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Gift Shop icon Gifts and Collectibles Retail Shop Business Plan

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Classique Gifts Etc.

Executive Summary

Classique Gifts Etc. is a start-up retail store offering fine gifts, collectible dolls and doll accessories. The store will be located in Lexington, Kentucky, catering to the middle- and upper-class consumers who look beyond the congested retail malls for the special shopping experience. In addition to offering a wide array of unique, quality products, the consumer will enjoy friendly and knowledgeable customer service and a convenient, uncongested location.

This business plan is prepared to obtain financing in the amount of $50,000 to purchase inventory and to help cover expenses in the first year of operations. We are also asking for a credit line of $10,000 to be used as necessary in low cash flow periods. Brenda and Charles Gajdik will own and operate the store together as a team. They will provide $40,000 in cash as an equity investment to be used in start-up costs, equipment purchases, and operating capital.

The sales forecasts used in this plan are very conservative compared to a similar business now operating in Lexington. Brenda has observed the strengths and weaknesses of this store and is convinced it can be done better.

Gifts and collectibles retail shop business plan, executive summary chart image

1.1 Objectives

  • To develop Classique Gifts Etc. into the premier gift retail store in Central Kentucky.
  • To begin and maintain a gross profit margin above 40% for the first year.
  • To acquire a customer base of 4,000 by the end of the second year by using personal customer service and marketing.
  • To achieve a substantial net profit by the end of Year 3.

1.2 Mission

Classique Gifts Etc.will be a retail gift store specializing in fine gifts, collectible dolls and doll accessories. We want to provide products from quality suppliers and provide professional customer service in a friendly environment.

1.3 Keys to Success

To succeed in this business we must:

  • Sell products the customer desires and are of the highest quality.
  • Provide friendly customer service.
  • Establish excellent vendor/supplier relations that will facilitate quick shipment of orders.
  • Advertise and promote our store immediately to take advantage of the current Christmas shopping season.
  • Continuously review our inventory and sales and adjust our inventory levels based on detailed records.
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Company Summary

Classique Gifts Etc. is proposed to be a sole-proprietorship company operated by Brenda and Charles Gajdik and is a newly established retail store offering unique gifts and elegant collectible dolls.

Located in Lexington, Kentucky, we will cater to special consumers who are interested in finding unique items to supplement their doll collection or finding a gift that cannot be found in the national chain store in the very busy, very congested shopping mall. 

We intend to expand our business by carefully building a repeat customer base and provide the products and merchandise they wish to purchase. We feel it is important to offer personal customer support and services to achieve our business philosophy.

 

2.1 Company Ownership

Classique Gifts Etc. will begin operation as a sole-proprietorship. The company will be owned by Charles and Brenda Gajdik.

2.2 Start-up Summary

Total current and long-term assets will make up 78% of start-up requirements. Start-up expenses, which are detailed in the following start-up table comprise the remaining 22% at $20,058

Funding

As detailed in the start-up funding table, $90,000 with a $10,000 line of credit will be required to fund Classique Gifts Etc. This proposal is to be accomplished as follows:

  • Owners’ investment from Charles and Brenda of $40,000
  • Commercial loan of $50,000, calculated at 7% for seven years
  • Line of credit of $10,000 to be used as necessary

Details of other start-up expenses include:

  • Research and Development:
Buying trip expenses to Columbus, OH. $133
Buying trip expenses to Atlanta, GA. $430
Internet provider service paid in July, for the Year 1 $120
Total $683
  • 1st Month Rent & Deposit (proposed location):
Rent = $9.50/square foot $1425/mo. $17,100/yr.
Common Area Maintenance (CAM) = $1.50/square foot $225/mo. $2700/yr.
Total Rent and CAM

$1650/mo.

$19,800/yr.

  • Leasehold Improvements:
Slatwall Panels and Accessories 50 panels @ $50 each

$2500

Ceiling Tiles 1,400 sq ft @ $.50/sq ft

$700

Carpet with Pad 1,400 sq ft @ 2.50/sq ft

$3500

Carpenter Estimate Display Risers and Counter

$300

Total

$7,000

  • Phone line installation: Single line installation $100
  • Insurance: Medical insurance for Brenda and Charles $650 first month

 

  • Advertising & Promotion:
Newspaper $76/week for 26 weeks (Community Section on Wednesday)

$1976

TV Shopping with Santa in the Bluegrass

$1500

Total

$3476

Start-up
Requirements
Start-up Expenses
Utility Deposits (gas, water, electric) $600
Legal $250
Advertising & Promotion $3,500
Consultants $200
Insurance: Store Liability $2,400
Medical Insurance 1st Month $650
Office Supplies, Gift Wrap and Packaging $1,500
Leasehold Improvements $7,000
1st Month Rent & Deposit $3,075
Phone line installation $100
Research and Development $683
Business Plan Development $100
Total Start-up Expenses $20,058
Start-up Assets
Cash Required $12,185
Start-up Inventory $45,000
Other Current Assets $12,757
Long-term Assets $0
Total Assets $69,942
Total Requirements $90,000
Start-up Funding
Start-up Expenses to Fund $20,058
Start-up Assets to Fund $69,942
Total Funding Required $90,000
Assets
Non-cash Assets from Start-up $57,757
Cash Requirements from Start-up $12,185
Additional Cash Raised $0
Cash Balance on Starting Date $12,185
Total Assets $69,942
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $50,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $50,000
Capital
Planned Investment
Charles & Brenda Gajdik $40,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $40,000
Loss at Start-up (Start-up Expenses) ($20,058)
Total Capital $19,942
Total Capital and Liabilities $69,942
Total Funding $90,000

2.2.1 Start-up Current & Long-term Asset Listing

Description of Asset Brand Quantity Cost
Display Cases and Furniture various

*$2,000

Cash Register Penny 1

     800

Phone System Radio Shack 1

   * 250

Office Furniture Office Depot desk, chair,cabinets

  * 750

Computer System Dell 1

 2,261

Additional SW and Services Quickbooks

 ** 700

Storefront Channel Sign Gabbard 1

 5,996

TOTAL  

$12,757

*budgeted amounts **including annual payroll service

2.3 Location: Proposed

The most desirable location we have found is in Imperial Plaza Shopping Center located on Waller Avenue. The center will soon be renamed to Waller Center. The property manager estimates that 20,000 cars pass this center daily.

Imperial Plaza: This location has 1,800 sq. ft. and is priced at $9.50 per sq. ft. The CAM expense is $1.50 per sq. ft. and is adjustable and refundable at the end of the year. In other words, if the common area maintenance fund has not been fully used during the year, the remaining portion of the fund will be credited toward the tenant’s lease payment.

Approximately 350 sq ft in the back room can be used as work space and storage. The sales counter is adequate but could use some paint. The drop-down ceiling panels need to be replaced. The floor needs carpet and the walls need to have the pegboard panels removed or covered with slatwall. The window display risers are adequate but could use some carpet.

Monthly rent is $1,425 and the Common Area Maintenance (CAM) is $225 for a total of $1,650 per month. However, the owner’s representative said he would consider taking less. All appropriate insurance for liability and inventory is the tenant’s responsibility. The owner appears to be very flexible and helpful. The start-up leasehold expenses have been based on this property.

Other potential sites we have looked at are as follows:

Southland Drive:  The location has 2,000 sq. ft. at the very end of  Southland Drive close to Lane Allen Rd.  It was previously occupied by Southland Florists, which moved to a new location. The property has been available for about three years. The space is one of 4 or 5 spaces of the same size in a stand-alone building at the end of Southland Shopping Center.

The back room, which serves as a work and storage area, has a bathroom and will need remodeling. The floor will need new tile and some of the walls in back need repair.

There is an office area with a separate ceiling which should be removed for additional ventilation. An additional small room is adjacent to the office and should be removed to provide additional retail floor space.

The retail portion of the property needs the carpet replaced. The sales counter and the display window risers need to be replaced. The front door needs advertising material removed and the walls throughout the front and back need painting. The entire ceiling must be repaired.

The business sign must be flat against the outside surface. The existing sign with a new face can be utilized. However, the signs cannot be seen from Southland Drive because of three very large pine trees blocking the view. Parking is small but probably adequate for these shops.

The rent is $1,800 per month with the first month free for renovation. There is no common area maintenance (CAM) charge. The deposit is $1,800 and is due along with the first month’s rent. The tenant must provide the appropriate insurance for liability and protection of his assets. The owner said he would repair the ceiling and walls. The tenant is responsible for all other leasehold improvements.

This space will need considerable leasehold improvements. An existing tenant next door is not happy with the owner or her current situation and has only been in the location for six months.

Chinoe Center: The location has 2,280 sq ft in an upscale strip center with a mix of office space and retail outlets anchored by Kroger Supermarket Grocery Store. The property is located next to Kroger and with the right sign will receive a tremendous amount of visual advertisement exposure with the Kroger traffic. However, there is no display window, which explains the relatively inexpensive rent and CAM expenses. We have not seen the inside space.

The door leading to the space is located between a carryout Pizza store and Kroger. The door leads to a hallway about 25 to 30 feet long into a space which turns into three separate oddly shaped rooms. The space was previously used as a modern dance studio.

The space is priced at $8 per sq ft and $1.65 per sq ft CAM fee. That is $1,833.50 per month. The tenant assumes full insurance responsibility for inventory and liability.

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Products

Classique Gifts Etc. plans to carry special occasion gifts and merchandise from the San Francisco Music Box Company, Swarovski crystal, Lennox crystal, Outback Chair Company, Traditions Artglass Company, children’s books from Harvest House and other suppliers who display their products at the Atlanta International Gift Market or the Columbus Marketplace for Gift, Garden and Home.

We will also purchase merchandise from the most well-known collectible doll manufacturers and suppliers in the United States, including Steiff, Madame Alexander, Turner Dolls, Lee Middleton, Wendy Lawton, Susan Wakeen, Kish Dolls, Lloyd Middleton and others that provide the quality products that our customers wish to purchase.

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Market Analysis Summary

According to Pam Danziger, President of Unity Marketing, the collectible doll industry generated $3 billion in retail sales in 2000. The gift industry, which includes general gifts, collectibles, stationery and greeting cards, generated $54 billion in sales in 2002. As predicted by Unity Marketing, “the future of the gifts and home accents market is positive for the next several years.” Source:Unity Marketing, The Home Report 2001:The Market, The Competitors, The Trends

4.1 Market Segmentation

The ideal customer we expect to serve is:

  • Middle to Upper Class
  • Primarily Female
  • 30-75 Years of Age
  • Educated
  • Homeowner
  • Quality Conscious
  • Value Conscious
  • Family Oriented

We will attract these customers by offering unique and uncommon product selections not found in the mass-market retail stores.

4.2 Industry Analysis

  • More and more consumers are seeking independent retailers that offer them the feel of home with a more personalized shopping experience.
  • As consumers become more time-deprived, they are looking to shop at stores whose service offerings are as equal in quality and value to their products.

4.2.1 Competition and Buying Patterns

Brand name products sell well in stores that maintain a good selection, good location, and knowledgeable, friendly employees. These are the most important factors when selling collectibles and gifts.

There is only one store in the Lexington area that carries a wide variety of collectible dolls. However, the doll inventory only makes up about 25% of the total inventory.  We do not consider this store serious competition because their lease for the 4800 sq. ft. store expires in March, 2004, and it is rumored the business will not renew the lease.

Other stores in the Central Kentucky area carry one or two lines of dolls but do not offer a wide variety of collectible doll lines. We intend to offer many different doll lines, doll accessories,  personalized knowledgeable service, and a variety of other unique gift merchandise.  

The Internet offers dolls at discount prices.  However, most of the merchandise is retired or discontinued lines that the manufacturers sell in bulk at discount wholesale prices. These are not the products we intend to carry in Classique Gifts Etc.

We intend to develop a web page at some point, probably in year three to market our merchandise on the Internet.

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Strategy and Implementation Summary

Classique Gifts Etc. will develop product offerings and marketing strategy to increase its customer base while driving sales and profit. The following sections review the various strategies that will support this effort.

5.1 Marketing Strategy

Classique Gifts Etc. will focus its marketing efforts by advertising in the Lexington Herald-Leader and Insight Media Advertising on cable TV.

We will also increase consumer awareness, retain the existing customer base and promote sales via seasonal postcard and newsletter mailings. The mailings will announce special events or holiday specials during the year. These events will be used to sell slow-moving products and vendor special promotions. This means our marketing resources will be centered around both sales promotions (events, displays) and personal sales (customer service, friendly atmosphere).

Classique Gifts Etc. will offer $5 coupons for every $100 spent. The coupon can be used by the customer on future visits to the store.

5.2 Sales Strategy

Classique Gifts Etc. will approach sales from a salesperson-customer relationship basis. All customers will be assisted in a very personal manner. Gathering key customer information and seeking performance feedback on the products and services offered will assist us in the following ways:

  • Targeting our marketing efforts more effectively.
  • Developing product offers and merchandising formats that will increase sales.
  • Developing services that enhance the shopping experience.
  • Increase awareness of Classique Gifts Etc. within the retail consumer marketplace.
  • Develop future sales opportunities that allow for continued growth of the business.

5.2.1 Sales Forecast

Sales in the retail gift and collectible doll industry is enhanced by seasonal holidays and special gift giving occasions. The following sales forecast is from direct retail sales and does not include miscellaneous income. The figures also include dips in sales for those slow periods the business usually experiences in the summer months.

Gifts and collectibles retail shop business plan, strategy and imlpementation summary chart image

Gifts and collectibles retail shop business plan, strategy and imlpementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Dolls & Accessories $72,105 $80,758 $90,449
Gifts $71,405 $79,974 $89,570
Total Sales $143,510 $160,731 $180,019
Direct Cost of Sales Year 1 Year 2 Year 3
Dolls & Accessories $40,871 $42,915 $45,060
Gifts $40,885 $42,929 $45,076
Subtotal Direct Cost of Sales $81,756 $85,844 $90,136

5.3 Competitive Edge

Classique Gifts Etc. will establish itself competitively as a unique retail environment through product offering and friendly, personal customer service. With St. Joseph Hospital, medical offices, the Kentucky Inn, the University of Kentucky and the Campbell House all located within 1/2 mile of the proposed site, we will attempt to offer items that appeal to this diverse population as well as the doll collector.

5.4 Milestones

The following table lists important milestone dates.

Milestones
Milestone Start Date End Date Budget Manager Department
Business Plan 11/1/2003 11/18/2003 $0 Charles Department
Secure Funding 11/18/2003 12/31/2003 $0 Charles Department
Negotiate and Sign Lease 11/18/2003 12/31/2003 $0 Charles Department
Business Setup 11/18/2003 12/31/2003 $0 Charles Department
Leasehold Improvements 11/18/2003 12/31/2003 $0 Charles Department
Purchase Start-up Equipment 11/18/2003 12/31/2003 $0 Charles Department
Advertising Developed 1/1/2004 2/1/2004 $0 Charles/Brenda Department
Store Open For Business 2/1/2004 2/2/2004 $0 Charles/Brenda Department
Totals $0

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Management Summary

Classique Gifts Etc. will be managed and operated on a daily basis by Brenda and Charles Gajdik, a husband and wife team.

Brenda will manage merchandising, sales, customer relations, and all part-time staff. She will also provide the information necessary to develop a marketing plan to attract repeat customers. Brenda has been employed for three years at Schwab’s Collectibles, a retail collectible and gift store in Lexington. She is currently the assistant store manager which she has held for two years. Some of her management duties include shipping and receiving, merchandising, and sales. She has always served the public in most every position she has previously held. She understands what customer service is and has a loyal following of repeat customers. 

Charles will manage the finances and financial records, operations, data processing and assist in all other areas of the business. Charles has 14 years experience in accounting and nearly 15 years experience in information technology as an Information Systems (IS) Support Specialist. He also maintains the financial records for a family owned business and has some experience in retail sales.

6.1 Personnel Plan

The personnel plan is included in the following table. It shows the owners’ salaries along with one part-time employee used as needed.

Personnel Plan
Year 1 Year 2 Year 3
Brenda Owner/Manager-Sales & Merchandising $14,600 $16,000 $16,000
Charles Owner/Manager-Operations & Finance $9,000 $14,000 $14,000
Part-Time as Needed ($7 per hour) $3,120 $4,120 $5,120
Total People 3 3 3
Total Payroll $26,720 $34,120 $35,120

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Financial Plan

  • Growth will be moderate.
  • Costs will be managed and forecasts for future needs will be performed on a regular basis.
  • Finding the right product, at the right price will enable the business to meet planned margins and maintain inventory at an acceptable level.

7.1 Important Assumptions

Key assumptions are:

  • We do not sell anything on credit.
  • We assume the continued popularity of collectibles.
  • We assume access to financing sufficient to maintain our financial plan as shown in the tables.
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 6.00% 6.00% 6.00%
Long-term Interest Rate 7.00% 7.00% 7.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Projected Profit and Loss

The following table shows our planned three-year profit and loss estimates. We expect to have a gross margin percent above 40% our first year, which will continue to grow in years two and three.

The associated charts show that we will have a negative profit/sales percentage for the first two years with a positive net profit by year three.

Gifts and collectibles retail shop business plan, financial plan chart image

Gifts and collectibles retail shop business plan, financial plan chart image

Gifts and collectibles retail shop business plan, financial plan chart image

Gifts and collectibles retail shop business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $143,510 $160,731 $180,019
Direct Cost of Sales $81,756 $85,844 $90,136
Other Costs of Goods $0 $0 $0
Total Cost of Sales $81,756 $85,844 $90,136
Gross Margin $61,754 $74,887 $89,883
Gross Margin % 43.03% 46.59% 49.93%
Expenses
Payroll $26,720 $34,120 $35,120
Sales and Marketing and Other Expenses $600 $1,200 $2,400
Depreciation $0 $0 $0
Rent and CAM Expense $18,150 $18,150 $18,150
Utilities $3,600 $3,600 $3,600
Liability Insurance:Store $0 $2,400 $2,400
Insurance (medical Brenda & Charles) $7,800 $7,150 $7,150
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $56,870 $66,620 $68,820
Profit Before Interest and Taxes $4,884 $8,267 $21,063
EBITDA $4,884 $8,267 $21,063
Interest Expense $3,156 $2,549 $1,915
Taxes Incurred $518 $1,716 $5,745
Net Profit $1,209 $4,003 $13,404
Net Profit/Sales 0.84% 2.49% 7.45%

7.3 Break-even Analysis

The following table and chart show our estimated monthly revenue break-even point.

Gifts and collectibles retail shop business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $11,013
Assumptions:
Average Percent Variable Cost 57%
Estimated Monthly Fixed Cost $4,739

7.4 Projected Cash Flow

The following table and chart represents the projected cash flow.

Gifts and collectibles retail shop business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $143,510 $160,731 $180,019
Subtotal Cash from Operations $143,510 $160,731 $180,019
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 $143,510 $160,731 $180,019
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $26,720 $34,120 $35,120
Bill Payments $67,291 $124,798 $131,213
Subtotal Spent on Operations $94,011 $158,918 $166,333
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 $9,060 $9,060 $9,060
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $103,071 $167,978 $175,393
Net Cash Flow $40,439 ($7,247) $4,625
Cash Balance $52,624 $45,378 $50,003

7.5 Projected Balance Sheet

The following table shows our projected Balance Sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $52,624 $45,378 $50,003
Inventory $8,583 $9,012 $9,463
Other Current Assets $12,757 $12,757 $12,757
Total Current Assets $73,964 $67,147 $72,223
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $73,964 $67,147 $72,223
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $11,873 $10,113 $10,845
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $11,873 $10,113 $10,845
Long-term Liabilities $40,940 $31,880 $22,820
Total Liabilities $52,813 $41,993 $33,665
Paid-in Capital $40,000 $40,000 $40,000
Retained Earnings ($20,058) ($18,849) ($14,846)
Earnings $1,209 $4,003 $13,404
Total Capital $21,151 $25,154 $38,558
Total Liabilities and Capital $73,964 $67,147 $72,223
Net Worth $21,151 $25,154 $38,558

7.6 Business Ratios

The following table outlines some of the more important ratios from the Gift Shop industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code 5947.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 12.00% 12.00% 3.34%
Percent of Total Assets
Inventory 11.60% 13.42% 13.10% 40.42%
Other Current Assets 17.25% 19.00% 17.66% 23.99%
Total Current Assets 100.00% 100.00% 100.00% 80.29%
Long-term Assets 0.00% 0.00% 0.00% 19.71%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.05% 15.06% 15.02% 36.19%
Long-term Liabilities 55.35% 47.48% 31.60% 15.42%
Total Liabilities 71.40% 62.54% 46.61% 51.61%
Net Worth 28.60% 37.46% 53.39% 48.39%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 43.03% 46.59% 49.93% 37.74%
Selling, General & Administrative Expenses 44.22% 47.15% 45.12% 23.72%
Advertising Expenses 0.00% 0.00% 0.00% 2.14%
Profit Before Interest and Taxes 3.40% 5.14% 11.70% 1.65%
Main Ratios
Current 6.23 6.64 6.66 1.98
Quick 5.51 5.75 5.79 0.74
Total Debt to Total Assets 71.40% 62.54% 46.61% 3.65%
Pre-tax Return on Net Worth 8.17% 22.73% 49.66% 58.19%
Pre-tax Return on Assets 2.34% 8.52% 26.51% 8.72%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 0.84% 2.49% 7.45% n.a
Return on Equity 5.72% 15.91% 34.76% n.a
Activity Ratios
Inventory Turnover 5.75 9.76 9.76 n.a
Accounts Payable Turnover 6.67 12.17 12.17 n.a
Payment Days 27 33 29 n.a
Total Asset Turnover 1.94 2.39 2.49 n.a
Debt Ratios
Debt to Net Worth 2.50 1.67 0.87 n.a
Current Liab. to Liab. 0.22 0.24 0.32 n.a
Liquidity Ratios
Net Working Capital $62,091 $57,034 $61,378 n.a
Interest Coverage 1.55 3.24 11.00 n.a
Additional Ratios
Assets to Sales 0.52 0.42 0.40 n.a
Current Debt/Total Assets 16% 15% 15% n.a
Acid Test 5.51 5.75 5.79 n.a
Sales/Net Worth 6.78 6.39 4.67 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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Appendix

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Dolls & Accessories 0% $7,400 $7,900 $5,350 $5,230 $5,600 $5,850 $6,475 $5,500 $5,400 $5,450 $5,700 $6,250
Gifts 0% $7,400 $7,900 $5,250 $5,230 $5,500 $5,750 $6,375 $5,400 $5,300 $5,450 $5,600 $6,250
Total Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500
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
Dolls & Accessories $3,900 $4,243 $2,690 $2,759 $3,425 $3,550 $3,988 $2,988 $3,150 $3,125 $3,150 $3,903
Gifts $3,900 $4,250 $2,690 $2,759 $3,425 $3,550 $3,998 $2,988 $3,150 $3,125 $3,150 $3,900
Subtotal Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803
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
Brenda Owner/Manager-Sales & Merchandising 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,300 $1,300
Charles Owner/Manager-Operations & Finance 0% $0 $0 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900
Part-Time as Needed ($7 per hour) 0% $280 $560 $0 $0 $0 $300 $300 $320 $320 $320 $320 $400
Total People 3 3 2 2 2 3 3 3 3 3 3 3
Total Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600

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 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
Long-term Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
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 $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500
Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803
Gross Margin $7,000 $7,307 $5,220 $4,942 $4,250 $4,500 $4,864 $4,924 $4,400 $4,650 $5,000 $4,697
Gross Margin % 47.30% 46.25% 49.25% 47.25% 38.29% 38.79% 37.85% 45.17% 41.12% 42.66% 44.25% 37.58%
Expenses
Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600
Sales and Marketing and Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $300
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent and CAM Expense $0 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650
Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Liability Insurance:Store $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Insurance (medical Brenda & Charles) $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650
Payroll Taxes 15% $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
Total Operating Expenses $2,430 $4,360 $4,700 $4,700 $4,700 $5,000 $5,000 $5,020 $5,020 $5,020 $5,420 $5,500
Profit Before Interest and Taxes $4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)
EBITDA $4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)
Interest Expense $287 $283 $278 $274 $270 $265 $261 $256 $252 $248 $243 $239
Taxes Incurred $1,285 $799 $72 ($10) ($216) ($230) ($119) ($106) ($262) ($185) ($199) ($313)
Net Profit $2,998 $1,865 $169 ($22) ($504) ($536) ($278) ($247) ($610) ($432) ($464) ($729)
Net Profit/Sales 20.26% 11.80% 1.60% -0.21% -4.54% -4.62% -2.16% -2.26% -5.70% -3.97% -4.11% -5.83%

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 $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500
Subtotal Cash from Operations $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500
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 $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500
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 $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600
Bill Payments $84 $2,561 $3,658 $2,948 $2,857 $2,785 $6,757 $11,529 $6,607 $9,234 $8,872 $9,399
Subtotal Spent on Operations $1,564 $4,321 $5,758 $5,048 $4,957 $5,185 $9,157 $13,949 $9,027 $11,654 $11,392 $11,999
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 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755
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 $2,319 $5,076 $6,513 $5,803 $5,712 $5,940 $9,912 $14,704 $9,782 $12,409 $12,147 $12,754
Net Cash Flow $12,481 $10,724 $4,087 $4,657 $5,388 $5,660 $2,938 ($3,804) $918 ($1,509) ($847) ($254)
Cash Balance $24,666 $35,390 $39,477 $44,134 $49,522 $55,182 $58,120 $54,315 $55,234 $53,725 $52,878 $52,624
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 $12,185 $24,666 $35,390 $39,477 $44,134 $49,522 $55,182 $58,120 $54,315 $55,234 $53,725 $52,878 $52,624
Inventory $45,000 $37,200 $28,707 $23,327 $17,809 $10,959 $7,810 $8,785 $6,574 $6,930 $6,875 $6,930 $8,583
Other Current Assets $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757
Total Current Assets $69,942 $74,623 $76,854 $75,561 $74,700 $73,238 $75,749 $79,662 $73,646 $74,921 $73,357 $72,565 $73,964
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $69,942 $74,623 $76,854 $75,561 $74,700 $73,238 $75,749 $79,662 $73,646 $74,921 $73,357 $72,565 $73,964
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 $2,438 $3,559 $2,853 $2,769 $2,565 $6,367 $11,312 $6,299 $8,939 $8,562 $8,989 $11,873
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 $2,438 $3,559 $2,853 $2,769 $2,565 $6,367 $11,312 $6,299 $8,939 $8,562 $8,989 $11,873
Long-term Liabilities $50,000 $49,245 $48,490 $47,735 $46,980 $46,225 $45,470 $44,715 $43,960 $43,205 $42,450 $41,695 $40,940
Total Liabilities $50,000 $51,683 $52,049 $50,588 $49,749 $48,790 $51,837 $56,027 $50,259 $52,144 $51,012 $50,684 $52,813
Paid-in Capital $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Retained Earnings ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058)
Earnings $0 $2,998 $4,863 $5,032 $5,009 $4,506 $3,970 $3,692 $3,446 $2,835 $2,403 $1,939 $1,209
Total Capital $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151
Total Liabilities and Capital $69,942 $74,623 $76,854 $75,561 $74,700 $73,238 $75,749 $79,662 $73,646 $74,921 $73,357 $72,565 $73,964
Net Worth $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151

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