Business plan for Entrepreneurial Project

PhotoSynthesis 10000 Millionaire Dr. Westerville, OH 43081 T 740-803-0952 F 740-816-2620 [email protected]

Business Plan

PhotoSynthesis

Business Plan 2

Table of ContentsExecutive Summary 4

Vision and Mission Statement 4

Industry Profile and Overview 4

Business Strategy 5

Company Goals and Objectives 5

SWOT Analysis 5

Company Products and Services 6

Core Products/Services Description 6

Value Added Products/Services 7

Marketing Strategy 9

Problem to be solved 9

Segmentation 9

Market Description 10

Marketing Plan 10

Pricing 11

Location and Layout 11

Location 12

Layout 12

Competitor Analysis 12

Description of Management Team 13

Financial Forecasts 14

Budget Plan 14

Summary of Cost 15

Income Statements 16

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Balance Sheets 17

Cash Flow Statements 19

Loan and Investment Proposal 20

Budget and Requested Funds 20

Exit Strategy and Cash Out 21

Appendices 22

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Executive Summary Digital photography has significantly changed the way people interact with their personal photos. The way

people manage their photographic memories now is a more streamlined and empowering experience to the average

consumer. This change has eliminated the need for boxes and folders of physical pictures, but many people still

have many old print photographs collecting dust. Time consuming to organize and tedious to display, physical

photos usually end up stacked away somewhere. Putting these pictures into elegant and beautiful displays such as

scrapbooks is costly both in time and money. To solve this problem we will use the advantages of digital

photography software and scanning technology. By digitizing physical photographs, they can be preserved forever

and easily compiled into pleasing presentations that are easily distributed to family and friends around the world. By

providing the technical equipment and expertise in these areas we eliminate the problem for the customer. By using

our services the customer will save valuable time, avoid great frustration, and come away with a finished product

that allows them to remember some of life's happiest moments forever.

Vision and Mission Statement

PhotoSynthesis LLC. is in the business of helping people protect and enhance their photographic memories in

a personal and respectful way. We understand the importance of each and every photograph. We support each

customers efforts to preserve and organize these memories. Through our technology, experience, and commitment

we will enable customers to take charge of their photo collections and enjoy them more thoroughly. We hope to

spread this personal service as far as we can by engaging other business owners and individuals in what we do and

allowing them to provide such services on their own. Our local retail presence will serve to anchor our business in

the community and allow positive personal interaction and collaboration. PhotoSynthesis is in a business that

preserves, a business that empowers, and a business that enriches our future.

Industry Profile and OverviewIndustry - Photo Finishing Laboratories (except One-Hour) - US

NAICS Code - 812921

This industry comprises establishments, known as commercial and professional photo finishing laboratories,

primarily engaged in developing film and making photographic slides, prints, and enlargements, on a large-scale

basis, typically for commercial clients, and providing specialty services not normally available from one-hour photo

finishing laboratories.

The photofinishing industry includes about 8,000 locations with combined annual revenue of $7 billion. The

industry is concentrated: the 50 largest companies hold more than 60 percent of the market. A typical store has

five employees and about $500,000 in annual revenue.

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Industry demand depends on consumer income. Profitability of individual companies is linked to marketing,

and, for photofinishers, efficiency of operations. Large companies can have economies of scale in purchasing and

operations. Small companies can compete successfully by offering superior service. The industry is fairly labor-

intensive: annual revenue per employee is about $100,000.

Business Strategy PhotoSynthesis will position itself within the market as a reasonably priced, high quality, excellent service

firm. We will be an approachable company for older clients and a complete solution for younger customers. Our

image should be focused around our locations. Unlike the big online scanning firms, a customer can come into the

store and talk with us about their photos. This interaction and proximity to the customer will allow us to provide a

higher level of service and also gain more of the trust of the customers.

Company Goals and Objectives1. Operational

• All orders should be completed within 5 business days of receiving the pictures.

• All customer inquiries will be answered within 24 hours of receipt.

• Make four new very personal customer contacts a day and add them to data base

• Call one former customer a day to make sure they are satisfied with our work and remind them of

upcoming promotions and new product releases.

• Post an operate a functional and stylish website

2. Financial Goals

• Generate positive cash flow in the 2nd year

• Be free of original debt by end of third year

• Make payroll

• Reach break even after the first year

3. Other Goals

• Sponsor and run one charity fundraiser a year held in and around our store.

SWOT Analysis1. Strengths

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• Local physical presence and ownership

• Personal contact between customer and company

• Ease of use for our service

• Complete solution to problem

2. Weaknesses

• Initial production capacity might be low

• Unknown brand in the local market

• Need to educate many customers about the service we provide

• Efficiencies lower than online competitors

3. Opportunities

• High growth through networking with local organizations (sports teams, churches)

• Contractual arrangements with organizations to scan their photos and maybe documents in future

• Being the first mover in the Columbus Market.

4. Threats

• Customers failing to take action on intentions to bring in pictures due to lack of motivation or

competitors actions.

• Improvement of consumer scanning technology

• Decreasing usage of film

• Passing on of the older generation

• Competitors value propositions

Company Products and ServicesCore Products/Services DescriptionPhotoSynthesis' core business revolves around three major product offerings:

1. Photo Scanning

PhotoSynthesis will scan print photos into digital format. Print photos of various sizes and print media will be

accepted. The digitized photos will be saved in industrial and consumer image formats. Customers will have the

option of choosing standard quality (JPEG) to high quality (TIFF) formats. Scanning of photos will be automated and

bulk

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processed with an imaging system from Kodak. By default, photos will be delivered on CDs and DVDs. Photos will

be accepted through PhotoSynthesis' store front and through mail.

2. Negative Scanning

Alongside print photo scanning, PhotoSynthesis will also digitize negatives. A separate automated negative

scanner will be used, but the customer provided with the same digital output options as the photo scanning

service. By default, photos will be delivered on CDs and DVDs. Negatives will be accepted through PhotoSynthesis'

store front and through mail.

3. VHS Digitization

PhotoSynthesis will also convert analog VHS videos into digital format. Various output options will be made

available, from compressed (AVI) to lossless (DVD) and high definition video formats. VHS tapes will be accepted

through PhotoSynthesis' store front and through mail.

At its core, PhotoSynthesis offers photo and video digitization services. By offering photo, negative, and VHS

digitization, PhotoSynthesis can offer a complete suite of products to customers. Since customers prefer to have all

related tasks completed conveniently at one location with the least hassle, PhotoSynthesis is positioned to take

advantage of this need. Moreover, this suite of services allows PhotoSynthesis to cross sell to customers. For

instance, a customer buying photo scanning services can be sold VHS digitization services. In addition to these

core services, customers will also be offered a host of value added services that are built atop these core offerings.

From a business perspective, these three related services will leverage and maximize the use of

PhotoSynthesis equipment and infrastructure. Although different scanners are required for the different services, the

output, storage, and retrieval interfaces are identical. Also, the skill set required for these services are similar. This

strategy enables PhotoSynthesis to spread its fixed costs over a larger base, keeping costs low. Additionally, with

this clear core definition, PhotoSynthesis will be able to focus its efforts to become the best in its class and achieve

a competitive advantage in photo, negative and VHS digitization.

Value Added Products/Services1. Digital photo album creation

As a way to increase the overall total value of each customer interaction we will offer a custom digital

photo album creation service. This service will be offered to all of our customers and will allow them to use their

newly digitized photos to create professional grade albums. Working with a professional photo management

specialist, customers will have a strong creative influence and the final word on how the album turns out. After

specifying what pictures they want in the album, the general theme, and any messages they may want to include,

our specialist will work to create a polished digital photo album that meets those desires. Through consultations via

email and face-to-face meetings, the customer and the photo specialist will together create a great piece that can

be shared with family and friends across the globe.

2. Retouching

To save on labor costs we will be using automated retouching software to quickly improve the overall

appearance and quality of the photos we scan en mass. But there are limits to our automated software and some

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pictures may need special attention. To address this need we will offer a special retouching service on top of thestandard retouching. Customers will select specific photos that they would like to be retouched beyond thestandard level. These pictures would be worked on individually by a digital photo specialist. They will be able toeliminate scratches and damages to the original photograph by "brushing" them out with advanced software likeAdobe Photoshop. Other improvements will include color enhancement, getting rid of yellow discoloration due toaging, and increasing picture clarity. With the technology available today even the oldest and most damagedphotographs can be returned to near new condition in a digital format that can be reprinted.

3. Photo Printing

For any photos that we scan we will also offer to professionally reprint them. This feature will allowcustomers to take very old and fragile photographs, have them retouched, and then re-printed on new paper. Thiswill extend the life of the photo and allow them to handle precious photographs without the worry of damagingthem. The costs of owning/operating a professional photo printing machine are very high so we will be outsourcingall printing activities to a photo printing business. This will allow us to offer this great feature while not incurring thecosts that such a venture would involve.

4. Transfer of scanned images onto user storage device

The management and distribution of the images after scanning is an important issue for our customers. Fora fee, we will transfer all of their scanned photos onto their personal storage device. This could include an externalhard drive or a flash drive. This will allow customers to choose how they want to receive their data.

5. Flash Drives

In addition to our standard DVD transfer service we will also offer to put the scanned images on a flash drivefor a fee. This will give the customer good portability and ease of use.

6. Proprietary Software

Having an entire photo collection digitized can be a great way to organize and manage personal memories.But working with all these photos on a computer can be overwhelming for some. Photo organization andmanagement software is extremely powerful but it can be very complicated to operate. Many of our customers donot have the time, desire, or technical knowledge to take full advantage of these tools. To allow our customers totake full advantage of their newly digitized photo collection we are going to create a new and innovative piece ofphoto organization software. The extremely intuitive visual interface based of the software will make photomanagement much easier and allow many of our target customers to enjoy their photos fully. Features will include :

• Name tagging

• Date tagging

• Location tagging

• Sorting options (Example: "show me all pictures of me and my brother")

• Chronological ordering

• Family tree via pictures

• Grouping by event or trip

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• Ability to attach notes to each picture

• Easy uploading to photo sharing sites

Marketing StrategyProblem to be solved

The focus of our business is to take print photographs and scan them into digital format so they can be

enhanced and compiled into professional slideshows, digital binders, and other storage and display options. By

using professional grade equipment we will ensure that our product/service is of the highest quality. After initially

scanning the photos we will be able to enhance the images by using photo editing software. After maximizing the

potential of each photo they can be compiled into several different display and storage formats. For display the

customer can work closely with one of our associates to create a personalized photo slideshow or digital

scrapbook. These finished products can be sent to family around the world as gifts. For storage the customer can

choose to have the photos and presentations placed on DVDs or USB drives. They may also choose to store their

photos and creations on-line where they will be accessible from anywhere.

Our physical storefront will serve as a place for customers to come in and drop off photos to be scanned.

They would also be able to work with us to create digital photo slideshows and albums. As we know that not all

customers will be able to make it into the store we will offer the option to send pictures to our facility to be

scanned via FedEx or UPS certified and insured boxes. Due to the digital nature of our work we could also work

with customers from across the country over the web while creating their slideshows and albums. The photos

would be scanned and either returned to the customer or saved off-site at a secure area with heavy fire prevention

systems.

Segmentation

Our target segment is young families and older parents or individuals who wish to preserve all their

childhood pictures or pictures of their young children. This segment also includes those who have numerous print

photos that need digitizing. Another segment is the individuals or families that do not have the time and or expertise

to digitize and edit photos.

For the opening of the first PhotoSynthesis location, our team has created a survey to collect data that

could help us better understand the consumers' wants and needs. Below are the key findings from the survey

answers:

• Those that are most interested in purchasing our services are parents in their 50s with household

annual income of $80,000 and above.

• 44% of the selected group has paid for digital photo scanning services before.

• 53% answered yes when asked if they use any online photo sharing services.

• 92% say their printed photos are important to them and that they could not bear to lose them.

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• 55% say their photographs are not safely stored.

• 78% say they have some but not all of their printed photos duplicated.

• 88% of the selected group they would consider using a service that digitally preserves photos.

• 69% of the group are willing to pay up to $100 for our service, 25% are comfortable within the

$100-200 range and the rest is willing to pay even more than $200.

• 85% of the group have thought of organizing their photos or scanning them.

• 95% people have not scanned all their printed photos.

• 74% say they do not have time to digitize their photos

• 87% agree that having all their photos digitally scanned would bring them great value.

Market Description

Right now the market for full service photo scanning and digital album creation is limited. There are

companies that offer scanning services but non offer comprehensive and personalized album creation services as

well. In addition many of these companies target other businesses by scanning paper documents. A market that is

closely related to our purposed segment is photo editing software for consumer use. There are hundreds of

programs out there that all claim to be the best way to organize and present your digital memories. What they all

have in common is the amount of time it takes to learn how to use them. We know our software backwards and

forwards and this allows the customer to focus on helping to create the most meaningful presentation possible. We

see older generations as a huge market niche that we can serve like no other business. Parents and Grandparents

trying to interact with their younger family members will find our personalized and sensitive service appealing. We

will help them to bridge the digital gap that often exists between generations.

Marketing Plan

1. Interactive Marketing

We will be using Yahoo, Google, and other online search services to promote our business. In particular,

every time when people search for specific keywords such as "photo scanning", our business would show up first

place in the results page, giving us more of the brand exposure needed to make our business a popular choice

among customers.

In addition, we will also be purchasing ad space on several websites that provide online photography

services such as Flickr or Photobucket. In so doing, we will be able to reach those photography-enthusiastic

audience who have a lot of potential to become our customers.

2. Traditional Marketing

Since the first PhotoSynthesis store will be located in central Ohio, we will be advertising our business on

several local newspapers and community newsletters such as The Columbus Dispatch or Delaware Gazette for at

least a

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year to make PhotoSynthesis a popular local household name. In addition, we will also promote PhotoSynthesis ona number of other photography, lifestyle and home magazines every quarter for a year to reach customers fromother areas.

Furthermore, we will be offering free trials for orders of 25 photos and fewer in the first three months ofoperation to create more incentives for people to try our services. We will also be visiting places such as school,retirement homes and churches to deliver presentation and demonstration on our products and services toencourage word-of-mouth communication.

Last but not least, during the first month of operation our company will send out 1000 postcards to potentialbusiness partners and customers in Ohio to introduce our business and services, and also to generate publicity.

PricingGeneral Pricing

0-500 Pictures 501-1000 Pictures 1001-2000 Pictures 2001 Pictures and Above

12.5 cents/picture 11 cents/picture 10 cents/picture Ask about pricing

Pricing of Add-On Features

Digital PhotoAlbum Creation

Retouching Photo Printing Data Transferto Customer’s

Device

Flash Drive Software

$150 for a singlecompletely

custom albumthat is 50 photosor less. Includes1 hard copy andDVD. Additionalhard copies andDVD editions canbe purchased as

well

$50dollars/photo,

Heavyrestoration

$25dollars/photo,

mediumrestoration

$15dollars/photo,

light restoration

Prices to bedetermined by

firm weoutsource to

$9.99 $14.99/flashdrive

$29.99

Location and LayoutLocation

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The first location of PhotoSynthesis will be opened in Westerville, Ohio. There are a number of reasons as towhy we chose this area to open our business. In particular, while Westerville is a well-established community ofprofessionals with steady income that could support our business, the city is also populated by elder residents whousually have a lot of photos and potential to become our customers. Therefore, this town would provide a perfecttest-market for us to test our business strategies and tactics. Moreover, the rental rates for a business office inWesterville is approximately $500/month. which is affordable for a start-up business like PhotoSynthesis.

Layout

Our office will be a 800 square feet room on the ground floor of a townhouse, which complies with theAmericans with Disabilities Act. The office space will be divided into two sections: one section is for studioworks/customer interactions while the other one will be used for storage and other logistics.

Competitor AnalysisScan My Photos International

http://www.scanmyphotos.com/

This is one of the largest companies in the market. They have been featured in such publications as The NewYork Times, The Wall Street Journal, The Chicago Sun-Times, USA Today, and CBS. They use the finest and mostadvanced scanning technology in the industry to achieve extremely high levels of efficiency. They use a Kodakscanner that cost 26k-29k dollars and can produce high quality scans of 750 photos in 5 minutes. They offer arange of services from VHS digitization to photo restoration. They were started in 1990 and have grown very strongin the market. They have one retail location, which is also their headquarters, in Irvine, California. The majority oftheir business is done through mail-in boxes. Customers purchase a box online and it is sent to their residence.They then fill the box with photos and mail it to scanmyphotos.com. This process has allowed them to keepoverhead cost down and have access to customers all over the country and even the world. Their pricing forregualr photo scanning is almost unbeatalbe at about 4 cents a scan. This is of coarse not where they are makingtheir money. The value-added services and products that come into play after the photos have been scanned arewhere the profit is found.

Larsen Digital Serviceshttp://www.slidescanning.com/

Based in Utah, this is a smaller company than scanmyphotos.com that was started in 1995. They pridethemselves for not outsourcing any work over seas. Everything they do is done in house and in the States. Theyoffer nearly all of the features and services as larger companies and are focused on providing great customerservice. Their prices are higher than scanmyphotos.com but they also are able to give a more personal experience.They have recently

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added and on-line organization tool that will allow customers to sort and name all the photos before they areburned onto DVDs. By accessing their photos online the customer can easily manage and organize them beforethey get them back from Larsen. This is a strong feature offered by Larsen. They have no retail space at this time.

Foto Bridgehttp://www.fotobridge.com/

Smaller private company that focuses on offering "all inclusive" pricing. They believe that customers valueknowing exactly how much they are going to be paying at the end so they price their products and services in areasonable way. They do many of the same things as bigger companies in terms of offering photos on DVDs andflash drives. In our opinion there is no clear point of differentiation for Fotobridge.

Dig My Picshttp://www.digmypics.com/

This company was started in 2002 by a couple who had got the idea after preserving their own family photos.In 2007 it had become a multi-million dollar company and had over 40 employees. They offer a completely uniquefeature in conjunction with their photo scanning service. It is called "Real Time Scanning" and it allows a customerto see their photos as they are being scanned as well as look at where their pictures are in the queue. This featureis unique in the industry and gives the customer greater comfort. Their pricing is wide ranging, but they offerdifferent levels of resolution to scan at and this causes a lot of the variation.

Description of Management TeamKey managers and employees

Duke, Nathaniel and David are three juniors from Ohio Wesleyan University. We would be the majorstakeholders and operators of the business. We would leverage our complementary skills and experience to createa competitive advantage for the business. Duke and Nathaniel would undertake sales, marketing, and operationalresponsibilities while David will be responsible for the technical and IT aspects of the business. Since digitalphotography, editing, and composition are beyond our core competencies, we would need to hire an artistic team.This team would include Ohio Wesleyan Junior and Photography major Taylor McCleneghan. Her knowledge ofphotography and training in photo editing software such as Adobe Photoshop will allow us to train others in thesesame areas and avoid having to pay for experience up-front.

Adviser

Rusty McClure - an Angel investor who has had a lot of experience in helping a start-up business

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Financial Forecasts Below are our financial forecasts for PhotoSynthesis in the first three years of operation, which includes a

budget plan, income statements, balance sheets and cash flow statements. We have also created three scenarios

in which our business will be underperforming, performing normally and outperforming respectively.

Budget Plan

Budget Plan

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1. Equipment

Computers

iMac (x2) $ 3,598PC (x1) 700

Storage & Backup

PowerVault DP500 2TB 3,000Networking

Dell Powerconnect 5424 Gigabit Switch 834Wiring facility, conduits, labor 500

Uninterrupted Power Supply

UPS/Generator 2,000Scanning Device

Kodak s1220 Photo Scanning System x 2 3,600Nikon Super CoolScan 5000 ED 1,200

Printing Device

HP Designjet 130nr Printer 1,500

Total Equipment Cost $ 16,932

2. Software

Adobe

Creative Suite 4 Design Premium $ 1,800Photoshop Lightroom 2 300

Total Software Cost $ 2,100

3. Facility Remodelling & Security Deposit

Labor & Materials $ 15,000Security Deposit ($1000 x 6 mo.) $6,000Total Renovation Cost $ 21,000

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4. Overhead ExpensesRent

Store Rental $ 1,000Utilities

Electricity 500Water 50

Office Supplies

Paper, Ink, Staples, etc… (first month only) 200Labor

Computer Imaging Contractor (x1) 2,000

Total Overhead Expense $ 3,750

5. Marketing Expense (per quarter)Interactive Marketing

Online Ads (Google, Yahoo, Social Webs) $ 500Traditional Marketing

Columbus Dispatch ($246/column inch) 2,952Delaware Gazette ($12/column inch) 48Photography Mag. ($990 every 1/6 page ad) 1,980Lifestyle Mag. (~$1000 every 1/6 page ad) 2,000Home Mag. (~$1000 every 1/6 page ad) 2,000Newsletter & Community Postings 1,000

Direct Mailing

Stamps (27cents x1000) 270Printing Cost (x1000 bundle) 120

Total Marketing Expense $ 10,870

6. Miscellaneous ExpenseExternalities Cost (5% of all operations) $ 2,732.60

Total Miscellaneous Expense $ 2,732.60

PROPOSED START-UP BUDGET $ 57,385

Summary of Cost

One Time CostsEquipment $ 16,932Software $ 2,100Facility Remodeling & Deposit $ 21,000

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Total $ 40,032

Monthly OverheadsRent $ 1,000Utilities $ 550Supplies $ 200Labor $ 2,000Marketing $ 3,623Miscellaneous $ 2,733 Total $ 10,106

Income Statements

PhotoSynthesis Income Statement [Underperform]

Year 1 Year 2 Year 3

Core Revenue $ 69,343 $ 143,314.26 $ 236,242.40Value Added Revenue $ 7,513 $ 15,973.51 $ 32,300.91 Total Revenue $ 76,856 $ 159,288 $ 268,543

COGS & SGA $ 121,271 $ 133,398 $ 146,738Depreciation $ 8,006 $ 10,006 $ 14,006Interest Expense $ 1,500 $ 1,500 $ 0Total Operating Expense $ 130,778 $ 144,905 $ 160,745 Operating Income $ (53,922) $ 14,383 $ 107,799

EBT $ (53,922) $ 14,383 $ 107,799Tax $ (18,873) $ 5,034 $ 37,730 Net Income $ (53,922) $ 9,349 $ 70,069

* Marginal Tax Rate 35%* Depreciation 5 year straight line

PhotoSynthesis Income Statement [Normal]




EBT $ (49,040) $ 63,281 $ 239,242

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Tax $ (17,164) $ 22,148 $ 83,735 Net Income $ (49,040) $ 41,133 $ 155,507


PhotoSynthesis Income Statement [Outperform]




EBT $ (43,285) $ 142,537 $ 482,410Tax $ (15,150) $ 49,888 $ 168,844 Net Income $ (43,285) $ 92,649 $ 313,567


Balance Sheets

PhotoSynthesis Balance Sheet [Underperform]

Year 0 Year 1 Year 2 Year 3Assets Current Assets Cash $ 49,968 $ 4,053 $ 13,408 $ 62,484 Accounts Receivable $ 0 $ 0 $ 0 $ 0 Inventory $ 0 $ 0 $ 0 $ 0 Total Current Assets $ 49,968 $ 4,053 $ 13,408 $ 62,484

Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032 Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019 Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013

Total Assets $ 90,000 $ 36,078 $ 45,427 $ 100,496

Liabilities Current Liabilities

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Accounts Payable $ 0 $ 0 $ 0 $ 0

Accruals $ 0 $ 0 $ 0 $ 0

Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0

Long Term Liabilities

Long Term Debt $ 0 $ 0 $ 0 $ 0

Total Liabilities $ 15,000 $ 15,000 $ 15,000 $ 0

Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000

Retained Earnings $ 0 $ (53,922) $ (44,573) $ 25,496

Total Equity $ 75,000 $ 21,078 $ 30,427 $ 100,496

Total Liabilities and Equity $ 90,000 $ 36,078 $ 45,427 $ 100,496

PhotoSynthesis Balance Sheet [Normal]

Year 0 Year 1 Year 2 Year 3

Assets

Current Assets Cash $ 49,968 $ 8,935 $ 50,074 $ 184,587

Accounts Receivable $ 0 $ 0 $ 0 $ 0

Inventory $ 0 $ 0 $ 0 $ 0

Total Current Assets $ 49,968 $ 8,935 $ 50,074 $ 184,587

Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032

Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019

Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013

Total Assets $ 90,000 $ 40,960 $ 82,093 $ 222,600

Liabilities

Current Liabilities


Accruals $ 0 $ 0 $ 0 $ 0

Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0




Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000

Retained Earnings $ 0 $ (49,040) $ (7,907) $ 147,600

Total Equity $ 75,000 $ 25,960 $ 67,093 $ 222,600


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PhotoSynthesis Balance Sheet [Outperform]

Year 0 Year 1 Year 2 Year 3Assets Current Assets Cash $ 49,968 $ 14,689 $ 107,344 $ 399,918

Accounts Receivable $ 0 $ 0 $ 0 $ 0

Inventory $ 0 $ 0 $ 0 $ 0

Total Current Assets $ 49,968 $ 14,689 $ 107,344 $ 399,918

Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032

Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019

Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013

Total Assets $ 90,000 $ 46,715 $ 139,364 $ 437,930

Liabilities

Current Liabilities


Accruals $ 0 $ 0 $ 0 $ 0

Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0




Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000

Retained Earnings $ 0 $ (43,285) $ 49,364 $ 362,930

Total Equity $ 75,000 $ 31,715 $ 124,364 $ 437,930


Cash Flow Statements

PhotoSynthesis Cash Flow Statement [Underperform]


Cash from Operating Activities: Net Income $ 0 $ (53,922) $ 9,349 $ 70,069

Depreciation $ 0 $ 8,006 $ 10,006 $ 14,006

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Changes in Working Capital $ 0 $ 0 $ 0 $ 0 Total Cash from Operating Activities $ 0 $ (45,915) $ 19,355 $ 84,076

Cash from Investing Activities:Capital Expenditures $ 0 $ 0 $ (10,000) $ (20,000) Total Cash from Investing Activities $ 0 $ 0 $ (10,000) $ (20,000)

Cash from Financing Activities:Debt $ 15,000 $ 0 $ 0 $ (15,000)Sale of Stock $ 75,000 $ 0 $ 0 $ 0Dividends $ 0 $ 0 $ 0 $ 0 Total Cash from Financing Activities $ 90,000 $ 0 $ 0 $ (15,000)

Net Cash Flow $ 90,000 $ (45,915) $ 9,355 $ 49,076

PhotoSynthesis Cash Flow Statement [Normal]


Cash from Operating Activities: Net Income $ 0 $ (49,040) $ 41,133 $ 155,507 Depreciation $ 0 $ 8,006 $ 10,006 $ 14,006 Changes in Working Capital $ 0 $ 0 $ 0 $ 0 Total Cash from Operating Activities $ 0 $ (41,033) $ 51,139 $ 169,514

Cash from Investing Activities:Capital Expenditures $ 0 $ 0 $ (10,000) $ (20,000) Total Cash from Investing Activities $ 0 $ 0 $ (10,000) $ (20,000)

Cash from Financing Activities:Debt $ 15,000 $ 0 $ 0 $ (15,000)Sale of Stock $ 75,000 $ 0 $ 0 $ 0Dividends $ 0 $ 0 $ 0 $ 0 Total Cash from Financing Activities $ 90,000 $ 0 $ 0 $ (15,000)

Net Cash Flow $ 90,000 $ (41,033) $ 41,139 $ 134,514

Loan and Investment ProposalBudget and Requested Funds

Detailed budget analysis (Appendix) puts PhotoSynthesis' startup costs at $57,385. To give a cash cushion

and to cover costs that were not budgeted, PhotoSynthesis will raise $90,000 for its initial cash infusion. The cash

will come from the following sources:

PhotoSynthesis

Business Plan 21

1. Personal Investments

As founding members of the business, Nathaniel Cook, David Khoo, and Thang Nguyen will each invest

$10,000 in personal funds into the business for a total of $30,000. Each member will source the money from

personal savings, families, friends, and credit cards.

2. Secured Bank Loans

PhotoSynthesis will borrow $15,000 from banks, secured by the equipment bought with the borrowed funds.

Given that PhotoSynthesis is a startup with no business history, rates would be high (around 10%). Hence,

PhotoSynthesis will seek to structure this $15,000 in borrowing as a short term loan (around 3 years) with the

option for early repayment.

3. Outside Investors

PhotoSynthesis will seek the remaining $45,000 in startup capital from outside investors. For their investment,

outside investors will be given an equity stake in the company. Each $3,000 investment will purchase a 1% stake in

PhotoSynthesis LLC, for a total of 15% offered for sale to investors. For use of these funds, investors will be repaid

according to the following schedule:

Funds used for 2 years: Payback 2 x initial investment




Exit Strategy and Cash Out PhotoSynthesis scales easily and quickly. As revenue grows, costs will be spread over a growing revenue

base, which significantly increases profitability. From the financial analysis, PhotoSynthesis will make a small profit

in the second year of its business in the under performing scenario. Moreover, by the third year, PhotoSynthesis will

have built a substantial cash position to pay off investors in cash, or through a combination of cash and debt in the

under performing scenario.

Although PhotoSynthesis is confident in its ability to pay investors back, investors can obtain a lucrative cash

out through the following scenarios:

1. Growth through Franchising

To further expand the business, PhotoSynthesis will franchise the business model. Managing many stores at

widespread locations is beyond the capability of management. Moreover, expanding would entail significant capital

commitments. Franchising will allow PhotoSynthesis to increase profit and reach without taking on much risk.

PhotoSynthesis will license the business concept, business practices, infrastructure expertise, marketing

campaigns, training, and software to independent print shops. Since these print shops are facing increasing

competition from "all in one" consumer office products, PhotoSynthesis' concept will give these prints shops a new

revenue source. Another possibility is franchising

PhotoSynthesis

Business Plan 22

or partnering with a large chain such as FedEx Kinkos to expand the business. Whichever possibility

PhotoSynthesis pursues, investors will stand to gain significantly as PhotoSynthesis' value grows through this

strategic plan.

2. Buyout

As PhotoSynthesis' increases in value through an established franchise network, it will become an attractive

buyout target. Given a reasonable buyout valuation, PhotoSynthesis would sell itself to buyer. In this scenario,

investors would profit handsomely from the stakes they hold in PhotoSynthesis.

AppendicesOn the next page is the summary of our survey