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Machine & Equipment Manufacturing icon Solar Water Heater Distributor Business Plan

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Sun Heat

Executive Summary

Sun Heat is a start-up company registered in California offering solar home water heating systems lead by Sara Clark.

The Market
The market for solar heating is huge in Southern California where they get over 245 days of sun a year. Sun Heat has identified two distinct market segments that they will market their products to. The first segment is the DIY segment of individuals. The second segment is people that will utilize a skilled installer to have the system implemented at their home. The DIY segment has an annual growth rate of 9% and 3.9 million potential customers. The professional install market has a 8% annual growth rate and 2.7 million possible customers.

The Products
Sun Heat will sell two different versions of a solar home water heating system: a do-it-yourself system and a unit installed by a licensed installer. Both groups are cost conscious and environmentally aware.

Sun Heat’s system can save the individual family from 70%-90% of the total amount spent on the electricity used for heating water.

Management
Sun Heat is being lead by Sara Clark who has the education and experience to execute on this proven business model. Sara has an undergraduate degree in environmental studies and Masters degrees in engineering and business administration. Sales are forecasted to grow substantially in year two and year three. Net profit will be correspondingly growing for years two and three.

Solar water heater distributor business plan, executive summary chart image

1.1 Objectives

  • To become the premier manufacturer of solar based water heating systems.
  • To quickly gain market penetration within the first three years.
  • To develop a customer-centric organization based on cutting edge technology.

1.2 Mission

Sun Heat’s mission is to become the premier solar water heater company offering the highest quality products and customer service while saving customers money and making positive contributions to our environment.

1.3 Keys to Success

Sun Heat has identified three keys to success that help the company grow into a mature market leader:

  • Providing cutting edge, reliable, and simple-to-install and maintain solar water heating systems.
  • Broadening the market of solar heating into a mainstream energy source.
  • Designing and implementing strict financial controls.
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Company Summary

Sun Heat has been formed as a California registered Corporation. The main shareholder is Sara Clark.

2.1 Company Ownership

Sun Heat has been established as a CA corporation. The main shareholder is Sara Clark, Founder and President.

2.2 Start-up Summary

Sun Heat will require the following items for start up of the business:

  • Computer system- the required components of this system include seven terminals, four laster printers, one central server, broadband Internet connections, and Microsoft Office for all computers, two ACT! licenses, and two QuickBooks Pro licenses.
  • Laptop computer and LCD projector.
  • Website development.
  • Office furniture including desks, cabinets and chairs for seven stations.
  • Waiting room furniture.
  • Eight extension telephone system including a hardware-based voice mail system.
  • Three large white boards.
  • Sales room promotional displays.
  • Fax machine and copier.
  • Racks and shelving for the warehouse.
  • Forklift.
Solar water heater distributor business plan, company summary chart image

Start-up Funding
Start-up Expenses to Fund $9,000
Start-up Assets to Fund $156,000
Total Funding Required $165,000
Assets
Non-cash Assets from Start-up $62,000
Cash Requirements from Start-up $94,000
Additional Cash Raised $0
Cash Balance on Starting Date $94,000
Total Assets $156,000
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
Investor 1 $60,000
Investor 2 $55,000
Other $50,000
Additional Investment Requirement $0
Total Planned Investment $165,000
Loss at Start-up (Start-up Expenses) ($9,000)
Total Capital $156,000
Total Capital and Liabilities $156,000
Total Funding $165,000
Start-up
Requirements
Start-up Expenses
Legal $4,000
Stationery etc. $1,000
Brochures $1,000
Consultants $2,000
Insurance $1,000
Total Start-up Expenses $9,000
Start-up Assets
Cash Required $94,000
Other Current Assets $0
Long-term Assets $62,000
Total Assets $156,000
Total Requirements $165,000

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Products

Sun Heat will sell two versions of a solar home water heating system. One will be a unit sold as a do-it-yourself model. The second model is sold as a unit to be installed by a licensed installer. By providing two models, Sun Heat will appeal to two different customer segments, one that likes the challenge of projects and has the skills to execute the plans, and people who desire a solar heating system but have no desire or skills to install it themselves.

The sun is the planet’s most powerful source of energy and also the most unused source of energy by humans. Solar power is a clean, environmentally friendly source of energy. It is renewable meaning it is impossible to consume the energy at a faster rate than it takes to replenish it for future users. There are no toxic by products or emissions. Sun Heat is an effective system that harnesses the sun’s energy for family water heating needs.

Solar water heating systems are in high demand. Typically 30%-40% of a family’s electricity bill is devoted to devoted water. Sun Heat’s system can save the individual family from 70%-90% of the total amount spent on the electricity used for heating water. The system generally meets all of the summer time heating needs. During times of decreased sunlight, the system will preheat the water then bring it up to temperature by the conventional water heating system all ready in place.

The Sun Heat system is designed for single family dwellings. The Sun Heat system consists of a solar collector, a large storage container, a pump, and different valves throughout the system. This system is an open loop set up. The plumbing from the storage tank to the collectors is affected by city water pressure, it is “on the grid.” A closed system would not be connected to city water and heat exchangers would be needed, increasing complexity and cost while decreasing efficiency.

Usually solar collectors or solar panels are located on the roof of the house. To get the full benefit of a solar heater there must be an area available that has sufficient exposure to the sun. The facing angle may be in any direction within 30 degrees of due south. The panels have insulated tubes within the collectors that heat the water. A pump moves hot water from the collectors to the storage tank and moves cold water into the collectors for heating. Several valves are used as safeguards within the system. A pressure and temperature relief valve is located near the steam vent. If a system or power failure occurs this valve protects against overheating inside the solar panels which could cause damage. Safety relief valves are located throughout the system to protect it should other components fail.

Sun Heat’s products are manufactured by a large industry supplier and shipped to the Sun Heat factory for partial assembly. With this procurement/manufacturing method, Sun Heat is able to minimize large capital expenditures for manufacturing while being able to offer high quality products.

Sun Heat provides a five year warranty on their products against manufacturer’s defects. Five years is the industry standard. Additionally, Sun Heat will require all of their licensed installers to offer an 18-month warranty on the installation labor. This requirement ensures that Sun Heat products are installed properly and minimizes the risk of decreasing brand equity due to faulty installation.

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Market Analysis Summary

Sun Heat has identified two distinct market segments for marketing their products. The first segment is the “DIY” segment of handy individuals. The second is the “Convenience” segment that will utilize a skilled installer to have the system installed at their home. The solar water heating industry is reasonably diverse. There are some companies that sell kits that must be assembled and then installed by the individual. There are other companies that only sell professional installed systems. Some companies sell solar water heaters specifically for swimming pools, others market their products for households.

4.1 Market Segmentation

Sun Heat has identified two market segments to target.

DIY
These people do a lot of repairs and upgrades on their home. They have lots of building and repair skills and like to tackle projects while learning new skills. This customer segment has a variety of motivations for do-it-yourself work. One motivation is saving money. Another is the satisfaction of completing the project on their own. Additionally, customizing the project may be appealing. Some demographic information of this group includes:

  • Age 29-56.
  • Primarily male.
  • Married with at least one child at home.
  • Household income ranges from $50,000-$80,000.
  • 73% have an undergraduate degree.
  • Undertake at least one project every three months.
  • Spend $250-$3000 per year on assorted projects at home stores such as Lowes or Home Depot.

Convenience
This segment is looking for the advantages of a solar based water heating system without the challenge of installation. They appreciate the value of the solar heating system. This group recognizes the environmental and/or economic benefits of solar water heating and will choose a professional installer. Demographic information is as follows:

  • Ages 35-65.
  • Married with at least one child at home.
  • Household incomes of $62,000-$110,000.
  • 79% have an undergraduate degree.
  • 27% have a graduate degree or post undergraduate coursework.
  • Have paid a contractor to carry out at least one home improvement project within the last 12 months.

Market Channels
Sun Heat will be be sold through several channels:

  • DIY Retailers: This channel purchases Sun Heat products in quantity and then resells them to individuals to install.
  • Professional Installers: This channel is comprised of approved Sun Heat installers.
Solar water heater distributor business plan, market analysis summary chart image

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
DIY 9% 3,968,987 4,326,196 4,715,554 5,139,954 5,602,550 9.00%
Convenience 8% 2,789,254 3,012,394 3,253,386 3,513,657 3,794,750 8.00%
Total 8.59% 6,758,241 7,338,590 7,968,940 8,653,611 9,397,300 8.59%

4.2 Target Market Segment Strategy

Sun Heat has decided to concentrate on these two market segments for several reasons. One reason is the lack of high quality products currently available to the DIY crowd. Another is the sheer size of the do-it-yourself market. This segment participates within the $23 billion DIY home improvement market and within the last six years has grown at double digit rates largely fueled by the Internet making information available to assist do-it-yourselfers in completing home improvement projects. The increase in size and activity within the available market makes it particularly attractive.

The new wave of environmentalism provides another reason of targeting these two market segments. More and more people want to reduce their negative impact on the environment and solar hot water heating is an easy and economical way to do it.

4.3 Industry Analysis

The industry is composed of many different manufacturers of solar water heating components and systems. Some companies operate serving the industrial market, others serve the residential market. There are several companies that make components they sell to different assemblers. There are other companies that make all the components for their systems in-house. Some solar heating systems are complex using computers to make adjustments such as the angle of the collectors based on the sun’s position. Others systems are quite basic. It is interesting to note that almost no one competes within different markets, each company has chosen a different niche and sticks with that one alone. To be noted in section 5.1 is part of Sun Heat’s competitive edge, serving two markets. This makes perfect sense since the products for the two markets are quite similar.

4.3.1 Competition and Buying Patterns

Sun Heat has several competitors. Its main competition comes from:

  • Mega Sun: This is a Helioakami company. Their products are good but because they are made in the EU (Greece) shipping and manufacturing costs make their prices less competitive.
  • Solar Energy Systems: This company, based in CA manufactures very basic, do-it-yourself systems. Their products are noticeably cheaper but are of poor quality with few features.
  • Shell Solar: This is a high end manufacturer pioneering the use of copper to increase efficiency. While their product is more efficient, the cost of copper makes their products too expensive for much of Sun Heat’s target market.
  • Imagination Solar: A simple but inefficient DIY system.
  • Go Solar Company: This company currently manufactures solar electric systems but will be releasing a solar water heating system within the next 11 months.

The buying patterns of customers is as follows:

  • DIY: These customers will typically go into a Lowes or Home Depot and solicit the advice of the floor sales agents.
  • Professional Installs: These customers typically rely on word of mouth or advice from their contractors.
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Strategy and Implementation Summary

Sun Heat has two competitive edges to gain market penetration. The first is the ability to serve both the DIY and the professional install market. No competitors do that. The quality of Sun Heat’s systems will also allow the company to expand market penetration. Marketing will be focused on education about the environmental and economic benefits of installing a solar water heating system

5.1 Competitive Edge

Sun Heat has two competitive edges that will distinguish them from the competition. First, Sun serves both the DIY market and the professional install market. This is a competitive edge because Sun Heat can reconfigure one product for both market segments, immediately increasing the number of potential customers, at minimal costs to Sun Heat. The equipment is the same with minor changes to packaging and installation instructions. The DIY system will also include some tools.

The second competitive edge, related to the first is the benchmark level of product quality for the DIY customers. By serving the two markets and meeting the need of a high quality product for professional install segment, Sun Heat is able to then offer the same high quality product to the DIY segment. Currently, Sun Heat competitors only offer DIYers very basic models whose quality does not approach Sun Heat’s.

5.2 Marketing Strategy

Sun Heat’s marketing campaign focuses on raising awareness about the environmental and economic benefits of having a solar-based water heating system. Environmental benefits include using a renewable resource and no toxic discharge or emissions, thus allowing individuals to make serious commitments to the Earth. Customers will also enjoy the economic savings afforded by a solar water heating system.

Sun Heat’s marketing will focus on advertising and trade shows. In each of these venues they will target the DIY and professional install markets along with retailers carrying Sun Heat products. In addition, Sun Heat will develop relationships with utilities in an attempt to offer rebates or other financial incentives for utility customers using the alternative energy source.

5.3 Sales Strategy

The two-part sales strategy addresses each customer segment. As mentioned in the previous section, to reach the DIY segment, Sun Heat will work with retailers selling DIY units to inform them about the product and its superiority to the competition. Retailers sell the DIY units, it is important to have good relationships with them and to support them with as much information and resources as possible.

Sun Heat is in the process of developing a licensing program to address the professional install market segment. This program includes product information, installation training and certification of installers. The licensing program is the foundation of the relationship between installers and Sun Heat. To support this relationship, Sun Heat assigns each installer an account executive for technical support. By offering this unmatched assistance, installers will more readily recommend Sun Heat, thereby driving sales.

For the professional install market, participation in trade shows will be the first step in the relationship between Sun Heat and the installer. In order to develop a strong network of installers, Sun Heat will offer an excellent margin system to installers using Sun Heat units. The margin will be similar to the margin that Sun Heat offers the DIY retailers, so for every sale that the installer makes, he makes a commission as well as revenue from the installation. This system provides the installer with an incentive to recommend Sun Heat over the competition. Installers will be sold the product on credit with enough time for them to collect from their customer before paying Sun Heat. Promotions will be used to help generate sales and will typically occur during the trade shows, giving Sun Heat an opportunity when they are face to face with the installer. High quality sales literature will be passed out to each customer segment illustrating the superior quality of Sun Heat products.

5.3.1 Sales Forecast

As a start up organization, sales will increase in a slow but steady fashion. Sun Heat has adopted a conservative sales forecast to increase the likelihood of reaching the goals. Please review the following table which provides detailed sales information by month for the first year and yearly forecasts for the following two years. Following the table are two graphs, one for sales by month, the other is sales by year.

Solar water heater distributor business plan, strategy and implementation summary chart image

Solar water heater distributor business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Professional install $131,573 $216,025 $279,887
DIY $108,736 $187,942 $243,502
Total Sales $240,309 $403,967 $523,389
Direct Cost of Sales Year 1 Year 2 Year 3
Professional install $59,208 $97,211 $125,949
DIY $48,931 $84,574 $109,576
Subtotal Direct Cost of Sales $108,139 $181,785 $235,525

5.4 Milestones

Sun Heat has several milestones to use as goals for the organization. The following table details the pertinent information.

Solar water heater distributor business plan, strategy and implementation summary chart image

Milestones
Milestone Start Date End Date Budget Manager Department
Completion of business plan 1/1/2003 1/15/2003 $0 Sara Marketing
First large DIY contract 1/1/2003 4/30/2003 $0 Sales Department
Revenue exceeding $200K 1/1/2003 11/1/2003 $0 Sales Department
Profitability 1/1/2003 3/1/2004 $0 Sara Department
Totals $0

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Web Plan Summary

Sun Heat will create a website to distribute product information. This will be an efficient source of disbursement since once the site is complete, maintenance costs are low and the site can serve a large number of potential users. The site also will be a source of technical information for current owners Sun Heat units.

6.1 Website Marketing Strategy

The marketing and sales department will be instructed to rely heavily on the website as a clearinghouse for information about Sun Heat products. Energy saving estimates, technical requirements, installations guidelines as well as product comparisons will be available. All printed materials will refer to the website as an information source. Sun Heat recognizes the value of the website and will promote it accordingly.

6.2 Development Requirements

Sun Heat has identified a programmer (after reviewing their portfolio) who has the time, technical skills, and artistic vision to create Sun Heat’s site. The site will take four to six weeks to complete and then require bi-monthly updates.

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Management Summary

Sara Clark will lead Sun Heat. Sara has undergraduate degrees in environmental studies and Masters in engineering and business administration. While pursuing this degree, Sara worked with a photovoltaic manufacturer, she worked on a team and took an idea of a solar panel for charging cellular batteries from the conceptual stage to the sales stage.

7.1 Personnel Plan

  • Sara: product design, component procurement, business development, marketing/sales, high level accounting.
  • Sales (2): set up licensing program, installer support, retail resellers sales and support, as well as direct sales.
  • Warehouse (2): inventory, sales fulfillment.
  • Customer support (1): all aspects of customer service.
  • Bookkeeper (1): this person will be responsible for accounts payable/receivable as well as some HR functions.
Personnel Plan
Year 1 Year 2 Year 3
Sara $24,000 $30,000 $36,000
Sales $22,000 $24,000 $26,000
Sales $18,000 $24,000 $26,000
Warehouse $14,300 $15,600 $15,600
Warehouse $11,700 $15,600 $15,600
Customer service $13,000 $15,600 $15,600
Bookkeeper/ HR $15,400 $16,800 $16,800
Total People 7 7 7
Total Payroll $118,400 $141,600 $151,600

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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 what will be needed in monthly revenue to reach the break-even point.

Solar water heater distributor business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $29,872
Assumptions:
Average Percent Variable Cost 45%
Estimated Monthly Fixed Cost $16,430

8.3 Projected Profit and Loss

The following table will indicate Projected Profit and Loss.

Solar water heater distributor business plan, financial plan chart image

Solar water heater distributor business plan, financial plan chart image

Solar water heater distributor business plan, financial plan chart image

Solar water heater distributor business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $240,309 $403,967 $523,389
Direct Cost of Sales $108,139 $181,785 $235,525
Other Costs of Goods $0 $0 $0
Total Cost of Sales $108,139 $181,785 $235,525
Gross Margin $132,170 $222,182 $287,864
Gross Margin % 55.00% 55.00% 55.00%
Expenses
Payroll $118,400 $141,600 $151,600
Sales and Marketing and Other Expenses $5,400 $5,400 $5,400
Depreciation $12,396 $1,033 $1,033
Rent $24,000 $25,000 $26,000
Utilities $9,000 $750 $750
Insurance $7,800 $7,800 $7,800
Payroll Taxes $17,760 $21,240 $22,740
Other $2,400 $2,400 $2,400
Total Operating Expenses $197,156 $205,223 $217,723
Profit Before Interest and Taxes ($64,986) $16,959 $70,141
EBITDA ($52,590) $17,992 $71,174
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,088 $21,042
Net Profit ($64,986) $11,871 $49,099
Net Profit/Sales -27.04% 2.94% 9.38%

8.4 Projected Cash Flow

The following chart and table will indicate Projected Cash Flow.

Solar water heater distributor business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $60,077 $100,992 $130,847
Cash from Receivables $136,262 $273,031 $370,691
Subtotal Cash from Operations $196,340 $374,022 $501,538
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 $196,340 $374,022 $501,538
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $118,400 $141,600 $151,600
Bill Payments $155,929 $247,529 $315,723
Subtotal Spent on Operations $274,329 $389,129 $467,323
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 $274,329 $389,129 $467,323
Net Cash Flow ($77,989) ($15,107) $34,215
Cash Balance $16,011 $904 $35,119

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 $16,011 $904 $35,119
Accounts Receivable $43,969 $73,914 $95,765
Other Current Assets $0 $0 $0
Total Current Assets $59,980 $74,818 $130,883
Long-term Assets
Long-term Assets $62,000 $62,000 $62,000
Accumulated Depreciation $12,396 $13,429 $14,462
Total Long-term Assets $49,604 $48,571 $47,538
Total Assets $109,584 $123,389 $178,421
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $18,570 $20,504 $26,438
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $18,570 $20,504 $26,438
Long-term Liabilities $0 $0 $0
Total Liabilities $18,570 $20,504 $26,438
Paid-in Capital $165,000 $165,000 $165,000
Retained Earnings ($9,000) ($73,986) ($62,115)
Earnings ($64,986) $11,871 $49,099
Total Capital $91,014 $102,885 $151,984
Total Liabilities and Capital $109,584 $123,389 $178,421
Net Worth $91,014 $102,885 $151,984

8.6 Business Ratios

The following table details important Business Ratios specific to Sun Heat as well as industry ratios for the Other Electric Power Generation industry, NAICS code 221119.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 68.10% 29.56% 10.72%
Percent of Total Assets
Accounts Receivable 40.12% 59.90% 53.67% 10.41%
Other Current Assets 0.00% 0.00% 0.00% 40.72%
Total Current Assets 54.73% 60.64% 73.36% 51.79%
Long-term Assets 45.27% 39.36% 26.64% 48.21%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 16.95% 16.62% 14.82% 12.65%
Long-term Liabilities 0.00% 0.00% 0.00% 40.12%
Total Liabilities 16.95% 16.62% 14.82% 52.77%
Net Worth 83.05% 83.38% 85.18% 47.23%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 55.00% 55.00% 55.00% 47.48%
Selling, General & Administrative Expenses 82.04% 52.06% 45.62% 13.69%
Advertising Expenses 0.00% 0.00% 0.00% 0.03%
Profit Before Interest and Taxes -27.04% 4.20% 13.40% 9.26%
Main Ratios
Current 3.23 3.65 4.95 2.10
Quick 3.23 3.65 4.95 1.69
Total Debt to Total Assets 16.95% 16.62% 14.82% 60.03%
Pre-tax Return on Net Worth -71.40% 16.48% 46.15% 7.72%
Pre-tax Return on Assets -59.30% 13.74% 39.31% 19.31%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -27.04% 2.94% 9.38% n.a
Return on Equity -71.40% 11.54% 32.31% n.a
Activity Ratios
Accounts Receivable Turnover 4.10 4.10 4.10 n.a
Collection Days 56 71 79 n.a
Accounts Payable Turnover 9.40 12.17 12.17 n.a
Payment Days 27 29 27 n.a
Total Asset Turnover 2.19 3.27 2.93 n.a
Debt Ratios
Debt to Net Worth 0.20 0.20 0.17 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $41,410 $54,314 $104,446 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.46 0.31 0.34 n.a
Current Debt/Total Assets 17% 17% 15% n.a
Acid Test 0.86 0.04 1.33 n.a
Sales/Net Worth 2.64 3.93 3.44 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
Professional install 0% $0 $0 $6,589 $9,854 $11,454 $13,545 $13,989 $14,022 $14,585 $15,655 $15,878 $16,002
DIY 0% $0 $0 $0 $8,573 $9,965 $11,784 $12,170 $12,199 $12,689 $13,620 $13,814 $13,922
Total Sales $0 $0 $6,589 $18,427 $21,419 $25,329 $26,159 $26,221 $27,274 $29,275 $29,692 $29,924
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
Professional install $0 $0 $2,965 $4,434 $5,154 $6,095 $6,295 $6,310 $6,563 $7,045 $7,145 $7,201
DIY $0 $0 $0 $3,858 $4,484 $5,303 $5,477 $5,490 $5,710 $6,129 $6,216 $6,265
Subtotal Direct Cost of Sales $0 $0 $2,965 $8,292 $9,639 $11,398 $11,772 $11,800 $12,273 $13,174 $13,361 $13,466
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
Sara 0% $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Sales 0% $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Sales 0% $0 $0 $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Warehouse 0% $0 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300
Warehouse 0% $0 $0 $0 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300
Customer service 0% $0 $0 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300 $1,300
Bookkeeper/ HR 0% $0 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400
Total People 1 4 5 7 7 7 7 7 7 7 7 7
Total Payroll $2,000 $6,700 $8,000 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300

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 $0 $6,589 $18,427 $21,419 $25,329 $26,159 $26,221 $27,274 $29,275 $29,692 $29,924
Direct Cost of Sales $0 $0 $2,965 $8,292 $9,639 $11,398 $11,772 $11,800 $12,273 $13,174 $13,361 $13,466
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $2,965 $8,292 $9,639 $11,398 $11,772 $11,800 $12,273 $13,174 $13,361 $13,466
Gross Margin $0 $0 $3,624 $10,135 $11,780 $13,931 $14,388 $14,422 $15,001 $16,101 $16,331 $16,458
Gross Margin % 0.00% 0.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00% 55.00%
Expenses
Payroll $2,000 $6,700 $8,000 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300
Sales and Marketing and Other Expenses $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450
Depreciation $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033 $1,033
Rent $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Utilities $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Insurance $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650
Payroll Taxes 15% $300 $1,005 $1,200 $1,695 $1,695 $1,695 $1,695 $1,695 $1,695 $1,695 $1,695 $1,695
Other $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Total Operating Expenses $7,383 $12,788 $14,283 $18,078 $18,078 $18,078 $18,078 $18,078 $18,078 $18,078 $18,078 $18,078
Profit Before Interest and Taxes ($7,383) ($12,788) ($10,659) ($7,943) ($6,298) ($4,147) ($3,690) ($3,656) ($3,077) ($1,977) ($1,747) ($1,620)
EBITDA ($6,350) ($11,755) ($9,626) ($6,910) ($5,265) ($3,114) ($2,657) ($2,623) ($2,044) ($944) ($714) ($587)
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 ($7,383) ($12,788) ($10,659) ($7,943) ($6,298) ($4,147) ($3,690) ($3,656) ($3,077) ($1,977) ($1,747) ($1,620)
Net Profit/Sales 0.00% 0.00% -161.77% -43.11% -29.40% -16.37% -14.11% -13.94% -11.28% -6.75% -5.89% -5.41%

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 $0 $1,647 $4,607 $5,355 $6,332 $6,540 $6,555 $6,818 $7,319 $7,423 $7,481
Cash from Receivables $0 $0 $0 $165 $5,238 $13,895 $16,162 $19,018 $19,621 $19,692 $20,505 $21,967
Subtotal Cash from Operations $0 $0 $1,647 $4,771 $10,592 $20,227 $22,702 $25,573 $26,440 $27,011 $27,928 $29,447
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 $0 $1,647 $4,771 $10,592 $20,227 $22,702 $25,573 $26,440 $27,011 $27,928 $29,447
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 $2,000 $6,700 $8,000 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300 $11,300
Bill Payments $145 $4,374 $5,160 $8,409 $14,082 $15,442 $17,156 $17,518 $17,560 $18,048 $18,925 $19,110
Subtotal Spent on Operations $2,145 $11,074 $13,160 $19,709 $25,382 $26,742 $28,456 $28,818 $28,860 $29,348 $30,225 $30,410
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 $2,145 $11,074 $13,160 $19,709 $25,382 $26,742 $28,456 $28,818 $28,860 $29,348 $30,225 $30,410
Net Cash Flow ($2,145) ($11,074) ($11,513) ($14,938) ($14,790) ($6,515) ($5,754) ($3,245) ($2,421) ($2,337) ($2,296) ($962)
Cash Balance $91,855 $80,782 $69,268 $54,331 $39,541 $33,026 $27,273 $24,028 $21,607 $19,270 $16,973 $16,011
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 $94,000 $91,855 $80,782 $69,268 $54,331 $39,541 $33,026 $27,273 $24,028 $21,607 $19,270 $16,973 $16,011
Accounts Receivable $0 $0 $0 $4,942 $18,597 $29,424 $34,526 $37,983 $38,631 $39,466 $41,730 $43,493 $43,969
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $94,000 $91,855 $80,782 $74,210 $72,928 $68,965 $67,552 $65,256 $62,659 $61,073 $60,999 $60,466 $59,980
Long-term Assets
Long-term Assets $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000 $62,000
Accumulated Depreciation $0 $1,033 $2,066 $3,099 $4,132 $5,165 $6,198 $7,231 $8,264 $9,297 $10,330 $11,363 $12,396
Total Long-term Assets $62,000 $60,967 $59,934 $58,901 $57,868 $56,835 $55,802 $54,769 $53,736 $52,703 $51,670 $50,637 $49,604
Total Assets $156,000 $152,822 $140,716 $133,111 $130,796 $125,800 $123,354 $120,025 $116,395 $113,776 $112,669 $111,103 $109,584
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 $4,205 $4,887 $7,941 $13,569 $14,871 $16,572 $16,933 $16,960 $17,418 $18,288 $18,469 $18,570
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 $4,205 $4,887 $7,941 $13,569 $14,871 $16,572 $16,933 $16,960 $17,418 $18,288 $18,469 $18,570
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $4,205 $4,887 $7,941 $13,569 $14,871 $16,572 $16,933 $16,960 $17,418 $18,288 $18,469 $18,570
Paid-in Capital $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000 $165,000
Retained Earnings ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000) ($9,000)
Earnings $0 ($7,383) ($20,171) ($30,830) ($38,773) ($45,071) ($49,218) ($52,908) ($56,564) ($59,642) ($61,619) ($63,366) ($64,986)
Total Capital $156,000 $148,617 $135,829 $125,170 $117,227 $110,929 $106,782 $103,092 $99,436 $96,358 $94,381 $92,634 $91,014
Total Liabilities and Capital $156,000 $152,822 $140,716 $133,111 $130,796 $125,800 $123,354 $120,025 $116,395 $113,776 $112,669 $111,103 $109,584
Net Worth $156,000 $148,617 $135,829 $125,170 $117,227 $110,929 $106,782 $103,092 $99,436 $96,358 $94,381 $92,634 $91,014

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