Valley Comics

Business Plan for FISCAL YEAR 15

Contributors:
Derek Smithcamp; Owner
Megan Smithcamp; Owner
Bob Mark; Advisor



Executive Summary
Mission statement
We offer the best books at the best price, with the best service and a friendly environment for
everyone.

Business opportunity
Comic book reading and collecting is an industry that continues to sell well even in this digital
age. With multiple stores already thriving in the area, we believe there is still an untapped
market potential. Both physical and online sales are opportunities.
Financial projections
For 2012 the entire comic book industry, which are comic books and trade paperbacks, was
estimated to be between 700 and 730 million. With comic book related media more popular than
ever that number is projected to go up. Diamond Comics, the premier provider of comics and
books to retailers, states that in 2013 they alone sold 517 million in merchandise to both retailers
and customers. This figure was just for North America and it was the largest year they have ever
had. It is also important to note that they sell their merchandise at a discount to retailers, so the
sales figures for total retail sales of 2013 would be somewhere between 25% to 50% higher.



Industry Environment
Overview of the industry
The industry began back in the 1930s and has survived ever since. Comic books were there
during World War II, survived multiple recessions, and have become the premier source for
blockbuster movie material. The great thing about comics is that they have evolved so much
over the years there are now comics for everyone. No longer are there just stories about super
heroes saving the world, but zombies, drama, love and other genres saturate the market as well.
And readers now have the choice of buying weekly books or waiting a few months for the
collected trade paperbacks. It is a great time to be a reader of comics.

Projected position for the future
As stated before there are currently two stores in the immediate area. The other nearest
competitors are at least 30 miles away. The two local stores would be our biggest competition.
Our obvious position to start will be third. While it is definitely possible to survive as number 3,
we believe that securing the 1 or 2 would cement our survival. Future positioning we believe
would be 2
nd
, with a possible first given the time to cement a customer base.

Potential customers
The great thing about the variety in comics is that everyone has the potential to be a customer.
Small children to adults, of both genders, will have something they can enjoy. Free Comic Book
Day is an event held every May in the industry. The free books that are offered on that day
range from My Little Ponies to The Walking Dead. The industry knows the potential that there
is a comic book for everyone out there.

Direct competitors
Bonanza Books and Kriers Cards & Comics are the most direct competitors. They are the only
other two brick mortar stores. However one must not forget the online competition. Comic book
publishers, other retailers and digital formats are all competition. Because each of these local
competitors are private owned businesses there financials are not readily available for
comparison.

Marketing
Business opportunity
In Modesto, CA there are currently two comic book stores that have survived many years. Both
stores survived the comic book industrys terrible late 90s in which some companies went
nearly bankrupt. No one has tried a third store. Both local stores do little to no marketing on a
regular basis. No mailers, commercials or newspaper ads currently exist with the two
competitors. With the city of Modesto and surrounding cities having a population of over
300,000, we believe there is significant ground to be made in the comic book sales market.
Thanks to other forms of entertainment comics are enjoying a record amount of exposure.
Movies like the Avengers, The Dark Knight, Iron Man and even television shows like The
Walking Dead have exposed more and more people to the industry. All people need is to realize
that there is something for everyone. We also believe there are many marketing tactics that have
yet to be tried with regards to comics.

Company impact
Product/ Place/ Price/ Promotion
Product; While we will essentially be offering a product that already exists; it will be the service
that accompanies that product that will let us stand out. We will offer extra room in the store for
tables and chairs for those that wish to sit and read and converse about our products. Plus we
will have a staff that is knowledgeable about our products. A quick trip to both local competitors
revealed that staff members knew very little about industry leading comics.
Place; Location is key for any business. Being centrally located in the city or next to the freeway
could help. Our business advisor Bob has actually suggested that we locate near Bonanza. He
pointed to examples where other stores like Starbucks and Wal-Mart have actually chosen to be
near competitors in hopes of capitalizing on existing customer traffic. If our store is truly the
better option and we contrast enough, we should move up in our position.
Price; One local store offers their books at cover price while the other store offers a 25%
discount on books. Digital comics are currently selling for anywhere from 0% - 25%. Other
online retailers also offer similar discounts. We would at least offer a 15% discount. It may be
possible to go lower but future financial analysis of stock and inventory turnover would dictate
that.
Promotion; This is what will help our business the most at the beginning. Social media like
Facebook and Twitter will be utilized. Newspaper ads in the local Modesto Bee will be used.
Street signs, fliers and mailers could also be used. They key to the promotional message
however is to entice potential customers with the idea that there are comic books for every taste.
Every house has magazines on the coffee table, so why not comics?
Company strategy
When was the last time you saw a television commercial for comic books? Marketing comics as
a form of entertainment that is for everyone is the key to increasing your customer base. Some
stores concentrate on hardcore collectors while others seem to not know or care who their
customers are. Are you a fan of the Hunger Games movies? Well there is a comic book called
Avengers Arena. Did you like Breakfast at Tiffanys? Try one of many English translated
Magna stories. See, there is something for everyone. With free advertising through social media
and a functional web service we will have a larger presence than our competitors. Our website
will allow customers to sign up for a newsletter, create a pull list for weekly books and even
set up a delivery of books.
Benefits matrix
Customer Pain Points Benefits
-Paying too much for comics Offer books at least 25% off.
-Do not understand comics Constant ads and social media to inform
-Dislike going to a physical store
Offer shipping to customers homes. Shipping is
free, but discount is reduced.
-Want to talk to someone who knows
the stories
Staff will read and stay current with story
material.
-Cant find a particular comic book
movie at the store.
Offer extensive selection of comic book related
films and TV.




Operations
Organizational structure
Being a small business that is primarily operated by me and my wife, the companys structure
will be a small one. We will have the two owners who also work as store employees. To cover
Sunday through Saturday, hours 0900-1900, 2-3 part time (un-benefited) workers will need to be
hired. We will have a part time accountant at the start of the business. A supplier (Diamond)
will need to be contracted.

Capital requirements
The store (rent and renovations), insurance, paperwork processing, inventory and salary for two
additional workers are the capital needs at the start.
The Store (Rent); Typical local rent for a store with 1500 sqft. Is $1,650 a month.
Renovations; $20,000 Max
Insurance (Business); $100.00 a month
2 part time workers (15 hours a week total; 10.00 a hour); $150.00 a week
Part Time Accountant; $100.00 a month/ for 6 months
Utilities; $250.00 a month
Inventory; Initial stock; $10,000; $750 a month (books only) (initial)
Marketing; $5,000
Initial Capital Needed; $25,000; 1
st
Year expenses; $41,400
Owners Investing Capital; $15,000; Additional Capital Financed; $50,000



Core operations
Risks; Being unable to attract new or existing customers is the largest risk. A solid marketing
plan and attractive pricing gives us the best chance to avoid this risk. The industry itself slowing
down is also a risk. All available data has shown this industry going in one direction; up. Being
robbed or vandalized is covered by our insurance plan.
Customers will be able to come into the store to buy and mingle with other customers. If
customers do not enjoy the store atmosphere or are unable to come in we will ship books directly
to a customers residence. As stated before we will simply reduce the store discount to cover this
cost. Gift cards for digital services will also be offered.
Friendly and knowledgeable staff will always be on hand. Books will always be discounted.
Some stores offer a trade-in service for old comics. To keep initial capital low we will forego
this service at the start. If the customer wants a book that we do not have, we will get it for them
at no additional cost (if the book is not a collectors item).

Financial Projections
For Full Breakdown see Excel Worksheets attached


Valley Comics Balance Sheet-Pro Forma 2015-2017
Assets
Current assets: 2015 2016 2017
Cash 15,000.00 25,000.00 32000
Investments - -
Inventori es 20,000.00 19,000.00 19500
Accounts recei vabl e - -
Pre-pai d expenses - -
Other - -
Total current assets 35,000.00 44,000.00 51500
Fixed assets: 2015 2016 2017
Property and equi pment 20,000.00 17,500.00 15000
Leasehol d i mprovements - -
Equi ty and other i nvestments - -
Less accumul ated depreci ati on - 2,500.00 2500
Total fixed assets 20,000.00 20,000.00 17500
Other assets: 2015 2016 2017
Goodwi l l - - 0
Total other assets - -
Total assets 55,000.00 64,000.00 69000
Liabilities and owner's equity
Current liabilities: 2015 2016 2017
Accounts payabl e 40,000.00 36,000.00 32000
Accrued wages - -
Accrued compensati on - -
Income taxes payabl e - -
Unearned revenue - -
Other - -
Total current liabilities 40,000.00 36,000.00 32000
Long-term liabilities: 2015 2016 2017
Mortgage payabl e - -
Total long-term liabilities - -
Owner's equity: 2015 2016 2017
Investment capi tal 15000 15,000.00 15000
Accumul ated retai ned earni ngs - 13,000.00 22000
Total owner's equity 15,000.00 28,000.00 37000
Total liabilities and owner's equity 55,000.00 64,000.00 69000
Balance - -


Break-Even Analysis
Valley Comics
Cost Description Fixed Costs ($) Variable Expenses (%)
Inventory or Materials 1,500 $ 0.0
Direct labor (includes payroll taxes) 200 0.0
Other expenses - 0.0
Other expenses - 0.0
Salaries (includes payroll taxes) - 0.0
Supplies - 0.0
Repairs & maintenance - 0.0
Advertising 50 0.0
Car, delivery and travel - 0.0
Accounting and legal - 0.0
Rent 1,500 0.0
Telephone 1 0.0
Utilities 200 0.0
Insurance 150 0.0
Taxes (Real estate, etc.) -
Interest - 0.0
Depreciation 50 0.0
Other (specify) - 0.0
Other (specify) - 0.0
Miscellaneous expenses - 0.0
Principal portion of debt payment 250 0.0
Owner's draw - 0.0
Total Fixed Expenses $ 3,901
Total Variable Expenses 0.0
Breakeven Sales level = $ 3,901
Suggestions

Income Statement
(all numbers
in $000)
Valley
Comics
12/31/2015

Revenue Current Month Year to Date
Amount % of Sales Amount % of Sales
Gross sales $6,000 $72,000
Less sales returns and allowances
Net sales $6,000 100% $72,000 100%
Cost of Sales Current Month Year to Date
Amount % of Sales Amount % of Sales
Beginning inventory $2,500 42% $30,000 42%
Plus goods purchased/manufactured 0% 0%
Total goods available $2,500 42% $30,000 42%
Less ending inventory 0% 0%
Total cost of goods sold $2,500 42% $30,000 42%
Gross profit (loss) $3,500 58% $42,000 58%
Operating Expenses Current Month Year to Date
Amount % of Sales Amount % of Sales
Selling
Salaries and wages $200 3% $2,400 3%
Commissions 0% 0%
Advertising $50 1% $600 1%
Depreciation $50 1% $600 1%
Total selling expenses $300 5% $3,600 5%
General/Administrative
Salaries and wages 0% 0%
Loan Business $250 4% $3,000 4%
Payroll taxes 0% 0%
Insurance 0% 0%
Rent $1,500 25% $18,000 25%
Utilities $200 3% $2,400 3%
Depreciation and amortization 0% 0%
Office supplies 0% 0%
Travel and entertainment 0% 0%
Postage 0% 0%
Equipment maintenance and rental 0% 0%
Interest 0% 0%
Furniture and equipment 0% 0%
Total General/Administrative
expenses
$1,950 33% $23,400 33%
Total operating expenses $2,250 38% $27,000 38%
Net income before taxes $1,250 21% $15,000 21%
Taxes on income 0% 0%
Net income after taxes $1,250 21% $15,000 21%
Extraordinary gain or loss 0% 0%
Income tax on extraordinary gain 0% 0%
Net Income (Loss) $1,250 21% $15,000 21%


Income Statement
(all numbers in
$000)
Valley Comics 12/31/2016




Revenue Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Gross sales $7,000

$84,000

Less sales returns and allowances



Net sales $7,000 100% $84,000 100%
Cost of Sales Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Beginning inventory $3,200 46% $38,400 46%
Plus goods purchased/manufactured 0% 0%
Total goods available $3,200 46% $38,400 46%
Less ending inventory 0% 0%
Total cost of goods sold $3,200 46% $38,400 46%
Gross profit (loss) $3,800 54% $45,600 54%
Operating Expenses Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Selling
Salaries and wages $200 3% $2,400 3%
Commissions 0% 0%
Advertising $50 1% $600 1%
Depreciation $50 1% $600 1%
Total selling expenses $300 4% $3,600 4%
General/Administrative
Salaries and wages 0% 0%
Loan Business $250 4% $3,000 4%
Payroll taxes 0% 0%
Insurance 0% 0%
Rent $1,500 21% $18,000 21%
Utilities $200 3% $2,400 3%
Depreciation and amortization 0% 0%
Office supplies 0% 0%
Travel and entertainment 0% 0%
Postage 0% 0%
Equipment maintenance and rental 0% 0%
Interest 0% 0%
Furniture and equipment 0% 0%
Total General/Administrative expenses $1,950 28% $23,400 28%
Total operating expenses $2,250 32% $27,000 32%
Net income before taxes $1,550 22% $18,600 22%
Taxes on income 0% 0%
Net income after taxes $1,550 22% $18,600 22%
Extraordinary gain or loss 0% 0%
Income tax on extraordinary gain 0% 0%
Net Income (Loss) $1,550 22% $18,600 22%


Income Statement
(all numbers in
$000)
Valley Comics 12/31/2017




Revenue Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Gross sales $8,000

$96,000

Less sales returns and allowances



Net sales $8,000 100% $96,000 100%
Cost of Sales Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Beginning inventory $3,800 48% $45,600 48%
Plus goods purchased/manufactured 0% 0%
Total goods available $3,800 48% $45,600 48%
Less ending inventory 0% 0%
Total cost of goods sold $3,800 48% $45,600 48%
Gross profit (loss) $4,200 53% $50,400 53%
Operating Expenses Current
Month
Year to Date
Amount % of Sales Amount % of Sales
Selling
Salaries and wages $200 3% $2,400 3%
Commissions 0% 0%
Advertising $50 1% $600 1%
Depreciation $50 1% $600 1%
Total selling expenses $300 4% $3,600 4%
General/Administrative
Salaries and wages 0% 0%
Loan Business $250 3% $3,000 3%
Payroll taxes 0% 0%
Insurance 0% 0%
Rent $1,500 19% $18,000 19%
Utilities $200 3% $2,400 3%
Depreciation and amortization 0% 0%
Office supplies 0% 0%
Travel and entertainment 0% 0%
Postage 0% 0%
Equipment maintenance and rental 0% 0%
Interest 0% 0%
Furniture and equipment 0% 0%
Total General/Administrative expenses $1,950 24% $23,400 24%
Total operating expenses $2,250 28% $27,000 28%
Net income before taxes $1,950 24% $23,400 24%
Taxes on income 0% 0%
Net income after taxes $1,950 24% $23,400 24%
Extraordinary gain or loss 0% 0%
Income tax on extraordinary gain 0% 0%
Net Income (Loss) $1,950 24% $23,400 24%
Cash Flow Statement; Unable to paste; check Excel file
Income Statement; For the first year we are looking at a modest net profit of $15,000. By the
end of year three that number should be nearly $24,000 for a growth of around .60.
The break-even analysis shows that on a monthly basis are sales would have to match $3901.00
This represents a product mix of 1,000 weekly books, 24 trade paper backs, and $100 in other
products (toys, gift cards).
Our Balance Sheet shows that we hope to grow our assets from 55,000 to 69,000 by the end of
the third year. During that period our initial Liabilities of 40,000 would shrink to 32,000. This
would give us Owners Equity going from 15,000 to 37,000.
The initial Liabilities of $40,000 would have to be secured through a small business loan. The
loan would be used for fixed assets and inventory building, split 50%. The $40,000 is a
maximum amount and it is quite possible to borrow less. The fixed assets need to be a counter,
register, shelves and a sign on the building. $12,000 is the estimated minimum for this part. An
inventory of backlogged books is integral to any comic store. For $20,000 a backlog of 7,000
comics and 400 trade paperbacks could be secured. This is a fairly accurate estimate to have a
proper inventory on hand. Also the owner has $15,000 readily available in capital. The loan
could be reduced to as much as $17,000. The length and interest would depend on how much
capital the owner would invest.


Project Notes;
This business plan was created for a business that I personally have a great deal of
passion about. Owning a comic book store has always been a dream of mine. This project really
opened my eyes to just how much product I would have to sell to make a significant monthly net
income. I used the cost of goods sold numbers that I found from the number one distributor of
comic books, Diamond.
Most of the numbers used in my financial statements reflect genuine numbers that were
researched for local expenses. Since this is a business plan for a new startup there were no
current or past financial statements to include.
The outline listed from our course lesson was used including the table for customer pains
and benefits.
The sales figures were conservative estimates. Researching other comic stores (both
physical and online) yielded larger estimates. I went with smaller numbers since the financials
of the other local stores was unavailable. For lending purposes the smaller numbers also show
just how little I would have to sell to cover expenses and loan repayment.


References
No Date Free Comic Book Store Business Plan The Financial Resource
http://www.thefinanceresource.com/free_business_plans/free_comic_book_store_business_plan.
aspx
2013 Discount & Ordering Information Diamond Comic Distributors, Inc
https://retailer.diamondcomics.com/support/retailer_docs/newaccts/diamondtos.pdf
2014 Comic Book Sales by Year Comic Chron
http://www.comichron.com/yearlycomicssales.html
2014 Ordering from Diamond Diamond Comic Distributors, Inc
https://retailer.diamondcomics.com/Home/1/1/28/228
2014 Stanislaus Property Search Loopnet
http://www.loopnet.com/xNet/MainSite/Listing/Search/SearchResults.aspx#/Stanislaus-
County,CA/Retail/For-Lease/c!ARYC$BAQIB
2014 The Marketing Mix and the Four Ps Mindtools
http://www.mindtools.com/pages/article/newSTR_94.htm
Naranjo, E 2014 Lesson 6: Business Plan 2 American Public University BUSN 499
https://edge.apus.edu/portal/site/242178/page/6dfb087c-39e2-4ab6-83c8-6cd11e30a8ef
Rozanski, C 2013 How to Open Your Own Comics Retail Store Part Mile High Comics
http://www.milehighcomics.com/tales/cbg53.html
Zjaba, T 2013 Comic Book Store Owners Biggest Mistakes TomHeroes
http://www.tomheroes.com/Comics/Stories/comic_store_owners_biggest_mistakes.htm