This workshop designed to help YOU and your business.

It will require your active participation during three formal sessions plus significant additional outside work.

You will be required to work with a SCORE Mentor in the workshops and in completing necessary homework.

If requirements and participation do not fit with yourexpectations, do not enroll so others may participate.

WELCOME

Confidentiality

To make the workshop more effective you will beUtilizing your own business information with yourSCORE mentor.

Keep this in mind as you make presentations duringThe workshop sessions.

Reading and planning preparation prior to 1st sessionFirst Formal Session 4 - 6 hours.

Scheduled Homework with SCORE Mentor.

Second Formal Session 4 - 6 hours to create and implement a formal plan for your business.

Follow up counseling with SCORE MentorThird Formal Session 60 -90 days later to review and test how well YOUR plan is working.

Make sure you are willing toCommit to the entire workshop.

Your SCORE Mentor is there to assist youIn understanding and interpreting

Information you learn. You are the one who will actually be doing the homework.

YOUR COMMITMENT

The benefit is to help you learn to better manage your business.

To provide tools and information important to both grow and enhance profitability of business.

To understand where money comes from and how it is utilized in your business.

They help you manage your business.

Accountant / CPAAttorneyBankerInsurance AgentSCORE Mentor

Create effective relationships with your trusted advisor team.

Measure your company’s financial health (and yours).

Understand basics of Cost Accounting

Management of Business Risks and Cash.

Cash Flow Forecasting and Budgeting.

Your accounting system must:

Conform to generally accepted accounting principles.

Is needed in dealing with outsiders – Banks, IRS, etc.

Understanding why standard methodology is important.

Cash – recognizes income and expense at timereceived or paid.

Accrual – recognizes income or expense at other times.

Combination – Use of both Cash and Accrual.

Cast Flow Statement (The Money)

Income Statement (Profit – Loss)

Balance Sheet (Business Overview)

Accounts Receivable, Days Sales Outstanding, Aging Analysis, Delinquent Accounts Collection Policy

Accounts Payable – Cash RequirementsPayables days outstanding Purchasing Terms

Allocation of expenses

(Important for Daily Controls)

Balance Sheet -A snapshot of where you are.

Cash Flow Projections -Where you need to be!

Shows inflow and outflow of cash for a period of time.

Indicates increase or decrease in available cash.

Most Important Allows for planning of cash needs.

Month 1 Sales Estimates

Possible Outcomes # of Units Weight Weighted Value Reason

Optimistic Case 275 40% 110 Less Uncertainty

Target (Best Estimate) 250 50% 125 Historical Data

Downside Case 225 10% 22.5 More or Less Competition

100% 257.5 Est. Units

Note: Weight of all three Possibilities must add up to 100%.

To Determine Realistic Projections For Cash Flow

Target - (Market Segment) ChannelProd/Svcs Code Del. Date # of Contacts * Response Rate ** Close Rate Avg Gross $/Sale # of Sales Sales Totals

% of Total Sales

Direct/E- Mail Month 1 1,000 100.00% 10.00% $120 100 $12,000 38.83%

Personal Contact Month 1 100 7.50% 50.00% $120 3.75 $450 1.46%

Internet (Website) Month 1 2,000 1.25% 15.00% $120 3.75 $450 1.46%

Walk-ins Month 1 200 100.00% 75.00% $120 150 $18,000 58.25%

Totals/Average Month 1 3,300 52.19% 37.50% $120 257.5 $30,900 100.00%

Annually 12 mos/yr 3090 $370,800

* - Response indicates at least an inquiry into Product or Service types, amounts, terms or conditions.

** - Close is an actual qualified buyer that follows thru with a purchase from this marketing effort.

(Alternate Method)

Monthly Cash Flow Projection

Enter Company Name Here

Enter Date HereREVENUE (Description) Month 1 Month 2

1. CASH ON HAND [Beginning of month] 10,000$ 9,272$ 2. CASH RECEIPTS

(a)Sales (45% of Sales) 12,500$ 13,875$ (b) Collections from Credit Accounts (55% of Previous Mo Sales) 16,995$ 16,222$ (c) Loan or Other Cash Injection -$ 5,000$

3. TOTAL CASH RECEIPTS

[2a + 2b + 2c=3] 29,495$ 35,097$ 4. TOTAL CASH AVAILABLE

[Before cash out] (1 + 3) 68,990$ 44,369$

OPERATING EXPENSES (Description) Month 1 Month 2

(a) Purchases (Merchandise, Inventory, Raw Materials) $ 11,798 $ 14,039

(b) Gross Wages (excludes withdrawals) $ 7,500 $ 8,500

(c) Payroll Expenses (Taxes, Benefits, etc.) $ 2,625 $ 2,975

(d) Outside Services $ 100 $ 100

(e) Supplies (Office and operating) $ 100 $ 100

(f) Repairs and Maintenance $ 500 $ 500

(g) Advertising $ 1,500 $ 2,000

(h) Auto, Delivery, and Travel $ 150 $ 150

(i) Accounting and Legal $ - $ -

(j) Rent $ 1,500 $ 1,500

(k) Telephone $ 250 $ 250

(l) Utilities $ 500 $ 500

(m) Insurance $ 200 $ 200

(n) Taxes (Real Estate, etc.) $ - $ -

(o) Interest on LOC $ - $ -

(p) Other Expenses [Specify each] $ 500 $ 500

(q) Miscellaneous [Unspecified] $ -

(r) Subtotal $ 27,223 $ 31,314

FINANCING (Description) Month 1 Month 2(s) Loan Principal Payment(t) Capital Purchases [Specify](u) Other Start-up Costs(v) Reserve and/or Escrow [Specify](w) Owner's Withdrawal 3,000$ 3,000$

6. TOTAL CASH PAID OUT

[Total 5a thru 5w] 30,223$ 34,314$ 7. CASH POSITION

[End of month] (4 minus 6) 9,272$ 10,055$

Monthly Cash Flow Projection

Enter Company Name Here

Enter Date Here

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 TOTAL1. CASH ON HAND

[Beginning of month] $10,000 $ 9,272 $10,055 $ 9,298 $ 8,879 $ 5,830 $ 2,151 $ (912) $ (1,710) $ (63) $ 4,357 $ 8,005 2. CASH RECEIPTS

(a)Sales (45% of Sales) $12,500 $13,875 $14,290 $15,750 $ 16,785 $ 17,525 $ 18,525 $ 17,650 $ 17,325 $ 16,350 $ 15,675 $ 13,250 189,500 (b) Collections from Credit Accounts (55% of Previous Mo Sales) $16,995 $16,222 $19,303 $19,851 $ 21,231 $ 20,909 $ 21,139 $ 21,815 $ 21,706 $ 21,467 $ 22,174 $ 20,817 243,629 (c) Loan or Other Cash Injection $ - $ 5,000 $ 2,500 $ 3,000 $ - $ - $ - $ - $ - $ 2,500 13,000

3. TOTAL CASH RECEIPTS

[2a + 2b + 2c=3] $29,495 $35,097 $36,093 $38,601 $ 38,016 $ 38,434 $ 39,664 $ 39,465 $ 39,031 $ 40,317 $ 37,849 $ 34,067 446,129

4. TOTAL CASH AVAILABLE

[Before cash out] (1 + 3) $39,495 $44,369 $46,149 $47,900 $ 46,895 $ 44,263 $ 41,815 $ 38,553 $ 37,321 $ 40,254 $ 42,206 $ 42,072 5. CASH PAID OUT

(a) Purchases (Merchandise, Inventory, Raw Materials) $11,798 $14,039 $16,242 $17,371 $ 19,008 $ 19,217 $ 19,832 $ 18,943 $ 17,564 $ 16,127 $ 15,140 $ 15,330 200,610 (b) Gross Wages (excludes withdrawals) $ 7,500 $ 8,500 $ 8,500 $ 9,000 $ 9,250 $ 9,500 $ 9,500 $ 8,000 $ 8,000 $ 8,000 $ 7,500 $ 7,500 100,750 (c) Payroll Expenses (Taxes, Benefits, etc.) $ 2,625 $ 2,975 $ 2,975 $ 3,150 $ 3,238 $ 3,325 $ 3,325 $ 2,800 $ 2,800 $ 2,800 $ 2,625 $ 2,625 35,263 (d) Outside Services $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 1,200 (e) Supplies (Office and operating) $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 1,200 (f) Repairs and Maintenance $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 6,000 (g) Advertising $ 1,500 $ 2,000 $ 2,250 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,000 $ 2,000 $ 2,000 $ 1,500 25,750 (h) Auto, Delivery, and Travel $ 150 $ 150 $ 200 $ 300 $ 350 $ 350 $ 350 $ 300 $ 300 $ 250 $ 200 $ 150 3,050 (i) Accounting and Legal $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (j) Rent $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 1,500 18,000 (k) Telephone $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 3,000 (l) Utilities $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 6,000 (m) Insurance $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 2,400 (n) Taxes (Real Estate, etc.) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (o) Interest on LOC $ - $ - $ 33.33 $ 50.00 $ 70.00 $ 70.00 $ 70.00 $ 70.00 $ 70.00 $ 70.00 $ 86.67 $ 86.67 677 (p) Other Expenses [Specify each] $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 6,000

-

(q) Miscellaneous [Unspecified] - (r) Subtotal $27,223 $31,314 $33,850 $36,021 $ 38,065 $ 38,612 $ 39,227 $ 36,263 $ 34,384 $ 32,897 $ 31,201 $ 30,842 409,899 (s) Loan Principal Payment - (t) Capital Purchases [Specify] - (u) Other Start-up Costs - (v) Reserve and/or Escrow [Specify] - (w) Owner's Withdrawal $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,500 $ 3,500 $ 4,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 38,000

6. TOTAL CASH PAID OUT

[Total 5a thru 5w] $30,223 $34,314 $36,850 $39,021 $ 41,065 $ 42,112 $ 42,727 $ 40,263 $ 37,384 $ 35,897 $ 34,201 $ 33,842 447,899

7. CASH POSITION

[End of month] (4 minus 6) $ 9,272 $10,055 $ 9,298 $ 8,879 $ 5,830 $ 2,151 $ (912) $ (1,710) $ (63) $ 4,357 $ 8,005 $ 8,230

Monthly Cash Flow Projection

Enter Company Name Here

Enter Date Here

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 TOTAL1. CASH ON HAND

[Beginning of month] $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 2. CASH RECEIPTS

(a)Sales (45% of Sales) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (b) Collections from Credit Accounts (55% of Previous Mo Sales) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (c) Loan or Other Cash Injection $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -

3. TOTAL CASH RECEIPTS

[2a + 2b + 2c=3] $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -

4. TOTAL CASH AVAILABLE

[Before cash out] (1 + 3) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 5. CASH PAID OUT

(a) Purchases (Merchandise, Inventory, Raw Materials) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (b) Gross Wages (excludes withdrawals) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (c) Payroll Expenses (Taxes, Benefits, etc.) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (d) Outside Services $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (e) Supplies (Office and operating) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (f) Repairs and Maintenance $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (g) Advertising $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (h) Auto, Delivery, and Travel $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (i) Accounting and Legal $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (j) Rent $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (k) Telephone $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (l) Utilities $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (m) Insurance $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (n) Taxes (Real Estate, etc.) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (o) Interest on LOC $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (p) Other Expenses [Specify each] $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -

-

(q) Miscellaneous [Unspecified] - (r) Subtotal $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - - (s) Loan Principal Payment - (t) Capital Purchases [Specify] - (u) Other Start-up Costs - (v) Reserve and/or Escrow [Specify] - (w) Owner's Withdrawal $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -

6. TOTAL CASH PAID OUT

[Total 5a thru 5w] $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -

7. CASH POSITION

[End of month] (4 minus 6) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Incoming Revenue Less AdjustmentsMinus Cost of GoodsShows Gross ProfitMinus -Outgoing ExpensesVarious Expense CategoriesEquals Net Operating Income

Income Statement

Example Income StatementINCOME STATEMENT (in thousands) 2010 2011 2012

Sales Revenue $1,500 $1,550 $1,700

Less: Cost of Goods Sold $1,000 $1,030 $1,040

Gross Profits $500 $520 $660

Less: Operating Expenses:

Selling Expense $140 $150 $155

General / Admin. Exp. $260 $270 $275

Lease Expense $5 $0 $2

Depreciation Expense $10 $11 $12

Total Operating Expenses $415 $431 $444

Operating Profits $85 $89 $216

Less: Interest Expense $23 $29 $30

Net Profits Before Taxes $62 $60 $186

Less: Taxes $10 $12 $15

Net Profit After Taxes $52 $48 $171

Income Statement TemplateINCOME STATEMENT (in thousands) 2010 2011 2012

Sales Revenue

Less: Cost of Goods Sold

Gross Profits

Less: Operating Expenses:

Selling Expense

General / Admin. Exp.

Lease Expense

Depreciation Expense

Total Operating Expenses

Operating Profits

Less: Interest Expense

Net Profits Before Taxes

Less: Taxes

Net Profit After Taxes

AssetsCurrent+ Long Term

Total Assets

LiabilitiesCurrent+ Long Term

Total Liabilities

Equity The difference between the Total Assets and the Total Liabilities

Total Equity

Total Assets = Total Liabilities + Total Equity

BALANCE SHEET ($000)

Current Assets: 2010 2011 2012

Cash $31 $12 $18

Accounts Receivable $104 $152 $160Inventories $145 $191 $200

Total Current Assets $280 $355 $378

Gross Fixed Assets (at cost):

Land & Buildings $180 $195 $200

Machinery and Equipment $50 $60 $72

Furniture & Fixtures $5 $6 $7

Vehicles $10 $12 $10Other (Inc. Fin. Leases) $0 $0 $0

Total Gross Fixed Assets $245 $273 $289Less: Accumulated Depreciation $52 $63 $65

Net Fixed Assets $193 $210 $224Other Assets $0 $0 $0

Total Assets $473 $565 $602

Current Liabilities: 2010 2011 2012

Accounts Payable $126 $136 $150

Taxes Payable $0 $0 $0Other Current Liabilities $0 $0 $0

Total Current Liabilities $126 $136 $150

Notes Payable $190 $200 $140L / T Debt (Inc. Financial Leases) $40 $38 $13Total Liabilities $356 $374 $303

Total Stockholders' Equity $117 $191 $299

Total Liabs. & Stockhldrs' Equity $473 $565 $602

BALANCE SHEET ($000)

Current Assets: 2010 2011 2012 2013 2014 2015

Cash

Accounts Receivable

Inventories            

Total Current Assets $0 $0 $0 $0 $0 $0

Gross Fixed Assets (at cost):

Land & Buildings

Machinery and Equipment

Furniture & Fixtures

Vehicles

Other (Inc. Fin. Leases)            

Total Gross Fixed Assets $0 $0 $0 $0 $0 $0

Less: Accumulated Depreciation            

Net Fixed Assets $0 $0 $0 $0 $0 $0

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

Total Assets $0 $0 $0 $0 $0 $0

Current Liabilities: 2010 2011 2012 2013 2014 2015

Accounts Payable

Notes Payable

Taxes Payable

Other Current Liabilities            

Total Current Liabilities $0 $0 $0 $0 $0 $0

L / T Debt (Inc. Financial Leases)            

Total Liabilities $0 $0 $0 $0 $0 $0

Common Stock

Paid-In Capital In Excess of Par

Retained Earnings            

Total Stockholders' Equity $0 $0 $0 $0 $0 $0 Total Liabs. & Stockhldrs' Equity $0 $0 $0 $0 $0 $0

Balance Sheet -A snapshot of where you are.

Cash Flow Projections -Where you need to be!

15 minute BREAK

Work with your SCORE Mentor

Various ratios are available to help you compare where you stand with your plan and how.

You can compare your plan with others in similar business ventures.

Your SCORE Mentor can help you understand where comparative data is available.

RATIO ANALYSIS 2010 2011 2012

Current Ratio 1.06 1.16 1.40

Quick Ratio 0.64 0.63 0.77

Inventory Turnover 6.90 5.39 5.20

Average Collection Period 24.96 35.30 33.88

Fixed Asset Turnover 11.72 11.74 12.59

Total Asset Turnover 3.06 2.80 2.93

Debt Ratio 0.78 0.73 0.57

Debt-to-Equity 0.37 0.25 0.05

Times Interest Earned 3.70 3.07 7.20

Gross Profit Margin 33.33% 33.55% 38.82%

Operating Profit Margin 5.67% 5.74% 12.71%

Net Profit Margin 3.47% 3.10% 10.06%

Return on Total Assets (ROA) 10.61% 8.68% 29.43%

Return on Equity (ROE) 47.71% 31.58% 68.40%

Earnings Per Share $0.10 $0.10 $0.34

Price/Earnings Ratio 29.41 52.08 16.08

Examples of Common Ratios

Current Assets divided by Current Liabilities.

The higher the number the better.

To Clarify Definitions

Current Assets---------------------

Current Liabilities

Key areas where your actions will make change

Gross Profit Margin

Return on Assets

Return on Equity

Gross Sales - Cost of Goods Sold----------------------------------------- Gross Sales

What is a realistic gross profit for your business?

Consider Margins for Specific Products or Services you Offer!

A/R Days OutstandingDays of InventoryA/P Days Outstanding

Effect of these on your business andCash flow

Breakeven analysis

General and Administrative expenses

Depreciation

Increase Revenue -- ProfitabilityReduce Costs – Profitability Increase Productivity – Efficiencies Forecasting Models -- Projections(Sales – Cash Flow – Budget)

15 minute Working BreakWith your SCORE mentor

Review 1-3 year business historySet specific items to track bring a 12 month budget. Plan to share your work with the group.

Schedule a tracking mechanism and use it Examples Reports – Dashboards

Meet with Mentor to discuss plans and Come prepared to discuss at next session

Item 1Item 2Item 3Item 4 Item 5

Tracking will be Daily? Weekly? Monthly?

1 Develop Cash Flow Projection for 12 months2 Possibly reduce inventory over 9 months3 Model Employee Productivity4 Determine Actual Profit Margins of (x) products5 Have Fun

Tracking will be Daily? Weekly? Monthly?

Action Plan Example

Do you understand assignment?

Do you understand where needed info is?

Do you have forms to fill out?

Do you have an assigned Mentor?

Have you worked out a schedule with Mentor?

Any Questions?

Do you have necessary forms?

Come prepared with Goals and Data

Basic Review of terminologyReview your work – Specific Goals Develop forward Projections / Tracking Develop an Action Plan for Your Business

Final meeting is 90 days from second session to review progress

To Review Your PlanIdentify Success StoriesTake Action on other items Redefine Goals and forward Projections Develop your Action Plan for the future

Follow Up Session (90 days)