Throughout the years we have seen a major trash pollution problem. The situation has gotten worse throughout the years. ACE hardware will expand their trash compacting market into Romania. ACE Hardware will provide solar powered trash compactors to the waste management authorities in the Romanian government. The benefits for the country of Romania to switch to solar powered trash compactors are many; energy saving, money saving, environment friendly, and space saving.

 

There is a growing potential market for the waste management industry in Romania. Because of the increased waste management situation will increase the health of the population and likely for an increase in population. Also the waste management programs have recently gained the support of the Romanian government. If ACE hardware were to get government support there will be no other competitors.

 

"Why will this business not fail?"

 

It is seen in the future that there will be no other competitors in the waste management industry as long as ACE Hardware has government support and funding. ACE Hardware will also have the benefits of free trade zones.




February 14, 2012 (TUE)

- Paul Kim's writing class

 



 

< Executive Summary Prep >
 

NOTES: The following checklist will help you cover the most important points in your summary. They are a guideline; you may want to emphasize additional points.

 

  • Description of Business:

1. Business form: proprietorship, partnership, or corporation?

2. Type of business: merchandising, manufacturing, or service?

3. What is the product and/or service?

4. Is it a new business? A takeover? An expansion?

5. Why will your business be profitable?

6. When is your business open?

7. Is it a seasonal business?

8. What have you learned about your kind of business from outside sources (trade suppliers, bankers, other business owners, publications)?

 

  • Product Service:

1. What are you selling?

2. What benefits are you selling?

3. Which products are rising stars? Which are cash cows? Which are in decline or investments in ego?

4. What is different about your goods and services?

 

  • The Market:

1. Who buys from you?

2. Are your markets growing, steady, or declining?

3. Is your market share growing, stready, or declining?

4. Have you segmented your market? How?

5. Are your markets large enough for expansion?

6. How will you attract, hold, and increase your market share?

7. Are you planning to enter or leave any markets?

8. How do you price your products?

 

  • Competition:

1. Who are your nearest direct competitors?

2. Who are your indirect competitors?

3. How are their businesses similar to and different from yours?

4. What have you learned from their operations? From their advertising?

 

  • Location of Business:

1. Where are you (should you be) located?

2. Why is it a desirable area? A desirable building?

3. What kind of space do you need?

4. Are any demographic or other market shifts going on?

 

 

  • Management:

1. How does your background/business experience help you in this business?

 

  • For your own use: What weaknesses do you have and how will you compensate for them?

1. What related work experience do you have?

2. Who is on the management team?

3. What are their strengths and weaknesses?

4. What are their duties?

5. Are these duties clearly defined? How?

6. What additional resources are available to your business?

 

  • Personnel:

1. What are your current personnel needs?

2. What skills will your employees need in the near future? In five years?

3. What are your plans for hiring and training personnel?

 

  • Application and Expected Effect of Loan (Investment):

1. How will the loan (investment) make your business more profitable?

2. Should you buy or lease (equipment/location and so on)?

3. Do you really need this money? Or can you make do without?




February 14, 2012 (TUE)

- Paul Kim's writing class

 


 

< Executive Summary >

: 1st part in the business plan (but the last part you will write)

 

What is it:  summary of the highlights of your business plan

 

Purpose

  • gives readers an overview of your business
  • introduction to your business

 

Should include:

  • description of your company / product
  • mission statement
  • the target market / customers
  • competition
  • business operations
  • financial projections & plans

 

Intro: paragraph format

  • situational analysis
  • 1-3 sentences for each topic
  • must include

    . Business name

    . Business location

    . What product/service

    . Purpose of the plan

 

Body

  • Highlights the important points
  • includes graphs & statistics

 

Conclusion

  • conclude with a clinching sentence
  • answer this question: "why this will not fail"
  • include appendix if needed

 

Tips

  • don't waste words when a graph/table will explain better
  • keep it brief (KISS)
  • language is strong & positive
  • 1-2 pages
  • know your audience


February 14, 2012 (TUE)

- Paul Kim's writing class

 

Memorandum

February 7, 2012

To: Students

From: Paul Kim

RE: Assignment: Planning a new business venture

 

Your group has decided to start up a business that will manufacture a new line of clothes. Please clarify the following:

Your business name (and rationale)

Your business concept

A mission statement for the business

A values statement for the business on a social, ethical and environmental level

Three strategic SMART goals for the company

 

Second, please find a real-life example of a clothing company with a business concept similar to the new business that you have identified above, and

Identify their business name

Identify their business concept

Present its mission statement

Present its values statement

 

In your research efforts, the identified company may not explicitly call their mission statement a mission statement. So, you may have to somewhat do your best to interpret their mission. Also, they may incorporate parts of their values statement in their mission statement, or you may be able to infer their values from their product concepts, how they produce their products, and/or the way they do business. Do your Best!



February 7, 2012 (TUE)

- Paul Kim's writing class

 

Business writing

  • 1st impression
  • clear & brief (blunt)
  • don't be creative, be tactful
  • think of your tone (semi-formal)
  • think of your audience

 

Pronouns: I, you, we

  • "we" only use when you're representing your company
  • starting an opinion use "I"

 

Active vs. Passive Voice

  • the best writers achieve a style that their message can't be misunderstood.
  • to be clear avoid the passive voice

       e.g. The net benefits of divesture were grossly over-estimated. (x)

               The global finance team grossly overestimated the net benefits of divesture. (o)

  • starting a mistake, use the passive voice.

 

Memorandum

  • Prepare (Before writing)
  • think/consider your audience
  • semi-formal (tone)
  • clear language
  • use the active voice
  • no longer than 1 page
  • for confidential information avoid the memorandum -face to face-

 

# Primary Purpose of Memorandum:

  • to communicate with a large # of employees or members another organization
  • connects employees in an effective, concise method that connects the writer with the interests/needs of the recipients.

 

# Purposes for Memorandums

  • policy change
  • promotions
  • personnel changes
  • project status update
  • offering products/services to employees
  • request employees
  • provide feedback


February 7, 2012 (TUE)

- Paul Kim's writing class


 
  • State the bad news.

When the bad news is a logical outcome of the reasons that come before it, the audience is psychologically prepared to receive it.

  • Tell the audience what you did do, can do, or will do rather than what you did not do, cannot do, or will not do.

Say "We sell exclusively to retailers, and the one nearest to you is ..." rather than "We are unable to serve you, so please call your nearest dealer."

  • Be optimistic about the future.

Don't anticipate problems (avoid statements such as "Should you have further problems, please let us know").

  • Avoid apologizing when giving your reasons.

Apologies are appropriate only when someone in your company has made a severe mistake.

  • Limit future correspondence.

Encourage additional communication only if you are willing to enter into further discussions.

  • End with a Positive Close

After giving your audience the bad news, your job is to end your message on an upbeat note.

  • By implying the bad news, you may not even need to actually state it.

("The five positions currently open have been staffed with people whose qualifications match those uncovered in our research"). By focusing on the positive and implying the bad news, you soften the blow.

  • Follow the following guidelines: Keep it positive

Don't refer to, repeat, or apologize for the bad news, and refrain for expressing any doubt that your reasons will be accepted (avoid statements such as "I trust our decision is satisfactory").

  • Be sincere

Steer clear of cliches that are insincere in view of the bad news (avoid saying, "If we can be of any help, please contact us").

  • Subordinate bad news in a complex or compound sentence ("My department is already shorthanded, so I will need all my staff for at least the next two months.")

This construction pushes the bad news into the middle of the sentence, the point of least emphasis.

  • Be confident

Don't show any doubt (avoid phrases such as "We hope you will continue to do business with us").

  • You might propose an attainable solution to the audience's problem

("The human resources department has offered to bring in temporary workers when I need them, and they would probably consider doing the same for you").

  • Provide enough detail for the audience to understand your reasons. Be concise.

Continue with a logical, neutral explanation of the reasons for the bad news

  • Use a conditional statement to imply that the audience could have received, or might someday receive, a favorable answer

("When you have more managerial experience, you are welcome to reapply").

  • These techniques are especially useful for saying no as clearly and kindly as possible.

Minimize the space devoted to the bad news.

 

- Paul Kim's writing class 


  • RESCHEDULE

Hello,

 

Unfortunately I must reschedule our [meeting/appointment] on [original time and place]. [Reason(s) and explanation(s).]

 

By waiting [amount of time], I feel our meeting will be much more valuable. I will call to reschedule a time to meet [time frame]. If you have any questions in the meantime, please don't hesitate to call me at [phone number].

Thank you for your patience and understanding.

 

Regards,

Name

 

  • CONFIRMATION

Hello,

 

I'm confirming our meeting on [date], at [time], at [location]. [additional logistics confirmation.]

 

[Overview or short agenda of the meeting.]

If you have any questions before we meet, please call me at [phone number]. If I don't hear from you [I'll/we'll] see you [date].

 

Regards,

Name

 

  • SETTING UP A FIRST MEETING

Hello,

 

[Description of prospect situation.][What you are offering.]

 

[Benefits of your product or service.]

I wouldn't ask for time in your busy schedule if I didn't truly believe [how you can help]. I will call you [time frame of follow-up call] to set up a mutually convenient time to meet. I look forward to it!

 

Regards,

Name

 

  • FOLLOW UP AFTER NO RESPONSE 

Hello,

I haven't heard from you and was wondering if you are still [what you are waiting for]. Since it has been [length of time], I was wondering if you have any unanswered questions.

 

[Optional recap of proposal.]

 

If for some reason you are no longer considering [what was offered], would you please [desired action]. Of course I hope that is not the case. If I have not heard from you by [deadline][result].

I look forward to hearing from you soon.

 

Regards,

Name

 

  • FOLLOW UP AFTER A MEETING

Hello,

Thank you for taking the time to meet with me [date or day]. I thought the meeting was very productive and gave me a lot of ideas on how we can work together to meet your objectives.

 

Sam Sung has a solid track record of providing quality [products/services/solutions] to companies like yours. As we discussed, I think there are several areas where we might be of service. [What you can do for his or her company.]

 

I look forward to discussing how Sam Sung can meet your needs. In the meantime, please don't hesitate to call me at [phone number] if you have any questions.

 

Regards,

Name

 

  • FOLLOW UP AFTER A TELEPHONE CALL

Hello,

I just wanted to drop you a note to re-cap our phone conversation [when conversation took place]. As we discussed, [re-cap conclusions].

 

It was a pleasure talking with you and I look forward to [next step]. If you have any further questions, please don't hesitate to call me at [phone number].

 

Regards,

Name





February 2, 2012 (THU)

- Paul Kim's writing class


 

Salutation:

  • Dear Mr. Kim
  • Dear Ms Choi

  

Starting:

  • We are writing to inform you that ...
  •                          to confirm ...
  •                          to request ...
  •                          to enquire about ...
  • I am contacting you for the following reason.
  • I recently read/heard about  . . . and would like to know . . .
  • I would be interested in (obtaining/receiving) ...
  • I am writing to tell you about ...

  

Referring to previous contact:

  • Thank you for your letter of January 31st ...
  • Thank you for contacting us.
  • In reply to your request ...
  • Thank you for your letter regarding ...
  • With reference to our telephone conversation yesterday ...
  • Further to our meeting last week ...
  • It was a pleasure meeting you in Seoul last month.
  • I would just like to confirm the main points we discussed on Tuesday . .

  

Making a request:

  • We would appreciate it if you would ...
  • I would be grateful if you could...
  • Could you please send me . . . 
  • I am interested in (obtaining/receiving...)
  • I would appreciate your immediate attention to this matter.

  

Offering help:

  • We would be happy to ...
  • Would you like us to ...
  • Our company would be pleased to ...

  

Giving good news:

  • We are pleased to announce that ...
  • I am delighted to inform you that ...
  • You will be pleased to learn that ...

  

Giving bad news:

  • We regret to inform you that ... ...
  • Unfortunately we cannot/we are unable to ...
  • After careful consideration we have decided (not) to ...

  

Complaining:

  • I am writing to express my dissatisfaction with ...
  • I am writing to complain about ...
  • Please note that the goods we ordered on (date) have not yet arrived.
  • We regret to inform you that our order n°--- is now considerably overdue.

  

Apologizing:

  • We are sorry for the delay in replying ...
  • I would like to apologize for (the delay/the inconvenience) ...
  • Once again, I apologize for any inconvenience.

  

Orders:

  • We are pleased to place an order with your company for ...
  • We would like to cancel our order n°...    
  • Please confirm receipt of our order.
  • I am pleased to acknowledge receipt of your order n°...
  • Your order will be processed as quickly as possible.
  • It will take about (three) weeks to process your order.
  • We can guarantee delivery before ...
  • Unfortunately these articles are no longer available/are out of stock.

  

Prices:

  • Please send us your price list.
  • You will find enclosed our most recent catalogue and price list.
  • Please note that our prices are subject to change without notice.
  • We have pleasure in enclosing a detailed quotation.
  • We can make you a firm offer of ...
  • Our terms of payment are as follows :

  

Referring to payment:

  • Our records show that we have not yet received payment of ...
  • According to our records ...
  • Please send payment as soon as possible.
  • You will receive a credit note for the sum of ...

  

Enclosing documents:

  • I am enclosing ...
  • Please find enclosed ...
  • You will find enclosed ...

  

Closing remarks:

  • If we can be of any further assistance, please let us know
  • If I can help in any way, please do not hesitate to contact me
  • If you require more information ...
  • Thank you for taking this into consideration
  • Thank you for your help.
  • We hope you are happy with this arrangement.
  • We hope you can settle this matter to our satisfaction.

  

Referring to future business:

  • We look forward to a successful working relationship in the future
  • We would be (very) pleased to do business with your company.
  • I would be happy to have an opportunity to work with your firm.

  

Referring to future contact:

  • I look forward to seeing you next week
  • Looking forward to hearing from you
  • Looking forward to receiving your comments
  • I look forward to meeting you on the 15th
  • I would appreciate a reply at your earliest convenience.  

  

Ending business letters:

  • Sincerely,          }
  • Yours sincerely, } (for all customers/clients)  
  • Regards,             (for those you already know and/or with who you already have a working relationship.)


February 2, 2012 (THU)

- Paul Kim's writing class

 

l   A/C or acct - account

l   A.O.B - any other business

l   attn - attention

l   appro. - approval

l   brb - be right back

l   CEO - Chief Executive Office

l   CFO - Chief Financial Office

l   COD - cash on delivery

l   dept - department

l   D.O.B - data of birth

l   A/S/L - Age, Sex, Location

l   e.g - exempli gratia

l   ETA - Expected Time of Arrival

l   etc. - et cetera

l   i.e. - That is

l   IOU -

l   mo - month

l   N/A - not available, non-applicable

l   no. - number

l   p.a. - per annum (per year)

l   pls, plz - please

l   PR - public relation

l   P.T.O. - please turn over

l   qty - quantity

l   RSVP - répondez s'il vous plaît(please reply)

l   VIP - very important person


January 31, 2012 (TUE)

- Paul Kim's writing class 

 


Coffeee Shop Business Plan.pdf
  

1.1  Objectives

Java Culture's objectives for the first year of operations are:

  • Become selected as the "Best New Coffee Bar in the area" by the local restaurant guide.
  • Turn in profits from the first month of operations.
  • Maintain a 65% gross margin.


1.2 Keys to Success

The keys to success will be:

  • Store design that will be both visually attractive to customers, and designed for fast and efficient operations.
  • Employee training to insure the best coffee preparation techniques.
  • Marketing strategies aimed to build a solid base of loyal customers, as well as maximizing the sales of high margin products, such as espresso drinks.

1.3 Mission

Java Culture will make its best effort to create a unique place where customers can socialize with each other in a comfortable and relaxing environment while enjoying the best brewed coffee or espresso and pastries in town. We will be in the business of helping our customers to relieve their daily stresses by providing piece of mind through great ambience, convenient location, friendly customer service, and products of consistently high quality. Java Culture will invest its profits to increase the employee satisfaction while providing stable return to its shareholders.

Company Summary

Java Culture, an Oregon limited liability company, sells coffee, other beverages and snacks in its 2,300 square feet premium coffee bar located near the University of Oregon campus.  Java Culture's major investors are Arthur Garfield and James Polk who cumulatively own over 70% of the company. The start-up loss of the company is assumed in the amount of $27,680.

2.1 Company Ownership

Java Culture is registered as a Limited Liability Corporation in the state of Oregon. Arthur Garfield owns 51% of the company. His cousin, James Polk, as well as Megan Flanigan and Todd Barkley hold minority stakes in Java Culture, LLC.

2.2 Start-up Summary

The start-up expenses include:

  • Legal expenses for obtaining licenses and permits as well as the accounting services totaling $1,300.
  • Marketing promotion expenses for the grand opening of Java Culture in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • Consultants fees of $3,000 paid to ABC Espresso Services <name changed> for the help with setting up the coffee bar.
  • Insurance (general liability, workers' compensation and property casualty) coverage at a total premium of $2,400.
  • Pre-paid rent expenses for one month at $1.76 per square feet in the total amount of $4,400.
  • Premises remodeling in the amount of $10,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).

The required start-up assets of $142,320 include:

  • Operating capital in the total amount of $67,123, which includes employees and owner's salaries of $23,900 for the first two months and cash reserves for the first three months of operation (approximately $14,400 per month).
  • Start-up inventory of $16,027, which includes:

*   Coffee beans (12 regular brands and five decaffeinated brands) - $6,000

*   Coffee filters, baked goods, salads, sandwiches, tea, beverages, etc. - $7,900

*   Retail supplies (napkins, coffee bags, cleaning, etc.) - $1,840

*   Office supplies - $287

  • Equipment for the total amount of $59,170:

*   Espresso machine - $6,000

*   Coffee maker - $900

*   Coffee grinder - $200

*   Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) - $18,000

*   Storage hardware (bins, utensil rack, shelves, food case) - $3,720

*   Counter area equipment (counter top, sink, ice machine, etc.) - $9,500

*   Serving area equipment (plates, glasses, flatware) - $3,000

*   Store equipment (cash register, security, ventilation, signage) - $13,750

*   Office equipment (PC, fax/printer, phone, furniture, file cabinets) - $3,600

*   Other miscellaneous expenses - $500

Funding for the company comes from two major sources--owners' investments and bank loans. Two major owners, Arthur Garfield and James Polk, have contributed $70,000 and $30,00 respectively. All other investors have contributed $40,000, which brings the total investments to $140,000. The remaining $30,000 needed to cover the start-up expenses and assets came from the two bank loans--a one-year loan in the amount of $10,000 and a long-term (five years) loan of $20,000. Both loans were secured through the Bank of America. Thus, total start-up loss is assumed in the amount of $27,680.

The following chart and table summarize the start-up assumptions.

 

 

Start-up Requirements

Start-up Expenses

Legal

$1,300

Stationery etc.

$500

Brochures

$3,580

Consultants

$3,000

Insurance

$2,400

Rent

$4,400

Remodeling

$10,000

Other

$2,500

Total Start-up Expenses

$27,680

Start-up Assets

Cash Required

$67,123

Start-up Inventory

$16,027

Other Current Assets

$0

Long-term Assets

$59,170

Total Assets

$142,320

Total Requirements

$170,000

 

 

Start-up Funding

Start-up Expenses to Fund

$27,680

Start-up Assets to Fund

$142,320

Total Funding Required

$170,000

Assets

Non-cash Assets from Start-up

$75,197

Cash Requirements from Start-up

$67,123

Additional Cash Raised

$0

Cash Balance on Starting Date

$67,123

Total Assets

$142,320

Liabilities and Capital

Liabilities

Current Borrowing

$10,000

Long-term Liabilities

$20,000

Accounts Payable (Outstanding Bills)

$0

Other Current Liabilities (interest-free)

$0

Total Liabilities

$30,000

Capital

Planned Investment

Arthur Garfield

$70,000

James Polk

$30,000

All other investors

$40,000

Additional Investment Requirement

$0

Total Planned Investment

$140,000

Loss at Start-up (Start-up Expenses)

($27,680)

Total Capital

$112,320

Total Capital and Liabilities

$142,320

Total Funding

$170,000


2.3 Company Locations and Facilities

Java Culture coffee bar will be located on the ground floor of the commercial building at the corner of West 13th Avenue and Patterson Street in Eugene, OR. The company has secured a one-year lease of the vacant 2,500 square feet premises previously occupied by a hair salon. The lease contract has an option of renewal for three years at a fixed rate that Java Culture will execute depending on the financial strength of its business.

The floor plan will include a 200 square feet back office and a 2,300 square feet coffee bar, which will include a seating area with 15 tables, a kitchen, storage area and two bathrooms. The space in the coffee bar will be approximately distributed the following way--1,260 square feet (i.e., 55% of the total) for the seating area, 600 square feet (26%) for the production area, and the remaining 440 square feet (19%) for the customer service area.

This property is located in a commercial area within a walking distance from the University of Oregon campus on the corner of a major thoroughfare connecting affluent South Eugene neighborhood with the busy downtown commercial area. The commercially zoned premises have the necessary water and electricity hookups and will require only minor remodeling to accommodate the espresso bar, kitchen and storage area. The coffee bar's open and clean interior design with modern wooden decor will convey the quality of the served beverages and snacks, and will be in-line with the establishment's positioning as an eclectic place where people can relax and enjoy their cup of coffee. The clear window displays, through which passerby will be able to see customers enjoying their beverages, and outside electric signs will be aimed to grab the attention of the customer traffic.

Products

Java Culture will offer its customers the best tasting coffee beverages in the area. This will be achieved by using high-quality ingredients and strictly following preparation guidelines. The store layout, menu listings and marketing activities will be focused on maximizing the sales of higher margin espresso drinks. Along with the espresso drinks, brewed coffee and teas, as well as some refreshment beverages, will be sold in the coffee bar. Java Culture will also offer its clients pastries, small salads and sandwiches. For the gourmet clientele that prefers to prepare its coffee at home, Java Culture will also be selling coffee beans.

The menu offerings will be supplemented by free books and magazines that customers can read inside the coffee bar.

3.1 Product Description

The menu of the Java Culture coffee bar will be built around espresso-based coffee drinks such as lattes, mochas, cappuccinos, etc. Each of the espresso-based drinks will be offered with whole, skimmed, or soy milk. Each of these coffee beverages is based on a 'shot' of espresso, which is prepared in the espresso machine by forcing heated water through ground coffee at high pressure. Such espresso shots are combined with steamed milk and/or other additives like cocoa, caramel, etc., to prepare the espresso-based beverages. Proper preparation techniques are of paramount importance for such drinks. A minor deviation from the amount of coffee in the shot, the size of the coffee particles, the temperature of milk, etc., can negatively affect the quality of the prepared drink.

Market Analysis Summary

U.S. coffee consumption has shown steady growth, with gourmet coffee having the strongest growth. Coffee drinkers in the Pacific Northwest are among the most demanding ones. They favor well-brewed gourmet coffee drinks and demand great service. Eugene, OR, with its liberal and outgoing populace and long rainy winter, has traditionally been a great place for coffee establishments. Java Culture will strive to build a loyal customer base by offering a great tasting coffee in a  relaxing environment of its coffee bar located close to the bustling University of Oregon campus.

4.1 Market Segmentation

Java Culture will focus its marketing activities on reaching the University students and faculty, people working in offices located close to the coffee bar and on sophisticated teenagers. Our market research shows that these are the customer groups that are most likely to buy gourmet coffee products. Since gourmet coffee consumption is universal across different income categories and mostly depends on the level of higher education, proximity to the University of Oregon campus will provide access to the targeted customer audience.

The chart and table below outline the total market potential (in number of customers) of gourmet coffee drinkers in Eugene, OR.

 

 

Market Analysis

Year 1

Year 2

Year 3

Year 4

Year 5

Potential Customers

Growth

CAGR

Students and Faculty

2%

18,000

18,360

18,727

19,102

19,484

2.00%

Teenagers

1%

3,000

3,030

3,060

3,091

3,122

1.00%

Office workers

2%

8,000

8,160

8,323

8,489

8,659

2.00%

Other

0%

5,000

5,000

5,000

5,000

5,000

0.00%

Total

1.63%

34,000

34,550

35,110

35,682

36,265

1.63%

 

4.2 Target Market Segment Strategy

Java Culture will cater to people who want to get their daily cup of great-tasting coffee in a relaxing atmosphere. Such customers vary in age, although our location close to the University campus means that most of our clientele will be college students and faculty. Our market research shows that these are discerning customers that gravitate towards better tasting coffee. Furthermore, a lot of college students consider coffee bars to be a convenient studying or meeting location, where they can read or meet with peers without the necessity to pay cover charges. For us, this will provide a unique possibility for building a loyal client base.

4.2.1 Market Needs

General trend toward quality among U.S. consumers definitely plays an important role in the recent growth in gourmet coffee. Additionally, such factors as desire for small indulgencies, for something more exotic and unique, provide a good selling opportunity for coffee bars.

4.3 Industry Analysis

Coffee consumption has shown a steady 2.5% growth rate in the United States over the last decade. In 1994, total sales of coffee were approximately $7.5 billion with gourmet coffee representing 33% (or $2.5 billion) of that. The retail coffee industry is flourishing in the U.S. Pacific Northwest. The local climate, with a long rainy season, is very conducive for the consumption of hot non-alcoholic beverages. At the same time, hot dry summers drive people into cafes to order iced drinks. Further, coffee has really become a part of the lifestyle in the Pacific Northwest. Its discerning coffee drinkers are in favor of well-prepared, strong coffee-based beverages, which they can consume in a relaxing environment.

4.3.1 Competition and Buying Patterns

Competition

According to the 1997 Oregon Food service Statistics (NAICS 72), Eugene had 45 established snack & non-alcoholic beverage bars (NAICS 722213) with total sales of $14.2 million. Among other establishments that offer coffee drinks to their customers are most of Eugene's limited- and full-service restaurants. Java Culture's direct competitors will be other coffee bars located near the University of Oregon campus. These include Starbucks, Cafe Roma, The UO Bookstore, and other Food service establishments that offer coffee. Starbucks will definitely be one of the major competitors because of its strong financial position and established marketing and operational practices. However, despite of Starbuck's entrenched market position, many customers favor smaller, independent establishments that offer cozy atmosphere and good coffee at affordable prices. Cafe Roma is a good example of such competition. We estimate that Starbucks holds approximately 35% market share in that neighborhood, Cafe Roma appeals to 25% of customers, The UO Bookstore caters to another 10%, with the remaining market share split among other establishments. Java Culture will position itself as a unique coffee bar that not only offers the best tasting coffee and pastries but also provides home-like, cozy and comfortable environment, which established corporate establishments lack. We will cater to customers' bodies and minds, which will help us grow our market share in this competitive market.

Buying Patterns

The major reason for the customers to return to a specific coffee bar is a great tasting coffee, quick service and pleasant atmosphere. Although, as stated before, coffee consumption is uniform across different income segments, Java Culture will price its product offerings competitively. We strongly believe that selling coffee with a great service in a nice setting will help us build a strong base of loyal clientele.

Strategy and Implementation Summary

Java Culture's marketing strategy will be focused at getting new customers, retaining the existing customers, getting customers to spend more and come back more often. Establishing a loyal customer base is of a paramount importance since such customer core will not only generate most of the sales but also will provide favorable referrals.

5.1 Competitive Edge

Java Culture will position itself as unique coffee bar where its patrons can not only enjoy a cup of perfectly brewed coffee but also spend their time in an ambient environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate Java Culture from incumbent competitors.

5.2 Sales Strategy

Java Culture baristas will handle the sales transactions. To speed up the customer service, at least two employees will be servicing clients--while one employee will be preparing the customer's order, the other one will be taking care of the sales transaction. All sales data logged on the computerized point-of-sale terminal will be later analyzed for marketing purposes.

In order to build up its client base, Java Culture will use banners and fliers, utilize customer referrals and cross-promotions with other businesses in the community. At the same time, customer retention programs will be used to make sure the customers are coming back and spending more at the coffee bar.

5.2.1 Sales Forecast

Food costs are assumed at 25% for coffee beverages and 50% for retail beans and pastries. Proximity to the University campus will dictate certain sales seasonality with revenues slightly decreasing during the school vacation periods.

 

The chart and table below outline our projected sales forecast for the next three years.

http://www.bplans.com/coffee_shop_business_plan/images/834aaa21ee164a999d18381262f405d6.png



 

Sales Forecast

Year 1

Year 2

Year 3

Sales

Coffee beverages

$350,400

$385,440

$423,984

Coffee beans

$87,600

$96,360

$105,996

Pastries, etc.

$146,000

$160,600

$176,660

Total Sales

$584,000

$642,400

$706,640

Direct Cost of Sales

Year 1

Year 2

Year 3

Coffee beverages

$87,600

$96,360

$105,996

Coffee beans

$43,800

$48,180

$52,998

Pastries, etc.

$73,000

$80,300

$88,330

Subtotal Direct Cost of Sales

$204,400

$224,840

$247,324


Management Summary

Java Culture is majority-owned by Arthur Garfield and James Polk. Mr. Garfield holds a Bachelor's Degree in Business Administration from the University of ZYX. He's worked for several years as an independent business consultant. Previously, he owned the ABC Travel Agency, which he profitably sold four years ago. Mr. Garfield has extensive business contacts in Oregon that he will leverage to help his new venture succeed. Mr. Polk has a Bachelor's Degree in Psychology from the XYZ State University. For the last five years he has worked as a manager of DEF Ristorante, a successful Italian restaurant in Portland, OR. Under Mr. Polk's management, the restaurant has consistently increased sales while maintaining a lower than average level of operating expenses.

However, because of the investors' other commitments they will not be involved into the daily management decisions at Java Culture. A professional manager ($35,000/yr) will be hired who will oversee all the coffee bar operations. Two full-time baristas ($25,000/yr each) will be in charge of coffee preparation. Four more part-time employees will be hired to fulfill the staffing needs. In the second and third year of operation one more part-time employee will be hired to handle the increased sales volume.

6.1 Management Team

A full-time manager will be hired to oversee the daily operations at Java Culture. The candidate (who's name is withheld due to his current employment commitment) has had three years of managerial experience in the definitely industry in Oregon. This person's responsibilities will include managing the staff, ordering inventory, dealing with suppliers, developing a marketing strategy and perform other daily managerial duties. We believe that our candidate has the right experience for this role. A profit-sharing arrangement for the manager may be considered based on the first year operational results.

6.2 Management Team Gaps

Despite the owners' and manager's experience in the definitely industry, the company will retain the consulting services of ABC Espresso Services, the consultants who have helped to develop the business idea for Java Culture. This company has over twenty years of experience in the retail coffee industry and has successfully opened dozens of coffee bars across the U.S. Consultants will be primarily used for market research, customer satisfaction surveys and to provide additional input into the evaluation of the new business opportunities.

6.3 Personnel Plan
 

The table below outlines the personnel needs of Java Culture coffee bar.

Personnel Plan

Year 1

Year 2

Year 3

Manager

$35,000

$37,800

$40,824

Baristas

$50,000

$54,000

$58,320

Employees

$39,600

$52,000

$56,000

Total People

7

8

8

Total Payroll

$124,600

$143,800

$155,144


Financial Plan

Java Culture will capitalize on the strong demand for high-quality gourmet coffee. The owners have provided the company with sufficient start-up capital. With successful management aimed at establishing and growing a loyal customer base, the company will see its net worth doubling in two years. Java Culture will maintain a healthy 65% gross margin, which combined with reasonable operating expenses, will provide enough cash to finance further growth.

7.1 Important Assumptions

General Assumptions

Year 1

Year 2

Year 3

Plan Month

1

2

3

Current Interest Rate

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

25.42%

25.00%

25.42%

Other

0

0

0

7.2 Projected Cash Flow

As the chart and table below present, the company will maintain a healthy cash flow position, which will allow for timely debt servicing and funds available for future development.

http://www.bplans.com/coffee_shop_business_plan/images/c12a0513de514071a4d63951fe021cb1.png


 

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received

Cash from Operations

Cash Sales

$584,000

$642,400

$706,640

Subtotal Cash from Operations

$584,000

$642,400

$706,640

Additional Cash Received

Sales Tax, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

New Long-term Liabilities

$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

$584,000

$642,400

$706,640

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations

Cash Spending

$124,600

$143,800

$155,144

Bill Payments

$327,865

$388,715

$420,945

Subtotal Spent on Operations

$452,465

$532,515

$576,089

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of Current Borrowing

$3,300

$3,300

$3,300

Other Liabilities Principal Repayment

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$3,585

$3,961

Purchase Other Current Assets

$0

$0

$0

Purchase Long-term Assets

$0

$2,000

$2,000

Dividends

$0

$0

$0

Subtotal Cash Spent

$455,765

$541,400

$585,350

Net Cash Flow

$128,235

$101,000

$121,290

Cash Balance

$195,358

$296,358

$417,648


7.3 Key Financial Indicators
 

http://www.bplans.com/coffee_shop_business_plan/images/d893aaca75374defb54463f11786a7d0.png


7.4 Break-even Analysis

With average monthly fixed costs of $20,300 in FY2001 and an average margin of 65%, Java Culture's break-even sales volume is around $31,300 per month. As shown further, the company is expected to generate such sales volume from the outstart.
 

http://www.bplans.com/coffee_shop_business_plan/images/0ca1cc6893544e14ab411a47291c9213.png

 

Break-even Analysis

Monthly Revenue Break-even

$31,247

Assumptions:

Average Percent Variable Cost

35%

Estimated Monthly Fixed Cost

$20,311

7.5 Projected Profit and Loss

Annual projected sales of $584,000 in FY2001 translate into $254.00 of sales per square foot, which is in line with the industry averages for this size of coffee bar. Overall, as the company gets established in the local market, its net profitability increases from 17.06% in FY2001 to 17.63% in FY2003. The table below outlines the projected Profit and Loss Statement for FY2001-2003.

 

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales

$584,000

$642,400

$706,640

Direct Cost of Sales

$204,400

$224,840

$247,324

Other

$0

$0

$0

Total Cost of Sales

$204,400

$224,840

$247,324

Gross Margin

$379,600

$417,560

$459,316

Gross Margin %

65.00%

65.00%

65.00%

Expenses

Payroll

$124,600

$143,800

$155,144

Sales and Marketing and Other Expenses

$25,800

$27,600

$31,000

Depreciation

$5,400

$5,500

$5,500

Rent

$48,400

$52,800

$52,800

Rent

$6,000

$6,000

$6,000

Maintenance

$5,840

$6,424

$7,066

Utilities/Phone

$9,000

$9,500

$10,000

Payroll Taxes

$18,690

$21,570

$23,272

Other

$0

$0

$0

Total Operating Expenses

$243,730

$273,194

$290,782

Profit Before Interest and Taxes

$135,870

$144,366

$168,534

EBITDA

$141,270

$149,866

$174,034

Interest Expense

$2,821

$2,326

$1,618

Taxes Incurred

$33,740

$35,510

$42,424

Net Profit

$99,308

$106,530

$124,491

Net Profit/Sales

17.00%

16.58%

17.62%

7.6 Projected Balance Sheet

The company's net worth is expected to increase from approximately $212,000 by the end of FY2001 to approximately $443,000 in FY2003. The table below summarizes the projected balance sheets for this period.

 

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

$195,358

$296,358

$417,648

Inventory

$21,175

$23,293

$25,622

Other Current Assets

$0

$0

$0

Total Current Assets

$216,533

$319,651

$443,270

Long-term Assets

Long-term Assets

$59,170

$61,170

$63,170

Accumulated Depreciation

$5,400

$10,900

$16,400

Total Long-term Assets

$53,770

$50,270

$46,770

Total Assets

$270,303

$369,921

$490,040

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Accounts Payable

$31,974

$31,947

$34,836

Current Borrowing

$6,700

$3,400

$100

Other Current Liabilities

$0

$0

$0

Subtotal Current Liabilities

$38,674

$35,347

$34,936

Long-term Liabilities

$20,000

$16,415

$12,454

Total Liabilities

$58,674

$51,762

$47,390

Paid-in Capital

$140,000

$140,000

$140,000

Retained Earnings

($27,680)

$71,628

$178,159

Earnings

$99,308

$106,530

$124,491

Total Capital

$211,628

$318,159

$442,650

Total Liabilities and Capital

$270,303

$369,921

$490,040

Net Worth

$211,628

$318,159

$442,650

7.7 Business Ratios

The table below outlines the company's business ratios. The last column represents industry average business ratios for Specialty Eating Places (SIC 5812).

 

Ratio Analysis

Year 1

Year 2

Year 3

Industry Profile

Sales Growth

0.00%

10.00%

10.00%

7.60%

Percent of Total Assets

Inventory

7.83%

6.30%

5.23%

3.60%

Other Current Assets

0.00%

0.00%

0.00%

35.60%

Total Current Assets

80.11%

86.41%

90.46%

43.70%

Long-term Assets

19.89%

13.59%

9.54%

56.30%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

14.31%

9.56%

7.13%

32.70%

Long-term Liabilities

7.40%

4.44%

2.54%

28.50%

Total Liabilities

21.71%

13.99%

9.67%

61.20%

Net Worth

78.29%

86.01%

90.33%

38.80%

Percent of Sales

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

65.00%

65.00%

65.00%

60.50%

Selling, General & Administrative Expenses

47.94%

48.47%

47.37%

39.80%

Advertising Expenses

2.26%

2.18%

2.26%

3.20%

Profit Before Interest and Taxes

23.27%

22.47%

23.85%

0.70%

Main Ratios

Current

5.60

9.04

12.69

0.98

Quick

5.05

8.38

11.95

0.65

Total Debt to Total Assets

21.71%

13.99%

9.67%

61.20%

Pre-tax Return on Net Worth

62.87%

44.64%

37.71%

1.70%

Pre-tax Return on Assets

49.22%

38.40%

34.06%

4.30%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

17.00%

16.58%

17.62%

n.a

Return on Equity

46.93%

33.48%

28.12%

n.a

Activity Ratios

Inventory Turnover

10.91

10.11

10.11

n.a

Accounts Payable Turnover

11.25

12.17

12.17

n.a

Payment Days

27

30

29

n.a

Total Asset Turnover

2.16

1.74

1.44

n.a

Debt Ratios

Debt to Net Worth

0.28

0.16

0.11

n.a

Current Liab. to Liab.

0.66

0.68

0.74

n.a

Liquidity Ratios

Net Working Capital

$177,858

$284,304

$408,334

n.a

Interest Coverage

48.16

62.07

104.13

n.a

Additional Ratios

Assets to Sales

0.46

0.58

0.69

n.a

Current Debt/Total Assets

14%

10%

7%

n.a

Acid Test

5.05

8.38

11.95

n.a

Sales/Net Worth

2.76

2.02

1.60

n.a

Dividend Payout

0.00

0.00

0.00

n.a

 

 

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

Coffee beverages

0%

$24,000

$27,000

$28,800

$28,800

$28,800

$28,800

$28,800

$28,800

$29,400

$31,200

$33,000

$33,000

Coffee beans

0%

$6,000

$6,750

$7,200

$7,200

$7,200

$7,200

$7,200

$7,200

$7,350

$7,800

$8,250

$8,250

Pastries, etc.

0%

$10,000

$11,250

$12,000

$12,000

$12,000

$12,000

$12,000

$12,000

$12,250

$13,000

$13,750

$13,750

Total Sales

$40,000

$45,000

$48,000

$48,000

$48,000

$48,000

$48,000

$48,000

$49,000

$52,000

$55,000

$55,000

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

Coffee beverages

$6,000

$6,750

$7,200

$7,200

$7,200

$7,200

$7,200

$7,200

$7,350

$7,800

$8,250

$8,250

Coffee beans

$3,000

$3,375

$3,600

$3,600

$3,600

$3,600

$3,600

$3,600

$3,675

$3,900

$4,125

$4,125

Pastries, etc.

$5,000

$5,625

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,125

$6,500

$6,875

$6,875

Subtotal Direct Cost of Sales

$14,000

$15,750

$16,800

$16,800

$16,800

$16,800

$16,800

$16,800

$17,150

$18,200

$19,250

$19,250

Personnel Plan

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Manager

0%

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

$2,917

Baristas

0%

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

$4,167

Employees

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

Total People

7

7

7

7

7

7

7

7

7

7

7

7

Total Payroll

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

 

General Assumptions

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

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%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other

0

0

0

0

0

0

0

0

0

0

0

0

 

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$40,000

$45,000

$48,000

$48,000

$48,000

$48,000

$48,000

$48,000

$49,000

$52,000

$55,000

$55,000

Direct Cost of Sales

$14,000

$15,750

$16,800

$16,800

$16,800

$16,800

$16,800

$16,800

$17,150

$18,200

$19,250

$19,250

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$14,000

$15,750

$16,800

$16,800

$16,800

$16,800

$16,800

$16,800

$17,150

$18,200

$19,250

$19,250

Gross Margin

$26,000

$29,250

$31,200

$31,200

$31,200

$31,200

$31,200

$31,200

$31,850

$33,800

$35,750

$35,750

Gross Margin %

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

65.00%

Expenses

Payroll

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

Sales and Marketing and Other Expenses

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

$2,150

Depreciation

$450

$450

$450

$450

$450

$450

$450

$450

$450

$450

$450

$450

Rent

$0

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

$4,400

Rent

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

Maintenance

$400

$450

$480

$480

$480

$480

$480

$480

$490

$520

$550

$550

Utilities/Phone

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

Payroll Taxes

15%

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

$1,558

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Operating Expenses

$16,191

$20,641

$20,671

$20,671

$20,671

$20,671

$20,671

$20,671

$20,681

$20,711

$20,741

$20,741

Profit Before Interest and Taxes

$9,809

$8,609

$10,529

$10,529

$10,529

$10,529

$10,529

$10,529

$11,169

$13,089

$15,009

$15,009

EBITDA

$10,259

$9,059

$10,979

$10,979

$10,979

$10,979

$10,979

$10,979

$11,619

$13,539

$15,459

$15,459

Interest Expense

$248

$245

$243

$241

$239

$236

$234

$232

$229

$227

$225

$223

Taxes Incurred

$2,868

$2,091

$2,572

$2,572

$2,573

$2,573

$2,574

$2,574

$2,735

$3,216

$3,696

$3,697

Net Profit

$6,693

$6,273

$7,715

$7,716

$7,718

$7,720

$7,721

$7,723

$8,205

$9,647

$11,088

$11,090

Net Profit/Sales

16.73%

13.94%

16.07%

16.08%

16.08%

16.08%

16.09%

16.09%

16.74%

18.55%

20.16%

20.16%

 

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received

Cash from Operations

Cash Sales

$40,000

$45,000

$48,000

$48,000

$48,000

$48,000

$48,000

$48,000

$49,000

$52,000

$55,000

$55,000

Subtotal Cash from Operations

$40,000

$45,000

$48,000

$48,000

$48,000

$48,000

$48,000

$48,000

$49,000

$52,000

$55,000

$55,000

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

$40,000

$45,000

$48,000

$48,000

$48,000

$48,000

$48,000

$48,000

$49,000

$52,000

$55,000

$55,000

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

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

$10,383

Bill Payments

$728

$22,112

$29,845

$30,569

$29,450

$29,449

$29,447

$29,445

$29,474

$30,424

$32,727

$34,195

Subtotal Spent on Operations

$11,112

$32,496

$40,228

$40,952

$39,834

$39,832

$39,830

$39,829

$39,857

$40,808

$43,110

$44,578

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

$275

$275

$275

$275

$275

$275

$275

$275

$275

$275

$275

$275

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

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

$11,387

$32,771

$40,503

$41,227

$40,109

$40,107

$40,105

$40,104

$40,132

$41,083

$43,385

$44,853

Net Cash Flow

$28,613

$12,229

$7,497

$6,773

$7,891

$7,893

$7,895

$7,896

$8,868

$10,917

$11,615

$10,147

Cash Balance

$95,736

$107,966

$115,462

$122,235

$130,127

$138,020

$145,914

$153,811

$162,679

$173,596

$185,211

$195,358

Pro Forma Balance Sheet

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Assets

Starting Balances

Current Assets

Cash

$67,123

$95,736

$107,966

$115,462

$122,235

$130,127

$138,020

$145,914

$153,811

$162,679

$173,596

$185,211

$195,358

Inventory

$16,027

$15,400

$17,325

$18,480

$18,480

$18,480

$18,480

$18,480

$18,480

$18,865

$20,020

$21,175

$21,175

Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Current Assets

$83,150

$111,136

$125,291

$133,942

$140,715

$148,607

$156,500

$164,394

$172,291

$181,544

$193,616

$206,386

$216,533

Long-term Assets

Long-term Assets

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

$59,170

Accumulated Depreciation

$0

$450

$900

$1,350

$1,800

$2,250

$2,700

$3,150

$3,600

$4,050

$4,500

$4,950

$5,400

Total Long-term Assets

$59,170

$58,720

$58,270

$57,820

$57,370

$56,920

$56,470

$56,020

$55,570

$55,120

$54,670

$54,220

$53,770

Total Assets

$142,320

$169,856

$183,561

$191,762

$198,085

$205,527

$212,970

$220,414

$227,861

$236,664

$248,286

$260,606

$270,303

Liabilities and Capital

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8