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Massage Tools

Executive Summary

Massage Tools Products Inc. sells massage tools to both the professional and retail market. Our products address the chronic overuse injuries and discomfort experienced by busy massage therapy professionals. Designed with the massage therapist in mind, Massage Tool Products’ unique ergonomic shape give you the leverage to apply pressure where needed with less hand and wrist strain. Ideal for trigger point, deep tissue, reflexology, seated massage or practically any modality, this product fills the need of a growing group of health care professionals whose careers are limited by their ability to serve multiple clients a day without interruption by injury.

This business plan is written for internal use to guide the company as we launch the business and aim toward growth. We will refer back to the plan on a quarterly basis to track our performance in comparison to our plans, and we will adjust our business plan according to our actual results.

Massage Tools Products has been riding a growth spurt, having discovered the professional massage therapy market that gave us a push to new potential volumes through schools. Bolstered by appearances in advertising in trade publications and end user magazines, we were able to develop an additional channel through our website.

This annual business plan calls for a year of slow but steady growth, followed by a year of swiftly increasing sales. The break-even analysis shows that Massage Tools has a good balance of fixed costs and sufficient sales strength to remain healthy. Our break-even point is just over $6,000 per month for the first year.

We also expect to be profitable as never before. In all, the outlook shows a healthy company with good growth prospects, looking to manage its orderly growth in the future.

1.1 Mission

Massage Tools Products Inc.’s mission is to provide top-quality massage tools to extend the effectiveness of massage therapists and reduce repetitive use injuries in massage professionals.

1.2 Keys to Success

  • Low cost of assembly;
  • Favorable profit margins;
  • Innovative, market leader in massage tools market;
  • Low overhead.

1.3 Objectives

To get Massage Tools’ product line into at least 100 retail stores and massage therapy schools throughout the United States.

Develop a website that includes online ordering capability for Massage Tools’ product line.

Create additional products within 18 months to broaden market share.

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Company Summary

Massage Tools Products Inc. is a start-up business, established in Eugene, Oregon in October 2002. We sell Massage Tools to both the professional and retail market. Our products are designed to address the chronic overuse injuries and discomfort experienced by busy massage therapy professionals. Massage Tools products can be used for massage therapy in place of or in addition to a therapists’ hands to provide sufficient pressure for therapeutic massage. This product fills the need of a growing group of health care professionals whose careers are limited by their ability to serve multiple clients a day without interruption by injury.

2.1 Start-up Summary

Our start-up costs come to $19,300, which is mostly insurance and product development, legal costs, and expenses associated with opening our office. The start-up costs are to be financed by direct owner investment and a $15,000 line of credit with the bank. The assumptions are shown in the following table and illustration.

Massage products business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $19,300
Start-up Assets to Fund $25,700
Total Funding Required $45,000
Assets
Non-cash Assets from Start-up $13,000
Cash Requirements from Start-up $12,700
Additional Cash Raised $0
Cash Balance on Starting Date $12,700
Total Assets $25,700
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
Ron Tickman $40,000
Investor 2 $5,000
Additional Investment Requirement $0
Total Planned Investment $45,000
Loss at Start-up (Start-up Expenses) ($19,300)
Total Capital $25,700
Total Capital and Liabilities $25,700
Total Funding $45,000
Start-up
Requirements
Start-up Expenses
Legal $750
Stationery etc. $1,500
Brochures $2,500
Consultants $1,000
Insurance $5,000
Rent $850
Research and Development $6,500
Expensed Equipment $1,200
Total Start-up Expenses $19,300
Start-up Assets
Cash Required $12,700
Start-up Inventory $8,000
Other Current Assets $5,000
Long-term Assets $0
Total Assets $25,700
Total Requirements $45,000

2.2 Company Ownership

Massage Tools Products Inc. is a privately owned, C-corporation with a single owner.

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Products

Designed with the massage therapist in mind, Massage Tool Products unique ergonomic shape give you the leverage to apply pressure where needed with less hand and wrist strain. Ideal for trigger point, deep tissue, reflexology, seated massage or practically any modality. The smooth contoured shape glides easily over clothing or on skin with oils or lotions. Save your hands – and your career with Massage Tools.

Massage Tool – $14.50

Massage Tool Deluxe – $16.50

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Market Analysis Summary

We are intending to appeal to the professional massage therapist and the massage school market. This market segment both appreciates and truly needs the Massage Tool Products line.

In our particular market, we also seek the end user who appreciates the advantage of having professional quality tools.

4.1 Target Market Segment Strategy

Massage therapists are generally exposed to tools and equipment by the school they attend. Their instructors have credibility and the products they endorse are generally the ones the students buy. Increasingly, massage therapists are looking for products to extend their productivity and the length of their career by avoiding overuse injuries. Our product addresses this critical need and we’ll buy visibility in Massage Magazine and with schools across the U.S. and in Europe and Japan, which are the primary markets. Gradually, we will also move into China.

4.2 Market Segmentation

Massage Tools Products Inc. sells Massage Tools to both the professional and retail market. Our products address the chronic overuse injuries and discomfort experienced by busy massage therapy professionals. Designed with the massage therapist in mind, Massage Tool Products unique ergonomic shape give you the leverage to apply pressure where needed with less hand and wrist strain. Ideal for trigger point, deep tissue, reflexology, seated massage or practically any modality, this product fills the need of a growing group of health care professionals whose careers are limited by their ability to serve multiple clients a day without interruption by injury.

Massage products business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Massage Professionals 8% 40,000 43,200 46,656 50,388 54,419 8.00%
Retail End Users 2% 1,200,000 1,224,000 1,248,480 1,273,450 1,298,919 2.00%
Total 2.21% 1,240,000 1,267,200 1,295,136 1,323,838 1,353,338 2.21%

4.3 Industry Analysis

The massage therapy industry has undergone a great deal of change in the last five years. Many of the larger manufacturers of tables and chairs have gone out of business. Those manufacturers were competing primarily on price. The few remaining companies have reputations for quality workmanship and money back guarantees. The integrity factor has been significant.

Many of the existing companies serving the massage professionals niche with equipment and supplies are offering products and tools, but none are providing a tool like ours that addresses overuse injuries.

Our product line is filling a niche that is just beginning to open up. The boom of massage therapy over the last 15 years has created a significant number of professional massage therapists who are experiencing carpal tunnel syndrome or other overuse injuries. Our products are designed to assist those professionals and to extend their careers. However, new professionals just completing their education will understand the importance of purchasing and using Massage Tools Products as they begin building their practices, having seen what is happening in the industry as a whole.

Most massage therapists who graduate are women 23-35 and intend to serve several clients a day to create adequate income. They tend to purchase from their massage schools or stores associated with the schools. We have contacts in these schools and with several physical therapy schools through the owners affiliation with a massage table company. It will be a natural product for these schools and stores to add to their product line.

4.3.1 Competition and Buying Patterns

A few newcomers to the U.S. market are the Chinese and the Europeans, both of whom have incredibly inexpensive products that are not of stellar quality, but do continue to steadily improve.

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Strategy and Implementation Summary

We focus on a special kind of customer, the professionally trained massage therapist as well as the schools that train them. What is important to the customer is performance, affordability and beauty, ease of use, ergonomics, and practicality.

Our marketing strategy assumes that we need to go into specialty channels to address our target customer’s needs. Our most important competitive edge is our positioning with the massage schools, so that our customers will be exposed to our products before they begin their professional career and while they are in the market to buy equipment to begin their practice.

5.1 Competitive Edge

Our competitive edge is our innovation in bringing to market a product that has never been offered and for which there is tremendous need among professional massage therapists.

5.2 Marketing Strategy

We are focusing on the massage school and massage student market segment. Massage therapists are generally exposed to tools and equipment by the school they attend. Their instructors have credibility and the products they endorse are generally the ones the students buy. Increasingly, massage therapists are looking for products to extend their productivity and the length of their career by avoiding overuse injuries. Our product addresses this critical need and we’ll buy visibility in Massage Magazine and with schools across the U.S. and in Europe and Japan, which are the primary markets. Gradually, we will also move into China.

5.3 Sales Strategy

Our strategy focuses first on getting our product in massage therapy schools and retail health and wellness stores and secondly on reaching end users via online sales from our web site.

In 2004, we will expand our focus to include a presence in high-end direct mail catalogs that cater to the high net worth individuals who have discretionary income to spend on personal health and wellness products. The Spa and Resort retail stores are a new channel that could become important for us.

5.3.1 Sales Forecast

Our sales forecast assumes a slow increase in cost and no change in prices, but the pricing may increase depending on the market reception and whether or not we find competing products entering the market.

We are projecting conservative growth in our first year. We are not projecting significant change in the product line.

Our seasonality, as shown in the chart, is still a factor in the business. We tend to sell much better in spring and fall, and sales drop in the summer due to the heavy emphasis on sales at massage schools, which tend to have few students enrolled or do not hold classes at all. We can expect some increase in retail sales due to the Christmas holiday buying season.

Massage products business plan, strategy and implementation summary chart image

Massage products business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Massage Tool $88,832 $97,715 $107,487
Massage Tool Deluxe $94,108 $101,637 $109,768
Total Sales $182,940 $199,352 $217,254
Direct Cost of Sales Year 1 Year 2 Year 3
Massage Tool $44,416 $48,858 $53,743
Massage Tool Deluxe $37,643 $40,655 $43,907
Subtotal Direct Cost of Sales $82,059 $89,512 $97,650

5.4 Milestones

The accompanying table shows specific milestones, with responsibilities assigned, dates, and (in most cases) budgets. We are focusing, in this plan, on a few key milestones that should be accomplished.

Massage products business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Research & Development 8/1/2002 10/15/2002 $3,000 Ron Tickman Marketing
Business Plan 10/1/2002 10/31/2002 $800 Katherine Allen Marketing
Ad Campaign 9/1/2002 10/15/2002 $1,500 Jerril Nelson Web
Overseas Production 8/31/2002 10/1/2002 $5,000 Steve Kippman Web
Patent & License 11/1/2002 11/31/02 $250 Ron Tickman Marketing
Totals $10,550

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Web Plan Summary

The Massage Tools website will focus on providing a vehicle for easily purchasing the Massage Tools line of products. We’ll also have content that explains overuse injuries for massage professionals and a self-test of questions that will help the user determine if they are likely to incur an overuse injury sooner due to the workload they carry.

We will have a grocery cart feature to allow quick and easy purchasing. We realize that a tedious ordering process can deter even the most interested consumers.

MassageTools.com may partner with online massage retailers to sell relevant products to the users, such as oils, lotions, sheets, pillows, aromatherapy, etc.

6.1 Website Marketing Strategy

Our Internet marketing activities will be focused on product sales. Although we will sell to massage schools and other resellers, we’ll focus our Internet activities towards the general public end user.

We’ll advertise this site in non-trade publications such as New Age, Health, Simple, Self, etc.

6.2 Development Requirements

The Massage Tools website will be initially developed with few technical resources. A simple local hosting provider, Jurgens Information Services, will host the site and provide the technical back end and will contract to provide user interface design to develop the simple site. The user interface designer will work with a JLM, a graphic artist, to come up with the website logo, and the website graphics.

The maintenance of the site will be done by the Jurgens consultants. We don’t anticipate much change necessary until further products are developed.

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Management Summary

We are a small company owned and operated by Ron Tickman, as an LLC. Ron is the developer and designer of the products, and manages the company as president.

Massage Tools Products’ immediate personnel plan calls for increases from one sales representative at present to two representatives three years from now, assuming our product line develops beyond our initial offering. The increase is needed to support the effort to move beyond the massage industry and into the general public market.

Most orders will be sent via fax or online. Consequently, we will continue to outsource fulfillment, shipping and packaging, etc., as well as calls to a local call center.

7.1 Personnel Plan

The president will take a small stiped the first year to enable the company to reinvest the bulk of the profits.

The sales rep will take a base salary generally in line with market pay for the Eugene area, and the remainder of her salary will be derived from a percentage of gross sales.

Personnel Plan
Year 1 Year 2 Year 3
Ron Tickman, President & Owner $1,200 $2,500 $2,500
Katherine Allen, Sales Rep $4,500 $6,500 $7,500
Other $0 $0 $0
Total People 0 0 0
Total Payroll $5,700 $9,000 $10,000

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Financial Plan

The financial picture is quite encouraging. We have been slow to take on debt, but our credit line with the bank is supported by assets.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

  • We assume a slow-growth economy, without major recession.
  • We assume access to equity capital and 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 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 shows that Massage Tools has a good balance of fixed costs and sufficient sales strength to remain healthy. Our break-even point is just over $6,000 per month for the first year.

Massage products business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $6,090
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $3,359

8.3 Projected Profit and Loss

We do expect a significant increase in profitability next year, and in the future, because we will have established ourselves in the market. Our higher sales volume will lower our cost of goods and increase our gross margin. This increase in gross margin is important to profitability.

Massage products business plan, financial plan chart image

Massage products business plan, financial plan chart image

Massage products business plan, financial plan chart image

Massage products business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $182,940 $199,352 $217,254
Direct Cost of Sales $82,059 $89,512 $97,650
Other Costs of Goods $11 $0 $0
Total Cost of Sales $82,070 $89,512 $97,650
Gross Margin $100,870 $109,840 $119,604
Gross Margin % 55.14% 55.10% 55.05%
Expenses
Payroll $5,700 $9,000 $10,000
Sales and Marketing and Other Expenses $7,800 $9,500 $12,500
Depreciation $0 $0 $0
Rent $10,200 $7,200 $8,500
Utilities $2,400 $2,800 $3,200
Insurance $4,200 $4,750 $5,000
Payroll Taxes $855 $1,350 $1,500
Commission $9,147 $9,968 $10,863
Total Operating Expenses $40,302 $44,568 $51,563
Profit Before Interest and Taxes $60,568 $65,272 $68,041
EBITDA $60,568 $65,272 $68,041
Interest Expense ($163) ($450) ($750)
Taxes Incurred $18,219 $19,717 $20,637
Net Profit $42,511 $46,005 $48,154
Net Profit/Sales 23.24% 23.08% 22.16%

8.4 Projected Cash Flow

We expect to manage cash flow over the next three years with new investment this year. The additional financing resources are required to finance the working capital of a growing business. However, the investment is small due to the low overhead.

Massage products business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $182,940 $199,352 $217,254
Subtotal Cash from Operations $182,940 $199,352 $217,254
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 $182,940 $199,352 $217,254
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $5,700 $9,000 $10,000
Bill Payments $124,321 $147,772 $159,059
Subtotal Spent on Operations $130,021 $156,772 $169,059
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $3,000 $3,000 $3,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $133,021 $159,772 $172,059
Net Cash Flow $49,919 $39,580 $45,195
Cash Balance $62,619 $102,198 $147,394

8.5 Projected Balance Sheet

Although we will not begin making a profit until April of this year, we are pleased that we will begin to recoup our investment in only four months. The critical piece of this success is the large margin on each product sold as well as the low operational expenses.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $62,619 $102,198 $147,394
Inventory $11,891 $12,971 $14,150
Other Current Assets $5,000 $5,000 $5,000
Total Current Assets $79,510 $120,169 $166,544
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $79,510 $120,169 $166,544
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $14,298 $11,953 $13,174
Current Borrowing ($3,000) ($6,000) ($9,000)
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $11,298 $5,953 $4,174
Long-term Liabilities $0 $0 $0
Total Liabilities $11,298 $5,953 $4,174
Paid-in Capital $45,000 $45,000 $45,000
Retained Earnings ($19,300) $23,211 $69,217
Earnings $42,511 $46,005 $48,154
Total Capital $68,211 $114,217 $162,370
Total Liabilities and Capital $79,510 $120,169 $166,544
Net Worth $68,211 $114,217 $162,370

8.6 Business Ratios

Standard business ratios for Health and Personal Care Stores (SIC 5047) are included in the following table. The ratios show a plan for balanced, healthy growth. Our return on sales and return on assets remain as strong as ever, actually increasing in percentage terms by the same year.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 8.97% 8.98% 6.98%
Percent of Total Assets
Inventory 14.96% 10.79% 8.50% 39.84%
Other Current Assets 6.29% 4.16% 3.00% 22.68%
Total Current Assets 100.00% 100.00% 100.00% 91.25%
Long-term Assets 0.00% 0.00% 0.00% 8.75%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 14.21% 4.95% 2.51% 37.11%
Long-term Liabilities 0.00% 0.00% 0.00% 10.41%
Total Liabilities 14.21% 4.95% 2.51% 47.52%
Net Worth 85.79% 95.05% 97.49% 52.48%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.14% 55.10% 55.05% 30.78%
Selling, General & Administrative Expenses 31.96% 32.18% 33.13% 15.53%
Advertising Expenses 0.00% 0.00% 0.00% 1.18%
Profit Before Interest and Taxes 33.11% 32.74% 31.32% 2.01%
Main Ratios
Current 7.04 20.19 39.90 2.24
Quick 5.98 18.01 36.51 0.99
Total Debt to Total Assets 14.21% 4.95% 2.51% 52.38%
Pre-tax Return on Net Worth 89.03% 57.54% 42.37% 6.06%
Pre-tax Return on Assets 76.38% 54.69% 41.31% 12.72%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 23.24% 23.08% 22.16% n.a
Return on Equity 62.32% 40.28% 29.66% n.a
Activity Ratios
Inventory Turnover 9.88 7.20 7.20 n.a
Accounts Payable Turnover 9.69 12.17 12.17 n.a
Payment Days 27 33 29 n.a
Total Asset Turnover 2.30 1.66 1.30 n.a
Debt Ratios
Debt to Net Worth 0.17 0.05 0.03 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $68,211 $114,217 $162,370 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.43 0.60 0.77 n.a
Current Debt/Total Assets 14% 5% 3% n.a
Acid Test 5.98 18.01 36.51 n.a
Sales/Net Worth 2.68 1.75 1.34 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
Massage Tool 0% $1,062 $1,322 $1,966 $3,346 $5,664 $7,538 $8,206 $9,922 $11,040 $13,560 $14,066 $11,140
Massage Tool Deluxe 0% $1,886 $2,506 $2,502 $4,462 $6,352 $7,122 $7,346 $9,348 $11,520 $13,674 $14,290 $13,100
Total Sales $2,948 $3,828 $4,468 $7,808 $12,016 $14,660 $15,552 $19,270 $22,560 $27,234 $28,356 $24,240
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
Massage Tool $531 $661 $983 $1,673 $2,832 $3,769 $4,103 $4,961 $5,520 $6,780 $7,033 $5,570
Massage Tool Deluxe $754 $1,002 $1,001 $1,785 $2,541 $2,849 $2,938 $3,739 $4,608 $5,470 $5,716 $5,240
Subtotal Direct Cost of Sales $1,285 $1,663 $1,984 $3,458 $5,373 $6,618 $7,041 $8,700 $10,128 $12,250 $12,749 $10,810
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
Ron Tickman, President & Owner 0% $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Katherine Allen, Sales Rep 0% $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600 $650
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 0 0 0 0 0 0 0 0 0 0 0
Total Payroll $200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750

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 $2,948 $3,828 $4,468 $7,808 $12,016 $14,660 $15,552 $19,270 $22,560 $27,234 $28,356 $24,240
Direct Cost of Sales $1,285 $1,663 $1,984 $3,458 $5,373 $6,618 $7,041 $8,700 $10,128 $12,250 $12,749 $10,810
Other Costs of Goods $0 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1 $1
Total Cost of Sales $1,285 $1,664 $1,985 $3,459 $5,374 $6,619 $7,042 $8,701 $10,129 $12,251 $12,750 $10,811
Gross Margin $1,663 $2,164 $2,483 $4,349 $6,642 $8,041 $8,510 $10,569 $12,431 $14,983 $15,606 $13,429
Gross Margin % 56.40% 56.52% 55.58% 55.70% 55.28% 54.85% 54.72% 54.85% 55.10% 55.02% 55.04% 55.40%
Expenses
Payroll $200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750
Sales and Marketing and Other Expenses $1,200 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $850 $850 $850 $850 $850 $850 $850 $850 $850 $850 $850 $850
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350
Payroll Taxes 15% $30 $38 $45 $53 $60 $68 $75 $83 $90 $98 $105 $113
Commission $147 $191 $223 $390 $601 $733 $778 $964 $1,128 $1,362 $1,418 $1,212
Total Operating Expenses $2,977 $2,479 $2,568 $2,793 $3,061 $3,251 $3,353 $3,596 $3,818 $4,109 $4,223 $4,075
Profit Before Interest and Taxes ($1,315) ($315) ($85) $1,556 $3,581 $4,791 $5,157 $6,973 $8,613 $10,874 $11,383 $9,355
EBITDA ($1,315) ($315) ($85) $1,556 $3,581 $4,791 $5,157 $6,973 $8,613 $10,874 $11,383 $9,355
Interest Expense ($2) ($4) ($6) ($8) ($10) ($13) ($15) ($17) ($19) ($21) ($23) ($25)
Taxes Incurred ($394) ($93) ($24) $469 $1,078 $1,441 $1,551 $2,097 $2,590 $3,269 $3,422 $2,814
Net Profit ($919) ($218) ($55) $1,095 $2,514 $3,362 $3,620 $4,893 $6,042 $7,627 $7,984 $6,566
Net Profit/Sales -31.17% -5.69% -1.24% 14.03% 20.92% 22.93% 23.28% 25.39% 26.78% 28.00% 28.16% 27.09%

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 $2,948 $3,828 $4,468 $7,808 $12,016 $14,660 $15,552 $19,270 $22,560 $27,234 $28,356 $24,240
Subtotal Cash from Operations $2,948 $3,828 $4,468 $7,808 $12,016 $14,660 $15,552 $19,270 $22,560 $27,234 $28,356 $24,240
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 $2,948 $3,828 $4,468 $7,808 $12,016 $14,660 $15,552 $19,270 $22,560 $27,234 $28,356 $24,240
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 $200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750
Bill Payments $79 $2,373 $2,136 $2,401 $7,236 $11,242 $12,207 $12,023 $15,713 $17,615 $21,256 $20,040
Subtotal Spent on Operations $279 $2,623 $2,436 $2,751 $7,636 $11,692 $12,707 $12,573 $16,313 $18,265 $21,956 $20,790
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 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
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 $529 $2,873 $2,686 $3,001 $7,886 $11,942 $12,957 $12,823 $16,563 $18,515 $22,206 $21,040
Net Cash Flow $2,419 $955 $1,782 $4,807 $4,130 $2,718 $2,595 $6,447 $5,997 $8,719 $6,150 $3,200
Cash Balance $15,119 $16,073 $17,855 $22,662 $26,792 $29,510 $32,106 $38,553 $44,549 $53,268 $59,419 $62,619
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 $12,700 $15,119 $16,073 $17,855 $22,662 $26,792 $29,510 $32,106 $38,553 $44,549 $53,268 $59,419 $62,619
Inventory $8,000 $6,715 $5,051 $3,067 $3,804 $5,910 $7,280 $7,746 $9,570 $11,141 $13,475 $14,024 $11,891
Other Current Assets $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Total Current Assets $25,700 $26,833 $26,125 $25,923 $31,466 $37,702 $41,790 $44,851 $53,123 $60,690 $71,743 $78,443 $79,510
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 $25,700 $26,833 $26,125 $25,923 $31,466 $37,702 $41,790 $44,851 $53,123 $60,690 $71,743 $78,443 $79,510
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 $2,302 $2,061 $2,165 $6,862 $10,835 $11,810 $11,501 $15,130 $16,905 $20,582 $19,547 $14,298
Current Borrowing $0 ($250) ($500) ($750) ($1,000) ($1,250) ($1,500) ($1,750) ($2,000) ($2,250) ($2,500) ($2,750) ($3,000)
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $2,052 $1,561 $1,415 $5,862 $9,585 $10,310 $9,751 $13,130 $14,655 $18,082 $16,797 $11,298
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $2,052 $1,561 $1,415 $5,862 $9,585 $10,310 $9,751 $13,130 $14,655 $18,082 $16,797 $11,298
Paid-in Capital $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 $45,000
Retained Earnings ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300) ($19,300)
Earnings $0 ($919) ($1,137) ($1,192) ($97) $2,418 $5,780 $9,400 $14,293 $20,335 $27,961 $35,946 $42,511
Total Capital $25,700 $24,781 $24,563 $24,508 $25,603 $28,118 $31,480 $35,100 $39,993 $46,035 $53,661 $61,646 $68,211
Total Liabilities and Capital $25,700 $26,833 $26,125 $25,923 $31,466 $37,702 $41,790 $44,851 $53,123 $60,690 $71,743 $78,443 $79,510
Net Worth $25,700 $24,781 $24,563 $24,508 $25,603 $28,118 $31,480 $35,100 $39,993 $46,035 $53,661 $61,646 $68,211

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