Aviation Rental Business_plan

8/2/2019 Aviation Rental Business_plan

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Table of Contents

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

Chart: Highlights .......................................................................................................................... 2

1.1 Objectives.................................................................................................................................... 21.2 Keys to Success ........................................................................................................................ 21.3 Mission .......................................................................................................................................... 3

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

2.1 Company Ownership ............................................................................................................... 3

2.2 Start-up Summary ................................................................................................................... 3

Table: Start-up.............................................................................................................................. 4

Table: Start-up Funding ............................................................................................................ 5Chart: Start-up ............................................................................................................................. 6

2.3 Company Locations and Facilities ...................................................................................... 63.0 Services............................................................................................................................................ 6

3.1 Service Description .................................................................................................................. 63.2 Competitive Comparison ....................................................................................................... 7

3.3 Sales Literature ......................................................................................................................... 7

3.4 Technology.................................................................................................................................. 7

3.5 Future Services ......................................................................................................................... 7

4.0 Market Analysis Summary ........................................................................................................ 74.1 Market Segmentation ............................................................................................................. 8

Table: Market Analysis ............................................................................................................... 8

Chart: Market Analysis (Pie).................................................................................................... 8

4.2 Target Market Segment Strategy ...................................................................................... 9

4.2.1 Market Trends.................................................................................................................... 9

4.2.2 Market Needs ..................................................................................................................... 94.2.3 Market Growth................................................................................................................... 9

4.3 Service Business Analysis ..................................................................................................... 9

4 3 1 Competition and Buying Patterns 10
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Table of Contents

Table: General Assumptions .................................................................................................. 15

7.2 Break-even Analysis.............................................................................................................. 16

Chart: Break-even Analysis ................................................................................................... 16Table: Break-even Analysis.................................................................................................... 16

7.3 Projected Profit and Loss..................................................................................................... 17

Table: Profit and Loss............................................................................................................... 17

Chart: Profit Monthly ................................................................................................................ 18

Chart: Profit Yearly .................................................................................................................... 18

Chart: Gross Margin Monthly................................................................................................. 19

Chart: Gross Margin Yearly .................................................................................................... 197.4 Projected Cash Flow .............................................................................................................. 20Chart: Cash .................................................................................................................................. 20Table: Cash Flow ........................................................................................................................ 21

7.5 Projected Balance Sheet...................................................................................................... 227.5 Projected Balance Sheet...................................................................................................... 22

Table: Balance Sheet ................................................................................................................ 22

7.6 Business Ratios ....................................................................................................................... 23

7.6 Business Ratios ....................................................................................................................... 23

Table: Ratios ................................................................................................................................ 237.7 Long-term Plan........................................................................................................................ 24

Table: Sales Forecast ......................................................................................................................... 1

Table: Personnel ................................................................................................................................... 2

Table: Personnel ................................................................................................................................... 2

Table: General Assumptions ............................................................................................................ 3

Table: General Assumptions ............................................................................................................ 3Table: Profit and Loss......................................................................................................................... 4

Table: Profit and Loss......................................................................................................................... 4

Table: Cash Flow 5


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Lansing Aviation, LLC

1.0 Executive Summary

Introduction

Lansing Aviation is being formed as a private company offering services to student pilots.Lansing Aviation will offer well-maintained aircraft for individual rental and for flight training.Lansing Aviation will also provide primary and advanced flight instruction through the use of

independent flight instructors possessing corporate and airline backgrounds. Lansing Aviationwill offer professional aviation consulting for corporate, airline, and individual aviation needs.

The Company

Lansing Aviation, LLC has been created and legally organized as a Michigan Limited Liability

Company based in Lansing, Michigan. The principle investors and operators will be responsiblefor all airplane acquisitions and company decisions.

Lansing Aviation will operate its aircraft out of Capital City Airport (LAN) in Lansing, Michigan.

The aircraft records, scheduling, and office will be located at an off-airport location 15 milesnorth of Capital City Airport.

Services

Lansing Aviation offers services in three primary areas; aircraft rental, flight instruction, andaviation consulting. In order to do so, Lansing Aviation will maintain a Cessna 172 Skyhawkupdated with the latest avionics.

Our competitive differences include professionally maintained aircraft, renter/instructor

insurance, and our 24-hour scheduling service that will allow greater flexibility of our aircraft

flight times.

In the future, Lansing Aviation plans to enhance their aircraft rental position by acquiringcomplex high-performance single and multi-engine aircraft for commercial and airline


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Lansing Aviation will be focusing initially on students interested in obtaining their private pilotcertificate. These students will primarily come from word-of-mouth-advertising from our

instructors, students, and other contacts at Mackinac-Great Lakes Airlines System (M-GLAS).We will attempt to continue teaching these students through their instrument rating course withus, upon completion of their private pilot package.

Chart: Highlights

1.1 Objectives


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1.3 Mission

Lansing Aviation offers an affordable, professionally-maintained aircraft for rental and flightinstruction. We will provide a safe and effective learning situation for our students whileadhering to safe practice and to applicable federal and state aviation regulations. Lansing

Aviation will provide students with an excellent aircraft for flight training and an aircraft to flyupon successful completion of their training.

2.0 Company Summary

Lansing Aviation is a new company that provides aircraft rental for general aviation enthusiasts,

flight instruction, and a dependable aircraft to build flight hours. We will focus on aircraft rentalfor registered pilots and rental for beginning and advanced flight training. Initially we will bemarketing our new business with aircraft specifications which include:

Clean, safe, and nice-looking aircraft readily available. Professionally maintained by certified aviation technicians. Continuously updated with leading-edge avionics.

2.1 Company Ownership

Lansing Aviation, LLC has been created and legally organized as a Michigan Limited Liability

Company based in Lansing, Michigan. The principle investors and operators will be responsiblefor all airplane acquisitions and company decisions.

2.2 Start-up Summary

The start-up costs of Lansing Aviation, LLC include:

An aircraft down payment. Office expenses. Down payment on aircraft renter's and flight instructor's insurance


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Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal -- Attorney Fees $400Office Supplies / Expenses $200Consultants $0Aircraft Insurance Down Payment $925

Expensed Equipment $0Hanger Down Payment + 1st Mo. Rent $600New ADF Radio $575Aircraft 10% Down Payment $3,600MBNA Loan Origination Fee $250Total Start-up Expenses $6,550

Start-up Assets

Cash Required $300Other Current Assets $0Long-term Assets $36,000Total Assets $36,300

Total Requirements $42,850


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Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $6,550Start-up Assets to Fund $36,300Total Funding Required $42,850

Assets

Non-cash Assets from Start-up $36,000Cash Requirements from Start-up $300Additional Cash Raised $0Cash Balance on Starting Date $300Total Assets $36,300

Liabilities and Capital

Liabilities

Current Borrowing $0Long-term Liabilities $32,400Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $32,400

Capital

Planned Investment

Michael J. Zorn - president $10,450Investor $0Other $0Additional Investment Requirement $0Total Planned Investment $10,450

Loss at Start-up (Start-up Expenses) ($6,550)Total Capital $3,900

Total Capital and Liabilities $36,300


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Chart: Start-up

2.3 Company Locations and Facilities

Lansing Aviation will operate its aircraft out of Capital City Airport (LAN) in Lansing, Michigan.

The aircraft will be hangared on the airport located just north of the I-96 Expressway and

Airport Road exit. Students, renters, and instructors will be given full access to the hangarfacilities. The aircraft records, scheduling, and office will be located at an off-airport location 15

miles north of Capital City Airport.

3.0 Services


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3.2 Competitive Comparison

The competitive differences are:

1. Our aircraft will be professionally maintained to the highest standards and regulations.Flying the aircraft with broken, deferred, or damaged components will not be acceptable.Our students, renters, and instructors will not have to fly aircraft that aren't properly

maintained.

2. We will provide renter and instructor insurance for our clients.3. Our 24-hour paging service will be used for aircraft scheduling and will give us a competitive

edge over other aircraft rental and instruction operators that open and close according to a

fixed schedule.

3.3 Sales Literature

The company will advertise its rental aircraft and flight instruction position in the Mackinac-

Great Lakes Airlines System airlines pilot union newspaper, the "ALPA Times." Additionally,brochures describing the aircraft and rental charges will also be positioned in the M-GLAS

airlines' union headquarters in Lansing, Michigan. All other initial advertising will be throughword of mouth from current instructors, renters, and students.

3.4 Technology

Lansing Aviation will maintain an updated Cessna 172 Skyhawk.

1. The aircraft will have at least two 720-channel radios for legal and practical navigation andcommunication purposes.

2. The aircraft will have the required equipment and certification necessary to conduct

instrument training and actual instrument flight.3. The aircraft will be continuously upgraded with M-GLAS Aviation Technology (M-GLAS-AT)

avionics.


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4.1 Market Segmentation

1. Unsatisfied Students: We hope to obtain students and renters that are dissatisfied withtheir current instructors or aircraft from our competition before they become so frustratedthat they cease flying.

2. M-GLAS Employees: Our largest group of new students will hopefully come fromMackinac-Great Lakes Airlines System employees looking to start an aviation career.However, the M-GLAS pilots, M-GLAS mechanics with pilots licenses, and their children will

also serve as a strong target market for us.

3. Curious Flyers: The unrealized group of students that have "always wanted to learn to fly"is another market segment that we intend to develop.

4. Other Flights/Miscellaneous Rental: Sight-seeing flights, color tours, real-estatesurveying, Air Force training, and traffic watch will also be targeted.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Curious / Interested FuturePilots

20% 15 18 22 26 31 19.90%

M-GLAS Pilots, Friends,Neighbors

30% 10 13 17 22 29 30.50%

Other Schools UnhappyStudents

1% 1 1 1 1 1 0.00%

Other Flights / Misc. Rentals 15% 5 6 7 8 9 15.83%Total 22.58% 31 38 47 57 70 22.58%

Chart: Market Analysis (Pie)


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4.2 Target Market Segment Strategy

We will focus our marketing to prospective students that are looking for fun, qualifiedinstructors and a well-maintained and well-equipped aircraft. The aircraft must fly several hourseach month, so we will continuously urge interested students to call our list of qualified

instructors. Each prospective pilot that contacts Lansing Aviation for information will be sent aprivate pilot price sheet with approximate costs and a free 6-month subscription toAOPAFlightTraining magazine.

4.2.1 Market Trends

The airline shortage has created an immense demand for increased pilot training. The previousaircraft rental company in Lansing ended up needing additional aircraft to meet the increaseddemands of new students in the area.

There are rising numbers of students and renters that are looking for a professionally-maintained and well-equipped aircraft for training and renting.

4.2.2 Market Needs

There are several students currently flying at Capital City Airport that are unhappy with eitherthe quality of their current instruction or the poorly maintained aircraft they are renting. A flight

with our instructors in our well-equipped Cessna 172 Skyhawk will confirm their displeasurewith our competition and generate new business for us.

Mackinac-Great Lakes Airlines Systems is the largest employer in Lansing, with 19,000employees, and we feel that these employees are aware of the excellent careers held by M-

GLAS pilots. We hope this awareness will generate interest in flying. Additionally, many M-GLAS

pilots and M-GLAS mechanics fly small airplanes for fun and to transport their families tovacation spots.

4.2.3 Market Growth


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4.3.1 Competition and Buying Patterns

In the flight instruction business, word-of-mouth advertising and personal marketing are themain reason that students choose one flight school over another. Many students begin flyingafter coincidentally meeting a certified flight instructor and discussing their dream of flying.

Through these discussions, students participate in an introductory flight and decide whether ornot they enjoyed the experience and whether or not the training will be affordable.

Occassionally, a student will have a personality conflict with his or her instructor and maychoose to try a new instructor. We intend to capitalize on some of these unfortunate conflicts at

Capital City Airport and attract their business with our professional, enthusiastic, and qualified

instructor group.

Our reputation of maintaining a nice-looking and well-maintained aircraft at an affordable pricewill be our final and most respected selling medium.

4.3.2 Main Competitors

Spartan Wings:

Strengths: They have several different rental aircraft from which to choose, and excellentmarketing in the field. Because of an all-female management team and ownership, theirexposure to women in aviation is enormous.

Weaknesses: Their flight instructors are only instructing to build flight time in order to obtain an

airline or corporate job. Male students have complained of special treatment and training forfemale students. Aircraft are not well-maintained, and the pilot-product of their school has notbeen strong.

Wolverine Aviation:

Strengths: They provide competition to Spartan Wings which gives an alternative for unhappy


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5.0 Strategy and Implementation Summary

Lansing Aviation will be focusing initially on students interested in obtaining their private pilotcertificate. These students will primarily come from word-of-mouth-advertising from ourinstructors, students, and other contacts at Mackinac-Great Lakes Airlines System (M-GLAS).

We will attempt to continue teaching these students through their instrument rating course withus, upon completion of their private pilot package.

In order to attract larger sums of money, we will offer a 10-hour block of aircraft rental for$730 ($73/hour) which is reduced from our normal rental rate of $75 per hour. Additionally, wewill offer M-GLAS employees the same $73 per hour rate for block or non-block rentals.

5.1 Sales Forecast

Our Sales Forecast tables shows our estimated aircraft rental revenue. This monthly breakdown

can be seen in the appendix. Estimated operating expenses and other charges are listed in theProfit and Loss table.

Chart: Sales Monthly


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Table: Sales Forecast

Sales Forecast


SalesAircraft Rental $49,068 $54,007 $55,392 $50,776 $60,931Other $0 $0 $0 $0 $0Total Sales $49,068 $54,007 $55,392 $50,776 $60,931

Direct Cost of Sales Year 1 Year 2 Year 3 Year 4 Year 5Aircraft Rental $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $0 $0 $0 $0 $0

Chart: Sales by Year


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5.2 Milestones

Sample Milestones topic text.

The milestones table and chart show the specific detail about actual program activities thatshould be taking place during the year. Each one has its manager, starting date, ending date,and budget. During the year we will be keeping track of implementation against plan, withreports on the timely completion of these activities as planned.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager DepartmentSample Milestones 1/4/2008 1/4/2008 $0 ABC DepartmentFinish Business Plan 9/13/2010 10/13/2010 $100 Dude BossAcquire Financing 9/23/2010 11/12/2010 $200 Dudette LegumersAh HA! Event 10/3/2010 10/8/2010 $60 Marianne BossesAh Merde Alors! Event 11/2/2010 11/7/2010 $250 Marionette Bouc missaireGrande Opening 11/12/2010 11/17/2010 $500 Gloworm NobsMarketing Program Starts 10/13/2010 11/7/2010 $1,000 Glower MarketeersPlan vs. Actual Review 3/10/2011 3/17/2011 $0 Galore AllesFirst Break-even Month 7/12/2011 8/11/2011 $0 Bouys SalersHire Employees 6/10/2011 7/10/2011 $150 Gulls HRMUpgrade Business Plan Pro 8/29/2011 8/31/2011 $100 Brass BossiesTotals $2,360

Chart: Milestones


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6.0 Management Summary

The initial organizer of Lansing Aviation, LLC is Michael J. Zorn. In order to maintain legalrequirements of an LLC, there is one other member of the company. At the current time, thereis only the need for two members in the organizational structure.

Lansing Aviation will rely on the member(s) of the LLC for decision making and financial

investing when needed. The ultimate responsibilities of the entire LLC will be given to themember(s).

6.1 Management Team

Lansing Aviation is not departmentalized. The owner and organizer, Michael J. Zorn, is also theCEO, CFO, and planner. All decisions will be based upon the company mission statement.

The collegiate advertising and marketing background, combined with the current airline pilotexperience of the CEO, will provide for timely, accurate, and professional decisions.

6.2 Personnel Plan

Lansing Aviation will employ no one. All flight instructors will be independent contractors

responsible for their own payroll. The company will not collect any funds from the instructorsfor their time, but solely from the rental of the company's aircraft. The owner will be paid anominal stipend.

Table: Personnel

Personnel PlanYear 1 Year 2 Year 3 Year 4 Year 5

Owner $7,833 $12,000 $0 $0 $0Name or title $0 $0 $0 $0 $0


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7.0 Financial Plan We want to finance our aircraft loan through cash flow from our aircraft rental.

We want to pay for our engine overhaul at the recommended TBO through cash savingsacquired during our aircraft rental. In order to attract larger sums of money, we will offer a 10-hour block of aircraft rental for

$730 ($73/hour) which is reduced from our normal rental rate of $75 per hour. Additionally,we will offer M-GLAS employees the same $73 per hour rate for block or non-block rentals.

7.1 Important Assumptions

The financial plan depends on the number of revenue hours flown each month in our aircraft.

The most important assumptions crucial to our success are:

The aircraft will maintain flying status other than routine, required inspections lasting a dayor two.

We will not have any major aircraft accidents or incidents that will result in major downtime. We also assume that student pilot starts will continue to increase and the demand for pilots

will continue.

Table: General Assumptions

General Assumptions


Plan Month 1 2 3 4 5Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 28.17% 28.00% 28.17% 28.00% 28.17%

Other 0 0 0 0 0


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7.2 Break-even Analysis

Breaking down our monthly fixed costs enables us to calculate how much the aircraft needs tobe flown each month to maintain profitability. Our monthly fixed costs include:

Hangar rental. Aircraft insurance. Engine overhaul fund. Aircraft loan payments. Routine aircraft maintenance and inspection costs. Estimated monthly fuel costs.

The following chart and table summarizes our break-even analysis.

Chart: Break-even Analysis


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7.3 Projected Profit and Loss

With monthly fixed costs of hangar rent, renter and instructor insurance, an engine overhaulfund, aircraft loan, planned maintenance and inspections, and fuel, we can actively market our

aircraft to obtain the correct number of students to exceed our expenses while making theaircraft convenient for the students to schedule for training and rental.

A loss is expected for the first few months while a student base is carefully chosen andconstructed. We hope to increase our number of flight hours flown each month by 25% until

the break-even point is reached. At that time, we will assess the number of students and the

number of hours being flown to determine how many more students and renters we want toincrease our profits and maintain good aircraft availability.

NOTE: You will notice in the year 2003 that the company is showing a net loss for the year.This is the year that we estimate the aircraft engine will require a factory overhaul. This

expense ranges from $13,000 to $20,000, depending on several variables. Therefore, we have

chosen to show an overhaul expense of $15,000 for that year. However, this was only shown todemonstrate the effect of not properly saving for the overhaul expense. We have allocated acertain percentage of each flight hour toward the engine overhaul savings fund which will cover

all of our expenses, thus, hopefully returning Lansing Aviation to a net profit for 2003.

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $49,068 $54,007 $55,392 $50,776 $60,931Direct Cost of Sales $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0Total Cost of Sales $0 $0 $0 $0 $0

Gross Margin $49,068 $54,007 $55,392 $50,776 $60,931Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00%


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Chart: Profit Monthly

Chart: Profit Yearly


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Chart: Gross Margin Monthly

Chart: Gross Margin Yearly


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7.4 Projected Cash Flow

The following cash flow projections show the amounts anticipated from the first few monthsduring the student accumulation period through the company's rental saturation.

Cash flow is critical to our success, for payment of the insurance and aircraft loan payments aswell as the fuel costs required to operate and the hangar to house the airplane.

Chart: Cash


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Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $49,068 $54,007 $55,392 $50,776 $60,931Subtotal Cash from Operations $49,068 $54,007 $55,392 $50,776 $60,931

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0Subtotal Cash Received $49,068 $54,007 $55,392 $50,776 $60,931

Expenditures Year 1 Year 2 Year 3 Year 4 Year 5

Expenditures from Operations

Cash Spending $7,833 $12,000 $0 $0 $0Bill Payments $31,725 $32,873 $35,808 $44,540 $37,787Subtotal Spent on Operations $39,558 $44,873 $35,808 $44,540 $37,787

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $2,600 $3,780 $3,780 $3,780 $3,780Purchase Other Current Assets $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0Subtotal Cash Spent $42,158 $48,653 $39,588 $48,320 $41,567

Net Cash Flow $6,910 $5,354 $15,804 $2,456 $19,364Cash Balance $7 210 $12 564 $28 367 $30 823 $50 188


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7.5 Projected Balance Sheet

The balance sheet in the following table shows some very important information regarding ourshort-term and long-term financial goals.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current Assets

Cash $7,210 $12,564 $28,367 $30,823 $50,188Other Current Assets $0 $0 $0 $0 $0Total Current Assets $7,210 $12,564 $28,367 $30,823 $50,188

Long-term Assets

Long-term Assets $36,000 $36,000 $36,000 $36,000 $36,000Accumulated Depreciation $3,300 $6,900 $10,500 $14,100 $17,700Total Long-term Assets $32,700 $29,100 $25,500 $21,900 $18,300Total Assets $39,910 $41,664 $53,867 $52,723 $68,488

Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5

Current Liabilities

Accounts Payable $2,966 $2,678 $2,967 $3,723 $3,050Current Borrowing $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0Subtotal Current Liabilities $2,966 $2,678 $2,967 $3,723 $3,050

Long-term Liabilities $29,800 $26,020 $22,240 $18,460 $14,680Total Liabilities $32,766 $28,698 $25,207 $22,183 $17,730

Paid-in Capital $10,450 $10,450 $10,450 $10,450 $10,450Retained Earnings ($6,550) ($3,306) $2,515 $18,210 $20,090Earnings $3,244 $5,822 $15,695 $1,880 $20,217Total Capital $7 144 $12 965 $28 660 $30 540 $50 757


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7.6 Business Ratios

We expect to see flat ratios of profitability during the first year while we build our customerbase. We expect these ratios to improve in the second and succeeding years. The followingtable shows the projected ratios for Lansing Aviation. The Industry Profile comes from Standard

Industry Code #8299, Schools and Educational Services.

Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Year 4 Year 5 Industry ProfileSales Growth n.a. 10.07% 2.56% -8.33% 20.00% 9.50%

Percent of Total Assets

Other Current Assets 0.00% 0.00% 0.00% 0.00% 0.00% 45.60%Total Current Assets 18.06% 30.16% 52.66% 58.46% 73.28% 62.40%Long-term Assets 81.94% 69.84% 47.34% 41.54% 26.72% 37.60%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Current Liabilities 7.43% 6.43% 5.51% 7.06% 4.45% 43.30%Long-term Liabilities 74.67% 62.45% 41.29% 35.01% 21.43% 17.30%Total Liabilities 82.10% 68.88% 46.79% 42.07% 25.89% 60.60%Net Worth 17.90% 31.12% 53.21% 57.93% 74.11% 39.40%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Gross Margin 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%Selling, General & AdministrativeExpenses

81.12% 75.41% 73.39% 102.00% 72.25% 73.80%

Advertising Expenses 60.14% 58.82% 57.35% 62.57% 57.35% 5.00%Profit Before Interest and Taxes 15.70% 20.14% 43.80% 9.15% 48.91% 3.20%

Main RatiosCurrent 2.43 4.69 9.56 8.28 16.45 1.33Quick 2.43 4.69 9.56 8.28 16.45 1.11Total Debt to Total Assets 82.10% 68.88% 46.79% 42.07% 25.89% 60.60%Pre-tax Return on Net Worth 63.23% 62.37% 76.23% 8.55% 55.45% 5.50%


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7.7 Long-term Plan

Our long-term plan is based primarily on the short-term future of the business. If the aircraft isable to support its expenses, then the future of Lansing Aviation and our long-term goal plan

can be successfully accomplished.

Our long-term plan contains the following elements:

Paying off the entire aircraft loan in the first three years of operation. Acquiring partial ownership of a twin-engine aircraft for training and travel needs.

Avoiding accident, incident, and lawsuit through our entire longevity. Providing present and future students and renters with a superlative aircraft for all of their

flying needs.


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Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Sales

Aircraft Rental 0% $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875

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

Aircraft Rental $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0


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Appendix

Page 2

Table: Personnel

Personnel Plan


Owner 0% $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Name or title 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Name or title 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total People 0 0 0 0 0 0 0 0 0 0 0 0

Total Payroll $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000


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Appendix

Page 3

Table: General Assumptions

General Assumptions


Plan Month 1 2 3 4 5 6 7 8 9 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 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%Tax Rate 30.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00% 28.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

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Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Margin $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875Gross Margin % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Expenses

Payroll $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Sales and Marketing and OtherExpenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Depreciation $0 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300Fixed Operations Costs $0 $1,300 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623 $2,623Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Aircraft Upgrades 15% $0 $0 $0 $0 $0 $0 $0 $0 $500 $0 $1,000 $0Mainenance and Repairs $0 $0 $0 $200 $0 $500 $0 $500 $0 $0 $0 $0

Total Operating Expenses $0 $1,600 $2,923 $3,123 $3,756 $4,423 $3,923 $4,423 $4,423 $3,923 $4,923 $3,923

Profit Before Interest and Taxes $693 ($100) $77 $627 $744 $1,202 $1,702 $452 $452 $952 ($48) $952

EBITDA $693 $200 $377 $927 $1,044 $1,502 $2,002 $752 $752 $1,252 $252 $1,252Interest Expense $270 $270 $270 $270 $270 $270 $270 $270 $265 $260 $255 $248Taxes Incurred $127 ($104) ($54) $100 $133 $261 $401 $51 $52 $194 ($85) $197

Net Profit $296 ($266) ($139) $257 $341 $671 $1,031 $131 $135 $498 ($218) $507

Net Profit/Sales 42.73% -17.76% -4.63% 6.85% 7.58% 11.93% 18.33% 2.69% 2.76% 10.22% -4.48% 10.39%

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Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from OperationsCash Sales $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875Subtotal Cash from Operations $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875

Additional Cash ReceivedSales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New 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 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $693 $1,500 $3,000 $3,750 $4,500 $5,625 $5,625 $4,875 $4,875 $4,875 $4,875 $4,875

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

Expenditures from Operations

Cash Spending $0 $0 $0 $0 $833 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Bill Payments $13 $433 $1,512 $2,851 $3,187 $3,047 $3,642 $3,299 $3,444 $3,428 $3,101 $3,769Subtotal Spent on Operations $13 $433 $1,512 $2,851 $4,020 $4,047 $4,642 $4,299 $4,444 $4,428 $4,101 $4,769

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

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $600 $600 $600 $800

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Spent $13 $433 $1,512 $2,851 $4,020 $4,047 $4,642 $4,299 $5,044 $5,028 $4,701 $5,569

Net Cash Flow $680 $1,067 $1,488 $899 $480 $1,578 $983 $576 ($169) ($153) $174 ($694)

Cash Balance $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210

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Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $300 $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $300 $980 $2,047 $3,535 $4,434 $4,914 $6,492 $7,475 $8,051 $7,883 $7,729 $7,904 $7,210

Long-term Assets

Long-term Assets $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000 $36,000Accumulated Depreciation $0 $0 $300 $600 $900 $1,200 $1,500 $1,800 $2,100 $2,400 $2,700 $3,000 $3,300Total Long-term Assets $36,000 $36,000 $35,700 $35,400 $35,100 $34,800 $34,500 $34,200 $33,900 $33,600 $33,300 $33,000 $32,700Total Assets $36,300 $36,980 $37,747 $38,935 $39,534 $39,714 $40,992 $41,675 $41,951 $41,483 $41,029 $40,904 $39,910

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

Current LiabilitiesAccounts Payable $0 $384 $1,418 $2,744 $3,087 $2,925 $3,532 $3,184 $3,329 $3,326 $2,974 $3,667 $2,966Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $384 $1,418 $2,744 $3,087 $2,925 $3,532 $3,184 $3,329 $3,326 $2,974 $3,667 $2,966

Long-term Liabilities $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $32,400 $31,800 $31,200 $30,600 $29,800Total Liabilities $32,400 $32,784 $33,818 $35,144 $35,487 $35,325 $35,932 $35,584 $35,729 $35,126 $34,174 $34,267 $32,766

Paid-in Capital $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450Retained Earnings ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550) ($6,550)Earnings $0 $296 $30 ($109) $148 $489 $1,160 $2,191 $2,322 $2,457 $2,955 $2,737 $3,244Total Capital $3,900 $4,196 $3,930 $3,791 $4,048 $4,389 $5,060 $6,091 $6,222 $6,357 $6,855 $6,637 $7,144Total Liabilities and Capital $36,300 $36,980 $37,747 $38,935 $39,534 $39,714 $40,992 $41,675 $41,951 $41,483 $41,029 $40,904 $39,910

Net Worth $3,900 $4,196 $3,930 $3,791 $4,048 $4,389 $5,060 $6,091 $6,222 $6,357 $6,855 $6,637 $7,144

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