JavaNet Internet Cafe
Executive Summary
JavaNet,
unlike a typical cafe, will provide a unique forum for communication
and entertainment through the medium of the Internet. JavaNet is the
answer to an increasing demand. The public wants: (1) access to the
methods of communication and volumes of information now available on the
Internet, and (2) access at a cost they can afford and in such a way
that they aren't socially, economically, or politically isolated.
JavaNet's goal is to provide the community with a social, educational,
entertaining, atmosphere for worldwide communication.
This
business plan is prepared to obtain financing in the amount of $24,000.
The supplemental financing is required to begin work on site preparation
and modifications, equipment purchases, and to cover expenses in the
first year of operations. Additional financing has already been secured
in the form of: (1) $24,000 from the Oregon Economic Development Fund
(2) $19,000 of personal savings from owner Cale Bruckner (3) $36,000
from three investors (4) and $9,290 in the form of short-term loans.
JavaNet
will be incorporated as an LLC corporation. This will shield the owner
Cale Bruckner, and the three outside investors, Luke Walsh, Doug Wilson,
and John Underwood, from issues of personal liability and double
taxation. The investors will be treated as shareholders and therefore
will not be liable for more than their individual personal investment of
$12,000 each.
The financing, in addition to the capital
contributions from the owner, shareholders and the Oregon Economic
Development Fund, will allow JavaNet to successfully open and maintain
operations through year one. The large initial capital investment will
allow JavaNet to provide its customers with a full featured Internet
cafe. A unique, upscale, and innovative environment is required to
provide the customers with an atmosphere that will spawn socialization.
Successful operation in year one will provide JavaNet with a customer
base that will allow it to be self sufficient in year two.
1.1 Objectives
JavaNet's objectives for the first three years of operation include:
- The creation of a unique, upscale, innovative environment that will differentiate JavaNet from local coffee houses.
- Educating the community on what the Internet has to offer.
- The formation of an environment that will bring people with diverse interests and backgrounds together in a common forum.
- Good coffee and bakery items at a reasonable price.
- Affordable access to the resources of the Internet and other online services.
1.2 Keys to Success
The keys to the success for JavaNet are:
- The
creation of a unique, innovative, upscale atmosphere that will
differentiate JavaNet from other local coffee shops and future Internet
cafes.
- The establishment of JavaNet as a community hub for socialization and entertainment.
- The
creation of an environment that won't intimidate the novice user.
JavaNet will position itself as an educational resource for individuals
wishing to learn about the benefits the Internet has to offer.
- Great coffee and bakery items.
1.3 Mission
As
the popularity of the Internet continues to grow at an exponential
rate, easy and affordable access is quickly becoming a necessity of
life. JavaNet provides communities with the ability to access the
Internet, enjoy a cup of coffee, and share Internet experiences in a
comfortable environment. People of all ages and backgrounds will come to
enjoy the unique, upscale, educational, and innovative environment that
JavaNet provides.
1.4 Risks
The risks involved with starting JavaNet are:
- Will there be a demand for the services offered by JavaNet in Eugene?
- Will the popularity of the Internet continue to grow, or is the Internet a fad?
- Will individuals be willing to pay for the service JavaNet offers?
- Will
the cost of accessing the Internet from home drop so significantly that
there will not be a market for Internet Cafes such as JavaNet?
Company Summary
JavaNet,
soon to be located in downtown Eugene on 10th and Oak, will offer the
community easy and affordable access to the Internet. JavaNet will
provide full access to email, WWW, FTP, Usenet and other Internet
applications such as Telnet and Gopher. JavaNet will also provide
customers with a unique and innovative environment for enjoying great
coffee, specialty beverages, and bakery items.
JavaNet will appeal
to individuals of all ages and backgrounds. The instructional Internet
classes, and the helpful staff that JavaNet provides, will appeal to the
audience that does not associate themselves with the computer age. This
educational aspect will attract younger and elderly members of the
community who are rapidly gaining interest in the unique resources that
online communications have to offer. The downtown location will provide
business people with convenient access to their morning coffee and
online needs.
2.1 Company Ownership
JavaNet
is a privately held Oregon Limited Liability Corporation. Cale
Bruckner, the founder of JavaNet, is the majority owner. Luke Walsh,
Doug Wilson, and John Underwood, all hold minority stock positions as
private investors.
2.2 Start-up Summary
JavaNet's
start-up costs will cover coffee making equipment, site renovation and
modification, capital to cover losses in the first year, and the
communications equipment necessary to get its customers online.
The
communications equipment necessary to provide JavaNet's customers with a
high-speed connection to the Internet and the services it has to offer
make up a large portion of the start-up costs. These costs will include
the computer terminals and all costs associated with their set-up. Costs
will also be designated for the purchase of two laser printers and a
scanner.
In addition, costs will be allocated for the purchase of
coffee making equipment. One espresso machine, an automatic coffee
grinder, and minor additional equipment will be purchased from Allann
Brothers.
The site at 10th and Oak will require funds for
renovation and modification. A single estimated figure will be allocated
for this purpose. The renovation/modification cost estimate will
include the costs associated with preparing the site for opening
business.
Start-up Expense Details:
- 11 computers = $22,000
- two printers = $1,000
- one scanner = $500
- software = $810
- one espresso machine = $10,700
- one automatic espresso grinder = $795
- other fixtures and remodeling:
- two coffee/food preparation counters = $1,000
- one information display counter = $1,000
- one drinking/eating counter = $500
- sixteen stools = $1,600
- six computer desks w/chairs = $2,400
- stationery goods = $500
- two telephones = $200
- decoration expense = $13,000
| Start-up |
| |
| Legal | $500 |
| Stationery etc. | $500 |
| Brochures | $500 |
| Consultants | $2,000 |
| Insurance | $700 |
| Rent | $1,445 |
| 4-group Automatic Coffee Machine | $10,700 |
| Bean Grinder | $795 |
| Computer Systems (x11), Software, Printer, Scanner | $24,310 |
| Communication Lines | $840 |
| Fixtures/Remodel | $20,000 |
| Total Start-up Expenses | $62,290 |
| |
| Cash Required | $24,000 |
| Start-up Inventory | $2,000 |
| Other Current Assets | $0 |
| Long-term Assets | $0 |
| Total Assets | $26,000 |
| |
| Total Requirements | $88,290 |
2.3 Company Locations and Facilities
A site has been chosen at 10th and Oak in downtown Eugene. This site was chosen for various reasons, including:
- Proximity to the downtown business community.
- Proximity to trendy, upscale restaurants such as West Brothers.
- Proximity to LTD's Eugene Station. Parking availability.
- Low cost rent - $.85 per square foot for 1700 square feet.
- High visibility.
All
of these qualities are consistent with JavaNet's goal of providing a
central hub of communication and socialization for the Eugene community.
Services
JavaNet
will provide full access to email, WWW, FTP, Usenet and other Internet
applications such as Telnet and Gopher. Printing, scanning, and
introductory courses to the Internet will also be available to the
customer. JavaNet will also provide customers with a unique and
innovative environment for enjoying great coffee, specialty beverages,
and bakery items.
3.1 Competitive Comparison
JavaNet
will be the first Internet cafe in Eugene. JavaNet will differentiate
itself from the strictly-coffee cafes in Eugene by providing its
customers with Internet and computing services.
3.2 Service Description
JavaNet
will provide its customers with full access to the Internet and common
computer software and hardware. Some of the Internet and computing
services available to JavaNet customers are listed below:
- Access to external POP3 email accounts.
- Customers
can sign up for a JavaNet email account. This account will be managed
by JavaNet servers and accessible from computer systems outside the
JavaNet network.
- FTP, Telnet, Gopher, and other popular Internet utilities will be available.
- Access to Netscape or Internet Explorer browser.
- Access to laser and color printing.
- Access to popular software applications like Adobe PhotoShop and Microsoft Word.
JavaNet
will also provide its customers with access to introductory Internet
and email classes. These classes will be held in the afternoon and late
in the evening. By providing these classes, JavaNet will build a client
base familiar with its services. The computers, Internet access, and
classes wouldn't mean half as much if taken out of the environment
JavaNet will provide. Good coffee, specialty drinks, bakery goods, and a
comfortable environment will provide JavaNet customers with a home away
from home. A place to enjoy the benefits of computing in a comfortable
and well-kept environment.
3.3 Fulfillment
JavaNet
will obtain computer support and Internet access from Bellevue
Computers located in Eugene. Bellevue will provide the Internet
connections, network consulting, and the hardware required to run the
JavaNetwork. Allann Brothers will provide JavaNet with coffee equipment,
bulk coffee, and paper supplies. At this time, a contract for the
bakery items has not been completed. JavaNet is currently negotiating
with Humble Bagel and the French Horn to fulfill the requirement.
3.4 Technology
JavaNet
will invest in high-speed computers to provide its customers with a
fast and efficient connection to the Internet. The computers will be
reliable and fun to work with. JavaNet will continue to upgrade and
modify the systems to stay current with communications technology. One
of the main attractions associated with Internet cafes, is the state of
the art equipment available for use. Not everyone has a Pentium PC in
their home or office.
3.5 Future Services
As
JavaNet grows, more communications systems will be added. The
possibility of additional units has been accounted for in the current
floor plan. As the demand for Internet connectivity increases, along
with the increase in competition, JavaNet will continue to add new
services to keep its customer base coming back for more.
Market Analysis Summary
JavaNet
is faced with the exciting opportunity of being the first-mover in the
Eugene cyber-cafe market. The consistent popularity of coffee, combined
with the growing interest in the Internet, has been proven to be a
winning concept in other markets and will produce the same results in
Eugene.
4.1 Target Market Segment Strategy
JavaNet
intends to cater to people who want a guided tour on their first spin
around the Internet and to experienced users eager to indulge their
passion for computers in a social setting. Furthermore, JavaNet will be a
magnet for local and traveling professionals who desire to work or
check their email messages in a friendly atmosphere. These professionals
will either use JavaNet's PCs, or plug their notebooks into Internet
connections. JavaNet's target market covers a wide range of ages: from
members of Generation X who grew up surrounded by computers, to Baby
Boomers who have come to the realization that people today cannot afford
to ignore computers.
4.1.1 Market Trends
A
market survey was conducted in the Fall of 1996. Key questions were
asked of fifty potential customers. Some key findings include:
- 35 subjects said they would be willing to pay for access to the Internet.
- Five dollars an hour was the most popular hourly Internet fee.
- 24 subjects use the Internet to communicate with others on a regular basis.
4.1.2 Market Needs
Factors
such as current trends, addiction, and historical sales data ensure
that the high demand for coffee will remain constant over the next five
years. The rapid growth of the Internet and online services, that has
been witnessed worldwide, is only the tip of the iceberg. The potential
growth of the Internet is enormous, to the point where one day, a
computer terminal with an online connection will be as common and
necessary as a telephone. This may be 10 or 20 years down the road, but
for the next five years, the online service provider market is sure to
experience tremendous growth. Being the first cyber-cafe in Eugene,
JavaNet will enjoy the first-mover advantages of name recognition and
customer loyalty. Initially, JavaNet will hold a 100 percent share of
the cyber-cafe market in Eugene. In the next five years, competitors
will enter the market. JavaNet has set a goal to maintain greater than a
50 percent market share.
4.2 Market Segmentation
JavaNet's
customers can be divided into two groups. The first group is familiar
with the Internet and desires a progressive and inviting atmosphere
where they can get out of their offices or bedrooms and enjoy a great
cup of coffee. The second group is not familiar with the Internet, yet,
and is just waiting for the right opportunity to enter the online
community. JavaNet's target market falls anywhere between the ages of 18
and 50. This extremely wide range of ages is due to the fact that both
coffee and the Internet appeal to a variety of people. In addition to
these two broad categories, JavaNet's target market can be divided into
more specific market segments. The majority of these individuals are
students and business people. See the Market Analysis chart and table
below for more specifics.
| Market Analysis |
| University Students | 4% | 15,000 | 15,600 | 16,224 | 16,873 | 17,548 | 4.00% |
| Office Workers | 3% | 25,000 | 25,750 | 26,523 | 27,319 | 28,139 | 3.00% |
| Seniors | 5% | 18,500 | 19,425 | 20,396 | 21,416 | 22,487 | 5.00% |
| Teenagers | 2% | 12,500 | 12,750 | 13,005 | 13,265 | 13,530 | 2.00% |
| Other | 0% | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | 0.00% |
| Total | 2.68% | 96,000 | 98,525 | 101,148 | 103,873 | 106,704 | 2.68% |
4.3 Service Business Analysis
The
retail coffee industry in Eugene experienced rapid growth at the
beginning of the decade and is now moving into the mature stage of its
life cycle. Many factors contribute to the large demand for good coffee
in Eugene. The University is a main source of demand for coffee
retailers. The climate in Eugene is extremely conducive to coffee
consumption. Current trends in the Northwest reflect the popularity of
fresh, strong, quality coffee and specialty drinks. Eugene is a haven
for coffee lovers.
The popularity of the Internet is growing
exponentially. Those who are familiar with the Internet are well aware
of how fun and addictive surfing the Net can be. Those who have not yet
experienced the Internet, need a convenient, relaxed atmosphere where
they can feel comfortable learning about and utilizing the current
technologies. JavaNet seeks to provide its customers with affordable
Internet access in an innovative and supportive environment.
Due
to intense competition, cafe owners must look for ways to differentiate
their place of business from others in order to achieve and maintain a
competitive advantage. The founder of JavaNet realizes the need for
differentiation and strongly believes that combining a cafe with
complete Internet service is the key to success. The fact that no
cyber-cafes are established in Eugene, presents JavaNet with a chance to
enter the window of opportunity and enter into a profitable niche in
the market.
4.3.1 Competition and Buying Patterns
The
main competitors in the retail coffee segment are Cafe Paradisio, Full
City, Coffee Corner and Allann Bros. These businesses are located in or
near the downtown area, and target a similar segment to JavaNet's (i.e.
educated, upwardly-mobile students and business people).
Competition
from online service providers comes from locally-owned businesses as
well as national firms. There are approximately eight, local, online
service providers in Eugene. This number is expected to grow with the
increasing demand for Internet access. Larger, online service providers,
such as AOL and CompuServe are also a competitive threat to JavaNet.
Due to the nature of the Internet, there are no geographical boundaries
restricting competition.
4.3.2 Business Participants
There
are approximately 16 coffee wholesalers in Lane County. These
wholesalers distribute coffee and espresso beans to over 20 retailers in
the Eugene area. Competition in both channels creates an even amount of
bargaining power between buyers and suppliers resulting in extremely
competitive pricing. Some of these major players in the industry (i.e.
Allann Brothers Coffee Co., Inc. and Coffee Corner Ltd.) distribute and
retail coffee products.
The number of online service providers in
Eugene is approximately eight and counting. These small, regional
service providers use a number of different pricing strategies. Some
charge a monthly fee, while others charge hourly and/or phone fees.
Regardless of the pricing method used, obtaining Internet access through
one of these firms can be expensive. Larger Internet servers such as
America Online (AOL), Prodigy, and CompuServe, are also fighting for
market share in this rapidly growing industry. These service providers
are also rather costly for the average consumer. Consumers who are not
convinced they would frequently and consistently travel the Internet,
will not be willing to pay these prices.
4.3.3 Distributing a Service
The
dual product/service nature of JavaNet's business faces competition on
two levels. JavaNet competes not only with coffee retailers, but also
with Internet service providers. The good news is that JavaNet does not
currently face any direct competition from other cyber-cafes in the
Eugene market. There are a total of three cyber-cafes in the state of
Oregon: one located in Portland and two in Ashland.
Heavy
competition between coffee retailers in Eugene creates an industry where
all firms face the same costs. There is a positive relationship between
price and quality of coffee. Some coffees retail at $8/pound while
other, more exotic beans may sell for as high as $16/pound. Wholesalers
sell beans to retailers at an average of a 50 percent discount. For
example, a pound of Sumatran beans wholesales for $6.95 and retails for
$13.95. And as in most industries, price decreases as volume increases.
Strategy and Implementation Summary
JavaNet
has three main strategies. The first strategy focuses on attracting
novice Internet users. By providing a novice friendly environment,
JavaNet hopes to educate and train a loyal customer base.
The
second, and most important, strategy focuses on pulling in power
Internet users. Power Internet users are extremely familiar with the
Internet and its offerings. This group of customers serves an important
function at JavaNet. Power users have knowledge and web-browsing
experience that novice Internet users find attractive and exciting.
The
third strategy focuses on building a social environment for JavaNet
customers. A social environment, that provides entertainment, will serve
to attract customers that wouldn't normally think about using the
Internet. Once on location at JavaNet, these customers that came for the
more standard entertainment offerings, will realize the potential
entertainment value the Internet can provide.
5.1 Strategy Pyramid
The
following subtopics provide an overview of JavaNet's three key
strategies. Strategy pyramid graphics are presented in the appendix of
this plan.
5.1.1 Attract Power Internet Users
JavaNet's
second strategy will be focused on attracting power Internet users.
Power Internet users provide an important function at JavaNet. JavaNet
plans on attracting this type of customer by:
- Providing the latest in computing technology.
- Providing scanning and printing services.
- Providing access to powerful software applications.
5.1.2 Social Hub
The
third strategy focuses on building a social environment for JavaNet
customers. A social environment, that provides entertainment, will serve
to attract customers that wouldn't normally think about using the
Internet. Once on location at JavaNet, these customers that came for the
more standard entertainment offerings, will realize the potential
entertainment value the Internet can provide.
5.1.3 Attract Novice Internet Users
JavaNet's first strategy focuses on attracting novice Internet users. JavaNet plans on attracting these customers by:
- Providing
a novice friendly environment. JavaNet will be staffed by knowledgeable
employees focused on serving the customer's needs.
- A customer
service desk will always be staffed. If a customer has any type of
question or concern, a JavaNet employee will always be available to
assist.
- JavaNet will offer introductory classes on the Internet
and email. These classes will be designed to help novice users
familiarize themselves with these key tools and the JavaNet computer
systems.
5.2 SWOT Analysis
The
SWOT analysis provides us with an opportunity to examine the internal
strengths and weaknesses JavaNet must address. It also allows us to
examine the opportunities presented to JavaNet as well as potential
threats.
JavaNet has a valuable inventory of strengths that will
help it succeed. These strengths include: a knowledgeable and friendly
staff, state-of-the-art computer hardware, and a clear vision of the
market need. Strengths are valuable, but it is also important to realize
the weaknesses JavaNet must address. These weaknesses include: a
dependence on quickly changing technology, and the cost factor
associated with keeping state-of-the art computer hardware.
JavaNet's
strengths will help it capitalize on emerging opportunities. These
opportunities include, but are not limited to, a growing population of
daily Internet users, and the growing social bonds fostered by the new
Internet communities. Threats that JavaNet should be aware of include,
the rapidly falling cost of Internet access, and emerging local
competitors.
5.2.1 Weaknesses
- A
dependence on quickly changing technology. JavaNet is a place for
people to experience the technology of the Internet. The technology that
is the Internet changes rapidly. Product lifecycles are measured in
weeks, not months. JavaNet needs to keep up with the technology because a
lot of the JavaNet experience is technology.
- Cost factor
associated with keeping state-of-the-art hardware. Keeping up with the
technology of the Internet is an expensive undertaking. JavaNet needs to
balance technology needs with the other needs of the business. One
aspect of the business can't be sacrificed for the other.
5.2.2 Opportunities
- Growing
population of daily Internet users. The importance of the Internet
almost equals that of the telephone. As the population of daily Internet
users increases, so will the need for the services JavaNet offers.
- Social
bonds fostered by the new Internet communities. The Internet is
bringing people from across the world together unlike any other
communication medium. JavaNet will capitalize on this social trend by
providing a place for smaller and local Internet communities to meet in
person. JavaNet will grow some of these communities on its own by
establishing chat areas and community programs. These programs will be
designed to build customer loyalty.
5.2.3 Threats
- Rapidly
falling cost of Internet access. The cost of access to the Internet for
home users is dropping rapidly. Internet access may become so cheap and
affordable that nobody will be willing to pay for access to it. JavaNet
is aware of this threat and will closely monitor pricing.
- Emerging
local competitors. Currently, JavaNet is enjoying a first-mover
advantage in the local cyber-cafe market. However, additional
competitors are on the horizon, and we need to be prepared for their
entry into the market. Many of our programs will be designed to build
customer loyalty, and it is our hope that our quality service and
up-scale ambiance won't be easily duplicated.
5.2.4 Strengths
- Knowledgeable
and friendly staff. We've gone to great lengths at JavaNet to find
people with a passion for teaching and sharing their Internet
experiences. Our staff is both knowledgeable and eager to please.
- State-of-the
art equipment. Part of the JavaNet experience includes access to
state-of-the-art computer equipment. Our customers enjoy beautiful
flat-screen displays, fast machines, and high-quality printers.
- Upscale
ambiance. When you walk into JavaNet, you'll feel the technology. High
backed mahogany booths with flat-screen monitors inset into the walls
provide a cozy hideaway for meetings and small friendly gatherings.
Large round tables with displays viewable from above provide a forum for
larger gatherings and friendly "how-to" classes on the Internet.
Aluminum track lighting and art from local artists sets the mood. Last,
but not least, quality cappuccino machines and a glass pastry display
case provide enticing refreshments.
- Clear vision of the
market need. JavaNet knows what it takes to build an upscale cyber cafe.
We know the customers, we know the technology, and we know how to build
the service that will bring the two together.
5.3 Competitive Edge
JavaNet
will follow a differentiation strategy to achieve a competitive
advantage in the cafe market. By providing Internet service, JavaNet
separates itself from all other cafes in Eugene. In addition, JavaNet
provides a comfortable environment with coffee and bakery items,
distinguishing itself from other Internet providers in Eugene.
5.4 Marketing Strategy
JavaNet
will position itself as an upscale coffee house and Internet service
provider. It will serve high-quality coffee and espresso specialty
drinks at a competitive price. Due to the number of cafes in Eugene, it
is important that JavaNet sets fair prices for its coffee. JavaNet will
use advertising as its main source of promotion. Ads placed in The
Register Guard, Eugene Weekly, and the Emerald will help build customer
awareness. Accompanying the ad will be a coupon for a free hour of
Internet travel. Furthermore, JavaNet will give away three free hours of
Internet use to beginners who sign up for an introduction to the
Internet workshop provided by JavaNet.
5.4.1 Pricing Strategy
JavaNet
bases its prices for coffee and specialty drinks on the "retail profit
analysis" provided by our supplier, Allann Brothers Coffee Co., Inc.
Allann Brothers has been in the coffee business for 22 years and has
developed a solid pricing strategy.
Determining a fair market,
hourly price, for online use is more difficult because there is no
direct competition from another cyber-cafe in Eugene. Therefore, JavaNet
considered three sources to determine the hourly charge rate. First, we
considered the cost to use other Internet servers, whether it is a
local networking firm or a provider such as America Online. Internet
access providers use different pricing schemes. Some charge a monthly
fee, while others charge an hourly fee. In addition, some providers use a
strategy with a combination of both pricing schemes. Thus, it can
quickly become a high monthly cost for the individual. Second, JavaNet
looked at how cyber-cafes in other markets such as Portland and Ashland
went about pricing Internet access. Third, JavaNet used the market
survey conducted in the Fall of 1996. Evaluating these three factors
resulted in JavaNet's hourly price of five dollars.
JavaNet
will implement a pull strategy in order to build consumer awareness and
demand. Initially, JavaNet has budgeted $5,000 for promotional efforts
which will include advertising with coupons for a free hour of Internet
time in local publications and in-house promotions such as offering
customers free Internet time if they pay for an introduction to the
Internet workshop taught by JavaNet's computer technician.
JavaNet
realizes that in the future, when competition enters the market,
additional revenues must be allocated for promotion in order to maintain
market share.
5.5 Sales Strategy
As
a retail establishment, JavaNet employs people to handle sales
transactions. Computer literacy is a requirement for JavaNet employees.
If an employee does not possess basic computer skills when they are
hired, they are trained by our full-time technician. Our full-time
technician is also available for customers in need of assistance.
JavaNet's commitment to friendly, helpful service is one of the key
factors that distinguishes JavaNet from other Internet cafes.
5.5.1 Sales Forecast
Sales forecast data is presented in the chart and table below.
Sales:
JavaNet is basing their projected coffee and espresso sales on the
financial snapshot information provided to them by Allann Bros. Coffee
Co. Internet sales were estimated by calculating the total number of
hours each terminal will be active each day and then generating a
conservative estimate as to how many hours will be purchased by
consumers.
Cost of Sales: The cost of goods sold for
coffee-related products was determined by the "retail profit analysis"
we obtained from Allann Bros. Coffee Co. The cost of bakery items is 20%
of the selling price. The cost of Internet access is $660 per month,
paid to Bellevue Computers for networking fees. The cost of e-mail
accounts is 25% of the selling price.
| Sales Forecast |
| Coffee (based on average) | 12,016 | 14,068 | 15,475 |
| Specialty Drinks (based on average) | 6,654 | 7,913 | 8,705 |
| Email Memberships | 8,703 | 10,505 | 11,556 |
| Hourly Internet Fees | 38,269 | 46,365 | 51,002 |
| Baked Goods (based on average) | 32,673 | 42,150 | 46,365 |
| Total Unit Sales | 98,315 | 121,001 | 133,103 |
| | | |
| Coffee (based on average) | $1.00 | $1.00 | $1.00 |
| Specialty Drinks (based on average) | $2.00 | $2.00 | $1.00 |
| Email Memberships | $10.00 | $10.00 | $10.00 |
| Hourly Internet Fees | $2.50 | $2.50 | $2.50 |
| Baked Goods (based on average) | $1.25 | $1.25 | $1.00 |
| | | |
| Coffee (based on average) | $12,016 | $14,068 | $15,475 |
| Specialty Drinks (based on average) | $13,308 | $15,826 | $8,705 |
| Email Memberships | $87,030 | $105,050 | $115,560 |
| Hourly Internet Fees | $95,673 | $115,913 | $127,505 |
| Baked Goods (based on average) | $40,841 | $52,688 | $46,365 |
| Total Sales | $248,868 | $303,544 | $313,610 |
| | | |
| Coffee (based on average) | $0.25 | $0.25 | $0.25 |
| Specialty Drinks (based on average) | $0.50 | $0.50 | $0.25 |
| Email Memberships | $2.50 | $2.50 | $2.50 |
| Hourly Internet Fees | $0.63 | $0.63 | $0.63 |
| Baked Goods (based on average) | $0.31 | $0.31 | $0.25 |
| | | |
| Coffee (based on average) | $3,004 | $3,517 | $3,869 |
| Specialty Drinks (based on average) | $3,327 | $3,957 | $2,176 |
| Email Memberships | $21,758 | $26,263 | $28,890 |
| Hourly Internet Fees | $23,918 | $28,978 | $31,876 |
| Baked Goods (based on average) | $10,210 | $13,172 | $11,591 |
| Subtotal Direct Cost of Sales | $62,217 | $75,886 | $78,403 |
5.6 Milestones
The
JavaNet management team has established some basic milestones to keep
the business plan priorities in place. Responsibility for implementation
falls on the shoulders of Cale Bruckner. This Milestones Table below
will be updated as the year progresses using the actual tables. New
milestones will be added as the first year of operations commences.
| Milestones |
| Business Plan | 1/1/1998 | 2/1/1998 | $1,000 | Cale Bruckner | Admin |
| Secure Start-up Funding | 2/15/1998 | 3/1/1998 | $1,000 | Cale Bruckner | Admin |
| Site Selection | 3/1/1998 | 3/15/1998 | $1,000 | Cale Bruckner | Admin |
| Architect Designs | 4/1/1998 | 5/1/1998 | $1,000 | Cale Bruckner | Admin |
| Designer Proposal | 4/1/1998 | 4/15/1998 | $1,000 | Cale Bruckner | Admin |
| Technology Design | 4/1/1998 | 4/15/1998 | $1,000 | Cale Bruckner | Admin |
| Year 1 Plan | 6/1/1998 | 6/5/1998 | $1,000 | Cale Bruckner | Admin |
| Personnel Plan | 7/1/1998 | 7/10/1998 | $1,000 | Cale Bruckner | Admin |
| Accounting Plan | 7/1/1998 | 7/5/1998 | $1,000 | Cale Bruckner | Admin |
| Licensing | 9/1/1998 | 9/15/1998 | $1,000 | Cale Bruckner | Admin |
| Totals | | | $10,000 | |
Management Summary
JavaNet
is owned and operated by Mr. Cale Bruckner. The company, being small in
nature, requires a simple organizational structure. Implementation of
this organizational form calls for the owner, Mr. Bruckner, to make all
of the major management decisions in addition to monitoring all other
business activities.
6.1 Personnel Plan
The
staff will consist of six part-time employees working thirty hours a
week at $5.50 per hour. In addition, one full-time technician (who is
more technologically oriented to handle minor terminal
repairs/inquiries) will be employed to work forty hours a week at $10.00
per hour. The three private investors, Luke Walsh, Doug Wilson and John
Underwood will not be included in management decisions. This simple
structure provides a great deal of flexibility and allows communication
to disperse quickly and directly. Because of these characteristics,
there are few coordination problems seen at JavaNet that are common
within larger organizational chains. This strategy will enable JavaNet
to react quickly to changes in the market.
| Personnel Plan |
| Owner | $24,000 | $26,400 | $29,040 |
| Part Time 1 | $7,920 | $7,920 | $7,920 |
| Part Time 2 | $7,920 | $7,920 | $7,920 |
| Part Time 3 | $7,920 | $7,920 | $7,920 |
| Part Time 4 | $7,920 | $7,920 | $7,920 |
| Part Time 5 | $7,920 | $7,920 | $7,920 |
| Part Time 6 | $3,960 | $7,920 | $7,920 |
| Technician | $21,731 | $23,904 | $26,294 |
| Manager | $4,000 | $24,000 | $26,400 |
| Total People | 9 | 9 | 9 |
| | | |
| Total Payroll | $93,291 | $121,824 | $129,254 |
Financial Plan
The following sections lay out the details of our financial plan for the next three years.
7.1 Start-up Funding
This
business plan is prepared to obtain financing in the amount of $24,000.
The supplemental financing is required to begin work on site
preparation and modifications, equipment purchases, and to cover
expenses in the first year of operations.
Additional financing has already been secured as follows:
- $24,000 from the Oregon Economic Development Fund
- $19,000 of personal savings from owner Cale Bruckner
- $36,000 from three investors
- and $9,290 in the form of short-term loans
| Start-up Funding |
| Start-up Expenses to Fund | $62,290 |
| Start-up Assets to Fund | $26,000 |
| Total Funding Required | $88,290 |
| |
| Non-cash Assets from Start-up | $2,000 |
| Cash Requirements from Start-up | $24,000 |
| Additional Cash Raised | $0 |
| Cash Balance on Starting Date | $24,000 |
| Total Assets | $26,000 |
| |
| |
| |
| Liabilities | |
| Current Borrowing | $9,290 |
| Long-term Liabilities | $24,000 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| Total Liabilities | $33,290 |
| |
| Capital | |
| |
| Planned Investment | |
| Cale Bruckner | $19,000 |
| Luke Walsh | $12,000 |
| Doug Wilson | $12,000 |
| John Underwood | $12,000 |
| Additional Investment Requirement | $0 |
| Total Planned Investment | $55,000 |
| |
| Loss at Start-up (Start-up Expenses) | ($62,290) |
| Total Capital | ($7,290) |
| |
| |
| Total Capital and Liabilities | $26,000 |
| |
| Total Funding | $88,290 |
7.2 Important Assumptions
Basic assumptions are presented in the table below.
| General Assumptions |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.00% | 8.00% | 8.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 30.00% | 30.00% | 30.00% |
| Other | 0 | 0 | 0 |
7.3 Key Financial Indicators
Important benchmark data is presented in the chart below.
7.4 Break-even Analysis
Break-even data is presented in the chart and table below.
| Break-even Analysis |
| |
| Monthly Units Break-even | 7,294 |
| Monthly Revenue Break-even | $18,462 |
| |
| Average Per-Unit Revenue | $2.53 |
| Average Per-Unit Variable Cost | $0.63 |
| Estimated Monthly Fixed Cost | $13,847 |
7.5 Projected Profit and Loss
Payroll
Expense: The founder of JavaNet, Cale Bruckner, will receive a salary
of $24,000 in year one, $26,400 in year two, and $29,040 in year three.
JavaNet intends to hire six part-time employees by the end of year one
at $5.75/hour and a full-time technician at $10.00/hour.
Rent
Expense: JavaNet is leasing a 1700 square foot facility at $.85/sq.
foot. The lease agreement JavaNet signed specifies that we pay
$2,000/month for a total of 36 months. At the end of the third year, the
lease is open for negotiations and JavaNet may or may not re-sign the
lease depending on the demands of the lessor.
Utilities Expense:
As stated in the contract, the lessor is responsible for the payment of
utilities including gas, garbage disposal, and real estate taxes. The
only utilities expense that JavaNet must pay is the phone bill generated
by fifteen phone lines; thirteen will be dedicated to modems and two
for business purposes. The basic monthly service charge for each line
provided by US West is $17.29. The 13 lines used to connect the modems
will make local calls to the network provided by Bellevue resulting in a
monthly charge of $224.77. The two additional lines used for business
communication will cost $34.58/month plus long distance fees. JavaNet
assumes that it will not make more than $40.00/month in long distance
calls. Therefore, the total cost associated with the two business lines
is estimated at $74.58/month and the total phone expense at
$299.35/month. In addition, there will be an additional utility expense
of $800 for estimated EWEB bills.
Marketing Expense: JavaNet will
allocate $33,750 for promotional expenses over the first year. These
dollars will be used for advertising in local newspapers in order to
build consumer awareness. For additional information, please refer to
section 5.0 of the business plan.
Insurance Expense: JavaNet has
allocated $1,440 for insurance for the first year. As revenue increases
in the second and third year of business, JavaNet intends to invest more
money for additional insurance coverage.
Depreciation: In
depreciating our capital equipment, JavaNet used the Modified
Accelerated Cost Recovery Method. We depreciated our computers over a
five-year time period and our fixtures over seven years.
Taxes: JavaNet is an LLC and, as an entity, it is not taxed. However, there is a 15% payroll burden.
Detailed Profit and Loss data is presented in the table below.
| Pro Forma Profit and Loss |
| Direct Cost of Sales | $62,217 | $75,886 | $78,403 |
| Other Costs of Sales | $0 | $0 | $0 |
| Total Cost of Sales | $62,217 | $75,886 | $78,403 |
| | | |
| Gross Margin | $186,651 | $227,658 | $235,208 |
| Gross Margin % | 75.00% | 75.00% | 75.00% |
| | | |
| | | |
| Payroll | $93,291 | $121,824 | $129,254 |
| Marketing/Promotion | $33,750 | $40,000 | $43,000 |
| Depreciation | $0 | $0 | $0 |
| Rent | $24,000 | $24,000 | $24,000 |
| Utilities | $9,120 | $9,120 | $9,120 |
| Insurance | $6,000 | $6,000 | $6,000 |
| Payroll Taxes | $0 | $0 | $0 |
| Other | $0 | $0 | $0 |
| | | |
| | | |
| Profit Before Interest and Taxes | $20,490 | $26,714 | $23,834 |
| EBITDA | $20,490 | $26,714 | $23,834 |
| Interest Expense | $2,325 | $1,470 | $1,100 |
| Taxes Incurred | $5,450 | $7,573 | $6,820 |
| | | |
| Net Profit/Sales | 5.11% | 5.82% | 5.07% |
7.6 Projected Cash Flow
Cash flow data is presented in the chart and table below.
Accounts
Payable: JavaNet acquired a $24,000 loan from a bank at a 10% interest
rate. The loan will be paid back at $800/month over the next three
years. The $9,290 short term loan will be paid back at a rate of 8%.
| Pro Forma Cash Flow |
| | | |
| Cash from Operations | | | |
| Cash Sales | $248,868 | $303,544 | $313,610 |
| Subtotal Cash from Operations | $248,868 | $303,544 | $313,610 |
| | | |
| Additional Cash Received | | | |
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $2,000 | $5,000 | $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 | $250,868 | $308,544 | $313,610 |
| | | |
| | | |
| Expenditures from Operations | | | |
| Cash Spending | $93,291 | $121,824 | $129,254 |
| Bill Payments | $133,870 | $165,945 | $168,467 |
| Subtotal Spent on Operations | $227,161 | $287,769 | $297,721 |
| | | |
| Additional Cash Spent | | | |
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $9,290 | $2,000 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $9,600 | $5,000 | $4,800 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $246,051 | $294,769 | $302,521 |
| | | |
| Cash Balance | $28,817 | $42,592 | $53,681 |
7.7 Projected Balance Sheet
Our projected balance sheet is presented in the table below.
| Pro Forma Balance Sheet |
| | | |
| Current Assets | | | |
| Cash | $28,817 | $42,592 | $53,681 |
| Inventory | $6,980 | $8,514 | $8,796 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $35,797 | $51,106 | $62,478 |
| | | |
| Long-term Assets | | | |
| Long-term Assets | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 |
| Total Assets | $35,797 | $51,106 | $62,478 |
| | | |
| | | |
| Current Liabilities | | | |
| Accounts Payable | $13,972 | $13,610 | $13,868 |
| Current Borrowing | $2,000 | $5,000 | $5,000 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $15,972 | $18,610 | $18,868 |
| | | |
| Long-term Liabilities | $14,400 | $9,400 | $4,600 |
| Total Liabilities | $30,372 | $28,010 | $23,468 |
| | | |
| Paid-in Capital | $55,000 | $55,000 | $55,000 |
| Retained Earnings | ($62,290) | ($49,574) | ($31,904) |
| Earnings | $12,716 | $17,671 | $15,913 |
| Total Capital | $5,426 | $23,096 | $39,010 |
| Total Liabilities and Capital | $35,797 | $51,106 | $62,478 |
| | | |
| Net Worth | $5,426 | $23,096 | $39,010 |
7.8 Business Ratios
The
Standard Industrial Classification (SIC) Code for the Internet Service
Provider industry is "Remote data base information retrieval" 7375.9903.
We used the report for "Information retrieval services" 7375 to
generate the industry profile. As we are also a food cafe we could have
used the ratios based on SIC classification 5812, "Eating places". The
combined nature of JavaNet Cafe makes our ratios a blend of the two
industries.
| Ratio Analysis |
| Sales Growth | 0.00% | 21.97% | 3.32% | 0.90% |
| | | | |
| Inventory | 19.50% | 16.66% | 14.08% | 2.17% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 84.78% |
| Total Current Assets | 100.00% | 100.00% | 100.00% | 86.95% |
| Long-term Assets | 0.00% | 0.00% | 0.00% | 13.05% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| | | | |
| Current Liabilities | 44.62% | 36.41% | 30.20% | 28.33% |
| Long-term Liabilities | 40.23% | 18.39% | 7.36% | 16.21% |
| Total Liabilities | 84.84% | 54.81% | 37.56% | 44.54% |
| Net Worth | 15.16% | 45.19% | 62.44% | 55.46% |
| | | | |
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 75.00% | 75.00% | 75.00% | 100.00% |
| Selling, General & Administrative Expenses | 69.89% | 69.18% | 69.93% | 79.00% |
| Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.01% |
| Profit Before Interest and Taxes | 8.23% | 8.80% | 7.60% | 1.62% |
| | | | |
| Current | 2.24 | 2.75 | 3.31 | 0.00 |
| Quick | 1.80 | 2.29 | 2.85 | 0.00 |
| Total Debt to Total Assets | 84.84% | 54.81% | 37.56% | 0.00% |
| Pre-tax Return on Net Worth | 334.80% | 109.30% | 58.28% | 0.00% |
| Pre-tax Return on Assets | 50.74% | 49.40% | 36.39% | 0.00% |
| | | | |
| Net Profit Margin | 5.11% | 5.82% | 5.07% | n.a |
| Return on Equity | 234.36% | 76.51% | 40.79% | n.a |
| | | | |
| Inventory Turnover | 12.00 | 9.80 | 9.06 | n.a |
| Accounts Payable Turnover | 10.58 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 30 | 30 | n.a |
| Total Asset Turnover | 6.95 | 5.94 | 5.02 | n.a |
| | | | |
| Debt to Net Worth | 5.60 | 1.21 | 0.60 | n.a |
| Current Liab. to Liab. | 0.53 | 0.66 | 0.80 | n.a |
| | | | |
| Net Working Capital | $19,826 | $32,496 | $43,610 | n.a |
| Interest Coverage | 8.81 | 18.17 | 21.67 | n.a |
| | | | |
| Assets to Sales | 0.14 | 0.17 | 0.20 | n.a |
| Current Debt/Total Assets | 45% | 36% | 30% | n.a |
| Acid Test | 1.80 | 2.29 | 2.85 | n.a |
| Sales/Net Worth | 45.87 | 13.14 | 8.04 | n.a |
| Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Appendix
| Sales Forecast |
| Coffee (based on average) | 0% | 400 | 680 | 750 | 970 | 1,019 | 1,070 | 1,102 | 1,135 | 1,169 | 1,204 | 1,240 | 1,277 |
| Specialty Drinks (based on average) | 0% | 225 | 300 | 400 | 546 | 573 | 602 | 620 | 638 | 657 | 677 | 698 | 718 |
| Email Memberships | 0% | 300 | 320 | 425 | 695 | 729 | 766 | 804 | 844 | 886 | 931 | 977 | 1,026 |
| Hourly Internet Fees | 0% | 1,000 | 1,800 | 2,500 | 3,245 | 3,343 | 3,443 | 3,546 | 3,653 | 3,762 | 3,875 | 3,991 | 4,111 |
| Baked Goods (based on average) | 0% | 1,000 | 1,400 | 300 | 2,950 | 3,039 | 3,130 | 3,224 | 3,321 | 3,420 | 3,523 | 3,629 | 3,737 |
| Total Unit Sales | | 2,925 | 4,500 | 4,375 | 8,406 | 8,703 | 9,011 | 9,296 | 9,591 | 9,894 | 10,210 | 10,535 | 10,869 |
| | | | | | | | | | | | | |
| Coffee (based on average) | | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 |
| Specialty Drinks (based on average) | | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 | $2.00 |
| Email Memberships | | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 | $10.00 |
| Hourly Internet Fees | | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 |
| Baked Goods (based on average) | | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 | $1.25 |
| | | | | | | | | | | | | |
| Coffee (based on average) | | $400 | $680 | $750 | $970 | $1,019 | $1,070 | $1,102 | $1,135 | $1,169 | $1,204 | $1,240 | $1,277 |
| Specialty Drinks (based on average) | | $450 | $600 | $800 | $1,092 | $1,146 | $1,204 | $1,240 | $1,276 | $1,314 | $1,354 | $1,396 | $1,436 |
| Email Memberships | | $3,000 | $3,200 | $4,250 | $6,950 | $7,290 | $7,660 | $8,040 | $8,440 | $8,860 | $9,310 | $9,770 | $10,260 |
| Hourly Internet Fees | | $2,500 | $4,500 | $6,250 | $8,113 | $8,358 | $8,608 | $8,865 | $9,133 | $9,405 | $9,688 | $9,978 | $10,278 |
| Baked Goods (based on average) | | $1,250 | $1,750 | $375 | $3,688 | $3,799 | $3,913 | $4,030 | $4,151 | $4,275 | $4,404 | $4,536 | $4,671 |
| Total Sales | | $7,600 | $10,730 | $12,425 | $20,812 | $21,611 | $22,454 | $23,277 | $24,135 | $25,023 | $25,959 | $26,920 | $27,922 |
| | | | | | | | | | | | | |
| Coffee (based on average) | 25.00% | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 | $0.25 |
| Specialty Drinks (based on average) | 25.00% | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 | $0.50 |
| Email Memberships | 25.00% | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 | $2.50 |
| Hourly Internet Fees | 25.00% | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 | $0.63 |
| Baked Goods (based on average) | 25.00% | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 | $0.31 |
| | | | | | | | | | | | | |
| Coffee (based on average) | | $100 | $170 | $188 | $243 | $255 | $268 | $276 | $284 | $292 | $301 | $310 | $319 |
| Specialty Drinks (based on average) | | $113 | $150 | $200 | $273 | $287 | $301 | $310 | $319 | $329 | $339 | $349 | $359 |
| Email Memberships | | $750 | $800 | $1,063 | $1,738 | $1,823 | $1,915 | $2,010 | $2,110 | $2,215 | $2,328 | $2,443 | $2,565 |
| Hourly Internet Fees | | $625 | $1,125 | $1,563 | $2,028 | $2,089 | $2,152 | $2,216 | $2,283 | $2,351 | $2,422 | $2,494 | $2,569 |
| Baked Goods (based on average) | | $313 | $438 | $94 | $922 | $950 | $978 | $1,008 | $1,038 | $1,069 | $1,101 | $1,134 | $1,168 |
| Subtotal Direct Cost of Sales | | $1,900 | $2,683 | $3,106 | $5,203 | $5,403 | $5,614 | $5,819 | $6,034 | $6,256 | $6,490 | $6,730 | $6,980 |
| Personnel Plan |
| Owner | 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 |
| Part Time 1 | 0% | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 |
| Part Time 2 | 0% | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 |
| Part Time 3 | 0% | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 |
| Part Time 4 | 0% | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 |
| Part Time 5 | 0% | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 | $660 |
| Part Time 6 | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $660 | $660 | $660 | $660 | $660 | $660 |
| Technician | 0% | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,500 | $1,650 | $1,815 | $1,997 | $2,196 | $2,416 | $2,657 |
| Manager | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $2,000 | $2,000 |
| Total People | | 7 | 7 | 7 | 7 | 7 | 7 | 8 | 8 | 8 | 8 | 9 | 9 |
| | | | | | | | | | | | | |
| Total Payroll | | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $7,610 | $7,775 | $7,957 | $8,156 | $10,376 | $10,617 |
| General Assumptions |
| Plan Month | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
| Current 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% |
| 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 |
| Direct Cost of Sales | | $1,900 | $2,683 | $3,106 | $5,203 | $5,403 | $5,614 | $5,819 | $6,034 | $6,256 | $6,490 | $6,730 | $6,980 |
| Other Costs of Sales | | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Cost of Sales | | $1,900 | $2,683 | $3,106 | $5,203 | $5,403 | $5,614 | $5,819 | $6,034 | $6,256 | $6,490 | $6,730 | $6,980 |
| | | | | | | | | | | | | |
| Gross Margin | | $5,700 | $8,048 | $9,319 | $15,609 | $16,208 | $16,841 | $17,458 | $18,101 | $18,767 | $19,469 | $20,190 | $20,941 |
| Gross Margin % | | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% | 75.00% |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Payroll | | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $7,610 | $7,775 | $7,957 | $8,156 | $10,376 | $10,617 |
| Marketing/Promotion | | $4,000 | $4,000 | $3,250 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
| Depreciation | | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 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 | | $760 | $760 | $760 | $760 | $760 | $760 | $760 | $760 | $760 | $760 | $760 | $760 |
| Insurance | | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 |
| Payroll Taxes | 15% | $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 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Profit Before Interest and Taxes | | ($8,360) | ($6,013) | ($3,991) | $3,049 | $3,648 | $4,281 | $4,088 | $4,566 | $5,050 | $5,553 | $4,054 | $4,564 |
| EBITDA | | ($8,360) | ($6,013) | ($3,991) | $3,049 | $3,648 | $4,281 | $4,088 | $4,566 | $5,050 | $5,553 | $4,054 | $4,564 |
| Interest Expense | | $250 | $239 | $227 | $215 | $204 | $205 | $194 | $182 | $170 | $159 | $147 | $133 |
| Taxes Incurred | | ($2,583) | ($1,875) | ($1,265) | $850 | $1,033 | $1,223 | $1,168 | $1,315 | $1,464 | $1,618 | $1,172 | $1,329 |
| | | | | | | | | | | | | |
| Net Profit/Sales | | -79.31% | -40.78% | -23.76% | 9.53% | 11.16% | 12.70% | 11.71% | 12.72% | 13.65% | 14.55% | 10.16% | 11.11% |
| Pro Forma Cash Flow |
| | | | | | | | | | | | | |
| Cash from Operations | | | | | | | | | | | | | |
| Cash Sales | | $7,600 | $10,730 | $12,425 | $20,812 | $21,611 | $22,454 | $23,277 | $24,135 | $25,023 | $25,959 | $26,920 | $27,922 |
| Subtotal Cash from Operations | | $7,600 | $10,730 | $12,425 | $20,812 | $21,611 | $22,454 | $23,277 | $24,135 | $25,023 | $25,959 | $26,920 | $27,922 |
| | | | | | | | | | | | | |
| 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 | $2,000 | $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 | | $7,600 | $10,730 | $12,425 | $20,812 | $21,611 | $24,454 | $23,277 | $24,135 | $25,023 | $25,959 | $26,920 | $27,922 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Expenditures from Operations | | | | | | | | | | | | | |
| Cash Spending | | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $6,800 | $7,610 | $7,775 | $7,957 | $8,156 | $10,376 | $10,617 |
| Bill Payments | | $224 | $6,806 | $9,085 | $9,172 | $14,074 | $12,613 | $13,017 | $13,159 | $13,518 | $13,885 | $14,254 | $14,063 |
| Subtotal Spent on Operations | | $7,024 | $13,606 | $15,885 | $15,972 | $20,874 | $19,413 | $20,627 | $20,934 | $21,475 | $22,041 | $24,630 | $24,680 |
| | | | | | | | | | | | | |
| 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 | | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $750 | $1,040 |
| Other Liabilities Principal Repayment | | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | | $800 | $800 | $800 | $800 | $800 | $800 | $800 | $800 | $800 | $800 | $800 | $800 |
| 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 | | $8,574 | $15,156 | $17,435 | $17,522 | $22,424 | $20,963 | $22,177 | $22,484 | $23,025 | $23,591 | $26,180 | $26,520 |
| | | | | | | | | | | | | |
| Cash Balance | | $23,026 | $18,600 | $13,589 | $16,879 | $16,066 | $19,557 | $20,657 | $22,308 | $24,307 | $26,675 | $27,415 | $28,817 |
| Pro Forma Balance Sheet |
| | | | | | | | | | | | | |
| Current Assets | | | | | | | | | | | | | |
| Cash | $24,000 | $23,026 | $18,600 | $13,589 | $16,879 | $16,066 | $19,557 | $20,657 | $22,308 | $24,307 | $26,675 | $27,415 | $28,817 |
| Inventory | $2,000 | $1,900 | $2,683 | $3,106 | $5,203 | $5,403 | $5,614 | $5,819 | $6,034 | $6,256 | $6,490 | $6,730 | $6,980 |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $26,000 | $24,926 | $21,282 | $16,696 | $22,082 | $21,469 | $25,170 | $26,476 | $28,342 | $30,562 | $33,165 | $34,145 | $35,797 |
| | | | | | | | | | | | | |
| Long-term Assets | | | | | | | | | | | | | |
| Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Assets | $26,000 | $24,926 | $21,282 | $16,696 | $22,082 | $21,469 | $25,170 | $26,476 | $28,342 | $30,562 | $33,165 | $34,145 | $35,797 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Current Liabilities | | | | | | | | | | | | | |
| Accounts Payable | $0 | $6,503 | $8,785 | $8,701 | $13,654 | $12,180 | $12,578 | $12,709 | $13,055 | $13,410 | $13,786 | $13,581 | $13,972 |
| Current Borrowing | $9,290 | $8,540 | $7,790 | $7,040 | $6,290 | $5,540 | $6,790 | $6,040 | $5,290 | $4,540 | $3,790 | $3,040 | $2,000 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $9,290 | $15,043 | $16,575 | $15,741 | $19,944 | $17,720 | $19,368 | $18,749 | $18,345 | $17,950 | $17,576 | $16,621 | $15,972 |
| | | | | | | | | | | | | |
| Long-term Liabilities | $24,000 | $23,200 | $22,400 | $21,600 | $20,800 | $20,000 | $19,200 | $18,400 | $17,600 | $16,800 | $16,000 | $15,200 | $14,400 |
| Total Liabilities | $33,290 | $38,243 | $38,975 | $37,341 | $40,744 | $37,720 | $38,568 | $37,149 | $35,945 | $34,750 | $33,576 | $31,821 | $30,372 |
| | | | | | | | | | | | | |
| Paid-in Capital | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 |
| Retained Earnings | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) | ($62,290) |
| Earnings | $0 | ($6,027) | ($10,403) | ($13,356) | ($11,372) | ($8,961) | ($6,108) | ($3,382) | ($313) | $3,103 | $6,879 | $9,614 | $12,716 |
| Total Capital | ($7,290) | ($13,317) | ($17,693) | ($20,646) | ($18,662) | ($16,251) | ($13,398) | ($10,672) | ($7,603) | ($4,187) | ($411) | $2,324 | $5,426 |
| Total Liabilities and Capital | $26,000 | $24,926 | $21,282 | $16,696 | $22,082 | $21,469 | $25,170 | $26,476 | $28,342 | $30,562 | $33,165 | $34,145 | $35,797 |
| | | | | | | | | | | | | |
| Net Worth | ($7,290) | ($13,317) | ($17,693) | ($20,646) | ($18,662) | ($16,251) | ($13,398) | ($10,672) | ($7,603) | ($4,187) | ($411) | $2,324 | $5,426 |
