, Becket Nilpferd.  Two relatively low-level technicians will be included to deal with repairs and testing of returns.  Rather than depend completely on outside consultants for software engineering, an engineer will be hired by 2002.  The technicians will report to Becket Nilpferd, but there will be a good deal of interaction with the administration manager as well as with the sales manager.  The software engineer will, like the outside consultants, report directly to Mr.  Nilpferd.

6.2 Management Team

The major members of the management team are Becket Nilpferd, owner and founder, his administrative assistant, Ms. Beda Fomm, and two independent consultant-engineers, who, as is common in the industry, prefer to remain independent rather than become full-time employees.  This team will be augmented by a sales manager who will coordinate the activities of those responding to telephone and website inquiries with direct sales efforts to VARs and OEMs referred through the partnering program, and a full-time software engineer.

6.3 Management Team Gaps

It is vital that a more proactive approach to selling be initiated to take full advantage of the partnering program which leverages the connections with operating system developers.  There are about 300 VARs which certainly justifies a dedicated sales person.  The number of original equipment manufacturers is also high enough to warrant employing someone with experience in dealing with large OEMs.  A sales manager should first be employed to oversee these sales efforts and to coordinate the involvement of media specialists and ad agency work.

The Personnel Plan projects the addition of this staff.

6.4 Personnel Plan

The founder and owner, Becket Nilpferd, during his years spent as a consultant to the industry, has many contacts among software and hardware engineers.  He has utilized them on a contractual basis for much of the software engineering during the development of Rosafarbenes Nilpferd & Sons Engineering’s product line.  He will still use them and their cost can be seen on the income statement under the heading “Contract Consultants” rather than in the Personnel Plan.

In addition to the owner/founder (Becket Nilpferd) and the office manager (Beda Fomm), it will be necessary to add this year:

Sales Manager
The primary duties of the sales manager will be to coordinate the activity of media people to make certain the correct amount of advertising is spent in the most suitable trade publications and that the campaign adequately meets the goals of RNSE’s positioning statement.  The sales manager should be engaged as soon as possible.  A starting salary of $60,000 is budgeted with increases to reward sales growth.

Sales Staff
Reporting to the sales manager will be salespersons who will work primarily via telephone and email.  One to concentrate on VARs and another to concentrate on OEMs.  One each will be added by the end of 2000 after the sales manager is in place.  Starting salary projected at $40,000 annually with increases connected to sales success. 

Two more will be added in the third year.

Technicians
Beginning in year 2002 two low-level technicians need to be added to deal with returns, repairs, testing, etc.  Salary of each is projected at $45,000.

Software Engineer
Despite the excellent success that RNSE has had with independent consulting engineers, it will be advisable by 2002 to hire a permanent in-house software engineer at a salary of $80,000.

Personnel Plan
2000 2001 2002
President $100,348 $100,000 $100,000
Sales Manager $30,000 $75,000 $90,000
Office Manager $25,500 $38,400 $38,400
Salesperson (VAR’s) $0 $50,000 $110,000
Salesperson (OEM’s) $0 $50,000 $110,000
Technicians $0 $0 $90,000
In-house Software Engineer $0 $0 $80,000
Other $0 $0 $0
Total People 2 5 10
Total Payroll $155,848 $313,400 $618,400

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Financial Plan

Rosafarbenes Nilpferd & Sons Engineering’s dramatic growth in sales poses substantial financing needs for receivables as well as inventory.  In 2001 and 2002 virtually all of this need can be supported by accumulated earnings. RNSE will need a line of credit to provide cash in the first year until accounts receivables begin to turn over into cash. Projections indicate a need for a line of approximately $135,000 which could stretch to $200,000.  As the receivables are projected to be high in the first year, and stem from prime quality customers, commercial banking lines of credit (or A/R factoring) should be easily obtainable supported by this current asset without a need for reliance on inventory.

7.1 Important Assumptions

Interest rate is assumed to be 10% if a commercial line of credit is obtained.  Should it be necessary to arrange for factoring of the receivables, interest expense would increase.  In the first year, factoring would add an additional cost of $10,000-$12,000.

The federal tax rate on corporate profits is graduated, beginning at 15% on profits up to $50,000.  The average weighted federal tax rate on profits up to $335,000 works out to 34%.  On profits in excess of $335,000 the federal tax rate is 34%.  To this an additional 9.5% has been added for Freedonia state corporate taxes.

The period of 45 days for receivables is not unusual, but the inventory turn-over is projected to be slow due to a need to keep higher levels than was necessary only a few years ago.  The growth in demand for components has put pressure on suppliers to keep up with the demand.  The risk of maintaining inadequate stocks of certain key components must be minimized by larger than normal forward purchasing.

General Assumptions
2000 2001 2002
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 43.50% 43.50% 43.50%
Other 0 0 0

7.2 Break-even Analysis

In the first quarter of year 2000 the first generation of Technology 1 devices sold an average of 133 units monthly.  The second generation (smaller, faster, smarter) will be ready by early June.  Many customers for Rosafarbenes Nilpferd & Sons Engineering’s products are holding back their orders awaiting the newer version.  The break-even analysis, below, indicates monthly sales needed to break even.

Electronic engineering business plan, financial plan chart image

Break-even Analysis
Monthly Units Break-even 89
Monthly Revenue Break-even $45,431
Assumptions:
Average Per-Unit Revenue $511.07
Average Per-Unit Variable Cost $203.21
Estimated Monthly Fixed Cost $27,366

7.3 Projected Profit and Loss

Projected gross profits for year 2000 will be strong and will climb even further in the second and third year.  Despite substantial investments in marketing (primarily advertising and sales staff), net profits before taxes are projected to  be high.

Explanations for projected expenses are outlined below:

Advertising
The actual expenditures were used for January, February and March.  This expense averaged $817 for 1999.  An additional $50,000 is budgeted for advertising during 2000, $150,000 in 2001, and $250,000 in year 2002.

Documentation Printing
This relates to the specification sheets and manuals that are included with sold products.  We project this expense in year 2000 at the same rate ($96 monthly) as 1999.  In years 2001 and 2002 we have increased this expense to reflect the projected increased sales.  We have assumed, with increased volume of sales, some efficiencies can be had in per unit printing costs.

Electronic Testing Equipment
The actual expenditures were recorded for the first quarter of 2000.  This is a significant expense which came to $1,430 in 1999, but will increase to $500 monthly in 2000 and to $650 monthly in 2001 and $750 monthly in year 2002.

Merchant Services
These services relate to fees paid to credit card companies when credit cards are accepted as cash payment for a sale.  These fees are about 3% (some more, some less) of the sales price.  Actual figures were used for the first quarter, thereafter, we’ll assume fees to be 3% of cash sales.

Computer Parts
Actual figures are given for the first quarter.  Thereafter, the historical monthly average of $542 is used for projection purposes.

Professional Fees
These include accounting ($95/month), legal and miscellaneous outside services such as photography, etc.  Actual figures are given for the first quarter, then $500 monthly is projected, increasing in years 2001 and 2002 to reflect increased sales. 

Computer Software
Actual expenditure is given for the first quarter 2000.  Thereafter, an average monthly figure of $200 is projected.

Office Supplies
The actual figures are given for the first quarter, and $350 monthly is projected thereafter.

Travel
Travel is kept at historical levels for 2000 but will double in years 2001 and 2002.

Miscellaneous
Included here are professional books, minor bank charges, Massachusetts annual report, etc.  Projected at $200 monthly, increasing in years 2001 and 2002.

Leased Equipment
These expenses relate to a computer that is on lease.  They are expected to continue at the same rate.

Online Services
Kept at historical levels.

Telephone
Actual figures are given for the first quarter.  Thereafter at $250/month increasing in years 2001 and 2002.

Utilities
Averaging $100 per month.  Are expected to increase as new space is acquired to accommodate staff hires.  Includes gas and electricity.

Insurance
Insurance related to a business policy which is expected to increase as additional office space is acquired.

Depreciation
Fixed assets are represented by such items as a printer and an iMAC computer plus some software.  Net capital assets are a bit over $4,000 as of 12/31/99.  Assume depreciation at $1,000 annually.

Rent
Currently two offices are rented. With the increase in staff, additional space will be acquired.

Health Care
This relates to the health care plan for the two current members and is projected at present actual cost.  It will increase proportionally as new employees are hired.

Contract/Consultants
These expenses are paid to independent computer technicians who regularly perform services for the company.  They charge $45/hr.  The actual costs for the first quarter are given.  The costs are projected at $2,200 per month, increasing as sales increase.

Pro Forma Profit and Loss
2000 2001 2002
Sales $1,613,970 $4,437,000 $14,790,000
Direct Cost of Sales $641,752 $1,782,150 $5,940,500
Other $0 $0 $0
Total Cost of Sales $641,752 $1,782,150 $5,940,500
Gross Margin $972,218 $2,654,850 $8,849,500
Gross Margin % 60.24% 59.83% 59.83%
Expenses
Payroll $155,848 $313,400 $618,400
Sales and Marketing and Other Expenses $125,793 $249,966 $438,955
Depreciation $1,000 $1,000 $1,000
Leased Equipment $2,628 $2,628 $2,628
Healthcare $10,272 $25,650 $51,360
On-line Services $1,225 $1,225 $1,225
Telephone $2,964 $3,500 $4,500
Utilities $1,200 $1,200 $1,200
Insurance $1,440 $1,600 $2,000
Rent $12,000 $18,000 $21,000
Payroll Taxes $14,026 $28,206 $55,656
Other $0 $0 $0
Total Operating Expenses $328,396 $646,375 $1,197,924
Profit Before Interest and Taxes $643,822 $2,008,475 $7,651,576
EBITDA $644,822 $2,009,475 $7,652,576
Interest Expense $7,030 $10,450 $3,700
Taxes Incurred $277,004 $869,141 $3,326,826
Net Profit $359,787 $1,128,884 $4,321,050
Net Profit/Sales 22.29% 25.44% 29.22%

7.4 Projected Cash Flow

The current borrowing of $14,866 outstanding at the end of 1999 was fully repaid in the first quarter 2000.

The cash flow reflects success in obtaining a line of credit in the range of $150,000-$200,000 which is drawn down and repaid in accordance with need during 2000 leaving a balance of $135,000 at the end of 2000 which is then repaid over the next two years.

Electronic engineering business plan, financial plan chart image

Pro Forma Cash Flow
2000 2001 2002
Cash Received
Cash from Operations
Cash Sales $403,493 $1,109,250 $3,697,500
Cash from Receivables $829,439 $2,622,159 $8,504,861
Subtotal Cash from Operations $1,232,932 $3,731,409 $12,202,361
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 $245,000 $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 $1,477,932 $3,731,409 $12,202,361
Expenditures 2000 2001 2002
Expenditures from Operations
Cash Spending $155,848 $313,400 $618,400
Bill Payments $962,508 $3,108,271 $10,002,746
Subtotal Spent on Operations $1,118,356 $3,421,671 $10,621,146
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $14,866 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $110,000 $85,000 $50,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,243,222 $3,506,671 $10,671,146
Net Cash Flow $234,709 $224,738 $1,531,215
Cash Balance $233,429 $458,168 $1,989,382

7.5 Projected Balance Sheet

Of the long-term liabilities, $12,000 relates to a family loan with no specific repayment schedule.  It carries an interest rate of 7%, although in the projections all LTD has been calculated at 10%.

Pro Forma Balance Sheet
2000 2001 2002
Assets
Current Assets
Cash $233,429 $458,168 $1,989,382
Accounts Receivable $403,397 $1,108,988 $3,696,627
Inventory $117,622 $326,637 $1,088,790
Other Current Assets $0 $0 $0
Total Current Assets $754,449 $1,893,793 $6,774,799
Long-term Assets
Long-term Assets $18,304 $18,304 $18,304
Accumulated Depreciation $14,478 $15,478 $16,478
Total Long-term Assets $3,826 $2,826 $1,826
Total Assets $758,275 $1,896,619 $6,776,625
Liabilities and Capital 2000 2001 2002
Current Liabilities
Accounts Payable $168,778 $263,238 $872,195
Current Borrowing $0 $0 $0
Other Current Liabilities $17,525 $17,525 $17,525
Subtotal Current Liabilities $186,303 $280,763 $889,720
Long-term Liabilities $147,000 $62,000 $12,000
Total Liabilities $333,303 $342,763 $901,720
Paid-in Capital $2,910 $2,910 $2,910
Retained Earnings $62,274 $422,061 $1,550,945
Earnings $359,787 $1,128,884 $4,321,050
Total Capital $424,971 $1,553,855 $5,874,905
Total Liabilities and Capital $758,275 $1,896,619 $6,776,625
Net Worth $424,971 $1,553,855 $5,874,905

7.6 Business Ratios

The following table outlines important business ratios for the electrical and electronic engineering industry, as described by the standard industry classification (SIC) index 8711.9905.

Ratio Analysis
2000 2001 2002 Industry Profile
Sales Growth 385.03% 174.91% 233.33% 1.74%
Percent of Total Assets
Accounts Receivable 53.20% 58.47% 54.55% 32.00%
Inventory 15.51% 17.22% 16.07% 2.11%
Other Current Assets 0.00% 0.00% 0.00% 37.08%
Total Current Assets 99.50% 99.85% 99.97% 71.19%
Long-term Assets 0.50% 0.15% 0.03% 28.81%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 24.57% 14.80% 13.13% 36.30%
Long-term Liabilities 19.39% 3.27% 0.18% 16.15%
Total Liabilities 43.96% 18.07% 13.31% 52.45%
Net Worth 56.04% 81.93% 86.69% 47.55%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 60.24% 59.83% 59.83% 100.00%
Selling, General & Administrative Expenses 37.37% 33.91% 30.36% 77.75%
Advertising Expenses 3.20% 3.38% 1.69% 0.33%
Profit Before Interest and Taxes 39.89% 45.27% 51.73% 3.13%
Main Ratios
Current 4.05 6.75 7.61 1.55
Quick 3.42 5.58 6.39 1.32
Total Debt to Total Assets 43.96% 18.07% 13.31% 56.41%
Pre-tax Return on Net Worth 149.84% 128.58% 130.18% 7.23%
Pre-tax Return on Assets 83.98% 105.35% 112.86% 16.60%
Additional Ratios 2000 2001 2002
Net Profit Margin 22.29% 25.44% 29.22% n.a
Return on Equity 84.66% 72.65% 73.55% n.a
Activity Ratios
Accounts Receivable Turnover 3.00 3.00 3.00 n.a
Collection Days 55 83 79 n.a
Inventory Turnover 10.83 8.02 8.39 n.a
Accounts Payable Turnover 6.61 12.17 12.17 n.a
Payment Days 28 25 20 n.a
Total Asset Turnover 2.13 2.34 2.18 n.a
Debt Ratios
Debt to Net Worth 0.78 0.22 0.15 n.a
Current Liab. to Liab. 0.56 0.82 0.99 n.a
Liquidity Ratios
Net Working Capital $568,145 $1,613,029 $5,885,079 n.a
Interest Coverage 91.58 192.20 2,067.99 n.a
Additional Ratios
Assets to Sales 0.47 0.43 0.46 n.a
Current Debt/Total Assets 25% 15% 13% n.a
Acid Test 1.25 1.63 2.24 n.a
Sales/Net Worth 3.80 2.86 2.52 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Unit Sales
Product Wrasse 0% 78 40 22 30 45 65 80 95 105 110 190 180
Product Parrotfish 0% 78 40 22 30 45 65 80 95 105 110 190 180
Product Damselfish 0% 78 40 22 30 45 65 80 95 105 110 190 180
Other 0% 20 15 3 0 0 0 0 0 0 0 0 0
Total Unit Sales 254 135 69 90 135 195 240 285 315 330 570 540
Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Product Wrasse $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00 $412.00
Product Parrotfish $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00 $610.00
Product Damselfish $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00 $457.00
Other $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00 $1,995.00
Sales
Product Wrasse $32,136 $16,480 $9,064 $12,360 $18,540 $26,780 $32,960 $39,140 $43,260 $45,320 $78,280 $74,160
Product Parrotfish $47,580 $24,400 $13,420 $18,300 $27,450 $39,650 $48,800 $57,950 $64,050 $67,100 $115,900 $109,800
Product Damselfish $35,646 $18,280 $10,054 $13,710 $20,565 $29,705 $36,560 $43,415 $47,985 $50,270 $86,830 $82,260
Other $39,900 $29,925 $5,985 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $155,262 $89,085 $38,523 $44,370 $66,555 $96,135 $118,320 $140,505 $155,295 $162,690 $281,010 $266,220
Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Product Wrasse 0.00% $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85 $165.85
Product Parrotfish 0.00% $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35 $244.35
Product Damselfish 0.00% $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85 $183.85
Other 0.00% $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00 $630.00
Direct Cost of Sales
Product Wrasse $12,936 $6,634 $3,649 $4,976 $7,463 $10,780 $13,268 $15,756 $17,414 $18,244 $31,512 $29,853
Product Parrotfish $19,059 $9,774 $5,376 $7,331 $10,996 $15,883 $19,548 $23,213 $25,657 $26,879 $46,427 $43,983
Product Damselfish $14,340 $7,354 $4,045 $5,516 $8,273 $11,950 $14,708 $17,466 $19,304 $20,224 $34,932 $33,093
Other $12,600 $9,450 $1,890 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $58,936 $33,212 $14,959 $17,822 $26,732 $38,613 $47,524 $56,435 $62,375 $65,346 $112,870 $106,929
Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
President 0% $0 $8,450 $16,901 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333 $8,333
Sales Manager 0% $0 $0 $0 $0 $0 $0 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Office Manager 0% $1,000 $1,000 $1,000 $2,000 $2,000 $2,000 $2,500 $2,500 $2,500 $3,000 $3,000 $3,000
Salesperson (VAR’s) 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Salesperson (OEM’s) 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Technicians 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
In-house Software Engineer 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 2 2 2 2 2 2 2 2 2 2 2 2
Total Payroll $1,000 $9,450 $17,901 $10,333 $10,333 $10,333 $15,833 $15,833 $15,833 $16,333 $16,333 $16,333

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50% 43.50%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $155,262 $89,085 $38,523 $44,370 $66,555 $96,135 $118,320 $140,505 $155,295 $162,690 $281,010 $266,220
Direct Cost of Sales $58,936 $33,212 $14,959 $17,822 $26,732 $38,613 $47,524 $56,435 $62,375 $65,346 $112,870 $106,929
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $58,936 $33,212 $14,959 $17,822 $26,732 $38,613 $47,524 $56,435 $62,375 $65,346 $112,870 $106,929
Gross Margin $96,326 $55,873 $23,564 $26,549 $39,823 $57,522 $70,796 $84,070 $92,920 $97,345 $168,141 $159,291
Gross Margin % 62.04% 62.72% 61.17% 59.83% 59.83% 59.83% 59.83% 59.83% 59.83% 59.83% 59.83% 59.83%
Expenses
Payroll $1,000 $9,450 $17,901 $10,333 $10,333 $10,333 $15,833 $15,833 $15,833 $16,333 $16,333 $16,333
Sales and Marketing and Other Expenses $5,380 $1,340 $4,991 $4,988 $5,087 $20,221 $5,320 $15,420 $15,487 $15,520 $16,053 $15,986
Depreciation $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $83 $87
Leased Equipment $219 $219 $219 $219 $219 $219 $219 $219 $219 $219 $219 $219
Healthcare $856 $856 $856 $856 $856 $856 $856 $856 $856 $856 $856 $856
On-line Services $50 $25 $160 $110 $110 $110 $110 $110 $110 $110 $110 $110
Telephone $151 $361 $202 $250 $250 $250 $250 $250 $250 $250 $250 $250
Utilities $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Insurance $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120 $120
Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Payroll Taxes 9% $90 $851 $1,611 $930 $930 $930 $1,425 $1,425 $1,425 $1,470 $1,470 $1,470
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $9,049 $14,405 $27,243 $18,989 $19,088 $34,222 $25,316 $35,416 $35,483 $36,061 $36,594 $36,531
Profit Before Interest and Taxes $87,277 $41,469 ($3,679) $7,560 $20,735 $23,300 $45,480 $48,654 $57,437 $61,284 $131,547 $122,760
EBITDA $87,360 $41,552 ($3,596) $7,643 $20,818 $23,383 $45,563 $48,737 $57,520 $61,367 $131,630 $122,847
Interest Expense $724 $1,141 $224 $100 $183 $350 $517 $642 $642 $642 $642 $1,225
Taxes Incurred $37,651 $17,543 ($1,698) $3,245 $8,940 $9,983 $19,559 $20,885 $24,706 $26,379 $56,944 $52,868
Net Profit $48,903 $22,785 ($2,205) $4,215 $11,612 $12,967 $25,404 $27,127 $32,089 $34,263 $73,961 $68,667
Net Profit/Sales 31.50% 25.58% -5.72% 9.50% 17.45% 13.49% 21.47% 19.31% 20.66% 21.06% 26.32% 25.79%

Pro Forma Cash Flow
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash Received
Cash from Operations
Cash Sales $38,816 $22,271 $9,631 $11,093 $16,639 $24,034 $29,580 $35,126 $38,824 $40,673 $70,253 $66,555
Cash from Receivables $11,180 $15,061 $114,792 $65,550 $29,038 $33,832 $50,656 $72,656 $89,295 $105,749 $116,656 $124,976
Subtotal Cash from Operations $49,995 $37,332 $124,423 $76,642 $45,677 $57,866 $80,236 $107,782 $128,118 $146,421 $186,909 $191,531
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 $60,000 $50,000 $0 $0 $10,000 $20,000 $20,000 $15,000 $0 $0 $0 $70,000
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 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $109,995 $87,332 $124,423 $76,642 $55,677 $77,866 $100,236 $122,782 $128,118 $146,421 $186,909 $261,531
Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Expenditures from Operations
Cash Spending $1,000 $9,450 $17,901 $10,333 $10,333 $10,333 $15,833 $15,833 $15,833 $16,333 $16,333 $16,333
Bill Payments $18,132 $69,253 $27,781 $8,451 $28,654 $55,379 $85,854 $87,484 $107,482 $113,873 $119,533 $240,632
Subtotal Spent on Operations $19,132 $78,703 $45,682 $18,784 $38,987 $65,712 $101,687 $103,317 $123,315 $130,206 $135,866 $256,965
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 $14,866 $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 $110,000 $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 $19,132 $78,703 $155,682 $33,650 $38,987 $65,712 $101,687 $103,317 $123,315 $130,206 $135,866 $256,965
Net Cash Flow $90,863 $8,630 ($31,259) $42,992 $16,690 $12,154 ($1,451) $19,466 $4,803 $16,215 $51,043 $4,565
Cash Balance $89,583 $98,212 $66,953 $109,945 $126,635 $138,789 $137,338 $156,803 $161,606 $177,821 $228,864 $233,429
Pro Forma Balance Sheet
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Assets Starting Balances
Current Assets
Cash ($1,280) $89,583 $98,212 $66,953 $109,945 $126,635 $138,789 $137,338 $156,803 $161,606 $177,821 $228,864 $233,429
Accounts Receivable $22,359 $127,626 $179,379 $93,479 $61,207 $82,085 $120,354 $158,438 $191,161 $218,337 $234,606 $328,708 $403,397
Inventory $99,447 $64,829 $36,533 $21,574 $19,604 $29,405 $42,475 $52,276 $62,078 $68,613 $71,880 $124,156 $117,622
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $120,526 $282,038 $314,124 $182,006 $190,756 $238,125 $301,617 $348,052 $410,042 $448,556 $484,308 $681,728 $754,449
Long-term Assets
Long-term Assets $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304 $18,304
Accumulated Depreciation $13,478 $13,561 $13,644 $13,727 $13,810 $13,893 $13,976 $14,059 $14,142 $14,225 $14,308 $14,391 $14,478
Total Long-term Assets $4,826 $4,743 $4,660 $4,577 $4,494 $4,411 $4,328 $4,245 $4,162 $4,079 $3,996 $3,913 $3,826
Total Assets $125,352 $286,781 $318,784 $186,583 $195,250 $242,536 $305,945 $352,297 $414,204 $452,635 $488,304 $685,641 $758,275
Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Current Liabilities
Accounts Payable $15,777 $68,304 $27,521 $7,526 $26,843 $52,518 $82,961 $83,908 $103,688 $110,030 $111,436 $234,812 $168,778
Current Borrowing $14,866 $14,866 $14,866 $14,866 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525 $17,525
Subtotal Current Liabilities $48,168 $100,695 $59,912 $39,917 $44,368 $70,043 $100,486 $101,433 $121,213 $127,555 $128,961 $252,337 $186,303
Long-term Liabilities $12,000 $72,000 $122,000 $12,000 $12,000 $22,000 $42,000 $62,000 $77,000 $77,000 $77,000 $77,000 $147,000
Total Liabilities $60,168 $172,695 $181,912 $51,917 $56,368 $92,043 $142,486 $163,433 $198,213 $204,555 $205,961 $329,337 $333,303
Paid-in Capital $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910 $2,910
Retained Earnings ($16,341) $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274 $62,274
Earnings $78,615 $48,903 $71,688 $69,483 $73,697 $85,309 $98,275 $123,680 $150,807 $182,896 $217,159 $291,120 $359,787
Total Capital $65,184 $114,087 $136,872 $134,667 $138,881 $150,493 $163,459 $188,864 $215,991 $248,080 $282,343 $356,304 $424,971
Total Liabilities and Capital $125,352 $286,781 $318,784 $186,583 $195,250 $242,536 $305,945 $352,297 $414,204 $452,635 $488,304 $685,641 $758,275
Net Worth $65,184 $114,087 $136,872 $134,667 $138,881 $150,493 $163,459 $188,864 $215,991 $248,080 $282,343 $356,304 $424,971

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