Business Plan Sample Pharmacy

Sample Business Plan, Sample Pharmacy 1
This business plan is only a sample. The name of the actual business and the owners have been changed
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Sample Business Plan. Sample Pharmacy

Sample Business Plan. Sample Pharmacy

Written by Vinil Ramdev

+91-90040-84813, dreamtoreality.in@gmail.com, www.startupgrowthexpert.com



Table of contents

Executive Summary

1.0 Objectives
1.01 Mission
1.02 Keys to success

2.0 Company summary
2.01 Company ownership
2.02 Past performance table
2.03 Company locations and facilities
2.04 Sales literature

3.0 Product and service summary
3.01 Product and service description
3.02 Competitive comparison
3.03 Fulfillment
3.04 Technology
3.05 Future products and services

4.0 Market Analysis Summary
4.01 Market analysis table
4.02 Market segmentation
4.03 Target market segmentation
4.04 Market needs
4.05 Market trends
4.06 Market growth

5.0 Service business analysis
5.01 Industry participants
5.02 Distribution patterns
5.03 Competition and buying
5.04 Main competitors
5.05 Value proposition

6.0 Sales strategy
6.01 Pricing strategy
6.02 Promotion strategy
6.03 Sales forecast table
6.04 Explain Sales forecast
6.05 Sales program

7.0 Marketing plan


7.01 Strengths
7.02 Weaknesses
7.03 Opportunities
7.04 Threats
7.05 SWOT analysis
7.06 Competitive edge
7.07 Positioning statement
7.08 Strategy pyramid
7.11 Distribution strategy
7.12 Strategic alliances
7.13 Milestones table
7.14 Milestones explanation

8.0 Web plan summary
8.01 Website marketing strategy
8.02 Development requirements

9.0 Management summary
9.01 Organizational chart
9.02 Organizational structure
9.03 Management team
9.04 Management team gaps

10.0 General assumptions table
10.01 Profit and loss table
10.02 Projected profit explanation
10.03 Break-even analysis table
10.04 Break-even analysis explanation
10.05 Benchmarks chart
10.06 Key financial indicators

11.0 Cash flow table
11.01 Projected cash flow explanation
11.02 Balance sheet table
11.03 Balance sheet explanation

12.0 Financial plan summary
12.01 Long-term plan
12.02 Valuation
12.03 Investment offering
12.04 Use of funds
12.05 Use of funds explanation
12.06 Payback
12.07 Ratios table

A. Appendix
B. Sources


Executive Summary
Sample Pharmacy is in the retail pharmacy business. It is located in Bangalore, India. Sample Pharmacy
presently owns 3 retail outlets in Bangalore, India.
Sample Pharmacys primary products are prescription medicines.
Sample Pharmacy is positioned as a premium pharmacy that caters to the upscale clientele.

Customers shop from sample Pharmacy for the following reasons:

Knowledgeable pharmacist
Availability of medications
'WOW factor' - Fun, Service & Refreshing Ambience

Sample Pharmacy is founded by experienced entrepreneurs who have passion and skill for business.

Revenues of Sample Pharmacy is expected to grow at 3.6 times in the fiscal year 2008.

Sample Pharmacys purpose is to create a vision in the hearts and minds of its community as a company
that cares about the welfare of its employees, the quality of its products and services, and the honesty
and integrity of its business relationships.

1.0 Objectives
Break even by March 31, 2008
EBIDTA in excess of Rs I0 Lakhs for the FY ending March 2009
EBIDTA in excess of Rs 20 Lakhs for the FY ending March 2010
EBIDTA in excess of Rs 30 Lakhs for the FY ending March 2011

1.01 Mission

Sample pharmacy is in the retail pharmacy business. Sample Pharmacys vision is to provide its
customers with a great store ambience, hygiene, good assortment of merchandise, great service and
convenience.
Sample Pharmacys purpose is to create a vision in the hearts and minds of its community as a company
that cares about the welfare of its employees, the quality of its products and services, and the honesty
and integrity of its business relationships.
Sample Pharmacys ideal team member is humble, respectful, customer centered (has the needs of the
customer in mind), has integrity, honesty & a high moral code and sets the highest standards of
excellence in his endeavors.


Sample Pharmacys customers buy from them because their staff members welcome them with a
beautiful smile, greet them by saying "Good Morning", "Thank You", "Welcome" and help them in
making an informed decision. Besides Sample Pharmacys customers like Sample Pharmacys store
ambience & hygiene, service, product availability and trust the quality of Sample Pharmacys products.
1.02 Keys to success
The keys to Sample Pharmacys success are:
1. Good Customer Service
2. Inventory Management
3. Effective Operations

2.0 Company summary
Sample Pharmacy is a company incorporated in December 2005. The core business of Sample Pharmacy
is pharmacy retail.
2.01 Company ownership

Sample Pharmacy is a privately held company with majority of its shares held by its Founder and
Chairman NAME WITHHELD
.
2.02 Past performance table

FY 2007

Sales Rs 3,139,121
Gross Margin Rs 533,650
Gross Margin 17.00%
Operating Expenses Rs 2,500,000
Inventory Turnover 3.76

Balance Sheet
FY 2007

Current Assets
Cash Rs 308,375
Inventory Rs 1,387,725
Other Current Assets Rs 1,123,045
Total Current Assets Rs 2,819,145

Long-term Assets
Long-term Assets Rs 3,525,054
Total Long-term Assets Rs 3,525,054


Total Assets Rs 6,344,199

Current Liabilities
Other Current Liabilities
(Interest free) Rs 270,400
Total Current Liabilities Rs 270,400

Long-term Liabilities Rs 2,950,000
Total Liabilities Rs 3,220,400

Paid-in Capital Rs 5,000,000
Earnings (Rs 1,876,201)
Total Capital Rs 3,123,799

Total Capital and Liabilities Rs 6,344,199

Other Inputs
Payment Days 7

2.03 Company locations and facilities

Head Office:

GF 2, 301.11 Mezzanine Floor, Mosque Rd.
Frazer Town, Bangalore 560005

Sample Pharmacy Store Locations:

Store 1: GF 2, 301.11 Pentagon Complex, Mosque Rd. Frazer Town Bangalore 560005
Sample Pharmacys Frazer Town location was the first location opened by Sample Pharmacy. The Frazer
Town location opened for business on May 14, 2006.

Store 2: #150/4, Bearing No 86/1, New Tippasandra Main Road, HAL 3rd stage, Bangalore 560075.
Sample Pharmacys Tippasandra location is the second location opened by Sample Pharmacy . It opened
on May 14, 2006 shortly after the opening of store 1.

Store 3: Esteem Plaza, #359/20, 13th main road, Sadashivnagar, Bangalore 560080.
Sample Pharmacys sadashivnagar location opened on May 22, 2006.

All Sample Pharmacys locations are leased premises. Sample Pharmacy stores range in square footage
from 120 sq. ft. - 430 sq. ft.

2.04 Sales literature
Sample Pharmacys sales flyer will present a very professional image of its business. It will be designed
by a good graphic designer.


The objective of the sales flyer and sales brochure is to present a very professional image of our
business and position ourselves as a trusted business. This sales flyer will be part of its marketing
program where it will be used as newspaper inserts and distribute it to our geographic target.

3.0 Product and service summary
Sample Pharmacy will sell prescription medications and OTC medications primarily through its retail
outlets. Sample Pharmacys primary focus will be prescription medications and OTC medications.
However Sample Pharmacy may carry a range of toiletries and daily use items like shampoos,
conditioners and other skin and hair care items.
3.01 Product and service description
Sample Pharmacys primary business will come from prescription medications and OTC medications. The
price range will be at the maximum retail price (i.e. suggestive retail price). Sample Pharmacy will also
evaluate other revenue streams like advertising and selling shelf space.
3.02 Competitive comparison
Sample Pharmacy will position itself as a premium pharmacy that caters to the upscale clientele.
The top three reasons customers shop from sample pharmacy is:
'WOW factor' - Fun, Service & Refreshing Ambience
3.03 Fulfillment
Sample Pharmacy plans on buying products directly from distributors. Distribution is a major concern for
Sample Pharmacy. Lot of prescription medication distributors do not supply to organized retailers as the
chemist association in the city wants to thwart the competition from organized retailers.
However, Sample Pharmacy can go to the physical location of the distributors and buy products directly
from their counter. However, there are distributors who do supply to Sample Pharmacy at their place of
business.
3.04 Technology
Today, a lot of good retail businesses use technology to manage their business better.
The first area of concern is the Point Of Sale (POS) software. A good Point Of Sale (POS) software allows
the user to serve his customers quickly. It allows the user to obtain specific reports like VAT returns,
category & sub-category sales, customer databases with customer information, purchases made by the
customer for a particular period, prescriptions of the customer and average ticket price per customer.


Preferably Sample Pharmacy would like the customer relationship software to be integrated with the
POS software. The customer relationship software should tell what customers are buying and will use
statistical analysis to tell what they will buy next. It should also have the names, addresses and contact
information of customers. It should make it easy to profile and segregate customers based on certain
demographic parameters. If it can profile customers on psychographic factors, that's even better.
3.05 Future products and services
Sample Pharmacy is evaluating selling products online. Sample Pharmacy may prepare a separate
business plan for the online retail business when decides to go ahead with the project.

4.0 Market Analysis Summary
The entire volume of business for prescription medicines and over-the-counter medications is about Rs
1 lakh per day in Frazer town (2 km radius around our store), Rs 2.85 lakhs per day in Tippasandara (1
km radius around our store), and Rs 1.93 lakhs per day in sadashivnagar (2 km radius around our store).
This is got by calculating the entire sales of all the pharmacies put together. Sample Pharmacy did a
market research through its internal team to determine the results. This also includes a small
percentage of personal care products.
Sample Pharmacy will do a market survey that gives information about the 3 greatest fears and three
benefits that customers face when they buy from a pharmacy.

Sample Pharmacy will focus on diabetic patients in and around its two km radius. According to
information from sources on the internet and the Deccan Herald - the local newspaper, there are at
least 500,000 diabetic patients in Bangalore.

Sample Pharmacy will need to do another market research that tells them how many diabetic patients
are there in its geographic target market.

Sample Pharmacys target market focus will be:

2 Km geographic radius
High & Mid income prospects
Diabetic Patients
Young mothers and women between the ages of 26 - 45

4.01 Market segmentation

Sample Pharmacy will initially target the following 3 segments:

1. The modern women & young mother - Women between the ages of 26-45
2. Diabetic Patients
3. Incidental shoppers

4.02 Target market segmentation



According to a survey done by Sample Pharmacy, it found that there are at least 4 gynecologists and/or
pediatricians in the 2 km radius of each of our locations. This shows that there are substantial amount of
women who use these services and therefore have a need for medications.

If it is estimated that there are 20 footfalls per day in each of these clinics, then that is about 80-100
customers per day in this segment alone. Focusing on women (with children) will help other categories
of products like skin care, hair care & baby care as well.

According to a local newspaper source on the internet, the entire city of Bangalore has about 500,000
diabetic patients. Sample Pharmacy assumes that there is a good chance that a sizable amount of
diabetic patients live in its geographic target. Sample Pharmacy is fairly certain about sadashivnagar
where there are about 3 diabetic clinics. However, Thippasandra and Frazer town are locations where
market research should help Sample Pharmacy.

Sample Pharmacys third market segment is the other category. These are incidental and convenience
shoppers who live in the neighborhood. Sample Pharmacy will not go after them consciously. Sample
Pharmacys main focus will be on the first two groups: The Modern Women & Diabetics.

4.03 Market needs

The three basic needs (according to Sample Pharmacy) that buyers look for in a pharmacy is:

Safety of medications
Hygiene

Sample Pharmacy plans on doing market research that will either agree or disagree with its opinion.
The research should talk about the needs of each segment i.e Women (gynecology), pediatric, Diabetic
and Cardiac
4.04 Market trends

Today, there are not many players in the organized retail pharmacy market. Most of the pharmacies are
owned by independent mom & pop operations. However things are changing now. Lot of big players are
entering the market.

Huge companies get into the retail sector and start multiple store chains. And they bypass the supply
chain by buying directly from stockiest or even the manufacturer. They cut out the distributor and thus
can pass on the benefit to the customer by offering a 10-15% discount. However it's difficult for the
independent retailer to offer such discounts as these margins go to the distributor.

Another trend that is happening is that a lot of companies are trying to sell consumer goods like
shampoos, soaps and others through retail pharmacies. The reason for doing that is because consumers
tend to trust pharmacists more than departmental stores and because pharmacies are more hygienic.
This trend was spotted by an article in the financial times.


4.05 Market growth

The pharmacy market in India is growing at about 9% annually. At the moment, in our current
geographic targets the total volume of business is about Rs 400,000 per day. i.e Frazer Town = Rs
93,000; Tippasandara = Rs 265,000; Sadashivnagar = Rs 129,000. Sample Pharmacy expects this growth
to be in proportionate to the national growth.

5.0 Service business analysis

Sample Pharmacys business fits into 3 industries; one is the retail industry that is valued at 180 billion
dollars, the pharmaceutical industry that is valued at approximately 93 billion dollars and the personal
care market at 3.7 billion dollars.

However, Sample Pharmacys core business will come from diabetics in its immediate 2 km radius.
According to a dietician in the Indian Bureau of Marketing and research, the diabetic market in India in
valued at $100 million or Rs 500 Crores. Sample Pharmacys immediate 2 km radius should have at least
1000 diabetics that spend Rs 1000 per month. That comes up to Rs 1 million in monthly sales.

Sample Pharmacy also plans on targeting women and children. The reason for this is that there are
sizable gaenocologists and pediatrics in the area.

The retail pharmacy industry is dominated by many independent retailers, it is fairly unorganized at the
moment. There are a few organized players like Trust, Subiksha, Apollo and LifeKen. The Reliance Group,
India's largest conglomerate is planning on getting into the retail sector shortly. This should increase
competition in the retail sector.

5.01 Industry participants

The pharmacy retail industry is made up of many small independent retailers or mom & pops. The
industry is fairly unorganized. In each of Sample Pharmacys locations, there are at least 10 pharmacies
in the two kilometer radius that compete with Sample Pharmacy

There are very few regional and national chains. Among the regional chains, Lifeken pharma, Trust,
Apollo & Subiksha are some of the major players. Most of the pharmacies do not offer discounts,
however subiksha offers a 10% discount on all medications & a newly launched pharmacy chain
ayurvadulu offers a 4% discount to all customers and 14% discount to senior citizens. Although they
offer a discount, their pharmacies are not very clean and hygienic.

5.02 Distribution patterns

In prescription medications, the supply chain goes from the manufacturer to the stockists to the
distributor and then to the retailer. In FMCG products, the products are sold from the manufacturer to
the distributor and then to the retailer.



However, the reliance group, one of the largest conglomerates in India is planning on acquiring many of
distributors and consolidating the industry. They plan on being a national distributor. This should level
the playing field as many of the independent retailers have a chemist association that boycotts
distributors for supplying to organized retailers. Therefore, many distributors are reluctant to supply to
organized retailers. Since Sample Pharmacy is an organized retailer, the problem of boycott is taken care
by consolidation from the reliance group.

5.03 Competition and buying

Most customers buy medications & toiletries from places that are close to their homes. Most business is
generated through word of mouth. Multi-Chain stores like lifeken, apollo and trust don't really have
great advertising campaigns. Their business is primarily through word of mouth.

There are some other customers who buy specialty medicines from specialty pharmacies like cash
pharmacy in Bangalore.

5.04 Main competitors

The following are some of Sample Pharmacys main competitors:

1. Surana Medicals, Frazer Town: Been in the market for a long time, the awareness about the store,
location, established base of regular customers, fairly organized store are some of his strenghts.
No real good customer service, no organized brand identity and no active marketing plan are some of
his weaknesses.

2. Balaji Medicals, Sadashivnagar: Been in the market for a long time, good awareness about the store,
established base of regular customers, good availability of medicines are some of his strenghts.
Poor customer service, poor presentation of the store are some of his weaknesses.

3. Medicine House, CMH road: Highly visible location close to a major hospital, good inventory of
medicines and experienced staff are some of his strengths.
Below average work culture, delays to customer requests are some of his weaknesses.

4. Prakash Medicals, 80 ft road: Highly visible location, huge inventory of products and experienced staff
are some of his strenghts.
Delays in customer requests and unorganization are some of his weaknesses.
This clearly shows that there is a big opportunity in the retail pharmacy market for a really well
organized, customer oriented and hygienic pharmacy.

5.05 Value proposition

Sample Pharmacys value proposition is knowledgeable pharmacist, availability of medicines and 'wow
factor' - fun, service and refreshing ambience.

6.0 Sales strategy


Most of Sample Pharmacys sales will come from its retail outlets.
Each sales associate will be trained to be a customer relationship associate using our sales processes
modeled after Rick Segel's and Brian Tracy's sales methods.
Home deliveries will be made to customers for extra convenience. Sample Pharmacy will use soft
suggestive selling techniques to increase our average ticket size (ATS). A database of customers with
demographic information about what they buy and when they buy have to be maintained. Most likely
Sample Pharmacy will use salesforce.com as our database vendor.
6.01 Pricing strategy

Most of Sample Pharmacys prices will be manufacturer suggested prices. Moreover, it is hard to charge
higher prices for the same product and the same brand. However, Sample Pharmacy should have a
mark-down section in its stores, that way Sample Pharmacy can offer a discount on some products. This
will ensure that products sell faster than normal, build traffic, have customers come back to its stores
more often and develop a perception among customers that our pricing is competitive.

6.02 Promotion strategy

The following will be Sample Pharmacys promotion strategy for the fiscal year 2007-08.
1. An awareness campaign throughout the year by farming its geographic target
2. One launch event or anniversary celebration per year
3. Two health camps per store per year.
4. One charity event per year.
5. Two contests per year.
6. 22 Q&A answer ads in Frazer times, 4 profile ads per year (one every quarter), 1 sale ad per
year.
7. 1 sale per store per year.
8. Direct mailers to diabetics, genecology, cardiac, pediatric and dermatology patients every
quarter i.e. 4 times a year.
9. Direct mailers of birthday cards with a gift coupon every month.
10. Market research (internal) twice a year.
11. Market research through an external agency, if required, once a year.
12. One Diwali promotion a year.
13. One Christmas and New Year promotion per year.
14. Listing on Just dial
15. Listing on the Yellow Pages
16. Implementation will be measured by filling up the pre and post promotion form.

6.03 Sales forecast table

FY 2008

Prescription Medications Rs 8,912,198
FMCG Rs 5,800,333


Total Sales Rs 14,712,531

Direct Cost of Sales

Cost of goods sold PM Rs 7,397,124
Cost of goods sold FMCG Rs 4,814,277
Subtotal Direct Cost of Sales Rs 12,211,401

6.04 Sales forecast explanation

Sample Pharmacy expects sales to be 60% medicines and 40% FMCG. Sample Pharmacy believes sales
will increase to average sale of Rs 30,000 per day per store by the end of the fiscal year 2007-08. Sample
Pharmacy expects its sales to increase by 15% on average every month during the fiscal year 2007-08.
In the fiscal year 2008-09, Sample Pharmacy expects sales to increase by Rs 14,000 on average every
month for prescription medicines and Rs 10,000 on average for FMCG products.

6.05 Sales program

All Sample Pharmacy sales associates will be extremely presentable. They will wear uniforms at all times
of work and present a consistent and professional image of the company. They will be trained in its sales
processes. Every new hire has to be trained in its sales process before they get involved in any
interaction with the customer.

7.0 Marketing plan

Sample Pharmacy marketing strategy is to improve the image of its company by improving the quality of
its ads and its communication materials. Sample Pharmacy realizes that its business cards, envelopes
and letterheads are tools to promote its business. Therefore Sample Pharmacy will get them designed
by a good graphic designer thus presenting a classy upscale image of its business. Its sensory package
has to be upscale & exciting.

The store interiors & store front should not have anything that is printed from its computer on an A4
sheet or cut in pieces of paper as this makes its business look extremely unprofessional. All
communication material has to be finished up by a good professional designer to give its business a
strong professional image

Store staff have to always wear uniforms and present a professional image of the business. The core
value proposition of Sample Pharmacy is knowledgeable staff, availability of medicines and the 'wow'
factor - service, fun & refreshing ambience.

7.01 Strengths

Good ambience: Our stores are very nicely designed & soothing music is played in the
background to provide our customers a great shopping experience.


Continuous improvement: We constantly strive to improve ourselves & get better at what we do
all the time.

7.02 Weaknesses

Owners are still climbing the retail learning curve
Certain operational weaknesses as the operations manual is still being developed
Cash flows are uncertain, since the last 10 months
All stores are not as professional as they need to be, employees need to wear uniforms, the
store displays need to be much more clearly organized
There are certain missed accountabilities
Marketing needs to be more active, we have to have solid promotions strategy, solid research
methods, spread the word and be well known in our communities.

7.03 Opportunities

The retail pharmacy industry is fairly unorganized. Most pharmacies in Sample Pharmacys communities
are fairly unorganized, unhygienic and lack good customer service. There is a great opportunity for a
pharmacy to provide good service in a hygienic & dynamic atmosphere.

7.04 Threats

Emerging Competition from organized retailers; Reliance, India's largest conglomerate plans on
venturing into the pharmacy retail space. And there are also rumors that other organized
retailers may follow suit.
Possible price ceiling by government regulation: Since medicines are important to the
community at large, the government may have a price ceiling on the pricing of medicines.

7.05 SWOT analysis

Sample Pharmacys strengths include our wonderful store ambience and continuous learning attitude of
its organization. Some of its weaknesses is that customer service needs to get better, Sample Pharmacy
needs to get better people and Sample Pharmacy needs to have much more active marketing and
promotion activities.

Sample Pharmacys opportunities are that there are not that many organized players in the market and
the competitors are nothing special. Sample Pharmacys threats are that there is such a big gap for an
organized retailer that it seems attractive for large retailers to enter the market. However, Sample
Pharmacy does believe it can beat anybody of any size if it focuses on being the best.

7.06 Competitive edge

Sample Pharmacys competitive edge is the trust we generate among our customers by positioning
ourselves as a world class pharmacy. Also, the design of Sample Pharmacys stores and the ambience
give Sample Pharmacy a distinct competitive edge with our competition.

7.07 Positioning statement


For the person who has a need for medications in its geographic target, who is usually between the age
of 25-45 with middle to upper-middle class income. Unlike, many mom and pop operations, who's
pharmacies are cluttered, dusty and customer service is poor to non-existent, Sample Pharmacy
operated pharmacies are organized, hygienic, have a great atmosphere and are positioned in a manner
where people trust the quality of its products.

7.08 Strategy pyramid

Sample Pharmacys main strategy is to position itself as a pharmacy that can be trusted.

This is done by portraying a professional image where all employees wear a uniform and the store is
neatly organized. Providing good customer service where staff welcome them with a beautiful smile and
even carry customer's bag to the car.

Sample Pharmacy will use consultative selling and relationship selling methods to position itself as a
pharmacy that customers trust.

All Sample Pharmacy communication materials will be professionally designed by exceptionally good
graphic designers to portray a strong image of its business.

Position ourselves as experts in our field

Sample Pharmacy will have banners in front of its stores that have a punch line that says "Prescription
medicines is our specialty." Sample Pharmacy will have flyers giving a brief description of its business
and its staff will distribute these flyers to its geographic target. Sample Pharmacy will have a small 3
page brochure giving a brief description about its business.

7.09 Distribution strategy

Sample Pharmacys distribution strategy will be mainly through its retail outlets. Sample Pharmacy will
also offer home delivery of medicines as this will be convenient for its customers.

7.10 Strategic alliances

It may be beneficial to have tie-ups with doctors and clinics around the area where doctors give Sample
Pharmacy customers a discount. This should help the doctors as this will bring them more customers
and will help Sample Pharmacy customers as this will give them benefits to shop at Sample Pharmacy
stores. It also brings Sample Pharmacy closer to doctors as this will help Sample Pharmacy promote its
business in their clinics.

It may also be beneficial to have tie-ups with other brands where they give us coupons and other
incentives for customers to purchase their products. Sample Pharmacy is still developing plans for co-
marketing programs with its vendors.

8.0 Web plan summary


Initially, Sample Pharmacy will not sell products online however Sample Pharmacy may sell products
online at a later period which is undecided. Sample Pharmacy will however have a discussion board,
groups, events and articles that change on a frequent basis, this will keep its customers coming back and
involved in the website.

8.01 Website marketing strategy

Section omitted

8.02 Development requirements

Section omitted

9.0 Management summary

Sample Pharmacys philosophy is to hire people who are humble and have a quest for excellence. For
Sample Pharmacy to be successful, Sample Pharmacy should be extremely organized. Sample Pharmacy
will need solid sales people with excellent salesmanship skills, A great manager who can motivate and
discipline these sales people and a good solid marketing manager.
Sample Pharmacy will have to prepare very clear job descriptions and clear position statements where
every person is aware of what results he or she is responsible for. Sample Pharmacy will have to have a
list of requirements for every position when they interview him so that they make good hiring decisions.

9.01 Organizational chart

Section ommited

9.02 Organizational structure

Sample Pharmacys organizational structure will have one managing director, one accounts department
that is outsourced, one operations manager that will handle store operations. At the store level we will
have 8 pharmacists and 3 housekeepers. The pharmacists shifts will be scheduled in a manner such that
there will 2 pharmacists during peak times.

9.03 Management team

Section omitted

9.04 Management team gaps

Section omitted

10.0 General assumptions table



General Assumptions FY08 FY09 FY10

Current Interest Rate 14% 14% 14%
Long-term Interest Rate 14% 14% 14%
Tax Rate 33% 33% 33%
Other

10.01 Profit and loss table

Pro Forma Profit and Loss

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Sales Rs14,712,531 Rs29,550,232 Rs32,800,757 Rs36,408,840 Rs40,413,813
Direct Costs of Goods Rs12,211,401 Rs24,526,692 Rs26,896,621 Rs29,855,249 Rs33,139,327
Franchise fee Rs294,251 Rs591,005 Rs656,015 Rs728,177 Rs808,276

------------ ------------ ------------ ------------ ------------
Cost of Goods Sold Rs12,505,651 Rs25,117,697 Rs27,552,636 Rs30,583,426 Rs33,947,603

Gross Margin Rs2,206,880 Rs4,432,535 Rs5,248,121 Rs5,825,414 Rs6,466,210
Gross Margin % 15.00% 15.00% 16.00% 16.00% 16.00%

Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll Rs0 Rs120,000 Rs132,000 Rs145,200 Rs159,720
Total marketing expenses Rs349,992 Rs360,000 Rs360,000 Rs360,000 Rs360,000
Other Sales and Marketing Expenses Rs0 Rs0 Rs0 Rs0 Rs0

------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses Rs349,992 Rs480,000 Rs492,000 Rs505,200 Rs519,720
Sales and Marketing % 2.38% 1.62% 1.50% 1.39% 1.29%

General and Administrative Expenses

General and Administrative Payroll Rs1,160,000 Rs1,030,800 Rs1,138,000 Rs1,266,000 Rs1,392,100
Depreciation Rs240,000 Rs300,000 Rs315,000 Rs330,750 Rs347,288
Rent Rs780,000 Rs819,000 Rs859,950 Rs902,948 Rs948,095
Printing & Stationary Rs30,000 Rs30,000 Rs31,500 Rs33,075 Rs34,729
Postage Rs6,000 Rs6,000 Rs6,300 Rs6,615 Rs6,946
Payroll Taxes Rs12,000 Rs12,000 Rs217,950 Rs240,503 Rs263,037
Office expenses Rs6,000 Rs6,000 Rs6,300 Rs6,615 Rs6,946
Outlet maintenance Rs27,600 Rs27,600 Rs28,980 Rs30,429 Rs31,950
Owners association fees Rs54,000 Rs56,700 Rs59,535 Rs62,512 Rs65,637
Telephone Rs108,000 Rs113,400 Rs119,070 Rs125,024 Rs131,275
Electricity Rs132,000 Rs132,660 Rs139,293 Rs146,258 Rs153,571
Professional fees Rs180,000 Rs198,000 Rs207,900 Rs218,295 Rs229,210


Legal fees Rs84,000 Rs92,400 Rs97,020 Rs101,871 Rs106,965
Travel & conveyance Rs7,200 Rs8,400 Rs8,820 Rs9,261 Rs9,724
Bank charges Rs91,992 Rs91,992 Rs96,592 Rs101,421 Rs106,492
Staff welfare Rs30,000 Rs31,800 Rs33,390 Rs35,060 Rs36,812

------------ ------------ ------------ ------------ ------------
Total General and Administrative
Expenses Rs2,948,792 Rs2,956,752 Rs3,365,600 Rs3,616,635 Rs3,870,775
General and Administrative % 20.04% 10.01% 10.26% 9.93% 9.58%

Other Expenses:

Other Payroll Rs153,000 Rs168,000 Rs183,000 Rs192,150 Rs201,757
Consultants Rs12,000 Rs12,000 Rs12,600 Rs13,230 Rs13,892
Other Expenses Rs0 Rs0 Rs0 Rs0 Rs0

------------ ------------ ------------ ------------ ------------
Total Other Expenses Rs165,000 Rs180,000 Rs195,600 Rs205,380 Rs215,649
Other % 1.12% 0.61% 0.60% 0.56% 0.53%

------------ ------------ ------------ ------------ ------------
Total Operating Expenses Rs3,463,784 Rs3,616,752 Rs4,053,200 Rs4,327,215 Rs4,606,144

Profit Before Interest and Taxes (Rs1,256,904) Rs815,783 Rs1,194,922 Rs1,498,200 Rs1,860,066
EBITDA (Rs1,016,904) Rs1,115,783 Rs1,509,922 Rs1,828,950 Rs2,207,354
Interest Expense Rs579,246 Rs417,275 Rs548,678 Rs505,989 Rs456,914
Taxes Incurred Rs0 Rs119,552 Rs213,261 Rs327,430 Rs463,040

Other Income

Advertising Rs74,000 Rs120,000 Rs126,000 Rs132,300 Rs138,915
Licensing sadashivnagar Rs126,500 Rs143,750 Rs150,938 Rs158,484 Rs166,409
Total Other Income Rs200,500 Rs263,750 Rs276,938 Rs290,784 Rs305,324

Net Other Income Rs200,500 Rs263,750 Rs276,938 Rs290,784 Rs305,324
Net Profit (Rs1,635,650) Rs542,705 Rs709,921 Rs955,566 Rs1,245,436
Net Profit/Sales -11.12% 1.84% 2.16% 2.62% 3.08%

10.02 Projected profit explanation

Sample Pharmacy is expected to achieve profitability in about two years from opening. i.e. Profitability is
expected in the fiscal year 2009. This is due to its high overhead costs and high rentals in certain
locations.

10.03 Break-even analysis table

Monthly Revenue Break-even Rs 1,697,933

Assumptions


Average Percentage Variable Cost 83%
Estimated monthly fixed cost Rs 288,649

10.04 Break even explanation

Sample Pharmacy predicts that its break even to be about 18,00,000 in sales per month. After
calculating income from advertising and licensing its sadashivnagar outlet, Sample Pharmacy predicts
that its break even will come down to Rs 17,00,000 per month. Sample Pharmacy predicts that it will
break even by March 31, 2009.

10.05 Benchmarks chart

Section ommited

10.06 Key financial indicators

Sample Pharmacy is expected to grow at around 3.6 times in the fiscal year 2007. This is mainly due to
higher marketing budgets, effective marketing and effective sales training. Sample Pharmacys gross
margin is expected to be between 14% - 17%. Sample Pharmacys inventory turnover is expected to be
12 to 15 turns per year. Sample Pharmacy does not plan to sell on credit.

11.0 Cash flow table

Pro Forma Cash Flow

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Cash Received

Cash from Operations

Cash Sales

Rs14,712,531 Rs29,550,232 Rs32,800,757 Rs36,408,840 Rs40,413,813
Cash from Receivables

Rs0 Rs0 Rs0 Rs0 Rs0
Subtotal Cash from Operations

Rs14,712,531 Rs29,550,232 Rs32,800,757 Rs36,408,840 Rs40,413,813

Additional Cash Received

Non Operating (Other) Income

Rs200,500 Rs263,750 Rs276,938 Rs290,784 Rs305,324
Sales Tax, VAT, HST/GST Received 8.00% Rs1,177,002 Rs2,364,019 Rs2,624,061 Rs2,912,707 Rs3,233,105
New Current Borrowing

Rs0 Rs0 Rs0 Rs0 Rs0
New Other Liabilities (interest-free)

Rs0 Rs0 Rs0 Rs0 Rs0
New Long-term Liabilities

Rs1,500,000 Rs0 Rs0 Rs0 Rs0
Sales of Other Current Assets

Rs0 Rs0 Rs0 Rs0 Rs0
Sales of Long-term Assets

Rs0 Rs0 Rs0 Rs0 Rs0
New Investment Received

Rs0 Rs0 Rs0 Rs0 Rs0
Subtotal Cash Received

Rs17,590,033 Rs32,178,000 Rs35,701,755 Rs39,612,332 Rs43,952,241



Expenditures

Expenditures from Operations

Cash Spending

Rs1,313,000 Rs1,318,800 Rs1,453,000 Rs1,603,350 Rs1,753,577
Bill Payments

Rs14,552,977 Rs28,375,508 Rs30,706,949 Rs34,007,668 Rs37,592,855
Subtotal Spent on Operations

Rs15,865,977 Rs29,694,308 Rs32,159,949 Rs35,611,018 Rs39,346,432

Additional Cash Spent

Non Operating (Other) Expense

Rs0 Rs0 Rs0 Rs0 Rs0
Sales Tax, VAT, HST/GST Paid Out

Rs1,177,002 Rs2,364,019 Rs0 Rs0 Rs0
Principal Repayment of Current Borrowing

Rs0 Rs0 Rs0 Rs0 Rs0
Other Liabilities Principal Repayment

Rs0 Rs0 Rs0 Rs0 Rs0
Long-term Liabilities Principal Repayment

Rs152,636 Rs236,140 Rs284,198 Rs325,642 Rs375,423
Purchase Other Current Assets

Rs70,500 Rs0 Rs0 Rs0 Rs0
Purchase Long-term Assets

Rs0 Rs0 Rs0 Rs0 Rs0
Dividends

Rs0 Rs0 Rs0 Rs0 Rs0
Subtotal Cash Spent

Rs17,266,116 Rs32,294,467 Rs32,444,147 Rs35,936,660 Rs39,721,855

Net Cash Flow

Rs323,918 (Rs116,467) Rs3,257,609 Rs3,675,672 Rs4,230,386
Cash Balance

Rs632,293 Rs515,826 Rs3,773,434 Rs7,449,106 Rs11,679,492

11.02 Projected cash flow explanation

Paid-up capital + Loan from the director = Rs 73,60,000 approx.
The business will need about Rs 15,00,000 to fund its working capital requirements. The business
expects positive cash flow from the month of December 2008 onwards.
11.03 Balance sheet table

Pro Forma Balance Sheet

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Assets

Current Assets

Cash Rs632,293 Rs515,826 Rs3,773,434 Rs7,449,106 Rs11,679,492
Accounts Receivable Rs0 Rs0 Rs0 Rs0 Rs0
Inventory Rs1,391,653 Rs2,157,591 Rs2,366,071 Rs2,626,339 Rs2,915,237
Other Current Assets Rs1,193,545 Rs1,193,545 Rs1,193,545 Rs1,193,545 Rs1,193,545
Total Current Assets Rs3,217,490 Rs3,866,962 Rs7,333,051 Rs11,268,990 Rs15,788,274

Long-term Assets

Long-term Assets Rs3,525,054 Rs3,525,054 Rs3,525,054 Rs3,525,054 Rs3,525,054


Accumulated Depreciation Rs240,000 Rs540,000 Rs855,000 Rs1,185,750 Rs1,533,038
Total Long-term Assets Rs3,285,054 Rs2,985,054 Rs2,670,054 Rs2,339,304 Rs1,992,017
Total Assets Rs6,502,544 Rs6,852,016 Rs10,003,105 Rs13,608,294 Rs17,780,290

Liabilities and Capital

Current Liabilities

Accounts Payable Rs446,632 Rs489,538 Rs590,843 Rs653,402 Rs722,280
Current Borrowing Rs0 Rs0 Rs0 Rs0 Rs0
Other Current Liabilities Rs270,400 Rs270,400 Rs2,894,461 Rs5,807,168 Rs9,040,273
Subtotal Current Liabilities Rs717,032 Rs759,938 Rs3,485,304 Rs6,460,569 Rs9,762,553

Long-term Liabilities Rs4,297,364 Rs4,061,224 Rs3,777,026 Rs3,451,384 Rs3,075,961
Total Liabilities Rs5,014,396 Rs4,821,162 Rs7,262,330 Rs9,911,953 Rs12,838,514

Paid-in Capital Rs5,000,000 Rs5,000,000 Rs5,000,000 Rs5,000,000 Rs5,000,000
Retained Earnings (Rs1,876,201) (Rs3,511,851) (Rs2,969,146) (Rs2,259,225) (Rs1,303,659)
Earnings (Rs1,635,650) Rs542,705 Rs709,921 Rs955,566 Rs1,245,436
Total Capital Rs1,488,149 Rs2,030,854 Rs2,740,775 Rs3,696,341 Rs4,941,776
Total Liabilities and Capital Rs6,502,544 Rs6,852,016 Rs10,003,105 Rs13,608,294 Rs17,780,290

Net Worth Rs1,488,149 Rs2,030,854 Rs2,740,775 Rs3,696,341 Rs4,941,776

11.04 Balance sheet explanation

Sample Pharmacys projected financial statements show that it will not have difficulty meeting its debt
obligations as long as it meets its objectives. Sample Pharmacy has taken a fairly conservative approach
to its financial planning. The business will see an increase in net worth from 2009 onwards.

12.0 Financial plan summary

Sample Pharmacys goal is to break even much faster than what it has forecasted in its financial plan.
Sample Pharmacy plans on raising Rs 40 lakhs in equity. Part of the capital will be used to finance its
operating expenses and the remaining will be kept as cash reserves that may be used to pay off existing
debt, acquire other businesses and/or generate additional revenue streams.

12.01 Long-term plan
Sample Pharmacys growth in FY 2008 is expected to be 3.68 times from its previous year. In FY 2009
Sample Pharmacy expects 100% growth in revenues and the fiscal years 2010, 2011 and 2012 sales is
expected to grow at about 11%.
12.02 Valuation


Sample Pharmacy has valued its company at Rs 90,00,000. New issues of its stock is priced at 2.5 times
the face value.

12.03 Investment offering

At this point Sample Pharmacy may get in investors who invest Rs 40 lakhs into the company for about
25 - 30% of the total capital structure. Sample Pharmacy would ideally prefer 1 to 4 investors. The price
of the shares is very nominally priced at 2.5 times the face value.
12.04 Use of funds

Working capital Rs 1,500,000
Cash reserves (for acquisitions or debt) Rs 2,500,000
Total Rs 4,000,000

12.05 Use of funds explanation
About Rs 15,00,000 will be used for working capital purposes. We will have some additional funds as
cash reserves to retire existing debt or for acquisitions, capital improvements or other opportunities
that may come up.
12.06 Payback

Sample Pharmacy does not plan on paying its investors any dividends. Sample Pharmacys philosophy is
to reinvest the money back into the business and increase shareholder value.

Sample Pharmacy plans on a management buyout by 2012 at 3 times the original investment of the
investor. This buyout will be financed by internal accruals, provided there are enough cash reserves.
Sample Pharmacy predicts it will have cash reserves to buy back 50% of the shares.

12.07 Ratios table

Ratio Analysis

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
Sales Growth 368.68% 100.85% 11.00% 11.00% 11.00%

Percent of Total Assets

Accounts Receivable 0.00% 0.00% 0.00% 0.00% 0.00%
Inventory 21.40% 31.49% 23.65% 19.30% 16.40%
Other Current Assets 18.36% 17.42% 11.93% 8.77% 6.71%
Total Current Assets 49.48% 56.44% 73.31% 82.81% 88.80%
Long-term Assets 50.52% 43.56% 26.69% 17.19% 11.20%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 11.03% 11.09% 34.84% 47.48% 54.91%
Long-term Liabilities 66.09% 59.27% 37.76% 25.36% 17.30%
Total Liabilities 77.11% 70.36% 72.60% 72.84% 72.21%
Net Worth 22.89% 29.64% 27.40% 27.16% 27.79%



Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 15.00% 15.00% 16.00% 16.00% 16.00%
Selling, General & Administrative Expenses 26.12% 13.16% 13.84% 13.38% 12.92%
Advertising Expenses 2.38% 1.22% 1.10% 0.99% 0.89%
Profit Before Interest and Taxes -8.54% 2.76% 3.64% 4.11% 4.60%
Main Ratios
Current 4.49 5.09 2.1 1.74 1.62
Quick 2.55 2.25 1.43 1.34 1.32
Total Debt to Total Assets 77.11% 70.36% 72.60% 72.84% 72.21%
Pre-tax Return on Net Worth -123.38% 19.62% 23.58% 26.84% 28.39%
Pre-tax Return on Assets -28.24% 5.82% 6.46% 7.29% 7.89%
Additional Ratios
Net Profit Margin -11.12% 1.84% 2.16% 2.62% 3.08%
Return on Equity -109.91% 26.72% 25.90% 25.85% 25.20%
Activity Ratios
Accounts Receivable Turnover 0 0 0 0 0
Collection Days 0 0 0 0 0
Inventory Turnover 8.65 13.82 11.89 11.96 11.96
Accounts Payable Turnover 33.58 58.05 52.14 52.14 52.14
Payment Days 6 6 6 7 7
Total Asset Turnover 2.26 4.31 3.28 2.68 2.27
Debt Ratios
Debt to Net Worth 3.37 2.37 2.65 2.68 2.6
Current Liab. to Liab. 0.14 0.16 0.48 0.65 0.76
Liquidity Ratios
Net Working Capital Rs2,500,459 Rs3,107,024 Rs3,847,747 Rs4,808,421 Rs6,025,721
Interest Coverage -2.17 1.96 2.18 2.96 4.07
Additional Ratios
Assets to Sales 0.44 0.23 0.3 0.37 0.44
Current Debt/Total Assets 11% 11% 35% 47% 55%
Acid Test 2.55 2.25 1.43 1.34 1.32
Sales/Net Worth 9.89 14.55 11.97 9.85 8.18
Dividend Payout 0 0 0 0 0



Appendix

Section Ommitted

Usually includes entrepreneur resumes and profiles. And market research information.



Sources

Section omitted.



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