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Cover Page

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Legal Page
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Table of Contents

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

Chart: Highlights.......................................................................................................................................2
1.1 Mission....................................................................................................................................................2
1.2 Objectives................................................................................................................................................2
2.0 Company Summary.....................................................................................................................................2
2.1 Company Ownership..............................................................................................................................3
2.2 Start-up Summary...................................................................................................................................3
Table: Start-up...........................................................................................................................................3
...................................................................................................................................................................3
Table: Start-up Funding............................................................................................................................4
Chart: Start-up...........................................................................................................................................5
3.0 Products.......................................................................................................................................................5
4.0 Market Analysis Summary.........................................................................................................................5
4.1 Market Segmentation..............................................................................................................................6
Chart: Market Analysis (Pie)....................................................................................................................6
Table: Market Analysis.............................................................................................................................6
4.2 Target Market Segment Strategy............................................................................................................7
4.3 Industry Analysis....................................................................................................................................7
5.0 Strategy and Implementation Summary.....................................................................................................7
5.1 Competitive Edge....................................................................................................................................8
5.2 Sales Strategy..........................................................................................................................................8
5.2.1 Sales Forecast...................................................................................................................................9
Chart: Sales Monthly............................................................................................................................9
Table: Sales Forecast..........................................................................................................................10
5.3 Milestones.............................................................................................................................................10
Table: Milestones....................................................................................................................................10
.........................................................................................................................................................................10
6.0 Management Summary.............................................................................................................................11
6.1 Personnel Plan.......................................................................................................................................11
Table: Personnel......................................................................................................................................11
.........................................................................................................................................................................11
7.0 Financial Plan............................................................................................................................................12
7.1 Important Assumptions.........................................................................................................................12
Table: General Assumptions...................................................................................................................12
.....................................................................................................................................................................12
7.2 Break-even Analysis.............................................................................................................................13
Chart: Break-even Analysis....................................................................................................................13
Table: Break-even Analysis....................................................................................................................13
.....................................................................................................................................................................13
7.3 Projected Profit and Loss......................................................................................................................14
Page 1

Table of Contents

Table: Profit and Loss.............................................................................................................................14

.....................................................................................................................................................................14
7.4 Projected Cash Flow.............................................................................................................................15
Chart: Cash..............................................................................................................................................15
Table: Cash Flow....................................................................................................................................16
.....................................................................................................................................................................16
7.5 Projected Balance Sheet........................................................................................................................17
Table: Balance Sheet...............................................................................................................................17
7.6 Business Ratios.....................................................................................................................................17
Table: Ratios...........................................................................................................................................18
Table: Sales Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table: Personnel................................................................................................................................................2
...........................................................................................................................................................................2
Table: General Assumptions.............................................................................................................................3
...........................................................................................................................................................................3
Table: Profit and Loss.......................................................................................................................................4
...........................................................................................................................................................................4
Table: Cash Flow..............................................................................................................................................5
Table: Balance Sheet.........................................................................................................................................6

Page 2

The Basket of Goodies

1.0 Executive Summary

Introduction
Basket of Goodies (BOG) is a premier gift basket retailer. BOG is concentrating on making
gourmet gift baskets out of a wide range of high-quality ingredients. In addition to having
several flagship baskets, BOG will also offer the option of a custom basket allowing the
customer to choose the ingredients themselves. BOG will be selling to individuals as well as
corporations. Initially the bulk of BOG's business will be generated by individuals from word-ofmouth referrals, but as time passes, corporations will become a growing percentage of sales.
Once up and running with some momentum, BOG will be steadily producing profits. It is
projected that BOG will be making a profit by December. By the end of year three, it is
projected that BOG will be generating a net profit of approximately $21,000.
The
Company
The Basket of Goodies' mission is to create the finest gift baskets available. BOG, soon to be
located in Salem, OR, will be hand assembling our products out of premier ingredients, local
when possible. The business will be based out of Susan Presento's home. Although this will be a
home-based business, toward the end of year one Susan will have an employee.
Susan Presento, founder and owner, managed a flower shop in Salem for three years and this
has given her insight to the gift giving practices of Oregonians. The primary gift baskets that
will be offered are: smoked fish basket, fruit basket, pasta dinner basket, and picnic basket that
has caviar, crackers, fruit, and smoked fish. BOG also offers a custom basket which allows
customers to pick items from a list and BOG will assemble the basket with its custom
ingredients.
The
Market
The purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasing
occurs during a wide variety of holidays.
BOG's competitive advantage will be based on two factors, low overhead which allows
reasonable prices, and an unrelenting desire for the highest quality product and service.
1. Low overhead.
2. Highest quality product and service.
BOG's sales strategy will be targeted at obtaining both the individual and corporate clients
through word-of-mouth referrals. Customers will be able to place an order at the office, over
the phone or via the website.
Financials
BOG's start-up costs will include all the equipment needed for the home-based office, legal
fees, website creation, and start-up advertising. The home office equipment will be the largest
chunk of the start-up expenses. This equipment includes a computer system, fax machine,
office supplies, cellular phone, and pager. Additionally, there will be the installation of a
broadband connection, and furniture for the home office. Total start-up expenses are expected
to be $28,000, all of which will be provided through Susan Presento's own equity.

Page 1

The Basket of Goodies

The Break-even Analysis indicates BOG will need to sell approximately $4,900 per month to
break even. BOG expects to earn approximately $14,000 in year two and $21,000 in year
three.

Chart: Highlights

Highlights
$100,000

$80,000

Sales

$60,000

Gross Margin
$40,000

Net Profit

$20,000
$0
Year 1

Year 2

Year 3

1.1 Mission
The Basket of Goodies' mission is to create the finest gift baskets available. We exist to attract
and maintain customers. When we adhere to this maxim, everything else will fall into place.
Our products and services will exceed the expectations of our customers.
1.2 Objectives
The objectives for the first three years of operation include:
1. To create a home-based company whose primary goal is to exceed customer's expectations.
2. To increase the number of clients served by at least 20% per year through superior
performance and word-of-mouth referrals.
3. To develop a sustainable home business, surviving off its own cash flow.
2.0 Company Summary
BOG, soon to be located in Salem, OR will offer a wide range of gourmet gift baskets,
production as well as custom units. BOG will be hand assembling the baskets out of premier
ingredients, local when possible. The business will be based out of Susan Presento's
home. Although this will be a home-based business, toward the end of year one Susan will have
an employee. If the business goes per the forecasted plan, the business will achieve profits by
the end of year one.

Page 2

The Basket of Goodies

2.1 Company Ownership

The Basket of Goodies will be a sole proprietorship, owned by Susan Presento.
2.2 Start-up Summary
BOG's start-up costs will include all the equipment needed for the home-based office, legal
fees, website creation, and start-up advertising. The home office equipment will be the largest
chunk of the start-up expenses. This equipment includes a computer system, fax machine,
office supplies, cellular phone, and pager. The computer should have a 500 megahertz
Celeron/Pentium processor, 64 megabytes of RAM (preferably 128), 6 gigabyte hard drive, and
a rewritable CD-ROM for backing up the system. Additionally, there will be the expense
installation of a broadband connection. While a broadband connection is not totally necessary, it
only costs between $40-50 per month for service and will make working on the Internet
significantly faster and easier.
The home office will also require a few pieces of furniture such as a desk, chair, and bookshelf
to transform a standard room into an office. Lastly, an additional land phone line will be
required. The legal fees are used for the formation of the business as well as for
reviewing/generating standard client contracts. The Web creation fees at start-up costs are for
design and creation of the website. The start-up advertising will be the production of brochures.
Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Office Supplies
General Supplies
Website Creation
Mailings
Total Start-up Expenses

$300
$100
$200
$1,500
$100
$250
$500
$400
$3,350

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$22,650
$0
$0
$2,000
$24,650

Total Requirements

$28,000

Page 3

The Basket of Goodies

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$3,350
$24,650
$28,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$2,000
$22,650
$0
$22,650
$24,650

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement
Total Planned Investment

$28,000
$0
$0
$28,000

Loss at Start-up (Start-up Expenses)

Total Capital

($3,350)
$24,650

Total Capital and Liabilities

$24,650

Total Funding

$28,000

Page 4

The Basket of Goodies

Chart: Start-up

Start-up
$30,000
$27,000
$24,000
$21,000
$18,000
$15,000
$12,000
$9,000
$6,000
$3,000
$0
Expenses

Assets

Investment

Loans

3.0 Products
BOG sells gourmet, hand-assembled gift baskets. Their premier baskets are: smoked fish
basket, fruit basket, pasta dinner basket, and picnic basket that has caviar, crackers, fruit, and
smoked fish. BOG also offers a custom basket which allow customers to pick items from a list
and BOG will assemble the basket with their custom ingredients.
For the customer baskets, BOG will provide a list of options grouped into four
different categories. The customer then chooses two items from each of the four categories and
the gift basket is made for them. BOG highlights four previously mentioned premier baskets. In
addition to these, BOG will typically have one or two specials, often seasonally based.
4.0 Market Analysis Summary
BOG will be going after two distinct market segments, individuals and corporations. Both groups
buy gift baskets as a goodwill gesture, typically for different reasons. Individuals typically buy
the baskets as a present with over half of sales occur during holidays. Corporations buy the
baskets as presents as well, but usually for events unrelated to the holidays. By going after
both of these groups, sales will be less seasonal (relative to if only the individuals were
targeted).
There are many different "gift basket" retailers in Salem. BOG will differentiate themselves
through the use of premium ingredients in their baskets. The gourmet baskets, coupled with a
custom option and reasonable prices (attributed to low overhead) will spell success for BOG.

Page 5

The Basket of Goodies

4.1 Market Segmentation

BOG's has two distinct groups of customers, individuals and corporate customers:

1. Individuals- The individuals are people who are looking to give a friend, relative, colleague,

2.

etc., a gift basket as a gesture of goodwill. These customers typically do not have a specific
type of gift basket in mind when they look at BOG's product offerings, they just want to give
a gift.
Corporate- The corporate customer is typically buying the basket for a colleague at work,
either as a sign of appreciation, for a special event, or as a thank you for a customer. The
corporate market can be further broken down to banks, health care, employment gifts, real
estate, apartments, special events/promotions, corporate headquarters, hotels/vacation
resorts, and automobile dealerships.

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Individuals
Corporations

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Individuals
Corporations
Total

8%
12%
8.09%

Year 1

Year 2

Year 3

Year 4

Year 5

14,258
298
14,556

15,399
334
15,733

16,631
374
17,005

17,961
419
18,380

19,398
469
19,867

CAGR
8.00%
12.01%
8.09%

Page 6

The Basket of Goodies

4.2 Target Market Segment Strategy

BOG is focusing on individuals and corporate customers because they are the largest segments
of purchasers for gift baskets. Individuals are the target purchaser of gift baskets. They
purchase baskets typically as a thank you in response for something the recipient did or just to
be nice. The gift basket is unmistakingly a gift so upon receipt there is no ambiguity why it was
sent or at least what it is trying to accomplish. Within the individual category, women are 69%
more likely to be the purchaser of a gift basket compared to men. This is not to say that
women more often purchase gifts, it just indicates women are more likely to buy gift baskets.
BOG is focusing on the corporate customers as they currently represent approximately a third
of the purchasers of gift baskets. The corporate customer could be buying the basket for
someone within their company, or they could be buying it for a customer, vendor, etc. The
trend for the corporation to purchase gifts is not a new phenomenon and therefore would
appear to be a solid market segment to pursue.
4.3 Industry Analysis
There are many different forms of competition in the gift basket business:
1. Similar gift basket type retail stores: There are several of these stores located in
Salem. These competitors offer a wide range of gift baskets, however none of them are
concentrating on the higher end, gourmet product line.
2. Nut/fruit companies: There are several stores that concentrate on nuts and or fruit baskets.
3. Bath product gift basket companies: There is currently one gift basket company that
concentrates on bath products. Bath products have a slightly smaller population of people
who appreciate these products (as women predominately appreciate bath products more
then men do).
4. Regional gift basket: There is one retailer that sells gift baskets composed of local
products. These type of baskets tend to appeal to people that are buying gifts for people
that are not from this area.
5. Candy gift baskets: There are several candy stores that offer, as one on their products, a
candy gift basket. Similar to the bath products basket, candy typically appeals to women a
bit more so then men.
6. Florists: Flowers are a similar product that competes with gift baskets. Once again flowers
tend to appeal to women more so then men.
The purchasing of gift baskets is very "seasonal." More than half of the gift basket
purchasing occurs during a wide variety of holidays.
5.0 Strategy and Implementation Summary
BOG's marketing and sales strategy will be based on two different types of media, brochures
and a website. Through these two tools, customers will become familiar with BOG's
products. BOG will also heavily rely on word-of-mouth referrals for business. BOG does not
anticipate any difficulties in developing these referrals as BOG's mission is customer
oriented. Everything they do revolves around developing a happy customer.

Page 7

The Basket of Goodies

5.1 Competitive Edge

BOG's competitive advantage will be based on two factors, low overhead which allows
reasonable prices, and an unrelenting desire for the highest quality product and service.
1. BOG's overhead is particularly low because it is a home-based business. Most of the
competition is based in retail shopping areas. While they receive more walk-by traffic and
therefore higher sales numbers, their rent is a large monthly expense. BOG avoids this large
expense by having the business run out of Susan's home. Additionally, Susan will be using a
modified version of just-in-time (JIT) inventory and assembling. Susan's husband passes by
the 90% of Susan's vendors on his way home from work and is able to pick up needed
inventory. This significantly lowers shipping and carrying costs for inventory. BOG will
have some of the standard baskets in stock for walk-by orders, but will try not to have large
amount in overhead.
2. Unrelenting desire for the highest quality product and service. This market space is already
crowded, a mediocre gift basket service will not succeed, so there must be some sort of
differentiation. Susan only uses the finest quality ingredients and can afford to because of
her low overhead. Additionally, she always follows the maxim that the customer must be
100% satisfied. That means she is willing to lose money in the short run if necessary to
please a customer, confident that in the long run that this is a wise business decision.
5.2 Sales Strategy
BOG's sales strategy will be targeted at obtaining both the individual and corporate clients. It is
our belief that the individual customers will be primarily obtained through word-of-mouth
referrals. It is likely that they will have spoken to a previous client about BOG and the referral
of our services will speak for itself. Our sales strategy will be to use an emphasis on our value
and high quality when trying to close the sale of the prospect. The prospective client can get a
similar product from a number of different vendors. BOG will attempt to close the sale by
showing the high quality of the basket by highlighting some of the individual ingredients. BOG's
expectation is that once they are impressed with the quality of the basket, they will then be
surprised that it is priced the same as competing products. The combination of the perception
of higher quality and the recognition of value should turn a lead into a customer.
Additionally, we provide several ways to procure the baskets. One way is for the customer to
come by the office and place the order. The customer can also place the order through a phone
call. Either they have ordered before, or are looking at a brochure and know what they want, or
they can visit our website for a complete catalog of our products. To receive the product, they
can pick up the product, or they may have it shipped via UPS. BOG believes that by providing
the customer a wide range of options, they will feel that they are special as we will do a wide
range of services to accommodate them. Our sales strategy for individuals and particularly
corporations will be based on our Web presence in conjunction with our printed catalog. Both
media will have detailed information about our service offerings.
Through our marketing efforts we will be driving people to our website and/or catalog. Once on
our website, people will see the wide range of product offerings we have and then can contact
us. The website will be especially useful for someone out of town who is need of a gift for
someone. BOG expects the corporate customers to utilize the website as a catalog, as well as
an order taker, because it takes less time for them to order on the Web then it does from them
to do in person.

Page 8

The Basket of Goodies

5.2.1 Sales Forecast

The first month will be spent setting up the business. It is unlikely that there will be much sales
activity. In addition to dealing with legal and accounting issues, equipment will need to be
purchased, an office created, and an assembly/inventory room set up in the basement. Susan
will be developing a system for assembly within the first month as a way to streamline the
entire process, as well as working on having the website designed and set up. This will require
a bit of time spent with her Web designer to perfect the look and feel of the site as well as to
set up the option of taking orders online.
Month two or three will begin to see some sales activity. BOG recognizes that it will take a bit of
time to really ramp up the sales. Susan will be doing a lot of networking in an attempt to
spread awareness about BOG's products and services. Susan will also be doing some direct
mailing to some local corporations in an attempt to drive in some corporate business. Susan
has a friend who works at a large company and she will serve as a consultant for ways of
increasing corporate purchases. Because Susan's husband will be helping out with picking up
some of the materials, Susan will not need an employee until near the end of year one.

Chart: Sales Monthly

Sales Monthly
$11,000
$10,000
$9,000
$8,000
$7,000

Individuals

$6,000

Corporations

$5,000
$4,000
$3,000
$2,000
$1,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

Page 9

The Basket of Goodies

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Individuals
Corporations
Total Sales

$33,640
$9,905
$43,545

$64,575
$28,744
$93,319

$78,452
$31,458
$109,910

Direct Cost of Sales

Individuals
Corporations
Subtotal Direct Cost of Sales

Year 1
$11,484
$3,505
$14,989

Year 2
$18,474
$7,854
$26,328

Year 3
$24,124
$9,898
$34,022

Sales

5.3 Milestones
BOG will have several milestones early on:
1. Business plan completion. This will be done as a road map for the company. While BOG
does not need a business plan to raise capital, it will be an indispensable tool for the
ongoing performance and improvement of the company.
2. Set up office.
3. Production of brochure and website.
4. BOG's 100th basket.
5. BOG's first profitable month.
Table: Milestones

Milestones
Milestone
Business plan completion
Set-up office
Production of brochure
website
BOG's 100th basket
Totals

and

Start Date
1/1/2001
1/1/2001
1/1/2001

End Date
1/1/2001
1/1/2001
2/1/2001

Budget
$0
$0
$0

Manager
Susan
Susan
Susan

Department
Marketing
Department
Department

3/1/2001

3/1/2001

$0
$0

Susan

Department

Page 10

The Basket of Goodies

6.0 Management Summary

BOG will be formed as a sole proprietorship, owned and operated by Susan Presento. There is
no compelling need to incorporate. The advantage of incorporation would be limited liability,
yet the disadvantage would be the set-up costs and maintenance (tax disadvantages). A
comprehensive insurance policy should cover any liability that BOG is exposed to.
Susan Presento, founder and owner, has a degree in communications from the University of
Portland. During her undergraduate years, Susan worked at Nothstroms, perfecting her
customer-centric perspective. After graduation, Susan managed a flower shop in Salem. It was
during these three years that Susan gained her insight to the gift giving practices of
Oregonians. Susan also gained valuable management experience in her work at the florist.
Susan will be relying on Robert Presento, her husband to help out in the pick up of the
ingredients of her products. In addition to Robert's help, Susan will be using Jennifer Simon
who works in the purchasing department of a large corporation. Jennifer will act as a consultant
regarding the purchasing habits of corporations, a niche of the industry that Susan would like to
be a part of.
6.1 Personnel Plan
The staff of BOG will consist of Susan working full time. Susan's husband Robert will help with
inventory procurement but will not be listed on the payroll. Robert will be picking up inventory
on his way home from work occasionally and will not be billing BOG for his work. Jennifer
Simon will be a consultant for BOG for insight into the corporate market. By month eight
Susan will bring on board a part-time employee. This employee will be used for the assembly of
the baskets.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Susan
Part-time employee
Other
Total People

$24,000
$7,500
$0
2

$24,000
$15,000
$0
2

$24,000
$15,000
$0
2

Total Payroll

$31,500

$39,000

$39,000

Page 11

The Basket of Goodies

7.0 Financial Plan

The following sections will outline the important financial data.
7.1 Important Assumptions
The following table details important financial assumptions for BOG.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
25.42%
0

2
10.00%
10.00%
25.00%
0

3
10.00%
10.00%
25.42%
0

Page 12

The Basket of Goodies

7.2 Break-even Analysis

The Break-even Analysis indicates BOG will need to sell approximately $4,900 in baskets per
month to break even.

Chart: Break-even Analysis

Break-even Analysis
$3,000
$2,000
$1,000
$0
($1,000)
($2,000)
($3,000)
$0

$1,600
$800

$3,200
$2,400

$4,800
$4,000

$6,400
$5,600

$8,000
$7,200

$8,800

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$4,915

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

34%
$3,223

Page 13

The Basket of Goodies

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.
Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other
Total Cost of Sales

$43,545
$14,989
$0
$14,989

$93,319
$26,328
$0
$26,328

$109,910
$34,022
$0
$34,022

Gross Margin
Gross Margin %

$28,556
65.58%

$66,991
71.79%

$75,888
69.05%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other

$31,500
$1,200
$655
$0
$0
$600
$0
$4,725
$0

$39,000
$1,200
$672
$0
$0
$600
$0
$5,850
$0

$39,000
$1,200
$672
$0
$0
$600
$0
$5,850
$0

Total Operating Expenses

$38,680

$47,322

$47,322

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($10,124)
($9,469)
$0
$0

$19,669
$20,341
$0
$4,917

$28,566
$29,238
$0
$7,261

Net Profit
Net Profit/Sales

($10,124)
-23.25%

$14,752
15.81%

$21,305
19.38%

Expenses

Page 14

The Basket of Goodies

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

Chart: Cash

Cash
$21,000
$18,000
$15,000
$12,000

Net Cash Flow

$9,000

Cash Balance

$6,000
$3,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

Page 15

The Basket of Goodies

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$43,545
$43,545

$93,319
$93,319

$109,910
$109,910

Sales Tax, VAT, HST/GST Received

New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received

$0
$0
$0
$0
$0
$0
$0
$43,545

$0
$0
$0
$0
$0
$0
$0
$93,319

$0
$0
$0
$0
$0
$0
$0
$109,910

Expenditures

Year 1

Year 2

Year 3

$31,500
$18,916
$50,416

$39,000
$42,516
$81,516

$39,000
$47,978
$86,978

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent

$0
$0
$0
$0
$0
$0
$0
$50,416

$0
$0
$0
$0
$0
$0
$0
$81,516

$0
$0
$0
$0
$0
$0
$0
$86,978

Net Cash Flow

Cash Balance

($6,871)
$15,779

$11,803
$27,582

$22,932
$50,515

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Page 16

The Basket of Goodies

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$15,779
$3,507
$0
$19,286

$27,582
$4,283
$0
$31,865

$50,515
$4,072
$0
$54,587

Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$2,000
$655
$1,345
$20,631

$2,000
$1,327
$673
$32,539

$2,000
$1,999
$1
$54,588

Liabilities and Capital

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$6,105
$0
$0
$6,105

$3,261
$0
$0
$3,261

$4,004
$0
$0
$4,004

Long-term Liabilities
Total Liabilities

$0
$6,105

$0
$3,261

$0
$4,004

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$28,000
($3,350)
($10,124)
$14,526
$20,631

$28,000
($13,474)
$14,752
$29,278
$32,539

$28,000
$1,278
$21,305
$50,584
$54,588

Net Worth

$14,526

$29,278

$50,584

Assets
Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets

Current Liabilities

7.6 Business Ratios

The ratios table compares BOG's estimated growth, balance and profit ratios to the industry
standard for Miscellaneous personal services (Standard Industry Code #7299).

Page 17

The Basket of Goodies

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

114.30%

17.78%

17.90%

Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

17.00%
0.00%
93.48%
6.52%
100.00%

13.16%
0.00%
97.93%
2.07%
100.00%

7.46%
0.00%
100.00%
0.00%
100.00%

4.60%
37.10%
52.80%
47.20%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

29.59%
0.00%
29.59%
70.41%

10.02%
0.00%
10.02%
89.98%

7.34%
0.00%
7.34%
92.66%

33.90%
28.00%
61.90%
38.10%

100.00%
65.58%
88.87%
0.00%
-23.25%

100.00%
71.79%
55.98%
0.00%
21.08%

100.00%
69.05%
49.55%
0.00%
25.99%

100.00%
0.00%
72.70%
2.20%
4.00%

3.16
2.58
29.59%
-69.69%
-49.07%

9.77
8.46
10.02%
67.18%
60.45%

13.63
12.61
7.34%
56.47%
52.33%

1.81
1.33
61.90%
6.30%
16.60%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-23.25%
-69.69%

15.81%
50.38%

19.38%
42.12%

n.a
n.a

10.80
4.10
27
2.11

6.76
12.17
43
2.87

8.14
12.17
27
2.01

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

0.42
1.00

0.11
1.00

0.08
1.00

n.a
n.a

$13,181
0.00

$28,605
0.00

$50,582
0.00

n.a
n.a

0.47
30%
2.58
3.00
0.00

0.35
10%
8.46
3.19
0.00

0.50
7%
12.61
2.17
0.00

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

Activity Ratios
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 18

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales
Individuals
Corporations
Total Sales
Direct Cost of Sales

0%
0%

$0
$0
$0
Month 1

$0
$0
$0
Month 2

$1,245
$75
$1,320
Month 3

$1,854
$187
$2,041
Month 4

$1,987
$421
$2,408
Month 5

$2,854
$564
$3,418
Month 6

$3,254
$745
$3,999
Month 7

$3,475
$887
$4,362
Month 8

$3,654
$998
$4,652
Month 9

$3,758
$1,014
$4,772
Month 10

$4,014
$1,645
$5,659
Month 11

$7,545
$3,369
$10,914
Month 12

Individuals

$0

$0

$621

$751

$812

$1,354

$1,547

$1,354

$1,345

$1,345

$154

$2,201

Corporations

$0

$0

$35

$64

$158

$225

$354

$321

$351

$352

$658

$987

Subtotal Direct Cost of Sales

$0

$0

$656

$815

$970

$1,579

$1,901

$1,675

$1,696

$1,697

$812

$3,188

Page 1

Appendix
Table: Personnel

Personnel Plan
Month 1
Susan
Part-time employee
Other
Total People
Total Payroll

0%
0%
0%

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$0
$0
1

$2,000
$1,500
$0
2

$2,000
$1,500
$0
2

$2,000
$1,500
$0
2

$2,000
$1,500
$0
2

$2,000
$1,500
$0
2

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1
Plan Month

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term
Rate
Tax Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other

Interest

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$0

$0

$1,320

$2,041

$2,408

$3,418

$3,999

$4,362

$4,652

$4,772

$5,659

$10,914

Direct Cost of Sales

$0

$0

$656

$815

$970

$1,579

$1,901

$1,675

$1,696

$1,697

$812

$3,188

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$656

$815

$970

$1,579

$1,901

$1,675

$1,696

$1,697

$812

$3,188

Gross Margin

$0

$0

$664

$1,226

$1,438

$1,839

$2,098

$2,687

$2,956

$3,075

$4,847

$7,726

Gross Margin %

0.00%

0.00%

50.30%

60.07%

59.72%

53.80%

52.46%

61.60%

63.54%

64.44%

85.65%

70.79%

Payroll

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

Sales and Marketing and

Other Expenses
Depreciation

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

Leased Equipment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Utilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Insurance

$50

$50

$50

$50

$50

$50

$50

$50

$50

$50

$50

$50

Rent

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$300
$0

$300
$0

$300
$0

$300
$0

$300
$0

$300
$0

$300
$0

$525
$0

$525
$0

$525
$0

$525
$0

$525
$0

Total Operating Expenses

$2,505

$2,505

$2,505

$2,505

$2,505

$2,505

$2,505

$4,230

$4,230

$4,230

$4,230

$4,230

Profit Before Interest and

Taxes
EBITDA

($2,505)

($2,505)

($1,841)

($1,279)

($1,067)

($666)

($407)

($1,543)

($1,274)

($1,155)

$617

$3,496

Expenses

Payroll Taxes
Other

15%

($2,450)

($2,450)

($1,786)

($1,224)

($1,012)

($611)

($352)

($1,488)

($1,219)

($1,100)

$672

$3,551

Interest Expense

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Taxes Incurred

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Net Profit

($2,505)

($2,505)

($1,841)

($1,279)

($1,067)

($666)

($407)

($1,543)

($1,274)

($1,155)

$617

$3,496

Net Profit/Sales

0.00%

0.00%

-139.44%

-62.64%

-44.29%

-19.47%

-10.17%

-35.36%

-27.38%

-24.19%

10.91%

32.04%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales

$0

$0

$1,320

$2,041

$2,408

$3,418

$3,999

$4,362

$4,652

$4,772

$5,659

$10,914

Subtotal Cash from Operations

$0

$0

$1,320

$2,041

$2,408

$3,418

$3,999

$4,362

$4,652

$4,772

$5,659

$10,914

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$0

$1,320

$2,041

$2,408

$3,418

$3,999

$4,362

$4,652

$4,772

$5,659

$10,914

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations

Cash Spending

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

Bill Payments

$15

$450

$496

$1,815

$1,454

$1,618

$2,699

$2,685

$2,111

$2,393

$2,316

$863

Subtotal Spent on Operations

$2,015

$2,450

$2,496

$3,815

$3,454

$3,618

$4,699

$6,185

$5,611

$5,893

$5,816

$4,363

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current

Borrowing
Other
Liabilities
Principal
Repayment
Long-term
Liabilities
Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Spent

$2,015

$2,450

$2,496

$3,815

$3,454

$3,618

$4,699

$6,185

$5,611

$5,893

$5,816

$4,363

Net Cash Flow

($2,015)

($2,450)

($1,176)

($1,774)

($1,046)

($200)

($700)

($1,823)

($959)

($1,121)

($157)

$6,551

Additional Cash Spent

Page 5

Appendix
Cash Balance

$20,635

$18,185

$17,009

$15,235

$14,189

$13,989

$13,289

$11,466

$10,507

$9,385

$9,228

$15,779

Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$22,650
$0
$0
$22,650

$20,635
$0
$0
$20,635

$18,185
$0
$0
$18,185

$17,009
$722
$0
$17,731

$15,235
$907
$0
$16,142

$14,189
$1,067
$0
$15,256

$13,989
$1,737
$0
$15,726

$13,289
$2,091
$0
$15,380

$11,466
$1,843
$0
$13,308

$10,507
$1,866
$0
$12,372

$9,385
$1,867
$0
$11,252

$9,228
$1,055
$0
$10,283

$15,779
$3,507
$0
$19,286

$2,000
$0
$2,000
$24,650

$2,000
$55
$1,945
$22,580

$2,000
$109
$1,891
$20,076

$2,000
$164
$1,836
$19,567

$2,000
$218
$1,782
$17,923

$2,000
$273
$1,727
$16,983

$2,000
$327
$1,673
$17,399

$2,000
$382
$1,618
$16,998

$2,000
$436
$1,564
$14,872

$2,000
$491
$1,509
$13,881

$2,000
$546
$1,455
$12,706

$2,000
$600
$1,400
$11,682

$2,000
$655
$1,345
$20,631

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Starting
Balances

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Month 10

Month 11

Month 12

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$435
$0
$0
$435

$435
$0
$0
$435

$1,767
$0
$0
$1,767

$1,402
$0
$0
$1,402

$1,528
$0
$0
$1,528

$2,609
$0
$0
$2,609

$2,615
$0
$0
$2,615

$2,031
$0
$0
$2,031

$2,314
$0
$0
$2,314

$2,294
$0
$0
$2,294

$653
$0
$0
$653

$6,105
$0
$0
$6,105

Long-term Liabilities
Total Liabilities

$0
$0

$0
$435

$0
$435

$0
$1,767

$0
$1,402

$0
$1,528

$0
$2,609

$0
$2,615

$0
$2,031

$0
$2,314

$0
$2,294

$0
$653

$0
$6,105

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$28,000
($3,350)
$0
$24,650
$24,650

$28,000
($3,350)
($2,505)
$22,145
$22,580

$28,000
($3,350)
($5,009)
$19,641
$20,076

$28,000
($3,350)
($6,850)
$17,800
$19,567

$28,000
($3,350)
($8,128)
$16,522
$17,923

$28,000
($3,350)
($9,195)
$15,455
$16,983

$28,000
($3,350)
($9,860)
$14,790
$17,399

$28,000
($3,350)
($10,267)
$14,383
$16,998

$28,000
($3,350)
($11,809)
$12,841
$14,872

$28,000
($3,350)
($13,083)
$11,567
$13,881

$28,000
($3,350)
($14,237)
$10,413
$12,706

$28,000
($3,350)
($13,620)
$11,030
$11,682

$28,000
($3,350)
($10,124)
$14,526
$20,631

Net Worth

$24,650

$22,145

$19,641

$17,800

$16,522

$15,455

$14,790

$14,383

$12,841

$11,567

$10,412

$11,030

$14,526

Page 6