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Financial Plan

Funding Requirements and Uses

The company will be raising $2 million for the purposes of:

  • Establishing an organization and office presence within the USA and overseas.
  • Completing the development of the Internet print shop.
  • Marketing the website and its services.
  • Providing a world-class customer service website.
Start-up Funding
Start-up Expenses to Fund $880,000
Start-up Assets to Fund $1,150,000
Total Funding Required $2,030,000
Non-cash Assets from Start-up $200,000
Cash Requirements from Start-up $950,000
Additional Cash Raised $0
Cash Balance on Starting Date $950,000
Total Assets $1,150,000
Liabilities and Capital
Current Borrowing $500,000
Long-term Liabilities $450,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $950,000
Planned Investment
Investor 1 $400,000
Investor 2 $430,000
Dalton Grant $250,000
Additional Investment Requirement $0
Total Planned Investment $1,080,000
Loss at Start-up (Start-up Expenses) ($880,000)
Total Capital $200,000
Total Capital and Liabilities $1,150,000
Total Funding $2,030,000

8.1 Financial Risks and Contingencies currently has no operating history, which makes it difficult to forecast future operating results. The company will encounter risks and difficulties that start-ups frequently encounter in rapidly evolving and competitive markets. These risks include expanding the number of certified commercial print vendors and improving technological and logistical connections to these vendors. If these risks are not addressed successfully, the business will be seriously harmed.

Due to the nature of Internet business, the performance and fluctuations in quarterly sales and operating expenses will depend on the current marketplace and competition. The performance of will depend on market and industry risk factors that the company recognizes it will be subject to. The company’s view of its risks is as follows:

  • Employee turnover. One of the biggest risks that all dot-com companies face today is the loss of key personnel. will minimize this risk by ensuring that our employees have a world-class working environment, which includes being paid competitive wages, excellent benefits, and stock options.
  • Competitors. To mitigate this risk, we will closely monitor our competitors’ pricing structures, business strategies, and overall customer satisfaction to make sure we are one step ahead at all times.
  • Economic Factors. To minimize this risk, we will diversify our position in the products and services that we offer, as well as planning to ensure there is always available cash flow and resources if the economy begins to show negative trends.
  • Customer retention. The company will aggressively advertise its products and services and establish strategic alliances with industry leaders in order to generate a solid customer base and retain customers.
  • Volume of transactions. The volume of transactions generated through the website and products for which we receive transaction fees.
  • Downtime. Technical difficulties, system failures, or Internet downtime.
  • Timing. The timing of large customer orders, or the failure to enter into strategic alliances.
  • Costs. The amount and timing of operating costs and capital expenditures relating to expansion of the business, operations, and infrastructure.
  • Pricing. Changes in our pricing policies or competitors’ pricing policies.

The success of will depend on a significant number of print-buying customers knowing about, and regularly using, our services. The market for Internet-enabled printing services is at an early stage of development. Many customers will be addressing issues such as quality, reliability, billing, delivery, and customer service for the first time in a self-service, Internet-based, print creation and ordering environment. Educating potential customers is a complex, time consuming and expensive process. In many cases, organizations must change established business practices and conduct business in new ways to use the services.

8.2 Important Assumptions

Nature and Limitation of Projections. This financial projection is based on sales volume at the levels described in the revenue section and presents, to the best of management’s knowledge and belief, the company’s expected assets, liabilities, capital, revenues, and expenses. The projections reflect management’s judgement of the expected conditions and its expected course of action given the hypothetical assumptions.

Nature of Operations. The company operates as an Oregon C-corporation.

Revenues. will generate revenues from the sale of a variety of printed products to end user customers. The company’s products and services will be available to customers through the and websites, managed affiliates and co-branded websites, and privately-branded websites.

The company will not recognize revenues until the product is shipped, collection of the receivable will be probable, and commercial print vendors have fulfilled all contractual obligations to the customer. will take title to all products that the company instructs its commercial print vendors to produce. believes that purchases by businesses will account for a majority of its revenues and will record sales net of discounts. The company will record the cost of promotional products that it will give away at no charge as a sales and marketing expense.

A significant portion of revenue will be generated through barter transactions with participants in the co-branded program in which will sell printed products in exchange for online advertising. Barter transaction revenues and related advertising costs will be recorded at the fair value of the goods or services provided or received, whichever will be more easily determined in the circumstances. The majority of revenues will be generated from sources within the United States; therefore, all sales will be in the United States dollar currency.

Expenses. The company’s expenses will be primarily those of salaries, sales commissions, and administrative costs. The company will categorize its operating expenses into research and development, sales and marketing, and general and administrative.

Research and development expenses will primarily consist of personnel costs, including costs related to consultants and outside contractors.

Sales and marketing expenses will consist of the cost of free promotional products, the cost of marketing programs including advertisements, costs to acquire email lists, personnel and related costs for our marketing staff and customer support groups, and participation in trade shows.

General and administrative expenses will primarily consist of personnel and related costs for corporate functions, including finance, accounting, legal, human resources, facilities, and management of commercial print vendor relationships.

Cost of sales. Cost of sales will primarily consist of direct expenses relating to printing products, rework and reprinting charges, shipping and handling fees, royalties on software licenses, and credit card processing fees.

8.3 Break-even Analysis

The following chart and table outline the break-even analysis for

Print shop website business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $94,646
Average Percent Variable Cost 32%
Estimated Monthly Fixed Cost $64,359

8.4 Projected Profit and Loss is in the early stage of development; thus, initial projections have only been made on accounts that are believed to most drive the income statement. The following table provides Printing Solution’s projected income statements for 2000-2002. operates on a fiscal year ending in December. In order to reflect fiscal year projections of revenue and profit, only the last six months of year 2000 shows income. This reflects the projected launch date of the company.

Print shop website business plan, financial plan chart image

Print shop website business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $250,000 $2,910,000 $5,820,000
Direct Cost of Sales $80,000 $125,000 $200,000
Other $10,000 $30,000 $55,000
Total Cost of Sales $90,000 $155,000 $255,000
Gross Margin $160,000 $2,755,000 $5,565,000
Gross Margin % 64.00% 94.67% 95.62%
Payroll $173,921 $224,131 $270,652
Marketing/Promotion $429,998 $360,000 $565,000
Depreciation $0 $0 $0
Software/IS expense $90,000 $60,000 $85,000
Contract Labor $26,091 $35,000 $35,000
Legal and Professiona expense $20,002 $10,000 $10,000
Bank charges $2,300 $2,000 $2,000
Rent $30,000 $15,000 $15,000
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $772,312 $706,131 $982,652
Profit Before Interest and Taxes ($612,312) $2,048,869 $4,582,348
EBITDA ($612,312) $2,048,869 $4,582,348
Interest Expense $83,535 $63,252 $42,084
Taxes Incurred $0 $496,404 $1,153,984
Net Profit ($695,847) $1,489,213 $3,386,280
Net Profit/Sales -278.34% 51.18% 58.18%

8.5 Projected Cash Flow

The following table has calculated that the company will have a negative cash outflow during the first year based on the start-up costs outlined in topic 2.0. However, the company will not begin financing or operations until July, 2000. In order to offset this supposed outflow, increases in the initial cash requirements in the Start-up table have been provided. The differences between calculated cash and actual needs will be used for other start-up costs. It is assumed that there will be no dividend payments for the first three years of business.

Print shop website business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $62,500 $727,500 $1,455,000
Cash from Receivables $128,267 $1,552,257 $3,675,524
Subtotal Cash from Operations $190,767 $2,279,757 $5,130,524
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 $190,767 $2,279,757 $5,130,524
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $173,921 $224,131 $270,652
Bill Payments $717,104 $1,175,362 $2,096,935
Subtotal Spent on Operations $891,024 $1,399,493 $2,367,587
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $166,656 $166,656 $166,688
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $45,000 $45,000 $45,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,102,680 $1,611,149 $2,579,275
Net Cash Flow ($911,914) $668,609 $2,551,249
Cash Balance $38,086 $706,695 $3,257,944

8.6 Balance Sheet

The following table outlines some key financial information for

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Current Assets
Cash $38,086 $706,695 $3,257,944
Accounts Receivable $59,233 $689,476 $1,378,952
Inventory $14,667 $22,917 $36,667
Other Current Assets $200,000 $200,000 $200,000
Total Current Assets $311,986 $1,619,088 $4,873,563
Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $311,986 $1,619,088 $4,873,563
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $69,489 $99,033 $178,917
Current Borrowing $333,344 $166,688 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $402,833 $265,721 $178,917
Long-term Liabilities $405,000 $360,000 $315,000
Total Liabilities $807,833 $625,721 $493,917
Paid-in Capital $1,080,000 $1,080,000 $1,080,000
Retained Earnings ($880,000) ($1,575,847) ($86,634)
Earnings ($695,847) $1,489,213 $3,386,280
Total Capital ($495,847) $993,366 $4,379,646
Total Liabilities and Capital $311,986 $1,619,088 $4,873,563
Net Worth ($495,847) $993,366 $4,379,646

8.7 Business Ratios

The table below provides key ratios in the Industry Profile column for the commercial printing industry, as found in the Standard Industry Classifications (SIC) index, code 2759. We have projected healthy ratios for the first three years of operation, and foresee a continuing upwards trend throughout the company’s life.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 1064.00% 100.00% 2.00%
Percent of Total Assets
Accounts Receivable 18.99% 42.58% 28.29% 27.00%
Inventory 4.70% 1.42% 0.75% 11.70%
Other Current Assets 64.11% 12.35% 4.10% 23.60%
Total Current Assets 100.00% 100.00% 100.00% 62.30%
Long-term Assets 0.00% 0.00% 0.00% 37.70%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 129.12% 16.41% 3.67% 30.60%
Long-term Liabilities 129.81% 22.23% 6.46% 25.50%
Total Liabilities 258.93% 38.65% 10.13% 56.10%
Net Worth -158.93% 61.35% 89.87% 43.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 64.00% 94.67% 95.62% 36.90%
Selling, General & Administrative Expenses 280.80% 47.95% 39.59% 19.10%
Advertising Expenses 40.00% 6.01% 4.30% 0.60%
Profit Before Interest and Taxes -244.92% 70.41% 78.73% 2.40%
Main Ratios
Current 0.77 6.09 27.24 2.06
Quick 0.74 6.01 27.03 1.44
Total Debt to Total Assets 258.93% 38.65% 10.13% 56.10%
Pre-tax Return on Net Worth 140.34% 199.89% 103.67% 4.90%
Pre-tax Return on Assets -223.04% 122.64% 93.16% 11.20%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -278.34% 51.18% 58.18% n.a
Return on Equity 0.00% 149.92% 77.32% n.a
Activity Ratios
Accounts Receivable Turnover 3.17 3.17 3.17 n.a
Collection Days 55 63 86 n.a
Inventory Turnover 10.91 6.65 6.71 n.a
Accounts Payable Turnover 11.32 12.17 12.17 n.a
Payment Days 27 26 23 n.a
Total Asset Turnover 0.80 1.80 1.19 n.a
Debt Ratios
Debt to Net Worth 0.00 0.63 0.11 n.a
Current Liab. to Liab. 0.50 0.42 0.36 n.a
Liquidity Ratios
Net Working Capital ($90,847) $1,353,366 $4,694,646 n.a
Interest Coverage -7.33 32.39 108.88 n.a
Additional Ratios
Assets to Sales 1.25 0.56 0.84 n.a
Current Debt/Total Assets 129% 16% 4% n.a
Acid Test 0.59 3.41 19.33 n.a
Sales/Net Worth 0.00 2.93 1.33 n.a
Dividend Payout 0.00 0.00 0.00 n.a