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Clara's Hardware Store - Sample Plan

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This sample business plan was created using Business Plan Pro®-

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business planning software published by Palo Alto Software, Inc.

This plan may be edited using Business Plan Pro and is one of 500+
sample plans available from within the software.
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small and medium sized businesses, visit us at www.paloalto.com.
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This is a sample business plan and the names, locations and numbers may have been
changed, and substantial portions of the original plan text may have been omitted to
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Copyright © Palo Alto Software, Inc., 1995-2008. All rights reserved.

 Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in

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this business plan is confidential; therefore, reader agrees not to disclose it without the
express written permission of _______________.

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It is acknowledged by reader that information to be furnished in this business plan is in all
respects confidential in nature, other than information which is in the public domain through
other means and that any disclosure or use of same by reader, may cause serious harm or
damage to _______________.

Upon request, this document is to be immediately returned to _______________.

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___________________
Signature

___________________
Name (typed or printed)

___________________
Date

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This is a business plan. It does not imply an offering of securities.
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Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
 Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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7.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
 Clara's Hardware Store

1.0 Executive Summary

The demographics of home ownership has changed radically in the South Gate section of

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Gilmore. Today, over 40% of the area's homes are owned by women. In addition, 60% of the
area's rentals are owned by women. More often than not, it's a woman who will now head to
the hardware store for repair parts and advice. Today's hardware store, which more and more
are dominated by the mega-store chains, are cold, uninviting and usually involve more driving

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time. Clara's Hardware is uniquely positioned to take advantage of this new fact of life.
Conveniently located to serve the South Gate area, Clara's Hardware offers parts, material,
and advice to tackle any home repair, as well as lawn care. The focus is on helping the
customer identify what they want as soon as they enter the store.

Through the use of a selection of hardware goods, superior personal customer attention, and

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reasonable prices, Clara's Hardware will capitalize on this incredible opportunity. A location has
been secured that offers very good foot traffic and easy accessibility. The store will efficiently
lay out the store to increase sales and give the customers the upmost in attention. The
projected growth rate for Clara's Hardware is quite steady. The store will reach profitability by
month six and will have revenue of $100,000 by year three.

1.1 Mission
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The mission of Clara's Hardware is to offer quality hardware products in a customer-friendly
shopping environment. Our customers will get assistance quickly and will leave the store
prepared to get the job done right the first time. Clara's Hardware will also focus on
anticipating the seasonal needs of its customers and providing the best products at
competitive prices. Most importantly, Clara's Hardware will make the additional 15 minute
drive to a mega-hardware store, too far to go and too expensive to entertain.
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1.2 Keys to Success

• Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza
is very strong. The plaza's primary tenants are the area's successful supermarket, drug
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store, and appliance store. South Gate Plaza has easy access points on both of the
area's major cross streets and is the biggest shopping center in South Gate's
residental area. The closest hardware store to the South Gate area is a twenty minute
drive.

• Seasonal Products: Each season has it own unique demand on a homeowner. Clara's
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Hardware will focus on this pattern and bring in local customers by marketing these
items at competitive prices.

• Repair/Project Resource Area: The first section customers will find when they enter
is a repair/project resource area that they can use to plan repairs or projects. There
will be a repair/project resource person to answer questions and direct them to the
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section of store where the needed products are.

• In-Store Expertise: Store employees will be knowledgeable in home repairs/projects.

In addition, the repair/project resource area will be used to conduct short trainings and
demonstrations in home repair and home projects.

Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 1
 Clara's Hardware Store

Highlights (Planned)

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$1,400,000

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$1,200,000

$1,000,000

$800,000 Sales
Gross Margin

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$600,000
Net Profit
$400,000

$200,000

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$0
2003 2004 2005
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2.0 Company Summary

Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as
lawn care. The store's owner, Clara Johnson, has worked in the hardware industry for over ten
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years. Most recently, she was the shift manager at Home Depot located in Waterfront
Shopping Center. Her area of expertise was home repairs. She conducted four presentations a
week on all manner of home repair.

The business will make a profit in month six, and will grow steadily each consecutive month.
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2.1 Company Ownership

Clara's Hardware is owned by Clara Johnson.

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Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 2
 Clara's Hardware Store

2.2 Start-up Summary

The start-up cost of Clara's Hardware will consist primarily of inventory and display equipment.

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Clara Johnson will invest $80,000. She will also secure a $150,000 SBA loan.

Table: Start-up

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Start-up

Requirements

Start-up Expenses
Legal $1,000

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Stationery etc. $0
Brochures $0
Consultants $0
Insurance $0
Rent $3,000
Start-Up Inventory $50,000
Display Set-Up $5,000
Cash Reserve for Hiring $20,000

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Advertising $0
Other $0
Total Start-up Expense $79,000

Start-up Assets Needed

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Cash Balance on Starting Date $121,000
Other Short-term Assets $0
Total Short-term Assets $121,000

Long-term Assets $30,000

Total Assets $151,000
Total Requirements $230,000
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Funding

Investment
Clara Johnson $80,000
Silent Partner
Other $0
Total Investment $80,000

Short-term Liabilities
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Accounts Payable $0
Current Borrowing $0
Other Short-term Liabilities $0
Subtotal Short-term Liabilities $0

Long-term Liabilities $150,000

Total Liabilities $150,000
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Loss at Start-up ($79,000)

Total Capital $1,000
Total Capital and Liabilities $151,000
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Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 3
 Clara's Hardware Store

Start-up

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$160,000

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$140,000

$120,000

$100,000

$80,000

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$60,000

$40,000

$20,000

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$0
Expenses Assets Investment Loans
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3.0 Products

Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as
lawn care. The primary focus will be to satisfy the seasonal needs of the area's customers.
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• Fall/Winter: Weatherization projects.

• Spring: Garden/lawn projects/home improvement projects.
• Summer: Outdoor building projects.

4.0 Market Analysis Summary

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In the past ten years, most local hardware stores have closed due to the success of large
hardware mega-stores drawing away local customers. The attraction of the larger stores has
always been price and and a large inventory. Customers would rather drive 20 minutes and
make sure they will find what they want rather than drive five minutes and hope the local
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store will have it at a low price. Yet these same hardware mega-stores are sterile and not
customer-friendly. Customers can wander the aisles, aimlessly lost, looking for a two dollar
item. And when they do find the right section, they will most likely select the most popular
brand no matter how large the selection is. What these store offer in price and selection, they
lose in creating a confusing, frustrating maze for their customers.
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Clara believes that a local hardware store can provide a reasonable selection in the most
important product areas, be competitive in pricing, and offer the customer a shopping
environment that will assure repeat business.

Copyright © Palo Alto Software, Inc. 1995-2008 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com Page 4
 Clara's Hardware Store

4.1 Market Segmentation

Clara's Hardware will focus on three significant customer groups:

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• Women home owners: Many women home owners perform their own home repairs
and home improvement projects. Clara knows this first hand since she has helped
many of these women in mastering the skills needed to do the work successfully.

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Clara's Hardware will be uniquely designed to be responsive to the shopping
environment that will attract and retain this important customer group.

• Customers who need assistance in planning a project/repair: This customer

group can have the most frustrating experience in the hardware mega-stores. If they
can't make the scheduled demos or trainings, they are left to sort thing out with

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whoever they can flag down in the store help them. Clara's Hardware will be set-up to
provide resources and assistance as soon as they walk into the store.

• Local repair and home improvement professionals: The South Gate area
supports a good number of repair and home improvement professionals. Currently, the
hardware mega-stores have their business but Clara's Hardware can win a increasing

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share of this customer group through aggressive marketing. Time is money and if
Clara's Hardware can save them a trip outside the area, they will buy there.
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Table: Market Analysis

Market Analysis
Potential Customers Growth 2002 2003 2004 2005 2006 CAGR
Women Home Owners 10% 15,000 16,500 18,150 19,965 21,962 10.00%
New Repair/Project Customers 20% 40,000 48,000 57,600 69,120 82,944 20.00%
Repair/Home Improvement 5% 42 44 46 48 50 4.46%
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Professionals
Total 17.51% 55,042 64,544 75,796 89,133 104,956 17.51%

Market Analysis (Pie)

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Women Home Owners

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New Repair/Project Customers

Repair/Home Improvement Professionals
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 Clara's Hardware Store

5.0 Strategy and Implementation Summary

Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore

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Sun, to advertise. In addition, we will have a drawing for five $1,000 home improvement gift
certificates that can be redeemed at selected home improvement professionals. We will have
new drawings each week for the first eight weeks of the store's operation. Clara's Hardware
will use the drawings to make connections with the local home improvement professionals. It

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is our plan to recoup some of the gift certificate money in material purchases that will be made
by the home improvement professionals the winners select.

5.1 Competitive Edge

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Clara's Hardware's competitive edge is:

• Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza
is very strong. The closest hardware store to the South Gate area is a twenty minute

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drive.

• Seasonal Products: Each season has it own unique demand on a homeowner. Clara's
Hardware will focus on this pattern and bring in local customers by marketing these
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items at competitive prices.

• Repair/Project Resource Area: The first section customers will find when they enter
the store is a repair/project resource area that they can use to plan repairs or projects.
There will be a repair/project resource person there to answer their questions and
direct them to the section of store where the needed products are.
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• In-Store Expertise: Store employees will be knowledgeable in home repairs/projects.

In addition, the repair/project resource area will be used to conduct short trainings and
demonstrations in home repair and home projects.

5.2 Sales Strategy

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The sales strategy of Clara's Hardware is simple. First, create a shopping environment that will
create confidence in the customer that he or she will get the needed material, part, or
instructions to get the job done right the first time. Second, make the store easy to navigate,
so customer can get in and out as quickly as possible. Third, know your customer's seasonal
hardware needs and offer it at competitive prices.
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 Clara's Hardware Store

5.2.1 Sales Forecast

Clara's Hardware will hit the ground running in April.

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Table: Sales Forecast (Planned)

Sales Forecast
Sales 2003 2004 2005
Hardware $964,000 $1,090,000 $1,240,000

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Other $0 $0 $0
Total Sales $964,000 $1,090,000 $1,240,000

Direct Cost of Sales 2003 2004 2005

Hardware $474,000 $500,000 $612,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $474,000 $500,000 $612,000

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Sales Monthly (Planned)

$100,000

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$90,000
$80,000

$70,000
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$60,000

$50,000 Hardware

$40,000 Other

$30,000
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$20,000

$10,000

$0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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 Clara's Hardware Store

6.0 Management Summary

Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of

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Clara's Hardware.

6.1 Personnel Plan

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Clara's Hardware will have the following staff members:

• Manager.
• Assistant Manager.
• Office Manager/Accountant.

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• Checkers (full time and part time).
• Two Customer Assistants.
• Stockers (full time and part time).

Table: Personnel (Planned)

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Personnel Plan
2003 2004 2005
Manager $36,000 $40,000 $45,000
Assistant Manager $36,000 $39,000 $43,000
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Office Manager/Bookkeeper $36,000 $39,000 $42,000
Checkers $32,400 $35,500 $40,000
Customer Assistants $60,000 $68,000 $74,000
Stockers $39,600 $44,000 $48,000
Other $0 $0 $0
Total Payroll $240,000 $265,500 $292,000

Total People 9 9 9
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Payroll Burden $36,000 $39,825 $43,800

Total Payroll Expenditures $276,000 $305,325 $335,800
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 Clara's Hardware Store

7.0 Financial Plan

The following is the financial plan for Clara's Hardware.

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7.1 Break-even Analysis

The monthly sales break-even point is $50,526.

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Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 842

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Monthly Sales Break-even $50,526

Assumptions:
Average Per-Unit Revenue $60.00
Average Per-Unit Variable Cost $3.00
Estimated Monthly Fixed Cost $48,000

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Break-even Analysis

$20,000
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$10,000

$0

($10,000)

($20,000)
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($30,000)

($40,000)

($50,000)
$0 $12,000 $24,000 $36,000 $48,000 $60,000

Monthly break-even point

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Break-even point = where line intersects with 0

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 Clara's Hardware Store

7.2 Projected Profit and Loss

The following table and chart highlight the projected profit and loss for three years.

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Table: Profit and Loss (Planned)

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Pro Forma Profit and Loss
2003 2004 2005
Sales $964,000 $1,090,000 $1,240,000
Direct Cost of Sales $474,000 $500,000 $612,000
Other Production Expenses $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $474,000 $500,000 $612,000
Gross Margin $490,000 $590,000 $628,000

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Gross Margin % 50.83% 54.13% 50.65%
Operating Expenses:
Advertising/Promotion $75,000 $100,000 $100,000
Travel $0 $0 $0
Miscellaneous $0 $0 $0
Payroll Expense $240,000 $265,500 $292,000
Payroll Burden $36,000 $39,825 $43,800

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Depreciation $4,284 $4,285 $4,285
Leased Equipment $0 $0 $0
Utilities $6,000 $6,000 $6,000
Insurance $0 $0 $0
Rent $36,000 $36,000 $36,000
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Inventory $0 $0 $0
Contract/Consultants $0 $0 $0
------------ ------------ ------------
Total Operating Expenses $397,284 $451,610 $482,085
Profit Before Interest and Taxes $92,716 $138,390 $145,915
Interest Expense Short-term $0 $0 $0
Interest Expense Long-term $13,375 $10,500 $7,500
Taxes Incurred $23,802 $38,367 $41,525
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Extraordinary Items $0 $0 $0
Net Profit $55,539 $89,523 $96,891
Net Profit/Sales 5.76% 8.21% 7.81%

Profit Monthly (Planned)

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$20,000

$15,000

$10,000

$5,000
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$0

($5,000)

($10,000)
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($15,000)

($20,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

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 Clara's Hardware Store

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

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Table: Cash Flow (Planned)

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Pro Forma Cash Flow 2003 2004 2005

Cash Received
Cash from Operations:
Cash Sales $964,000 $1,090,000 $1,240,000
From Receivables $0 $0 $0
Subtotal Cash from Operations $964,000 $1,090,000 $1,240,000

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Additional Cash Received
Extraordinary Items $0 $0 $0
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of other Short-term Assets $0 $0 $0

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Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $964,000 $1,090,000 $1,240,000

Expenditures 2003 2004 2005

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Expenditures from Operations:
Cash Spent on Costs and Expenses $62,818 $69,087 $80,302
Wages, Salaries, Payroll Taxes, etc. $276,000 $305,325 $335,800
Payment of Accounts Payable $515,297 $616,784 $713,784
Subtotal Spent on Operations $854,115 $991,196 $1,129,886

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
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Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $30,000 $30,000 $30,000
Purchase Other Short-term Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Adjustment for Assets Purchased on Credit $0 $0 $0
Subtotal Cash Spent $884,115 $1,021,196 $1,159,886
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Net Cash Flow $79,885 $68,804 $80,114

Cash Balance $200,885 $269,689 $349,803
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 Clara's Hardware Store

Cash (Planned)

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$250,000

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$200,000

$150,000

$100,000 Net Cash Flow

Cash Balance

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$50,000

$0

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($50,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
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 Clara's Hardware Store

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

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Table: Balance Sheet (Planned)

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Pro Forma Balance Sheet

Assets
Short-term Assets 2003 2004 2005
Cash $200,885 $269,689 $349,803
Other Short-term Assets $0 $0 $0
Total Short-term Assets $200,885 $269,689 $349,803
Long-term Assets

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Long-term Assets $30,000 $30,000 $30,000
Accumulated Depreciation $4,284 $8,569 $12,854
Total Long-term Assets $25,716 $21,431 $17,146
Total Assets $226,601 $291,120 $366,949

Liabilities and Capital

2003 2004 2005

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Accounts Payable $50,062 $55,058 $63,997
Current Borrowing $0 $0 $0
Other Short-term Liabilities $0 $0 $0
Subtotal Short-term Liabilities $50,062 $55,058 $63,997
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Long-term Liabilities $120,000 $90,000 $60,000
Total Liabilities $170,062 $145,058 $123,997

Paid-in Capital $80,000 $80,000 $80,000

Retained Earnings ($79,000) ($23,461) $66,062
Earnings $55,539 $89,523 $96,891
Total Capital $56,539 $146,062 $242,952
Total Liabilities and Capital $226,601 $291,120 $366,949
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Net Worth $56,539 $146,062 $242,952

7.5 Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 5251, Hardware Stores, are shown for
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comparison.
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 Clara's Hardware Store

Table: Ratios (Planned)

Ratio Analysis
2002 2003 2004 Industry Profile

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Sales Growth 0.00% 13.07% 13.76% 6.00%

Percent of Total Assets

Accounts Receivable 0.00% 0.00% 0.00% 11.00%
Inventory 0.00% 0.00% 0.00% 48.50%

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Other Short-term Assets 0.00% 0.00% 0.00% 20.20%
Total Short-term Assets 88.65% 92.64% 95.33% 79.70%
Long-term Assets 11.35% 7.36% 4.67% 20.30%
Total Assets 100.00% 100.00% 100.00% 100.00%

Other Short-term Liabilities 0.00% 0.00% 0.00% 37.60%

Subtotal Short-term Liabilities 22.09% 18.91% 17.44% 30.00%

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Long-term Liabilities 52.96% 30.92% 16.35% 19.70%
Total Liabilities 75.05% 49.83% 33.79% 49.70%
Net Worth 24.95% 50.17% 66.21% 50.30%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.83% 54.13% 50.65% 33.80%

ro
Selling, General & Administrative Expenses 45.07% 45.92% 42.83% 21.10%
Advertising Expenses 7.78% 9.17% 8.06% 1.90%
Profit Before Interest and Taxes 9.62% 12.70% 11.77% 1.10%

Main Ratios
nP
Current 4.01 4.90 5.47 2.24
Quick 4.01 4.90 5.47 0.58
Total Debt to Total Assets 75.05% 49.83% 33.79% 57.30%
Pre-tax Return on Net Worth 187.64% 101.94% 63.15% 2.20%
Pre-tax Return on Assets 46.82% 51.14% 41.81% 5.30%

Business Vitality Profile 2002 2003 2004 Industry

Sales per Employee $107,111 $121,111 $137,778 $0
Pla

Survival Rate 0.00%

Additional Ratios 2002 2003 2004

Net Profit Margin 5.76% 8.21% 7.81% n.a
Return on Equity 98.23% 61.29% 39.88% n.a

Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 n.a
Collection Days 0 0 0 n.a
Inventory Turnover 0.00 0.00 0.00 n.a
ess

Accounts Payable Turnover 11.29 11.29 11.29 n.a

Total Asset Turnover 4.25 3.74 3.38 n.a

Debt Ratios
Debt to Net Worth 3.01 0.99 0.51 n.a
Short-term Liab. to Liab. 0.29 0.38 0.52 n.a
sin

Liquidity Ratios
Net Working Capital $150,823 $214,631 $285,806 n.a
Interest Coverage 6.93 13.18 19.46 n.a

Additional Ratios
Assets to Sales 0.24 0.27 0.30 n.a
Current Debt/Total Assets 22% 19% 17% n.a
Bu

Acid Test 4.01 4.90 5.47 n.a

Sales/Net Worth 17.05 7.46 5.10 n.a
Dividend Payout $0 0.00 0.00 n.a

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 Appendix

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Appendix Table: Sales Forecast (Planned)

Sales Forecast

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Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Hardware $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

m
Total Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005

a
Hardware $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

S
Subtotal Direct Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000

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 Appendix

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Appendix Table: Personnel (Planned)

Personnel Plan

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Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Manager $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $40,000 $45,000
Assistant Manager $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $39,000 $43,000

m
Office Manager/Bookkeeper $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $39,000 $42,000
Checkers $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $32,400 $35,500 $40,000
Customer Assistants $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $60,000 $68,000 $74,000

a
Stockers $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $39,600 $44,000 $48,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

S
Total Payroll $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $240,000 $265,500 $292,000

Total People 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
Payroll Burden $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $39,825 $43,800

o
Total Payroll Expenditures $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $276,000 $305,325 $335,800

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 Appendix

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Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

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Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
Direct Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000

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Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000

a
Gross Margin $25,000 $30,000 $35,000 $38,000 $43,000 $45,000 $50,000 $43,000 $45,000 $43,000 $40,000 $53,000 $490,000 $590,000 $628,000
Gross Margin % 50.00% 50.00% 50.00% 50.67% 50.59% 50.00% 50.00% 50.59% 50.00% 50.59% 50.63% 55.79% 50.83% 54.13% 50.65%

S
Operating Expenses:
Advertising/Promotion $20,000 $25,000 $5,000 $0 $5,000 $5,000 $0 $5,000 $0 $0 $5,000 $5,000 $75,000 $100,000 $100,000
Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Miscellaneous $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

o
Payroll Expense $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $240,000 $265,500 $292,000
Payroll Burden $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $39,825 $43,800

r
Depreciation $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $4,284 $4,285 $4,285
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 $6,000 $6,000

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Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $36,000 $36,000
Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

n
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $46,857 $51,857 $31,857 $26,857 $31,857 $31,857 $26,857 $31,857 $26,857 $26,857 $31,857 $31,857 $397,284 $451,610 $482,085

la
Profit Before Interest and Taxes ($21,857) ($21,857) $3,143 $11,143 $11,143 $13,143 $23,143 $11,143 $18,143 $16,143 $8,143 $21,143 $92,716 $138,390 $145,915
Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense Long-term $1,229 $1,208 $1,188 $1,167 $1,146 $1,125 $1,104 $1,083 $1,063 $1,042 $1,021 $1,000 $13,375 $10,500 $7,500
Taxes Incurred ($6,926) ($6,920) $587 $2,993 $2,999 $3,605 $6,612 $3,018 $5,124 $4,530 $2,137 $6,043 $23,802 $38,367 $41,525

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Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($16,160) ($16,146) $1,369 $6,983 $6,998 $8,413 $15,427 $7,042 $11,956 $10,571 $4,986 $14,100 $55,539 $89,523 $96,891
Net Profit/Sales -32.32% -26.91% 1.96% 9.31% 8.23% 9.35% 15.43% 8.28% 13.28% 12.44% 6.31% 14.84% 5.76% 8.21% 7.81%

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 Appendix

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Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005

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Cash Received
Cash from Operations:

m
Cash Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
From Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash from Operations $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000

a
Additional Cash Received

S
Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000

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Expenditures Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Expenditures from Operations:
Cash Spent on Costs and Expenses $4,280 $5,279 $4,527 $4,466 $5,464 $5,823 $6,122 $5,460 $5,469 $5,107 $5,066 $5,754 $62,818 $69,087 $80,302

n
Wages, Salaries, Payroll Taxes, etc. $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $276,000 $305,325 $335,800
Payment of Accounts Payable $1,284 $38,823 $47,284 $40,728 $40,493 $49,288 $52,497 $54,896 $49,144 $49,110 $45,952 $45,798 $515,297 $616,784 $713,784

la
Subtotal Spent on Operations $28,564 $67,101 $74,812 $68,194 $68,958 $78,111 $81,619 $83,356 $77,612 $77,217 $74,018 $74,553 $854,115 $991,196 $1,129,886

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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Principal Repayment of Current Borrowing $0 $0 $0 $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 $0 $0 $0
Long-term Liabilities Principal Repayment $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $30,000 $30,000 $30,000
Purchase Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

s
Purchase Long-term Assets $0 $0 $0 $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 $0 $0 $0

s
Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $31,064 $69,601 $77,312 $70,694 $71,458 $80,611 $84,119 $85,856 $80,112 $79,717 $76,518 $77,053 $884,115 $1,021,196 $1,159,886

e
Net Cash Flow $18,936 ($9,601) ($7,312) $4,306 $13,542 $9,389 $15,881 ($856) $9,888 $5,283 $2,482 $17,947 $79,885 $68,804 $80,114
Cash Balance $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803

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Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

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Assets
Short-term Assets Starting Balances Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005

m
Cash $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Short-term Assets $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803

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Long-term Assets
Long-term Assets $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000

S
Accumulated Depreciation $0 $357 $714 $1,071 $1,428 $1,785 $2,142 $2,499 $2,856 $3,213 $3,570 $3,927 $4,284 $4,284 $8,569 $12,854
Total Long-term Assets $30,000 $29,643 $29,286 $28,929 $28,572 $28,215 $27,858 $27,501 $27,144 $26,787 $26,430 $26,073 $25,716 $25,716 $21,431 $17,146
Total Assets $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949

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Liabilities and Capital
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005

r
Accounts Payable $0 $37,239 $45,926 $39,389 $38,854 $47,541 $50,660 $53,258 $47,503 $47,577 $44,433 $44,072 $50,062 $50,062 $55,058 $63,997
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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Subtotal Short-term Liabilities $0 $37,239 $45,926 $39,389 $38,854 $47,541 $50,660 $53,258 $47,503 $47,577 $44,433 $44,072 $50,062 $50,062 $55,058 $63,997

Long-term Liabilities $150,000 $147,500 $145,000 $142,500 $140,000 $137,500 $135,000 $132,500 $130,000 $127,500 $125,000 $122,500 $120,000 $120,000 $90,000 $60,000
Total Liabilities $150,000 $184,739 $190,926 $181,889 $178,854 $185,041 $185,660 $185,758 $177,503 $175,077 $169,433 $166,572 $170,062 $170,062 $145,058 $123,997

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Paid-in Capital $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000

la
Retained Earnings ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($23,461) $66,062
Earnings $0 ($16,160) ($32,306) ($30,937) ($23,954) ($16,956) ($8,543) $6,884 $13,926 $25,882 $36,453 $41,439 $55,539 $55,539 $89,523 $96,891
Total Capital $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952
Total Liabilities and Capital $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949

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Net Worth $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952

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