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Northwind Traders Sample Business Plan

Introduction to the Sample Plan


The following document is a sample of a finished business plan. In your final plan, you have the opportunity to elaborate on those ideas in your outline that you feel are most integral to your business. In composing your business plan, you can follow your outline as loosely or closely as you choose. or instance, in the sample plan, the !"ecutive Summary, which is the last section of the Business Planning #i$ard, is presented first in order to emphasi$e the most impressive features of the business. %our goal in composing a finished business plan is to construct the most comprehensive, thorough document possible, in order to attract investors and to confirm that you have ta&en the time to e"plore as many potential issues for your business as may arise.

Northwind Traders Sample Business Plan

'

(r. )ichard *arey *anton Street Seattle, #ashington '''''

+ear (r. *arey, (y attorney, (r. #illiam -ollands, suggested I write to you regarding my business, Northwind Traders. I am currently see&ing funding, and I believe that my company would coincide with your interest in businesses relating to the travel industry ma&es my company a great investment for you. Northwind Traders is positioned to ta&e advantage of the significant mar&et opportunities available in the customi$ed travel.planning field. Through a professional approach to mar&eting, e"perienced management, and an emphasis on outstanding customer support and service, Northwind Traders can become the /reater Seattle area0s premier provider of planning services for !uropean adventure travel through a strong mar&eting campaign, e"perienced management, and an emphasis on outstanding customer support and service. e"pand to become a regional force. #e are see&ing 123,455 in funding, and anticipate this to be the e"tent of the funds re6uired. The funds will be used to refurbish the shop, to e"pand the staff, and to developincrease mar&eting activities, primarily our #eb site and databasee development. I appreciate your consideration of the business plan for Northwind Traders. I will contact you ne"t wee& in appro"imately ten days to see if you have any 6uestions andor to discuss how we may proceed. Than& you. Sincerely, rom that base, the company will

-eather (itchell President

Northwind Traders Sample Business Plan

Northwind Traders Sample Business Plan

Table of Contents
EXECUTIVE SUMMARY.................................................................................................................................................1 DESCRIPTION OF THE COMPANY............................................................................................................................... 1 MISSION STATEMENT............................................................................................................................................... 1 PRODUCTS AND SERVICES......................................................................................................................................... 1 FINANCIAL FORECAST.............................................................................................................................................. 2 FINANCING REQUIREMENTS...................................................................................................................................... 2 HISTORY AND POSITION TO DATE............................................................................................................................4 THE COMPANYS MISSION........................................................................................................................................ 4 MANAGEMENT TEAM AND KEY PERSONNEL.............................................................................................................. 4 SERVICES................................................................................................................................................................. 6 TRANSPORTATION.................................................................................................................................................... 7 COMPANY HISTORY.................................................................................................................................................. 7 GUARANTEES AND WARRANTIES............................................................................................................................... 8
USINESS STRUCTURE.............................................................................................................................................. 8

MARKET RESEARCH......................................................................................................................................................8 ECONOMIC AND SOCIAL FACTORS............................................................................................................................. ! COMPETITIVE ENVIRONMENT.................................................................................................................................... ! LONG"TERM OPPORTUNITIES.................................................................................................................................... ! GEOGRAPHIC AREA................................................................................................................................................ 1# MARKET DESCRIPTION........................................................................................................................................... 1# TARGET CUSTOMERS.............................................................................................................................................. 1# MARKET DEFINITION.............................................................................................................................................. 1# MARKET OPPORTUNITIES........................................................................................................................................ 11 COMPETITIVE ANALYSIS......................................................................................................................................... 12 COMPETITIVE ADVANTAGES................................................................................................................................... 1$ COMPETITORS POSITIONS...................................................................................................................................... 14 POTENTIAL FUTURE COMPETITION.......................................................................................................................... 14 BUSINESS STRATEGY ...................................................................................................................................................15 CUSTOMER INCENTIVES.......................................................................................................................................... 1% ADVERTISING AND PROMOTION.............................................................................................................................. 1% SALES AND MARKETING......................................................................................................................................... 16 COMMISSION.......................................................................................................................................................... 17 OPERATIONS...................................................................................................................................................................17 PREMISES............................................................................................................................................................... 17 CHOICE OF LOCATION AND PREMISES..................................................................................................................... 17 Northwind Traders Sample Business Plan 4

HOURS OF OPERATION............................................................................................................................................ 17 EQUIPMENT............................................................................................................................................................ 18 STAFFING............................................................................................................................................................... 18 FORECASTING................................................................................................................................................................18 SALES FORECAST.................................................................................................................................................... 18 CASH FLOW PRO&ECTIONS...................................................................................................................................... 2# INCOME STATEMENT.............................................................................................................................................. 2#
ALANCE

SHEET.................................................................................................................................................... 21

PERFORMANCE RATIOS........................................................................................................................................... 21
REAK"EVEN.......................................................................................................................................................... 21

FUNDS REQUIRED AND TIMING............................................................................................................................... 21 FUNDING OPTIONS.................................................................................................................................................. 22 BUSINESS CONTROLS...................................................................................................................................................23 ACCOUNTING SYSTEM............................................................................................................................................ 2$ QUALITY CONTROL................................................................................................................................................ 2$ NEW TOUR OPERATORS.......................................................................................................................................... 2$ CAPACITY.............................................................................................................................................................. 2$ LONG"TERM GOALS............................................................................................................................................... 24 STEPS FOR ACHIEVING GOALS................................................................................................................................ 24 POSITION................................................................................................................................................................ 2% RISKS ASSOCIATED WITH GROWTH......................................................................................................................... 2% APPENDIX 1 MARKET RESEARCH..........................................................................................................................2! APPENDIX 2 FINANCIAL FORECASTS....................................................................................................................35 EXECUTIVE SUMMARY.................................................................................................................................................! THE COMPANY......................................................................................................................................................... 6 THE COMPANYS MISSION........................................................................................................................................ 6 PRODUCTS AND SERVICES......................................................................................................................................... 6 MARKETING AND SALES TECHNIQUES....................................................................................................................... 6 THE COMPETITION................................................................................................................................................... 7 TARGET MARKET..................................................................................................................................................... 7 OPERATIONS............................................................................................................................................................ 8 MANAGEMENT......................................................................................................................................................... 8 FINANCIALS.............................................................................................................................................................. 8 FUNDING.................................................................................................................................................................. ! HISTORY AND POSITION TO DATE..........................................................................................................................1" THE COMPANYS MISSION...................................................................................................................................... 1# Northwind Traders Sample Business Plan 8

MANAGEMENT TEAM AND KEY PERSONNEL............................................................................................................ 1# SERVICES............................................................................................................................................................... 12 TRANSPORTATION.................................................................................................................................................. 1$ COMPANY HISTORY................................................................................................................................................ 1$ GUARANTEES AND WARRANTIES............................................................................................................................. 14
USINESS STRUCTURE............................................................................................................................................ 14

MARKET RESEARCH....................................................................................................................................................14 ECONOMIC AND SOCIAL FACTORS........................................................................................................................... 1% COMPETITIVE ENVIRONMENT.................................................................................................................................. 1% LONG"TERM OPPORTUNITIES.................................................................................................................................. 1% GEOGRAPHIC AREA................................................................................................................................................ 16 MARKET DESCRIPTION........................................................................................................................................... 16 TARGET CUSTOMERS.............................................................................................................................................. 17 MARKET DEFINITION.............................................................................................................................................. 17 MARKET OPPORTUNITIES........................................................................................................................................ 18 COMPETITIVE ANALYSIS......................................................................................................................................... 1! COMPETITIVE ADVANTAGES................................................................................................................................... 22 COMPETITORS POSITIONS...................................................................................................................................... 22 POTENTIAL FUTURE COMPETITION.......................................................................................................................... 2$ BUSINESS STRATEGY ...................................................................................................................................................23 CUSTOMER INCENTIVES.......................................................................................................................................... 2$ ADVERTISING AND PROMOTION.............................................................................................................................. 24 SALES AND MARKETING......................................................................................................................................... 2% COMMISSION.......................................................................................................................................................... 2% OPERATIONS...................................................................................................................................................................25 PREMISES............................................................................................................................................................... 2% CHOICE OF LOCATION AND PREMISES..................................................................................................................... 26 HOURS OF OPERATION............................................................................................................................................ 26 EQUIPMENT............................................................................................................................................................ 26 STAFFING............................................................................................................................................................... 26 FORECASTING................................................................................................................................................................27 SALES FORECAST.................................................................................................................................................... 27 CASH FLOW PRO&ECTIONS...................................................................................................................................... 28 INCOME STATEMENT.............................................................................................................................................. 28
ALANCE

SHEET.................................................................................................................................................... 2!

PERFORMANCE RATIOS........................................................................................................................................... 2!
REAK"EVEN.......................................................................................................................................................... 2!

FUNDS REQUIRED AND TIMING............................................................................................................................... $# Northwind Traders Sample Business Plan 9

FUNDING OPTIONS.................................................................................................................................................. $1 BUSINESS CONTROLS...................................................................................................................................................31 ACCOUNTING SYSTEM............................................................................................................................................ $1 QUALITY CONTROL................................................................................................................................................ $1 NEW TOUR OPERATORS.......................................................................................................................................... $2 CAPACITY.............................................................................................................................................................. $2 LONG"TERM GOALS............................................................................................................................................... $2 STEPS FOR ACHIEVING GOALS................................................................................................................................ $2 POSITION................................................................................................................................................................ $$ RISKS ASSOCIATED WITH GROWTH......................................................................................................................... $4 APPENDIX 1 MARKET RESEARCH..........................................................................................................................35 INTERNATIONAL ARRIVALS
Y

WORLD REGION...................................................................................................... $%

INDICATIONS OF TOURISM DEMAND IN 1!!7........................................................................................................... $6 SUMMARY OF FINDINGS FROM MARKET RESEARCH SURVEY.................................................................................... $7 NORTHWIND TRADERS QUESTIONNAIRE.................................................................................................................. 41 INTERNET GROWTH AND THE SALE OF TRAVEL SERVICES....................................................................................... 44 APPENDIX 2 FINANCIAL FORECASTS....................................................................................................................4! CASH FLOW PRO&ECTION YEAR ONE....................................................................................................................... 46 INCOME STATEMENT' YEARS ONE TO THREE.......................................................................................................... 48
ALANCE

SHEET AT END OF YEAR ONE.................................................................................................................. %1

SOURCES AND USES OF FUNDS................................................................................................................................ %$

Northwind Traders Sample Business Plan

Northwind Traders Sample Business Plan

EXECUTIVE SUMMARY
The escription of the Compan!
Northwind Traders, Inc. provides travel.planning services for !uropean adventure vacations to residents ofindividuals in the /greater Seattle)edmond area. The service industry, including travel agencies, is one of the fastest growing business sectorsareas of the economy, and Northwind Traders intends to capitali$e on the success of this industry by ta&ing advantage of travel planning opportunities in the Pacific Northwest region.

President -eather (itchell and :ice President of Sales and (ar&eting ;im <im currently hold the company0s stoc&. Prior to starting the Northwind Traders travel agency, (s. (itchell cofounded, co.owned, and operated the Northwind Traders clothing store. She has selected a small team with e"tensive travel, sales, and computer s&ills, all of whom will be invaluable to the new venture. -er cowor&ers bring a combined total of 34 years of travel industry e"perience to the agency. President -eather (itchell and :ice President of Sales and (ar&eting ;im <im currently hold the company0s stoc&.

The Compan!"s Mission Statement


The mission of Northwind Traders is to become the premier provider of adventure vacations for '4. to 34. year.old professionals. Northwind Traders is dedicated to building long.term relationships with customers through 6uality training and customer support, and wants to be recogni$ed as the leading adventure vacation company in the /greater Seattle)edmond area. The company0s goal is to grow steadilyy e"pansion, becoming profitable by the secondthird year of operations.

Products and Ser#ices


Northwind Traders recently became the appointed agents for (argie0s Travel, one of the largest and most respected tour operators in the mar&et. #ith virtually no mar&eting effort, Northwind Traders has sold some '55 adventure vacations in the past si" months, netting 188,255 in commissions. Sales of insurance policies and other services have added to this total, and could potentially add much more. Northwind Traders offers a comprehensive range of services to support the adventurous traveler, including pre. and postvacation briefings, travel insurance, and a directory of services specific to each destination and activity.
Northwind Traders Sample Business Plan '

Mar$etin% and Sales Techni&ues


Northwind Traders believes that by concentrating on one mar&et segment and one geographic destination, it will be able to deliver a service that is superior to anything currently on the mar&et. Published research shows that tourism is a fast.growing business sector and that !urope is the favored location for most travelers. =dventure vacations, while a relatively new and small mar&et, loo&s set for e"plosive growth. In addition to targeting adventure travelers and wor&ing as the appointed agents for established travel tour firms, Northwind Traders plans to leverage its relationship with its sister business, Northwind Traders outdoor clothing shop, by offering discount services to shop customers.

The Competition
rom des& and field mar&et research carried out on 355 clients, it is clear that there is considerable potential in the adventure travel business. )esearch indicates that Northwind Traders0 target mar&et finds it difficult to obtain reliable and authoritative advice on destinations and activities. )esearch also suggests that the customers in this mar&et are unli&ely to purchase their vacations again from the firm who provided their last vacation due to a lac& of informative sales personnel. Northwind Traders will cater to these needs and develop a strong return. customer base. Because they are currently the only travel agency focused on !uropean adventure vacations that is located in the Seattle)edmond area, Northwind Traders has a substantial opportunity to dominate the region. In order to maintain and improve their current position in the region, they will need to invest in a #eb site, as well as database software and systems, and in refurbishing the shop premises. Northwind Traders maintains the following advantages over e"isting competition, ongoing support to clients> e"tensive &nowledge of the !uropean adventure vacation field> superior customer service> speciali$ed training programs for staff> informative #eb site> competitive rates. informative #eb site
Northwind Traders Sample Business Plan 3

competitive rates

Tar%et Mar$et
rom des& and field mar&et research carried out on 355 clients, it is clear that there is considerable potential in the adventure travel business. )esearch indicates that Northwind Traders0 target mar&et finds it difficult to obtain reliable and authoritative advice on destinations and activities. )esearch also suggests that the customers in this mar&et are unli&ely to purchase their vacations again from the firm who provided their last vacation due to a lac& of informative sales personnel. Northwind Traders will cater to these needs and develop a strong return. customer base.

'perations
The Northwind Traders travel agency business will operate from a self.contained facility within the e"isting clothing shop, with its own shop window and entrance from the main street. The business will benefit both from its accessible location in the heart of Seattle)edmond0s downtown shopping district, as well as from the clientele it will gain through its pro"imity to the already established Northwind Traders clothing store.

Mana%ement
Prior to starting the Northwind Traders travel agency, (s. (itchell cofounded, co.owned, and operated the Northwind Traders clothing store. She has selected a small team with e"tensive travel, sales, and computer s&ills, all of whom will be invaluable to the new venture. -er cowor&ers bring a combined total of 34 years of travel industry e"perience to the agency.

(inancial (orecasts
Northwind Traders started as a clothing store and has e"panded into the travel agency business, with its focus on adventure travel in !urope. ?ast year, Northwind Traders clothing store made 1'55,755 profit on sales of 11,71@,455 and employed seven people. Northwind Traders e"pects that by concentrating full.time on selling adventure vacations, clients will increase from the present level of '55 Aachieved over a si".month period with only a part.time effortB, to at least 885 in the first year, 1755 in the second, and '155 in the third. To help achieve this growth, (s. (itchell has identified three other tour operators she wishes to represent and has begun negotiations with them.
Northwind Traders Sample Business Plan 7

Selling between two and three vacations a day will allow the business to reach cash flow brea&. even in %ear Cne, while ma&eing a modest profit in %ear Cne. By the %ear Two postta" profits should be 13575,5855, and will increase to nearly 17@8451,555 by %ear Three.

(undin%(inancin% Re&uirementss Sou%ht and Utili)ation


(s. (itchell plans to sell her shares in the clothing shop and invest the proceeds in the new travel business, Northwind Traders. In addition, she will be investing 171,945 of her own money in the business, and see&ing 123,455 from outside sources. )eturn on shareholders capital by %ear Three is proDected to be close to 155 percent. The purpose of the business plan is to communicate this highly profitable opportunity to (s. (itchell0s partners in the clothing shop and to outside investors, and to attract interest in the venture. =lternatively, (s. (itchell is considering loan finance made up of a 171,945 two.year loan and a credit line of 142,745. In total, about 11'4,'45 will be needed to fund the business during the initial months.

Northwind Traders Sample Business Plan

Northwind Traders Sample Business Plan

*IST'RY A+ P'SITI'+ T' ATE


Northwind Traders, Inc. provides travel.planning services to individuals and businesses in the /greater Seattle)edmond area. The business is located at 1'37 ran&lin Street, Seattle)edmond, #ashington.

The Compan!"s Mission


The goal of Northwind Traders is to be the leading provider of hassle.free !uropean adventure vacations to the '4. to 34.year.old business professional mar&et. Initially operating in the Seattle)edmond area inoutside of Seattle, #ashington, Northwind Traders is rapidly e"panding to sell its services worldwide via the Internet. Travel service sales is the fastest growing category of business to consumer activity on the Internet, and by the year '555, the value of this mar&et is estimated at 17.455( billion Asee =ppendi" 1, Internet /rowth and the Sale of Travel ServicesB. Cur emphasis will be on providing a complete speciali$ed service based on having a detailed &nowledge of the vacation destination and adventure activities being offered. (ar&et research indicates that the maDor criticism our type of client has of e"isting travel agencies is that their agents E&now nothing about their products, they Dust open the catalogue and read,F to 6uote one of many disappointed travelers. By capitali$ing on our e"perience in the Northwind Traders clothing shop, we will be able to both advise and direct our clients to the type of travel e6uipment they will need to get the very best out of their vacation.

Mana%ement Team and ,e! Personnel


-eather (itchell, President and *!C. Before founding Northwind Traders, (s. (itchell owned and operated Northwind Traders, an outdoor clothing shop in the Seattle area. Prior to that, she managed the Clympia branch of one of the larger regional chains of general travel agencies operating throughout western #ashington, where she was responsible for managing the office systems and a staff of four. She has a degree in travel and tourism from State Gniversity. In addition to (s. (itchell, team members ;im <im and )ichard Bready will be moving into the new venture on a full.time basis, and =my !gert has been recently recruited to cover Saturdays and
Northwind Traders Sample Business Plan 9

vacations. reelance business consultant ;ae Pa& will be advising during the business0s changeover from clothing shop to adventure travel agency. ;im <im, :ice President Sales and (ar&eting. Prior to Doining Northwind Traders, (r. <im wor&ed for the mar&eting department of a maDor airline. -is current responsibilities include the company0s direct mar&eting campaign and all sales.related issues. )ichard Bready, Cffice (anager. Twenty years as a travel agent has given (r. Bready the ideal bac&ground for Northwind Traders. = &nowledgeable salesperson, (r. Bready0s e"pertise in the area of !uropean travel enables him to entice the adventure traveler. =my !gert, Sales =ssistant. =fter completing her undergraduate degree at the Institute of =rt, (s. !gert spent a year traveling abroad and Doined the staff at Northwind Traders recently as a sales assistant. ;ae Pa&, Business *onsultant. #ith over '5 years of consulting e"perience in industries ranging from aerospace to technology to retail, (r. Pa&0s &nowledge and guidance will be instrumental to the success of Northwind Traders. The volunteer members of the Board of +irectors provide guidance to the management and staff of Northwind Traders. The board meets twice yearly to discuss policy changes, review the mission statement, and update the business plan if needed. (embers include ?isa ;acobson, retail store owner -olly Barrett, *P= ;o Brown, former travel agent #illiam -ollands, lawyer ?isa /armaise, retail store owner Tony *hor, human resource manager Prasanna Samarawic&rama, caterer

Northwind Traders Sample Business Plan

Ser#ices
#e are currently the appointed agents for (argie0s Travel, a maDor supplier in the mar&et. *urrently, (argie0s Travel offers some 75 different adventure vacation pac&ages throughout !urope, including horse tre&&ing in Iceland> above.the.clouds tre&&ing on islands and in remote regions in such areas as *orsica and Norway> van.supported inn.to.inn bicycling> mountain bi&ing and hi&ing adventure tours throughout rance, /ermany, Italy, and =ustria> and ballooning across the =lps.

#e intend to be appointed agents by three other maDor adventure travel tour firms with whom we are currently in negotiation, !nchantment ?a&es *orporation. Cffers rafting, sea &aya&ing, and yachting trips around remote !uropean rivers and coastline areas, covering such areas as the =driatic, the Blac& Sea, and Tur&ey. #est *oast Sales. Cffers adventure vacation pac&ages to corporate clients to use as incentives and rewards, and as part of management development programs. They are particularly strong in rance, Italy, and /ermany. !"ploration =ir. Speciali$es in adventure vacations in !astern !urope and former Soviet countries, covering Bulgaria, )omania, Poland, and ?atvia. These are three relatively new and small tour operators, but they have ac6uired a reputation for innovation and reliabilityHand they are currently underrepresented. In addition, we will offer a comprehensive range of complementary services to support the adventurous traveler, ensuring that they will have a safe, enDoyable, and memorable e"perience. These services will include insurance, pre. and postvacation briefing pac&s, and a directory of advice and information services particular to each destination and adventure activity.

Transportation S!stems
The vacations we will offer will use all principal travel systems, including planes, trains, buses, and where appropriate, ta"is. #e will aim for a standard of travel higher than that offered by the
Northwind Traders Sample Business Plan @

general travel industry. The feeling we are loo&ing for is definitely not that which is engendered by the bac&pac&er mar&et.

Compan! *istor!
ive years ago -eather (itchell cofounded Northwind Traders, an outdoor clothing shop in Seattle)edmond, #ashington. Cver the years, Northwind Traders has e"tended its product range to include everything the adventurous traveler could want, from tents and sleeping bags to maps, guideboo&s, and insurance. The clothing shop has sales of 11,7'5,555 per year Asee Table 1B, ma&es a gross profit of 1'5',755, and employs seven people, either full. or part.time. = mail. order service is now provided by catalogue and via a new #eb site. Table -. +orth/ind Traders Clothin% Shop Performance '#er Past (i#e Years

%ear Sales /ross Profit

1123,955 18',8'4

0 17'',415 1189

1 188@,895 1155,951

2 11,5'3,915 1133,85'

3ast Year 11,7'1,195 1'51,@18

Increasingly, shop customers have as&ed for advice on adventurous places to go on vacation. ?ast year Northwind Traders ac6uired an agency from (argie0s Travel, one of the largest and most respected tour operators in this mar&et, and began to promote and sell their products. In the si" months that we have been selling travel agency products, some '55 vacation pac&ages, at an average cost of 13375, have been sold. Northwind Traders0 commission on the sales has been 188,255 A15 percent commissionB. In addition, 34 insurance policies have been sold at an average price of 1189, yielding 11947 A35 percent commissionB. -eather (itchell, one of Northwind Traders0s founding partners, intends to sell her shares in the store and to concentrate on setting up the new travel business, Northwind Traders.

4uarantees and 5arranties


Cur clients will be protected financially against either our own or our tour operator0s failure, by virtue of the =)* bonding held by our principals. #e will only use vacation providers who can provide '7.hour emergency support services for clients while on vacation.
Northwind Traders Sample Business Plan 15

6usiness Structure3e%al Status


Northwind Traders is incorporated under the laws of the state of #ashington. The company has authori$ed 15,555 shares, 8555 of which are owned by President and *!C -eather (itchell. :ice President of Sales and (ar&eting ;im <im owns 1555 shares, and the remaining shares are held by the company for future distribution. In the ne"t few wee&s, the business will be set up as an operation independent from the clothing store. This structure will clearly separate the travel business from the clothing shop and ma&e it possible to attract the ris& capital that will be re6uired when the business starts to grow. =t a later stage the business may wish to sell and issue airline tic&ets and to create its own charter vacations. This will re6uire membership in the =)* A=irline )eporting *orporationB and I=T=N AInternational =irlines Travel =gency Networ&B. These organi$ations regulate the collection of money and distribution to the appropriate airlines. -owever, in the period covered by this Business Plan we intend to operate only as the appointed agents for a number of tour operators. =s such we can EshelterF under their licenses and bonds.

MAR,ET RESEARC*I+ USTRY A+A3YSIS


+uring the current period of strong economic growth, Northwind Traders can capitali$e on the many significant opportunities in the travel industry.

Economic and Social (actors


Service industries represent the fastest growing sector of the national economy, and travel and tourism agencies are poised to flourish in the midst of today0s economic boom. These services are proDected to grow at an average annual growth rate of 7.1 percent over the period from 1@@5 to '515 A=ppendi" 1B. The travel and tourism industry thrives in a vital economy. The general economic climate in the city of Seattle)edmond is very strong. =n influ" of new businesses has added to the area0s prosperity, and the already large population of young professionals is growing. Nearby, tThe city of Seattle is the center for business in <ing *ounty, with over 755,555 people employed in industries such as aerospace, transportation e6uipment, health services, tourism, computer software, and biotechnology.
Northwind Traders Sample Business Plan 11

Competiti#e En#ironment
*urrently, tThe 6ualitylevel of service and the number of providers in the travel industry constantly fluctuatebroadly uneven, and providers enter and leave the field rapidly. Cur competitive edge will be in attracting and retaining our customers with the most highly trained and well.informed individuals we can recruit. #ith our e"pertise in !uropean adventure vacations, we will be able to provide the most accurate, up.to.date information possible.

3on%7Term 'pportunities
Tourism in general is on the rise A=ppendi" 1B, !urope loo&s li&e it will continue to be the maDor destination, and the Internet will be an important channel into this mar&et. The state of the economy will be the most influential factor in how many people travel. Cther driving forces for travel will include the cost of tic&ets, fuel prices, the threat of terrorism, and currency rates. Northwind Traders *an +evelop Strong Position in )egion The current lac& of industry leaders in the !uropean adventure travel industry represents an e"ceptional opportunity for Northwind Traders to develop a dominant presence in the !uropean adventure travel industry in the /greater Seattle)edmond area. #ith their e"ceptional &nowledge of the adventure travel industry, strong customer base, and competitive prices, the company will be well situated to ta&e advantage of the region0s current economic prosperity.

T=)/!T (=)<!T =N=?%SIS

4eo%raphic Area
Northwind Traders is basedoperates in the Seattle)edmond, #ashington, area, and targets individuals interested in adventure vacations in !urope. The region comprisesgeographic area includes the incorporated cities ofof )edmond, Bellevue, and Tacoma and the encompassing counties of <ing, Snohomish, and Pierce. )edmondSeattle Bellevue Tacoma and the encompassing counties of
Northwind Traders Sample Business Plan 1'

<ing Snohomish

Pierce

Mar$et Si)e and escription


The /greater Seattle areaIincluding all of <ing, Pierce, and Snohomish countiesIis home to appro"imately 3 million people A1@@7 figureB, half of whom fall within our target mar&et. Seattle0s Dob rate is climbing at a rate of 15 percent each year, and new Dobs and growth are e"pected through the year '559. Seattle has become a world.class destination, and the downtown retail and shopping core has grown steadily over the last decade. The following maDor facilities reside in the /greater Seattle area, an international airport, several maDor medical centers, and a state university, and four other colleges and universities. The percentages of employment by industry are as follows, '2 percent services, '4 percent wholesale and retail, 18 percent manufacturing, 17 percent government, 8 percent transportation and communication, 8 percent finance and insurance, and 4 percent construction.

Tar%et Customers
SeattleJ<ing *ountyKs labor force is highly educated, s&illed, productive, and stable. It consists of individuals who are deeply attached to the area and have tended to stay and wait out past periods of economic downturn. The vital economy, the Northwest lifestyle, and its uni6ue environmental 6ualities attract people. Both public officials and business leaders recogni$e the need to &eep our labor force well e6uipped with mar&etable s&ills. rom within this population, our target customers are individuals who are professionals with incomes of 175,555L,, ages '4 to 34, with incomes of 175,555L, single or married, without children, and college educated.

Mar$et efinition
The world travel mar&et is forecast to e"pand at a 7.1 percent average annual growth rate until '515. This is faster than the general economic growth rate, which is e"pected to be around '.7 percent per year. The !uropean mar&et, while not the fastest growing, will be the most important destination, accounting for over 45 percent of all international arrivals Asee =ppendi" 1B. #ithin !urope,
Northwind Traders Sample Business Plan 13

rance, Italy, and Spain are the most popular destinations. This is why we have selected tour operators with appropriate products in these areas as our initial partners. igures for the si$e and proDected growth of adventure vacations are s&etchy, but the figures from one recent study A#orld =dventure Travel +ata *orp.B are in Table '.

Table 0. Ad#enture Tra#el Vacations 7 5orld forecast 8Million Arri#als9: -;;< 7 0<-<

estination !urope N. =merica )est of #orld Total A%e 18 . '7 '4 . 34 38 . 74 78L

-;;< 5.'4 5.74 5.15 5.25

1##7 5.85 5.85 5.'4 1.74 -;;< = 81 '5 14 7 155

0<<1 1.85 1.75 5.@4 3.@4

0<-< '.34 '.'5 1.15 4.84 0<-< = 32 31 '4 8 155

Source, #=T+ *orp. 1@@9

Mar$et 'pportunities
#e believe that by concentrating on the !uropean travel mar&et, offering a limited but e"tensive range of vacation pac&ages, and targeting our service at affluent professionals, we can meet the needs of our clients. Cur speciali$ed &nowledge of !urope and adventure travel will allow us both to satisfy our customers and to surpass the services offered by our competitors. Cur mar&et study Asee =ppendi" 1B has shown that theis group composed of affluent professionals has specific needs that are not currently being met, as 84 percent of those planning vacations
Northwind Traders Sample Business Plan 17

would not purchase them from the same source againM Specifically, they want their travel agent to have comprehensive &nowledge of the destination A29 percentB> to have an efficient administration system in which they can have confidence A27 percentB> to go on vacation with similar professional people A21 percentB> and to be offered useful advice and ancillary services such as insurance A9@ percentB. In addition, our mar&et study confirms that !urope is li&ely to be the largest destination mar&et for adventure vacations. Cur study shows only 35 percent of adventure travelers to be under '7 years of age, while the #orld =dventure Travel +ata study claims 81 percent is under '7. #e feel the difference is because our survey sample is confined to relatively affluent people who had spent at least 1345 on adventure clothing Asee =ppendi" 1B. Cne further emerging mar&et segment for adventure vacations is that of corporate clients. Cur research suggests that up to one in five adventure vacations is at this top price end of the mar&et.

Competiti#e'MPETITIVE Anal!sis+A3YSIS
Northwind Traders is the only travel agency located in the Seattle area that is focused on !uropean adventure vacations. -owever, there are many adventure travel agents in capital and secondary cities such as )edmondSeattle, Bellevue, and Tacoma that compete with Northwind Traders to provide adventure vacation pac&ages. These agencies are described below, /eneral Travel =gents These agents have added adventure vacations to their services, but often have little or no &nowledge of adventure destinations or activities. They sell literally from the page, offering limited advice, information, and support. =ccording to our mar&et study, 75 percent of adventure vacations are boo&ed through these general travel agents, but only a third of clients would use them again. =dventure Tour Cperators These tour operators who advertise their vacations in the press attract about a 6uarter of all adventure vacation clients. -owever, clients have to shop around several tour operators to find what they want, and clientsthey cannot get unbiased advice or much help with information.
Northwind Traders Sample Business Plan 14

Cnly 74 percent would go bac& to a tour operator for their ne"t vacation. Independent Travelers These travelers comprise about 14 percent of those going on adventure vacations, of whom 84 percent would travel that way again. #e need to persuade this group that our superior product &nowledge and service is worth their consideration. Internet Providers These providers sell only 4 percent of adventure travel vacations> however, 95 percent of adventure travelers would buy their ne"t vacation via the Internet. There is plenty of scope to offer a superior #eb site. #e believe that by having daily face.to.face contact with clients, we will be better able to manage a fresh, vital, and relevant #eb site aimed at the specific needs of our mar&et segment. Specialist =dventure Travel =gencies These agencies sell only about 14 percent of travel pac&ages at present, but we feel this is partially due to lac& of client awareness and to the comparative rarity of such outlets. #e will differentiate ourselves from our competitors by offering the most e"tensive material available from the most up.to.date, well.informed staff. *lients will return for our service, &nowledge and competitive prices. These findings are some of the most powerful results of our research. #hile general travel agents may be the most li&ely resource for those travelers ta&ing an adventure vacation, they are in fact the least li&ely place those clients will return to. =nd t=lthough specialist adventure travel agents, such as the business we are setting up, account for only 14 percent of the mar&et, 84 percent of clients would use them again. #e aim to increase this percentage through our superior service.

Competiti#e Ad#anta%es
Some 84 percent of those clients using specialist adventure vacation travel agents would use them againImany more than would use either a direct tour operator direct or a general travel agent. -owever, these agents were critici$ed for having such a wide range of activities and destinations that their sales agents &new little about them. Cur research shows that while 71 percent of clients ta&e adventure vacations in !urope, only '3 percent of the 4555 adventure tours offered are for
Northwind Traders Sample Business Plan 18

!uropean destinations. #e feel that by concentrating on !uropean destinations, which is the largest mar&et for both vacations in general and adventure vacations in particular, we will be able to have superior product &nowledge. #e will need to &now only perhaps 155 destinations and activities well, rather than have only a passing &nowledge of the 4555 adventure vacations available. Cur mar&et research has also shown that many adventure travel agents are catering to the bac&pac&er mar&et, consisting mostly of individuals who are under '7 years of age and are generally very cost conscious. This can lead to very different types of clients ending up at the same destination, with some conse6uent dissatisfaction. It is also noteworthy that t The bac&pac&er mar&et re6uires a much lower level of service and information than does the mar&et for the more affluent '4. to 34.year.old professional. '4H34 year old mar&et.

Competitors" Positions
The two maDor competitors of Northwind Traders are ?a&es N Sons and erguson and Bardell, and ?a&es N Sons. erguson and Bardell is the strongest competitor of Northwind Traders, due to its strong client base and e"perienced owner. -owever, itstheir press releases are of a very low 6uality, and itstheir location is undesirable, with difficult par&ing and limited customer service space. In addition, erguson and Bardell lac&s the &nowledge and e"pertise in the field of !uropean adventure travel that is valued so highly by the clientele of Northwind Traders. ?a&es N Sons will be a formidable competitor for Northwind Traders because of itstheir prime location, well.established business, and e"tensive training program.

Potential (uture Competition


Northwind Traders will occupy a speciali$ed niche in the travel industry, with its focus on adventure vacations in !urope. =lthough they areit is currently the only !uropean adventure travel agency located in the Seattle)edmond area, there are competitors do e"ist in nearby areas Asee aboveB. In order to stay competitive, Northwind Traders will need to establish itself as the leader in adventure travel planning for !urope with its superior product &nowledge and high.6uality service. The lac& of current adventure travel providers in the area represents a uni6ue opportunity for Northwind Traders to e"pand in a rapidly growing mar&et.

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19

6USI+ESS STRATE4YMAR,ETI+4 > SA3ES P3A++I+4


#ith Northwind Traders0 e"pertise in !uropean adventure travel, we can create customi$ed travel itineraries for our clients and provide the most thorough, informative adventure travel service available. By offering superior customer service, Northwind Traders can distinguish itself from its competitors.

Customer Incenti#es
Cur mar&et research shows that publicity has the greatest impact on people0s choice of an adventure vacation travel agent, followed closely by having the right location, and having a recommendation from a friend, relative, or colleague. /eneral press advertising seems to be fairly ineffective in this sector, and event specialist press advertising only brings in one out of seven clients. ASee =ppendi" 1, Summary of indings from (ar&et )esearch.B

Ad#ertisin% and Promotion


Cur advertising and promotions will pivot around si" &ey strategies, public relations, our shop front, an Internet #eb site, customer relations, press advertising, and our association with the Northwind Traders clothing store. Public relations. #e will put considerable effort into preparing and disseminating a regular flow of press releases. These will be based on stories about our destinations, activities, corporate clients, and our staff. #e will employuse a freelance public relations adviser to help us write copy and locate publications editors. Shop front. #e plan to have an e"citing, informative, and actively managed display window. There will be a video display showing adventure vacations in progress. +ifferent destinations can be selected from outside the window via a control panel>, otherwise, the scenes will rotate on a random basis.

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12

Internet #eb site. This is fast becoming a maDor promotional channel, and we believe it will increase in importance over time. =lso, it is the most convenient way for us to have a global presence at the outset. ASee =ppendi" 1, Internet /rowth and the Sale of Travel Services.B *ustomer relations. #e will &eep records of every sales contact. +ata such as source of in6uiry, client needs, previous vacation, Dob, and income will be included. By having superior information on our clients and prospects, we intend to offer a truly personali$ed service. Cur database will contain full details on all our clients, including the vacations they have ta&en and their postvacation appraisal data. #e will use this data to encourage our satisfied customers to recommend our services to friends, relatives, colleagues, and employers. Press advertising. #e will underta&e a small amount of specialist press advertising in order to enhance our public relations activity. There is considerable research to support the argument that the more often a potential client hears about you, the more li&ely they are to approach you when they have a need for your type of service. Northwind Traders association. #e will write to all past shop clients announcing the establishment of the travel business and offer them a special introductory adventure vacation pac&age.

Sales and Mar$etin%


!"cellent selling s&ills are vital in our type of business. Therefore, everyone will be fully trained in sales. =dditionally, every month we will EauditF each other by observing half.a.day0s selling activity and giving feedbac& on strengths and wea&nesses in s&ills. #e will also be using a Econtact managementF system that will allow us to monitor the effectiveness of different promotional strategies and of different mar&eting messages. The &ey to our strategic advantage lies in having superior data on prospects and clients.

Commission
The normal commission paid to travel agents for this type of vacation is in the 15 percent to 14 percent range. #hile (argie0s Travel, the first agency we have been appointed to, pays us at the lower end of the scale, they are a prestigious firm to represent. -aving them in our portfolio will enable us to negotiate much higher commissions from our new principals. =ccordingly, we are

Northwind Traders Sample Business Plan

1@

planning on an average travel agency commission of 11 percent, rising to 13 percent by the end of %ear Three. *ommission on insurance and other services will be 35 percent, throughout. /uarantees and *ustomer Protection Cur clients will be protected financially against either our own or our tour operator0s failure, by virtue of the =)* bonding held by our principals. #e will only use vacation providers who can provide '7.hour emergency support services for clients while on vacation.

'PERATI'+S
Premises
It is vital that the travel business has both a storefront facing onto the main street and a visible separate entrance. The goal is for clothing shop clients to be able to move between the premises without going outside. #e will be renting '555 s6uare meters of fully serviced space at a cost of 135,585 per year fully serviced. #e will need to spend 1'4,545 on internal refurbishing. #e plan to do some of this wor& ourselves. =n additional 17194 will be needed for des&s, chairs, and other office furnishings.

Choice of 3ocation and Premises


#e intend to locate within the e"isting Northwind Traders shop, sinceas this is close to the city center with a high density of both residential and business premises. The pavement is wide, so people can stand and loo& in the window without being in the way of other pedestrians.

'penin% *ours of 'peration


The telephone lines will be staffed '7 hours a day by live operators. +uring the period from @ am to 8 pm, this will be done mostly by our staff. -owever, overload calls during the day and afterout. of.hours calls will go to our live telemar&eting bureau. People consider vacation decisions at home in the evenings after discussion with friends and partners. #e want to be available as their first point of contact with an informed, friendly service. #e believe that since our clients will mostly be busy professional people, off.pea&. hours access to our services is also a &ey way in which we can differentiate ourselves from other travel agencies.
Northwind Traders Sample Business Plan '5

E&uipment
#e will be renting an integrated telephoneJdata.base system from the outset. This will allow up to ten sales staff to answer calls and have full on.screen data on clients and products. =s service is one of our &ey components, it is essential that we have full access to all relevant data speedily and efficiently.

Staffin%
rom the outset all staff will have Dob descriptions, a career and training history file, and a record of employee reviews. New staff will ta&e the travel agency Psychometric =ptitude Test, and then spend time with each member of the Northwind Traders team. =ll staff will undergo full product training, and will spend at least four wee&s a year on.site at &ey travel destinations. Cur dress code will re6uire us to loo& as though we are on our way to one of our adventure vacations. #e plan to start with a staff of three full.time employees, including the founder, and one part.timer. #e plan to be operating with a staff of thirteen during the fifth year of business.

5ith this s!stem /e can re#ie/ our sales and mar$etin% acti#ities on a re%ular basis. Thus /e /ill be able?ualit! Control #e will be developing outline scripts to help the sales staff manage in6uiries. This will ensure that all incoming phone calls are dealt with in the same way and meet a high standard. #e will encourage people in6uiring about vacations to give us feedbac& on, Cur ability to handle their in6uiry The amount of time from the client0s first in6uiry to the date of actual travel
Northwind Traders Sample Business Plan '1

The client0s reactions to the vacation in terms of whether it meets their e"pectations +e/ Tour 'perators -eather (itchell will be responsible for reviewing the range of tour operators that we see& to represent, and negotiating with prospective new principals.

Capacit! Cur offices can accommodate five sales des&s. !ach sales des& has a capacity to handle four clients per hour, which means over the year we could handle up to 75,555 in6uiries. #ith our average sales rate of one in five, we could service @855 clients from our present facilities. This is well above the numbers we are anticipating in the business plan.

MA+A4EME+T > 'R4A+I@ATI'+

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''

,e! Emplo!ees -eather (itchell, President and *!C. Before founding Northwind Traders, (s. (itchell owned and operated Northwind Traders, an outdoor clothing shop in the )edmond area. Prior to that, she managed the Clympia branch of one of the larger regional chains of general travel agencies operating throughout western #ashington, where she was responsible for managing the office systems and a staff of four. She has a degree in travel and tourism from State Gniversity. In addition to (s. (itchell, team members ;im <im and )ichard Bready will be moving into the new venture on a full.time basis, and =my !gert has been recently recruited to cover Saturdays and vacations. clothing shop to adventure travel agency. ;im <im, :ice President Sales and (ar&eting. Prior to Doining Northwind Traders, (r. <im wor&ed for the mar&eting department of a maDor airline. -is current responsibilities include the company0s direct mar&eting campaign and all sales related issues. )ichard Bready, Cffice (anager. Twenty years as a travel agent has given (r. Bready the ideal bac&ground for Northwind Traders. = &nowledgeable salesperson, (r. Bready0s e"pertise in the area of !uropean travel enables him to entice the adventure traveler. =my !gert, Sales =ssistant. =fter completing her undergraduate degree at the Institute of =rt, (s. !gert spent a year traveling abroad and Doined the staff at Northwind Traders recently as a sales assistant. reelance business consultant ;ae Pa& will be advising during the business0s changeover from

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'3

;ae Pa&, Business *onsultant. #ith over twenty years of consulting e"perience in industries ranging from aerospace to technology to retail, (r. Pa&0s &nowledge and guidance will be instrumental to the success of Northwind Traders. A-eather (itchell0s *: is in =ppendi" 3B 6oard of irectors The volunteer members of the Board of +irectors provide guidance to the management and staff of Northwind Traders. The board meets twice yearly to discuss policy changes, review the mission statement, and update the business plan if needed. (embers include, ?isa ;acobson, retail store owner -olly Barrett, *P= ;o Brown, former travel agent #illiam -ollands, ?awyer ?isa /armaise, retail store owner Tony *hor, human resource manager Prasanna Samarawic&rama, caterer

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Northwind Traders Sample Business Plan

'4

3on%7Term 4oals Northwind Traders plans to grow steadily over the ne"t five years, becoming the premier provider of !uropean adventure vacations in the greater )edmond area. Cur financial obDectives are to be operating at or close to brea&.even cash flow by the end of the first year. #e aim to be profitable from %ear Cne onward> our goal is to earn at least 1355,555 post ta" profit in the %ear Two, and nearly 1455,555 in %ear Three. Cur profit margin on sales by %ear Three will be a respectable 9 percent. Strate%! for Achie#in% 4oals !"tensive public relations campaign )ecruit well.trained, enthusiastic staff +eliver superior product &nowledge Provide high 6uality customer service *reate library of toolsJreference materials for clients Cffer competitive pricing on vacation pac&ages The first priority is to hire a competent public relations consultant. This individual will be the &ey to producing state.of.the art publicity materials and determining where these materials should be placed for optimum visibility. The second priority will be to increase the staff. The individuals recruited will go through an e"tensive training program to ensure that they will be able to provide superior product &nowledge in the field of !uropean adventure travel. The present staff is passionate about adventure vacations, and we intend to maintain their enthusiasm through constant product development and s&ill
Northwind Traders Sample Business Plan '8

training. #e will only recruit those individuals who share our vision. #e also want the business to have an enDoyable atmosphere. The third priority is to install a library of reference wor&s in the shop. These materials will be available for clients to browse through while in the shop, or to Echec& outF and peruse at home. =n agent will be on hand at all times to answer any 6uestions. Position #hile at present we are offering only other company0s adventure vacations, we have protected our position in a number of ways. irst, we have a two.year agency agreement with (argie0s Travel, which gives us access to all their e"isting vacation products as well as any new ones. This contract is dependent on Northwind Traders achieving sales of at least '45 vacation pac&ages a year. #e intend to negotiate similar agreements with future suppliers, although sales targets with them will be lower to reflect their relative mar&et position. Second, we intend to maintain a high service element to our business, e"tending our range of value added services such as vacation insurance, individuali$ed prevacation boo&lets, postvacation follow.up, and continually updating our client database. In this way, we will see& to build up a high level of repeat business. *ustomer loyalty is vital to our profitable growth. Ris$s Associated /ith 4ro/th ?osing touch with customers ?oss of clientele to other providers Ouality of services diminished
Northwind Traders Sample Business Plan '9

New businesses The ris&s facing the e"pansion of Northwind Traders can be summed up in one word, competition. In order to sustain our position in the area as the premiere !uropean adventure travel business, Northwind Traders needs to outshine our competition. By maintaining our focus on superior product &nowledge and outstanding customer service, we will be able to uphold our position in the industry, thereby retaining current clients and attracting new clients.

('RECASTI+4
Sales (orecast
Cur ratio of sales to in6uiries ofn the adventure travel vacations sold to date, while operating within the outdoor clothing shop, has been one in three. or the purposes of our sales forecast, we are assuming that only one in five in6uiries will actually result in an adventure vacation being boo&ed. This is a very conservative estimate. #e e"pect there to be a steady buildup of clients coming from the clothing shop to tal& to us about vacations Asee Table 3 belowB. -owever, the number of new in6uiries generated by our promotional activity will also build up during the year, gradually overta&ing in6uiries from the clothinges shop. This is a trend we e"pect to continue. Based on the proDection below, we are forecasting to sell 885 adventure travel vacations ne"t year at an average price of 1347@. Cnce insurance and other service sales are added in, we e"pect to generate a gross profitn income of 1'82,923 over the first 1' months.

Table 1. Sales (orecast ProAection


??0 ?1 ?2 Year Total In6uiries generated through promotion Northwind Traders Sample Business Plan '2 '55 7'4 7'4 945 1255

Shop in6uiries Total in6uiries :acations sold =verage vacations cost *ommission received *ommission on insurance N other services received Total commission N fees earned

355 455 155 13375 133,755 11895

355 9'4 174 13375 172,735 13375

745 294 194 13942 19',331 14515

745 1'55 '75 13942 1@2,949 14274

1455 3355 885 1347@ 1'4',@12 114,284

134,595

141,995

199,371

1157,85'

1'82,923

In %ear Two we are forecasting a gross profitcommissions of 18'7,312, and in %ear Three we plan to reach 1@28,278.

Cash (lo/ ProAections


The *ash low proDections for %ear Cne Asee =ppendi" 'B show that after the owner has put in 171,945, the business will need additional short.term financing of about 123,455. surplus of 11@,@34. In our *ash low proDection, we have assumed the whole 123,455 additional financing has come from a ban& loan. #e have allowed for interest on the full amount for the whole period. In practice we would hope to finance part of this at least by a line of credit e6ual to the money actually re6uired. In this way we believe we have made a prudent, conservative provision. or the last two months of the year, we are forecasting a positive cumulative cash flow and a year.end cash

Income Statement
#e e"pect to ma&e a small after. ta" profit of 137,@51 in the first year of 137,@51 Asee =ppendi" ' and Table 7 belowB. This is before the owner0s drawings. =ny owner0s drawings will be contingent on performance being better than that e"pected in the Plan.

Table 2. Profits in Years 'ne to Three /ill be


Northwind Traders Sample Business Plan '@

Year 'ne Sales ?ess cost of sales /ross profit ?ess e"penses Net income before ta"es Provision for ta"es Net income after ta"es ',387,23@ ',5@8,548 '82,923 ''7,975 77,573 @17' 137,@51

Year T/o 4,'5',874 7,492,3'9 8'7,312 '73,7573 325,@174 98,127 1357,9351

Year Three 9,4@1,13' 8,857,'28 @28,278 374,8@5 871,148 174,941 17@4,754

6alance Sheet
The Balance Sheet at the end of %ear Cne Asee =ppendi" 'B shows a healthy surplus of current assets over current liabilities. #e have shown a conservative funding position, which does not include any of the additional capital that we hope to secure.

Performance Ratios
#e plan to move our gross profit up from 11 percent in %ear Cne, to 13 percent in %ear Three. These figures loo& 6uite low, but it should be remembered that our gross profitincome is really the sales commission we earn, not the full price of an adventure vacation. Cur net income before ta"es is a more accurate measure of performance. This we e"pect to move from ' percent at the outset, up to 2 percent by %ear Three. *ommission generated and profit per employee will be among the highest in the industry. Table B. Commission 4enerated and Profit per Emplo!ee
Year 'ne /ross profit P Net income before ta"es P *ommission generated per employee Profit per employee 11',427 18@,'49 1158,242 11 ' 198,9@4 Year T/o 1' 9 1132,939 Year Three 13 2 1187,793

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35

6rea$7E#en
To brea& even we will need to sell between ' and 3 vacations per day. This compares with our present sales of 1.3 vacations per day, based on our part.time effort out of the clothing shop. #e feel confident that the brea&.even point can be attained within a reasonable period of time.

(unds Re&uired and Timin%


#e plan to ma&e two maDor investments, one in #eb site and database development and one in shop premises development. ma&e are the, #eb site and data base development . this will cost 171,3'4945. The data base system is one of our &ey differentiators. It will allow us to offer superior service and ensure a high level of repeat business and referrals. The #eb site is vital if we are to reach this wide and disparate global mar&et. The group of potential clients we have chosen as our target mar&etI, affluent, professional '4. to 34. year oldsI, are prime users of the Internet. !ven those people in our locality will e"pect to be able to research our offers on the Internet before coming to the shop. ASee =ppendi" 1, Internet /rowth and the Sale of Travel Services B Shop premises development . this will cost us 1'@,''4. #e have to loo& professional and to have an efficient wor& environment. If our staff do not have the right tools, we can hardly e"pect them to deliver superior performance. If clients see EamateurF premises, they will not be inspired to spend thousands of dollars and entrust their adventure vacation plans to us. Both these investments need to be made at the outset to ensure that the business creates the right impression from the start. #e get only one chance to ma&e a first impression. #e have decided to lease our telephone and computer systems, sinceas this is a rapidly changing area and we need to have access to the very latest technology. e6uipment suppliers are currently very attractive. inancing pac&ages from

(undin% 'ptions
The owner plans to invest 171,945 of her own money Athe proceeds of the sale of her share of the clothing shop businessB. The cash flow proDections show that the business will re6uire 123,455 of wor&ing capital during the early months of the first year0s operations. #e thin& we should provide
Northwind Traders Sample Business Plan 31

an additional 115,5'5 for unforeseen eventualities. #e are considering In the event that additional funds prove necessary, we have identified two options for raising further fundsthis 1@3,4'5, 'ption -: The sale of e6uity, perhaps to the original shop partners, could raise between 171,945 and 1189,555. This would provide some capital to allow for growth. =ny shortfall could be funded either by a line of credit or a ban& loan. 'ption 0, =pproach our ban& with a view to raising a medium. term loan of 171,945 and a line of credit of 142,745. -eather (itchell could, with family help, provide any lender with security for part, if not all, of this facility. inancial #e will be using a computer.based financial management system. This will allow us to analy$e the profitability of sales of different vacations through each tour operator. In this way we can review our sales and mar&eting activities on a regular basis. It will also allow us to reward staff on the basis of profit achieved rather than Dust on sales.

6USI+ESS C'+TR'3S
Accountin% S!stem
#e will be using a computer.based financial management system. #ith this system we can review our sales and mar&eting activities on a regular basis. This will allow us to analy$e the profitability of sales of different vacations through each tour operator. Thus we will be able to reward staff on the basis of profit achieved rather than Dust on sales.

?ualit! Control
#e will be developing outline scripts to help the sales staff manage in6uiries. This will ensure that all incoming phone calls are dealt with in the same way and meet a high standard. #e will encourage people in6uiring about vacations to give us feedbac& on our service, Cur ability to handle their in6uiry The amount of time from the client0s first in6uiry to the date of actual travel
3'

Northwind Traders Sample Business Plan

The client0s reactions to the vacation in terms of whether it meets their e"pectations

+e/ Tour 'perators


-eather (itchell will be responsible for reviewing the range of tour operators that we see& to represent and negotiating with prospective new principals.

Capacit!
Cur offices can accommodate five sales des&s. !ach sales des& has a capacity to handle four clients per hour, which means over the course of a year, we could handle up to 75,555 in6uiries. #ith our average sales rate of one in five, we could service @855 clients from our present facilities. This is well above the numbers we are anticipating in the business plan.

3on%7Term 4oals
Northwind Traders plans to grow steadily over the ne"t five years, becoming the premier provider of !uropean adventure vacations in the /reater Seattle area. CurThe financial obDectives of Northwind Traders are to be operating at or close to brea&.even cash flow by the end of the first year, with steady growth over the ne"t five years. #e aim to be profitable from %ear Cne onward> our goal is to earn at least 1357,555 postta" profit in %ear Two and nearly 17@8,555 in %ear Three. Cur profit margin on sales by %ear Three will be a respectable 9 percent.

Steps for Achie#in% 4oals


Northwind Traders0 strategy for achieving our goals consists of si" maDor points, !stablish an e"tensive public relations campaign )ecruit well.trained, enthusiastic staff +eliver superior product &nowledge Provide high.6uality customer service *reate a library of toolsJreference materials for clients Cffer competitive pricing on vacation pac&ages The first step to achieving our goals is to hire a competent public relations agency. This will be the &ey to producing state.of.the art publicity materials and determining where these materials should be placed for optimum visibility.

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33

The second step will be to increase the staff. The individuals recruited will go through an e"tensive training program to ensure that they will be able to provide superior product &nowledge in the field of !uropean adventure travel. The present staff is passionate about adventure vacations, and we intend to maintain their enthusiasm through constant product development and s&ill training. #e will only recruit those individuals who share our vision. #e also want the business to have an enDoyable atmosphere. The third step is to install a library of reference wor&s in the shop. These materials will be available for clients to browse through while in the shop or to Echec& outF and peruse at home. =n agent will be on hand at all times to answer any 6uestions.

Position
#hile at present we are offering only other company0s adventure vacations, we have protected our position in a number of ways. irst, we have a two.year agency agreement with (argie0s Travel, which gives us access to all their e"isting vacation products as well as any new ones. This contract is dependent on Northwind Traders achieving sales of at least '45 vacation pac&ages a year. #e intend to negotiate similar agreements with future suppliers, although sales targets with them will be lower to reflect their relative mar&et position. Second, we intend to maintain a high service element to our business, e"tending our range of value.added services such as vacation insurance, individuali$ed prevacation boo&lets, postvacation follow.up, and continually updating our client database. In this way, we will see& to build up a high level of repeat business. *ustomer loyalty is vital to our profitable growth.

Ris$s Associated /ith 4ro/th


#e see some ris&s associated with our e"pected growth, ?osing touch with customers ?oss of clientele to other providers Ouality of services diminished New businesses

Northwind Traders Sample Business Plan

37

The ris&s facing the e"pansion of Northwind Traders can be summed up in one word, competition. In order to sustain our position in the area as the premier agency for !uropean adventure travel, Northwind Traders needs to outshine its competition. By maintaining our focus on superior product &nowledge and outstanding customer service, we will be able to uphold our position in the industry, thereby retaining current clients and attracting new clients.

Northwind Traders Sample Business Plan

34

Northwind Traders Sample Business Plan

38

APPE+ IX -: MAR,ET RESEARC*


International Arri#als b! 5orld Re%ion
Updated forecast for the !ears 0<<< and 0<-< 8millions9
=verage annual 1@94 !urope !ast =siaJPacific =mericas =frica (iddle !ast South =sia #orld total 143.2 2.9 45.5 7.9 3.8 1.8 '''.3 1@@4 332.' 27.4 115.1 12.9 11.3 7.4 489.7 1@@8 379.7 @5.1 114.4 1@.7 14.1 7.4 4@'.1 '555 3@9 1'' 132 '4 17 8 95' '515 4'4 ''@ 1@4 39 '1 11 1,512 growth rate APB 1@@5 . '515 3.1 9.8 3.9 7.8 7.@ 8.9 7.1

Source, /lobal Stats. *orp. 1@@9

Northwind Traders Sample Business Plan

39

Indications of Tourism emand in -;;C


International tourist arrivals A" 1,555B =ustria Belgium +enmar& inland rance /ermany /reece Ireland Italy ?u"embourg Netherlands Portugal Spain Sweden Gnited <ingdom !G Iceland ?iechtenstein Norway !!= Swit$erland !urope.1@ 19,193 4485 1817 234 85,115 17,279 15,135 7'31 31,54' 989 8497 @958 77,228 823 '',955 '35,282 1@5 4@ '225 '33,@@9 11,455 '74,7@9 Nights spent by foreign tourists A(illB 83.2 1'.2 15.2 3.3 47.3 34.4 3@.8 17.5 113.5 '.3 1@.9 ''.' 159.2 9.@ 187.@ 89'.5 5.2 5.1 9.1 825.5 37.5 917.5 International tourism receipts A(ill. !*GB 11,182 7998 '217 13'5 '5,97' 1',752 3132 '54@ '5,@@3 7998 7@78 3335 1@,731 '84' 17,388 1'7,173 1'9 nJa 12'8 1'8,5@8 9'38 133,33'

Source, /lobal Stats. *orp. 1@@9

Northwind Traders Sample Business Plan

32

Summar! of (indin%s from Mar$et Research Sur#e!


Three hundred clients of Northwind Traders who had made purchases in e"cess of 1345 in the past si" months were surveyed. Percenta%e of Sample Customers Ta$in% and +ot Ta$in% Ad#enture Vacations =ccording to our research, only '5 percent of our sample customers had never ta&en or considered ta&ing an adventure vacation. Thirty percent, while they had not yet ta&en such a vacation, had at least actively considered doing so. ifty percent of our sample are regular adventure travelersusers, ta&ing at least one adventure vacation each year. Information About -B< Respondents 5ho Too$ At 3east 'ne tra#el Vacation Per Year /ender, Status, (ale (arried 84P '1P emale Single 9@P 34P

Ad#enture Vacation Tra#elersD b! A%e and Percent =ccording to our study, the percentages of adventure vacation travelers in fall into various age groups as follows, 4P are under the age of 18 '4P are between the ages of 18 toand '7 75P are between the ages of '4 toand 34 '5P are between the ages of 38 toand 74 15P are over the age of 74

Percenta%e of Ad#enture Vacation Tra#elers b! Income 4roup =ccording to our research, the percentages of adventure vacation travelers in various income brac&ets are as follows, 8P earn less than 118,955 or less annually ''P earn between 118,951 and 1'4,545 annually '2P earn between 1'4,541 and 133,755 annually
3@

Northwind Traders Sample Business Plan

'4P earn between 133,751 and 171,945 annually 1@P earn more than 171,945 annually

orty.five percent of respondents ta&ing adventure vacations spend in e"cess of 13375 per person per vacation. Twenty percent of the respondents, who tend to be professionals in the '4. to 34.year age range, typically spend over 14515 per person. Those respondents spending under 13375 are both in the lower income and lower age groups and represent 15 percent of the respondents. Percenta%e b! estination of B<<< MaAor Ad#enture Tours A#ailable on the Mar$et = study by destination of appro"imately 4555 maDor adventure tours on the mar&et reveals the following, 1'55 of the 4555 offered are for destinations in !urope 1555 of the 4555 offered are for destinations in North =merica 855 of the 4555 offered are for destinations in India 215 of the 4555 offered are for destinations in =frica 894 of the 4555 offered are for destinations in the ar !ast 894 of the 4555 offered are for other destinations

By contrast, the percentages of the mar&et adventure travelers devoted purchasing vacation pac&ages to each of these regions destinations is are as follows, !urope . 71P of adventure travelers purchase vacation pac&ages for destinations in !urope North =merica . 35P of adventure travelers purchase vacation pac&ages for destinations in North =merica India . 15P of adventure travelers purchase vacation pac&ages for destinations in India =frica 9P of adventure travelers purchase vacation pac&ages for destinations in =frica ar !ast . 9P of adventure travelers purchase vacation pac&ages for destinations in the ar !ast other destinations . 4P of adventure travelers purchase vacation pac&ages for destinations in other regions
Northwind Traders Sample Business Plan 75

Cur research shows that !urope is the most popular destination for adventure vacation travelersa&ers. -owever, only 1'55 of the 4555 adventure tours on the mar&et are for !uropean destinations. =frica, which only attracts 9 percent of the mar&et, has 18 percent of the tours aimed at it. It follows that the !uropean mar&et has scope for e"pansion and that if we concentrate on that mar&et, we only need to have detailed &nowledge of upmar&et !uropean tours, rather than all 4555. In that way we can have the advantage of superior &nowledge in our chosen mar&et.

Percenta%e b! Source from /hich Tra#eler *eard About 3ast Ad#enture Vacation Cur research reveals the following about the source from which adventure travelers originally found out about the last adventure vacation they purchased, publicity activity . 35P heard about their vacation pac&age through publicity activity travel agent . '4P heard about their vacation pac&age through a travel agent friend . 12P heard about their vacation pac&age through a friend adventure press . 14P heard about their vacation pac&age through adventure press press advertising . 2P heard about their vacation pac&age through press advertising Internet . 7P heard about their vacation pac&age through the Internet

These findings demonstrate the power of publicity. The ne"t most effective way to reach potential clients is via the travel agent0s shop window. Both the press in general and the adventure travel press do not appear to have much effect on buyers in this mar&et.

The percentagemaDority of respondents who have not been on an adventure vacation organi$ed by their employer far outnumbers those who have been on a vacation planned by their employer. There is a significant minority of corporate clients who buy adventure vacations to use as rewards,
Northwind Traders Sample Business Plan 71

motivation, or as a part of a management development program. These corporate customers are also those clients who spend over 14515 per person per tour.

Northwind Traders Sample Business Plan

7'

+'RT*5I+ TRA ERS ?UESTI'++AIRE (Your replies are anonymous so confidentiality is assured)
1. 4ender, Married: Children A%e, (ale %es %es Gnder 18 18 . '7 '4 . 34 38 . 74 74L 'ccupation: emale No No Income, Gnder 118,955 118,951.1'4,545 1'4,541.133,755 133,751.171,945 over 171,945

Self,................................................................... Partner,.............................................................

'.

-ow many adventure vacations have you ta&en in the past three yearsQ None . never considered ta&ing one *onsidered, but not yet ta&en a vacation Ta&en one adventure vacation Ta&en two adventure vacations Ta&e at least one adventure vacation every year

3.

If you ta&e adventure vacations, how much do you spend per head per vacationQ Gnder 11895 11891.13375 13371.14515 Cver 14515

Northwind Traders Sample Business Plan

73

7.

#ho did you buy your last adventure vacation fromQ #ould you use that source Traveled independently +irectly from the tour operator :ia the Internet rom a specialist adventure travel agent rom a general travel agent %es %es %es %es %es No No No No No

againQ

4.

-ow did you hear about the last adventure vacation that you too&Q rom a friendJcolleagueJrelative :ia an advertisement in general press :ia the Internet Saw it in the travel agent0s window :ia an advertisement in specialist adventure travel press !ditorial in pressJT:Jradio

8.

#hat impressed you most about the people you bought your last adventure vacation fromQ )an&ing for level of impression A1 R e"cellent, 7 R uselessB <nowledge of activity <nowledge of destination )ange of helpful advice =dditional services, such as insurance )an&ing for importance of factor A1 R very high, 7 R 6uite unimportantB

9.

#hat did you disli&e most about the last adventure travel vacation that you too&Q The other people on the vacation were not compatible Ae.g. much older, Jyounger, or had very different competence levelsB

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77

Too e"pensive

The travel agentJtour operator did not properly e"plain the true nature of the vacation The administrative arrangements were poor . I had to do all the chasingM 2. #hat was the destination of your last adventure travel vacationQ !urope =sia

N. =merica

Cther

=frica @.

India

If you have never ta&en an adventure vacation would you consider ta&ing one from a reputable travel agent with proven e"pertise in this mar&etQ %es No

15.

-ave you ever been on an adventure vacation organi$ed by your employerQ %es No

Thank you for your help with our research. We hope thisit will help Northwind Traders to bring you more exciting adventure vacations.

Northwind Traders Sample Business Plan

74

Internet 4ro/th and the Sale of Tra#el Ser#ices


Sales of travel services on the Internet have risen steadily over the past several years and loo& to continue increasing through the year '555. These sales far outweigh other Internet sales, including P* sales of software and hardware, clothing sales, and boo& sales. or e"ample, in 1@@2, sales of travel services totaled 11.7 billion55(, while P* products e6ualed 11.5 billion55(, boo&s 1755 million5(, and clothing 1'45 million5(. It is also evident that the !uropean users of the Internet are growing rapidly. The Gnited <ingdom is the second largest Internet user mar&et after /ermany, followed in decreasing order by the Netherlands, rance, inland, Italy, and Spain. Percenta%e of Internet Users 5ho *a#e Shopped 'nlineD -;;ED in Millions #hen it comes to actually using the Internet for online shopping, inland leads the way, with /ermany and the Gnited <ingdom sitting s6uarely in the middle, close to the !uropean average. The percentage of Internet users, by region, who have shopped online in 1@@2 are as follows, inland . 8@P of Internet users in inland have shopped onlineP the Netherlands . 73P of Internet users in the Netherlands have shopped online /ermany . 71P of Internet users in /ermany have shopped online Gnited <ingdom . 32P of Internet users in the Gnited <ingdom have shopped online Italy . 33P of Internet users in Italy have shopped online Spain . 31P of Internet users in Spain have shopped online rance . '@P of Internet users in rance have shopped online

The average percentage of !uropean Internet users who have shopped online in 1@@2 is 71 percent.

Northwind Traders Sample Business Plan

78

APPE+ IX 0: (I+A+CIA3 ('RECASTS


Cash (lo/ ProAection Year 'ne
Cash (lo/ (orecast 7 -0 Mont hs

Month:

Pre7 Start

Receipts *ash Sales *ollections from *redit Sales New !6uity Inflow ?oans )eceived Cther Total Receipts < -FDC < < -<D< 0 < --D- < F 0-D0 ; 1 -2DF ; F -FD1 F F 0CD1 < B 00D2 F 0 18,955 2,345 2,345 15,5'5 15,244 '41 1',4'4 712 17,1@4 451 14,284 451 12,395 424 '1,915 94'

Pa!men ts *ash Purchases Payments to *reditors Salaries and #ages !mployee Benefits Payroll Ta"es )ent Gtiltities )epairs and (aintenance Insurance Travel Telephone Postage Cffice Supplies =dvertising Adelete rowB (ar&eting and =dvertising Professional ees 8,@32 4,73@ 1,941 '8 5 5 5 5 '4,545 5 4,834 7,712 1,7'' '1 5 5 5 5 5 5 ',223 ','81 9'2 11 5 5 5 5 7,194 5 ','84 1,998 49' @ 5 5 5 5 5 15,555 7,153 3,'19 1,538 18 5 5 5 5 5 5 ',223 ','81 9'2 11 5 5 5 5 5 5 ',491 ',518 87@ 15 5 5 5 5 5 15,555 ',491 ',518 87@ 15 5 5 5 5 5 5 !" "#$!% 8,357 3,14' 1,541 4,'43 1,5'1 427 1,5'1 1,'75 1,573 732 @7@

3'8
&'( 4,1'5 ',485 243 7,'89 235 797 235 1,559 279 342 995

188 && ',8'5 1,315 739 ',123 7'4 '73 7'4 414 737 12' 3@7

131 %&$ ',542 1,5'@ 373 1,914 333 1@1 333 754 371 173 315

'39 '"% 3,9'2 1,287 8'1 3,159 857 374 857 937 819 '4@ 481

188 && ',8'5 1,315 739 ',123 7'4 '73 7'4 414 737 12' 3@7

17@ ) ',338 1,182 32@ 1,@79 39@ '18 39@ 785 329 18' 34'

17@ ) ',338 1,182 32@ 1,@79 39@ '18 39@ 785 329 18' 34'

Training and +evelopment Ban& *harges (iscellaneous CwnerKs +rawings ?oan )epayments Ta" Payments *apital Purchases Cther . +atabase and #eb Site

Northwind Traders Sample Business Plan

79

Total Pa!men ts

<

F0DE F 2

1<DC - F

-;DE ; -

00D1 2 F

00D1 F F

-BDC - F

02D< - F

-2D< - F

Cashflo/ SurplusG eficit 87 9

<

82FD- F 2 9

80<DF ; F 9

8EDCE B 9

8-D< B 1 9

8CDFC < 9

FB<

1D0E ;

ED22 F

'penin% Cash 6alance

<

<

82FD- F 2 9

8FFDE F < 9

8CBDF 2 B 9

8CFDF ; E 9

8E2D1 F E 9

8E1DC - E 9

8E<D2 0 ; 9

Closin% Cash 6alance

<

82FD- F 2 9

8FFDE F < 9

8CBDF 2 B 9

8CFDF ; E 9

8E2D1 F E 9

8E1DC - E 9

8E<D2 0 ; 9

8C-D; E 1 9

Northwind Traders Sample Business Plan

72

Income StatementD Years 'ne to Three


Income State me n t D Profit and 3oss Stateme n t 7 -0 Mont hs

Year Year Year Period Startin%: Month Sales Sales Cther Total Sales 0D1F 2 D E BD0< 0 D F CDB; - D 1; Less Cost of 4oods Sold (aterials ?abor Cverhead Cther Total Cost of 4oods Sold 4ross Profit ',5@8,54 7,492,3' 8,857,'2 8 9 8 0D<; F D < 2DBC E D 1 FDF< 2 D 0 BF 0FEDC E 1 'peratin % EHpenses Salaries and #ages !mployee Benefits Payroll Ta"es )ent Gtilities )epairs and (aintenance Insurance Travel Telephone Postage Cffice Supplies =dvertising Adelete rowB (ar&eting and =dvertising 3@,955 32,715 45,155 38,59' 12,538 8,51' 35,585 4,274 3,375 4,274 9,5@9 4,@95 ',454 4,7'2 75,421 '5,'@1 8,987 35,585 4,274 3,375 @,124 19,434 9,@33 7,194 2,345 *(#"") $&#!*( &#)() 75,525 8,825 3,375 18,955 35,2@4 15,244 2,345 1',4'4 0C F02D1 E EF ;EFDE 2 F < < < < < < < < < < < < < < < < 2B 10 < < < < < < < < ',387,23 4,'5',87 9,4@1,13 @ 4 '

0
Month 0

1
Mont h 1 Month 2 Mont h B Month F Month C Mont h E Month ; Mont h -< Month --

Northwind Traders Sample Business Plan

7@

Professional Training and +evelopment Ban& *harges +epreciation (iscellaneous Cther

ees

31,1'4 15,5'5 145 @,124

18,445 18,955 145 @,124

18,455 34,595 '55 @,124

Total 'peratin % EHpenses 'peratin % Income

0-FD1 ; < B0D1 ; 1

01BD< B 2 1E;D0 F 2

11CD1 2 < F2;DB < F A2,345B

<

<

<

<

<

<

<

<

<

<

<

<

<

<

<

<

Interest Income A!"penseB Cther Income A!"penseB Total +onopera tin % Income 8EHpense9 Income 83oss9 6efore TaHes Income TaHes

A2,345B

A2,345B

8ED1B < 9

8ED1B < 9

8ED1 B < 9

<

<

<

<

<

<

<

<

22D< 2 1

1E<D; 2

F2-D- B F

<

<

<

<

<

<

<

<

@,17'

98,127 174,941

+et Income 83oss9

12D; < -

1<2DC 1 <

2;BD2 < B E1BD< 1 F

<

<

<

<

<

<

<

<

Cumulati#e +et Income 83oss9

12D; < -

11;DF 1 -

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

E1BD< 1 F

Northwind Traders Sample Business Plan

45

6alance Sheet at end of Year 'ne


6alance Sheet 7 T/o Years 8?uarte rl!9 Year ?tr ?tr 0 ?tr 1 ?tr 2 ?tr Year 0 ?tr 0 ?tr 1

?tr

ASSETS

Curren t Assets *ash (ar&etable Securities =ccounts )eceivable, Net Inventory Prepaid !"penses Cther Total Current Assets 1@,@34 5 74,212 5 234 5 FFDB E E < < < < < <

3on%7 Term Assets Property, Plant, and !6uipment ?ess =ccumulated +epreciation Net Property, Plant, and !6uipment Cther ?ong. Term =ssets Total 3on%7 Term Assets Total Assets '@,''4 @,124 '5,575 5 0<D< 2 < EFDF 0 E < < < < < < < < < < < < 5 5 5 5 5 5

3IA6I3ITIES A+

S*ARE*'3 ERSI E?UITY

Curren t 3iabilities Short. Term +ebt *urrent (aturities of ?ong. Term +ebt =ccounts Payable Income Ta"es Payable =ccrued ?iabilities Cther Total Current 3iabilities 5 5 234 @,17' 5 5 ;D;C C < < < < < <

3on%7 Term 3iabilities ?ong. Term +ebt ?ess *urrent (aturities +eferred Income Ta"es Cther ?ong. Term ?iabilities Total 3on%7 Term 3iabilities 5 5 5 < < < < < < <

ShareholdersI E&uit!

Northwind Traders Sample Business Plan

41

*ommon Stoc& =dditional Paid.In *apital )etained !arnings Cther Total ShareholdersI E&uit! Total 3iabilities and ShareholdersI E&uit!

71,945 5 37,@51 5 CFDF B EFDF 0 E < < < < < < < < < < < <

Northwind Traders Sample Business Plan

4'

Sources and Uses of (unds


Sources and Use of (unds +umbe r of fundin% rounds eHpecte d for full financin%: Total dollar amount bein% sou%ht in this round: S'URCES '( (U+ S E&uit! (inancin%: Preferred Stoc&, *ommon Stoc&, ebt (inancin%: (ortgage ?oans, Cther ?ong. Term ?oans, Short. Term ?oans, *onvertible +ebt, In#estm e n t from Principals: USE '( (U+ S Capital EHpenditur es: Purchase of Property, ?easehold Improvements, Purchase of !6uipmentJ urniture, Cther, 5or$in% Capital: Purchase of Inventory, Staff !"pansion, New Product ?ine Introduction, =dditional (ar&eting =ctivities, Cther Business !"pansion =ctivities, Cther, +atabase and #eb site ebt Retire m e n t : Cash Reser#e: 171,945 JE1DB < < -

1'@,''4

1'5,555 1 37,955

1 71,3'4

Northwind Traders Sample Business Plan

43

Sources and Use of (unds +umbe r of fundin% rounds eHpecte d for full financin%: Total dollar amount bein% sou%ht in this round: S'URCES '( (U+ S E&uit! (inancin%: Preferred Stoc&, *ommon Stoc&, ebt (inancin%: (ortgage ?oans, Cther ?ong. Term ?oans, Short. Term ?oans, *onvertible +ebt, In#estm e n t from Principals: USE '( (U+ S Capital EHpenditur es: Purchase of Property, ?easehold Improvements, Purchase of !6uipmentJ urniture, Cther, 5or$in% Capital: Purchase of Inventory, Staff !"pansion, New Product ?ine Introduction, =dditional (ar&eting =ctivities, Cther Business !"pansion =ctivities, Cther, +atabase and #eb site ebt Retire m e n t : Cash Reser#e: 171,945 JE1DB < < -

1'@,''4

1'5,555 137,'94

171,945

6alance SheetD 'ne Year 8?uarterl!9


6alance Sheet 7 'ne Year 8?uart erl!9

Northwind Traders Sample Business Plan

47

Year ?tr ASSETS Curren t Assets *ash (ar&etable securities =ccounts receivable, net Inventory Prepaid e"penses Cther Total Current Assets 3on%7 Term Assets Property, plant, and e6uipment ?ess accumulated depreciation Net property, plant, and e6uipment Cther long. term assets Total 3on%7 Term Assets Total Assets 3IA6I3ITIES A+ S*ARE*'3 ERSI E?UITY Curren t 3iabilities Short. term debt *urrent maturities of long. term debt =ccounts payable Income ta"es payable =ccrued liabilities Cther Total Current 3iabilities 3on%7 Term 3iabilities ?ong. term debt less current maturities +eferred income ta"es Cther long. term liabilities Total 3on%7 Term 3iabilities ShareholdersI E&uit! *ommon stoc& =dditional paid. in capital )etained earnings Cther Total ShareholdersI E&uit! Total 3iabilities and ShareholdersI E&uit! ?tr 0 ?tr 1 ?tr 2

9244 5 4855 5 755 5 -1DE B B

'15 5 18,255 5 434 5 -CDB 2 B

'5,982 5 34,2@5 5 234 5 BCD2 ; 1

1@,@34 5 74,212 5 234 5 FFDB E E

'@,''4 A''@8B '8,@'@ 5 0FD; 0 ; 2<DC E 2

'@,''4 A74@'B '7,833 5 02DF 1 1 20D- C E

'@,''4 A8222B '',339 5 00D1 1 C C;DE 1 <

'@,''4 A@124B '5,575 5 0<D< 2 < EFDF 0 E

5 5 4'4 5 5 5 B0B

5 5 875 5 5 5 F2<

5 5 945 3455 5 5 20B <

5 5 234 @17' 5 5 ;;CC

5 5 5 <

5 5 5 <

5 5 5 <

5 5 5 <

71,945 5 A1,7@1B 5 2<D0 B ; 2<DC E 2

71,945 5 A'1'B 2-DB 1 E 20D- C E

71,945 5 33,235 CBDB E < C;DE 1 <

71,945 5 37,@51 5 CFDF B EFDF 0 E

Northwind Traders Sample Business Plan

44

Cash (lo/ (orecastD -0 Months


Cash (lo/ (orecast 7 -0 Mont hs Month Pre7 Receipts Start *ash sales *ollections from credit New sales e6uity inflow ?oans received Cther Total Receipts < Pa!men ts *ash purchases Payments to creditors Salaries and wages !mployee benefits Payroll ta"es )ent Gtilities )epairs and maintenance Insurance Travel Telephone Postage Cffice supplies (ar&eting and advertising Professional fees Training and development Ban& charges (iscellaneous CwnerKs drawings ?oan repayments Ta" payments *apital purchases Cther . database and #eb Total Pa!men ts site Cashflo/ SurplusG eficit 6alance 87 9 'penin% Cash Closin% Cash 6alance 0 15,5'5 1 15,244 '41 2 1',4'4 712 2345 -<D< 0 < --D- < F 0-D0 ; 1 -2DF ; F -FD1 F F B 17,1@4 451 F 14,284 451 C 12,395 424 2345 0CD1 < B 00D2 F 0 02D; F C E '1,915 94' ; '7,'14 94' -< '8,758 155' 2345 1BDC B E 0;DE - < 12D0 1 0 -'2,252 155' -0 33,588 1188 Totals 0-FD< 1 B F;1< < 2-DC B < < 0F2DC - B

18,955 -FDC < <

< < < <

751 1'53 8357 314' 1541 4'43 15'1 427 15'1 1'75 1573 732 @7@ 8@32 473@ 1941 '8 5 5 5 5 '4,545 5 F0DE F 2 82FD- F 2 9 < 82FD- F 2 9

3'8 @92 41'5 '485 243 7'89 235 797 235 1559 279 342 995 4834 7712 17'' '1 5 5 5 5 5 5 1<DC - F 80<DF ; F 9 82FD- F 2 9 8FFDE F < 9

188 7@@ '8'5 1315 739 '123 7'4 '73 7'4 414 737 12' 3@7 '223 ''81 9'2 11 5 5 5 5 7194 5 -;DE ; 8EDCE B 9 8FFDE F < 9 8CBDF 2 B 9

131 3@' '542 15'@ 373 1914 333 1@1 333 754 371 173 315 ''84 1998 49' @ 5 5 5 5 5 15,555 00D1 2 F 8-D<B 1 9 8CBDF 2 B 9 8CFDF ; E 9

'39 913 39'2 1287 8'1 3159 857 374 857 937 819 '4@ 481 7153 3'19 1538 18 5 5 5 5 5 5 00D1 F F 8CDFC < 9 8CFDF ; E 9 8E2D1 F E 9

188 7@@ '8'5 1315 739 '123 7'4 '73 7'4 414 737 12' 3@7 '223 ''81 9'2 11 5 5 5 5 5 5 -BDC - F FB< 8E2D1 F E 9 8E1DC - E 9

17@ 778 '338 1182 32@ 1@79 39@ '18 39@ 785 329 18' 34' '491 '518 87@ 15 5 5 5 5 5 15,555 02D< - F 1D0E ; 8E1DC - E 9 8E<D2 0 ; 9

17@ 778 '338 1182 32@ 1@79 39@ '18 39@ 785 329 18' 34' '491 '518 87@ 15 5 5 5 5 5 5 -2D< - F ED22 F 8E<D2 0 ; 9 8C-D; E 1 9

188 7@@ '8'5 1315 739 '123 7'4 '73 7'4 414 737 12' 3@7 '223 ''81 9'2 11 5 5 5 5 5 5 -BDC - F ;D0B 8C-D; E 1 9 8F0DC 1 0 9

113 33@ 1925 2@5 '@9 1723 '22 184 '22 345 '@4 1'7 '82 1@4@ 1438 7@7 9 5 5 5 5 5 '1,3'4 10D< < 1DCB C 8F0DC 1 0 9 8BED; C B 9

113 33@ 1925 2@5 '@9 1723 '22 184 '22 345 '@4 1'7 '82 1@4@ 1438 7@7 9 5 5 5 5 5 5 -<DF C F -;D- 1 2 8BED; C B 9 81;DE 2 - 9

189 453 '831 1314 732 '1@' 7'8 '77 7'8 412 734 123 3@8 '2@4 ''95 931 11 5 5 5 5 5 5 -BDC E -ED2 B 81;DE 2 - 9 80-D1 ; < 9

0D0E 2 FDEB F 1BD; 1 1 -CD; F F B;E; 0;D; 2 1 BE01 110; BE01 C<F; B;2; 02;; B2<E 1;DB 2 B 1-D< < C ;;E0 -B< < < < < 0;D0 0 B 2-D1 0 B 0EFD- < B 80-D1 ; < 9

Northwind Traders Sample Business Plan

48

Income StatementD Three Year Summar!


Income State me n t 7 Three Year Year Summar! Sales Sales Cther Total Sales 3ess Cost of 4oods Sold (aterials ?abor Cverhead Cther Total Cost of 4oods Sold 4ross Profit 'peratin % EHpenses Salaries and wages !mployee benefits Payroll ta"es )ent Gtilities )epairs and maintenance Insurance Travel Telephone Postage Cffice supplies (ar&eting and advertising Professional fees Training and development Ban& charges +epreciation (iscellaneous Cther Total 'peratin % EHpenses 'peratin % Income Interest income Ae"penseB Cther income Ae"penseB Total +onopera tin % Income 8EHpense9 Income 83oss9 6efore TaHes Income TaHes +et Income 83oss9 Cumulati#e +et Income 83oss9 ',387,23@ 0D1F 2 D E 1 ; Year 0 4,'5',874 BD0< 0 D F 2 B Year 1 9,4@1,13' CDB; - D - 1 0 Totals -BD- B E D F - F < -BD- B E D F - F

',5@8,548 0D<; F D < B F 0FEDC E 1

7,492,3'9 2DBC E D 1 0 C F02D1 - E

8,857,'28 FDF< 2 D 0 E F ;EFDE 2 F

< < < -1D0 C E D F F ; -1D0 C E D F F ; -DEC ; D ; 2 C

38,59' 12,538 851' 35,585 4274 3375 4274 9,5@9 4@95 '454 47'2 3@,955 31,1'4 15,5'5 145 @124

75,421 '5,'@1 8987 35,585 4274 3375 @124 19,434 9@33 7194 2345 32,715 18,445 18,955 145 @124

42,118 '@,542 @828 75,525 8825 3375 18,955 35,2@4 15,244 2345 1',4'4 45,155 18,455 34,595 '55 @124

0-FD1 ; < B0D1 ; 1 A2345B 8E1B < 9 22D< 2 1 @17' 12D; < 12D; < -

01BD< B 2 1E;D0 F 2 A2345B 8E1B < 9 1E<D; - 2 98,127 1<2DC 1 < 11;DF 1 -

11CD1 2 < F2;DB < F A2345B 8E1B < 9 F2-D- B F 174,941 2;BD2 < B E1BD< 1 F

-12DC F ; FCD1 E B 00D2 F 0 -<<D0 < < -ED1 C < -<D< 0 < 1-DC 1 < BBDB 0 C 02DC B E -BD< 1 < 0FD1 < 1 -0ED0 - < F2D- C B F-DC ; < B<< 0CDB B B < < CEEDC E 2 -D<; - D - F 1 80BD< B < 9 < 80BD< B < 9 -D<F F D - - 1 01-D< C C E1BD< 1 F E1BD< 1 F

Northwind Traders Sample Business Plan

49

Sources and Uses of (unds


Sources and Use of (unds Number of funding rounds e"pected for full financing, Total dollar amount being sought in this round, 123,455 S'URCES '( (U+ S E&uit! (inancin%: Preferred Stoc&, *ommon Stoc&, ebt (inancin%: (ortgage ?oans, Cther ?ong. Term ?oans, Short. Term ?oans, *onvertible +ebt, In#est me n t from Principals: USE '( (U+ S Capital EHpenditu res: Purchase of Property, ?easehold Improvements, Purchase of !6uipmentJ urniture, Cther, 5or$in% Capital: Purchase of Inventory, Staff !"pansion, New Product ?ine Introduction, =dditional (ar&eting =ctivities, Cther Business !"pansion =ctivities, Cther, +atabase and #eb site ebt Retireme n t : Cash Reser#e: 171,3'4 137,955 1'5,555 1'@,''4 171,945 1

Northwind Traders Sample Business Plan

42