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Roth & Calder Telemarketing Professionals, Inc.

Executive Summary

Introduction
It is the mission of Roth & Calder Telemarketing Professionals, Inc. (R&C) to provide comprehensive telemarketing consultation and creation of telemarketing advertising campaigns for our clients in the Cawleweton region. It is our long-term goal to become THE preferred business-to-business telemarketing agency for the East Coast area. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message can reach the right people, at the right moment to insure effective communication with their market.

The Company
Roth & Calder will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Thomas Roth, a former marketing executive with General Foods. Mr. Roth has brought together a highly respected group of marketing, development, and telemarketing specialists who, combined, have a total of 25 years of experience in this industry.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Cawleweton. The facilities include conference rooms and office spaces. The company expects to begin offering its services in January of Year 1.

The company’s potential clients will initially be all the companies in the Cawleweton area. We can service both small and large companies and provide virtually any consultation services in regards to telephone communications with clients.

The Services
In order to create the maximum effect for our clients, we provide a comprehensive program for them that may include some of the following services:

  • Identification of Program Objectives and Expectations
  • Creation of customized lists of leads
  • Market research
  • Consultation and training of telemarketing personnel
  • Script writing for programs
  • Creation of follow-up programs for successful calls.

This is only a partial list of our services as each project is customized to our client and its scope, length, depth, reach, and cost are unique.

The Market
The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

R&C believes that the greatest threat at the moment is in new entrants to the market who perceive an opportunity in a “high” growth industry. The most likely entrants will be existing advertising agencies wishing to horizontally integrate and enter new sub-markets. However, the one major disadvantage to new entrants is that all firms engaged in contracting to telemarketing agencies face significant switching costs when bringing on a new partner. Furthermore, R&C understands that in this industry there is a significant learning curve that creates declining “unit” costs as a firm gains more cumulative experience in the field itself and with long-term clients specifically.

Rivalry among different telemarketing agencies as stated before is quite intense. The telemarketing industry as a whole is mature with long-term moderate growth. Most of the largest agencies are mutually dependent when it comes to jockeying for position and market share. The fact that there are so many diverse and seemingly “generic” or general telemarketing agencies makes this a cutthroat industry.

The threat of clients backwardly integrating so as to have all their advertising done in-house is one of the major factors that buyers use to indirectly control price in this industry, and increase competition among firms. This must always be foremost in the minds of R&C’s management when offering services and setting prices.

Financial Considerations
Start-up assets required include expenses and cash needed to support operations until revenues reach an acceptable level. Most of the company’s liabilities will come from outside private investors and management investment, however, we have obtained current borrowing from Bank of America Commercial Investments, the principal to be paid off in three years. A long-term loan through VieilArgent Bank of Richburb will be paid off in ten years.

Telemarketing consultants business plan, executive summary chart image

1.1 Objectives

The Three-year goals for Roth & Calder Telemarketing Professionals, Inc. are as follows.

  • Achieve break-even by year two.
  • Establish a regional (East Coast) scope for operations within five years and a national presence within 10 years.
  • Establish minimum 95% customer satisfaction rate to establish long-term relationships with our clients and create a viable reputation.

1.2 Mission

It is the mission of Roth & Calder Telemarketing Professionals, Inc. (R&C) to provide comprehensive telemarketing consultation, and creation of telemarketing advertising campaigns for our clients in the Cawleweton region. It is our long-term goal to become THE preferred business-to-business telemarketing agency for the East Coast area. Our firm is not interested in simply producing a service for our clients. We believe in creating a long-term relationship with them so that the delivery of their message can reach the right people, at the right moment to insure effective communication with their market.

R&C is strictly a business-to-business company and seeks to provide answers to companies who desire to communicate with their customers via the phone. This can take the shape of advertising, surveys, seminar and conference invitations, etc. R&C has a combined 25 years of experience working with companies in delivering effective and professional telemarketing techniques.

1.3 Keys to Success

R&C’s keys to long-term survivability and profitability are as follows:

  • Differentiate our services so that our clients realize that we are able to better serve their needs rather than a more generic competitor or in-house telemarketing.
  • Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and a top notch reputation.
  • Establish a comprehensive service experience for our clients that includes consultation, analysis of telemarketing campaign goals and target markets, creation of streamlined and custom advertising campaigns based on needs, expectations, implementation, and follow-up analysis.
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Company Summary

Roth & Calder will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Thomas Roth, formerly a marketing executive with General Foods. Mr. Roth has brought together a highly respected group of marketing, development, and telemarketing specialists who, combined, have a total of 25 years of experience in this industry.

The company has a limited number of private investors and does not plan to go public. The company has its main offices in Cawleweton. The facilities include conference rooms and office spaces. The company expects to begin offering its services in January.

The company’s potential clients will initially be all the companies in the Cawleweton area. We can service both small and large companies and provide virtually any consultation services in regards to telephone communications with clients.

2.1 Company Ownership

The company will have a number of outside private investors who will own 27% of the company’s shares. The rest will be owned by the senior management including Mr. Thomas Roth, (25%), Ms. Jane Calder (20%), Mrs. Susan Howell, (20%), and Mr. Leonard Gray (8%). All other financing will come from loans.

2.2 Start-up Summary

Start-up assets required include equipment, and additional expenses as well as cash to support operations until revenues reach an acceptable level. Most of the company’s liabilities will come from outside private investors and management investment, however, we have obtained current borrowing from Bank of America Commercial Investments, the principal to be paid off in three years. A long-term loan through VieilArgent Bank of Richburb will be paid off in ten years.

Telemarketing consultants business plan, company summary chart image

Start-up
Requirements
Start-up Expenses
Legal $2,000
Insurance $1,000
Utilities $200
Rent $2,000
Accounting and bookkeeping fees $2,000
Expensed equipment $10,000
Advertising $6,500
Other $8,000
Total Start-up Expenses $31,700
Start-up Assets
Cash Required $117,300
Other Current Assets $5,000
Long-term Assets $10,000
Total Assets $132,300
Total Requirements $164,000
Start-up Funding
Start-up Expenses to Fund $31,700
Start-up Assets to Fund $132,300
Total Funding Required $164,000
Assets
Non-cash Assets from Start-up $15,000
Cash Requirements from Start-up $117,300
Additional Cash Raised $0
Cash Balance on Starting Date $117,300
Total Assets $132,300
Liabilities and Capital
Liabilities
Current Borrowing $16,000
Long-term Liabilities $45,000
Accounts Payable (Outstanding Bills) $3,000
Other Current Liabilities (interest-free) $0
Total Liabilities $64,000
Capital
Planned Investment
Mr. Thomas Roth $25,000
Ms. Jane Calder $20,000
Mrs. Susan Howell $20,000
Mr. Leonard Grey $8,000
Others $27,000
Additional Investment Requirement $0
Total Planned Investment $100,000
Loss at Start-up (Start-up Expenses) ($31,700)
Total Capital $68,300
Total Capital and Liabilities $132,300
Total Funding $164,000

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Services

Roth & Calder offers a complete, custom telemarketing campaign. The most common telemarketing campaigns are for the following purposes:

  • Generate sales leads
  • Set appointments
  • Market research
  • Surveys (including statistical analysis and political surveys)
  • Driving eyeballs to websites
  • Trial subscriptions
  • Database or mailing list information
  • Business development
  • Point-of-sale product promotion
  • Seminar and conference invitations.

In order to create the maximum effect for our clients, we provide a comprehensive program for them that may include some of the following services:

  • Identification of Program Objectives and Expectations.
  • Creation of customized lists of leads
  • Market research
  • Consultation and training of telemarketing personnel
  • Script writing for programs
  • Creation of follow-up programs for successful calls.

This is only a partial list of our services as each project is customized to our client and its scope, length, depth, reach, and cost are unique.

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Market Analysis Summary

The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

Roth & Calder Telemarketing Professionals’ business strategy is to establish a focused approach to its services rather than being everything to its clients. Our company does not intend to be a call center, nor will it ever become so. We are a consulting firm that designs telemarketing campaigns for its clients and matches these clients with the appropriate call center who has the necessary capabilities. These services are where we can offer a higher standard of quality to our clients. This will allow us to charge a higher profit margin to our clients for these differentiated and more focused services. This will also require average project times to be somewhat longer, and therefore we expect initial profitability levels to be lower than average.

4.1 Market Segmentation

Virtually every company, whether large and small, requires some form of telemarketing at some point. Often it is a survey to determine customer satisfaction or awareness. Sometimes it is effectively communicating an upcoming event such as a conference. Other companies wish to know if telemarketing is a feasible method of sales generation. Because of this almost universal need for some form of telemarketing consultation that spans almost all industries, R&C has decided not to create any market segments it wishes to concentrate on nor focus on a target market. We have the capacity to service almost any company of whatever size. We think that at this point in the company’s history, any attempt to target specific markets would hinder our growth potential.

The market analysis table and chart which follows shows the number of businesses within the greater Cawleweton region. This will be our geographical focus for the first 4-5 years of our company’s existance. Later, as we expand to an East Coast, and then a nationwide scope, our future business plans will include all of our potential clients across the country.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Total companies within the Atlanta area 4% 13,400 13,869 14,354 14,856 15,376 3.50%
Other 0% 0 0 0 0 0 0.00%
Total 3.50% 13,400 13,869 14,354 14,856 15,376 3.50%

4.2 Service Business Analysis

The telemarketing industry is, at the moment, a growing industry with most companies having an annual growth between 6.5% and 8%. This is due to businesses that are becoming increasingly aware of the need for market information and the desire to reduce customer turnover rates in a hard hit economy. However, long-term analysis of growth rates in this industry shows a cyclical pattern and R&C does not expect this high growth rate to continue.

The telemarketing industry is quite fragmented with companies that vary greatly in size, scope, services offered, and market share. Many companies are general advertising agencies that offer telemarketing services along with a wide range of other consulting services. In addition, many companies, not realizing the potential advantages of outsourcing, choose to develop their own telemarketing services.

R&C believes that the greatest threat at the moment is in new entrants to the market who perceive an opportunity in a “high” growth industry. The most likely entrants will be existing advertising agencies wishing to horizontally integrate and enter new sub-markets. However, the one major disadvantage to new entrants is that all firms engaged in contracting to telemarketing agencies face significant switching costs when bringing on a new partner. Furthermore, R&C understands that in this industry there is a significant learning curve that creates declining “unit” costs as a firm gains more cumulative experience in the field itself and with long-term clients specifically.

Rivalry among different telemarketing agencies as stated before is quite intense. The telemarketing industry as a whole is mature with long-term moderate growth. Most of the largest agencies are mutually dependent when it comes to jockeying for position and market share. The fact that there are so many diverse and seemingly “generic” or general telemarketing agencies makes this a cutthroat industry.

 The threat of clients backwardly integrating so as to have all their advertising done in-house is one of the major factors that buyers use to indirectly control price in this industry, and increase competition among firms. This must always be foremost in the minds of R&C’s management when offering services and setting prices.

4.2.1 Competition and Buying Patterns

Competition
Competition includes all potential advertising and telemarketing agencies plus call centers across the country. In addition we have indirect competition from organizations that handle all their telemarketing in-house. Practically speaking, this means we have the greatest threat from the largest telemarketing agencies such as Davis & Henke, Ludquist telemarketing, and other big, nationwide consulting companies that hold significant market share. The telemarketing consultation industry is highly fragmented, with a large number of small companies that mainly cater to small firms and a few large companies that seek the largest contracts from companies such as Sprint, GM, etc. This makes competition within the industry very intense. Through our focused strategy we intend to avoid such a debilitating environment and avoid its drawbacks such as price wars, etc. 

Buying patterns and needs
Companies usually enter into contracts with telemarketing agencies based on their reputation of professionalism and effective campaigns in the past. This reputation is difficult to obtain by new firms unless its personnel bring it with them from previous companies such as ours. Price and scope are also important reasons for accepting contracts, especially if the company is small.

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Strategy and Implementation Summary

Roth & Calder Telemarketing Professionals’ business strategy is to establish a focused approach to its services rather than being everything to its clients. Our company does not intend to be a call center, nor will it ever become so. We are a consulting firm that designs telemarketing campaigns for its clients and matches these clients with the appropriate call center who has the necessary capabilities. These services are where we can offer a higher standard of quality to our clients. This will allow us to charge a higher profit margin to our clients for these differentiated and more focused services. This will also require average project times to be somewhat longer, and therefore we expect initial profitability levels to be lower than average.

5.1 Marketing Strategy

In order to attract clients, R&C will begin to contact promising organizations and offer free initial consultations, and initial contracts at reduced prices. These promotions will allow us to begin to make our reputation. In addition, Mr. Roth and Ms. Calder will be traveling to six conventions across the Eastern part of the country during the first year of operations where we will have booths to advertise our services. Finally we will be setting up cold calls to potential clients and have half- and full-page advertisements in various publications catering to local businesses and organizations.

5.2 Sales Strategy

R&C’s management will be focusing on leveraging its employee’s established reputations and contacts in the telemarketing industry to generate contracts. Both Mr. Roth and Ms. Calder have been in the industry for many years and experience shows that many of their existing clients will still wish to work with them despite having to establish new contracts with R&C. We also understand that we may need to lower prices in our first couple of years in order to attract new customers and close deals.

Mr. Roth has been actively seeking to acquire a large contract with Magraw Construction over the past seven months. This company is the largest single residential contractor on the East Coast and has been seeking a telemarketing consultant for a customer survey project to be launched in the near future. R&C believes that its chances of acquiring this contract are excellent.

5.2.1 Sales Forecast

Sales forecasts are based on the various contract projects we anticipate acquiring. Anticipated revenues are based on average costs per project based on estimated time and complexity of project plus an undisclosed profit margin. The company does not have any significant direct costs of sales. We have broken up our total projected sales into the various size companies we expect to attract as clients.

  • Large companies – predominently large projects
  • Medium companies – varied projects
  • Small companies – mostly small projects
Telemarketing consultants business plan, strategy and implementation summary chart image

Telemarketing consultants business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Sales
Large Companies $93,000 $145,000 $224,000
Medium Companies $33,000 $56,000 $98,000
Small Companies $69,000 $110,000 $93,000
Other $36,000 $45,000 $45,000
Total Sales $231,000 $356,000 $460,000
Direct Cost of Sales Year 1 Year 2 Year 3
All client projects $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

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Management Summary

The company will have four officers: President, Mr. Thomas Roth; Head of Operations, Ms. Jane Calder; plus two telemarketing consultants. We will also hire an office manager, and someone to do cold calls. The company plans to hire additional consultants and administrative personnel as we begin to get large numbers of contracts.

6.1 Personnel

R&C’s management brings to the company strong capabilities in creative flair, research, and a unique combination of skills drawn from other businesses.

Mr. Thomas Roth just recently left a position as marketing executive with General Foods and has many years of experience working with telemarketing programs. Among the companies Mr. Roth has previously worked for are Lucas Advertising, McDonald Pollsters, and Capital Investments. Mr. Roth has successfully launched numerous telemarketing campaigns with these organizations including customer surveys, political surveys, and product introductions. Mr. Roth has an MBA in Marketing and an BS in International Relations.

Ms. Jane Calder, who has a Bachelors degree in marketing, worked for Ford Motor Company from 1978-1988 as an advertising executive. In 1989 she went to work for Anderson Consulting in their marketing and advertising division. Four years later Ms. Calder went to work as information campaign consultant for Senator Offenbaughten of Bigstate.

Personnel Plan
Year 1 Year 2 Year 3
Mr. Thomas Roth – President $36,000 $36,000 $60,000
Ms. Jane Calder – Operations Head/Principal Consultant $36,000 $36,000 $60,000
Mrs. Susan Howell – Telemarketing Consultant $36,000 $36,000 $45,000
Mr. Leonard Grey – Telemarketing Consultant $36,000 $36,000 $36,000
Office Manager $20,400 $22,000 $22,000
Cold Caller $13,440 $15,000 $0
Total People 6 6 5
Total Payroll $177,840 $181,000 $223,000

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Financial Plan

Our financial plan anticipates one year of negative profits as we gain sales volume. We have budgeted enough investment to cover these losses and have an additional credit line available if sales do not match predictions. 

Annual financial data is presented with associated topics. Monthly table data is provided in the Appendix.

7.1 Important Assumptions

We are assuming approximately 75% sales on credit and average interest rates below 10%. These are considered to be conservative in case our predictions are erroneous.

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 8.00% 8.00% 8.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

Our break-even analysis is based on the assumption that our gross margin is 100%. In other words, we will have insignificant direct cost of sales. Since each project will be of different scope, length, and complexity, it is difficult to assign an average per unit revenue figure. However, it is conservatively believed that during the first three years, average profitability per month per “segment” (based on client size) will be about $8,000. This is because, at first, we will be dealing with smaller companies that have smaller projects. We expect that about three to four projects per month will guarantee a break-even point, for the first year, averaged over 12 months.

Telemarketing consultants business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $22,210
Assumptions:
Average Percent Variable Cost 0%
Estimated Monthly Fixed Cost $22,210

7.3 Projected Profit and Loss

The following table itemizes our revenues and associated costs. We expect to be paying higher costs in marketing and advertising than other companies as we attempt to build sales volume. As the reader can see, we expect monthly profits to begin in third quarter 2004 and yearly profits to occur in 2005.

Telemarketing consultants business plan, financial plan chart image

Telemarketing consultants business plan, financial plan chart image

Telemarketing consultants business plan, financial plan chart image

Telemarketing consultants business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $231,000 $356,000 $460,000
Direct Cost of Sales $0 $0 $0
Other Costs of Sales $1,200 $0 $0
Total Cost of Sales $1,200 $0 $0
Gross Margin $229,800 $356,000 $460,000
Gross Margin % 99.48% 100.00% 100.00%
Expenses
Payroll $177,840 $181,000 $223,000
Sales and Marketing and Other Expenses $12,000 $24,000 $24,000
Depreciation $0 $2,500 $2,500
Rent $12,000 $12,000 $13,000
Utilities $3,600 $3,600 $4,000
Insurance $3,000 $3,000 $3,000
Payroll Taxes $26,676 $27,150 $33,450
Travel $24,200 $12,000 $10,000
Other $7,200 $8,000 $10,000
Total Operating Expenses $266,516 $273,250 $322,950
Profit Before Interest and Taxes ($36,716) $82,750 $137,050
EBITDA ($36,716) $85,250 $139,550
Interest Expense $5,021 $4,420 $3,440
Taxes Incurred $0 $23,499 $40,083
Net Profit ($41,737) $54,831 $93,527
Net Profit/Sales -18.07% 15.40% 20.33%

7.4 Projected Cash Flow

The following is our cash flow table and chart. We do not expect to have any short-term cash flow problems even though we will be operating at a loss for the first year. Our short-term loan will be repaid by the end of 2006. Our long-term loan will be paid off in ten years.

Telemarketing consultants business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $57,750 $89,000 $115,000
Cash from Receivables $121,425 $238,956 $321,668
Subtotal Cash from Operations $179,175 $327,956 $436,668
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 $3,000 $0 $0
Subtotal Cash Received $182,175 $327,956 $436,668
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $177,840 $181,000 $223,000
Bill Payments $89,413 $116,481 $139,058
Subtotal Spent on Operations $267,253 $297,481 $362,058
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $2,000 $6,000 $8,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $2,000 $3,000 $4,000
Purchase Other Current Assets $0 $7,000 $10,000
Purchase Long-term Assets $0 $0 $0
Dividends $15,000 $20,000 $56,000
Subtotal Cash Spent $286,253 $333,481 $440,058
Net Cash Flow ($104,078) ($5,525) ($3,390)
Cash Balance $13,222 $7,697 $4,307

7.5 Projected Balance Sheet

The Projected Balance Sheet is shown below.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $13,222 $7,697 $4,307
Accounts Receivable $51,825 $79,869 $103,201
Other Current Assets $5,000 $12,000 $22,000
Total Current Assets $70,047 $99,566 $129,508
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $0 $2,500 $5,000
Total Long-term Assets $10,000 $7,500 $5,000
Total Assets $80,047 $107,066 $134,508
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $8,484 $9,671 $11,587
Current Borrowing $14,000 $8,000 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $22,484 $17,671 $11,587
Long-term Liabilities $43,000 $40,000 $36,000
Total Liabilities $65,484 $57,671 $47,587
Paid-in Capital $103,000 $103,000 $103,000
Retained Earnings ($46,700) ($108,437) ($109,606)
Earnings ($41,737) $54,831 $93,527
Total Capital $14,563 $49,394 $86,921
Total Liabilities and Capital $80,047 $107,066 $134,508
Net Worth $14,563 $49,394 $86,921

7.6 Business Ratios

We have included industry standard ratios from the advertising consultant industry, Standard Industrial Classification (SIC) code 7311.9901, to compare with ours. As this is a new sub-market of the overall industry, we expect some significant differences especially in sales growth, financing ratios, long-term asset investments and net worth. However, our projections indicate a healthy company that will be able to obtain land retain long-term profitability.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 54.11% 29.21% 5.46%
Percent of Total Assets
Accounts Receivable 64.74% 74.60% 76.72% 32.83%
Other Current Assets 6.25% 11.21% 16.36% 43.34%
Total Current Assets 87.51% 92.99% 96.28% 79.45%
Long-term Assets 12.49% 7.01% 3.72% 20.55%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 28.09% 16.51% 8.61% 33.32%
Long-term Liabilities 53.72% 37.36% 26.76% 9.34%
Total Liabilities 81.81% 53.87% 35.38% 42.66%
Net Worth 18.19% 46.13% 64.62% 57.34%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 99.48% 100.00% 100.00% 100.00%
Selling, General & Administrative Expenses 118.02% 84.81% 79.82% 79.77%
Advertising Expenses 0.00% 0.00% 0.00% 5.00%
Profit Before Interest and Taxes -15.89% 23.24% 29.79% 2.91%
Main Ratios
Current 3.12 5.63 11.18 1.94
Quick 3.12 5.63 11.18 1.61
Total Debt to Total Assets 81.81% 53.87% 35.38% 50.78%
Pre-tax Return on Net Worth -286.59% 158.58% 153.71% 11.85%
Pre-tax Return on Assets -52.14% 73.16% 99.33% 24.09%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin -18.07% 15.40% 20.33% n.a
Return on Equity -286.59% 111.01% 107.60% n.a
Activity Ratios
Accounts Receivable Turnover 3.34 3.34 3.34 n.a
Collection Days 54 90 97 n.a
Accounts Payable Turnover 11.19 12.17 12.17 n.a
Payment Days 28 28 28 n.a
Total Asset Turnover 2.89 3.33 3.42 n.a
Debt Ratios
Debt to Net Worth 4.50 1.17 0.55 n.a
Current Liab. to Liab. 0.34 0.31 0.24 n.a
Liquidity Ratios
Net Working Capital $47,563 $81,894 $117,921 n.a
Interest Coverage -7.31 18.72 39.84 n.a
Additional Ratios
Assets to Sales 0.35 0.30 0.29 n.a
Current Debt/Total Assets 28% 17% 9% n.a
Acid Test 0.81 1.11 2.27 n.a
Sales/Net Worth 15.86 7.21 5.29 n.a
Dividend Payout 0.00 0.36 0.60 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
Large Companies 0% $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $9,000 $24,000
Medium Companies 0% $0 $0 $0 $0 $0 $2,000 $4,000 $4,000 $5,000 $5,000 $6,000 $7,000
Small Companies 0% $0 $0 $0 $0 $7,000 $5,000 $3,000 $26,000 $4,000 $7,000 $10,000 $7,000
Other 0% $0 $0 $0 $0 $0 $0 $7,000 $5,000 $12,000 $5,000 $2,000 $5,000
Total Sales $6,000 $6,000 $6,000 $6,000 $13,000 $13,000 $20,000 $41,000 $27,000 $23,000 $27,000 $43,000
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
All client projects $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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
Mr. Thomas Roth – President 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Ms. Jane Calder – Operations Head/Principal Consultant 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Mrs. Susan Howell – Telemarketing Consultant 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Mr. Leonard Grey – Telemarketing Consultant 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Office Manager 0% $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700
Cold Caller 0% $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120 $1,120
Total People 0% 6 6 6 6 6 6 6 6 6 6 6 6
Total Payroll $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820

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 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
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 $6,000 $6,000 $6,000 $6,000 $13,000 $13,000 $20,000 $41,000 $27,000 $23,000 $27,000 $43,000
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Costs of Sales $0 $0 $0 $0 $0 $500 $0 $700 $0 $0 $0 $0
Total Cost of Sales $0 $0 $0 $0 $0 $500 $0 $700 $0 $0 $0 $0
Gross Margin $6,000 $6,000 $6,000 $6,000 $13,000 $12,500 $20,000 $40,300 $27,000 $23,000 $27,000 $43,000
Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00% 96.15% 100.00% 98.29% 100.00% 100.00% 100.00% 100.00%
Expenses
Payroll $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820
Sales and Marketing and Other Expenses $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Insurance $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Payroll Taxes 15% $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223 $2,223
Travel 15% $1,200 $3,000 $1,000 $2,000 $2,000 $3,000 $2,000 $1,000 $2,000 $3,000 $1,000 $3,000
Other $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Total Operating Expenses $21,393 $23,193 $21,193 $22,193 $22,193 $23,193 $22,193 $21,193 $22,193 $23,193 $21,193 $23,193
Profit Before Interest and Taxes ($15,393) ($17,193) ($15,193) ($16,193) ($9,193) ($10,693) ($2,193) $19,107 $4,807 ($193) $5,807 $19,807
EBITDA ($15,393) ($17,193) ($15,193) ($16,193) ($9,193) ($10,693) ($2,193) $19,107 $4,807 ($193) $5,807 $19,807
Interest Expense $433 $431 $428 $425 $422 $420 $417 $414 $412 $409 $406 $403
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($15,826) ($17,624) ($15,621) ($16,618) ($9,615) ($11,113) ($2,610) $18,693 $4,395 ($602) $5,401 $19,404
Net Profit/Sales -263.77% -293.73% -260.35% -276.97% -73.97% -85.48% -13.05% 45.59% 16.28% -2.62% 20.00% 45.12%

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 $1,500 $1,500 $1,500 $1,500 $3,250 $3,250 $5,000 $10,250 $6,750 $5,750 $6,750 $10,750
Cash from Receivables $0 $150 $4,500 $4,500 $4,500 $4,675 $9,750 $9,925 $15,525 $30,400 $20,150 $17,350
Subtotal Cash from Operations $1,500 $1,650 $6,000 $6,000 $7,750 $7,925 $14,750 $20,175 $22,275 $36,150 $26,900 $28,100
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 $1,500 $1,500 $0 $0 $0 $0
Subtotal Cash Received $1,500 $1,650 $6,000 $6,000 $7,750 $7,925 $16,250 $21,675 $22,275 $36,150 $26,900 $28,100
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 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820 $14,820
Bill Payments $3,234 $7,066 $8,737 $6,834 $7,798 $7,845 $9,243 $7,780 $7,497 $7,818 $8,715 $6,846
Subtotal Spent on Operations $18,054 $21,886 $23,557 $21,654 $22,618 $22,665 $24,063 $22,600 $22,317 $22,638 $23,535 $21,666
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 $181 $181 $181 $181 $181 $181 $181 $181 $181 $181 $190
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $181 $181 $181 $181 $181 $181 $181 $181 $181 $181 $190
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 $15,000
Subtotal Cash Spent $18,054 $22,248 $23,919 $22,016 $22,980 $23,027 $24,425 $22,962 $22,679 $23,000 $23,897 $37,046
Net Cash Flow ($16,554) ($20,598) ($17,919) ($16,016) ($15,230) ($15,102) ($8,175) ($1,287) ($404) $13,150 $3,003 ($8,946)
Cash Balance $100,746 $80,148 $62,229 $46,213 $30,983 $15,881 $7,706 $6,419 $6,015 $19,165 $22,168 $13,222
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 $117,300 $100,746 $80,148 $62,229 $46,213 $30,983 $15,881 $7,706 $6,419 $6,015 $19,165 $22,168 $13,222
Accounts Receivable $0 $4,500 $8,850 $8,850 $8,850 $14,100 $19,175 $24,425 $45,250 $49,975 $36,825 $36,925 $51,825
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 $122,300 $110,246 $93,998 $76,079 $60,063 $50,083 $40,056 $37,131 $56,669 $60,990 $60,990 $64,093 $70,047
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Total Assets $132,300 $120,246 $103,998 $86,079 $70,063 $60,083 $50,056 $47,131 $66,669 $70,990 $70,990 $74,093 $80,047
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 $3,000 $6,773 $8,510 $6,574 $7,538 $7,536 $8,983 $7,530 $7,238 $7,525 $8,489 $6,553 $8,484
Current Borrowing $16,000 $16,000 $15,819 $15,638 $15,457 $15,276 $15,095 $14,914 $14,733 $14,552 $14,371 $14,190 $14,000
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $19,000 $22,773 $24,329 $22,212 $22,995 $22,812 $24,078 $22,444 $21,971 $22,077 $22,860 $20,743 $22,484
Long-term Liabilities $45,000 $45,000 $44,819 $44,638 $44,457 $44,276 $44,095 $43,914 $43,733 $43,552 $43,371 $43,190 $43,000
Total Liabilities $64,000 $67,773 $69,148 $66,850 $67,452 $67,088 $68,173 $66,358 $65,704 $65,629 $66,231 $63,933 $65,484
Paid-in Capital $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $101,500 $103,000 $103,000 $103,000 $103,000 $103,000
Retained Earnings ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($31,700) ($46,700)
Earnings $0 ($15,826) ($33,450) ($49,071) ($65,689) ($75,305) ($86,417) ($89,027) ($70,335) ($65,939) ($66,541) ($61,140) ($41,737)
Total Capital $68,300 $52,474 $34,850 $19,229 $2,611 ($7,005) ($18,117) ($19,227) $965 $5,361 $4,759 $10,160 $14,563
Total Liabilities and Capital $132,300 $120,246 $103,998 $86,079 $70,063 $60,083 $50,056 $47,131 $66,669 $70,990 $70,990 $74,093 $80,047
Net Worth $68,300 $52,474 $34,850 $19,229 $2,611 ($7,005) ($18,117) ($19,227) $965 $5,361 $4,759 $10,160 $14,563

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