business plan for ecommerce startup

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Business plan for Gift store

Please Visit: www.Enterslicellp.comFree Download

Requests for Investor Ready Business plan with deck and projectionsin excel , Business valuation , SEED / Series A funding. Please emailyour questions / request to the Startup support department ofEnterslice Value advisors LLP at [email protected]. For moreinformation please visit our Website: www.enterslicellp.com

Copyright © Enterslice, LLP., 2013-2016 All rights reserved.

Noida: California

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Confidentiality Agreement

The undersigned reader acknowledges that the information provided in this business plan isconfidential; therefore, reader agrees not to disclose it without express written permission.

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

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

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____________________________Date

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

Table of Contents

Page 1

1.0 Executive Summary ........................................................................................................................... 1Chart: Highlights.............................................................................................................................. 1

1.1 Objectives ........................................................................................................................................ 11.2 Mission............................................................................................................................................. 21.3 Keys to Success ............................................................................................................................... 2

2.0 Company Summary........................................................................................................................... 22.1 Company Ownership .................................................................................................................... 22.2 Startup Summary ........................................................................................................................... 2

Table: Startup.................................................................................................................................... 3Chart: Startup ................................................................................................................................... 4

2.3 Company Locations and Facilities............................................................................................... 43.0 Products............................................................................................................................................... 5

3.1 Product Description ....................................................................................................................... 53.2 Competitive Comparison.............................................................................................................. 53.3 Sales Literature ............................................................................................................................... 53.4 Sourcing........................................................................................................................................... 53.5 Technology...................................................................................................................................... 53.6 Future Products .............................................................................................................................. 5

4.0 Market Analysis Summary ............................................................................................................... 54.1 Market Segmentation .................................................................................................................... 6

Table: Market Analysis.................................................................................................................... 6Chart: Market Analysis (Pie) .......................................................................................................... 6

4.2 Target Market Segment Strategy ................................................................................................. 74.2.1 Market Needs .......................................................................................................................... 74.2.2 Market Trends ......................................................................................................................... 74.2.3 Market Growth ........................................................................................................................ 7

4.3 Industry Analysis ........................................................................................................................... 74.3.1 Industry Participants .............................................................................................................. 74.3.2 Distribution Patterns .............................................................................................................. 74.3.3 Competition and Buying Patterns ........................................................................................ 74.3.4 Main Competitors ................................................................................................................... 8

5.0 Web Plan Summary ........................................................................................................................... 85.1 Website Marketing Strategy ......................................................................................................... 85.2 Development Requirements ......................................................................................................... 8

6.0 Strategy and Imlpementation Summary ........................................................................................ 86.1 SWOT Analysis .............................................................................................................................. 8

6.1.1 Strengths................................................................................................................................... 86.1.2 Weaknesses .............................................................................................................................. 86.1.3 Opportunities........................................................................................................................... 86.1.4 Threats ...................................................................................................................................... 8

Table of Contents

Page 2

6.2 Strategy Pyramid............................................................................................................................ 96.3 Value Proposition........................................................................................................................... 96.4 Competitive Edge........................................................................................................................... 96.5 Marketing Strategy ........................................................................................................................ 9

6.5.1 Positioning Statement............................................................................................................. 96.5.2 Pricing Strategy ....................................................................................................................... 96.5.3 Promotion Strategy ................................................................................................................. 96.5.4 Distribution Strategy .............................................................................................................. 96.5.5 Marketing Programs ............................................................................................................. 10

6.6 Sales Strategy ................................................................................................................................ 106.6.1 Sales Forecast ......................................................................................................................... 10

Table: Sales Forecast .................................................................................................................. 10Chart: Sales Monthly ................................................................................................................. 11Chart: Sales by Year ................................................................................................................... 11

6.6.2 Sales Programs ...................................................................................................................... 116.7 Strategic Alliances ........................................................................................................................ 126.8 Milestones ..................................................................................................................................... 12

Table: Milestones............................................................................................................................ 12Chart: Milestones ........................................................................................................................... 12

7.0 Management Summary ................................................................................................................... 137.1 Organizational Structure............................................................................................................. 13

Org. Chart: Organizational Chart ................................................................................................ 137.2 Management Team ...................................................................................................................... 137.3 Management Team Gaps ............................................................................................................ 137.4 Personnel Plan .............................................................................................................................. 13

Table: Personnel ............................................................................................................................. 148.0 Financial Plan ................................................................................................................................... 15

8.1 Startup Funding ........................................................................................................................... 15Table: Startup Funding.................................................................................................................. 15

8.2 Important Assumptions .............................................................................................................. 168.3 Key Financial Indicators.............................................................................................................. 16

Chart: Benchmarks......................................................................................................................... 168.4 Break-even Analysis .................................................................................................................... 17

Table: Break-even Analysis .......................................................................................................... 17Chart: Break-even Analysis .......................................................................................................... 17

8.5 Projected Profit and Loss ............................................................................................................ 18Table: Profit and Loss .................................................................................................................... 18Chart: Profit Monthly .................................................................................................................... 19Chart: Profit Yearly ........................................................................................................................ 19Chart: Gross Margin Monthly ...................................................................................................... 20

Table of Contents

Page 3

Chart: Gross Margin Yearly.......................................................................................................... 208.6 Projected Cash Flow .................................................................................................................... 21

Table: Cash Flow ............................................................................................................................ 21Chart: Cash...................................................................................................................................... 22

8.7 Projected Balance Sheet ............................................................................................................... 23Table: Balance Sheet....................................................................................................................... 23

8.8 Business Ratios ............................................................................................................................. 24Table: Ratios.................................................................................................................................... 24

8.9 The Investment Offering ............................................................................................................. 25Table: Investment Offering ........................................................................................................... 25

8.10 Valuation ..................................................................................................................................... 26Table: Investment Analysis .......................................................................................................... 26

8.11 Use of Funds ............................................................................................................................... 27Table: Use of Funds ....................................................................................................................... 27

8.12 Payback........................................................................................................................................ 27Table: Payback ................................................................................................................................ 27Chart: Payback Period ................................................................................................................... 28

Table: Sales Forecast ................................................................................................................................ 1Table: Personnel ....................................................................................................................................... 2Table: Profit and Loss .............................................................................................................................. 3Table: Cash Flow ...................................................................................................................................... 5Table: Balance Sheet................................................................................................................................. 7

Table of Contents

Page 1

www.enterslicellp.com

Page 1

1.0 Executive Summary

Enterslice LLP Etc. is a start-up retail store offering fine gifts, collectible dolls and dollaccessories. The store will be located in Lexington, Kentucky, catering to the middle- andupper-class consumers who look beyond the congested retail malls for the special shoppingexperience. In addition to offering a wide array of unique, quality products, the consumer willenjoy friendly and knowledgeable customer service and a convenient, uncongested location.

This business plan is prepared to obtain financing in the amount of $50,000 topurchase inventory and to help cover expenses in the first year of operations. We are alsoasking for a credit line of $10,000 to be used as necessary in low cash flow periods. Brenda andCharles Gajdik will own and operate the store together as a team. They will provide $40,000 incash as an equity investment to be used in start-up costs, equipment purchases, and operatingcapital.

The sales forecasts used in this plan are very conservative compared to a similar business nowoperating in Lexington. Brenda has observed the strengths and weaknesses of this store and isconvinced it can be done better.

Chart: Highlights

1.1 Objectives

To develop Enterslice LLPEtc. into the premier gift retail store in Central Kentucky. To begin and maintain a gross profit margin above 40% for the first year. To acquire a customer base of 4,000 by the end of the second year by using personal

customer service and marketing. To achieve a substantial net profit by the end of Year 3.


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1.2 Mission

Enterslice LLPEtc.will be a retail gift store specializing in fine gifts, collectible dolls and dollaccessories. We want to provide products from quality suppliers and provide professionalcustomer service in a friendly environment.

1.3 Keys to Success

To succeed in this business we must:

Sell products the customer desires and are of the highest quality. Provide friendly customer service. Establish excellent vendor/supplier relations that will facilitate quick shipment of orders. Advertise and promote our store immediately to take advantage of the current Christmas

shopping season. Continuously review our inventory and sales and adjust our inventory levels based on

detailed records.

2.0 Company Summary

Enterslice LLPEtc. is proposed to be a sole-proprietorship company operated by Brenda andCharles Gajdik and is a newly established retail store offering unique gifts and elegantcollectible dolls.

Located in Lexington, Kentucky, we will cater to special consumers who are interested infinding unique items to supplement their doll collection or finding a gift that cannot be found inthe national chain store in the very busy, very congested shopping mall.

We intend to expand our business by carefully building a repeat customer base and provide theproducts and merchandise they wish to purchase. We feel it is important to offer personalcustomer support and services to achieve our business philosophy.

2.1 Company Ownership

Enterslice LLPEtc. will begin operation as a sole-proprietorship. The company will be owned byCharles and Brenda Gajdik.

2.2 Startup Summary

Total current and long-term assets will make up 78% of start-up requirements. Start-upexpenses, which are detailed in the following start-up table comprise the remaining 22% at$20,058

Funding

As detailed in the start-up funding table, $90,000 with a $10,000 line of credit will be requiredto fund Enterslice LLPEtc. This proposal is to be accomplished as follows:

Owners' investment from Charles and Brenda of $40,000 Commercial loan of $50,000, calculated at 7% for seven years Line of credit of $10,000 to be used as necessary


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Details of other start-up expenses include:

Research and Development:

Buying trip expenses to Columbus, OH. $133Buying trip expenses to Atlanta, GA. $430Internet provider service paid in July, for the Year 1 $120Total $683

1st Month Rent & Deposit (proposed location):

Rent = $9.50/square foot $1425/mo. $17,100/yr.Common Area Maintenance (CAM) =$1.50/square foot $225/mo. $2700/yr.

Total Rent and CAM $1650/mo. $19,800/yr.

Leasehold Improvements:

Slatwall Panels and Accessories 50 panels @ $50 each $2500Ceiling Tiles 1,400 sq ft @ $.50/sq ft $700Carpet with Pad 1,400 sq ft @ 2.50/sq ft $3500Carpenter Estimate Display Risers and Counter $300

Total $7,000

Phone line installation: Single line installation $100 Insurance: Medical insurance for Brenda and Charles $650 first month

Advertising & Promotion:

Newspaper $76/week for 26 weeks (Community Section onWednesday) $1976

TV Shopping with Santa in the Bluegrass $1500

Total $3476

Table: Startup

Startup

Requirements

Startup ExpensesUtility Deposits (gas, water, electric) $600Legal $250


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Advertising & Promotion $3,500Consultants $200Insurance: Store Liability $2,400Medical Insurance 1st Month $650Office Supplies, Gift Wrap and Packaging $1,500Leasehold Improvements $7,0001st Month Rent & Deposit $3,075Phone line installation $100Research and Development $683Business Plan Development $100Total Startup Expenses $20,058

Startup AssetsCash Required $12,185Other Current Assets $12,757Long-term Assets $0Total Assets $24,942

Total Requirements $45,000

Chart: Startup

2.3 Company Locations and Facilities


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3.0 Products

Enterslice LLPEtc. plans to carry special occasion gifts and merchandise from the San FranciscoMusic Box Company, Swarovski crystal, Lennox crystal, Outback Chair Company, TraditionsArtglass Company, children's books from Harvest House and other suppliers who display theirproducts at the Atlanta International Gift Market or the Columbus Marketplace for Gift, Gardenand Home.

We will also purchase merchandise from the most well-known collectible doll manufacturers andsuppliers in the United States, including Steiff, Madame Alexander, Turner Dolls, Lee Middleton,Wendy Lawton, Susan Wakeen, Kish Dolls, Lloyd Middleton and others that provide the qualityproducts that our customers wish to purchase.

3.1 Product Description

3.2 Competitive Comparison

3.3 Sales Literature

3.4 Sourcing

3.5 Technology

3.6 Future Products

4.0 Market Analysis Summary

According to Pam Danziger, President of Unity Marketing, the collectible doll industry generated$3 billion in retail sales in 2000. The gift industry, which includes general gifts, collectibles,stationery and greeting cards, generated $54 billion in sales in 2002. As predicted by UnityMarketing, "the future of the gifts and home accents market is positive for the next severalyears." Source:Unity Marketing, The Home Report 2001:The Market, The Competitors, TheTrends


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4.1 Market Segmentation

The ideal customer we expect to serve is:

Middle to Upper Class Primarily Female 30-75 Years of Age Educated Homeowner Quality Conscious Value Conscious Family Oriented

We will attract these customers by offering unique and uncommon product selections not foundin the mass-market retail stores.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGRRecreational Artists 15% 5,000 5,750 6,613 7,605 8,746 15.00%Serious Artists 10% 2,000 2,200 2,420 2,662 2,928 10.00%Total 13.64% 7,000 7,950 9,033 10,267 11,674 13.64%

Chart: Market Analysis (Pie)


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4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.2.2 Market Trends

4.2.3 Market Growth

4.3 Industry Analysis

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

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

4.3.1 Industry Participants

4.3.2 Distribution Patterns

4.3.3 Competition and Buying Patterns

Brand name products sell well in stores that maintain a good selection, good location, andknowledgeable, friendly employees. These are the most important factors when sellingcollectibles and gifts.

There is only one store in the Lexington area that carries a wide variety of collectible dolls.However, the doll inventory only makes up about 25% of the total inventory. We do notconsider this store serious competition because their lease for the 4800 sq. ft. store expires inMarch, 2004, and it is rumored the business will not renew the lease.

Other stores in the Central Kentucky area carry one or two lines of dolls but do not offer a widevariety of collectible doll lines. We intend to offer many different doll lines, doll accessories,personalized knowledgeable service, and a variety of other unique gift merchandise.

The Internet offers dolls at discount prices. However, most of the merchandise is retired ordiscontinued lines that the manufacturers sell in bulk at discount wholesale prices. These arenot the products we intend to carry in Enterslice LLPEtc.


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We intend to develop a web page at some point, probably in year three to marketour merchandise on the Internet.

4.3.4 Main Competitors

5.0 Web Plan Summary

5.1 Website Marketing Strategy

5.2 Development Requirements

6.0 Strategy and Imlpementation Summary

Enterslice LLPEtc. will develop product offerings and marketing strategy to increase itscustomer base while driving sales and profit. The following sections review the variousstrategies that will support this effort.

6.1 SWOT Analysis

6.1.1 Strengths

6.1.2 Weaknesses

6.1.3 Opportunities

6.1.4 Threats


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6.2 Strategy Pyramid

6.3 Value Proposition

6.4 Competitive Edge

Enterslice LLPEtc. will establish itself competitively as a unique retail environment throughproduct offering and friendly, personal customer service. With St. Joseph Hospital, medicaloffices, the Kentucky Inn, the University of Kentucky and the Campbell House all located within1/2 mile of the proposed site, we will attempt to offer items that appeal to this diversepopulation as well as the doll collector.

6.5 Marketing Strategy

Enterslice LLPEtc. will focus its marketing efforts by advertising in the Lexington Herald-Leaderand Insight Media Advertising on cable TV.

We will also increase consumer awareness, retain the existing customer base and promotesales via seasonal postcard and newsletter mailings. The mailings will announce special eventsor holiday specials during the year. These events will be used to sell slow-moving products andvendor special promotions. This means our marketing resources will be centered around bothsales promotions (events, displays) and personal sales (customer service, friendly atmosphere).

Enterslice LLPEtc. will offer $5 coupons for every $100 spent. The coupon can be used by thecustomer on future visits to the store.

6.5.1 Positioning Statement

6.5.2 Pricing Strategy

6.5.3 Promotion Strategy

6.5.4 Distribution Strategy


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6.5.5 Marketing Programs

6.6 Sales Strategy

Enterslice LLPEtc. will approach sales from a salesperson-customer relationship basis. Allcustomers will be assisted in a very personal manner. Gathering key customer information andseeking performance feedback on the products and services offered will assist us in thefollowing ways:

Targeting our marketing efforts more effectively. Developing product offers and merchandising formats that will increase sales.

Developing services that enhance the shopping experience. Increase awareness of Enterslice LLPEtc. within the retail consumer marketplace. Develop future sales opportunities that allow for continued growth of the business.

6.6.1 Sales Forecast

Sales in the retail gift and collectible doll industry is enhanced by seasonal holidays and specialgift giving occasions. The following sales forecast is from direct retail sales and does not includemiscellaneous income. The figures also include dips in sales for those slow periods the businessusually experiences in the summer months.

Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

SalesDolls & Accessories $72,105 $80,758 $90,449Gifts $71,405 $79,974 $89,570Total Sales $143,510 $160,731 $180,019

Direct Cost of Sales Year 1 Year 2 Year 3Dolls & Accessories $40,871 $42,915 $45,060Gifts $40,885 $42,929 $45,076Subtotal Direct Cost of Sales $81,756 $85,844 $90,136


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Chart: Sales Monthly

Mon

th1

Mon

th2

Mon

th3

Mon

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Mon

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Mon

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Mon

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Chart: Sales by Year

6.6.2 Sales Programs


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6.7 Strategic Alliances

6.8 Milestones

The following table lists important milestone dates.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager DepartmentBusiness Plan 01-11-2003 18-11-2003 $0 Charles DepartmentSecure Funding 18-11-2003 31-12-2003 $0 Charles DepartmentNegotiate and Sign Lease 18-11-2003 31-12-2003 $0 Charles DepartmentBusiness Setup 18-11-2003 31-12-2003 $0 Charles DepartmentLeasehold Improvements 18-11-2003 31-12-2003 $0 Charles DepartmentPurchase Start-upEquipment 18-11-2003 31-12-2003 $0 Charles Department

Advertising Developed 01-01-2004 01-02-2004 $0 Charles/Brenda DepartmentStore Open For Business 01-02-2004 02-02-2004 $0 Charles/Brenda Department

Totals $0

Chart: Milestones


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7.0 Management Summary

Enterslice LLPEtc. will be managed and operated on a daily basis by Brenda and Charles Gajdik,a husband and wife team.

Brenda will manage merchandising, sales, customer relations, and all part-time staff. She willalso provide the information necessary to develop a marketing plan to attract repeat customers.Brenda has been employed for three years at Schwab's Collectibles, a retail collectible and giftstore in Lexington. She is currently the assistant store manager which she has held for twoyears. Some of her management duties include shipping and receiving, merchandising, andsales. She has always served the public in most every position she has previously held. Sheunderstands what customer service is and has a loyal following of repeat customers.

Charles will manage the finances and financial records, operations, data processing and assistin all other areas of the business. Charles has 14 years experience in accounting and nearly 15years experience in information technology as an Information Systems (IS) Support Specialist.He also maintains the financial records for a family owned business and has some experience inretail sales.

7.1 Organizational Structure

Org. Chart: Organizational Chart

7.2 Management Team

7.3 Management Team Gaps

7.4 Personnel Plan

The personnel plan is included in the following table. It shows the owners' salaries along withone part-time employee used as needed.


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Table: Personnel

Personnel Plan

Year 1 Year 2 Year 3Brenda Owner/Manager-Sales & Merchandising $14,600 $16,000 $16,000Charles Owner/Manager-Operations & Finance $9,000 $14,000 $14,000Part-Time as Needed ($7 per hour) $3,120 $4,120 $5,120Total People 3 3 3

Total Payroll $26,720 $34,120 $35,120


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8.0 Financial Plan

Growth will be moderate.

Costs will be managed and forecasts for future needs will be performed on a regular basis.

Finding the right product, at the right price will enable the business to meet plannedmargins and maintain inventory at an acceptable level.

8.1 Startup Funding

Table: Startup Funding

Startup Funding

Startup Expenses to Fund $20,058Startup Assets to Fund $24,942Total Funding Required $45,000

AssetsNon-cash Assets from Startup $12,757Cash Requirements from Startup $12,185Additional Cash Raised $45,000Cash Balance on Starting Date $57,185Total Assets $69,942

Liabilities and Capital

LiabilitiesCurrent Borrowing $0Long-term Liabilities $50,000Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $50,000

Capital

Planned InvestmentCharles & Brenda Gajdik $40,000Other $0Additional Investment Requirement $0Total Planned Investment $40,000


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Loss at Startup (Startup Expenses) ($20,058)Total Capital $19,942

Total Capital and Liabilities $69,942

Total Funding $90,000

8.2 Important Assumptions

Key assumptions are:

We do not sell anything on credit. We assume the continued popularity of collectibles. We assume access to financing sufficient to maintain our financial plan as shown in the

tables.

8.3 Key Financial Indicators

Chart: Benchmarks


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8.4 Break-even Analysis

The following table and chart show our estimated monthly revenue break-even point.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $11,013

Assumptions:Average Percent Variable Cost 57%Estimated Monthly Fixed Cost $4,739

Chart: Break-even Analysis


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8.5 Projected Profit and Loss

The following table shows our planned three-year profit and loss estimates. We expect to havea gross margin percent above 40% our first year, which will continue to grow in years two andthree.

The associated charts show that we will have a negative profit/sales percentage for the first twoyears with a positive net profit by year three.

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3Sales $143,510 $160,731 $180,019Direct Cost of Sales $81,756 $85,844 $90,136Other Costs of Goods $0 $0 $0Total Cost of Sales $81,756 $85,844 $90,136

Gross Margin $61,754 $74,887 $89,883Gross Margin % 43.03% 46.59% 49.93%

ExpensesPayroll $26,720 $34,120 $35,120Sales and Marketing and Other Expenses $600 $1,200 $2,400Depreciation $0 $0 $0Rent and CAM Expense $18,150 $18,150 $18,150Utilities $3,600 $3,600 $3,600Liability Insurance:Store $0 $2,400 $2,400Insurance (medical Brenda & Charles) $7,800 $7,150 $7,150Payroll Taxes $0 $0 $0Other $0 $0 $0

Total Operating Expenses $56,870 $66,620 $68,820

Profit Before Interest and Taxes $4,884 $8,267 $21,063EBITDA $4,884 $8,267 $21,063

Interest Expense $3,156 $2,549 $1,915Taxes Incurred $518 $1,716 $5,745

Net Profit $1,209 $4,003 $13,404Net Profit/Sales 0.84% 2.49% 7.45%


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Chart: Profit Monthly

Chart: Profit Yearly


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Chart: Gross Margin Monthly

Chart: Gross Margin Yearly


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8.6 Projected Cash Flow

The following table and chart represents the projected cash flow.

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from OperationsCash Sales $143,510 $160,731 $180,019Subtotal Cash from Operations $143,510 $160,731 $180,019

Additional Cash ReceivedSales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $143,510 $160,731 $180,019

Expenditures Year 1 Year 2 Year 3

Expenditures from OperationsCash Spending $26,720 $34,120 $35,120Bill Payments $105,306 $122,806 $130,765Subtotal Spent on Operations $132,026 $156,926 $165,885

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $9,060 $9,060 $9,060Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $141,086 $165,986 $174,945

Net Cash Flow $2,424 ($5,254) $5,074Cash Balance $59,609 $54,355 $59,429


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Chart: Cash


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8.7 Projected Balance Sheet

The following table shows our projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current AssetsCash $59,609 $54,355 $59,429Other Current Assets $12,757 $12,757 $12,757Total Current Assets $72,366 $67,112 $72,186

Long-term AssetsLong-term Assets $0 $0 $0Accumulated Depreciation $0 $0 $0Total Long-term Assets $0 $0 $0Total Assets $72,366 $67,112 $72,186

Liabilities and Capital Year 1 Year 2 Year 3

Current LiabilitiesAccounts Payable $10,275 $10,077 $10,808Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $10,275 $10,077 $10,808

Long-term Liabilities $40,940 $31,880 $22,820Total Liabilities $51,215 $41,957 $33,628

Paid-in Capital $40,000 $40,000 $40,000Retained Earnings ($20,058) ($18,849) ($14,846)Earnings $1,209 $4,003 $13,404Total Capital $21,151 $25,154 $38,558Total Liabilities and Capital $72,366 $67,112 $72,186

Net Worth $21,151 $25,154 $38,558


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8.8 Business Ratios

The following table outlines some of the more important ratios from the Gift Shop industry. Thefinal column, Industry Profile, details specific ratios based on the industry as it is classified bythe Standard Industry Classification (SIC) code 5947.

Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Industry ProfileSales Growth n.a. 12.00% 12.00% 3.34%

Percent of Total AssetsOther Current Assets 17.63% 19.01% 17.67% 23.99%Total Current Assets 100.00% 100.00% 100.00% 80.29%Long-term Assets 0.00% 0.00% 0.00% 19.71%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 14.20% 15.02% 14.97% 36.19%Long-term Liabilities 56.57% 47.50% 31.61% 15.42%Total Liabilities 70.77% 62.52% 46.58% 51.61%Net Worth 29.23% 37.48% 53.42% 48.39%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 43.03% 46.59% 49.93% 37.74%Selling, General & Administrative Expenses 44.22% 47.15% 45.12% 23.72%Advertising Expenses 0.00% 0.00% 0.00% 2.14%Profit Before Interest and Taxes 3.40% 5.14% 11.70% 1.65%

Main RatiosCurrent 7.04 6.66 6.68 1.98Quick 7.04 6.66 6.68 0.74Total Debt to Total Assets 70.77% 62.52% 46.58% 3.65%Pre-tax Return on Net Worth 8.17% 22.73% 49.66% 58.19%Pre-tax Return on Assets 2.39% 8.52% 26.53% 8.72%

Additional Ratios Year 1 Year 2 Year 3Net Profit Margin 0.84% 2.49% 7.45% n.aReturn on Equity 5.72% 15.91% 34.76% n.a

Activity RatiosAccounts Payable Turnover 11.25 12.17 12.17 n.aPayment Days 27 30 29 n.a


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Total Asset Turnover 1.98 2.39 2.49 n.a

Debt RatiosDebt to Net Worth 2.42 1.67 0.87 n.aCurrent Liab. to Liab. 0.20 0.24 0.32 n.a

Liquidity RatiosNet Working Capital $62,091 $57,034 $61,378 n.aInterest Coverage 1.55 3.24 11.00 n.a

Additional RatiosAssets to Sales 0.50 0.42 0.40 n.aCurrent Debt/Total Assets 14% 15% 15% n.aAcid Test 7.04 6.66 6.68 n.aSales/Net Worth 6.78 6.39 4.67 n.aDividend Payout 0.00 0.00 0.00 n.a

8.9 The Investment Offering

Table: Investment Offering

Investment Offering Seed Round 1 Round 2 Exit

Proposed Year: 1 2 3 7

Valuation, Investment, Shares

Investment Amount $0 $0 $0

Equity Share Offering Percentage 0.00% 0.00% 0.00%

Valuation $0 $0 $0 $0

Investor Exit Payout $0 $0 $0

Investor Years Until Exit 6 5 4

Investor IRR 0.00% 0.00% 0.00%

Share Ownership Year 1 Year 2 Year 3 Year 7

Founders' Shares 0 0 0 0

Stock Split Multiple 0 0 0

Stock Options Issued 0 0 0 0

Investor Shares Issued 0 0 0


Page 26

Price per share $0.00 $0.00 $0.00 $0.00

Options Holders' Shares 0 0 0 0

Year 1 Investors' Shares 0 0 0 0

Year 2 Investors' Shares 0 0 0

Year 3 Investors' Shares 0 0

Total Shares Outstanding 0 0 0 0

Equity Ownership Percentage Year 1 Year 2 Year 3 Year 7

Founders' Equity 0.00% 0.00% 0.00% 0.00%

Option Holders' Equity 0.00% 0.00% 0.00% 0.00%

Year 1 Investors' Equity 0.00% 0.00% 0.00% 0.00%

Year 2 Investors' Equity 0.00% 0.00% 0.00%

Year 3 Investors' Equity 0.00% 0.00%

Total Equity 0.00% 0.00% 0.00% 0.00%

Investors' Equity 0.00% 0.00% 0.00% 0.00%

Founders' & Employees' Equity 0.00% 0.00% 0.00% 0.00%

8.10 Valuation

Table: Investment Analysis

Investment Analysis

Start Year 1 Year 2 Year 3

Initial InvestmentInvestment $40,000 $0 $0 $0Dividends $0 $0 $0 $0Ending Valuation $0 $0 $0 $126,000Combination as Income Stream ($40,000) $0 $0 $126,000Percent Equity Acquired 35%

Net Present Value (NPV) $49,696

Internal Rate of Return (IRR) 47%

Assumptions

Discount Rate 10.00%

Valuation Earnings Multiple 10 10 10

Valuation Sales Multiple 2 2 2


Page 27

Investment (calculated) $40,000 $0 $0 $0Dividends $0 $0 $0

Calculated Earnings-based Valuation $10,000 $40,000 $130,000

Calculated Sales-based Valuation $290,000 $320,000 $360,000

Calculated Average Valuation $150,000 $180,000 $245,000

8.11 Use of Funds

Table: Use of Funds

Use of Funds

Use AmountName $0Name $0Name $0Name $0Total $0

8.12 Payback

Table: Payback

Payback

Projected Payback Calculation

Investment Year 1 Year 2 Year 3 Year 4 Year 5

Investment $500,000

Cash Returns by Year $100,000 $100,000 $100,000 $100,000 $100,000Combination as Income Stream ($500,000) $100,000 $100,000 $100,000 $100,000 $100,000Cumulative Net Cash Flow toInvestors ($500,000) ($400,000) ($300,000) ($200,000) ($100,000) $0


Page 28

Payback Period 5 years

Chart: Payback Period

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales

Dolls & Accessories 0% $7,400 $7,900 $5,350 $5,230 $5,600 $5,850 $6,475 $5,500 $5,400 $5,450 $5,700 $6,250Gifts 0% $7,400 $7,900 $5,250 $5,230 $5,500 $5,750 $6,375 $5,400 $5,300 $5,450 $5,600 $6,250

Total Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Dolls & Accessories $3,900 $4,243 $2,690 $2,759 $3,425 $3,550 $3,988 $2,988 $3,150 $3,125 $3,150 $3,903

Gifts $3,900 $4,250 $2,690 $2,759 $3,425 $3,550 $3,998 $2,988 $3,150 $3,125 $3,150 $3,900

Subtotal Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Appendix

Page 2

Table: Personnel

Personnel Plan


Brenda Owner/Manager-Sales &Merchandising 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,300 $1,300

Charles Owner/Manager-Operations &Finance 0% $0 $0 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900

Part-Time as Needed ($7 per hour) 0% $280 $560 $0 $0 $0 $300 $300 $320 $320 $320 $320 $400

Total People 3 3 2 2 2 3 3 3 3 3 3 3

Total Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600

Appendix

Page 3

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Gross Margin $7,000 $7,307 $5,220 $4,942 $4,250 $4,500 $4,864 $4,924 $4,400 $4,650 $5,000 $4,697

Gross Margin % 47.30% 46.25% 49.25% 47.25% 38.29% 38.79% 37.85% 45.17% 41.12% 42.66% 44.25% 37.58%

Expenses

Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600

Sales and Marketing andOther Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $300

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent and CAM Expense $0 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650

Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300

Liability Insurance:Store $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance (medical Brenda& Charles) $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650

Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $2,430 $4,360 $4,700 $4,700 $4,700 $5,000 $5,000 $5,020 $5,020 $5,020 $5,420 $5,500

Profit Before Interest andTaxes $4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)

Appendix

Page 4

EBITDA $4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)

Interest Expense $287 $283 $278 $274 $270 $265 $261 $256 $252 $248 $243 $239

Taxes Incurred $1,285 $799 $72 ($10) ($216) ($230) ($119) ($106) ($262) ($185) ($199) ($313)

Net Profit $2,998 $1,865 $169 ($22) ($504) ($536) ($278) ($247) ($610) ($432) ($464) ($729)

Net Profit/Sales 20.26% 11.80% 1.60% -0.21% -4.54% -4.62% -2.16% -2.26% -5.70% -3.97% -4.11% -5.83%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Subtotal Cash from Operations $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

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 $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

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 $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600

Bill Payments $344 $10,384 $12,047 $8,333 $8,420 $9,511 $9,769 $10,661 $8,732 $8,891 $8,923 $9,290

Subtotal Spent on Operations $1,824 $12,144 $14,147 $10,433 $10,520 $11,911 $12,169 $13,081 $11,152 $11,311 $11,443 $11,890

Appendix

Page 6

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 CurrentBorrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities PrincipalRepayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities PrincipalRepayment $755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755

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 $2,579 $12,899 $14,902 $11,188 $11,275 $12,666 $12,924 $13,836 $11,907 $12,066 $12,198 $12,645

Net Cash Flow $12,221 $2,901 ($4,302) ($728) ($175) ($1,066) ($74) ($2,936) ($1,207) ($1,166) ($898) ($145)

Cash Balance $69,406 $72,307 $68,005 $67,277 $67,103 $66,036 $65,962 $63,026 $61,819 $60,653 $59,755 $59,609

Appendix

Page 7

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $57,185 $69,406 $72,307 $68,005 $67,277 $67,103 $66,036 $65,962 $63,026 $61,819 $60,653 $59,755 $59,609Other Current Assets $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757Total Current Assets $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

Long-term Assets

Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Assets $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

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

Current Liabilities

Accounts Payable $0 $9,978 $11,769 $8,053 $8,103 $9,187 $9,411 $10,370 $8,436 $8,594 $8,615 $8,936 $10,275Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $9,978 $11,769 $8,053 $8,103 $9,187 $9,411 $10,370 $8,436 $8,594 $8,615 $8,936 $10,275

Long-term Liabilities $50,000 $49,245 $48,490 $47,735 $46,980 $46,225 $45,470 $44,715 $43,960 $43,205 $42,450 $41,695 $40,940Total Liabilities $50,000 $59,223 $60,259 $55,788 $55,083 $55,412 $54,881 $55,085 $52,396 $51,799 $51,065 $50,631 $51,215

Paid-in Capital $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000Retained Earnings ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058)Earnings $0 $2,998 $4,863 $5,032 $5,009 $4,506 $3,970 $3,692 $3,446 $2,835 $2,403 $1,939 $1,209Total Capital $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151Total Liabilities and Capital $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

Appendix

Page 8

Net Worth $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151

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