Clara s Hardware Store

27
November 2001 This sample business plan has been made available to users of Business Plan Pro", business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright Palo Alto Software, Inc., 1995-2007

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Transcript of Clara s Hardware Store

Page 1: Clara s Hardware Store

November 2001

This sample business plan has been made available to users of Business Plan Pro", business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information.

You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here.

Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.

Copyright Palo Alto Software, Inc., 1995-2007

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Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________. Upon request, this document is to be immediately returned to _______________.

___________________ Signature ___________________Name (typed or printed) ___________________Date This is a business plan. It does not imply an offering of securities.

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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................11.1 Mission ........................................................................................................................................11.2 Keys to Success ........................................................................................................................1

2.0 Company Summary.............................................................................................................................22.1 Company Ownership .................................................................................................................22.2 Start-up Summary ......................................................................................................................3

3.0 Products ...............................................................................................................................................54.0 Market Analysis Summary ..................................................................................................................5

4.1 Market Segmentation ................................................................................................................65.0 Strategy and Implementation Summary ............................................................................................7

5.1 Competitive Edge ......................................................................................................................85.2 Sales Strategy ............................................................................................................................85.2.1 Sales Forecast........................................................................................................................9

6.0 Management Summary ....................................................................................................................106.1 Personnel Plan .........................................................................................................................10

7.0 Financial Plan ....................................................................................................................................117.1 Break-even Analysis................................................................................................................117.2 Projected Profit and Loss .......................................................................................................127.3 Projected Cash Flow ...............................................................................................................137.4 Projected Balance Sheet ........................................................................................................167.5 Ratios ........................................................................................................................................167.6 Business Ratios .......................................................................................................................18

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1.0 Executive Summary

The demographics of home ownership has changed radically in the South Gate section of Gilmore. Today, over 40% of the area's homes are owned by women. In addition, 60% of the area's rentals are owned by women. More often than not, it's a woman who will now head to the hardware store for repair parts and advice. Today's hardware store, which more and more are dominated by the mega-store chains, are cold, uninviting and usually involve more driving time. Clara's Hardware is uniquely positioned to take advantage of this new fact of life. Conveniently located to serve the South Gate area, Clara's Hardware offers parts, material, and advice to tackle any home repair, as well as lawn care. The focus is on helping the customer identify what they want as soon as they enter the store.

Through the use of a selection of hardware goods, superior personal customer attention, and reasonable prices, Clara's Hardware will capitalize on this incredible opportunity. A location has been secured that offers very good foot traffic and easy accessibility. The store will efficiently lay out the store to increase sales and give the customers the upmost in attention. The projected growth rate for Clara's Hardware is quite steady. The store will reach profitability by month six and will have revenue of approximately $100,000 by year three.

1.1 Mission

The mission of Clara's Hardware is to offer quality hardware products in a customer-friendly shopping environment. Our customers will get assistance quickly and will leave the store prepared to get the job done right the first time. Clara's Hardware will also focus on anticipating the seasonal needs of its customers and providing the best products at competitive prices. Most importantly, Clara's Hardware will make the additional 15 minute drive to a mega-hardware store, too far to go and too expensive to entertain.

1.2 Keys to Success

• Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The plaza's primary tenants are the area's successful supermarket, drug store, and appliance store. South Gate Plaza has easy access points on both of the area's major cross streets and is the biggest shopping center in South Gate's residental area. The closest hardware store to the South Gate area is a twenty minute drive.

• Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring in local customers by marketing these items at competitive prices.

• Repair/Project Resource Area: The first section customers will find when they enter is a repair/project resource area that they can use to plan repairs or projects. There will be a repair/project resource person to answer questions and direct them to the section of store where the needed products are.

• In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area will be used to conduct short trainings and demonstrations in home repair and home projects.

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2.0 Company Summary

Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The store's owner, Clara Johnson, has worked in the hardware industry for over ten years. Most recently, she was the shift manager at Home Depot located in Waterfront Shopping Center. Her area of expertise was home repairs. She conducted four presentations a week on all manner of home repair.

The business will make a profit in month six, and will grow steadily each consecutive month.

2.1 Company Ownership

Clara's Hardware is owned by Clara Johnson.

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2.2 Start-up Summary

The start-up cost of Clara's Hardware will consist primarily of inventory and display equipment. Clara Johnson will invest $80,000. She will also secure a $150,000 SBA loan.

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $1,000

Stationery etc. $0

Brochures $0

Consultants $0

Insurance $0

Rent $3,000

Start-Up Inventory $50,000

Display Set-Up $5,000

Cash Reserve for Hiring $20,000

Advertising $0

Other $0

Total Start-up Expenses $79,000

Start-up Assets

Cash Required $121,000

Start-up Inventory $0

Other Current Assets $0

Long-term Assets $30,000

Total Assets $151,000

Total Requirements $230,000

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Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $79,000

Start-up Assets to Fund $151,000

Total Funding Required $230,000

Assets

Non-cash Assets from Start-up $30,000

Cash Requirements from Start-up $121,000

Additional Cash Raised $0

Cash Balance on Starting Date $121,000

Total Assets $151,000

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabil ities $150,000

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $150,000

Capital

Planned Investment

Clara Johnson $80,000

Silent Partner $0

Other $0

Additional Investment Requirement $0

Total Planned Investment $80,000

Loss at Start-up (Start-up Expenses) ($79,000)

Total Capital $1,000

Total Capital and Liabil ities $151,000

Total Funding $230,000

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3.0 Products

Clara's Hardware offers the parts, material, and advice to tackle any home repair, as well as lawn care. The primary focus will be to satisfy the seasonal needs of the area's customers.

• Fall/Winter: Weatherization projects.• Spring: Garden/lawn projects/home improvement projects.• Summer: Outdoor building projects.

4.0 Market Analysis Summary

In the past ten years, most local hardware stores have closed due to the success of large hardware mega-stores drawing away local customers. The attraction of the larger stores has always been price and and a large inventory. Customers would rather drive 20 minutes and make sure they will find what they want rather than drive five minutes and hope the local store will have it at a low price. Yet these same hardware mega-stores are sterile and not customer-friendly. Customers can wander the aisles, aimlessly lost, looking for a two dollar item. And when they do find the right section, they will most likely select the most popular brand no matter how large the selection is. What these store offer in price and selection, they lose in creating a confusing, frustrating maze for their customers.

Clara believes that a local hardware store can provide a reasonable selection in the most important product areas, be competitive in pricing, and offer the customer a shopping environment that will assure repeat business.

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4.1 Market Segmentation

Clara's Hardware will focus on three significant customer groups:

• Women home owners: Many women home owners perform their own home repairs and home improvement projects. Clara knows this first hand since she has helped many of these women in mastering the skills needed to do the work successfully. Clara's Hardware will be uniquely designed to be responsive to the shopping environment that will attract and retain this important customer group.

• Customers who need assistance in planning a project/repair: This customer group can have the most frustrating experience in the hardware mega-stores. If they can't make the scheduled demos or trainings, they are left to sort thing out with whoever they can flag down in the store help them. Clara's Hardware will be set-up to provide resources and assistance as soon as they walk into the store.

• Local repair and home improvement professionals: The South Gate area supports a good number of repair and home improvement professionals. Currently, the hardware mega-stores have their business but Clara's Hardware can win a increasing share of this customer group through aggressive marketing. Time is money and if Clara's Hardware can save them a trip outside the area, they will buy there.

Table: Market Analysis

Market Analysis

2002 2003 2004 2005 2006

Potential Customers Growth CAGR

Women Home Owners 10% 15,000 16,500 18,150 19,965 21,962 10.00%

New Repair/Project Customers 20% 40,000 48,000 57,600 69,120 82,944 20.00%

Repair/Home Improvement

Professionals

5% 42 44 46 48 50 4.46%

Total 17.51% 55,042 64,544 75,796 89,133 104,956 17.51%

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5.0 Strategy and Implementation Summary

Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore Sun, to advertise. In addition, we will have a drawing for five $1,000 home improvement gift certificates that can be redeemed at selected home improvement professionals. We will have new drawings each week for the first eight weeks of the store's operation. Clara's Hardware will use the drawings to make connections with the local home improvement professionals. It is our plan to recoup some of the gift certificate money in material purchases that will be made by the home improvement professionals the winners select.

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5.1 Competitive Edge

Clara's Hardware's competitive edge is:

• Location: Clara's Hardware is located in South Gate Plaza. The foot traffic in the plaza is very strong. The closest hardware store to the South Gate area is a twenty minute drive.

• Seasonal Products: Each season has it own unique demand on a homeowner. Clara's Hardware will focus on this pattern and bring in local customers by marketing these items at competitive prices.

• Repair/Project Resource Area: The first section customers will find when they enter the store is a repair/project resource area that they can use to plan repairs or projects. There will be a repair/project resource person there to answer their questions and direct them to the section of store where the needed products are.

• In-Store Expertise: Store employees will be knowledgeable in home repairs/projects. In addition, the repair/project resource area will be used to conduct short trainings and demonstrations in home repair and home projects.

5.2 Sales Strategy

The sales strategy of Clara's Hardware is simple. First, create a shopping environment that will create confidence in the customer that he or she will get the needed material, part, or instructions to get the job done right the first time. Second, make the store easy to navigate, so customer can get in and out as quickly as possible. Third, know your customer's seasonal hardware needs and offer it at competitive prices.

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5.2.1 Sales Forecast

Clara's Hardware will hit the ground running in April.

Table: Sales Forecast

Sales Forecast

FY 2003 FY 2004 FY 2005

Sales

Hardware $964,000 $1,090,000 $1,240,000

Other $0 $0 $0

Total Sales $964,000 $1,090,000 $1,240,000

Direct Cost of Sales FY 2003 FY 2004 FY 2005

Hardware $474,000 $500,000 $612,000

Other $0 $0 $0

Subtotal Direct Cost of Sales $474,000 $500,000 $612,000

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6.0 Management Summary

Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of Clara's Hardware.

6.1 Personnel Plan

Clara's Hardware will have the following staff members:

• Manager.• Assistant Manager.• Office Manager/Accountant.• Checkers (full time and part time).• Two Customer Assistants.• Stockers (full time and part time).

Table: Personnel

Personnel Plan

FY 2003 FY 2004 FY 2005

Manager $36,000 $40,000 $45,000

Assistant Manager $36,000 $39,000 $43,000

Office Manager/Bookkeeper $36,000 $39,000 $42,000

Checkers $32,400 $35,500 $40,000

Customer Assistants $60,000 $68,000 $74,000

Stockers $39,600 $44,000 $48,000

Other $0 $0 $0

Total People 9 9 9

Total Payroll $240,000 $265,500 $292,000

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7.0 Financial Plan

The following is the financial plan for Clara's Hardware.

7.1 Break-even Analysis

The monthly sales break-even point is $65,133.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $65,133

Assumptions:

Average Percent Variable Cost 49%

Estimated Monthly Fixed Cost $33,107

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7.2 Projected Profit and Loss

The following table and chart highlight the projected profit and loss for three years.

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Table: Profit and Loss

Pro Forma Profit and Loss

FY 2003 FY 2004 FY 2005

Sales $964,000 $1,090,000 $1,240,000

Direct Cost of Sales $474,000 $500,000 $612,000

Other Production Expenses $0 $0 $0

Total Cost of Sales $474,000 $500,000 $612,000

Gross Margin $490,000 $590,000 $628,000

Gross Margin % 50.83% 54.13% 50.65%

Expenses

Payroll $240,000 $265,500 $292,000

Sales and Marketing and Other Expenses $75,000 $100,000 $100,000

Depreciation $4,284 $4,285 $4,285

Leased Equipment $0 $0 $0

Util ities $6,000 $6,000 $6,000

Insurance $0 $0 $0

Rent $36,000 $36,000 $36,000

Payroll Taxes $36,000 $39,825 $43,800

Other $0 $0 $0

Total Operating Expenses $397,284 $451,610 $482,085

Profit Before Interest and Taxes $92,716 $138,390 $145,915

EBITDA $97,000 $142,675 $150,200

Interest Expense $13,375 $10,500 $7,500

Taxes Incurred $23,802 $38,367 $41,525

Net Profit $55,539 $89,523 $96,891

Net Profit/Sales 5.76% 8.21% 7.81%

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

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Table: Cash Flow

Pro Forma Cash Flow

FY 2003 FY 2004 FY 2005

Cash Received

Cash from Operations

Cash Sales $964,000 $1,090,000 $1,240,000

Subtotal Cash from Operations $964,000 $1,090,000 $1,240,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $964,000 $1,090,000 $1,240,000

Expenditures FY 2003 FY 2004 FY 2005

Expenditures from Operations

Cash Spending $240,000 $265,500 $292,000

Bill Payments $648,662 $734,676 $847,507

Subtotal Spent on Operations $888,662 $1,000,176 $1,139,507

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabil ities Principal Repayment $30,000 $30,000 $30,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $918,662 $1,030,176 $1,169,507

Net Cash Flow $45,338 $59,824 $70,493

Cash Balance $166,338 $226,162 $296,655

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7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Table: Balance Sheet

Pro Forma Balance Sheet

FY 2003 FY 2004 FY 2005

Assets

Current Assets

Cash $166,338 $226,162 $296,655

Inventory $46,200 $48,734 $59,651

Other Current Assets $0 $0 $0

Total Current Assets $212,538 $274,896 $356,305

Long-term Assets

Long-term Assets $30,000 $30,000 $30,000

Accumulated Depreciation $4,284 $8,569 $12,854

Total Long-term Assets $25,716 $21,431 $17,146

Total Assets $238,254 $296,327 $373,451

Liabilities and Capital FY 2003 FY 2004 FY 2005

Current Liabil ities

Accounts Payable $61,715 $60,265 $70,499

Current Borrowing $0 $0 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $61,715 $60,265 $70,499

Long-term Liabil ities $120,000 $90,000 $60,000

Total Liabil ities $181,715 $150,265 $130,499

Paid-in Capital $80,000 $80,000 $80,000

Retained Earnings ($79,000) ($23,461) $66,062

Earnings $55,539 $89,523 $96,891

Total Capital $56,539 $146,062 $242,952

Total Liabil ities and Capital $238,254 $296,327 $373,451

Net Worth $56,539 $146,062 $242,952

7.5 Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5251, Hardware Stores, are shown for comparison.

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Table: Ratios

Ratio Analysis

FY 2003 FY 2004 FY 2005 Industry Profile

Sales Growth 0.00% 13.07% 13.76% 6.00%

Percent of Total Assets

Inventory 19.39% 16.45% 15.97% 48.50%

Other Current Assets 0.00% 0.00% 0.00% 20.20%

Total Current Assets 89.21% 92.77% 95.41% 79.70%

Long-term Assets 10.79% 7.23% 4.59% 20.30%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 25.90% 20.34% 18.88% 37.60%

Long-term Liabil ities 50.37% 30.37% 16.07% 19.70%

Total Liabilities 76.27% 50.71% 34.94% 57.30%

Net Worth 23.73% 49.29% 65.06% 42.70%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 50.83% 54.13% 50.65% 33.80%

Selling, General & Administrative Expenses 45.07% 45.92% 42.83% 21.10%

Advertising Expenses 7.78% 9.17% 8.06% 1.90%

Profit Before Interest and Taxes 9.62% 12.70% 11.77% 1.10%

Main Ratios

Current 3.44 4.56 5.05 2.24

Quick 2.70 3.75 4.21 0.58

Total Debt to Total Assets 76.27% 50.71% 34.94% 57.30%

Pre-tax Return on Net Worth 140.33% 87.56% 56.97% 2.20%

Pre-tax Return on Assets 33.30% 43.16% 37.06% 5.30%

Additional Ratios FY 2003 FY 2004 FY 2005

Net Profit Margin 5.76% 8.21% 7.81% n.a

Return on Equity 98.23% 61.29% 39.88% n.a

Activity Ratios

Inventory Turnover 10.91 10.53 11.29 n.a

Accounts Payable Turnover 11.51 12.17 12.17 n.a

Payment Days 27 30 28 n.a

Total Asset Turnover 4.05 3.68 3.32 n.a

Debt Ratios

Debt to Net Worth 3.21 1.03 0.54 n.a

Current Liab. to Liab. 0.34 0.40 0.54 n.a

Liquidity Ratios

Net Working Capital $150,823 $214,631 $285,806 n.a

Interest Coverage 6.93 13.18 19.46 n.a

Additional Ratios

Assets to Sales 0.25 0.27 0.30 n.a

Current Debt/Total Assets 26% 20% 19% n.a

Acid Test 2.70 3.75 4.21 n.a

Sales/Net Worth 17.05 7.46 5.10 n.a

Dividend Payout 0.00 0.00 0.00 n.a

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7.6 Business Ratios

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Appendix

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Table: Sales Forecast

Sales Forecast

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Sales

Hardware 0% $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Hardware $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000

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

Subtotal Direct Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000

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Appendix

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Table: Personnel

Personnel Plan

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Manager 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Assistant Manager 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Office Manager/Bookkeeper 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Checkers 0% $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700 $2,700

Customer Assistants 0% $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

Stockers 0% $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300 $3,300

Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People 9 9 9 9 9 9 9 9 9 9 9 9

Total Payroll $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

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Appendix

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Table: General Assumptions

General Assumptions

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

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% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

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

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Appendix

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Table: Profit and Loss

Pro Forma Profit and Loss

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Direct Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000

Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000

Gross Margin $25,000 $30,000 $35,000 $38,000 $43,000 $45,000 $50,000 $43,000 $45,000 $43,000 $40,000 $53,000

Gross Margin % 50.00% 50.00% 50.00% 50.67% 50.59% 50.00% 50.00% 50.59% 50.00% 50.59% 50.63% 55.79%

Expenses

Payroll $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Sales and Marketing and Other

Expenses

$20,000 $25,000 $5,000 $0 $5,000 $5,000 $0 $5,000 $0 $0 $5,000 $5,000

Depreciation $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357

Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Payroll Taxes 15% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

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

Total Operating Expenses $46,857 $51,857 $31,857 $26,857 $31,857 $31,857 $26,857 $31,857 $26,857 $26,857 $31,857 $31,857

Profit Before Interest and Taxes ($21,857) ($21,857) $3,143 $11,143 $11,143 $13,143 $23,143 $11,143 $18,143 $16,143 $8,143 $21,143

EBITDA ($21,500) ($21,500) $3,500 $11,500 $11,500 $13,500 $23,500 $11,500 $18,500 $16,500 $8,500 $21,500

Interest Expense $1,229 $1,208 $1,188 $1,167 $1,146 $1,125 $1,104 $1,083 $1,063 $1,042 $1,021 $1,000

Taxes Incurred ($6,926) ($6,920) $587 $2,993 $2,999 $3,605 $6,612 $3,018 $5,124 $4,530 $2,137 $6,043

Net Profit ($16,160) ($16,146) $1,369 $6,983 $6,998 $8,413 $15,427 $7,042 $11,956 $10,571 $4,986 $14,100

Net Profit/Sales -32.32% -26.91% 1.96% 9.31% 8.23% 9.35% 15.43% 8.28% 13.28% 12.44% 6.31% 14.84%

Page 26: Clara s Hardware Store

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Cash Received

Cash from Operations

Cash Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Subtotal Cash from Operations $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000

Expenditures Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Expenditures from Operations

Cash Spending $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Bill Payments $2,443 $72,903 $61,038 $53,644 $50,302 $63,191 $64,703 $69,019 $49,207 $60,646 $50,758 $50,807

Subtotal Spent on Operations $22,443 $92,903 $81,038 $73,644 $70,302 $83,191 $84,703 $89,019 $69,207 $80,646 $70,758 $70,807

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $24,943 $95,403 $83,538 $76,144 $72,802 $85,691 $87,203 $91,519 $71,707 $83,146 $73,258 $73,307

Net Cash Flow $25,057 ($35,403) ($13,538) ($1,144) $12,198 $4,309 $12,797 ($6,519) $18,293 $1,854 $5,742 $21,693

Cash Balance $146,057 $110,654 $97,115 $95,972 $108,169 $112,478 $125,275 $118,756 $137,049 $138,903 $144,645 $166,338

Page 27: Clara s Hardware Store

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Assets Starting Balances

Current Assets

Cash $121,000 $146,057 $110,654 $97,115 $95,972 $108,169 $112,478 $125,275 $118,756 $137,049 $138,903 $144,645 $166,338

Inventory $0 $27,500 $33,000 $38,500 $40,700 $46,200 $49,500 $55,000 $46,200 $49,500 $46,200 $42,900 $46,200

Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets $121,000 $173,557 $143,654 $135,615 $136,672 $154,369 $161,978 $180,275 $164,956 $186,549 $185,103 $187,545 $212,538

Long-term Assets

Long-term Assets $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000

Accumulated Depreciation $0 $357 $714 $1,071 $1,428 $1,785 $2,142 $2,499 $2,856 $3,213 $3,570 $3,927 $4,284

Total Long-term Assets $30,000 $29,643 $29,286 $28,929 $28,572 $28,215 $27,858 $27,501 $27,144 $26,787 $26,430 $26,073 $25,716

Total Assets $151,000 $203,200 $172,940 $164,544 $165,244 $182,584 $189,836 $207,776 $192,100 $213,336 $211,533 $213,618 $238,254

Liabilities and Capital Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Current Liabilities

Accounts Payable $0 $70,860 $59,246 $51,982 $48,198 $61,040 $62,379 $67,392 $47,175 $58,954 $49,080 $48,679 $61,715

Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $0 $70,860 $59,246 $51,982 $48,198 $61,040 $62,379 $67,392 $47,175 $58,954 $49,080 $48,679 $61,715

Long-term Liabilities $150,000 $147,500 $145,000 $142,500 $140,000 $137,500 $135,000 $132,500 $130,000 $127,500 $125,000 $122,500 $120,000

Total Liabilities $150,000 $218,360 $204,246 $194,482 $188,198 $198,540 $197,379 $199,892 $177,175 $186,454 $174,080 $171,179 $181,715

Paid-in Capital $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000

Retained Earnings ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000)

Earnings $0 ($16,160) ($32,306) ($30,937) ($23,954) ($16,956) ($8,543) $6,884 $13,926 $25,882 $36,453 $41,439 $55,539

Total Capital $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539

Total Liabilities and Capital $151,000 $203,200 $172,940 $164,544 $165,244 $182,584 $189,836 $207,776 $192,100 $213,336 $211,533 $213,618 $238,254

Net Worth $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539