Marketing Consulting Business Plan

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This is a business plan. It does not imply an offering of securities.

Table of Contents

1.0 Executive Summary.....................................................................................................................1
Chart: Highlights...........................................................................................................................2
1.1 Objectives....................................................................................................................................2
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................2
2.2 Start-up Summary....................................................................................................................3
Table: Start-up Funding..............................................................................................................3
Chart: Start-up..............................................................................................................................4
Table: Start-up...............................................................................................................................4
2.3 Company Locations and Facilities.......................................................................................4
3.0 Services.............................................................................................................................................5
3.1 Service Description...................................................................................................................5
3.2 Competitive Comparison........................................................................................................5
3.3 Sales Literature..........................................................................................................................5
3.4 Fulfillment....................................................................................................................................5
3.5 Technology...................................................................................................................................5
3.6 Future Services..........................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................5
Chart: Market Analysis (Pie).....................................................................................................6
Table: Market Analysis................................................................................................................6
5.0 Strategy and Implementation Summary.............................................................................7
5.1 Competitive Edge......................................................................................................................7
5.2 Sales Strategy............................................................................................................................7
5.3 Sales Forecast............................................................................................................................7
Table: Sales Forecast...................................................................................................................7
Chart: Sales Monthly...................................................................................................................8
Chart: Sales by Year....................................................................................................................8
5.4 Milestones....................................................................................................................................9
Table: Milestones...........................................................................................................................9
Chart: Milestones..........................................................................................................................9
6.0 Management Summary.............................................................................................................10
6.1 Personnel Plan..........................................................................................................................10
Table: Personnel..........................................................................................................................10
6.2 Management Team.................................................................................................................10
6.3 Management Team Gaps......................................................................................................10
7.0 Financial Plan................................................................................................................................11
7.1 Important Assumptions........................................................................................................11
Table: General Assumptions...................................................................................................11
7.2 Key Financial Indicators........................................................................................................12
Chart: Benchmarks....................................................................................................................12
7.3 Break-even Analysis...............................................................................................................13
Table: Break-even Analysis.....................................................................................................13
Page 1

Table of Contents

Chart: Break-even Analysis....................................................................................................13
7.4 Projected Profit and Loss.....................................................................................................14
Chart: Profit Monthly.................................................................................................................14
Chart: Profit Yearly.....................................................................................................................14
Chart: Gross Margin Monthly.................................................................................................15
Chart: Gross Margin Yearly.....................................................................................................15
Table: Profit and Loss................................................................................................................16
7.5 Projected Cash Flow...............................................................................................................17
Chart: Cash...................................................................................................................................17
Table: Cash Flow.........................................................................................................................18
7.6 Projected Balance Sheet......................................................................................................19
Table: Balance Sheet.................................................................................................................19
7.7 Business Ratios........................................................................................................................20
7.7 Business Ratios........................................................................................................................20
Table: Ratios.................................................................................................................................20
Table: Personnel....................................................................................................................................1
Table: General Assumptions.............................................................................................................2
Table: General Assumptions.............................................................................................................2
Table: Profit and Loss..........................................................................................................................3
Table: Profit and Loss..........................................................................................................................3
Table: Cash Flow...................................................................................................................................4
Table: Cash Flow...................................................................................................................................4
Table: Balance Sheet...........................................................................................................................5
Table: Balance Sheet...........................................................................................................................5
Table: Sales Forecast...........................................................................................................................6
Table: Sales Forecast...........................................................................................................................6

Page 2

MarketCamp

1.0 Executive Summary
MarketCamp is a Mexico City based start-up business that provides local businesses with worldclass qualified traffic generation and lead closures for Internet businesses. MarketCamp will
offer a wide range of services including: detailed research, internet targeting, mini-site
development, search engine submissions, and statistical reporting.
The Market
Mexico City's business community will be the primary market for our company. The business
size that we service can be relatively small because the cost per month is only $1,000, but
services can be scaled up to meet the needs of huge clients due to the focus and expertise of
the business. Internet connectivity in Mexico, in comparison with the U.S., is currently low, but
interest is growing. Though far behind the major industrial countries, Mexico maintains one of
the fastest growth rates on the Internet with thousands of users and thousands of WWW sites.
Mexican WWW sites have been growing at the rate of 200-300 per month this year.
CompuServe Mexico, the largest commercial Internet service provider in Mexico has 30,000
subscribers, while Spin Internet has 28,000 Mexican members.
Competitive Edge
MarketCamp has the competitive edge of experience and market expertise in a complicated
field. This is truly an advantage as the founder and principal Paul Berry has spent the last five
years in the United States honing his e-business skills. Paul received his MBA from the
University of Oregon in 1992 and worked at a local software company for a few years. Wanting
to see the East Coast, Paul moved to Boston and worked at Forrester Research, the premier
Internet marketing research company. It was Paul's work at Forrester Research that provided
him with the experience and insight that he will leverage for MarketCamp.
MarketCamp has conservatively forecasted sales for year onewith sales more than doubling in
year three. Profitability will be reached by year one. MarketCamp's profit margin will steadily
increase from year one to year three.

Page 1

MarketCamp

Chart: Highlights

1.1 Objectives
The following are the objectives for the company:



To be self sufficient within three months.
Healthy sales in Year 1, steadily growing in Year 2 and Year 3.

1.2 Mission
MarketCamp will provide full-service Internet marketing campaigns, focusing directly on
keyword combination search results, targeted advertising and mini-sites that deliver an offer in
a clean, statistically monitored environment.
1.3 Keys to Success
1. Keeping existing clients to develop repeat business.
2. Clients must make money, and know it.
3. Start with easily-demonstratable simple module, and build up from there.
2.0 Company Summary
MarketCamp is a Web marketing business based in Mexico City. The company will start up as a
simple consulting business billing directly in the founder's name.
2.1 Company Ownership
This company is owned 100% by its founder, Paul Berry.

Page 2

MarketCamp

2.2 Start-up Summary
Start-up costs are detailed in the chart and table below.
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$3,500
$20,000
$23,500

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$0
$20,000
$0
$20,000
$20,000

Liabilities and Capital
Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital
Planned Investment
Paul Berry
Other
Additional Investment Requirement
Total Planned Investment

$23,500
$0
$0
$23,500

Loss at Start-up (Start-up Expenses)
Total Capital

($3,500)
$20,000

Total Capital and Liabilities

$20,000

Total Funding

$23,500

Page 3

MarketCamp

Chart: Start-up

Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Insurance
Other
Total Start-up Expenses

$1,000
$1,000
$1,000
$500
$0
$3,500

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$20,000
$0
$0
$20,000

Total Requirements

$23,500

2.3 Company Locations and Facilities
MarketCamp will begin as a home-office business in the founder's apartment in Mexico City.
After six months of operation it will expand to a formal office space in Mexico City.

Page 4

MarketCamp

3.0 Services








Detailed Research.
Internet Targeting Proposal.
Focused Mini-Site Development.
Top Search Results on Keywords.
Advertising Creative Design.
Monthly Statistical Reporting.
Campaign Maintenance.

3.1 Service Description
**Details and a description of services have been omitted from this published plan because
they were strategic and proprietary.
3.2 Competitive Comparison
Competition isn't the most important factor at this time, there is plenty of need and potential
customers out there.
3.3 Sales Literature
Our website will serve as sales literature.
3.4 Fulfillment
For the present time, until there is real growth, services will be delivered by the founder.
3.5 Technology
**Details have been omitted from this published plan because they were strategic and
proprietary.
3.6 Future Services
**Details have been omitted from this published plan because they were strategic and
proprietary.
4.0 Market Analysis Summary
Mexico City's business community will be the primary market for our company. We will attempt
to work with business models that attract customers and sign contracts. The business size can
be relatively small because the cost per month is only $1,000, but services can be scaled up to
meet the needs of huge clients due to the focus and expertise of the business.
Internet connectivity in Mexico, in comparison with the U.S., is currently low, but interest is
growing. Though far behind the major industrial countries, Mexico maintains one of the fastest
growth rates on the Internet with thousands of users and thousands of WWW sites. Mexican
WWW sites have been growing at the rate of 200-300 per month this year. CompuServe Mexico,
the largest commercial Internet service provider in Mexico has 30,000 subscribers, while Spin

Page 5

MarketCamp

Internet has 28,000 Mexican members. Microsoft Mexico, a division of Microsoft's recentlylaunched online service named Microsoft Network, will charge $4.95 per month (about one half
of CompuServe's $9.95 per month rate) and will offer local telephone access in Mexico City,
Guadalajara, Monterrey, and three other cities. The service will be English-only and U.S.oriented for at least the first six months, but will eventually include local content.
Many companies in Mexico City currently have Internet access and more are realizing the
importance of presence on the Web in order to attract international business. For this
reason, our Market Analysis table predicts rapid growth amongst potential small businesses and
marketing managers for medium-sized businesses to grow in-line with the growth of Internet
usage.
We will try to work with other more established marketing companies, giving up some of the
margin in order to get access to more clients more quickly.
We will need to make a decision on pricing, whether to keep rates at an attractive sign-up rate
or focus on the more successful clients and raise rates.

Chart: Market Analysis (Pie)

Table: Market Analysis
Market Analysis
Potential Customers
Small Business Start-up
Entrepreneurs
Medium Business Marketing
Managers
Established Marketing
Companies

Year 1

Year 2

Year 3

Year 4

Year 5

100%

475

950

1,900

3,800

7,600

100.00%

80%

684

1,231

2,216

3,989

7,180

80.00%

20%

97

116

139

167

200

19.83%

Growth

CAGR

Page 6

MarketCamp

Total

85.84%

1,256

2,297

4,255

7,956

14,980

85.84%

5.0 Strategy and Implementation Summary
We will obtain our first clients through word-of-mouth from the board of directors and board of
advisors as well as the previous connections of Paul Berry's freelance business. Each mini-site
will contain a small "powered by MarketCamp" logo which will lead to information about us.
Because of the quality of our work, and the desirability of our expertise, we expect to add a
number of clients in the near future.
5.1 Competitive Edge
The strongest competitive edge that MarketCamp has is our expertise in a very
complicated field. Obtaining high click-through and top placement in search engines is a fine art
that our founder has tremendous, world-class experience in. Because Mexico is somewhere
between three and five years behind the American Internet, the expertise of the founder has
huge leverage. We will essentially be the first to market this service in Mexico City, and we will
be years ahead of competitors.
5.2 Sales Strategy
The beauty of this business is in the subscription model and the commissions based earnings.
Once we sign a client, most will stay for a long period of time, possibly for the lifetime of the
business. We feel 30% to 60% growth rates are very modest, therefore we could potentially
sign many clients more quickly.
5.3 Sales Forecast
We expect that a 30% to 60% growth rate throughout the first year is very modest. If we find
more clients signing up we can scale the team quickly to reach those expectations. The backend of the business will be built by the founder and a network of top programmers.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$210,550
$86,760
$297,310

$290,000
$130,000
$420,000

$410,000
$200,000
$610,000

Year 1
$39,831
$17,352
$57,183

Year 2
$54,860
$26,000
$80,860

Year 3
$77,561
$40,000
$117,561

Sales
Monthly Revenue
Commission Sales
Total Sales
Direct Cost of Sales
Monthly Revenue
Commission Sales
Subtotal Direct Cost of Sales

Page 7

MarketCamp

Chart: Sales Monthly

Chart: Sales by Year

Page 8

MarketCamp

5.4 Milestones
The specific milestones are shown in the following chart and table.
Table: Milestones

Milestones
Milestone
Site Finished, Company Emails
Set
First Client Signs
Second Client Signs
Third Client Signs
Official Investment and Equity
Transactions
10th Client Signs
Second Marketing Push
Totals

Start Date
1/1/2001

End Date
3/1/2001

Budget
$0

Manager
Paul Berry

Department
Founder

4/1/2001
4/15/2001
5/1/2001
6/1/2001

4/30/2001
5/15/2001
6/1/2001
8/31/2001

$0
$0
$0
$0

Paul Berry
Paul Berry
Paul Berry
Paul Berry

Founder
Founder
Founder
Founder

8/1/2001
11/1/2001

10/31/2001
1/31/2001

$0
$0
$0

Paul Berry
Paul Berry

Founder
Founder

Chart: Milestones

Page 9

MarketCamp

6.0 Management Summary
Paul Berry will be president, responsible for decisions on all hires and expenses. Paul will also
do the work behind the scenes, structuring a system that will enable other future employees to
scale the business as clients are added.
Carlos Silva will be an initial investor, possibly also a co-founder and part of the board of
directors.
Gabriela Lopez will be one of the first employees, contracted part-time for her expertise in
design and knowledge of the Web.
Raul Garcia will be another of the first employees, contracted part-time for his expertise as
a sales person and junior executive in Mexico City.
6.1 Personnel Plan
Paul will be paid somewhere between $3,000 and $5,000 in the initial months, depending on
the amount of clients signed, and the nature of those contracts.
Gabriela Lopez will be contracted for $1,000 to $2,000 depending on the load of work and her
availability. She will be responsible for the corporate identity and all stationery and brochures.
Raul Garcia will be contracted for $1,000 to $2,000 depending on his involvement with the
company and he will also receive a commission structure for additional clients beyond the
expected ones.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Paul Berry
Commission
Programmers
Total People

$43,000
$17,352
$19,900
0

$60,000
$26,000
$27,000
0

$75,000
$40,000
$43,000
0

Total Payroll

$80,252

$113,000

$158,000

6.2 Management Team
**Details have been omitted from this published plan because they were strategic and
proprietary.
6.3 Management Team Gaps
**Details have been omitted from this published plan because they were strategic and
proprietary.

Page 10

MarketCamp

7.0 Financial Plan
MarketCamp will finance growth mainly through cash flow. We recognize that this means we will
have to grow more slowly than we might like.
The most important factor to our success is collection days. We can't push our clients hard on
collection days, because they are in larger companies and will normally have marketing
authority, not financial authority. Therefore, we need to develop a permanent system of
receivables financing, using one of the established financial companies in that business.
We are also assuming start-up capital which will be more than enough to cover salaries, artwork
and other expenses while the business begins to produce more cash.
We may take more financing than we originally planned to be able to bring in some very key
investors as equity partners, more for their connections to potential clients in Mexico City than
for the investment itself.
7.1 Important Assumptions
The Financial Plan depends on important assumptions, most of which are shown in the following
table as annual assumptions. The monthly assumptions are included in the appendix. From the
beginning, we recognize that collection days are critical, but are not a factor we can influence
easily. Interest rates, tax rates, and personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:



We assume an economy slightly crippled by the George W. Bush administration in the U.S.
and by the skepticism caused by the fall of the dot-coms with terrible business models.
We assume that we can communicate the service to Mexican business owners.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
25.42%
0

2
10.00%
10.00%
25.00%
0

3
10.00%
10.00%
25.42%
0

Page 11

MarketCamp

7.2 Key Financial Indicators
The Benchmarks chart shows our projections on an index basis for key financial indicators.

Chart: Benchmarks

Page 12

MarketCamp

7.3 Break-even Analysis
The following chart and table summarize our Break-even Analysis showing fixed costs in U.S.
dollars per month at the outset (a bare minimum), and what we need to bill to cover our costs.
We don't really expect to reach break-even until a few months into the business operation.
Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$17,510

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

19%
$14,142

Chart: Break-even Analysis

Page 13

MarketCamp

7.4 Projected Profit and Loss
Projected Profit and Loss is presented in the following table and charts.

Chart: Profit Monthly

Page 14

MarketCamp

Chart: Profit Yearly

Chart: Gross Margin Monthly

Page 15

MarketCamp

Chart: Gross Margin Yearly

Page 16

MarketCamp

Table: Profit and Loss

Pro Forma Profit and Loss
Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other
Total Cost of Sales

$297,310
$57,183
$39,581
$96,763

$420,000
$80,860
$44,000
$124,860

$610,000
$117,561
$48,000
$165,561

Gross Margin
Gross Margin %

$200,547
67.45%

$295,140
70.27%

$444,439
72.86%

$80,252
$41,372
$0
$15,832
$1,800
$2,400
$12,000
$16,050
$0

$113,000
$48,000
$0
$17,000
$2,000
$3,000
$24,000
$22,600
$0

$158,000
$61,000
$0
$19,000
$2,000
$3,000
$26,000
$31,600
$0

$169,707

$229,600

$300,600

Profit Before Interest and Taxes
EBITDA
Interest Expense
Taxes Incurred

$30,840
$30,840
$667
$7,420

$65,540
$65,540
$3,000
$15,635

$143,839
$143,839
$3,500
$35,669

Net Profit
Net Profit/Sales

$22,753
7.65%

$46,905
11.17%

$104,669
17.16%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Page 17

MarketCamp

7.5 Projected Cash Flow
Cash flow is going to rely on the time to collect from account receivables. Carlos Silva, Raul
Garcia and others who have more experience working with Mexican businesses will be able to
help us estimate both the collection and payment times. We are working on an assumption of
30 days to collect. Clients will pay at the beginning of each month except when this is
impossible for them.
The present cash flow projection assumes sacrificed salaries taken as equity contribution for the
first few months. The inputs for capital input are actually "sweat equity" contributions from the
founder.

Chart: Cash

Page 18

MarketCamp

Table: Cash Flow

Pro Forma Cash Flow
Year 1

Year 2

Year 3

$0
$197,360
$197,360

$0
$378,754
$378,754

$0
$546,126
$546,126

$0
$20,000
$0
$0
$0
$0
$14,000
$231,360

$0
$40,000
$0
$0
$0
$0
$0
$418,754

$0
$0
$0
$0
$0
$0
$0
$546,126

Year 1

Year 2

Year 3

$80,252
$159,263
$239,515

$113,000
$273,759
$386,759

$158,000
$340,161
$498,161

$0
$0
$0
$0
$0
$0
$0
$239,515

$0
$20,000
$0
$0
$0
$0
$0
$406,759

$0
$10,000
$0
$0
$0
$0
$0
$508,161

($8,155)
$11,845

$11,995
$23,840

$37,965
$61,805

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 19

MarketCamp

7.6 Projected Balance Sheet
The Balance Sheet in the following table shows managed but sufficient growth of net worth, and
a sufficiently healthy financial position. The monthly estimates are included in the appendix.
Table: Balance Sheet

Pro Forma Balance Sheet
Year 1

Year 2

Year 3

$11,845
$99,950
$0
$111,795

$23,840
$141,196
$0
$165,036

$61,805
$205,070
$0
$266,875

$0
$0
$0
$111,795

$0
$0
$0
$165,036

$0
$0
$0
$266,875

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$35,041
$20,000
$0
$55,041

$21,378
$40,000
$0
$61,378

$28,548
$30,000
$0
$58,548

Long-term Liabilities
Total Liabilities

$0
$55,041

$0
$61,378

$0
$58,548

$37,500
($3,500)
$22,753
$56,753
$111,795

$37,500
$19,253
$46,905
$103,658
$165,036

$37,500
$66,158
$104,669
$208,327
$266,875

$56,753

$103,658

$208,327

Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 20

MarketCamp

7.7 Business Ratios
Business Ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 8742, Management Consulting Services, are shown
for comparison.
Table: Ratios
Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

41.27%

45.24%

8.60%

Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

89.40%
0.00%
100.00%
0.00%
100.00%

85.55%
0.00%
100.00%
0.00%
100.00%

76.84%
0.00%
100.00%
0.00%
100.00%

24.40%
46.70%
74.90%
25.10%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

49.23%
0.00%
49.23%
50.77%

37.19%
0.00%
37.19%
62.81%

21.94%
0.00%
21.94%
78.06%

42.80%
17.20%
60.00%
40.00%

100.00%
67.45%
59.84%
1.01%
10.37%

100.00%
70.27%
59.10%
1.43%
15.60%

100.00%
72.86%
55.60%
2.46%
23.58%

100.00%
0.00%
83.50%
1.20%
2.60%

2.03
2.03
49.23%
53.17%
26.99%

2.69
2.69
37.19%
60.33%
37.89%

4.56
4.56
21.94%
67.36%
52.59%

1.59
1.26
60.00%
4.40%
10.90%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin
Return on Equity

7.65%
40.09%

11.17%
45.25%

17.16%
50.24%

n.a
n.a

2.97
54
5.55
27
2.66

2.97
105
12.17
40
2.54

2.97
104
12.17
26
2.29

n.a
n.a
n.a
n.a
n.a

0.97
1.00

0.59
1.00

0.28
1.00

n.a
n.a

$56,753
46.26

$103,658
21.85

$208,327
41.10

n.a
n.a

0.38
49%
0.22
5.24

0.39
37%
0.39
4.05

0.44
22%
1.06
2.93

n.a
n.a
n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth

Page 21

MarketCamp

Dividend Payout

0.00

0.00

0.00

n.a

Page 22

Appendix
Table: Personnel

Personnel Plan
Paul Berry
Commission
Programmers
Total People
Total Payroll

0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$3,000
$50
$0
0

$3,000
$400
$0
0

$3,000
$623
$0
0

$3,000
$911
$0
1

$3,000
$1,019
$1,200
1

$3,000
$1,559
$1,400
1

$4,000
$1,163
$1,800
2

$4,000
$1,163
$2,500
0

$4,000
$1,703
$3,000
0

$4,000
$2,547
$3,000
0

$4,000
$3,035
$3,300
0

$5,000
$3,179
$3,700
0

$3,050

$3,400

$3,623

$3,911

$5,219

$5,959

$6,963

$7,663

$8,703

$9,547

$10,335

$11,879

Page 1

Appendix
Table: General Assumptions

General Assumptions
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

1

2

3

4

5

6

7

8

9

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Tax Rate

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

0

0

0

0

0

0

0

0

0

0

0

0

Plan Month

Other

Month 12

Page 2

Appendix
Table: Profit and Loss

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

$5,250

$10,000

$10,650

$13,890

$16,230

$22,530

$20,050

$22,450

$32,250

$42,470

$47,710

$53,830

Direct Cost of Sales

$1,300

$1,600

$2,063

$2,639

$3,093

$4,047

$4,149

$4,746

$6,003

$7,707

$9,227

$10,609

$1,000
$2,300

$1,200
$2,800

$1,440
$3,503

$1,728
$4,367

$2,074
$5,166

$2,488
$6,536

$2,986
$7,135

$3,583
$8,329

$4,300
$10,303

$5,160
$12,867

$6,192
$15,418

$7,430
$18,039

Other
Total Cost of Sales

10%

Gross Margin

$2,950

$7,200

$7,147

$9,523

$11,064

$15,994

$12,915

$14,121

$21,947

$29,603

$32,292

$35,791

Gross Margin %

56.19%

72.00%

67.11%

68.56%

68.17%

70.99%

64.41%

62.90%

68.05%

69.70%

67.68%

66.49%

Payroll

$3,050

$3,400

$3,623

$3,911

$5,219

$5,959

$6,963

$7,663

$8,703

$9,547

$10,335

$11,879

Sales and Marketing and Other
Expenses
Depreciation

$1,000

$1,175

$1,393

$1,663

$2,001

$2,422

$2,950

$3,610

$4,439

$5,481

$6,792

$8,445

Expenses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$400
$150
$200
$0
$610
$0

$480
$150
$200
$0
$680
$0

$576
$150
$200
$0
$725
$0

$691
$150
$200
$0
$782
$0

$829
$150
$200
$0
$1,044
$0

$995
$150
$200
$0
$1,192
$0

$1,194
$150
$200
$2,000
$1,393
$0

$1,433
$150
$200
$2,000
$1,533
$0

$1,720
$150
$200
$2,000
$1,741
$0

$2,064
$150
$200
$2,000
$1,909
$0

$2,477
$150
$200
$2,000
$2,067
$0

$2,972
$150
$200
$2,000
$2,376
$0

$5,410

$6,085

$6,666

$7,398

$9,443

$10,919

$14,850

$16,589

$18,953

$21,351

$24,021

$28,022

Profit Before Interest and Taxes

($2,460)

$1,115

$481

$2,125

$1,621

$5,076

($1,935)

($2,469)

$2,995

$8,252

$8,271

$7,769

EBITDA

($2,460)

$1,115

$481

$2,125

$1,621

$5,076

($1,935)

($2,469)

$2,995

$8,252

$8,271

$7,769

$0

$0

$0

$0

$0

$0

$0

$0

$167

$167

$167

$167

($738)

$279

$120

$531

$405

$1,269

($484)

($617)

$707

$2,021

$2,026

$1,900

Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Interest Expense
Taxes Incurred

10%
10%
10%
10%
20%

Net Profit

($1,722)

$836

$361

$1,594

$1,216

$3,807

($1,451)

($1,851)

$2,121

$6,064

$6,078

$5,701

Net Profit/Sales

-32.80%

8.36%

3.39%

11.48%

7.49%

16.90%

-7.24%

-8.25%

6.58%

14.28%

12.74%

10.59%

Page 3

Appendix
Table: Cash Flow

Pro Forma Cash Flow
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Cash from Receivables

$0

$175

$5,408

$10,022

$10,758

$13,968

$16,440

$22,447

$20,130

$22,777

$32,591

$42,645

Subtotal Cash from Operations

$0

$175

$5,408

$10,022

$10,758

$13,968

$16,440

$22,447

$20,130

$22,777

$32,591

$42,645

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$20,000

$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

$7,000

$4,000

$3,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$7,000

$4,175

$8,408

$10,022

$10,758

$13,968

$16,440

$22,447

$40,130

$22,777

$32,591

$42,645

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

$3,050

$3,400

$3,623

$3,911

$5,219

$5,959

$6,963

$7,663

$8,703

$9,547

$10,335

$11,879

$131

$3,983

$5,794

$6,724

$8,432

$9,894

$12,823

$14,608

$16,798

$21,607

$27,007

$31,462

$3,181

$7,383

$9,417

$10,635

$13,651

$15,853

$19,786

$22,271

$25,501

$31,154

$37,342

$43,341

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Spent

$3,181

$7,383

$9,417

$10,635

$13,651

$15,853

$19,786

$22,271

$25,501

$31,154

$37,342

$43,341

Net Cash Flow

$3,819

($3,208)

($1,009)

($613)

($2,893)

($1,885)

($3,346)

$176

$14,629

($8,377)

($4,751)

($697)

Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing

0.00%

Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Page 4

Appendix
Cash Balance

$23,819

$20,611

$19,602

$18,989

$16,096

$14,211

$10,865

$11,041

$25,670

$17,293

$12,541

$11,845

Table: Balance Sheet

Pro Forma Balance Sheet
Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$20,000
$0
$0
$20,000

$23,819
$5,250
$0
$29,069

$20,611
$15,075
$0
$35,686

$19,602
$20,317
$0
$39,919

$18,989
$24,185
$0
$43,174

$16,096
$29,657
$0
$45,753

$14,211
$38,219
$0
$52,430

$10,865
$41,829
$0
$52,694

$11,041
$41,832
$0
$52,873

$25,670
$53,952
$0
$79,622

$17,293
$73,645
$0
$90,938

$12,541
$88,764
$0
$101,306

$11,845
$99,950
$0
$111,795

$0
$0
$0
$20,000

$0
$0
$0
$29,069

$0
$0
$0
$35,686

$0
$0
$0
$39,919

$0
$0
$0
$43,174

$0
$0
$0
$45,753

$0
$0
$0
$52,430

$0
$0
$0
$52,694

$0
$0
$0
$52,873

$0
$0
$0
$79,622

$0
$0
$0
$90,938

$0
$0
$0
$101,306

$0
$0
$0
$111,795

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$3,791
$0
$0
$3,791

$5,572
$0
$0
$5,572

$6,444
$0
$0
$6,444

$8,105
$0
$0
$8,105

$9,469
$0
$0
$9,469

$12,339
$0
$0
$12,339

$14,053
$0
$0
$14,053

$16,084
$0
$0
$16,084

$20,712
$20,000
$0
$40,712

$25,964
$20,000
$0
$45,964

$30,254
$20,000
$0
$50,254

$35,041
$20,000
$0
$55,041

Long-term Liabilities
Total Liabilities

$0
$0

$0
$3,791

$0
$5,572

$0
$6,444

$0
$8,105

$0
$9,469

$0
$12,339

$0
$14,053

$0
$16,084

$0
$40,712

$0
$45,964

$0
$50,254

$0
$55,041

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$23,500
($3,500)
$0
$20,000
$20,000

$30,500
($3,500)
($1,722)
$25,278
$29,069

$34,500
($3,500)
($886)
$30,114
$35,686

$37,500
($3,500)
($525)
$33,475
$39,919

$37,500
($3,500)
$1,069
$35,069
$43,174

$37,500
($3,500)
$2,284
$36,284
$45,753

$37,500
($3,500)
$6,091
$40,091
$52,430

$37,500
($3,500)
$4,640
$38,640
$52,694

$37,500
($3,500)
$2,789
$36,789
$52,873

$37,500
($3,500)
$4,910
$38,910
$79,622

$37,500
($3,500)
$10,974
$44,974
$90,938

$37,500
($3,500)
$17,052
$51,052
$101,306

$37,500
($3,500)
$22,753
$56,753
$111,795

Net Worth

$20,000

$25,278

$30,114

$33,475

$35,069

$36,284

$40,091

$38,640

$36,789

$38,910

$44,974

$51,052

$56,753

Page 5

Appendix
Table: Sales Forecast

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

$5,000
$250
$5,250

$8,000
$2,000
$10,000

$7,535
$3,115
$10,650

$9,335
$4,555
$13,890

$11,135
$5,095
$16,230

$14,735
$7,795
$22,530

$14,235
$5,815
$20,050

$16,635
$5,815
$22,450

$23,735
$8,515
$32,250

$29,735
$12,735
$42,470

$32,535
$15,175
$47,710

$37,935
$15,895
$53,830

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

Monthly Revenue

$1,250

$1,200

$1,440

$1,728

$2,074

$2,488

$2,986

$3,583

$4,300

$5,160

$6,192

$7,430

$50

$400

$623

$911

$1,019

$1,559

$1,163

$1,163

$1,703

$2,547

$3,035

$3,179

$1,300

$1,600

$2,063

$2,639

$3,093

$4,047

$4,149

$4,746

$6,003

$7,707

$9,227

$10,609

Sales
Monthly Revenue
Commission Sales
Total Sales

Commission Sales
Subtotal Direct Cost of Sales

40%
50%

Page 6

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