Glitch Busters

Glitch BustersTechnology repair

Presented to Professor Messer & Professor Lutz

By Kyle Norris, Taylor Price, Andrew Sparger, Brittany Thomas, and Morgan Wolff

Index

Contents PageExecutive Summary 3Description of Company 4 - 5Management Team Description 6Marketing Plan 7Industry Attractiveness and Target Market 8Market Research 9 - 10Operations Plan 9 - 10Financial Plan 11 - 13Appendices 14 - 23

2

Executive Summary

Glitch Busters is a technology repair company that will be located in North Manchester, IN. In

North Manchester, the few competitors we will have are the ITS department on the Manchester

University campus and BIT Computers. We plan to locate our business on Main Street so that

we are able to provide our service to Manchester University students, North Manchester

residents, and residents of surrounding towns. At Glitch Busters, we will provide customer

repairs on cell phones, laptops, and other electronics. These repairs will include screen or battery

changes, virus repairs, general maintenance, hard drive backups, and any other repair they may

need. We will also hire two full-time employees who have a professional knowledge of

technology repair as well as student interns from Manchester University.

Technology is an attractive industry due to the fact that so many people own cell phones, laptops,

tablets, gaming systems, and otherwise. The field is also constantly changing and adapting with

new products and upgrades resulting in it being one of the fastest growing industries in the US.

Being located so close to a college campus is a huge advantage for Glitch Busters because every

student has some kind of technology accessory that may need fixed at some point in time. We

will keep large amounts of commonly needed inventory on hand and small amounts of not so

common items.

Our main contingency will be ensuring customers come to Glitch Busters for their repair needs.

We will do this by offering steady prices and great service. To make customers aware of this, we

will be implementing a marketing plan of newspaper, TV, radio ads, and flyers in local

restaurants and on Manchester University campus. By having such a wide range of options, we

hope to hit our entire target market. We will also implement a guerilla marketing plan by

holding a competition to attract new customers.

There will be five main investors that will contribute to the start-up costs of Glitch Busters. Each

partner will invest $10,000 and hold a 20% share of the company. The remaining costs will be

taken out in a bank loan of $30,000. We expect to make a net income of $42,860.02 in our first

year of operation and foresee this number growing in future years as the business expands and

gains a foothold in the market.

3

Description of Company

Mission Statement

At Glitch Busters, our main goal will be to provide excellent customer service to anyone who

walks through our doors by having the best-equipped and knowledgeable staff. We are a

company that aims to complete all tasks in the most efficient way possible, while maintaining

quality work. We will partner with the local university and surrounding communities to provide

our customers with the most affordable choice to all their technological needs.

Description of Services

Currently Glitch Busters offers repair services for all technology, including but not limited to,

cell phones, computers, and laptops. The services our employees will provide to the public will

range from general part replacements to virus diagnostics to personal computer construction and

anything in between. Most services will be provided at the store location, however Glitch Busters

employees will also do in home repairs and installations. Glitch Busters will also offer services

to local businesses. These services would include repairing systems, maintaining the systems,

installing antivirus programs, etc.

Store Location

Glitch Busters will be located at 408 W Main Street in North Manchester, Indiana ($1,925 per

month). Since Glitch Busters is located on Main Street it will be very convenient for our

customers to stop by the store. Being in this location will also prevent customers from having to

travel to Fort Wayne or Warsaw for repairs. This location also allows ample room for storage,

repair space, and office space.

4

Store Operation

Glitch Busters is a Technology Repair Company. The store will be open from 9 a.m. to 5 p.m. on

week days which allows customers to bring in and pick up products which need repaired. Our

store may also be open late a few nights a week and Saturday to appeal to a larger market. Our

company will also have a phone line which customers can call for minor problems which can be

fixed over the phone. Glitch Busters will be staffed by two full time information technology

professionals as well as two interns from Manchester University.

Store Policies

Glitch Busters will accept cash and debit cards. As we gain a foothold in the market, we may

allow accounts for business which we have built a strong relationship with. We will also have a

30 day warranty on repairs.

Company Ownership

Glitch Busters is organized as a limited liability partnership with five partners. Taylor Price,

Brittany Thomas, Morgan Wolff, Kyle Norris, and Andrew Sparger each own 20 percent of the

company.

Company History

Glitch Busters was created by five Manchester University students in September 2014. The

company was created so college students could have their technology repaired at a low cost and

with high quality without having to travel at least a half an hour or waiting until they went home.

Glitch Busters financed by each of the five partners ($10,000 investment from each), private

investors, and also loans from local banks. This money was used to cover all costs needed to start

the business.

5

Management Team Description

Management activities will be split between the five owners and the two full time employees.

Taylor and Andrew will be the accountants for the company, they will also be in charge of

payroll. Brittany, Kyle, and Morgan will be in charge of all other management activities, the

three will split these activities. Brittany, Kyle, and Morgan will be in charge of maintaining

customer and vendor relationships, they will be in charge of marketing and expanding the

company, evaluating business processes, training the two full time employees and all basic day-

to-day activities. There are many other management tasks which have not been listed above, in

the case of these tasks Brittany, Kyle, and Morgan will work together to make sure all tasks are

completed in a timely and efficient manner. The two full time employees will be in charge of

inventory and maintaining strong relationships with customers. These two employees will also

be highly qualified IT professionals, capable of all general IT tasks that would be expected of

them. These employees will also be in charge of training the interns which will be hired from

Manchester University. The Glitch Busters team that will be brought together will be strong and

work as a team. Each person has skills and knowledge of different perspectives of this business

that will make it successful. From the accounting and marketing to repairing computers, Glitch

Buster’s personnel will excel this business into the community’s minds as a great place to take

their technology to be repaired. We will offer a friendly atmosphere of professionals whose goal

is to provide the best possible customer service at an affordable rate. Although the goal is to

make a profit for the business to continue operations, the main focus of our employees will be to

do whatever it takes to satisfy our customers to ensure that they will return. By working together

on all aspects of the business, Glitch Busters will grow into a successful, local business.

6

Marketing Plan

At Glitch Busters, we plan to attack the target market that we set as North Manchester residents,

Manchester University students and local businesses that aren’t large enough to have a nationally

known chain do their repair work. We have several methods that we will use to gain the attention

of our market. First we plan to use a fairly inexpensive guerilla marketing technique that would

involve a contest where we will have 3 computers set outside of New Market/ Pizza Hut parking

lot where a substantial amount of foot traffic is. The contest would be a timed typing event. The

contestant would have a set story that the participants will have to type in an allotted time. This

event will last for a few hours to gather many potential customers. Each customer will have to

fill out their information (Name, E-mail, and Address) and at the end of the day the person who

has the most typed words of the story in the time frame will win a free laptop. Next we plan on

approaching the market through flyers at local restaurants around town in doorways or advertised

in the menu to where customers can see our name and provide more recognition of Glitch

Busters. We estimate that ads in menus and on placemats (3” x 2.5”) will be around $720.00 a

year per restaurant, and we will plan on placing ads in 5 restaurants which results in $3560.00 a

year for this type of advertising. We also plan on using different forms of media to market our

company, for example radio ads, newspaper ads (local papers, Campus Oak Leaves). Spending

on this media will be minimal because we feel other media will gain more exposure. Radio ad

spending is estimated to be around $6,000.00 for 8, 1.5 month long advertisements. We will also

spend an estimated $7,200.00 on a year-long TV slot that will gain exposure to around 30,000

viewers. Along with those we would like to use social media as a main source because our

student market and with our generation being so heavily involved with social media and with our

expertise on knowing how to use social media we can promote the business with having a

Twitter, Instagram, and Facebook account. These media also give us the ability to be contacted

by our customers directly and very convenient for our target market as well. With this marketing

penetration we plan to increase our customer base and then with a quality service offered to

customers we plan to get business by word of mouth which helps gain repeat customers and

that’s essential for our Company.

7

Industry Attractiveness & Target Market

The technology market is a very attractive industry. Technology is always evolving and

changing. 91% of United States adults own a cell phone; this does not include tablets, laptops,

mobile DVD players, iPods, desktop computers, and gaming systems. The point here is to prove

the attractiveness of the industry, the technology industry is very large, new people are joining

the industry every day. The technology market is one of the fastest growing industries in the

United States. In 2012 the technology industry was growing at a rate of 3:1 compared to all other

industries. The technology industry currently has an average gross margin of 45.49%. This

means that a technology company will earn an average of 46 cents on every dollar of revenue the

company generates. New businesses in the industry do not typically see high profit margins.

However, maturing (experienced) technology companies are known to have some of, if not the

highest profit margins of all industries. Technology will never go away; there will always be

room for new businesses (those creating new technology) in the industry. The total market is

plenty large enough. Our company however, is concerned that we will not have enough business

to cover our operating expenses. We are concerned about this because we do have competition

close. AT&T and BIT Computers provide some of the same services our company will offer. In

attempt to grow our company we will offer a broad range of services that expand to many people

and businesses.

Market Niche

There is a niche in our market. Glitch Busters must be able to repair cell phones, computers, and

other electronic items and do it in a manner that is timely. We plan to hire technology

professionals that will help us to give the best service we possibly can.

Target Market

Our target market is very broad due to the fact that everyone has electronic technology and it is

constantly evolving. Our focus target market will be North Manchester residents and

Manchester University students because we will be in such a convenient location. We will also

target residents of towns surrounding North Manchester and local businesses.

8

Market Research

We also took it upon ourselves to conduct market research on the Manchester University

campus. Through our research we determined that approximately 90% of Manchester University

students had experienced the need for a repair on a personally owned technological device at

some point in the past year. Those who had needed repairs within the last year also reported that

they had been required to wait on average three weeks to travel to a location in which they could

get their product repaired.

Operations Plan

Glitch Busters is a very service based company. This will make manufacturing a bit easier. We

will be purchasing products for our inventory from Newegg, an Internet retail company that sells

a variety of items, including those we will need for technology repair. We will purchase a large

amount of items for our inventory that will be commonly needed for our repairs. The resources

we will need for these repairs include iPhone screens, laptop screens, replacement batteries for

both phones and laptops, materials to build computers, and virus cleaning software. By buying

these items in bulk, we hope to not only be prepared to fulfill customer needs, but to possibly get

a price discount from our supplier. Our services will be provided as customers bring us the item

that requires repair. We will be hiring two experienced IT professionals to work full time at a

salary of $70,000. We will also be hiring part time employees at an hourly rate of $8.00.

Buyers

Our buyers will mainly be students living in North Manchester, college and high school. We

will also target the entire population of North Manchester and surrounding towns. Technology is

so prominent in everyone’s lives and is always bound to have problems, especially in clumsy

hands. Being so close to Manchester University, we will alleviate students from having to drive

so far to get a simple fix that can easily be done at Glitch Busters.

9

Suppliers

We will purchase our supplies from Newegg. Newegg is an Internet retailer that sells a variety

of items and has all items that Glitch Busters will need for any repair brought to us. We can

purchase the items cheaply and in bulk so that we can have some amount of inventory. We hope

to use buying in bulk as a way to also get discounts on commonly needed items from our

supplier.

Bargaining power of suppliers

Since we are buying most of our inventory and materials through an online technology store,

with a large number of substitute stores, it is not assumed that the supplier will have a large

amount of bargaining power.

Bargaining power of customers

Our customers could potentially have some bargaining power over us. Because there are two

other tech repair services in town, our customers will be able to “shop around” for the best deal.

To reduce this, we will offer steady prices and great service to ensure they will become return

customers.

10

Financial Plan

Sources of Funding

We estimate that Glitch Busters will need approximately $80,000 for start-up expenses and

start-up cash. Our first source of funding will come from investor that will be made up of 5

partners. Each partner will provide $10,000 each, which will result in equal ownership of

20% for each partner. The remaining $30,000 will come from a small business bank loan.

Per Chron.com's article "The Average Interest Rates for Small Business Loans", the average

interest rate for a small business loan for under $100,000 dollars is estimated to be 7.0 to 8.0

percent. Using Bankrate.com's loan calculator, a $30,000 loan at 8.0 percent interest rate

over 10 years results in a monthly payment of $363.98. This is the funding that will be used

to start Glitch Busters.

Financial Ratios

2015 2016 2017Current Ratio 4.32 6.37 9.04

Debt Ratio 0.23 0.16 0.11

Equity Ratio 0.77 0.84 0.89

Profit Margin Ratio 20.98% 21.74% 22.72%

Return on Total Assets 35.47% 27.63% 23.53%

Return on Equity 46.16% 32.78% 26.46%

Return on Investment -14.28% -23.70% -24.29% Per Investor

11

Financial Ratios, Cont’d

The high current ratios are a positive sign for our company. They indicate that we are able to

pay off any short-term debt we may incur at a quick pace due to our access to a much larger

amount of current assets than our current liabilities. Our low debt ratio is also a positive sign

indicating that in total we currently have almost five times as many current assets as we do

current liabilities. The equity ratio is relatively high as it shows that predominant our Financial Statements

The financial statements show that Glitch Busters is in excellent financial position. Since

Glitch Busters offers a diversified amount of services that will appeal to many people as well

as cover a variety of services need we believe our revenues will grow each year we are in

business. We believe that they will grow more as we are in business longer as our reputation

grows in this small community. We estimate that our expenses will grow every year by at

least 3 percent, which is an assumed rate for inflation each year we are in operation. With

these assumptions Glitch Busters shows increases in net income over the three year period.

The way our assets were depreciated over three years show some assets have no book value.

Although this is the case they still have intrinsic value and will be used by our company until

they are updated every 3 to 5 years or as needed. In conclusion our financials show a

healthy financial position for our new born company. The plan of the business will

continuously call for expansion of services and growth of our company to provide excellent

service to our neighboring communities.

12

Sensitivity Analysis

The sensitivity analysis is a look at where the company would stand financially if the worst

case scenario or the best case scenario were to take place in any given year. This is of course

compared to the estimated amount of income. In our case the worst case scenario was

viewed to be our company achieving twenty-one percent less revenues than currently

expected. At this percentage our company was experiencing a loss just under the breakeven

point in the first year of operations. This loss was for thirty-one dollars and forty-three cents.

Of course this followed through into the next two years where, while there wasn’t a loss

experienced, the return to each of the investors was extremely low compared to expectations. Exit Strategy

All investors, upon initial $10,000 investment, have earned a twenty percent stake in the

company. The profit from each year is currently planned to simply be kept within the

company and reinvested with the intent to increase growth of the company. If at any time a

stakeholder in the company feels the desire to leave they may sell their stake in Glitch

Busters to the other four stakeholders, or any single stakeholder who has a desire to purchase

their stake. This will all be discussed in detail at the board meetings that would take place

among the five stakeholders. Also, if Glitch Busters were to be purchased by a larger

organization then the monetary gain from the sale of the company would be divvied up

among the current stakeholders of Glitch Busters based upon their percentage stake in the

company.

13

Appendices

14

Product or Service Feasibility

Benefits of Service

There will be many benefits to the customers of Glitch Busters. We will be located on Main

Street. This location will be close enough to the University campus and North Manchester

residents that they would not have to drive to Fort Wayne or Warsaw for a simple phone or

laptop repair. We will keep an inventory in store of commonly needed repair items so that some

of the more usual customers’ problems can be resolved efficiently. Due to the small area we will

be servicing, we can maintain a close relationship with regular customers. This will help to build

a strong customer base for repeat business.

Development of Service

To provide the best service we can, we will keep commonly used inventory on hand at all times.

We will hire experienced IT professionals who have a good knowledge of the field to help us

deliver the best service possible to our customers. To further develop our services, we will

encourage and provide continuing education to our employees to ensure that all problems can be

met with up-to-date technological knowledge.

Customer Appeal

Our quality of service is what will be most important to Glitch Busters, and this is what will be

most appealing to our customers. Customers will know that when they bring their business to us

they will receive outstanding service in a timely manner. Along with this our customer

relationship will be highly valued. Repeat service will be a big part of Glitch Buster’s success so

it will be crucial to go above and beyond our customer’s expectations. We can also offer

discounts and warranties to customers to gain trust and repeat business.

15

Unique Selling Proposition

One of the main unique selling points will be our location. Since we will be located on Main

Street, we will be in a place that is extremely convenient for customers that don’t want to travel

far to get their products fixed. We will also have IT professionals doing the repairs to ensure the

best quality service as possible. Glitch Busters could even potentially extend short-term

warranties to customers so that if there is a problem soon after the repair, it can be fixed. This

can ultimately help us gain repeat customers.

Competitors

Our two main competitors are the ITS Department on Manchester University’s campus and BIT

Computers in North Manchester. The ITS Department may be limited on some of the repairs

they can do because they cannot break warranties. BIT Computers is located in North

Manchester, close enough to where students could potentially go to them over Glitch Busters.

The advantage that we have over BIT Computers is that they do not seem to advertise much so

students may not even know that they exist.

Threat of new entrants

There will always be a threat of new entrants in the technology field. It is something that is so

engrained in our lives and ever changing that, entrepreneurs will always be able to enter the field.

We will keep our prices as low as we can and always provide great service so that if new entrants

come into the market, we can have a loyal customer base built up.

Threat of substitute products or services

Just like the threat of new entrants, there is always a threat of substitute services. Glitch Busters

service is one that can be provided at many other technology repair stores. By providing timely

service at a reasonable price. We hope that customers will be more attracted to use Glitch

Busters service than at another place of business.

16

Glitch BustersIncome Statement

For 12 months ended December 31

For Year Ended For Year Ended For Year Ended12/31/2015 12/31/2016 12/31/2017

Revenues:iPhone Replacement Screens $13,620.00 $13,892.40 $14,587.02Computer Building 38,000.00 38,760.00 40,698.00Battery Replacement 10,125.00 10,327.50 10,843.88Virus Cleaning 20,000.00 20,400.00 21,420.00Computer Backup 30,000.00 30,600.00 32,130.00Data Recovery 43,750.00 44,625.00 46,856.25Software Installation 7,500.00 7,650.00 8,032.50Hardware Installation 26,250.00 26,775.00 28,113.75Computer Setup 15,000.00 15,300.00 16,065.00

Total Revenue 204,245.00 208,329.90 218,746.40Operating Expenses:

Salary Expense - Full Time 70,000.00 71,400.00 74,256.00Salary Expense - Part Time 5,760.00 5,760.00 5,760.00Salary Expense - Bonus 2,000.00 0.00 0.00FICA Expense 5,948.64 5,902.74 6,121.22FUTA Expense 1,185.60 1,185.60 1,185.60Cost of Goods Sold 6,680.00 6,819.60 7,148.22Health Insurance Expense 9,000.00 9,270.00 9,548.10Rent Expense 23,100.00 23,100.00 23,100.00Advertising Expense 17,000.00 18,700.00 20,570.00Rent Insurance Expense 350.00 360.50 371.32License Expense 200.00 206.00 212.18Security Expense 460.00 370.80 381.92Insurance Expense 5,000.00 5,150.00 5,304.50Utilities Expense 6,000.00 6,180.00 6,365.40Education Expense 500.00 500.00 500.00Membership Expense 60.00 61.80 63.65Debit Card Fee Expense 5,106.13 5,208.25 5,468.66Depreciation Expense - All 708.39 708.39 708.39

Total Operating Expense 159,058.76 160,883.68 167,065.17Operating Income 45,186.24 47,446.22 51,681.23Non-Operating Expenses

Interest Expense 2,326.22 2,156.77 1,973.26Net Income $42,860.02 $45,289.45 $49,707.97

17

Glitch BustersStatement of Changes in Owner's Equity

For 12 months ended December 31


Beginning Owner's Equity 1/1 $0.00 $92,860.02 $138,149.47Capital Invested 1/1/2015

Owner 1 10,000.00Owner 2 10,000.00Owner 3 10,000.00Owner 4 10,000.00Owner 5 10,000.00

Total Beginning Owner's Equity 50,000.00 92,860.02 138,149.47

Net Income attributable to Owners

Owner 1 8,572.00 9,057.89 9,941.59Owner 2 8,572.00 9,057.89 9,941.59Owner 3 8,572.00 9,057.89 9,941.59Owner 4 8,572.00 9,057.89 9,941.59Owner 5 8,572.00 9,057.89 9,941.59

Ending Owner's Equity 12/31/15 $92,860.02 $138,149.47 $187,857.44

18

Glitch BustersBalance Sheet

For Year Ended

12/31/2015 12/31/2016 12/31/2017Assets:

Cash $109,975.85 $153,762.67 $201,784.49Rent Security 8,181.00 8,181.00 8,181.00Inventory - iPhone Replacement Screens

0.00 0.00 0.00

Inventory - Battery Replacements

0.00 0.00 0.00

Inventory - Miscellaneous

0.00 0.00 0.00

Supplies - Office 0.00 0.00 0.00Supplies - Cleaning 0.00 0.00 0.00Equipment - Maintenance Tool Kits, net

90.00 80.00 70.00

Equipment - External Hard Drive, net

102.86 85.71 68.57

Equipment - Laptops, net

600.00 300.00 0.00

Equipment - Software, net

400.00 200.00 0.00

Equipment - Miscellaneous

200.00 200.00 200.00

Equipment - Furniture, net

1,268.75 1,087.50 906.25

Total Assets $120,818.45 $163,896.88 $211,210.31

Liabilities and Owner's Equity:Liabilities:

Notes Payable $27,958.43 $25,747.41 $23,352.87

Owner's Equity:Ending Owner's Equity 92,860.02 138,149.47 187,857.44

Total Liabilities and Owner's Equity

$120,818.45 $163,896.88 $211,210.31

19

Glitch BustersCash Flow Statements

For Year Ended

12/31/2015 12/31/2016 12/31/2017

Net Income $42,860.02 $45,289.45 $49,707.97Depreciation 708.39 708.39 708.39Decrease in Inventory 0.00 0.00 0.00Increase in Interest Paid 2,326.22 2,156.77 1,973.26Cash Flows From Operating Activities $41,242.20 $43,841.07 $48,443.10

Equipment Purchase $3,370.00 $0.00 $0.00Cash Flows From Investing Activities ($3,370.00) $0.00 $0.00

Acquisition of Note Payable $30,000.00 $0.00 $0.00Payment on Note Payable 2,041.57 2,211.02 2,394.54Cash Flows From Financing Activities $27,958.43 ($2,211.02) ($2,394.54)

Total Cash Flow For Year Ended $65,830.63 $41,630.05 $46,048.56

20

Best Case Sensitivity AnalysisGlitch Busters

Income StatementFor 12 months ended December 31

For Year EndedFor Year

EndedFor Year

Ended12/31/2015 12/31/2016 12/31/2017



Salary Expense - Full Time 70,000.00 71,400.00 74,256.00Salary Expense - Part Time 5,760.00 5,760.00 5,760.00Salary Expense - Bonus 2,000.00 0.00 0.00FICA Expense 5,948.64 5,902.74 6,121.22FUTA Expense 1,185.60 1,185.60 1,185.60Cost of Goods Sold 6,680.00 6819.6 7,148.22Health Insurance Expense 9,000.00 9,270.00 9,548.10Rent Expense 23,100.00 23,100.00 23,100.00Advertising Expense 17,000.00 18,700.00 20,570.00Rent Insurance Expense 350.00 360.50 371.32License Expense 200.00 206.00 212.18Security Expense 460.00 370.80 381.92Insurance Expense 5,000.00 5,150.00 5,304.50Utilities Expense 6,000.00 6,180.00 6,365.40Education Expense 500.00 500.00 500.00Membership Expense 60.00 61.80 63.65Debit Card Fee Expense 5,106.13 5,208.25 5,468.66Depreciation Expense - All 708.39 708.39 708.39


Interest Expense 2,326.22 2,156.77 1,973.26Net Income $57,157.17 $59,872.54 $65,020.21

21

Worst Case Sensitivity AnalysisGlitch Busters

Income StatementFor 12 months ended December 31




Salary Expense - Full Time 70,000.00 71,400.00 74,256.00Salary Expense - Part Time 5,760.00 5,760.00 5,760.00Salary Expense - Bonus 2,000.00 0.00 0.00FICA Expense 5,948.64 5,902.74 6,121.22FUTA Expense 1,185.60 1,185.60 1,185.60Cost of Goods Sold 6,680.00 6819.6 7,148.22Health Insurance Expense 9,000.00 9,270.00 9,548.10Rent Expense 23,100.00 23,100.00 23,100.00Advertising Expense 17,000.00 18,700.00 20,570.00Rent Insurance Expense 350.00 360.50 371.32License Expense 200.00 206.00 212.18Security Expense 460.00 370.80 381.92Insurance Expense 5,000.00 5,150.00 5,304.50Utilities Expense 6,000.00 6,180.00 6,365.40Education Expense 500.00 500.00 500.00Membership Expense 60.00 61.80 63.65Debit Card Fee Expense 5,106.13 5,208.25 5,468.66Depreciation Expense - All 708.39 708.39 708.39


Interest Expense 2,326.22 2,156.77 1,973.26Net Income ($31.43) $1,540.17 $3,771.22

22

Notes to the Financial Statements

Income Statement – The revenues section of the Income statement consists of the all the services

that Glitch Busters will provide when starting business. We calculated that revenues would

increase by 2% from year one to year two. We also calculated an increase from year 2 to year 3

of 5% to estimate growth in our company. The expense category consists of all the operating

and non-operating expenses we expect to incur in a given year. Generally, expenses were

increased by 3% to account for increases in inflation. Exceptions to this general rule are as

follows. Salaries were increased by 2% in year two and 4% in year three assuming we had the

same full-time employees. We assumed that rent expense would not increase from year-to-year

because we plan on staying in the same space for the near future. Advertising costs were

increased by 10% each year to help gain more market share. Debit card fee expense is calculated

by multiplying our total revenues by 2.5% for processing fees.

Statement of Changes in Owner’s Equity – This is calculated by taking the initial investment of

$50,000 divided by the number of investors to have an equal share of $10,000 invested. Each

year the net income from the year is divided equally among the 5 investors. We assume that the

investors will keep their share of income within the company which is why it is included in the

beginning owner’s equity for the next year.

Balance Sheet – The balance sheet shows all the assets, liabilities, and owner’s equity for the

year. We assume that we use up all inventory and supplies which is why they have a balance of

zero at year end. Our equipment is depreciated at a rate that is stated by the Internal Revenue

Service. Our Liabilities at the beginning of 2015 starts at the initial loan balance of $30,000 and

is decreased by a years-worth of payments.

Statement of Cash Flows – The statement of cash flows shows all of the incoming and outgoing

cash flows for the company throughout any given year. Our company has extremely low

liabilities and very little investing activities as shown through the cash flows from investing and

financing activities. However, our company is a cash basis operation so our cash flows from

operating activities are particularly high compared to the investing and financing activities. No

loans or equipment are acquired past year 2015, hence the zero balance for those accounts in the

following years.

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Works Cited

"Amortization Schedule Calculator." Amortization Schedule Calculator. N.p., n.d. Web. 06 Nov. 2014.

Bender, Jennifer F. "The Average Interest Rate for Small Business Loans." Small Business. Demand Media, n.d. Web. 06 Nov. 2014.

N.p., n.d. Web.

"Rate Search." Loan Calculator: Bankrate.com. N.p., n.d. Web. 06 Nov. 2014.

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Glitch Busters

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Transcript of Glitch Busters