Ideal Business Plan2

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This is a business plan. It does not imply an offering of securities.



Table of Contents

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

1.1 Objectives............................................................................................................................... 2

1.2 Mission..................................................................................................................................... 2

1.3 Keys to Success.................................................................................................................... 3

2.0 Company Summary ................................................................................................................ 3

2.1 Company Ownership........................................................................................................... 4

2.2 Start-up Summary .............................................................................................................. 4

Table: Start-up......................................................................................................................... 5

3.0 Products ...................................................................................................................................... 5

4.0 Market Analysis Summary .................................................................................................. 11

4.1 Market Segmentation ....................................................................................................... 12

Table: Market Analysis......................................................................................................... 13

4.2 Target Market Segment Strategy ................................................................................. 14

4.3 Industry Analysis ............................................................................................................... 14

4.3.1 Competition and Buying Patterns ......................................................................... 14

5.0 Web Plan Summary............................................................................................................... 17

5.1 Website Marketing Strategy........................................................................................... 17

5.2 Development Requirements ........................................................................................... 17

6.0 Strategy and Implementation Summary ....................................................................... 18

6.1 SWOT Analysis.................................................................................................................... 18

6.1.1 Strengths ...................................................................................................................... 18

6.1.2 Weaknesses ................................................................................................................. 18

6.1.3 Opportunities............................................................................................................... 18

6.1.4 Threats .......................................................................................................................... 186.2 Competitive Edge............................................................................................................... 19

6.3 Marketing Strategy............................................................................................................ 19

6.4 Sales Strategy..................................................................................................................... 20

6 4 1 Sales Forecast 22



Table of Contents

Table: Personnel .................................................................................................................... 27

8.0 Financial Plan .......................................................................................................................... 27

8.1 Start-up Funding................................................................................................................ 27

Table: Start-up Funding ...................................................................................................... 27

8.2 Important Assumptions ................................................................................................... 28

8.3 Break-even Analysis ......................................................................................................... 28

Table: Break-even Analysis................................................................................................ 28

8.4 Projected Profit and Loss................................................................................................. 29

Table: Profit and Loss .......................................................................................................... 30

8.5 Projected Cash Flow.......................................................................................................... 32

Table: Cash Flow ................................................................................................................... 33

8.6 Projected Balance Sheet.................................................................................................. 34

Table: Balance Sheet ........................................................................................................... 34

8.7 Business Ratios................................................................................................................... 35

Table: Ratios ........................................................................................................................... 35

8.8 Long-term Plan ................................................................................................................... 36



Ideal Business Plan

1.0 Executive Summary

One of the nation's top interior designers, Dan Carithers of Atlanta, said, "If I had $500,000 tospend on a room, I'd spend $400,000 of it on the accessories . . . A sofa's a sofa, a rug a rug,but accessories are how you can sense what a person is all about. They are the most importantingredient in decorating . . . It's the accessories that create the "I'm home" feeling." Source: Atlanta Magazine Shops Fall 2001

The Scarlet Tassel is a start-up retail store offering eclectic home accessories and gifts toconsumers wanting to create a personalized home environment - that "I'm home" feeling. TheScarlet Tassel is planning to locate in the Sandy Springs/Lower Roswell area of Atlanta, Georgia

April of 2003, catering to middle- and upper-class consumers who look beyond the nationalhome accessory and gift chain stores for those expressions of individual personality and style.In addition to the offering of unique products, unparallel customer service, quality, value willcomplement the customer experience. In year 2, The Scarlet Tassel will develop its onlinepresence at www.thescarlettassel.com. In year 3, The Scarlet Tassel will move to e-commerce,shipping directly to its web customers. The Web will be an extension of the store concept - avirtual business card and portfolio for the company - its online "home."

Growth plans for The Scarlet Tassel include an expectation of total revenue of $626,000 in year1. Year 2 will develop services and marketing plans, in addition to the Web presence, so that a30% growth rate is realized. Year 3 expectations of further growth with development of e-commerce and continued awareness by the consumer are set at approximately 20%. It is thefeeling of both owners that these expectations are realistic and attainable.

Deirdre Staab and Shelly Dozier-Mckee, bring a combined 36 years of experience to thisventure with expertise that crosses merchandising, marketing, purchasing, forecasting,operations and direct import sourcing. The Scarlet Tassel, Inc. is an S corporation. Deirdre and

Shelly each have a 50% share of the business and an equity investment of $25,000 each. Anadditional $120,000 in funding is needed for asset purchases and start-up costs to make TheScarlet Tassel a reality.



Ideal Business Plan

1.1 Objectives

y Maintain a direct cost of sales of 45% or less, and gross margin of 55% or greater. y Maintain operating expenses to equal or less than that of plan. y Generate total revenue of $_______ in year 1. y Develop an Internet presence in year 2. y Take Internet presence to e-commerce in year 3. y

Realize an annual growth rate of approximately 30% in year 2. y Realize an annual growth rate of approximately 20% in year 3.

1.2 Mission

Company Mission A celebration of personal style, The ___ Store Name ______ is a store for the quality- andstyle-conscious consumer. Providing unique, luxuries and personal style accessories with

affordable price , we intend to generate a fair return to finance continued growth andexpanded community involvement.

Customer Creed The ____ Stroe Name ______will inform, inspire and show you, our customer, how to createan expression of yourself within your Through custom services, smart pricing and a sense



Ideal Business Plan

1.3 Keys to Success

Sell products that provide quality and value to the consumer while meeting needs for anexpression of personal style.

y PROVIDE custom services such as in-store media and personalized promotions so thatcustomers are retained to generate repeat purchases and make referrals.

y COMMUNICATE with our customer base through print newsapers advertising, word-of-mouth advertising, promotion of our community mission and via our website.

y ESTABLISH a visible, accessible and welcoming storefront and website to position us

as the premier choice for our products and services within the marketplace and beyond. y ENSURE through daily management practices the values of The ____ Store

Name ________ 's mission are followed so that a successful and growth-orientedbusiness is developed and maintained.

2.0 Company Summary

Privately owned and operated by ____ Owner Name __ and ___ Owner Name ____,

The___ Store Name _____is a newly established retail store offering stylish,unique, luxuriesand personal style accessories with affordable price to consumers wanting to create apersonalized edgy fashion appearance.

Located in the ______ Store Location _______ area of Jeddah ,Kingdom of Saudi Arabia ,The ____ Store Name ___ will cater to lower ,middle- and upper-class consumers who lookbeyond the national chain stores for edgy fashion and personal accessories.

After having established a successful and growth-oriented business, we look to expand our business to e-commerce during our third year of operation. This additional businesschannel will allow us to reach a broader customer base as well as expand the level of customer service and personalized services we are able to offer the consumer.

STORE LOCATION

The ___ Store Name _______ will be located in the _____ Store Location ______ of Jeddah, Kingdom of Saudi Arabia. With easy access from ____ Street Name ______,the ____ Store Location ___ area is well known throughout Jeddah city residants andattracts shoppers from many parts of the city. As a destination shopping area, consumerscome here because of the diversity of business venues available.

The ____ Store Name ____ looks to open a ____ Store Room __square foot store locatedi St L ti ll ff i hi h i ibilit d t bli h d f t t ffi





Ideal Business Plan

. This is proposed to be accomplished as follows:

y Owner's investment of $______. y Commercial loan of $__________, calculated at 10.5% for six years.

Table: Start-up

Start-up

Requirements

Start-up Expenses Legal $350Stationery etc. $50Rent $1,100Computer $300Payroll $1,200Design $2,000Franshise Fee $5,000Total Start-up Expenses $10,000

Start-up Assets

Cash Required $5,000Start-up Inventory $10,000Other Current Assets $16,050Long-term Assets $1,050Total Assets $32,100

Total Requirements $42,100



Ideal Business Plan

within Jeddah ciity. To do this we conducted an Online Shoppers Group. Held in __Month __,__Year __, the focus group was comprised of 10 women representing a diversity of backgrounds and lifestyles:

y 15-50 years of agey Independent business ownersy Single to marriedy Representing several ethnic groups

The objective of the focus group session was to gain insight into the following topics:

y Shopping experiencesy Store servicesy Product conceptsy Market and competitive awarenessy The retail concept that came to be known as The ____Store Name ____.

To solicit feedback, the group was asked a series of questions related to shopping, shoppingexperiences and store services. Additional feedback was gathered through a word associationgame focusing on the brand identity elements of stores in Jeddah city . Lastly the group wasshown the concept boards for our business and asked to describe what it represented to them.

The ideas gathered provided us with a wealth of information that helped to formulate anddefine the products, services and marketing strategies outlined in this plan. This focus groupwas a key element in establishing a successful blueprint for The ____Store Name ____.

PRODUCTS: The ____Store Name ____focuses on selling quality- and value-oriented personal

accessories and luxuries to the independent homeowner and decorating trade.

Our eclectic product mix will consist of products that allow for the successful combination of alot of different styles - blending the old with the new, the classic with the contemporary, thewild with the tame. Products will be showcased via lifestyle merchandising that inspires apersonalization of the home environment.

To support continued business expansion and growth, The Scarlet Tassel will firmly establish itsproduct identity through a narrow and focused product assortment in year 1. In year 2 and 3,the product offer will be expanded and enhanced with new product statements and a

broadening of the most profitable product categories. This approach will establish a brandidentity, allowing us to tailor our offering to meet the needs of our customers.

The following table identifies the categories for year 1 and beyond:

Category Year 1 Year 2 Year 3



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Decorative Accessories--Candles X

Accent Furniture--Shelving X

Accent Furniture--Footstools & Benches X

Accent Furniture--Bed & Bath X

Accent Furniture--Chairs X

Wall Decor--Framed Art X

Wall Decor--Wall Grills & Plaques X

Wall Decor--Mirrors X

Home Textiles--Accent Pillows & Throws X

Home Textiles--Accent Rugs X

Home Textiles--Tabletop Linens X

Special Occasion Gifts--Men's X

Special Occasion Gifts--Personal/Girlfriend X

Special Occasion Gifts--Housewarming X

Special Occasion Gifts--Baby X

Special Occasion Gifts--Hostess X

Personal Accessories--Bath & Body X

Personal Accessories--Tote Bags X

Personal Accessories--Cards & Stationery X

Personal Accessories--Personal Interest Books X

Personal Accessories--Jewelry X

Personal Accessories--Pet Interest X

Seasonal Decor--Valentines XSeasonal Decor--Halloween X

Seasonal Decor--Fall Harvest X

Seasonal Decor--Christmas X

Seasonal Decor--Other X

Garden Decor--Planters X

Garden Decor--Fountains X

Garden Decor--Accent Furniture X

Garden Decor--Garden Gifts X

Garden Decor--Miscellaneous Gifts X

Garden Decor--Statuary X

As an overview, each of the product categories will be represented as described below:



Ideal Business Plan

y Dried and silk floral arrangementsy Lamps including tabletop and floor lamps

Accent Furniture: Smaller, more unique furniture items used as accents with larger furniturepieces make up this product category with price-points ranging from $100 to $800.

y Occasional and accent furniturey Tablesy Shelvingy Footstools and benchesy Bed and bath accessories

Wall Decor: One of the fastest growing product categories in the home decorative market, ourwall decor offering will encompass a unique variety of items beyond traditional framed artwork.Price-points in the category will range from $25 to $200.

y Mirrorsy Framed arty Wall grills and plaques

Home Textiles: Known as the "soft elements" in the home decorative market, our home textileoffering will provide the finishing touches to a room or table setting. Price-points in thiscategory will range from $15 to $150.

y Accent pillowsy Accent rugsy Tabletop linens

Special Occasion Gifts: For unique gift giving occasions, our gift selection will allow ourcustomers to purchase items that reflect their personal sentiments and feelings for the giftgiving occasion and gift recipient. Price-points in this category will range from $10 to $80.

y Hostess giftsy Men's giftsy Personal/girlfriend giftsy Housewarming giftsy Baby gifts

Personal Accessories: Our personal accessory offering will encompass items that ourcustomers will use for themselves, enhancing their wardrobe, lifestyles and homeenvironments. Price-points in this category will range from $10 to $60.

y Bath and body products



Ideal Business Plan

y Giftable valentinesy Halloween decory Fall Harvest decory Christmas/New Years decory Other

Garden Decor: Allowing our customers to extend their living environments outdoors, ourdecorative garden offering will feature both decorative elements as well as functional elements.The accent pieces in this category will range in price-point from $25 to $300.

y Statuary

y Plantersy Fountainsy Small accent furniturey Garden giftsy Miscellaneous decorative

Focusing on offering products with quality, value, style and uniqueness, The Scarlet Tassel willutilize established vendors from four home decorative product markets to preview and purchaseproducts from: Atlanta International Gift & Home Furnishings Market, Dallas International Gift

and Home Accessories Show, New York International Gift Show and High Point InternationalHome Furnishings Market. One-of-a-kind products will be sourced through local artist andcraftsmen via major antique markets and craft shows.

SERVICES: To create a point of differentiation between The Scarlet Tassel and other retailersin the area, we will offer a variety of custom, personalized services that further enhance theproducts offered and shopping experience of our customers. Our service offering will provideone-on-one design inspiration for the customer, will allow the customer to shop in a variety of ways, and will support a broad consumer, business and design trade client base.

Customized Giftwrap: The signature gift wrap offered by The Scarlet Tassel will be the addedtouch that makes the gift special. The gift wrap will reinforce the brand image of the store.

Corporate Gift Program: As a business-to-business offering, our corporate gift program willallow a business to purchase fun and unique gifts for their client or employee at a 10%discount.

Gift Certificates: Making gift giving easy for a variety of occasions, The Scarlet Tassel willoffer gift certificates in a variety of denominations.

Gif i & i h i h h f dd b hd h l



Ideal Business Plan

our customer base will be greatly enhanced.

Creative Workshops: As a way to inspire and educate customers on "do-it-yourself"decorating projects, The Scarlet Tassel will offer a variety of educational workshops that willprovide hands-on techniques to decorate and adorn your home. Utilizing products sold in thestore, we look to enhance sales as well as make decorating easy for our customers.

"Makeover In A Day:" This unique service will provide the customer with "in-home"decorating assistance, re-creating a room or two in a customer's house within a day, utilizing

both the homeowner's existing pieces as well as incorporating new decorative pieces from TheScarlet Tassel. Exposing our products and services to the friends and family of customers willenhance our opportunity to attain new customers. This service program will be available tocustomers during year 2 of operation.

ASID Discount: Offered exclusively to the design trade, an ASID discount of 20% will beextended to Interior Designers.

Preferred Customer Shopping Events: As recognition of our best customers, we will holdpreferred customer shopping events allowing those customers to shop special days and hours,and receive personalized shopping assistance and special discount offers.

Newsletter: As a way to communicate with our customer base, we will publish a quarterlynewsletter that highlights design trends, new product offers, gift giving ideas and decorating

tips. This service program will be available to customers during year 2 of operation.

Customer Comment Card: To ensure that we are servicing our customers fully and offeringthe products they desire, we will provide a customer comment card where ideas and thoughtscan be expressed by the customer. Comments will be reviewed on a regular basis in an effort toenhance products and services.

Personal Shopper: The entire staff of The Scarlet Tassel will possess the skillset to personallyassist each customer with all of her shopping and decorating needs. As customers and salesassociates establish personal relationships, The Scarlet Tassel will be able to inform thecustomer about new product arrivals that might interest them as well as provide decorating andgift giving tips that are aimed at the unique and individual customer.



Ideal Business Plan

4.0 Market Analysis Summary

Launching a new business venture during tough economic times can prove challenging,however, through extensive research and analysis the following market findings and projectionssupport the launching of The Scarlet Tassel retail store in 2003.

While the U.S. economy and specific business sectors were hit by a stagnating economy during3rd and 4th quarter of 2001, the "gift industry" which includes the product categories of homedecorative accents, general gifts, collectibles, stationery and greeting cards, and seasonaldecorations suffered only a 1% drop generating sales of $54.6 billion against 2000 sales of $55.2 billion.

It has been reported in many industry trade publications that despite the downturn in theeconomy, American consumers are spending more and more of their disposable income on theirhome. The home decorative accents segment of the gifts industry continues to perform stronglyposting a 2.2% growth over 2000 and reaching $16.9 billion in sales.

As predicted by Unity Marketing, "the future of the gifts and home accents market is positivefor the next several years." Source: Unity Marketing, The Home Report 2001: The Market, TheCompetitors, The Trends

Closer to home, homeowners in the Sandy Springs/Lower Roswell area of Atlanta spent $1.8billion on home decorative products in the year 2000. We expect sales to continue to grow ashome ownership grows by 8.8% and 61% of homeowners reach a level of earnings above$60,000 per year by the year 2005. Source: CACI Marketing Systems for Georgia 2000Information Systems, The University of Georgia

The Pulse of the Industry

y "The home has become the most desired status symbol for Americans, and as such, agrowing portion of the American families' discretionary spending is budgeted for the home."Source: Unity Marketing, The Home Report 2001: The Market, The Competitors, The Trends

y "The home market has been transformed from a largely functional to a fashion business,thus allowing consumers to dress and decorate their houses like they dress and accessorizethemselves. Consumers are wanting products that reflect their tastes, values andsensibilities." Source: Unity Marketing, The Home Report 2001: The Market, The

Competitors, The Trends

y "In the past two years consumers spent more money on home furnishings than they did onclothes. Consumers are not just striving to make their homes more 'beautiful,' rather theyare seeking decorative items that can positively impact the mood and emotional climate of their home." Source: Unity Marketing, The Gifts and Decorative Accessories Report 2001:The Ma ket The Ind st The T ends



Ideal Business Plan

channels of operation will set themselves up for continued growth and success. The ScarletTassel plans to establish an e-commerce business segment in year 3 of operation.

The Market With More As a city with dominant growth in the southern region, the Atlanta retail marketplace continuesto benefit from the South's dominance over other regions in almost every indicator of growthand affluence.

y The South has more discretionary income dollars, leading the U.S. with 33.5%.y The South leads in households with $75,000+ income and $100,000+ income.y The South leads in projected growth of total personal income.y

The South leads in the number of housing starts at 39.1%.y The South generates more retail sales than any other U.S. region in every sales category.y The South is number one in sales of furniture and home furnishings.

Source: U.S. Department of Commerce, Bureau of Census, 2001

4.1 Market Segmentation

The ____Store Name ___intends to target specific market segments to generate sales.

BABY BOOMER S (age 38 to 56) still have kids at home, so they need bigger houses andpossessions to put in those houses. Their affluence is reaching its highest level.

GENER ATION X (age 24 to 37) is thriftier than previous generations, very home-oriented, andprefers more free time to more money.

ECHO BOOMER S (including people born between 1979 and 2005 - customers who have yet to

be born!) will be the most affluent young generation ever (they have access to the BabyBoomers' money), and they grew up with technology.

Market Segment Characteristics

y Within a 5 mile radius of the Sandy Springs/Lower Roswell area of Atlanta, the populationstatistics (age 0-59) encompassing the market segments targeted by The Scarlet Tasseltotalled 124,964 in 2000. A growth rate of 6.8% is projected through 2005.

y By market segment, The Scarlet Tassel's customer base will be represented as follows:o 33.0% Baby Boomerso 41.0% Generation Xo 26.0% Echo Boomers

y Targeting primarily female shoppers, 51.6% of the market segments targeted by TheScarlet Tassel are female with a growth projection of 6.8% through 2005.

y By race, The Scarlet Tassel's market segments will be represented as follows:

Id l B i Pl



Ideal Business Plan

excess of $60,000 per year represented 56.8% of total household earners. By 2005 thisnumber is projected to jump to 61.5% of total household earners.

Source: CACI Marketing Systems for Georgia 2000 Information Systems, University of Georgia

Who Is The Scarlet Tassel Customer?

y Middle to Upper Classy Primarily Femaley 15 - 50 Years of Agey Educated

y Homeownery Social, Enjoys Gatherings With Friendsy Family Orientedy Values the Comforts of Homey Relaxed and Approachable Lifestyley Quality Consciousy Value Consciousy Possesses Style Awareness

Table: Market Analysis

M arket Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR Male 3% 1,760,000 1,812,800 1,867,184 1,923,200 1,980,896 3.00%

Female 2% 1,440,000 1,468,800 1,498,176 1,528,140 1,558,703 2.00%

Total 2.55% 3,200,000 3,281,600 3,365,360 3,451,340 3,539,599 2.55%

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Ideal Business Plan

4.2 Target Market Segment Strategy

4.3 Industry Analysis

The state of the industry is being determined in a positive way by consumer attitudes andchanges in behavior. Following are a few observations:

y Having seen growth prior to September 11, 2001, the home decorative and gift industry isexperiencing continued success as Americans begin to refocus their priorities and place

more emphasis on the core values of home and family. This shift in priorities has drivenmany consumers to sprucing up their homes in a desire to make it more pleasing andpersonal.

y As consumers become more time-deprived, they are looking to shop at stores whose serviceofferings are as equal in quality and value as their product offerings.

y As consumers are overwhelmed with choices in their lives, they look for stores to offer themproducts that will enhance their lifestyle, make their lives more comfortable and provide

unique and uncommon product selections beyond the mass market retailers.

y More and more consumers are seeking independent retailers that offer them the feel of home with a more personalized shopping experience.

y In many cases, retail stores are beginning to "look alike" to many consumers. The morepersonal and interesting the product, the better it reflects your personality. Personalizationis making a huge difference. Eclectic doesn't just mean you have a mix of styles, it meansyou have things that are intensely personal and can reflect one's individual style and taste.

y In the service arena, making business easier for consumers is a winning element. Simplethings like offering convenient hours, free delivery, and easy return policy will win big pointsin the consumer's mind.

4.3.1 Competition and Buying Patterns

The home decorative and gift marketplace is a diverse arena encompassing many choices for

the consumer. While The Scarlet Tassel recognizes that our competition in the SandySprings/Lower Roswell areas comes in many shapes and sizes, our in-depth analysis of each, asoutlined below, has allowed us to identify our market strengths, areas of uniqueness andcompetitive edge. The following analysis reflects competition located within a three mile radius.

Hospitality House: Located in the Sandy Springs Plaza shopping center as well as severalothe locations in Atlanta this gift and deco ati e accesso ies sto e has established itself as a

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Ideal Business Plan

decorating style. The clientele that shops at Hospitality House tend to be older in age. Pricesrange from $10 for small gift items to $350 for a more formal decorative item. Hours of operation are Monday through Saturday 9:00 a.m. to 6:00 p.m. As they are closed on Sundays,

they are not taking advantage of the Sunday traffic the center draws.

What Fun: With a single location in the Sandy Springs Plaza shopping center, this highlywhimsical and eclectic gift store offers playful, comical and creative gifts for all occasions,serious or fun. Within the store, items are grouped by gift giving occasion or recipient such as,"For Him," "For Her," "Wedding," "Pet" or Birthday." Products range from fur coveredtelephones, novelty books and hand-painted pottery to a chair shaped like a shoe, lava lampsand novelty pet dishes. The store environment is colorful, festive, playful and fun, and

reinforces the store name and brand positioning. Opening price-points start at $5.00 and reach$250 on the high end.Establishing a brand position that resolves around elements of "fun," theyhave gone so far as to apply this to their store hours: Monday through Saturday 9:59 a.m. to6:01 p.m. and Sunday 12:01 p.m. to 4:59 p.m.

Store House: This national retail furniture chain store has many locations around Atlanta, withone located in the Sandy Spring Plaza shopping center. With the primary focus on large homefurnishing pieces, items within the store can be described as modern, classic and contemporary,with a distinct Scandinavian or Swedish style. The store offers furniture pieces for all rooms in

the home as well as a narrowed assortment of decorative accessories such as lamps, ceramics,and artwork and wall decor. As with the furniture, the decorative accessories are morecontemporary and modern in style. Observations indicate that the customer that shops at thisstore is younger to middle age with a distinct decorating style. Pricing starts at $50 for a smalldecorative accessory to $1,000's for larger furniture pieces. Interior decorating services areavailable for an additional fee. Store hours are Monday through Saturday from 9:00 a.m. to6:00 p.m. and Sunday 12:00 p.m. to 6:00 p.m.

Paper Affair: As the name indicates, the primary focus of this store is a large and diverse

offering of paper products: Stationery, cards, gift-wrap, invitations and announcements. One of many locations in Atlanta, the Sandy Spring Plaza store is a bit smaller than their typical store,thus offering less depth in all the product categories they carry. Cards, invitations andannouncements make up the largest percentage of the assortment and are further enhancedwith custom printing services available. A small offering of personal gifts such as writinginstruments, picture frames, books and bath and beauty products are also available. Holidaysare addressed with a narrow offering of themed gift and paper products specific to the season.Paper Affair attracts a broad demographic audience as their paper products address manylooks, styles, colors, formats and needs. Within the paper goods industry, their main

competitors are stores such as Swoozies, Papyrus, Crane and Queen's Paperie. Given the rangeof products offered, prices start at $1.25 for a greeting card to $40 for a picture frame.Following a company policy, all locations are open Monday through Friday 10:00 a.m. to 7:00p.m., Saturday, 10:00 a.m. to 6:00 p.m. and Sunday 12:00 a.m. to 5:00 p.m.

The Beaded Lizard: This independent jewelry and gift store has three locations in the Atlanta

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Ideal Business Plan

R oss Dress for Less: This National Discount Apparel and Accessories store is new to theSouthern region and Atlanta Area. The Sandy Springs store is newly opened (September 2002)and is of significant square footage. Primarily selling adult and kids apparel, personal

accessories and footwear the store does offer a selection of home decorative accessories andlinens. A majority of the items are overstocks or second quality items purchased in the marketfrom full price stores and are being sold at deep discounts. Quality levels tend to be lowerbecause of the price-point positioning and item selections limited given the source of goods. Acustomer purchasing from this store will not find any decorating inspiration or decoratingservices available. Ross attracts a wide customer base, primarily those looking for value anddiscount pricing. The store is open Monday through Sunday.

K-Mart: As a national chain discount store, K-Mart has a diverse product offering that appealsto consumers looking for value pricing. Product statements range from clothing and footwear toassemble-it-yourself furniture, lamps, mass marketed decorative accessories, household linensand electronics. Because of recent bankruptcy filings and stiff competition from Wal-Mart andTarget, K-Mart has lost market share.

Marshall's: Much like Ross Dress for Less, Marshall's is a national discount store offeringclothing, footwear and home products. They too purchase overstocks and "seconds" from theafter-market suppliers and offer them at heavily discounted prices. Selections are limited and

shopping is a "hunt-and-peck" experience. Items are positioned on shelves by category withlittle merchandising criteria applied other than get as much on the selling floor as possible. Thestore is open Monday through Sunday.

Target: This highly recognizable multi-channel discount store offers a wide range of productsand styles that appeal to a broad audience. Target has positioned itself as a source for thelatest styles and trends at value pricing. Offering clothing and footwear, home decor, cleaningsupplies, bath and beauty products, electronics, outdoor camping and sports equipments aswell as toys, Target is a one stop shopping source. Because they focus on offering the latest

trends and styles many of the gifts and home decorative products tend to be morecontemporary and modern in feel. Quality is acceptable but is not recognized as being trulylong lasting. Design inspiration is limited within the store and personalized services consist of ababy and wedding registry service. Store Hours are 8:00 a.m. to 10:00 p.m. Monday throughSaturday and 9:00 a.m. to 7:00 p.m. on Sundays.

Lakewood Antiques Mall: With a single store located in Sandy Springs, this antiques mallsupplements the Lakewood Antiques Fair that comes to Atlanta the second weekend of eachmonth. Set up with individual booths within a larger complex, the primary focus is on antiquefurnishing, accessories, rugs and garden decor. Because antiques reflect a unique decoratingstyle, this store does not have mass appeal. Pricing can range from $5.00 to many $1,000's forlarger furniture pieces. Each booth owner merchandises his or her own space so there is nopattern or style that flows throughout the store. Sales help is located at the front of the largesquare footage building so it is difficult to receive personalized assistance. This store is openMonday through Sunday.

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Ideal Business Plan

5.0 Web Plan Summary

In year 2, The Scarlet Tassel plans to develop a Web presence and in year 3, add e-commerceto its business model. The Scarlet Tassel's website, www.scarlettassel.com andwww.thescarlettassel.com, will be a secondary channel of business serving as virtual businesscard and portfolio for the company, as well as its online "home."

The website will showcase the product offer available for purchase, and provide design andtrend information appropriate to the home decorative market. Additional tips and inspirationalideas will focus on gifts and gift giving. To further show off its expertise, The Scarlet Tasselwebsite will provide a resources area, offering articles, research, product information and

website links of interest to its customers.

The Scarlet Tassel website will mirror the image and branding elements showcased in the storeand at the same time, keep up with the latest trends in user interface design. The key to thewebsite strategy will be combining a well designed front-end, with a back-end capable of capturing "hits" and customer data for use in future marketing endeavors.

5.1 Website Marketing Strategy

Market strategy in an Internet retail business depends on recognition of expertise by theconsumer. For The Scarlet Tassel, it will start with our existing brick-and-mortar store customerbase, informing them of our Internet presence and encouraging their word-of-mouthrecommendations to others. Further awareness will be heightened by utilizing search enginemarketing, banner advertising, and affiliates.

5.2 Development Requirements

Costs that The Scarlet Tassel will expect to incur with development of its website include:

Development Costs

y Upgrade to Celerant ARMS Internet Engine - $7,500.y Site Design - $3,000.y Site Implementation - Free. The Scarlet Tassel will utilize the programming services of

Andy Staab, husband and friend. Andy Staab has 20 years of experience in softwaredevelopment including custom programming, data management, and Web development. His

skills and services are profiled at his own website: www.programmerplus.com. The ScarletTassel is grateful for the significant cost savings and advice that this connection will provide.

Ongoing Costs

y Website name registration for both www.thescarlettassel.com and www.scarlettassel.com -

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6.0 Strategy and Implementation Summary

The Scarlet Tassel will leverage its expertise, product offer and marketing strategy to increase

its customer base while driving sales and profit. The following sections review the variousstrategies that will support this effort.

6.1 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within

the company, and describes the opportunities and threats facing Interior Views.

6.1.1 Strengths

y Strong relationships with suppliers that offer credit arrangements, flexibility,and response to special product requirements.

Excellent and stable staff, offering personalized customer service.Great retail space that offers flexibility with a positive and attractive, inviting atmosphere.Strong merchandising and product presentation.Good referral relationships with complementary vendors, local realtors, and some designers.

In-store complementary products through "The Window Seat" and "Antique Bureau" addinterest, stability and revenue.High customer loyalty among repeat and high-dollar purchase customers.

6.1.2 Weaknesses

y Access to additional operating capital. Cash flow continues to be unpredictable, and since April 2001, a periodic problem.

Owners are still climbing the "retail experience curve."Location is not in a heavily traveled, traditional retail area.Challenges of the seasonality of the business.

6.1.3 Opportunities

y Growing market with a significant percentage of our target market still notknowing we exist.

y

Strategic alliances offering sources for referrals and joint marketing activities to extend ourreach.y Promising activity from high levels of new home construction.y Changes in design trends can initiate home updating, and therefore, generate sales.y Increasing sales opportunities beyond our "100-mile" target area including several smaller

communities that have produced a faithful following of customers.Internet potential for selling products to other markets

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y Competition from a national store; or a store with greater financing orproduct resources could enter the market.

y

Catalog resources, including Calico Corners and Pottery Barn, with aggressively pricedtrend-setting fabric products including drapery, bedding, and slipcovers.Continued price pressure due to competition or the weakening market reducing contributionmargins.y Dramatic changes in design, including fabric colors and styles, creates obsolete or less

profitable inventory.

6.2 Competitive Edge

The Scarlet Tassel looks to establish itself competitively as a unique retail environment throughits product offering, the scope and level of services it provides, and the expertise of itsemployees.

PRODUCTS: Sourced through established manufacturers via international trade shows andone-of-a-kind specialty craft fairs, the products offered by The Scarlet Tassel will provide a highlevel of quality and value to the consumer. The range of products will be unique, with littlecrossover to other retailers within the Atlanta marketplace.

SERVICES: Connecting with the customer is a key focus for The Scarlet Tassel. Throughpersonalized design services, educational decorating workshops, gift registry, realtor programs,ASID discounts, gift certificates, gift wrap and preferred customer recognition programs, TheScarlet Tassel will provide a level of personalization not commonly found in today's hectic, massmarket. It is our desire that customers look to us as their valued resource to achieve apersonalized home environment.

EMPLOYEES: Employees of The Scarlet Tassel will enjoy a friendly, fair and creative work

environment, which respects diversity, new ideas and hard work. Development throughexperience and training will be a primary focus. It is our desire that employees are long-termensuring an expertise that will support the customer experience.

6.3 Marketing Strategy

In addition to price and item promotional announcements, The Scarlet Tassel will focus itsmarketing efforts via several key direct-to-consumer advertising vehicles:

Local and R egional Magazine Publications: Each of these advertising vehicles provides ademographic base that lines up nicely with that of The Scarlet Tassel.

Direct Mail Postcards: The Scarlet Tassel will look to increase consumer awareness, retainthe existing customer base and promote increased sales via seasonal postcard mailings These

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Website Marketing: As we establish our e-commerce business segment during year 3 of operation, we will support the business via search engine marketing, banner advertising, URLlinks and e-mail marketing on all correspondence. This third channel of business will increase

the customer base, sales potential and service opportunities provided by The Scarlet Tassel.

6.4 Sales Strategy

THE CUSTOMER The Scarlet Tassel will approach sales from a salesperson-customer relationship basis. All salesassociates will be trained and encouraged to assist customers in a personal manner, utilizingfirst names and asking the questions needed to provide the customers with the services they

desire. Gathering key customer information and seeking performance feedback on the productsand services offered will assist us in the following ways:

y Targeting our marketing efforts more effectively.y Developing product offers and merchandising formats that will increase sales.y Developing services that enhance the shopping experience.y Training and developing sales associates in order to effectively service the customer.y Increase awareness of The Scarlet Tassel within the retail consumer marketplace.y Develop future sales opportunities that allow for continued growth of the business.

THE PRODUCT In order to provide the customer with the most up-to-date home decorative and gift productson the market, we will attend international tradeshows which showcase all of the productsmanufactured within this category of business. Attending market will not only allow us toensure our product offer is current and up-to-date but will provide us with fresh, new storemerchandising and display ideas.

To stay abreast of market and product trends, we will utilize the following trade publications toreinforce and expand our knowledge base:

y Giftware Newsy Home Accents Todayy Home Decor Buyery Residential Lightingy Accessory Merchandisingy Gifts and Decorative Accessoriesy

Greetings etc.

MERCHANDISING Products will be showcased via lifestyle merchandising that inspires and promotes multiplepurchases. We look to create a strong visual impact creating an invitation to touch andpurchase.





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Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5 Watches $37.28 $37.28 $37.28 $37.28 $37.28

Bags $50.00 $50.00 $50.00 $50.00 $50.00Bracelets $8.85 $8.85 $8.85 $8.85 $8.85

Sunglasses $30.00 $30.00 $30.00 $30.00 $30.00

Shawls and Scarves $15.00 $15.00 $15.00 $15.00 $15.00

Sales Watches $54,690 $65,628 $67,597 $69,895 $73,390

Bags $101,050 $121,260 $124,898 $129,144 $135,602

Bracelets $12,280 $14,736 $15,178 $15,694 $16,479

Sunglasses $34,890 $41,868 $43,124 $44,590 $46,820

Shawls and Scarves $22,485 $26,982 $27,791 $28,736 $30,173Total Sales $225,395 $270,474 $278,588 $288,060 $302,463

Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5 Watches $11.18 $12.30 $12.55 $12.80 $13.06

Bags $25.00 $27.50 $28.05 $28.61 $29.18

Bracelets $0.89 $0.97 $0.99 $1.01 $1.03

Sunglasses $7.50 $8.25 $8.41 $8.58 $8.75

Shawls and Scarves $2.25 $2.48 $2.52 $2.57 $2.63

Direct Cost of Sales Watches $16,407 $21,657 $22,753 $23,997 $25,701

Bags $50,525 $66,693 $70,068 $73,899 $79,146

Bracelets $1,228 $1,621 $1,703 $1,796 $1,924

Sunglasses $8,723 $11,514 $12,096 $12,758 $13,664

Shawls and Scarves $3,373 $4,452 $4,677 $4,933 $5,283

Subtotal Direct Cost of Sales $80,255 $105,937 $111,297 $117,383 $125,717

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6.5 Milestones

The following table lists important milestones, with dates and persons primarily responsible forplanning, as well as budgets where applicable. Mentioned by first name in the table are a fewpersons whose expertise in their field of work are required to make The Scarlet Tassel a reality.They include:

y Bob Levine - Real Estate Agent, Coldwell Banker Commercialy

Jeff Burkholder - Graphic Artist, Burkholder Designsy Victor Moldovan, ASID - Store Planner & Designer, Moldovan Interior Designy Barry Brouner, CPA - Accounting & Tax Consultingy Steve Anderson - Attorney, Anderson & Dailey

Table: Milestones

M ilestones

Milestone Start Date End Date Budget Manager Department Name me 12/11/2010 12/12/2010 $0 ABC Department Name me 12/11/2010 12/12/2010 $0 ABC Department Name me 12/11/2010 12/12/2010 $0 ABC Department Name me 12/11/2010 12/12/2010 $0 ABC Department Name me 12/11/2010 12/12/2010 $0 ABC Department Name me 12/11/2010 12/12/2010 $0 ABC Department

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7.0 Management Summary

The ____Store Name ___ has a very strong, experienced and professional management teamin co-owners __Name ___ and ____Name ___, with 36 years of combined experience. Eachbrings to the business their own area of expertise leaving few gaps of knowledge.

__Name___, Co-Owner/Manager - Merchandising & Marketing Shelly has spent 17 years in the retail and catalog industry, with direct experience in men's and

women's apparel, footwear, personal accessories, gifts and home decor. She spent 10years with a large-scale industry-leading international retail and catalog company in the Seattlearea. Her extensive background has included positions such as buyer, senior buyer, director of merchandising and general merchandise manager. She has been responsible for strategicplanning and business management for business segments generating in excess of $400 millionannually, including new business development and implementation. Additionally, Shelly has fiveyears of off-shore sourcing and product development experience. Having spent extensive timein the home decorative marketplace, she is very familiar with the product lines, vendor baseand business elements utilized within the home decorative industry. Shelly has a Bachelor of

Arts degree from Washington State University, is married, 40 years old and a homeowner in theSmyrna, Georgia area.

__Name___, Co-Owner/Manager - Operations & Finance Deirdre is a 19 year veteran of the catalog industry, with direct experience in footwear,personal accessories, gifts and home decor. Her background has included positions such asb h d f h &



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$10.00 per hour. Atlanta Average Source: Atlanta Magazine, Salaries Survey 2002

y Year 3 Ending March, 2006 - Salaries for Deirdre and Shelly will be maintained at

$60,000 each. Current full-time and part-time employees will be provided salary reviewsand given appropriate salary increases - 4% has been factored in. A second full-timeemployee will be hired in April 2005 at the annual salary of $26,000, and a temporary part-time employee will be hired for the Holiday season, if needed.

Table: Personnel

P ersonnel P lan

Year 1 Year 2 Year 3 Year 4 Year 5 Marketing & Advertising $0 $0 $0 $0 $0

Merchandising & Store Planning $0 $0 $0 $0 $0

Purchasing & Numerical Analysis $0 $0 $0 $0 $0

Custoner Service $0 $0 $0 $0 $0

Operations & Accounting $0 $0 $0 $0 $0

Software & Computer Systems $0 $0 $0 $0 $0

Web Development: Front End $0 $0 $0 $0 $0

Web Development: Back End $0 $0 $0 $0 $0

Sales Force $9,600 $9,600 $9,600 $9,600 $9,600

Total People 7 7 10 10 10

Total Payroll $9,600 $9,600 $9,600 $9,600 $9,600

8.0 Financial Plan

The Scarlet Tassel's financial plan makes some critical assumptions that will determine thepotential for future success.

y The Economy. This could not be a better time to start a business as the economy reachesits lowest point of the business cycle and begins its trek back up. Consumer spending is up."The Commerce Department reported consumers had increased their spending by 1% inJuly, the largest advance in nine months." Source: The Wall Street Journal, "In Uneasy Times, Consumers Boost a Fragile U.S. Economy", September 3, 2002

y Owner Experience. A shorter learning curve will be brought to the business by Deirdreand Shelly due to their extensive backgrounds and in-depth market knowledge.

y Managed Costs. A clear understanding of the need to manage costs and forecast futureneeds so that the business is not "broad-sided" by the unexpected.

y Wise Purchases. Finding the right product, at the right price will enable the business tomeet planned margins and maintain inventory at an attractive level with a high turn rate.

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Start-up Expenses to Fund $10,000

Start-up Assets to Fund $32,100

Total Funding Required $42,100

Assets

Non-cash Assets from Start-up $27,100

Cash Requirements from Start-up $5,000

Additional Cash Raised $0

Cash Balance on Starting Date $5,000

Total Assets $32,100

Liabilities and Capital

Liabilities Current Borrowing $37,100

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $5,000

Total Liabilities $42,100

Capital

Planned Investment Owner $0

Investor Additional Investment Requirement $0

Total Planned Investment $0

Loss at Start-up (Start-up Expenses) ($10,000) Total Capital ($10,000)

Total Capital and Liabilities $32,100

Total Funding $42,100

8.2 Important Assumptions

8.3 Break-even Analysis

The Break-even Analysis in the table and chart following illustrate the number of units and retail $ sales thatTh S l t T l t k t b k h th

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Assumptions: Average Per-Unit Revenue $29.91

Average Per-Unit Variable Cost $10.65

Estimated Monthly Fixed Cost $2,500

8.4 Projected Profit and Loss

The projected Profit and Loss for three years is detailed in the table and charts following.Monthly projected Profit and Loss for year 1 is available in the Appendix. Some assumptionsand inclusions to be noted are:

y Accounting and Legal includes: CPA, attorney and payroll service costs.

y Insurance includes: Business property, liability and interruption and key person lifeinsurance. Health Insurance as an employee benefit will be considered in year 3 and is

reflected as such.

y Miscellaneous includes: Bank account fees, employment advertising, software maintenance,Web hosting, annual Internet name registration, software upgrades, annual search engineregistration when applicable, off-site data backup, and other.

M h t F 80% f t t l i i dit d l d l l t d t

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y Rent assumes 3,500 square feet of retail space is charged at fixed per square cost foot plustaxes, maintenance and insurance.

y Payroll taxes and workman's compensation were calculated at 12% of payroll.

y A 3% inflation factor was applied to select operation expenses for years 2 and 3.

y Marketing and advertising has been maintained for all three years at approximately 4.5% to6.5% of total revenue.

y Travel costs were increased by 20% in years 2 and 3 based on the assumption that thestate of the airline and hotel industries will recover from the current economic trends and

react with increased rates and as well, to allow for an additional employee to travel if needed.

Table: Profit and Loss

P ro Forma P rofit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5 Sales $225,395 $270,474 $278,588 $288,060 $302,463

Direct Cost of Sales $80,255 $105,937 $111,297 $117,383 $125,717

Other Costs of Sales $80,563 $80,563 $80,563 $80,563 $80,563

Total Cost of Sales $160,818 $186,500 $191,860 $197,946 $206,280

Gross Margin $64,577 $83,974 $86,728 $90,114 $96,183

Gross Margin % 28.65% 31.05% 31.13% 31.28% 31.80%

Expenses Payroll $9,600 $9,600 $9,600 $9,600 $9,600

Marketing/Promotion $18,000 $27,000 $28,350 $29,768 $31,256Depreciation $600 $0 $0 $0 $0

Rent $1,320 $2,430 $2,430 $2,430 $2,430

Utilities $480 $960 $960 $960 $960

$0

Total Operating Expenses $30,000 $39,990 $41,340 $42,758 $44,246

Profit Before Interest and Taxes $34,577 $43,984 $45,388 $47,357 $51,937

EBITDA $35,177 $43,984 $45,388 $47,357 $51,937Interest Expense $0 $0 $0 $0 $0

Taxes Incurred $0 $0 $0 $0 $0

Net Profit $34,577 $43,984 $45,388 $47,357 $51,937

Net Profit/Sales 15.34% 16.26% 16.29% 16.44% 17.17%

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8.5 Projected Cash Flow

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Table: Cash Flow

P ro Forma Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5 Cash Received

Cash from Operations Cash Sales $225,395 $270,474 $278,588 $288,060 $302,463

Subtotal Cash from Operations $225,395 $270,474 $278,588 $288,060 $302,463

Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0

Subtotal Cash Received $225,395 $270,474 $278,588 $288,060 $302,463

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations Cash Spending $9,600 $9,600 $9,600 $9,600 $9,600

Bill Payments $179,124 $229,039 $225,654 $231,937 $242,191

Subtotal Spent on Operations $188,724 $238,639 $235,254 $241,537 $251,791

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0

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

Dividends $0 $0 $0 $0 $0

Subtotal Cash Spent $188,724 $238,639 $235,254 $241,537 $251,791

Net Cash Flow $36,671 $31,835 $43,334 $46,523 $50,672

Cash Balance $41,671 $73,507 $116,841 $163,364 $214,036

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8.6 Projected Balance Sheet

The projected Balance Sheet for three years is detailed in the table following. Monthlyprojections for the first year Balance Sheet are available for review in the Appendix. Plannednumbers show that liabilities are expected to decrease approximately 40% by the end of year3, increasing owner's equity and net worth.

Table: Balance Sheet

P ro Forma Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5

Assets

Current Assets Cash $41,671 $73,507 $116,841 $163,364 $214,036

Inventory $29,745 $39,263 $41,250 $42,652 $44,785

Other Current Assets $16,050 $16,050 $16,050 $16,050 $16,050

Total Current Assets $87,466 $128,820 $174,140 $222,066 $274,870

Long-term Assets Long-term Assets $1,050 $1,050 $1,050 $1,050 $1,050

Accumulated Depreciation $600 $600 $600 $600 $600

Total Long-term Assets $450 $450 $450 $450 $450

Total Assets $87 916 $129 270 $174 590 $222 516 $275 320

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Long-term Liabilities $0 $0 $0 $0 $0

Total Liabilities $63,339 $60,709 $60,641 $61,210 $62,077

Paid-in Capital $0 $0 $0 $0 $0

Retained Earnings ($10,000) $24,577 $68,561 $113,949 $161,306

Earnings $34,577 $43,984 $45,388 $47,357 $51,937

Total Capital $24,577 $68,561 $113,949 $161,306 $213,243

Total Liabilities and Capital $87,916 $129,270 $174,590 $222,516 $275,320

Net Worth $24,577 $68,561 $113,949 $161,306 $213,243

8.7 Business Ratios

Table: Ratios

R atio Analysis

Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile Sales Growth 0.00% 20.00% 3.00% 3.40% 5.00% 11.45%

Percent of Total Assets Inventory 33.83% 30.37% 23.63% 19.17% 16.27% 36.35%

Other Current Assets 18.26% 12.42% 9.19% 7.21% 5.83% 26.03%

Total Current Assets 99.49% 99.65% 99.74% 99.80% 99.84% 88.24%

Long-term Assets 0.51% 0.35% 0.26% 0.20% 0.16% 11.76%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 72.05% 46.96% 34.73% 27.51% 22.55% 29.64%

Long-term Liabilities 0.00% 0.00% 0.00% 0.00% 0.00% 17.07%

Total Liabilities 72.05% 46.96% 34.73% 27.51% 22.55% 46.71%Net Worth 27.95% 53.04% 65.27% 72.49% 77.45% 53.29%

Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Gross Margin 28.65% 31.05% 31.13% 31.28% 31.80% 12.75%

Selling, General & Administrative Expenses 13.31% 14.79% 14.84% 14.84% 14.63% 6.12%

Advertising Expenses 7.99% 9.98% 10.18% 10.33% 10.33% 0.36%

Profit Before Interest and Taxes 15.34% 16.26% 16.29% 16.44% 17.17% 0.00%

Main Ratios Current 1.38 2.12 2.87 3.63 4.43 2.58

Quick 0.91 1.48 2.19 2.93 3.71 1.15

Total Debt to Total Assets 72.05% 46.96% 34.73% 27.51% 22.55% 50.91%

Pre-tax Return on Net Worth 140.69% 64.15% 39.83% 29.36% 24.36%

Pre tax Return on Assets 39 33% 34 03% 26 00% 21 28% 18 86%

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Total Asset Turnover 2.56 2.09 1.60 1.29 1.10 n.a

Debt Ratios

Debt to Net Worth 2.58 0.89 0.53 0.38 0.29 n.a Current Liab. to Liab. 1.00 1.00 1.00 1.00 1.00 n.a

Liquidity Ratios Net Working Capital $24,127 $68,111 $113,499 $160,856 $212,793 n.a Interest Coverage 0.00 0.00 0.00 0.00 0.00 n.a

Additional Ratios Assets to Sales 0.39 0.48 0.63 0.77 0.91 n.a Current Debt/Total Assets

72% 47% 35% 28% 23% n.a

Acid Test 0.91 1.48 2.19 2.93 3.71 n.a Sales/Net Worth 9.17 3.95 2.44 1.79 1.42 n.a Dividend Payout 0.00 0.00 0.00 0.00 0.00 n.a

8.8 Long-term Plan



Appendix

Sunglasses $585 $608 $630 $653 $675 $705 $735 $765 $795 $825 $855 $893



Page 2

Shawls and Scarves $149 $164 $182 $203 $225 $250 $277 $308 $342 $380 $423 $470

Subtotal Direct Cost of Sales $4,894 $5,172 $5,453 $5,762 $6,098 $6,444 $6,622 $7,030 $7,466 $7,931 $8,426 $8,958

Appendix

Table: Personnel



Page 3

Personnel Plan

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Marketing & Advertising $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Merchandising & Store Planning $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchasing & Numerical Analysis $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Custoner Service $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Operations & Accounting $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Software & Computer Systems $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Web Development: Front End $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Web Development: Back End $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales Force $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Total People 7 7 7 7 7 7 7 7 7 7 7 7

Total Payroll $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Appendix

Table: Profit and Loss



Page 4

Pro Forma Profit and Loss


Sales $14,010 $14,765 $15,545 $16,390 $17,300 $18,255 $18,476 $19,594 $20,777 $22,040 $23,391 $24,852

Direct Cost of Sales $4,894 $5,172 $5,453 $5,762 $6,098 $6,444 $6,622 $7,030 $7,466 $7,931 $8,426 $8,958

Other Costs of Sales $4,000 $4,360 $4,752 $5,180 $5,646 $6,154 $6,708 $7,312 $7,970 $8,688 $9,469 $10,322

Total Cost of Sales $8,894 $9,532 $10,206 $10,942 $11,744 $12,598 $13,330 $14,342 $15,436 $16,618 $17,896 $19,280

Gross Margin $5,117 $5,233 $5,339 $5,448 $5,556 $5,657 $5,146 $5,252 $5,341 $5,422 $5,495 $5,572

Gross Margin % 36.52% 35.44% 34.35% 33.24% 32.11% 30.99% 27.85% 26.80% 25.71% 24.60% 23.49% 22.42%

Expenses

Payroll $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Marketing/Promotion $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Depreciation $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50

Rent $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110

Utilities $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40

Total Operating Expenses $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Profit Before Interest and Taxes $2,617 $2,733 $2,839 $2,948 $3,056 $3,157 $2,646 $2,752 $2,841 $2,922 $2,995 $3,072

EBITDA $2,667 $2,783 $2,889 $2,998 $3,106 $3,207 $2,696 $2,802 $2,891 $2,972 $3,045 $3,122

Interest Expense $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

Net Profit $2,617 $2,733 $2,839 $2,948 $3,056 $3,157 $2,646 $2,752 $2,841 $2,922 $2,995 $3,072

Net Profit/Sales 18.68% 18.51% 18.27% 17.99% 17.66% 17.29% 14.32% 14.04% 13.67% 13.26% 12.81% 12.36%

Appendix

Table: Cash Flow



Page 5

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $14,010 $14,765 $15,545 $16,390 $17,300 $18,255 $18,476 $19,594 $20,777 $22,040 $23,391 $24,852

Subtotal Cash from Operations $14,010 $14,765 $15,545 $16,390 $17,300 $18,255 $18,476 $19,594 $20,777 $22,040 $23,391 $24,852

Additional Cash Received 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 Current 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 $14,010 $14,765 $15,545 $16,390 $17,300 $18,255 $18,476 $19,594 $20,777 $22,040 $23,391 $24,852

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Bill Payments $522 $15,662 $16,023 $16,083 $7,179 $17,313 $17,823 $18,045 $9,317 $19,644 $20,364 $21,148

Subtotal Spent on Operations $1,322 $16,462 $16,823 $16,883 $7,979 $18,113 $18,623 $18,845 $10,117 $20,444 $21,164 $21,948

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 Current 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

Subtotal Cash Spent $1,322 $16,462 $16,823 $16,883 $7,979 $18,113 $18,623 $18,845 $10,117 $20,444 $21,164 $21,948

Appendix

N t C h Fl $12 688 ($1 697) ($1 278) ($493) $9 321 $142 ($147) $749 $10 660 $1 596 $2 227 $2 904



Page 6

Net Cash Flow $12,688 ($1,697) ($1,278) ($493) $9,321 $142 ($147) $749 $10,660 $1,596 $2,227 $2,904

Cash Balance $17,688 $15,991 $14,713 $14,220 $23,541 $23,683 $23,536 $24,285 $34,944 $36,540 $38,767 $41,671



Documents

Ideal Business Plan2