January 2001

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 Table of Contents

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

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

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

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
 Ideal Business Support Services

1.0 Executive Summary

Ideal Business Support is a full-service support agency for the insurance industry. Ideal offers
a wide range of support services tailored for insurance agents. Ideal will specialize on a few
offerings, but can do almost anything. While the support service market is competitive, most
companies are generalists. Ideal will stand out by concentrating on the insurance niche.

Ideal has two strong competitive advantages. The first is industry knowledge of insurance.
Sarah Helpinghand, the owner, spent five years previous to Ideal working as an insurance
agent. This experience is priceless. Additionally, the value of networking based on Sarah's
previous insurance relationships will give Ideal a large leg up on the competition.

Lastly, Sarah will be designing an intensive training program to share her intellectual capital
regarding the insurance industry with the rest of her company. All employees with go through
this training.

Ideal is projected to reach profitability by month 11 and will have net profits of $44,000 by
year three.

Highlights (Planned)

$300,000

$250,000

$200,000

$150,000 Sales
Gross Margin
$100,000
Net Profit
$50,000

$0

($50,000)
2001 2002 2003

1.1 Objectives

The objectives for the first three years of operation include:

To create a service-based company whose primary goal is to exceed customers'

expectations.
The utilization of Ideal in at least 20 different insurance agents practices.
To increase the number of clients served by 20% per year through superior
performance.
To develop a sustainable start-up business that is profitable.

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 Ideal Business Support Services

1.2 Mission

Ideal Business Support's mission is to provide the highest quality support services for
insurance agent industry. We exist to attract and maintain customers. When we adhere to this
maxim, everything else will fall into place. Our services will exceed the expectations of our
customers.

2.0 Company Summary

Ideal Business Support Services, soon to be located in Salem, OR, will offer business support
services for the insurance industry. Ideal will concentrate on transcription, database
management, word processing and website development. These services will be offered to
insurance agents who do not have the staff to perform these functions. By providing these
services to the agents, the agents do not need to pay the overhead for the equipment,
personnel, and knowledge.

The business will be based in downtown Salem and will have four employees in addition to
Sarah Helpinghand, the founder and owner. Ideal is projected to reach profitability by month
11.

2.1 Company Ownership

Ideal Business Support Services is an Oregon corporation owned by Sarah Helpinghand.

2.2 Start-up Summary

Ideal Business Support Services have the following start-up expenses:

Computer system with three workstations, a printer, CD-RW, Microsoft Office, and
Microsoft Access.
Office furniture including four desks and chairs, three file cabinets.
Legal fees regarding business formation and generating and reviewing contracts.
Copier, fax, and two phone lines.
Website development.
Various office supplies.
Two laptop computers with Pentium processors and Microsoft Office Professional
version.
Transcription machine.

Please note that any equipment that will be used for more than a year will be considered a
long-term asset and will be depreciated using the straight-line method.

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 Ideal Business Support Services

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $1,000
Stationery etc. $100
Other $0
Total Start-up Expense $1,100

Start-up Assets Needed

Cash Balance on Starting Date $57,400
Other Short-term Assets $0
Total Short-term Assets $57,400

Long-term Assets $8,500

Total Assets $65,900
Total Requirements $67,000

Funding

Investment
Sarah $67,000
Other $0
Total Investment $67,000

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

Long-term Liabilities $0
Total Liabilities $0

Loss at Start-up ($1,100)

Total Capital $65,900
Total Capital and Liabilities $65,900

Start-up

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0
Expenses Assets Investment Loans

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 Ideal Business Support Services

3.0 Services

Ideal Business Support Services, as the name implies, offers support services for the insurance
industry. Ideal's service offerings will be diverse, however, it will be specializing in
transcription, database management, word processing, and website development and
maintenance.

These services will be typically used by insurance agents who do not have the need to have a
full-time person on payroll and the equipment in overhead. Ideal will be able to come in on
short notice and perform the tasks that are needed by the agent.

4.0 Market Analysis Summary

Ideal will be focusing on a very specific part of the business market, the insurance industry.
Within the industry there are two types of agents, exclusive agents that represent one specific
company, and insurance brokers who represent multiple insurance companies.

Everyone needs insurance. Some types, such as car insurance is mandate by law. Other types,
such as homeowners, just make good fiscal sense. For these reasons alone, the insurance
industry is going to be around for a while and it makes sense to concentrate on them.

Salem has several support service companies but none as focussed as Ideal and none with the
same industry knowledge that Ideal has.

4.1 Market Segmentation

The insurance market that is in need of support services can be broken down into two
segments:

Exclusive agents: these agents represent only one type of insurance, such as State
Farm. While the selection here is limited, the advantage of the exclusive agent is that
they have a strong relationship with their representative company which is good for
any claims issues. The stronger the relationship the agent has with the insurance
company, the more effective of a cheerleader they can be for you.
Insurance brokers: these agents do not have an exclusive contract with any one
insurance company. They can offer insurance from multiple companies. The advantage
of this set up is that they can offer a wider range of service offerings than an agent
who only sells one brand of insurance.

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 Ideal Business Support Services

Market Analysis (Pie)

Exclusive agents
Insurance brokers

Table: Market Analysis

Market Analysis
Potential Customers Growth 2001 2002 2003 2004 2005 CAGR
Exclusive agents 7% 78 83 89 95 102 6.94%
Insurance brokers 8% 123 133 144 156 168 8.11%
Total 7.66% 201 216 233 251 270 7.66%

4.2 Target Market Segment Strategy

Ideal Business Support Services is focusing on the insurance industry because the agents that
represent the insurance companies are often located in small offices. An insurance agent will
have one or two support staff in their office in addition to the agent. This is a perfect
atmosphere for a support agency because the services Ideal provides are typically out of the
field of expertise for the normal support staff.

Another reason for focusing on a specific industry is that it is easier to be competitive when the
focus of a business is narrow. Too often a business will stagnate when they try to do to many
different things to too many customers. A narrow focus is very beneficial for a company,
particularly one that is just starting up.

For these reasons, Ideal Business Support Services will concentrate on the insurance industry
to be able to quickly grow and obtain market share.

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 Ideal Business Support Services

4.3 Service Business Analysis

There are approximately 70-100 different insurance agents in the Salem area alone. While
some are in larger offices, many are one or two person agent offices. This high concentration
of small insurance agents is due to a previous historical trend where the service offering of
insurance was done at the local level by "someone you could trust." Recently there has been
the trend to offer insurance without an agent, via the phone or Internet. While this method of
service delivery has gained market share, there is no reason to believe that it will eclipse the
original agent-customer relationship. For many people, insurance is a very personal thing and
they are more comfortable to discuss insurance needs in person with an agent as opposed to
taking a chance and purchasing a commodity-like insurance over the phone or Internet. There
is significant value in having the agent who knows you personally as your advocate against the
insurance company if problems arise. For these reasons, the insurance agent will be around for
a long time to come.

4.3.1 Competition and Buying Patterns

The competition consists of many different support service companies that offer a very wide
range of service offerings. These companies replicate the offerings of Ideal, however none
target the insurance industry only.

The buying patterns of the agents mimic a long-term relationship. If they are happy they will
generally stay with the same service provider. The reasons for this is that there is generally a
break-in period where both parties spend time getting to know each other, and the different
needs each has. If this can be done upfront once and never again, then it is more cost
effective then jumping through the hoops each time.

5.0 Strategy and Implementation Summary

Ideal will use its sustainable competitive advantages to steadily gain market share. The first
advantage is based on extensive inside industry knowledge of the insurance field. The second
advantage is an already established network of contacts within the industry.

While these competitive advantages currently reside in Sarah's head as intellectual capital, it
will be downloaded to the organization through intensive training courses that Sarah is
designing and putting all employees through.

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 Ideal Business Support Services

5.1 Competitive Edge

Ideal's competitive edge is a very specific, deep industry knowledge of insurance. While having
this specific knowledge will preclude a lot of the market, it makes a small part of the market
quite attractive to you and your customers.

This deep industry knowledge is based on Sarah's five years spent as an independent
insurance agent. Sarah will then gather all of this intellectual capital and process it into a
training program so is is shared knowledge throughout the organization.

This approach is somewhat backwards relative to the norm for the support service industry.
Generally, the background of the company owner is from the support staff industry. They then
apply the support staff proficiencies to the industry of their different customers. Sarah believes
that the intricacies of the insurance industry are far more complex then that of the support
agency. Her rationale is that she can pick up the few things she does not know about support
much quicker than having to learn about each industry.

Sarah's industry access is valuable for networking as well. Having spent time in the industry,
Sarah developed many strong relationships with agents. Having established these relationships
previously created a trust bond that is significant when it comes to attempting to transform
the professional insurance relationship to a support service based relationship.

5.2 Sales Strategy

Ideal's sales strategy will based on closing the deal through a persuasive spiel detailing how
Ideal can provide a superior service relative to the competitor. Because Ideal is intimately
familiar with the industry, they can provide a superior service for the same cost.

This approach will only work with agents that have already decided to forgo an in-house
support staff and are trying to decide between a specific support staff.

Sarah will also be targeting newly registered agents who are making the decision whether to
have an in-house solution or to outsource the service. Although Sarah no longer sells
insurance, she has kept her license current. This allows her to be part of the various insurance
associations that agents typically belong to. By being an active member of the association, she
is able to do a lot of networking for her business. This develops new relationships with
insurance agents that she was not aware of before while in practice. Additionally, it allows her
to maintain relationships with all the agents that she was colleagues with previously. Sarah will
turn this access into contracts.

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 Ideal Business Support Services

5.2.1 Sales Forecast

The first month will be used to set up the office. This will include choosing the site, purchasing
furniture, and setting up the computer network. During this first month Sarah will be
contacting some of her former colleagues

The first week of the second month will be used for an intensive training of two of the support
staff. The last three weeks of the month will see some sales activity. Sales will steadily
increase from this point.

Month five will see the hiring of the final two support staff. They will also be trained during the
first week of the month and then will take on a work load.

Sales Monthly (Planned)

$20,000

$18,000

$16,000

$14,000

$12,000

$10,000 Exclusive agents

$8,000 Insurance brokers

$6,000

$4,000

$2,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Table: Sales Forecast (Planned)

Sales Forecast
Sales 2001 2002 2003
Exclusive agents $51,049 $112,548 $121,458
Insurance brokers $59,812 $125,745 $134,745
Total Sales $110,861 $238,293 $256,203

Direct Cost of Sales 2001 2002 2003

Exclusive agents $7,657 $16,882 $18,219
Insurance brokers $8,972 $18,862 $20,212
Subtotal Direct Cost of Sales $16,629 $35,744 $38,430

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 Ideal Business Support Services

5.3 Milestones

Ideal will have several milestones early on:

1. Business plan completion. This will be done as a roadmap for the organization. While
Ideal does not need a business plan to raise capital, it will be an indispensable tool for
the ongoing performance and improvement of the company.
2. Office set up.
3. Training program. This will be the development of a training program for the
employees.
4. Revenue of $50,000.

Table: Milestones (Planned)

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/01 2/1/01
Office set up 1/1/01 2/1/01
Training program 1/1/01 2/1/01
Revenue of $50,000 1/1/01 10/31/01
Totals $0

6.0 Management Summary

Sarah Helpinghand, founder and owner received her Bachelor degree in business management
from Willamette University. The summer of her last year she interned with State Farm
Insurance which has a large corporate headquarter in Salem. From this internship Sarah was
able to learn a lot about the insurance industry.

Upon graduation Sarah "fell into a job" through a contact at State Farm. Her friend knew an
insurance agent who was retiring and looking for someone to take over their practice. Sarah
came highly recommended and was offered the job. She readily accepted and spent five years
as an agent. Toward the end of her tenure as an agent she was getting a bit restless. She was
looking for a new challenge, something she could do all on her own. The idea one day dawned
on her that she could leverage her industry knowledge of insurance, and with the bit of
information she had about support services from college and create her own company.

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 Ideal Business Support Services

6.1 Personnel Plan

Sarah will be working full time for Ideal. Her responsibilities will be generating contracts,
training, payroll, customer service, and other back office tasks. During month two she will
bring on board two support specialists. The headcount will remain at three until month five
when the business generated will be too much for the two support staff and two more will be
hired. The support staff will be paid $12 an hour, several dollars more an hour than the market
rate. The purpose behind this is to protect Sarah's investment in training the staff. It costs too
much for her to invest time and money into training someone and have them leave after a few
months. Paying the staff more than market is her insurance to keep them with the company.

Table: Personnel (Planned)

Personnel Plan
2001 2002 2003
Sarah $30,000 $30,000 $30,000
Support staff $21,120 $23,040 $23,040
Support staff $21,120 $23,040 $23,040
Support staff $15,360 $23,040 $23,040
Support staff $15,360 $23,040 $23,040
Total Payroll $102,960 $122,160 $122,160

Total People 5 5 5
Payroll Burden $15,444 $18,324 $18,324
Total Payroll Expenditures $118,404 $140,484 $140,484

7.0 Financial Plan

The following sections will outline the important financial assumptions, key financial indicators,
break-even analysis, profit and loss, cash flow, and the balance sheet.

7.1 Important Assumptions

The following table highlights some of the important financial assumptions for Ideal.

Table: General Assumptions

General Assumptions
2001 2002 2003
Short-term Interest Rate % 10.00% 10.00% 10.00%
Long-term Interest Rate % 10.00% 10.00% 10.00%
Tax Rate % 25.00% 25.00% 25.00%
Expenses in Cash % 10.00% 10.00% 10.00%
Sales on Credit % 65.00% 65.00% 65.00%
Personnel Burden % 15.00% 15.00% 15.00%

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 Ideal Business Support Services

7.2 Break-even Analysis

The break-even analysis indicates $15,609 is needed in monthly revenue to break even.

Break-even Analysis

$10,000

$5,000

$0

($5,000)

($10,000)

($15,000)
$0 $4,800 $9,600 $14,400 $19,200 $24,000

Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 26
Monthly Sales Break-even $15,609

Assumptions:
Average Per-Unit Revenue $600.00
Average Per-Unit Variable Cost $90.00
Estimated Monthly Fixed Cost $13,268

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 Ideal Business Support Services

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

2001 2002 2003
Sales $110,861 $238,293 $256,203
Direct Cost of Sales $16,629 $35,744 $38,430
Other $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $16,629 $35,744 $38,430
Gross Margin $94,232 $202,549 $217,773
Gross Margin % 85.00% 85.00% 85.00%
Operating Expenses:
Advertising/Promotion $1,800 $1,300 $1,300
Travel $0 $0 $0
Miscellaneous $1,200 $1,200 $1,200
Payroll Expense $102,960 $122,160 $122,160
Payroll Burden $15,444 $18,324 $18,324
Depreciation $2,832 $2,832 $2,832
Leased Equipment $0 $0 $0
Utilities $1,500 $1,500 $1,500
Insurance $1,800 $1,800 $1,800
Rent $9,600 $9,600 $9,600
Contract/Consultants $0 $0 $0
------------ ------------ ------------
Total Operating Expenses $137,136 $158,716 $158,716
Profit Before Interest and Taxes ($42,904) $43,833 $59,057
Interest Expense Short-term $0 $0 $0
Interest Expense Long-term $0 $0 $0
Taxes Incurred $0 $10,958 $14,764
Extraordinary Items $0 $0 $0
Net Profit ($42,904) $32,875 $44,292
Net Profit/Sales -38.70% 13.80% 17.29%

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 Ideal Business Support Services

7.4 Projected Cash Flow

The following chart and table indicates projected cash flow.

Cash (Planned)

$60,000

$50,000

$40,000

$30,000
Net Cash Flow
$20,000 Cash Balance

$10,000

$0

($10,000)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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 Ideal Business Support Services

Table: Cash Flow (Planned)

Pro Forma Cash Flow 2001 2002 2003

Cash Received
Cash from Operations:
Cash Sales $38,801 $83,403 $89,671
From Receivables $54,370 $134,557 $163,674
Subtotal Cash from Operations $93,172 $217,959 $253,345

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
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $93,172 $217,959 $253,345

Expenditures 2001 2002 2003

Expenditures from Operations:
Cash Spent on Costs and Expenses $3,253 $6,210 $6,859
Wages, Salaries, Payroll Taxes, etc. $118,404 $140,484 $140,484
Payment of Accounts Payable $25,628 $52,575 $61,007
Subtotal Spent on Operations $147,285 $199,269 $208,350

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
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 $147,285 $199,269 $208,350

Net Cash Flow ($54,113) $18,690 $44,995

Cash Balance $3,287 $21,977 $66,971

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 Ideal Business Support Services

7.5 Projected Balance Sheet

The following table indicates the projected balance sheet.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

Assets
Short-term Assets 2001 2002 2003
Cash $3,287 $21,977 $66,971
Accounts Receivable $17,689 $38,023 $40,881
Other Short-term Assets $0 $0 $0
Total Short-term Assets $20,976 $60,000 $107,852
Long-term Assets
Long-term Assets $8,500 $8,500 $8,500
Accumulated Depreciation $2,832 $5,664 $8,496
Total Long-term Assets $5,668 $2,836 $4
Total Assets $26,644 $62,836 $107,856

Liabilities and Capital

2001 2002 2003
Accounts Payable $3,648 $6,965 $7,693
Current Borrowing $0 $0 $0
Other Short-term Liabilities $0 $0 $0
Subtotal Short-term Liabilities $3,648 $6,965 $7,693

Long-term Liabilities $0 $0 $0
Total Liabilities $3,648 $6,965 $7,693

Paid-in Capital $67,000 $67,000 $67,000

Retained Earnings ($1,100) ($44,004) ($11,129)
Earnings ($42,904) $32,875 $44,292
Total Capital $22,996 $55,871 $100,163
Total Liabilities and Capital $26,644 $62,836 $107,856
Net Worth $22,996 $55,871 $100,163

Page 15
 Appendix

Appendix Table: Sales Forecast (Planned)

Sales Forecast
Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Exclusive agents $0 $1,001 $1,204 $2,145 $3,454 $3,658 $4,258 $4,987 $6,254 $6,985 $8,125 $8,978
Insurance brokers $0 $1,325 $1,545 $2,785 $3,852 $4,141 $4,787 $6,235 $7,458 $8,325 $9,214 $10,145
Total Sales $0 $2,326 $2,749 $4,930 $7,306 $7,799 $9,045 $11,222 $13,712 $15,310 $17,339 $19,123

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Exclusive agents $0 $150 $181 $322 $518 $549 $639 $748 $938 $1,048 $1,219 $1,347
Insurance brokers $0 $199 $232 $418 $578 $621 $718 $935 $1,119 $1,249 $1,382 $1,522
Subtotal Direct Cost of Sales $0 $349 $412 $740 $1,096 $1,170 $1,357 $1,683 $2,057 $2,297 $2,601 $2,868

Page 1
 Appendix

Appendix Table: Personnel (Planned)

Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sarah $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Support staff $0 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920
Support staff $0 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920
Support staff $0 $0 $0 $0 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920
Support staff $0 $0 $0 $0 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920
Total Payroll $2,500 $6,340 $6,340 $6,340 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180

Total People 1 3 3 3 5 5 5 5 5 5 5 5
Payroll Burden $375 $951 $951 $951 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527
Total Payroll Expenditures $2,875 $7,291 $7,291 $7,291 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707

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 Appendix

Appendix Table: General Assumptions

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Short-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate % 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
Expenses in Cash % 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Sales on Credit % 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00% 65.00%
Personnel Burden % 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%

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 Appendix

Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $0 $2,326 $2,749 $4,930 $7,306 $7,799 $9,045 $11,222 $13,712 $15,310 $17,339 $19,123
Direct Cost of Sales $0 $349 $412 $740 $1,096 $1,170 $1,357 $1,683 $2,057 $2,297 $2,601 $2,868
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $0 $349 $412 $740 $1,096 $1,170 $1,357 $1,683 $2,057 $2,297 $2,601 $2,868
Gross Margin $0 $1,977 $2,337 $4,191 $6,210 $6,629 $7,688 $9,539 $11,655 $13,014 $14,738 $16,255
Gross Margin % 0.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%
Operating Expenses:
Advertising/Promotion $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Miscellaneous $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Payroll Expense $2,500 $6,340 $6,340 $6,340 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180 $10,180
Payroll Burden $375 $951 $951 $951 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527 $1,527
Depreciation $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236 $236
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125
Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Rent $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $4,436 $8,852 $8,852 $8,852 $13,268 $13,268 $13,268 $13,268 $13,268 $13,268 $13,268 $13,268
Profit Before Interest and Taxes ($4,436) ($6,875) ($6,515) ($4,662) ($7,058) ($6,639) ($5,580) ($3,729) ($1,613) ($255) $1,470 $2,987
Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($4,436) ($6,875) ($6,515) ($4,662) ($7,058) ($6,639) ($5,580) ($3,729) ($1,613) ($255) $1,470 $2,987
Net Profit/Sales 0.00% -295.57% -237.01% -94.55% -96.60% -85.12% -61.69% -33.23% -11.76% -1.66% 8.48% 15.62%

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 Appendix

Appendix Table: Cash Flow (Planned)

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

Cash Received
Cash from Operations:
Cash Sales $0 $814 $962 $1,726 $2,557 $2,730 $3,166 $3,928 $4,799 $5,359 $6,069 $6,693
From Receivables $0 $0 $806 $1,659 $2,543 $4,028 $4,920 $5,501 $6,634 $8,158 $9,467 $10,655
Subtotal Cash from Operations $0 $814 $1,768 $3,384 $5,100 $6,758 $8,086 $9,429 $11,433 $13,516 $15,535 $17,348

Additional Cash Received

Extraordinary Items $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
New Current Borrowing $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
New Long-term Liabilities $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
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $814 $1,768 $3,384 $5,100 $6,758 $8,086 $9,429 $11,433 $13,516 $15,535 $17,348

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Expenditures from Operations:
Cash Spent on Costs and Expenses $133 $167 $174 $206 $242 $249 $268 $301 $338 $362 $393 $419
Wages, Salaries, Payroll Taxes, etc. $2,875 $7,291 $7,291 $7,291 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707 $11,707
Payment of Accounts Payable $40 $1,203 $1,508 $1,573 $1,869 $2,181 $2,251 $2,423 $2,719 $3,051 $3,268 $3,541
Subtotal Spent on Operations $3,047 $8,661 $8,973 $9,071 $13,818 $14,138 $14,226 $14,431 $14,764 $15,120 $15,368 $15,668

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $3,047 $8,661 $8,973 $9,071 $13,818 $14,138 $14,226 $14,431 $14,764 $15,120 $15,368 $15,668

Net Cash Flow ($3,047) ($7,847) ($7,205) ($5,687) ($8,718) ($7,380) ($6,141) ($5,002) ($3,331) ($1,604) $167 $1,680
Cash Balance $54,353 $46,505 $39,301 $33,614 $24,896 $17,517 $11,376 $6,374 $3,043 $1,439 $1,606 $3,287

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 Appendix

Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

Assets
Short-term Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash $57,400 $54,353 $46,505 $39,301 $33,614 $24,896 $17,517 $11,376 $6,374 $3,043 $1,439 $1,606 $3,287
Accounts Receivable $0 $0 $1,512 $2,492 $4,038 $6,244 $7,286 $8,245 $10,038 $12,317 $14,111 $15,914 $17,689
Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Short-term Assets $57,400 $54,353 $48,017 $41,793 $37,652 $31,141 $24,802 $19,621 $16,412 $15,360 $15,550 $17,521 $20,976
Long-term Assets
Long-term Assets $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500 $8,500
Accumulated Depreciation $0 $236 $472 $708 $944 $1,180 $1,416 $1,652 $1,888 $2,124 $2,360 $2,596 $2,832
Total Long-term Assets $8,500 $8,264 $8,028 $7,792 $7,556 $7,320 $7,084 $6,848 $6,612 $6,376 $6,140 $5,904 $5,668
Total Assets $65,900 $62,617 $56,045 $49,585 $45,208 $38,461 $31,886 $26,469 $23,024 $21,736 $21,690 $23,425 $26,644

Liabilities and Capital

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Accounts Payable $0 $1,153 $1,456 $1,511 $1,796 $2,106 $2,171 $2,333 $2,617 $2,942 $3,151 $3,415 $3,648
Current Borrowing $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
Subtotal Short-term Liabilities $0 $1,153 $1,456 $1,511 $1,796 $2,106 $2,171 $2,333 $2,617 $2,942 $3,151 $3,415 $3,648

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,153 $1,456 $1,511 $1,796 $2,106 $2,171 $2,333 $2,617 $2,942 $3,151 $3,415 $3,648

Paid-in Capital $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000
Retained Earnings ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100) ($1,100)
Earnings $0 ($4,436) ($11,311) ($17,826) ($22,488) ($29,546) ($36,185) ($41,764) ($45,494) ($47,106) ($47,361) ($45,891) ($42,904)
Total Capital $65,900 $61,464 $54,589 $48,074 $43,412 $36,354 $29,716 $24,136 $20,406 $18,794 $18,539 $20,009 $22,996
Total Liabilities and Capital $65,900 $62,617 $56,045 $49,585 $45,208 $38,461 $31,886 $26,469 $23,024 $21,736 $21,690 $23,425 $26,644
Net Worth $65,900 $61,464 $54,589 $48,074 $43,412 $36,354 $29,716 $24,136 $20,406 $18,794 $18,539 $20,009 $22,996

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