The following sections lay out the details of our financial plan for the next three years.
This business plan is prepared to obtain financing in the amount of $24,000. The supplemental financing is required to begin work on site preparation and modifications, equipment purchases, and to cover expenses in the first year of operations.
Additional financing has already been secured as follows:
Basic assumptions are presented in the table below.
Important benchmark data is presented in the chart below.
Break-even data is presented in the chart and table below.
Payroll Expense: The founder of JavaNet, Cale Bruckner, will receive a salary of $24,000 in year one, $26,400 in year two, and $29,040 in year three. JavaNet intends to hire six part-time employees by the end of year one at $5.75/hour and a full-time technician at $10.00/hour.
Rent Expense: JavaNet is leasing a 1700 square foot facility at $.85/sq. foot. The lease agreement JavaNet signed specifies that we pay $2,000/month for a total of 36 months. At the end of the third year, the lease is open for negotiations and JavaNet may or may not re-sign the lease depending on the demands of the lessor.
Utilities Expense: As stated in the contract, the lessor is responsible for the payment of utilities including gas, garbage disposal, and real estate taxes. The only utilities expense that JavaNet must pay is the phone bill generated by fifteen phone lines; thirteen will be dedicated to modems and two for business purposes. The basic monthly service charge for each line provided by US West is $17.29. The 13 lines used to connect the modems will make local calls to the network provided by Bellevue resulting in a monthly charge of $224.77. The two additional lines used for business communication will cost $34.58/month plus long distance fees. JavaNet assumes that it will not make more than $40.00/month in long distance calls. Therefore, the total cost associated with the two business lines is estimated at $74.58/month and the total phone expense at $299.35/month. In addition, there will be an additional utility expense of $800 for estimated EWEB bills.
Marketing Expense: JavaNet will allocate $33,750 for promotional expenses over the first year. These dollars will be used for advertising in local newspapers in order to build consumer awareness. For additional information, please refer to section 5.0 of the business plan.
Insurance Expense: JavaNet has allocated $1,440 for insurance for the first year. As revenue increases in the second and third year of business, JavaNet intends to invest more money for additional insurance coverage.
Depreciation: In depreciating our capital equipment, JavaNet used the Modified Accelerated Cost Recovery Method. We depreciated our computers over a five-year time period and our fixtures over seven years.
Taxes: JavaNet is an LLC and, as an entity, it is not taxed. However, there is a 15% payroll burden.
Detailed Profit and Loss data is presented in the table below.
Cash flow data is presented in the chart and table below.
Accounts Payable: JavaNet acquired a $24,000 loan from a bank at a 10% interest rate. The loan will be paid back at $800/month over the next three years. The $9,290 short term loan will be paid back at a rate of 8%.
Our projected balance sheet is presented in the table below.
The Standard Industrial Classification (SIC) Code for the Internet Service Provider industry is "Remote data base information retrieval" 7375.9903. We used the report for "Information retrieval services" 7375 to generate the industry profile. As we are also a food cafe we could have used the ratios based on SIC classification 5812, "Eating places". The combined nature of JavaNet Cafe makes our ratios a blend of the two industries.