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October 1999

This sample business plan has been made available to users of Business Plan Pro", business planning software published by Palo Alto Software. Names, loc ations and numbers may have been c hanged, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, ac ademic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.

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Table of Contents
1.0 Executive Summary.............................................................................................................................1 1.1 Mission........................................................................................................................................2 1.2 Objectives ...................................................................................................................................2 1.3 Keys to Success ........................................................................................................................3 2.0 Company Summary.............................................................................................................................4 2.1 Company Ownership .................................................................................................................4 2.2 Company Locations and Facilities ..........................................................................................4 2.3 Start-up Summary ......................................................................................................................4 3.0 Services................................................................................................................................................7 3.1 Competitive Comparison..........................................................................................................8 3.2 Service Description ...................................................................................................................9 3.3 Macroenvironment ...................................................................................................................10 3.4 Sales Literature........................................................................................................................10 3.5 Fulfillment ..................................................................................................................................10 3.6 Technology ...............................................................................................................................11 3.7 Future Services ........................................................................................................................11 4.0 Market Analysis Summary................................................................................................................12 4.1 Market Segmentation..............................................................................................................12 4.2 Target Market Segment Strategy...........................................................................................13 4.2.1 Market Needs .......................................................................................................................14 4.2.2 Market Trends .......................................................................................................................14 4.3 Service Business Analysis .....................................................................................................14 4.3.1 Distributing a Service...........................................................................................................14 4.3.2 Competition and Buying Patterns .......................................................................................15 4.3.3 Main Competitors .................................................................................................................15 5.0 Strategy and Implementation Summary..........................................................................................16 5.1 SWOT Analysis ........................................................................................................................16 5.1.1 Strengths ...............................................................................................................................17 5.1.2 Weaknesses .........................................................................................................................17 5.1.3 Opportunities.........................................................................................................................17 5.1.4 Threats ...................................................................................................................................17 5.2 Marketing Strategy ..................................................................................................................18 5.2.1 Pricing Strategy ....................................................................................................................18 5.2.2 Promotion Strategy ..............................................................................................................19 5.2.3 Positioning Statement..........................................................................................................20 5.3 Sales Strategy..........................................................................................................................20 5.3.1 Sales Forecast .....................................................................................................................21 5.4 Strategic Alliances...................................................................................................................22 5.5 Corporate Social Responsibility ............................................................................................22 6.0 Management Summary ....................................................................................................................22 6.1 Organizational Structure..........................................................................................................23 6.2 Management Team .................................................................................................................23 6.3 Personnel Plan.........................................................................................................................23 6.4 Training .....................................................................................................................................24 6.5 Feedback and Control ............................................................................................................24 7.0 Financial Plan ....................................................................................................................................25 7.1 Important Assumptions............................................................................................................25
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7.2 Key Financial Indicators ..........................................................................................................26 7.3 Break-even Analysis................................................................................................................27 7.4 Projected Profit and Loss .......................................................................................................28 7.5 Projected Cash Flow ...............................................................................................................32 7.6 Projected Balance Sheet ........................................................................................................34 7.7 Business Ratios .......................................................................................................................35 8.0 Controls ..............................................................................................................................................37

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Sephats Tours
1.0 Executive Summary
The tourism industry has undergone rapid growth of unsurpassed nature over the last several dec ades. This has mainly been due to the advent of a 'borderless' world and increased information dissemination about the majestic sc eneries throughout the world, with the southern African region being no exception. We are on the brink of penetrating a lucrative market in a rapidly growing industry. The current trend towards an increase in the number of tourists entering the country presents an opportunity for Sephats Tours to penetrate the market. An opportunity for Sephats Tours' success exists bec ause the national tourism industry is growing at a rapid pac e annually. Sephats Tours is poised to take advantage of this growth and moderate competition in the city travel portion of the industry, with a dedicated and experienced staff, excellent networking, and effective management and marketing. Sephats Tours intends to provide travel and adventure pac kages to tourists primarily in the Southern region, but also the whole of Botswana. Services and products provided by Sephats will initially include pre-arranged tours, custom pac kages ac cording to clients specifications, travel consultation, and as time progresses making reservations for lodging amongst other related services. Sephats Tours seeks to differentiate itself as the premier adventure mobile operator in the greater Gaborone area. Our services will be positioned very carefully: they will be of extremely high quality, comfortable, informative and tailored to the clients needs such that they will enable individuals to have a greater apprec iation of the natural environment and its intricac ies. Our marketing strategy will be based mainly on ensuring customers know about our existence and the service(s) we fulfill. Hence our intention is to make the right information available to the right target customers. This will be done through implementing a market penetration strategy that will ensure that we are well known and respec ted in the tourism industry. We will ensure that our prices take into consideration peoples' budgets, that these people apprec iate the service(s), know that it exists, and how to contac t us. The marketing will convey the sense of quality in every picture, every promotion, and every publication. Our promotional strategy will involve integrating advertising, events, personal selling, public relations, direc t marketing and the Internet, details of which are provided in the marketing section of this plan. It is important to rec ognize that we do not intend to just take individuals on sightseeing excursions, but also to ensure that they apprec iate nature through informative briefings on objec ts' origins. This element will assist in differentiating us from our competitors and contribute towards the development of a sustainable competitive advantage. Hence we need to engage the right people in the right plac e at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows - a mutually beneficial relationship. We projec t sales to increase from more than P350,000 (Botswanan Pula [P]) the first year to more than P556,500 the second, and P630,000 in the third year. In a nutshell, we do not just intend to market and sell our service, but to market and sell travel solutions and a total-quality environment. This will ensure we establish a reputable corporate image.

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1.1 Mission
Internally we intend to create and nurture a healthy, exuberant, respec tful, and enjoyable environment, in which our employees are fairly compensated and encouraged to respec t the customer and the quality of the service we intend to provide. In addition follow-up will be mandatory so as ensure customer satisfac tion and make any improvements as rec ommended by the customers in future. We seek fair and responsible profit, enough to keep the company financially healthy for the short and long term, and to fairly remunerate employees for the work and effort.

1.2 Objectives
Our business strategy will revolve around the need to provide quality service to our various target customers, in the proc ess fully satisfying their needs. This shall be undertaken through rec ruitment of a professional team and the provision of good quality custom-designed travel pac kages, catering to the client's particular needs. With time our marketing campaign will increase the awareness of our services in the various market segments we shall be targeting. This is particularly so with the organization looking at establishing a clear advantage(s) in an increasingly competitive market. We will provide clients with the opportunity to foc us on their core ac tivities whilst their transportation side needs are fully satisfied. Marketing material shall be professionally done so as to be reflec tive of our intended image and reputation. We shall position ourselves as a quality commercial transportation operator that provides customer-need fulfillment, enjoyment, reliability and a good image. We intend to establish a good rapport with all the relevant stakeholders, especially hotels and travel agents. We also intend to have well-designed broc hures and other promotional material that will enable clients to have an understanding of the types of services we offer and advantages of utilizing them. In addition well-done, informative broc hures, fac t sheets and business cards often have a triggering effect on clients contemplating utilizing our services. Hence this will undoubtedly generate increased sales of our service. In summary we intend to attain the following objec tives: Continuously provide enjoyable quality excursions/trips on time and on budget. Develop enthusiastically satisfied customers all of the time. Establish a market presence that assures short-term and long-term profitability, growth and success. We are fully committed to supporting growth and development in the tourism and overall ec onomy of Botswana. Contribute positively to our communities and our environment.

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1.3 Keys to Success
The keys to Sephats Tours success will undoubtedly be effective market segmentation through identification of several niche markets and implementation strategies. Along these lines the company intends to implement advertising, personal selling and direc t marketing strategies to the target markets. Our personal selling marketing strategies will rotate around keeping in touch with hotels and travel agencies for major customers, and advertising for more individual customers. Hence our key success fac tors will include the following: 1. Excellence in fulfilling the promise: We intend to offer completely enjoyable, comfortable and informative travel excursions that will ensure that travelers are thoroughly satisfied and apprec iative at the end of their trip. 2. Timely response to customers' requests: We cannot afford to delay our clients for whatever reason, as this will have a negative bearing on our image and reputation, including future business. Hence we need to be continually communicating with the client, including hotels and lodges so as to ensure that we are constantly available to the client meeting their expec tations. 3. Solid and fruitful strategic alliances: Considering the nature of our services and our relative infancy on the market, we realize the importance of establishing and maintaining fruitful strategic alliances with various stakeholders, including hotels, lodges, and travel agencies, amongst others, so as be assured of a constant flow of customers, fulfilling their needs at every opportunity. 4. Marketing know-how: As a relatively new company on the market there will be a need to aggressively market our business and the services we provide so as to be continuously at the top of our prospec tive clients minds. This will also ac t as a temporary deterrent for companies contemplating entering our market. Advertising shall be undertaken on a regular basis.

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Sephats Tours
2.0 Company Summary
Sephats Tours intends to provide individual and group travel to leisure clients. Services and products provided by Sephats will initially include pre-arranged tours, custom pac kages ac cording to clients specifications, travel consultation, and as time progresses making reservations for lodging amongst other related services. Sephats Tours seeks to differentiate itself as the premier adventure travel company in the greater Gaborone area. As it grows it will take on people and expand into related markets and services. It will also look for additional leverage by establishing relationships and representations with appropriate strategic allies.

2.1 Company Ownership


Sephats Tours is a Private Limited company incorporated at the Registrar of Companies in October, 1999, through the foresight and vision of Mr. X and Mrs. Y. It is a 100% wholly owned Botswana firm.

2.2 Company Locations and Facilities


At present the company offices are loc ated at Plot Number 28338, Bloc k 3, Belabela road opposite Gaborone Television Station, near Hill Crest Primary Sc hool. However, as time progresses the intention is to move into more ac cessible and attrac tive offices in a prime area. This regardless of the fac t that our type of business is not too dependent on office loc ation and size.

2.3 Start-up Summary


Thus far the direc tors have contributed one hundred and sixty seven thousand pula (P167,000) to purchase a Mercedes Benz mini bus currently in its possession and P30,000 for cash expenses. Total start-up expenses covered (including legal costs, business plan compilation, license costs and related expenses) come to approximately P5,000. NOTE: All currency values in the charts and tables are expressed in Botswanan pulas (P).

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Table: Start-up
Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements

$1,000 $500 $700 $1,200 $800 $500 $300 $5,000

$30,000 $0 $0 $167,000 $197,000 $202,000

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Table: Start-up Funding
Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $5,000 $197,000 $202,000

$167,000 $30,000 $0 $30,000 $197,000

Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Investor 1 Investor 2 Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital

$0 $0 $0 $0 $0

$100,000 $102,000 $0 $202,000 ($5,000) $197,000

Total Capital and Liabilities Total Funding

$197,000 $202,000

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3.0 Services
Sephats Tours is a travel company that intends to deliver leisure travel excursions to customers. Sephats intends to guide customers in selec ting a trip(s) based on pre-defined vac ation criteria. This analysis will be based on user profiles, set by the consumers, which includes preferences such as: Budget Ac tivities sought Destination, and Time of Travel

A traveler will hence be able to selec t areas of interest based on their preferences and subsequently identify destinations to visit. The intention is to provide customers with access to exclusive travel destinations, service to fully apprec iate destinations through information pac kages, not just sight-seeing, and ac cess to special interest travel ac cording to the group's/individual's preferences.

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3.1 Competitive Comparison
There are presently few competitors offering services similar to ours. However considering the pac e of change and current growth rate of the tourism industry luring many companies into the sector, this may be short-lived. Hence there will be a need to not only firmly establish ourselves on the market, but also strongly differentiate ourselves from these other businesses. However on a broader sc ale our competition comes in several forms: 1. The most significant competition are hotels and travel agencies offering travel excursions to their clients. They undertake this service in order to establish a competitive advantage over their competitors. However, instead of direc tly competing with them we intend to establish good working relationships in the form of strategic alliances such that we are able to offer the service for their clients and thus enabling them to concentrate on their core ac tivities whilst ensuring customers are fully satisfied. Our key advantage in this regard will be our specialty of the service and hence wide knowledge ensuring customer satisfac tion at all times as well as flexibility in providing the service. 2. Existing hotels, lodges and travel agencies may identify the opportunity to diversify into our intended services utilizing their current client database. Naturally, existing clients will be inclined towards utilizing these familiar companies due to the fac t that a good relationship may have already been nurtured over the years during their business dealings. This presents a potential challenge to us, as we need to aggressively market our services and expertise in the field. 3. Existing safari operators that mainly foc us on the remote environs such as Maun and Kasane are at times able to compromise, offering excursions in and around Gaborone, though very rare. Hence we intend to foc us on this market. An analysis of competition is provided in the Market Analysis section of this plan.

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3.2 Service Description
Sephats Tours intends to offer the service and knowledge a disc erning leisure traveler seeks whilst on vac ation, with the intention of seeing and apprec iating the numerous sights in the area. Keeping in mind the comforts of a tourist, our fleet shall be very well maintained and designed as per customer standard and expec tations. However not wanting to limit ourselves we intend to be open to special hire by churches, organizations, groups, sc hools and sports teams, amongst other related groups. The game reserves and lodges that we intend to be our main destinations are: Mokolodi Nature Reserve Goborone Game Reserve Gaborone Dam The Oodi and Moc hudi Craft Villages Kolobeng and Thamaga Khutse Game Reserve

Below is a briefing of several plac es of interest and their various attrac tions. 1. Mokolodi Nature Reserve: Set in a wide valley just 10 minutes drive from the city, this sc enic reserve offers a well-developed network of game drives and stone and thatch c halets overlooking a water hole. Mokolodi also offers the rare opportunity to trac k rhino or to walk through the bush with young elephants. These excursions offer excellent photographic opportunities. Evening drives can include a bush braai giving visitors the chance to see the more unusual nocturnal creatures. 2. Gaborone Game Reserve: This 550 hectare reserve provides an ideal get-away for tourists who can see a remarkable range of wildlife in the park including rhino, eland, zebra, gemsbok, wildebeest, kudu, ostrich and impala, all on well-maintained bush roads that are designed for easy ac cess. Bird watching in the Gaborone Game Reserve is excellent, particularly along the eastern edge, bounded by Notwane River, and it typifies the incredible diversity of bird life to be found throughout the Gaborone area. 3. Gaborone Dam: On the south bank a remarkably rich variety of bird and wildlife can be seen, including herds of impala, kudu and sc uttling families of warthog. New picnic sites, which are currently under development will also provide plac es of interest. The Gaborone Yac ht Club is the main attrac tion on the dam with its swimming pool, bar and wide verandah overlooking the water off a roc ky koppie in the middle of the dam which often bec omes an island in the wet season. 4. The Oodi and Mochudi Craft Villages: In Oodi the main attrac tion will be the Lenstwe-laOodi weavers. In Mochudi apart from traditionally dec orated Setswana architec ture, the tourists will find the most southerly baobab trees in Botswana and traditional crafts including the Ithuteng Tin Workshop and Ikgabiseng handmade jewelery. The Phuthadikobo Museum in Moc hudi will also be an attrac tion site. Other sites will include Matsieng Foot Point, Gemsbok National Park, Mabuasehube Game Reserve, Legaga la ga Kobokwe, Central Kgalagadi Game Reserve, Nxaii Pan and Khama Rhino Sanctuary. Integrating the above plac es of interest into our tours we intend to be offering the following tours: 1. "Capital Crusade" - City Tour: This will be a professionally guided tour around the city centre including visits to the Main Mall, Finance Mall, National Museum, City Council Library, Page 9

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Gaborone Station, and House of Parliament including others. These tours shall be eye opening in terms of the normal Botswana town folk life style providing knowledge and information throughout the guided tour. Included in this pac kage will be refreshments and information folders detailing the main sites and history of Gaborone. This tour will cover approximately 50 kilometers taking about half a day to complete. Cost: PX per person. 2. "Cultural Enrichment" - Cultural Tour: This shall involve tours to the main historical and cultural sites in and around Gaborone including Mokolodi Nature Reserve, Oodi and Moc hudi Craft Villages, including the cultural dances. This tour shall reveal the 'Kgotla' - cultural villages, traditional paintings and art, as well as the traditional lifestyle. Obviously baobabs will make for good viewing. The tour pac kage will include an information folder, guided tour and refreshments. This tour will cover approximately 200 kilometers taking the whole day to complete. Cost: PY per person. 3. "The Essence: Past & Present" - City & Cultural Tour: This will be a combination of the cultural tour and city centre excursion. This will be marketed as a "total pac kage" enabling tourists with very little time to apprec iate the Botswana lifestyle, both in the present and past. This tour will invariably take the whole day and cover approximately 250 kilometers. The tour pac kage will include the information folder, guided tour, refreshments and a picnic lunch. Cost: PZ per person.

3.3 Macroenvironment
At a large sc ale research demonstrates that tourism is undergoing a rapid growth of unsurpassed nature. Generally there is a trend towards shorter stays but increased visits, as individuals strive to experience as many cultures as possible, including seeing as many attrac tions as possible. Increasingly Botswana is being marketed as "one of the few plac es in Africa where game sanctuaries have remained completely unspoiled. A destination that unloc ks the mystery of nature - an oasis in a wilderness which is an ideal esc ape for nature lovers. Very little of this fascinating country has seen human habitation - this is true Africa in all her remoteness and authenticity." With such marketing in plac e the number of tourists entering the country is bound to increase, presenting a larger potential market for ourselves. This potential market is what we seek to tap.

3.4 Sales Literature


The business will begin with a general corporate broc hure establishing its position on the market. This broc hure will be developed as part of the start-up expenses including the business cards and Company Profile, mainly for the large organizations that often rec ommend services to potential customers. Compliment slips are also intended so as to raise awareness of the company and its services. We also intend to have information pamphlets that will provide information on our various tour pac kages. Literature and mailings for the initial market forums will be very important.

3.5 Fulfillment
1. The key fulfillment and delivery will be provided by the employees of the company. The real core value will be professional expertise, provided by a combination of expertise, experience, hard work, and education (in that order). Hence we intend to ensure that the work we undertake is always thorough and relevant to the clients' needs. 2. We will turn to reputable companies for supplying the necessary individuals and groups for our services. Hence the need to establish good relationships with our strategic allies.

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3.6 Technology
Sephats Tours will strive to ensure that it contains the latest, or extremely rec ent personal computer including relevant software so as to ensure that the company is continuously at the forefront in our market arena. The one certainty in our industry is that tec hnology will continue to evolve and develop, changing what we market as well as how we market it. Our aim will be to be aware of the implications of this new tec hnology and utilizing it in our existing framework where possible. However it should be noted that as we are new on the market it will take some time before we have in plac e our own website and other multimedia presentations. With time we also intend to have the latest and most efficient software in plac e to enable smooth operations.

3.7 Future Services


In putting the company together we have attempted to offer enough services to allow us to always be in demand by our customers and clients. The most important fac tor in developing future services/products is market need. Our understanding of the needs of our target market segments shall be one of our competitive advantages. It is critical to our effort to develop the right new services. In the future, Sephats Tours intends to broaden its coverage by expanding into additional markets. One of the main services it aims at providing is to bec ome a destination management company that brings alive the magnificence of this country to the traveler. This will be done by co-coordinating the traveler's entire experience from hotel bookings, safaris and tours, greeting and porter services, and to tour pac kages and incentives. However in doing so we will strive to ensure that it is compatible with the existing products and company personnel. As time progresses the intention will to provide a Southern Africa tour pac kage covering the whole of southern Africa.

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4.0 Market Analysis Summary
We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been brought about by, amongst other things, the relaxation of foreign exchange policies and mac roeconomic policies geared towards attrac ting foreign investors into the country. The fisc al and monetary policies of the government geared towards maintaining growth with soc ial justice have largely contributed towards this, evidenced by our ec onomy averaging a growth rate of 7% since 1990 - very high by international standards. The current drive and emphasis by the government on diversification of the industrial base away from the minerals sector presents an opportunity for Sephats Tours to make a valuable contribution towards ac hieving this goal. Having undertaken a thorough and comprehensive research of the market we realized that there was a need for a tourist transport company that foc uses on providing leisure excursions to tourists. Though there are mobile operators currently on the market, some of whom have been in existence for a relatively long period of time, we believe that there is a market need for one that specializes on providing comfortable and enjoyable transport to tourists and visitors. This, also considering the fac t that, potentially Botswana's richest natural resource, the tourism industry is bec oming an increasingly important player in the ec onomy and may in the long term prove even more valuable than mineral resources in earning foreign exchange. Aware of the fac t that operating in such a market is largely dependent on good networking, we intend to establish networks and strategic relationships with various hotels, lodges and travel agents to ensure a steady stream of clients. However in so doing we intend to ensure that the service we provide is of extremely high quality and comfortable. Our initial overall target market share shall be 10% of the market, mainly foc using on the greater Gaborone area and southern Botswana. We apprec iate that entering such a market is not a 'bed of roses' and will require us establishing strong links with strategic partners as outlined previously. Hence we intend to implement an aggressive marketing strategy, well supported by the other business functions. The above prognosis influenced our dec ision to enter the tourist transport industry.

4.1 Market Segmentation


We will be foc using on those foreign tourists seeking leisure travel and excursions whilst on vac ation in Botswana, with the intention of letting them see and apprec iate the numerous attrac tions in our country. Though we realize that the majority of our tourists come from South Africa we shall be mainly targeting those from Europe and the Americas who often do not have transport or adequate knowledge about the country, unlike their South African counterparts who often do. Hence we shall be mainly targeting those who are not that mobile but wanting to see as many sites as possible. These people often do not want to waste their money on hiring vehicles to move about by themselves, but instead want to be escorted around plac es of interest by a reliable source. Hence the need to professionally market ourselves and the services we provide, offering a service of uncompromised nature.

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Table: Market Analysis


Market Analysis 1999 Potential Customers Tourists from Europe and Americas Tourists from South Africa Total Growth 15% 25% 22.85% 124,000 400,000 524,000 2000 142,600 500,000 642,600 2001 163,990 625,000 788,990 2002 188,589 781,250 969,839 2003 216,877 976,563 1,193,440 CAGR 15.00% 25.00% 22.85%

4.2 Target Market Segment Strategy


Our marketing strategy will be based mainly on making the right service(s) available to the right target customer. We will ensure that our services' prices take into consideration organizations' and peoples' budgets, and that these people know that we exist, apprec iate the value of our services, and how to contac t us. The marketing will convey the sense of quality in every picture, every promotion, and every publication. Our intension will be to target those individuals and groups looking for leisure ac tivities and plac es to visit. We realize the need to foc us our marketing message and our service offerings. We need to develop our message, communicate it, and make good on it. The dec ision to establish strategic alliances with several hotels, lodges and travel agencies is aimed at tapping our target market effec tively and efficiently.

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4.2.1 Market Needs
Though the tourism sector has undergone rapid growth over the last dec ade the vast majority entering this sector have rushed to the North where we have the Okavango Delta, Chobe National Park, and other sites as attrac tion points. Very few have foc used on south and central Botswana. With this in mind we intend to exploit the untapped market in this area so as to provide our customers with a good service and realize our business objec tives. We understand that our target markets need more than just being shown the areas of interest but also to be informed about their significance and origins. Hence we don't just intend to provide a service(s), but to provide one of unparalleled nature relative to the market.

4.2.2 Market Trends


Of all the uncertainty surrounding this industry, one fac t is certain: tourism is here to stay. The only question is how large the industry will bec ome and whether it can sustain, if not exceed, its current growth rate. However large the market ultimately bec omes, the company strongly believes that travel will be an important component of this market plac e. Tourism statistics provide a reliable guide as to the size of the market. Ac cording to the latest tourism statistics total arrivals for 1998 amounted to 1,351,798 representing an increase of approximately 12.65% from the previous year. Of the total arrivals in 1998 205,146 (15.2%) were holiday/tourists whilst 319,440 (23,6%) were visitors, both groups of which c onstitute our target market, totaling approximately 524,586 individuals. Source: Tourism Statistics 1998 - Central Statistics Office.

4.3 Service Business Analysis


Potentially Botswana's richest natural resource, the tourism industry is bec oming an increasingly important player in the ec onomy and may in the long term prove even more valuable than mineral resources in earning foreign exchange. With this in mind Sephats Tours intends to play a contributing role towards development of the tourism industry through provision of an impec cable mobile service fac ility primarily direc ted at tourists.

4.3.1 Distributing a Service


Mobile operations such as ours are sold mainly on a word of mouth and referral basis with relationships and previous experience being, by far, the most important fac tor. Relationships in this regard means establishment of links with the various hotels, lodges, and travel agencies who often come into contac t with our target customers. Invariably the experience a customer has with us will go a long way toward influencing them in whether they should refer their friends to use our service(s). To this end we intend to ensure we provide a luxurious, comfortable and unforgettable experience to our customers that will only encourage them to pass on a good word about us. In the medium term we intend to be connec ted on the World Wide Web so that we can market ourselves on the Internet, as well as enabling potential customers to make pre-bookings over the Web, helping save time and money. This will also assist in widening our customer catchment area increasing customers.

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4.3.2 Competition and Buying Patterns
The key element in service utilization dec isions made at the company's client level is trust in the reputation and reliability of the firm. The most important fac tor in this market will be the quality of the service and plac es of excursion. This is particularly so considering the various interests of individuals and groups as they strive to see as many plac es as possible. The very nature of our services dictates that the pricing of our services will vary ac cording to distance traveled, as different customers opt to visit different areas and within spec ified time frames. In our line of business, clients often c ompare travel companies direc tly, looking for two, or more, possible companies. However, they usually follow word of mouth rec ommendations obtained from hotels, travel agencies, government departments, car hire companies and other such related companies.

4.3.3 Main Competitors


We have identified competing companies, some firmly established, that fill the same needs as Sephats Tours. We intend to market ourselves in such a way that with time competitor customers will choose our service over competitors' on the basis of our higher quality and informative excursions. A more thorough outline of our main c ompetitors including their strengths and weaknesses follows: 1. XXX: Located on the first floor of the G Hotel, Gear Adventures specializes in tailor-made safaris throughout Botswana and her neighboring countries. Gear Adventures offers Mobile Wilderness Safaris, Weekend Adventures, One-day explorations and safari operators. Of particular concern to us are the day tours around Gaborone that it offers to G Hotel guests. Research indicated that Gear Adventures is the only operator that offers day trips in and around Gaborone. Several of its services include: [details omitted]. 2. YYY: Arguably one of the most reputable companies in our intended line of business. It has a fleet of nineteen buses comprising two semi-luxury B7 Volvo train-buses, six semi-luxury B7 Volvo, five M/Benz, four Nissan and two DAF buses. All the Volvo buses have radio fac ilities, and one of the train-buses has toilet fac ilities. With c lose to twenty years of experience Mr. K supported by his wife, Mrs. K, are ac hieving most of what they envisioned when they started their business-to provide a nation-wide road transport service renowned for its efficiency and reliability. The rec ent launch of a new imported South American double-dec ker luxury bus serves as testimony of their continued dedication towards providing a good service to their clients. 3. ZZZ: Similar to YYY, Z is well respec ted in the market with a large fleet of buses. As well as providing daily transport to Selebi Phikwe and several towns it also provides loc al and international trips by hire. However they lac k the marketing edge and foreign tourist foc us we intend to have. Upon c loser analysis of the above competitors it may be observed that the majority of these are offering safari excursions, and this represents an opportunity to be realized by us. Ac cording to the Central Statistics Office there are approximately 81 travel agents, tour operators and safari operators in Botswana at present, the majority of which have a South African bac kground either in direc torship or ac tual origin.

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5.0 Strategy and Implementation Summary
Initially Sephats Tours will foc us on the loc al market in the adventure travel sector. The target customers will mainly include foreign tourists intending on sightseeing various attrac tions. Our marketing strategy will emphasize foc us. We are a relatively new company on the market and hence must foc us on certain kinds of services with c ertain kinds of clients. Initially the business will foc us on the loc al market, expanding into the regional market as time progresses, and as we gain the necessary experience. Therefore the initial aim will be to instill awareness and confidence in our services. In order to ac hieve its goal of bec oming the premiere mobile operator, Sephats intends to adopt the following strategies: 1. Establish Sephats reputation as a differentiated, specialty provider of city/ adventure travel and excursions. This will be ac complished through a diverse marketing communications programme direc ted at Sephats target market, utilizing various media as well as the establishment of strategic allies. 2. Provide unparalleled service to the tourists, loc al and international, of Botswana in order to gain repeat business and build trust. This will include providing superior service in all phases of the transaction, including timely follow-through. 3. Aggressively promote excursions as healthy, eye-opening and exciting ac tivities with those who participate in them as apprec iative of the finer things in life. 4. We intend to build image and awareness through consistency and distinctiveness in our service provision. Our strategy is to grow the business by nurturing clients, differentiating the service from our competitors, particularly through service and staff behavior. All criteria from customer satisfac tion, service provision, price competitiveness to staff attitudes are to be looked at thoroughly in the initial stages as areas for improvement. Alliances and collaboration with hotels, lodges and travel agencies are to be adopted as strategies for market penetration. Training will be conducted on a regular basis to ensure that our staff is fully meeting customer expec tations. Through the implementation of a fair, effec tive and competitive remuneration policy we intend to optimize our human resource output and advancement. We need the right people in the right plac e at the right time if we are to ensure optimum growth. We intend to develop our team so that our people can grow as the company grows - a mutually beneficial relationship. We are currently vigorously searching and rec ruiting the right people for our organization.

5.1 SWOT Analysis


We intend to enter a highly lucrative market in a rapidly growing ec onomy. We foresee our strengths as the ability to respond timeously to the market dictates and to provide custom designed travel excursions to travelers. Our key personnel will have a wide and thorough knowledge of the areas we intend to take travelers, which will go a long way towards penetrating the market. Below are the summarized strengths, weaknesses, opportunities and threats.

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5.1.1 Strengths
Diversified client base: This will reduce our dependency on one particular market. Combination of skills in employees: The direc tors intend to engage well-qualified and experienced employees to jointly develop business strategy and long-term plans, so as to attain c ompany objec tives. Extensive advertising and marketing: The company will undertake extensive advertising and marketing, promoting both its name as well as service/product awareness. Hence an aggressive and foc used marketing campaign with c lear goals and strategies shall be one of our mainstays.

5.1.2 Weaknesses
Lack of a reputation in c omparison to our competitors. This is due to the fac t that we are still new on the market. However this shall be addressed as shown in the marketing section of this plan. The introduction of new organizational prac tices and personnel who have not previously worked together presents a challenge to the organization. A limited financial base compared to the major players in the industry. Lack of clear strategic allies.

5.1.3 Opportunities
Current drive by government towards encouraging the participation of indigenous entrepreneurs in tourism presents an opportunity which we may fully utilize. Current growth rate of tourism presents an opportunity for ourselves which we may take advantage of. This is further supported by the current marketing campaigns by both the government and regional tourism body, the Regional Tourism Organization of Southern Africa - RETOSA, aimed at promoting tourism into the region. Presently there is no reliable public transportation company to take tourists to areas of interest. International tourism trends indicate that today's traveler wants a more enriching experience than that provided by conventional 'sun and sea' vac ations.

5.1.4 Threats
The present growth in the tourism sector may result in an increasing number of firms entering the market. This may led to increased competition emerging from a variety of given sources including: Established travel agencies, hotels and lodges may look at the development of new lines and vertically integrate transportation so as to provide additional services to clients. New marketing strategies and tac tics by established companies aimed at providing excursions of our intended nature. Existing competition. Other start-up travel companies generated by healthy nationwide ec onomic and tourism growth.

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5.2 Marketing Strategy
One core element of our strategy will be that of differentiation from our competitors. In terms of marketing we intend to ensure that our name and services are marketed on an extensive basis so that customers are aware of our existence. In price, we intend to offer reasonable and competitive prices in c omparison to competition and we need to be able to sustain that. Our service marketing will strive to ensure that we establish long relationships with c lients. Marketing Expenses Initial marketing and training expenses will be relatively high as we seek to bec ome known on the market and staff get trained in the professional provision of our services. This will be brought about by the development of sales literature and advertising expenses. As our market share increases and capital is generated, further marketing programmes and the expansion of those in existence at the time will be undertaken, to ensure market development. However with time these programmes will start generating revenue for the business, which we shall in turn reinvest.

5.2.1 Pricing Strategy


Sephats Tours will be competitively priced in relation to the dictates of the market. Due to the introductory nature of our services we intend to implement a penetration pricing strategy which will ensure that potential customers are not frightened away by our prices, up until our services are apprec iated and fully operational. However this will dictate that our costs are prudently kept so as to ensure our financial goals come to fruition. This is reflec ted in our prices as stated in the services description of this plan charging close to PX per kilometre per person. Each trip will include an average of eight to ten persons. We intend our income structure to match our cost structure, so as to ensure that the salaries we pay to our employees to assure good service are balanced by the cost we charge to the customer.

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5.2.2 Promotion Strategy
This strategy will be based primarily on informing potential customers of the existence of our services and making the right information available to our target customer. The intention will be to highlight the benefit of utilizing our service(s), which will include: Ac cess to exclusive travel destinations Service to fully apprec iate destinations through information pac kages, and not just sightseeing Ac cess to special interest travel ac cording to the groups preferences In such a market we cannot afford to appear in or produce second-rate material with poor labels that make our services look less than they are. Hence we intend to leverage our presence using quality broc hures and other sales literature, including promotional material such as pens, complimentary slips and pads. We intend to spread the word about our business through the following: 1. Advertising: This shall be undertaken through trade and industry publications, which are read by tourists, as well as the loc al newspapers. A constant look out will be made of any special editions in the loc al newspapers, which may provide an opportunity for us to advertise our services and business name. Sephats Tours will also be advertised through professionally done broc hures, and other such sales literature, which allow enough detail to be communicated about the services offered by the company. This literature will be mainly targeted at potential clients and plac ed or made available at strategic points, such as travel agencies. With time we also intend to utilize billboards to advertise ourselves, likewise loc ated at strategic points. Hence we intend to design and put up posters communicating the services we provide loc ated around hotels, lodges, airports and other such areas where tourists typically pass by. However in doing so we always intend to obtain the consent of the respec tive authority. 2. Personal Selling: Undoubtedly customer solicitation fac e-to-fac e will be a powerful form of promotion mainly due to the fac t that its flexibility will enable us to match the customer's needs to specific attributes of our services as well as giving concise details of what we have to offer. Another important determinant in utilizing personal selling is the fac t that we are relatively new on the market. As such, potential customers/clients will, to a certain degree, be skeptical towards the intended service(s) and how they are able to benefit from them. In c ases where the opportunity of obtaining a large order exists it may be necessary for the top management to go out personally, especially considering the fac t that we are still a relatively new firm on the market. However this shall be the situation in the majority of cases due to our relative infancy. 3. Direct Marketing: This will be used but only to a limited extent in the form of telemarketing and informing potential customers and obtaining referrals where possible. In the case of telemarketing it will involve our targeting potential customers of our services and informing them of our existence and destinations. We may then arrange for an appointment with the respec tive dec ision-maker, with the intention being to lure them into utilizing of our services. 4. Events: These are increasingly bec oming important as more firms establish in the country and hence the need to be known. The organization aims to promote itself through attending trade shows and expositions. Not only will these increase awareness of our services and business name, but also enable us to interac t with potential clients who may dec ide to utilize our service. Trade shows that come to mind include Botswana International Trade Fair (BITF) and BITEC. Page 19

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5. Internet Marketing: The increasing growth of the Internet as an information source provides an opportunity for ourselves that we may exploit. This is particularly so in view of the increasing dissemination of information over the World Wide Web, as individuals and groups look at obtaining the best deal possible. More often than not these individuals and groups seek out information over the Internet due to its relatively low cost and ease of use helping to minimize time wasting. However this will require adequate planning so as to ensure that all information on the website is ac curate and up-to-date, ensuring we market a professional image. This will mainly serve foreign tourists and other interested stakeholders. In all the above we intend to communicate our ability to deliver a good service that will satisfy the customers needs. Hence our messages will influence the engagement dec ision of prospec tive customers by emphasizing our customer foc us and, persuade prospec tive clients that we are different from our competitors. All the above promotional tools shall be well integrated and utilized in tandem so as to maximize their effec t.

5.2.3 Positioning Statement


Sephats intends to offer a unique service to all of its customers, primarily travelers, so as to position itself as the premier travel provider in Botswana. This shall be undertaken through provision of affordable, comfortable and luxurious transport as well as informative insights about the various sights and areas. These excursions will be tailored to the individuals'/groups' interests and thus providing enjoyment and satisfac tion. Our competitive advantage shall be our customer orientation and friendly staff who shall go at lengths to ensure the customer is served and fully satisfied. Through our reasonable charges and satisfying excursions we intend to attrac t a large portion of the market, both direc tly and indirec tly. Hence all promotional material and campaigns shall be direc ted to fulfilling our intended positioning on the market.

5.3 Sales Strategy


For the short term at least, the selling proc ess will depend on personal selling/networking and advertising to lure and inform potential customers about the services we offer and the benefits of utilizing our services. Our marketing does not intend to affect the perception of need as much as knowledge and awareness of the service category.

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5.3.1 Sales Forecast
The following chart and table show our planned Sales Forec ast for the next three years.

Table: Sales Forecast


Sales Forecast FY 2000 Sales All tourist services Other Total Sales Direct Cost of Sales All tourist services Other Subtotal Direct Cost of Sales $350,000 $0 $350,000 FY 2000 $70,000 $0 $70,000 FY 2001 $556,500 $0 $556,500 FY 2001 $111,300 $0 $111,300 FY 2002 $630,000 $0 $630,000 FY 2002 $126,000 $0 $126,000

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5.4 Strategic Alliances
In today's competitive environment it is bec oming increasingly essential for organizations to concentrate on their core ac tivities so as to gain and maintain a competitive advantage. This brings out the advantage of undertaking strategic alliances with organizations that the firm may benefit from and visa versa. Sephats Tours intends to establish strong partnerships with several hotels, lodges and travel agencies so as to be able to deliver customer wants. These alliances will assist in ensuring that we obtain a regular stream of customers from various establishments. At this writing, strategic alliances with several companies are possibilities, given the content of existing interest and disc ussions. However ultimately it is the quality of our service(s) and the skill and experience of the staff that will attrac t customers. During the start-up phase word-ofmouth from satisfied customers will play a large part in increasing awareness and gaining exposure for our services.

5.5 Corporate Social Responsibility


Sephats Tours rec ognizes the fac t that as it is involved in the tourism sector of the overall ec onomy there is need to be involved in a wide range of social responsibility engagement programmes so as to invest bac k into the community in which we operate. We believe that through our social responsibility programme we can indeed assist in improving peoples lives. We believe that if we are to contribute to development in a sustainable way, we need to support numerous projec ts. However, before we commit ourselves to projec ts we intend to ensure that they will be beneficial to the community, particularly in the long term. We know that we cannot address all the development needs of our society. Where we can, we assist and sometimes may form partnerships so as to increase capacity. One of the ways the company intends to be involved in c orporate social responsibility is through organizing cleaning campaigns with various communities. Basically this will involve briefing the community on the advantages of having a clean environment, now and in future. In order to entice the community to get involved in these campaigns, as well as to increase awareness about our business and services we intend to give out T-shirts and caps with our company name. These campaigns will also assist in us being perceived and apprec iated as a good corporate citizen.

6.0 Management Summary


The human resources element shall be an essential component in the delivery of the total service. By encouraging all employees to handle customers well, and by having enthusiastic, capable and empowered people interac ting with our customers, we intend to build the competitive advantage of being able to comprehensively meet our customers' needs. There will be need to evaluate jobs and remuneration pac kages against market benchmarks to employees for their agreed and set out tasks so as to ensure they are competitive. These principles extend to ac cident, medical, death and welfare benefits.

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6.1 Organizational Structure
Sephats Tours shall be managed primarily by working owners/partners. The company will engage more of a functional organization structure whereby people shall be foc using on their prime area of expertise. However in engaging this organization structure we intend to ensure that there is open communication between all personnel at all levels. With such a group we believe it will be simple to communicate with and support one another. Our organizational structure demonstrates the importance we shall put on our customers, and ensuring their satisfac tion in utilizing our services. As the company grows there will be more structure to the utilizing, with new employees being assigned a supervisor or subordinate. When the company is at its full staff potential, it will operate as any closely held utilizing, but maintain the personal interest in eac h employee's personal and family welfare and their contributions to the business. We ac knowledge the fac t that successful rec ruiting, motivation, and disc ipline proc edures are keys to the growth of the utilizing. Hence we intend to promote and maintain good labour relations, strong morale and high quality work per employee through undertaking the following: [disc ussion omitted].

6.2 Management Team


The founders of Sephats Tours are passionate about the ac tivities it will promote and offer on the market. Management style will reflec t the participation of the direc tors/shareholders. The company intends to respec t its community and treat all employees well. We will develop and nurture the company as community. However we realize that we are not fully conversant in tourism and as such intend to engage experienced staff as well as undergo a training course from a reputable institution. The Managing Direc tor's experience in public commercial transportation and government will assist in the establishment of good networks. He also has attended a course in Auto Mechanics at X Centre that will assist in servicing the vehicles. However ac knowledging the importance of continuous training and improvement the Managing Direc tor intends to undergo a course in Travel and Tourism so as to be fully conversant in the field, as well as obtain knowledge of the latest developments in the industry.

6.3 Personnel Plan


The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are included here. We believe this plan is a good compromise between fairness and expedience, and meets the commitments of our mission and business objec tives. We intend to compensate our personnel well, so as to retain their invaluable expertise and to ensure job satisfac tion and enrichment through delegation of authority. Our compensation will include health c are, generous profit sharing, plus a minimum of three weeks vac ation. Sephats Tours rec ognizes that our employees contribute fundamentally to the company's long-term prosperity, ac knowledging our obligation to remunerate them competitively. We intend to enhance our capacity to attrac t and retain people of quality through competitive remuneration pac kages.

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Table: Personnel
Personnel Plan Directors Accountant Tour Guide Sales & Marketing Driver Personal Assistant Cleaner Nightwatchman Mechanic Total People Total Payroll FY 2000 $0 $30,000 $21,600 $19,200 $14,400 $13,200 $7,200 $7,200 $0 11 $112,800 FY 2001 $48,000 $36,000 $48,000 $32,400 $36,000 $18,000 $18,000 $9,600 $20,400 14 $266,400 FY 2002 $60,000 $36,000 $48,000 $43,200 $36,000 $18,000 $18,000 $9,600 $20,400 16 $289,200

6.4 Training
In-house training shall be continuous so that we are continuously up-to-date in meeting customer requirements. With time we also intend to undertake regular external training particularly following any new developments in the market. This will ensure we are implementing the latest tec hniques and aware of customers expec tations. By setting our standards against industry benchmarks we will be able to ensure a regular flow of customers as they are continually referred to us. Internal training will not only include service and technical aspec ts, but also expand to give much greater knowledge of customers, market trends, services, new technology aids, time management amongst other such variables. Marketing sessions in particular will be a regular oc currence, as this will ensure that our personnel continuously portray a positive image of the business, assisting in bringing in more business.

6.5 Feedback and Control


1. We intend to make sure that eac h employee understands the goals of the firm, is customer foc used, proud of their work and work as a team. This will encourage employees to bec ome entrepreneurial and customer responsible, in addition to unifying staff in c ustomer foc us and values. 2. Important notices and developments will be continuously communicated to employees so as to keep them abreast of developments and promoting a sense of belonging and oneness in the organization. 3. We will encourage our employees to put forward any suggestions they might have regarding the improvement of any of the company's functions - an open door philosophy. Such a culture will enhance innovativeness and creativity in turn leading to job satisfac tion and enrichment. 4. We undertake to continuously formalize and measure cross-functional working communication so as to ensure that the various departments work harmoniously towards attainment of company objec tives.

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7.0 Financial Plan
The financial plan shall be essential if we are to meet our objec tives. The intention is to finance growth through cash flow and equity. One of the most important fac tors will be the payment terms as agreed between the client or customer. We can't push our customers hard on collec tion days, bec ause they are extremely sensitive and will normally judge us on our terms. Therefore there is need to develop a permanent system of rec eivables financing systems mutually agreed between both parties. Hence in the financial plan we intend to have the following: 1. A fundamental respec t for giving our customers value, and for maintaining a healthy and congenial workplac e. 2. Cash flow as first priority, growth sec ond, profits third. 3. Respec t for realistic forec asts, and conservative cash flow and financial management.

7.1 Important Assumptions


The financial plan depends on important assumptions. From the beginning, we rec ognize that payment terms and hence collec tion days are critical, but not a fac tor we can influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Some of the more important underlying assumptions are: We assume a strong economy, without major rec ession. We assume, of course, that there are no unforeseen changes in economic policy to make our service immediately obsolete or unwanted. We assume amongst other things a 60-day average collec tion period, sales entirely on invoice basis except for individuals who come direc tly to us, expenses mainly on a net 30 day basis, 30 days on average for payment of invoices, and present-day interest rates.

Table: General Assumptions


General Assumptions FY 2000 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 10.00% 10.00% 18.08% 0 2 10.00% 10.00% 17.00% 0 FY 2001 3 10.00% 10.00% 18.08% 0 FY 2002

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7.2 Key Financial Indicators
We foresee a slow initial growth in sales, as we strive to ensure we are known on the market, though operating expenses will be relatively high, and a bump in our sales and revenue generation as we spread our services during expansion. Collec tion days are very important. We do not want to let our average collec tion days get above the client's ac tual subsc ription period under any circumstances. This could cause a serious problem with c ash flow, bec ause our working capital situation is chronically tight. However, we rec ognize that we cannot control this fac tor easily, bec ause of the relationship we wish to create with our clients.

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7.3 Break-even Analysis
Our break-even analysis will be based on running costs, that is costs we shall incur in keeping the business running, including salaries and wages, rent, vehicle and computer maintenance costs, water and elec tricity, insurance amongst others. Hence many fixed costs shall be included in these costs. We will thus ensure that our sales levels are running comfortably above breakeven.

Table: Break-even Analysis


Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $18,656

20% $14,925

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7.4 Projected Profit and Loss
Our projec ted profit and loss is shown in the table below, with sales increasing from more than P350,000 the first year to more than P556,500 the second, and P630,000 in the third year. Our net profit margin is relatively good for a start-up organization in our line of business. Hence we do expec t to more than break-even in the first year of operation. As with the break-even, we are projec ting very conservatively regarding cost of sales and gross margin. Our cost of sales may be much lower, and gross margin higher, than in this projec tion. We prefer to projec t conservatively so that we make sure we have enough cash. The detailed monthly projec tions are included in the appendix.

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Table: Profit and Loss
Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % FY 2000 $350,000 $70,000 $0 $70,000 $280,000 80.00% FY 2001 $556,500 $111,300 $0 $111,300 $445,200 80.00% FY 2002 $630,000 $126,000 $0 $126,000 $504,000 80.00%

Expenses Payroll Sales and Marketing and Other Expenses Depreciation Miscellaneous Leased Equipment Rent Travel Insurance Maintenance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$112,800 $23,700 $0 $2,400 $0 $14,400 $1,800 $12,000 $12,000 $0 $0 $179,100 $100,900 $100,900 $0 $16,799 $84,101 24.03%

$266,400 $27,163 $0 $2,640 $0 $15,840 $1,980 $13,200 $0 $0 $0 $327,223 $117,977 $117,977 $0 $20,056 $97,921 17.60%

$289,200 $29,879 $0 $2,904 $0 $17,424 $2,184 $14,520 $0 $0 $0 $356,111 $147,889 $147,889 $0 $26,743 $121,146 19.23%

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7.5 Projected Cash Flow
The following chart and table highlights the projec ted Cash Flow statement for Sephats Tours.

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Table: Cash Flow
Pro Forma Cash Flow FY 2000 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance FY 2001 FY 2002

$175,000 $133,700 $308,700

$278,250 $253,883 $532,133

$315,000 $306,327 $621,327

$0 $0 $0 $0 $0 $0 $0 $308,700 FY 2000

$0 $0 $0 $0 $0 $0 $0 $532,133 FY 2001

$0 $0 $0 $0 $0 $0 $0 $621,327 FY 2002

$112,800 $144,204 $257,004

$266,400 $199,521 $465,921

$289,200 $219,625 $508,825

$0 $0 $0 $0 $0 $0 $0 $257,004 $51,696 $81,696

$0 $0 $0 $0 $0 $0 $0 $465,921 $66,212 $147,907

$0 $0 $0 $0 $0 $0 $0 $508,825 $112,502 $260,409

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7.6 Projected Balance Sheet
The table below outlines the company's Balance Sheet.

Table: Balance Sheet


Pro Forma Balance Sheet FY 2000 Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth FY 2001 FY 2002

$81,696 $41,300 $9,240 $0 $132,236

$147,907 $65,667 $14,692 $0 $228,266

$260,409 $74,340 $16,632 $0 $351,381

$167,000 $0 $167,000 $299,236 FY 2000

$167,000 $0 $167,000 $395,266 FY 2001

$167,000 $0 $167,000 $518,381 FY 2002

$18,134 $0 $0 $18,134 $0 $18,134 $202,000 ($5,000) $84,101 $281,101 $299,236 $281,101

$16,244 $0 $0 $16,244 $0 $16,244 $202,000 $79,101 $97,921 $379,022 $395,266 $379,022

$18,213 $0 $0 $18,213 $0 $18,213 $202,000 $177,022 $121,146 $500,168 $518,381 $500,168

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7.7 Business Ratios
The following table shows some important ratios for the Tour Operators industry, as determined by the Standard Industry Classification (SIC) Code, 4725.

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Table: Ratios
Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth 0.85 6% 4.51 1.25 0.71 4% 9.11 1.47 0.82 4% 14.30 1.26 n.a n.a n.a n.a FY 2000 0.00% FY 2001 59.00% FY 2002 13.21% Industry Profile 4.00%

13.80% 3.09% 0.00% 44.19% 55.81% 100.00% 6.06% 0.00% 6.06% 93.94%

16.61% 3.72% 0.00% 57.75% 42.25% 100.00% 4.11% 0.00% 4.11% 95.89%

14.34% 3.21% 0.00% 67.78% 32.22% 100.00% 3.51% 0.00% 3.51% 96.49%

22.30% 0.70% 42.80% 65.80% 34.20% 100.00% 33.10% 16.40% 49.50% 50.50%

100.00% 80.00% 56.07% 4.71% 28.83%

100.00% 80.00% 62.40% 3.26% 21.20%

100.00% 80.00% 60.52% 3.17% 23.47%

100.00% 40.10% 30.80% 0.80% 1.20%

7.29 6.78 6.06% 35.89% 33.72% FY 2000 24.03% 29.92%

14.05 13.15 4.11% 31.13% 29.85% FY 2001 17.60% 25.84%

19.29 18.38 3.51% 29.57% 28.53% FY 2002 19.23% 24.22%

1.66 1.29 49.50% 2.70% 5.30%

n.a n.a

4.24 56 10.91 8.95 27 1.17

4.24 70 9.30 12.17 32 1.41

4.24 81 8.05 12.17 28 1.22

n.a n.a n.a n.a n.a n.a

0.06 1.00

0.04 1.00

0.04 1.00

n.a n.a

$114,101 0.00

$212,022 0.00

$333,168 0.00

n.a n.a

Page 36

Sephats Tours
Dividend Payout 0.00 0.00 0.00 n.a

8.0 Controls
The loc al tourism industry has been growing rapidly over the last dec ade due to increases in the number of people seeking holidays in the country. With this in mind we intend our marketing programmes to expand ac cordingly. The introduction of good broc hures and other sales literature will enable Sephats Tours to market to potential customers. We projec t sales to increase ac cordingly, though slightly slower as we establish a reputation for ourselves. With time, we intend to be at the forefront of customers' minds with regards to travel excursions. Throughout the year we intend to undertake regular evaluations of our marketing programmes so as to ensure that we are in line with our intended objec tives. In summary we intend to undertake the following: 1. Tracking and follow-up: We intend to have the disc ipline, as an organization, to trac k results of the business plan and make sure that we implement it. 2. Market segment focus: We intend to have the disc ipline to maintain the market segment foc us. 3. Customer Follow-up: We intend to have the disc ipline as an organization to constantly follow-up on customers so as to ensure that we are meeting their expec tations at all times.

Page 37

Appendix
Table: Sales Forecast
Sales Forecast Oct Sales All tourist services Other Total Sales Direct Cost of Sales All tourist services Other Subtotal Direct Cost of Sales 0% 0% $14,000 $0 $14,000 Oct $2,800 $0 $2,800 Nov $17,500 $0 $17,500 Nov $3,500 $0 $3,500 Dec $17,500 $0 $17,500 Dec $3,500 $0 $3,500 Jan $28,000 $0 $28,000 Jan $5,600 $0 $5,600 Feb $28,000 $0 $28,000 Feb $5,600 $0 $5,600 Mar $28,000 $0 $28,000 Mar $5,600 $0 $5,600 Apr $28,000 $0 $28,000 Apr $5,600 $0 $5,600 May $31,500 $0 $31,500 May $6,300 $0 $6,300 Jun $35,000 $0 $35,000 Jun $7,000 $0 $7,000 Jul $38,500 $0 $38,500 Jul $7,700 $0 $7,700 Aug $42,000 $0 $42,000 Aug $8,400 $0 $8,400 Sep $42,000 $0 $42,000 Sep $8,400 $0 $8,400

Page 1

Appendix
Table: Personnel
Personnel Plan Directors Accountant Tour Guide Sales & Marketing Driver Personal Assistant Cleaner Nightwatchman Mechanic Total People Total Payroll 0% 0% 0% 0% 0% 0% 0% 0% 0% Oct $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Nov $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Dec $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Jan $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Feb $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Mar $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Apr $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 May $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Jun $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Jul $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Aug $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400 Sep $0 $2,500 $1,800 $1,600 $1,200 $1,100 $600 $600 $0 11 $9,400

Page 2

Appendix
Table: General Assumptions
General Assumptions Oct Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 10.00% 10.00% 30.00% 0 2 10.00% 10.00% 17.00% 0 Nov 3 10.00% 10.00% 17.00% 0 Dec 4 10.00% 10.00% 17.00% 0 Jan 5 10.00% 10.00% 17.00% 0 Feb 6 10.00% 10.00% 17.00% 0 Mar 7 10.00% 10.00% 17.00% 0 Apr 8 10.00% 10.00% 17.00% 0 May 9 10.00% 10.00% 17.00% 0 Jun 10 10.00% 10.00% 17.00% 0 Jul 11 10.00% 10.00% 17.00% 0 Aug 12 10.00% 10.00% 17.00% 0 Sep

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Oct $14,000 $2,800 $0 $2,800 $11,200 80.00% Nov $17,500 $3,500 $0 $3,500 $14,000 80.00% Dec $17,500 $3,500 $0 $3,500 $14,000 80.00% Jan $28,000 $5,600 $0 $5,600 $22,400 80.00% Feb $28,000 $5,600 $0 $5,600 $22,400 80.00% Mar $28,000 $5,600 $0 $5,600 $22,400 80.00% Apr $28,000 $5,600 $0 $5,600 $22,400 80.00% May $31,500 $6,300 $0 $6,300 $25,200 80.00% Jun $35,000 $7,000 $0 $7,000 $28,000 80.00% Jul $38,500 $7,700 $0 $7,700 $30,800 80.00% Aug $42,000 $8,400 $0 $8,400 $33,600 80.00% Sep $42,000 $8,400 $0 $8,400 $33,600 80.00%

Expenses Payroll Sales and Marketing and Other Expenses Depreciation Miscellaneous Leased Equipment Rent Travel Insurance Maintenance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 ($2,725) ($2,725) $0 ($818) ($1,908) -13.63%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $75 $75 $0 $13 $62 0.36%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $3,000 $0 $0 $16,925 ($2,925) ($2,925) $0 ($497) ($2,428) -13.87%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $8,475 $8,475 $0 $1,441 $7,034 25.12%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $8,475 $8,475 $0 $1,441 $7,034 25.12%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $3,000 $0 $0 $16,925 $5,475 $5,475 $0 $931 $4,544 16.23%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $8,475 $8,475 $0 $1,441 $7,034 25.12%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $11,275 $11,275 $0 $1,917 $9,358 29.71%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $3,000 $0 $0 $16,925 $11,075 $11,075 $0 $1,883 $9,192 26.26%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $16,875 $16,875 $0 $2,869 $14,006 36.38%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $0 $0 $0 $13,925 $19,675 $19,675 $0 $3,345 $16,330 38.88%

$9,400 $1,975 $0 $200 $0 $1,200 $150 $1,000 $3,000 $0 $0 $16,925 $16,675 $16,675 $0 $2,835 $13,840 32.95%

0%

Page 4

Appendix
Table: Cash Flow
Pro Forma Cash Flow Oct Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $0 $0 $0 $0 $9,720 ($2,720) $27,280 $0 $0 $0 $0 $0 $0 $0 $18,962 ($9,978) $17,302 $0 $0 $0 $0 $0 $0 $0 $18,265 ($2,457) $14,845 $0 $0 $0 $0 $0 $0 $0 $20,039 $2,711 $17,556 $0 $0 $0 $0 $0 $0 $0 $23,199 ($274) $17,282 $0 $0 $0 $0 $0 $0 $0 $21,049 $6,951 $24,234 $0 $0 $0 $0 $0 $0 $0 $23,373 $4,627 $28,861 $0 $0 $0 $0 $0 $0 $0 $21,031 $8,719 $37,580 $0 $0 $0 $0 $0 $0 $0 $23,034 $8,524 $46,105 $0 $0 $0 $0 $0 $0 $0 $26,534 $8,524 $54,629 $0 $0 $0 $0 $0 $0 $0 $25,303 $13,255 $67,884 $0 $0 $0 $0 $0 $0 $0 $26,497 $13,811 $81,696 $9,400 $320 $9,720 $9,400 $9,562 $18,962 $9,400 $8,865 $18,265 $9,400 $10,639 $20,039 $9,400 $13,799 $23,199 $9,400 $11,649 $21,049 $9,400 $13,973 $23,373 $9,400 $11,631 $21,031 $9,400 $13,634 $23,034 $9,400 $17,134 $26,534 $9,400 $15,903 $25,303 $9,400 $17,097 $26,497 0.00% $0 $0 $0 $0 $0 $0 $0 $7,000 Oct $0 $0 $0 $0 $0 $0 $0 $8,983 Nov $0 $0 $0 $0 $0 $0 $0 $15,808 Dec $0 $0 $0 $0 $0 $0 $0 $22,750 Jan $0 $0 $0 $0 $0 $0 $0 $22,925 Feb $0 $0 $0 $0 $0 $0 $0 $28,000 Mar $0 $0 $0 $0 $0 $0 $0 $28,000 Apr $0 $0 $0 $0 $0 $0 $0 $29,750 May $0 $0 $0 $0 $0 $0 $0 $31,558 Jun $0 $0 $0 $0 $0 $0 $0 $35,058 Jul $0 $0 $0 $0 $0 $0 $0 $38,558 Aug $0 $0 $0 $0 $0 $0 $0 $40,308 Sep Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

$7,000 $0 $7,000

$8,750 $233 $8,983

$8,750 $7,058 $15,808

$14,000 $8,750 $22,750

$14,000 $8,925 $22,925

$14,000 $14,000 $28,000

$14,000 $14,000 $28,000

$15,750 $14,000 $29,750

$17,500 $14,058 $31,558

$19,250 $15,808 $35,058

$21,000 $17,558 $38,558

$21,000 $19,308 $40,308

Page 5

Appendix
Table: Balance Sheet
Pro Forma Balance Sheet Oct Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth Starting Balances Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

$30,000 $0 $0 $0 $30,000

$27,280 $7,000 $3,080 $0 $37,360

$17,302 $15,517 $3,850 $0 $36,669

$14,845 $17,208 $3,850 $0 $35,904

$17,556 $22,458 $6,160 $0 $46,174

$17,282 $27,533 $6,160 $0 $50,976

$24,234 $27,533 $6,160 $0 $57,927

$28,861 $27,533 $6,160 $0 $62,554

$37,580 $29,283 $6,930 $0 $73,794

$46,105 $32,725 $7,700 $0 $86,530

$54,629 $36,167 $8,470 $0 $99,266

$67,884 $39,608 $9,240 $0 $116,733

$81,696 $41,300 $9,240 $0 $132,236

$167,000 $0 $167,000 $197,000

$167,000 $0 $167,000 $204,360 Oct

$167,000 $0 $167,000 $203,669 Nov

$167,000 $0 $167,000 $202,904 Dec

$167,000 $0 $167,000 $213,174 Jan

$167,000 $0 $167,000 $217,976 Feb

$167,000 $0 $167,000 $224,927 Mar

$167,000 $0 $167,000 $229,554 Apr

$167,000 $0 $167,000 $240,794 May

$167,000 $0 $167,000 $253,530 Jun

$167,000 $0 $167,000 $266,266 Jul

$167,000 $0 $167,000 $283,733 Aug

$167,000 $0 $167,000 $299,236 Sep

$0 $0 $0 $0 $0 $0 $202,000 ($5,000) $0 $197,000 $197,000 $197,000

$9,268 $0 $0 $9,268 $0 $9,268 $202,000 ($5,000) ($1,908) $195,093 $204,360 $195,093

$8,514 $0 $0 $8,514 $0 $8,514 $202,000 ($5,000) ($1,845) $195,155 $203,669 $195,155

$10,177 $0 $0 $10,177 $0 $10,177 $202,000 ($5,000) ($4,273) $192,727 $202,904 $192,727

$13,413 $0 $0 $13,413 $0 $13,413 $202,000 ($5,000) $2,761 $199,761 $213,174 $199,761

$11,180 $0 $0 $11,180 $0 $11,180 $202,000 ($5,000) $9,796 $206,796 $217,976 $206,796

$13,587 $0 $0 $13,587 $0 $13,587 $202,000 ($5,000) $14,340 $211,340 $224,927 $211,340

$11,180 $0 $0 $11,180 $0 $11,180 $202,000 ($5,000) $21,374 $218,374 $229,554 $218,374

$13,061 $0 $0 $13,061 $0 $13,061 $202,000 ($5,000) $30,732 $227,732 $240,794 $227,732

$16,605 $0 $0 $16,605 $0 $16,605 $202,000 ($5,000) $39,925 $236,925 $253,530 $236,925

$15,335 $0 $0 $15,335 $0 $15,335 $202,000 ($5,000) $53,931 $250,931 $266,266 $250,931

$16,472 $0 $0 $16,472 $0 $16,472 $202,000 ($5,000) $70,261 $267,261 $283,733 $267,261

$18,134 $0 $0 $18,134 $0 $18,134 $202,000 ($5,000) $84,101 $281,101 $299,236 $281,101

Page 6

Appendix
Table: Ratios
Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover 7.29 6.78 6.06% 35.89% 33.72% FY 2000 24.03% 29.92% 14.05 13.15 4.11% 31.13% 29.85% FY 2001 17.60% 25.84% 19.29 18.38 3.51% 29.57% 28.53% FY 2002 19.23% 24.22% 1.66 1.29 49.50% 2.70% 5.30% FY 2000 0.00% FY 2001 59.00% FY 2002 13.21% Industry Profile 4.00%

13.80% 3.09% 0.00% 44.19% 55.81% 100.00% 6.06% 0.00% 6.06% 93.94%

16.61% 3.72% 0.00% 57.75% 42.25% 100.00% 4.11% 0.00% 4.11% 95.89%

14.34% 3.21% 0.00% 67.78% 32.22% 100.00% 3.51% 0.00% 3.51% 96.49%

22.30% 0.70% 42.80% 65.80% 34.20% 100.00% 33.10% 16.40% 49.50% 50.50%

100.00% 80.00% 56.07% 4.71% 28.83%

100.00% 80.00% 62.40% 3.26% 21.20%

100.00% 80.00% 60.52% 3.17% 23.47%

100.00% 40.10% 30.80% 0.80% 1.20%

n.a n.a

4.24 56 10.91 8.95

4.24 70 9.30 12.17

4.24 81 8.05 12.17

n.a n.a n.a n.a

Page 7

Appendix
Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout 0.06 1.00 0.04 1.00 0.04 1.00 n.a n.a 27 1.17 32 1.41 28 1.22 n.a n.a

$114,101 0.00

$212,022 0.00

$333,168 0.00

n.a n.a

0.85 6% 4.51 1.25 0.00

0.71 4% 9.11 1.47 0.00

0.82 4% 14.30 1.26 0.00

n.a n.a n.a n.a n.a

Page 8