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The Metolius Agency

Executive Summary

The Metolius Agency is a Eugene, Ore. based graphic design and visual communications firm.  Metolius will be concentrating on corporate identity of established companies.  The targeted customer is a small- to medium-size company that has been established for five to 15 years.  The company has done well with the business so far, but they are in need of a new corporate identity to allow them to move to the next level.

Metolius will operate out of a small office in the downtown area.  For months one through seven, Kiev Lartiste will be the sole employee.  By month seven, Kiev will be hiring an assistant to help with design work as well as administrative details.

Metolius will offer companies a fresh perspective regarding corporate identity and visual communication.  Kiev has a unique background where he has business skills and creative skills.  Most firms come solely from creative backgrounds.  While this is useful for the crafting of logos and other devices of visual communication, it lacks the intuitive business mindset that Kiev brings to the firm.  This competitive edge allows Kiev to bring both an aesthetic design focus as well as a practical, quantitative mindset that adds value to the service offerings by creating solutions that have both creative elements combined with rational, business ideas.  This is useful since the clients are more business oriented.

Metolius will grow their customer base by providing clients with well-priced projects due to reasonably low overhead, creative, practical designs that add more value than competing graphical art firms, and superior customer attention.  The Metolius Agency will reach profitability by month nine and generate $27,347 in profits by year three. 

Graphic design business plan, executive summary chart image

1.1 Objectives

The objectives for the first three years of operation include:

  1. To develop a start-up graphics agency that will grow to profitability within year two.
  2. To create a company whose primary goal is to exceed customer’s expectations.
  3. To create a firm that provides the target customers with valuable services and provides the owner with a flexible, creative, fun, and profitable business opportunity.

1.2 Mission

The Metolius Agency’s mission is to provide the customer with creative and practical graphic design work and visual communication services.  We exist to attract and maintain customers.  When we adhere to this maxim, everything else will fall into place.  Our services will exceed the expectations of our customers.

1.3 Keys to Success

The keys to success are:

  • Professionalism
  • Creativity
  • Practical insight
  • Enjoyment of the experience
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Company Summary

The Metolius Agency is a start-up graphics firm that serves small- to medium-sized companies.  The firm will be based in Eugene, Ore. and will operate from a small, downtown office.

2.1 Company Ownership

The Metolius Agency is a sole proprietorship owned and operated by Kiev Lartiste.

2.2 Start-up Summary

The Metolius Agency will incur the following start-up costs:

  • Assorted office furniture including two filing cabinets, two work desks, a couch and two chairs for the waiting area, a round table with chairs, and assorted fixtures for the office.
  • Two computers, each with 21″ monitors, graphic tablet, black and white laser printer, inkjet color printer, scanner, CD-RW, and the following software: Illustrator, Freehand, Quark, Photoshop, Font Management Utilities, Traffic Office Manager (a scheduling and billing software), and Microsoft Project.
  • Development of the website which will include design time by Kiev and implementation from a University of Oregon computer science graduate student.
  • A current library of requisite magazines and journals.
  • A DSL connection.
  • Assorted office supplies.
  • Stationary and brochures.
  • Legal fees regarding business formation, creation of standard client contracts, and other general advice.

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

Graphic design business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $1,000
Start-up Assets to Fund $42,000
Total Funding Required $43,000
Assets
Non-cash Assets from Start-up $19,800
Cash Requirements from Start-up $22,200
Additional Cash Raised $0
Cash Balance on Starting Date $22,200
Total Assets $42,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $0
Capital
Planned Investment
Kiev $43,000
Investor 2 $0
Other $0
Additional Investment Requirement $0
Total Planned Investment $43,000
Loss at Start-up (Start-up Expenses) ($1,000)
Total Capital $42,000
Total Capital and Liabilities $42,000
Total Funding $43,000
Start-up
Requirements
Start-up Expenses
Legal $500
Stationery etc. $250
Brochures $250
Other $0
Total Start-up Expenses $1,000
Start-up Assets
Cash Required $22,200
Other Current Assets $0
Long-term Assets $19,800
Total Assets $42,000
Total Requirements $43,000

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Services

The Metolius Agency provides graphic design and visual communication services to established, primarily Eugene-based, companies.  Some of the services offered are corporate identity, marquees, logos, branding, and packaging. 

The pricing of the projects are typically estimated as a project-based cost.  The project cost will be estimated by the approximate number of hours needed to complete the project.  Generally, Kiev will be charging $75 an hour for his services.

The majority of services will be provided at The Metolius Agency’s office space.  This office will be modern, practical, and sleek.  This is very important because the office of a graphic designer is to a large degree a piece of their portfolio and reflects their work product.  Therefore, a decent amount of money will be used to develop a proper appearing business office.

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Market Analysis Summary

The Metolius Agency will be targeting small- to medium-sized companies.  What these companies have in common is they have started as a small company with a good idea and have grown into a larger, more mature company that must now decide if they are going to maintain the current business strategy, or reinvigorate the company, employ professional service providers, and move to the next level.

4.1 Market Segmentation

The Metolius Agency has two distinct customer groups which they will concentrate on:

  • Small-size companies: typically five to 15 employees
  • Medium-size companies: 15 to 40 employees

These companies started with a valuable concept and leveraged their original grassroots visual communication elements. Now that they have matured into a larger company, they can no longer rely on the original grassroots corporate identity. These companies are in need of a professional firm like The Metolius Agency to expand their identify and take them to that same level as their competitors and be able to compete.

Graphic design business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Small companies 8% 234 253 273 295 319 8.05%
Medium companies 7% 145 155 166 178 190 6.99%
Total 7.65% 379 408 439 473 509 7.65%

4.2 Target Market Segment Strategy

The market segments will be targeted in a number of different ways.  It must be noted that graphics firms generate visibility and sales not through advertising, but through networking and client referrals.  The methods used for the target market segment strategy will be:

  • Networking. The networking will be based on leveraging Kiev’s personal and professional relationships that he has developed after spending years in the industry.  Ways of networking include sending out notecards to all acquaintances announcing the opening of The Metolius Agency, periodically meeting with people to catch up–as well to continue to network which means to find out who this person knows within the target companies that Metolius will try to turn into customers. 
  • Client referral. A lot of business is derived through referrals.  Some of the referrals will come through the Chamber of Commerce, some of the referrals will come from customers.  Recognizing that referrals will be a good source of new customers, Kiev will be in constant contact with the Chamber.  In addition to being in contact with them, Kiev will investigate the possibility of doing a small project pro bono for the Chamber.  This will be done to let the Chamber view an example of The Metolius Agency’s work.  It will also provide a reason for the Chamber to recommend The Metolius Agency.  Kiev will work very hard to satisfy all of his customers.  By making sure that he exceeds their expectations, he will increase the likelihood that he will receive referrals from satisfied customers.
  • Targeted customer acquisition. This is the researching and strategic formulation to attract a chosen company to become a customer.  Kiev will put together a list of 20-30 companies that would be excellent customers.  Once these companies have been identified, Kiev will devise a strategy to target these companies as customers by initially determining what value Metolius can offer them. Eventually, the goal is to be able to meet with the decision maker of the company and present them with a portfolio of Kiev’s past work as well as the proposed value Kiev can offer them.

4.3 Service Business Analysis

The graphic design industry is fairly diverse with all types of service providers. There are large advertising agencies, freelance designers, and in-house firms that typically only serve the specific company.

Within the last seven to 10 years, there has been a trend in the industry for the general advertising agencies, that previously only worked with advertising, to act as a full-service agency that not only prepares advertisements, but also does a lot of the creative work in-house instead of outsourcing it.  This trend toward full-service agencies has continued.  To a large degree it is occurring due to higher profit margins for the service providers.  The Metolius Agency will be bucking this trend and concentrating on their specific skill set.

4.3.1 Competition and Buying Patterns

The following are examples of the different types of competitors:

  • Large advertising agencies: over the years these firms have increased their number of service offerings from selling media forms of advertising, to a full-service company that develops creative work in-house, working with companies to develop corporate identity, etc.
  • Freelance designers: these competitors are similar to Kiev because they are typically a one-man operation, often operating out of their own home.  Often the freelance designers are just getting into the business and are trying to get experience, or they have left a firm in search of a more flexible lifestyle.  Some freelance designers are well experienced and can offer the same professional level of quality the large agencies offer.
  • Kinko’s: while Kinko’s is not a true competitor, it is a substitute competitor that should be mentioned. Kinko’s stores do not have a true creative department, but for some of the larger accounts, it offers free creative services as a value-added feature to the larger customer.  These services are typically provided by an employee who has introductory or intermediate skills using graphic design software such as Quark or Freehand, and in a small amount of time can generate creative images for the client.  These services are typically not billed but used as a value-added benefit.  While the price is quite good, the customer must recognize the fact that these services are not on par with a professional agency.
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Strategy and Implementation Summary

The Metolius Agency’s marketing and sales strategy will utilize networking and referrals to develop visibility for the company.  Prospective customers will be turned into qualified sales through a professional showing that displays Kiev’s portfolio of past work.  The portfolio is key for making a positive impression regarding Kiev which illustrates his skill set and capacity as a creative designer.

5.1 Marketing Strategy

As noted previously in the target market segment strategy, The Metolius Agency will rely on three activities in their marketing efforts.  These include:

  • Networking: leveraging relationships to build more relationships within Eugene’s relatively intimate community.
  • Client referral: by providing outstanding customer attention, current customers are more likely to become a long-term customer and are more likely to refer their friends.
  • Targeted customer acquisition: the first step of this process is to target who the ideal customer is, determine how Metolius can offer them value, and then network to come into contact with the decision maker at that company.

5.2 Sales Strategy

The sales strategy will be to utilize Kiev’s portfolio of past work to qualify a sales lead.  Using a portfolio is very common within the industry to show past examples of work.  Kiev’s strategy will be the development of several different portfolios, each one customized to a specific type of work.  By having different portfolios, Kiev is able to better illustrate his proficiency with that specific skill set.  In addition to the use of the portfolio, Kiev will do research on the prospective company and their industry so that he has specific knowledge of the needs the company may have and solutions that he can offer.

5.2.1 Sales Forecast

The first month of operation will be used to get the office set up and ready for business.  Some of the time will be working with the interior designers to create a modern looking office space.

Months two through four will be somewhat slow as Kiev is developing clients. He is forecasted to take on some smaller projects.  By month five Metolius will have developed larger projects and will continue to grow steadily.

Graphic design business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Small companies $29,339 $50,697 $58,849
Medium companies $40,058 $74,554 $86,543
Total Sales $69,397 $125,251 $145,392
Direct Cost of Sales Year 1 Year 2 Year 3
Small companies $880 $1,521 $1,765
Medium companies $1,202 $2,237 $2,596
Subtotal Direct Cost of Sales $2,082 $3,758 $4,362

5.3 Milestones

The Metolius Agency will have several milestones early on:

  1. Business plan completion
  2. Office set up
  3. Establishment of the first major account
  4. Profitability
Graphic design business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/2001 2/1/2001 $0 ABC Marketing
Office set up 1/1/2001 2/1/2001 $0 ABC Department
Establishment of the first major account 1/1/2001 5/15/2001 $0 ABC Department
Profitability 1/1/2001 9/31/01 $0 ABC Department
Totals $0

5.4 Competitive Edge

The Metolius Agency’s competitive edge is based on Kiev’s diverse background of business and creativity.  Typically, most creative agencies are staffed by right-brain creative types.  These people are extremely aesthetically oriented.  While this is certainly an asset in the field of graphic design, it can be limiting because while their work might be extremely creative, it might not “hit home” with non-creative types which make up a large portion in the business world.

Kiev’s background is based both in aesthetics and business.  While Kiev always had a creative streak that he would use, his education was business oriented. This competitive edge allows The Metolius Agency to offer similar creative services other firms can offer, but also provide a unique business perspective.

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Web Plan Summary

The website will be used as a way to disseminate information regarding the firm, show past examples of work, provide the interested party will several ways of contacting The Metolius Agency.  In today’s day and age, a website is almost a given, a standard source of information regarding the company.

6.1 Website Marketing Strategy

The marketing strategy for the website will be based on inclusion of the Internet address in all materials that The Metolius Agency releases, as well as submission to popular websites.  Submission to search engines is an art in itself as different search engines work in different ways so a customized submission is most effective.

6.2 Development Requirements

A graduate student from the University of Oregon’s computer science department will be used for the development (writing the code, Kiev will be responsible for the creative work) of the website as well as the periodic maintenance of the site.  A graduate student will be used because of their expertise and typical below market rate.

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Management Summary

Kiev Lartiste received his Bachelor of Arts in graphic design and business administration from the University of Oregon.  While pursuing his undergraduate degree, Kiev was able to take several different graduate level business courses which were more challenging for him.  While pursuing the double degree, Kiev began to recognize just how unique his skills were.  Most of his colleagues in the art department had artistic skills equal to Kiev, but had no business sense.  Likewise, his colleagues in the business department were very business oriented but struggled with creativity. 

Upon graduation, Kiev went to work for Wieden & Kennedy in Portland.  This was a wonderful experience as Kiev was surrounded by very bright, creative people.  Kiev was given small projects, usually components of larger projects.  While this was a good experience, he was unable to leverage his business skills under these circumstances.

After three years Kiev moved to Eugene and took a position with (name omitted), a large full-service advertising agency.  The firm gave Kiev more management responsibility for his projects. After the third year, Kiev felt confident enough to entertain the idea of going out on his own and opening his own firm.  After market research and writing a business plan, Kiev gave notice and opened up The Metolius Agency.

7.1 Personnel Plan

Kiev will be the sole employee through month seven at which time he will hire an assistant to help out with design execution, as well as some of the administrative details.

Personnel Plan
Year 1 Year 2 Year 3
Kiev $42,000 $42,000 $42,000
Assistant $17,280 $34,560 $34,560
Total People 2 2 2
Total Payroll $59,280 $76,560 $76,560

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Financial Plan

The following sections will outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

The Break-even Analysis indicates that approximately $7,000 will be needed in monthly revenue to reach the break-even point.

Graphic design business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $7,053
Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $6,841

8.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Graphic design business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $69,397 $125,251 $145,392
Direct Cost of Sales $2,082 $3,758 $4,362
Other Production Expenses $0 $0 $0
Total Cost of Sales $2,082 $3,758 $4,362
Gross Margin $67,316 $121,493 $141,030
Gross Margin % 97.00% 97.00% 97.00%
Expenses
Payroll $59,280 $76,560 $76,560
Sales and Marketing and Other Expenses $2,820 $2,820 $2,820
Depreciation $2,400 $2,400 $2,400
Website maintenance $600 $600 $600
Insurance $900 $900 $900
Rent $7,200 $7,200 $7,200
Payroll Taxes $8,892 $11,484 $11,484
Other $0 $0 $0
Total Operating Expenses $82,092 $101,964 $101,964
Profit Before Interest and Taxes ($14,776) $19,529 $39,066
EBITDA ($12,376) $21,929 $41,466
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,859 $11,720
Net Profit ($14,776) $13,670 $27,347
Net Profit/Sales -21.29% 10.91% 18.81%

8.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Graphic design business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $69,397 $125,251 $145,392
Subtotal Cash from Operations $69,397 $125,251 $145,392
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 $69,397 $125,251 $145,392
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $59,280 $76,560 $76,560
Bill Payments $20,322 $32,111 $38,554
Subtotal Spent on Operations $79,602 $108,671 $115,114
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $79,602 $108,671 $115,114
Net Cash Flow ($10,205) $16,580 $30,278
Cash Balance $11,995 $28,575 $58,853

8.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $11,995 $28,575 $58,853
Other Current Assets $0 $0 $0
Total Current Assets $11,995 $28,575 $58,853
Long-term Assets
Long-term Assets $19,800 $19,800 $19,800
Accumulated Depreciation $2,400 $4,800 $7,200
Total Long-term Assets $17,400 $15,000 $12,600
Total Assets $29,395 $43,575 $71,453
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $2,172 $2,681 $3,213
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,172 $2,681 $3,213
Long-term Liabilities $0 $0 $0
Total Liabilities $2,172 $2,681 $3,213
Paid-in Capital $43,000 $43,000 $43,000
Retained Earnings ($1,000) ($15,776) ($2,106)
Earnings ($14,776) $13,670 $27,347
Total Capital $27,224 $40,894 $68,240
Total Liabilities and Capital $29,395 $43,575 $71,453
Net Worth $27,224 $40,894 $68,240

8.6 Business Ratios

The following table compares standard business ratios with the Standard Industry Code #7336, Graphic Design Services.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 80.48% 16.08% 9.02%
Percent of Total Assets
Other Current Assets 0.00% 0.00% 0.00% 52.57%
Total Current Assets 40.81% 65.58% 82.37% 76.45%
Long-term Assets 59.19% 34.42% 17.63% 23.55%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 7.39% 6.15% 4.50% 34.45%
Long-term Liabilities 0.00% 0.00% 0.00% 23.62%
Total Liabilities 7.39% 6.15% 4.50% 58.07%
Net Worth 92.61% 93.85% 95.50% 41.93%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 97.00% 97.00% 97.00% 100.00%
Selling, General & Administrative Expenses 118.29% 86.09% 78.19% 77.05%
Advertising Expenses 1.47% 0.81% 0.70% 1.42%
Profit Before Interest and Taxes -21.29% 15.59% 26.87% 0.83%
Main Ratios
Current 5.52 10.66 18.32 1.51
Quick 5.52 10.66 18.32 1.13
Total Debt to Total Assets 7.39% 6.15% 4.50% 66.33%
Pre-tax Return on Net Worth -54.28% 47.76% 57.25% 2.06%
Pre-tax Return on Assets -50.27% 44.82% 54.67% 6.12%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -21.29% 10.91% 18.81% n.a
Return on Equity -54.28% 33.43% 40.07% n.a
Activity Ratios
Accounts Payable Turnover 10.36 12.17 12.17 n.a
Payment Days 27 27 28 n.a
Total Asset Turnover 2.36 2.87 2.03 n.a
Debt Ratios
Debt to Net Worth 0.08 0.07 0.05 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $9,824 $25,894 $55,640 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.42 0.35 0.49 n.a
Current Debt/Total Assets 7% 6% 4% n.a
Acid Test 5.52 10.66 18.32 n.a
Sales/Net Worth 2.55 3.06 2.13 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
Small companies 0% $0 $600 $1,500 $1,360 $1,820 $2,296 $2,811 $3,240 $3,558 $3,769 $3,936 $4,450
Medium companies 0% $0 $0 $0 $2,000 $2,676 $3,376 $4,134 $4,765 $5,232 $5,543 $5,788 $6,544
Total Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
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
Small companies $0 $18 $45 $41 $55 $69 $84 $97 $107 $113 $118 $133
Medium companies $0 $0 $0 $60 $80 $101 $124 $143 $157 $166 $174 $196
Subtotal Direct Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330
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
Kiev 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Assistant 0% $0 $0 $0 $0 $0 $0 $2,880 $2,880 $2,880 $2,880 $2,880 $2,880
Total People 1 1 1 1 1 1 2 2 2 2 2 2
Total Payroll $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380

General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Direct Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $18 $45 $101 $135 $170 $208 $240 $264 $279 $292 $330
Gross Margin $0 $582 $1,455 $3,259 $4,361 $5,502 $6,737 $7,765 $8,526 $9,033 $9,432 $10,664
Gross Margin % 0.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00% 97.00%
Expenses
Payroll $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380
Sales and Marketing and Other Expenses $235 $235 $235 $235 $235 $235 $235 $235 $235 $235 $235 $235
Depreciation $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Website maintenance $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Insurance $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75 $75
Rent $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Payroll Taxes 15% $525 $525 $525 $525 $525 $525 $957 $957 $957 $957 $957 $957
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $5,185 $5,185 $5,185 $5,185 $5,185 $5,185 $8,497 $8,497 $8,497 $8,497 $8,497 $8,497
Profit Before Interest and Taxes ($5,185) ($4,603) ($3,730) ($1,926) ($824) $317 ($1,760) ($732) $29 $536 $935 $2,167
EBITDA ($4,985) ($4,403) ($3,530) ($1,726) ($624) $517 ($1,560) ($532) $229 $736 $1,135 $2,367
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($5,185) ($4,603) ($3,730) ($1,926) ($824) $317 ($1,760) ($732) $29 $536 $935 $2,167
Net Profit/Sales 0.00% -767.17% -248.67% -57.32% -18.33% 5.58% -25.34% -9.14% 0.33% 5.75% 9.62% 19.71%

Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Subtotal Cash from Operations $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $600 $1,500 $3,360 $4,496 $5,672 $6,945 $8,005 $8,790 $9,312 $9,724 $10,994
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $6,380 $6,380 $6,380 $6,380 $6,380 $6,380
Bill Payments $50 $1,486 $1,504 $1,532 $1,587 $1,621 $1,671 $2,126 $2,158 $2,181 $2,197 $2,210
Subtotal Spent on Operations $3,550 $4,986 $5,004 $5,032 $5,087 $5,121 $8,051 $8,506 $8,538 $8,561 $8,577 $8,590
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $3,550 $4,986 $5,004 $5,032 $5,087 $5,121 $8,051 $8,506 $8,538 $8,561 $8,577 $8,590
Net Cash Flow ($3,550) ($4,386) ($3,504) ($1,672) ($591) $551 ($1,106) ($501) $252 $751 $1,147 $2,404
Cash Balance $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995
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 $22,200 $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $22,200 $18,651 $14,265 $10,761 $9,089 $8,498 $9,049 $7,943 $7,442 $7,693 $8,444 $9,592 $11,995
Long-term Assets
Long-term Assets $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800 $19,800
Accumulated Depreciation $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400
Total Long-term Assets $19,800 $19,600 $19,400 $19,200 $19,000 $18,800 $18,600 $18,400 $18,200 $18,000 $17,800 $17,600 $17,400
Total Assets $42,000 $38,251 $33,665 $29,961 $28,089 $27,298 $27,649 $26,343 $25,642 $25,693 $26,244 $27,192 $29,395
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,436 $1,453 $1,479 $1,533 $1,566 $1,600 $2,055 $2,085 $2,108 $2,123 $2,135 $2,172
Paid-in Capital $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000
Retained Earnings ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000) ($1,000)
Earnings $0 ($5,185) ($9,788) ($13,518) ($15,444) ($16,268) ($15,951) ($17,712) ($18,444) ($18,415) ($17,879) ($16,944) ($14,776)
Total Capital $42,000 $36,815 $32,212 $28,482 $26,556 $25,732 $26,049 $24,288 $23,556 $23,585 $24,121 $25,056 $27,224
Total Liabilities and Capital $42,000 $38,251 $33,665 $29,961 $28,089 $27,298 $27,649 $26,343 $25,642 $25,693 $26,244 $27,192 $29,395
Net Worth $42,000 $36,815 $32,212 $28,482 $26,556 $25,732 $26,049 $24,288 $23,556 $23,585 $24,121 $25,056 $27,224

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