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This sample business plan has been made available to users ofBusiness Plan Pro, businessplanning software published by Palo Alto Software. Names, locations and numbers may have been
changed, and substantial portions of text may have been omitted from the original plan topreserve confidentiality and proprietary information.
You are welcome to use this plan as a starting point to create your own, but you do not havepermission to reproduce, resell, publish, distribute or even copy this plan as it exists here.
Requests for reprints, academic use, and other dissemination of this sample plan should be emailed
to the marketing department of Palo Alto Software at [email protected]. For productinformation visit our Website: www.paloalto.com or call: 1-800-229-7526.
Copyright P a l o A lt o S o ft wa r e , In c . , 1 9 9 5 - 2 0 0 9 A l l r i g h t s r e s er v e d
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Confidentiality Agreement
The undersigned reader acknowledges that the information provided by_________________________ in this business plan is confidential; therefore, reader agrees not todisclose it without the express written permission of _________________________.
It is acknowledged by reader that information to be furnished in this business plan is in all respects
confidential in nature, other than information which is in the public domain through other meansand that any disclosure or use of same by reader, may cause serious harm or damage to
_________________________.
Upon request, this document is to be immediately returned to _________________________.
___________________
Signature
___________________Name (typed or printed)
___________________Date
This is a business plan. It does not imply an offering of securities.
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Table of Contents
1.0 Executive Summary.............................................................................................................................11.1 Objectives ...................................................................................................................................11.2 Keys to Success ........................................................................................................................11.3 Mission.......................................................................................... ..............................................1
Chart: Highlights......................................................................................................................22.0 Company Summary.............................................................................................................................2
2.1 Company Ownership .................................................................................................................22.2 Start-up Summary......................................................................................................................2
Table: Start-up.........................................................................................................................3Chart: Start-up .........................................................................................................................4Table: Start-up Funding..........................................................................................................5
2.3 Company Locations and Facilities ..........................................................................................53.0 Services................................................................................................................................................5
3.1 Service Description...................................................................................................................63.2 Sales Literature..........................................................................................................................63.3 Fulfillment....................................................................................................................................7
3.4 Technology..................................................................................................................................73.5 Future Services ..........................................................................................................................8
4.0 Market Analysis Summary..................................................................................................................84.1 Target Market Segment Strategy.............................................................................................8
4.1.1 Market Needs ................................................................................................................94.1.2 Market Trends................................................................................................................94.1.3 Market Growth ...............................................................................................................9
4.2 Service Business Analysis .....................................................................................................10
4.2.1 Main Competitors .......................................................................................................104.2.2 Business Participants.................................................................................................11
4.3 Market Segmentation..............................................................................................................11Chart: Market Analysis (Pie) 12
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Table of Contents6.3 Personnel Plan.........................................................................................................................20
Table: Personnel...................................................................................................................207.0 Financial Plan....................................................................................................................................21
7.1 Important Assumptions............................................................................................................21Table: General Assumptions ...............................................................................................21
7.2 Key Financial Indicators..........................................................................................................21Chart: Benchmarks...............................................................................................................22
7.3 Break-even Analysis................................................................................................................23Chart: Break-even Analysis .................................................................................................23
Table: Break-even Analysis.................................................................................................237.4 Projected Profit and Loss .......................................................................................................24
Chart: Profit Monthly .............................................................................................................24Chart: Profit Yearly................................................................................................................24Chart: Gross Margin Monthly...............................................................................................25Chart: Gross Margin Yearly..................................................................................................25Table: Profit and Loss ..........................................................................................................26
7.5 Projected Cash Flow...............................................................................................................27Chart: Cash ...........................................................................................................................27Table: Cash Flow..................................................................................................................28
7.6 Projected Balance Sheet........................................................................................................29Table: Balance Sheet...........................................................................................................29
7.7 Business Ratios.......................................................................................................................30Table: Ratios .........................................................................................................................31
Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................2Table: General Assumptions ....................................................................................................................3Table: Profit and Loss ...............................................................................................................................4Table: Cash Flow.......................................................................................................................................6Table: Balance Sheet 7
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Ibrio, Inc.
1.0 Executive Summary
Ibrio Incorporated is a small start-up firm located in the business district of Palmyra,
Pennsylvania. We offer Internet and Web-related services to small businesses in the CentralPennsylvania area. The services we offer include website development and design, hosting,maintenance, marketing, and analysis.
Given our experience and expertise in both commercial Web development and business-to-
business sales, we believe we can offer a unique and superior service to small business owners,in comparison to what is currently available.
The demand and growth rate for Web development and marketing services in the smallbusiness market is at an all time high and shows no sign of slowing anytime soon. Even more
astonishing is the fact that very few Web development companies have taken advantage ofthe opportunity, as there are no dominating participants in this huge market.
We believe the reason for this virtually untapped market is due to expensive project costs, the
highest profit margins in Web development today are in servicing large- and medium-sizedcorporations. We have developed a system that dramatically reduces steep project costs and
henceforth will allow us to offer the same high-end Web development services as largercompanies receive at a much lower cost to the client.
This business plan will highlight many aspects of our system and our business. It will detailmarket growth and demand, and it will outline our projected cash flow and profit margins over
the next three years. All numbers regarding our projected company growth are based on previousinformation gathered by activity in the company over the last few months of operation.
1.1 Objectives
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Ibrio, Inc.small businesses. We have developed a system for offering many different types of Web
services (site development, hosting, marketing, and maintenance) that are exclusively tailored tofit the needs and resources of small companies.
2.0 Company Summary
Ibrio Incorporated is a start-up company that will provide high-end, affordable Internet relatedi t ll b i th t l ki t d th i i ti k ti ff t t h
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Ibrio, Inc.hours toward the start-up of Ibrio Inc.
The cash requirement of $17,000 are funds that we need to provide the capital to run our
business for the first few months. This capital will fund two employees payroll and equipment/supplies to get them started. It will cover business expenses for a few months until our cash
flow takes over.
The four-year $20,000 loan has been secured from the XYZ bank to supply the needed capital
explained above.
Table: Start-up
Start-up
Requirements
Start-up Expenses
Business Cards $60
Phone Line Instal l (Two Lines) $150
Computer Monitor $200
InfoUSA Database $400
Office Equipment $580
Dedicated Server Setup Fee $150
Membership Fees $600
DSL Setup and Instal l $350
Phones $160
Total Start-up Expenses $2,650
Start-up AssetsCash Required $17,000
Other Current Assets $7,650
Long-term Assets $0
Total Assets $24,650
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Ibrio, Inc.
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Ibrio, Inc.
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $2,650
Start-up Assets to Fund $24,650
Total Funding Required $27,300
Assets
Non-cash Assets from Start-up $7,650
Cash Requirements from Start-up $17,000
Addit ional Cash Raised $0
Cash Balance on Starting Date $17,000
Total Assets $24,650
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabili ties $20,000
Accounts Payab le (Outstanding Bi ll s) $0
Other Current Liabili ties (interest-free) $0
Total Liabili ties $20,000
Capital
Planned Investment
David W. Hickethier $3,650
Richard B. Andrews $3,650
Addit ional Investment Requi rement $0
Total Planned Investment $7,300
Loss at Start-up (Start-up Expenses) ($2,650)
Total Capital $4,650
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Ibrio, Inc. Marketing and analysis.
Hosting and maintenance.
We currently offer the following secondary services:
E-commerce development. Website renovations and upgrades. Application development (i.e. chatrooms, message boards, online polling, live-feed audio/
video, etc.). Website maintenance training.
Internet/website educat ion seminars. Database construction.
We have plans to offer the following services within the next year:
Internet access service for small businesses. Local Area Network (LAN) installation. Intranet setup and installation. Result-based website marketing.
3.1 Service Description
Website Design and Development: The service that we offer to small businesses is modeledafter the service that larger Web development firms offer Fortune 1000 companies in the sensethat it is completely customized and unique to each individual client.
Website Marketing and Analysis: After we build the website for our client, or a new clientintroduces us to their pre-existing site, we offer this service. As experts of the Web, we cananalyze and test a website based on an established set of standards that account for the
website's aesthetic value, scalability, functionality, ease-of-use, and main customer base.After an analysis has been made we then explore and present to the client a detailed list of
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Ibrio, Inc.about the company, plus a variety of helpful resources for small business owners which we will
be constantly updating.
In the next six months, we plan to produce and distribute bulk mail and fax flyers promotingour Web development and hosting services to small businesses in Central PA to solicit new
business.
We have plans to offer a more compact version of our main sales folder in a brochure format.
This brochure will be available both as a mailer to interested parties and as a sales solicitat ionin area businesses.
3.3 Fulfillment
For the website design, development, marketing, analysis, and maintenance we will employindustry professionals to handle our clients' needs. Working for the company presently is Brandon
Andrews, a professional website development engineer and strategist with four years ofexperience in the commercial Web development industry. To keep employee costs low, we
have designed a "team" development system that will consist of two full-time sales people andthree full-time Web developers. Of the Web developers, one position will be filled by a highly-
qualified senior Web professional and two lesser-qualified, lower paid developers. All three willwork full-time on separate projects provided to them by the sales people. However, the seniordeveloper will have the duty of maintaining the same high quality level of work in the junior
developers' projects, that our clients have learned to expect from us now.
For the website hosting services we offer, Ibrio Inc. has formed several alliances with industryleaders to provide top-rate, reliable host ing solutions. Forming the alliances has allowed us
much flexibility in important hosting features, customizability, and it has drove costs downdramatically. All these benefits are c rucial to preserving the integrity of our company as being a'fully-rounded Internet solutions provider' for small businesses.
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Ibrio, Inc.
3.5 Future Services
Local Area Network Installation: These days, a quickly increasing number of small
businesses are using computers as a necessary tool in the everyday operations of thecompany. We would like to be able to expand our current services to meet this new demand. Wewill handle every aspect of sett ing up a small business with an internal network of computers
from purchasing, installing, and configuring the machines to software integration and educatingthe employees on proper usage and operating funct ions.
Intranet Setup Installation: In our plan, after developing an Internet website for outside
marketing purposes, we would like to offer the service of implementing the website into thenetwork for use in all the business day-to-day operations. This would include extensiveproduct /service cataloging, vital employee and management information, sharing of accounting
and inventory details, etc., all intended for strictly company uses.
Internet Access for Small Business: This feature would act as another residual, packageableservice. We would target small businesses exclusively allowing us to provide more flexibility and
affordability to our clients through discounted high volume rates, value added servicepackages, and much more aggressive technical support services.
Result-based Marketing: This is a service that no small business can turn down. We have plansto offer aggressive, intensified marketing services with the fees based solely on results. To
achieve this, we are in the process of forming multiple partnerships and alliances with industryspecific Internet websites and various other software and service-oriented companies that
provide specific marketing services and tools based on results achieved. We feel as thoughoffering this rare service will dramatically increase our portfolio of clients.
4.0 Market Analysis Summary
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Ibrio, Inc.market with such a high demand. In addition to the very promising supply and demand ratio, it
is also technically easier and less expensive to market to and attract small website projects thanlarger projects.
4.1.1 Market Needs
The need for small business Internet services has existed for several years. Small businesses andstart-up businesses alike are migrating onto the Web at an astonishing rate and making their
online presence a higher priority than in earlier years. We have noticed an enormous holehowever in the small business services that are currently available.
Without a doubt, there is a need for custom, high-end, dynamic services designed exclusively forsmall businesses. At this point, the majority of our competitors are offering services tailored
around big business, to small business owners, or they are offering the exact opposite, one-dimensional, "cookie cutter" type services.
While every small business has now recognized the need for having a presence on the
Internet, many do not know where to start, how much it will cost, or even how it will benefittheir company. It has been our experience by talking to small business owners that the
decision to take advantage of the Web is not a matter of 'if' but a matter of 'when.'
4.1.2 Market Trends
An important market trend right now is the one toward aggressive online and website
marketing. Although many small businesses are still waiting to gain an Internet presence,those who already have are beginning to look for more options along the lines of improvingtheir existing efforts. We believe that in the upcoming years, small companies especially, will
start to look for more ways to increase the traffic to their websites.
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Ibrio, Inc.U.S. businesses spend more of their total IT expenditures on Web-related services than
on IT hardware (IDC Research). Currently, the total number of online users in the U.S. is 107 million, by 2004 that
number will grow to 210 million (IDC Research). E-commerce revenue will reach nearly $6.8 trillion by the year 2004, up from $48.6 billion
in 2000 (Forrester Research Group).
4.2 Service Business Analysis
Web services and development companies vary greatly in the type of service they offer and
the type of client they attract. Ibrio Inc. will be relatively unique in the fact that we aremarketing exclusively to small businesses.
This industry consists of many small Web development firms usually less than 10 years old thatgenerally start out offering services to smaller companies but with long-term goals of catering to
large, corporate Web accounts.
4.2.1 Main Competitors
1. Teeple Graphics: Located approximately 10 miles from our Palmyra offices, they offer
Web development and graphic services.Strengths: Teeple has a very strong clientele, by talking to several of their Web
development clients, we have come to the conclusion that Teeple offers a verydependable and high-quality service.
Weaknesses: Teeple Graphics is owned and operated by George Teeple, he is also theonly employee working for the company out of his home, and does not run his business as
a full-time operation. In addition, Teeple Graphics requires all clients who operate an e-
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Ibrio, Inc.
Weaknesses: For a company that claims to be experts in marketing for small business,they do virtually no advertising of their own and it appears that they lack in the ability to
bring on clients that are outside the city of Lebanon. Even though Web development isa service that Say1 offers, it is only one in a long list of varied services and we believe
this will dramatically hinder their focus toward leading the industry in our market.
4. WebWorks: Located approximately 25 miles from our Palmyra, PA offices. WebWorks
offers Web development and marketing services to businesses in the Greater Harrisburg,PA area.
Strengths: WebWorks has been in the Web services business for almost six years and hasa very experienced team of developers and programmers. They also offer outstanding
marketing services.
Weaknesses: Although WebWorks is a direct competitor, they have begun to focus a
large portion of their services toward attracting medium- to large-sized companies.Their pricing is dramatically higher than any competing firms in the Central PA area and
they now have put into effect a policy of only excepting jobs of a certain size.
4.2.2 Business Participants
The Web services and development industry consists mainly of three different types of firms.
The first type are the very large, high revenue companies who service larger Fortune 1000corporations and well-funded Internet based start-ups exclusively. In this category are only a
few worldwide participants that dominate.
The second type of firm offers pre-fabricated, all-in-one, proprietary type Web services to any
size company at a very low cost or without any cost. The participants in this category consist
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Ibrio, Inc.counties and therefore we will market in proportion to its size. The number of businesses is
estimated at 2,547. It will make up 9% of our target area.
York County: Located Southwest, approx. 40 miles from our location. York county is the lastof the four counties we will market in. It will be late next year before we begin marketing in
this county. The number of businesses is estimated at 8,238. It will make up 28% of our targetarea.
Our business allows us to offer services to small companies, no matter their geographicallocation, and we plan to do so, eventually expanding outside our immediate area. The above
counties are where we will market most heavily and expect to receive the majority of ourwork. We do expect to receive a small portion from outside this target area due to ad placement
in a national business directory.
The above demographic information can be found through the Geospatial & Statistical Data
Center.
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Ibrio, Inc.Ibrio Inc. will initially focus all marketing and sales efforts toward the Central Pennsylvania
area, this includes Harrisburg, Lebanon, Lancaster, and York counties.
We will market ourselves as an Internet and Web services organization devoted to offeringhigh-end services to small businesses exclusively. Our target customer will be the owners of
any small or home-based company who are looking to implement their business into the Web.
5.1 Competitive Edge
We have a valuable competitive edge over our local competitors based on the fact that we have
streamlined all our services into the small business market. Through setting up severalstrategic partnerships with various Internet and Web-related companies, we are able to offer ourclients an affordable and efficient proprietary Web package that will meet all their related needs.
Ibrio Inc. also has as its lead development manager, Brandon Andrews, a main principal in the
company. Brandon Andrews has four years of commercial Web development experience and hasbeen recognized as a leader and innovator in the graphic design and layout areas of website
development.
5.2 Marketing Strategy
Successful marketing of Web services to small business owners depends on how you approach
and follow-up every potential client. It is very important to deliver our marketing pitch in a clear,no non-sense method. Details of the Internet and Web are still relatively unknown by many small
business owners, giving it the tendency to confuse and intimidate easily.
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Ibrio, Inc.For most small business owners, cost, both residual and one-time are huge influences on the
decisions they make regarding everyday operations of their company. Even though we offer100% customized services and our pricing is based on an hourly fee, to make it easier and less
confusing for the clients, Ibrio has established a packaged pricing system.
Budget Domain Website Package ($585.00): For simple, information based websites.Popular with companies who just need to gain an Internet presence.
Mid-Level Website Package ($945.00): Information based websites with a large amountof content. Popular with companies that have a large services/products list and/or want
to implement more of their business into the Web.
Catalog Website Package ($1,440.00): Usually reserved for product-oriented websitesthat are e-commerce enabled. Popular with companies that have a desire to marketheavily on the Internet or sell their products/services directly from the Web.
Website Hosting (from $15.00 to $45.00 per month): Depending on the type and size
of the website, the price for hosting can vary greatly. The average cost of hosting formost clients is $25 per month.
Website Maintenance ($45.00 per hour): We charge a set fee of $45.00 per hour billedin 10 minute increments. If a client feels as though they will need their website updated
or maintained on a regular basis, packages are available at a discount rate.
5.2.3 Promotion Strategy
Our target client is part of a very specific demographic, for this reason, we market andpromote our services in a direct and specifically targeted manner.
Print Ads:
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Ibrio, Inc.advertising.
Educational Seminars:
Ibrio Inc. has been invited to speak to business owners and managers at several
Internet and Web-related educational seminars on a variety of topic. In the nearfuture, we will promote our services through these seminars.
Local Area Commerce Groups:
To promote our services and our name as a participant in the Web services industry,we will be joining many of the local area Chamber of Commerce groups and variousother strategic partnership clubs.
5.3 Sales Strategy
Our clients are small business owners, most are very protective of their company, and almostall of them are salesmen themselves. We sell value, service, and quality when we talk to
business owners. We need to convince them that they can look past all of the hypesurrounding the Internet and still see why having a website is worth the money spent.
We currently utilize a database system specifically targeted toward our desired demographic to
establish our first contact with every potential client. It has proven a successful method forsoliciting new business directly due to the method in which we approach the first call. Thesalesman always requests to speak to the business owner, asking for him by his first name
only, and when asked who is calling, responds by providing simply his first name as well. Once on
the phone with the business owner, there is absolutely no script and the salesman clearlyidentifies himself and asks the business owner if he has ever considered having a websitedeveloped for his company, no matter what the response, a brief conversation will always
pursue, sometimes leading to an appointment, and sometimes to a follow-up call.
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Ibrio, Inc.
5.3.1 Sales Forecast
The following table and chart summarize our forecast sales. We expect the first month of
operations (October) to be spent training the new developer and new salesman. November willbe our first month of operation and we expect to grow steadily in the following months.
Website development sales will be the largest portion of our revenue with result-based marketingfollowing. Maintenance and hosting revenue will be built up slowly but are the residual base we
will stand on in the future.
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Ibrio, Inc.
5.3.2 Sales Programs
The following is a summary of the our sales programs from the Milestones table:
October 9-16: Hiring first salesman. We will be training this employee this month to maketelephone calls to business owners in the area and set appointments to meet with them
and show them what we have to offer. Starting in mid-November he/she will beginmeeting with c lients alone
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Ibrio, Inc.The accompanying table lists important program milestones, with dates and managers in
charge, and budgets for each. The milestone schedule indicates our emphasis on planning forimplementation.
What the table doesn't show is the commitment behind it. Our business plan includes complete
provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings everymonth to discuss the variance and course corrections.
Table: Milestones
Milestones
Milestone Start Date End Date Budget Manager Department
Incorporation 8/14/2000 8/28/2000 $500 Dave Admin
Acquire Start-up Fi nancing 8/14 /2000 10/1/2000 $0 Dave Admin
Accounti ng/Bal ance Sheet
Setup
8/31/2000 8/31/2000 $300 Dave Admin
Acquire Chamber M emberships 10/2 /2000 10/9/2000 $600 Dave Marketi ng
Staff Sales Position #1 10/9/2000 10/16/2000 $2,240 Dave HR
Staff Development Position #1 10/16/2000 10/23/2000 $3,200 Brandon HRUpgrade Current Sales Literature 10/23/2000 11/6/2000 $300 Dave Sales
Acquire Dedicated Web Host
Service
11/1/2000 11/8/2000 $770 Brandon Development
Staff Development Position #2 1/15/2001 2/1/2001 $3,200 Brandon HR
Staff Sales Position #2 2/12/2001 2/26/2001 $2,240 Dave HR
Acquire Large Scal e Ou tside
Marketing
3/5/2001 4/5/2001 $2,000 Dave Marketing
Staff Developer Postion #3 3/19/2001 4/2/2001 $3,200 Brandon HR
Other 1/1/2001 1/1/2001 $0 ABC Department
Totals $18,550
6.0 Management Summary
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Ibrio, Inc.payable, marketing, and talent recruitment.
David Hickethier will serve as chief operations officer and sales manager. He will supervise all
salesmen and all sales promotions and projects. David will also be holding the office of thetreasurer therefore will be responsible for all financial related matters.
Brandon Andrews will serve as chief technology off icer and lead Web developer. He will bedirectly supervising all Web development (employee and sub-contracting projects), and will
also be responsible for any necessary training in the same department.
6.2 Management Team Gaps
The current management team will require support in both the business development and
administrative departments. Both managers have had prior experience in these fields, but feelas though their experience is limited given the fact that prior working environments rarely
required this type of support.
We will turn to Parks & Company, our finance and accounting firm, to provide expert adviseand counseling in both the business development and administrative support departments. This
strategy will allow the partners of Ibrio Inc. to lend the majority of their time to theirrespective areas of the company.
We will turn to the law offices of Keefer Wood Allen & Rahal, LLP for all advice concerning thelegal issues of running Ibrio, Inc.
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Ibrio, Inc.
6.3 Personnel Plan
We visualize implementing a "team" development system that will consist of two full-time sales
people and three full-time Web developers. Of the Web developers, one position will be filled by ahighly-qualified senior Web professional and two lesser-qualified, lower paid developers. Allthree will work full-t ime on separate projects provided to them by the sales people. However,
the senior developer will have the duty of maintaining the same high quality level of work in thejunior developers' projects, that our clients have learned to expect from us now. By May, 2001
we plan to have one of these teams fully functional.
The following table shows how we plan on making the above a reality.
Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3
Production PersonnelBrandon/Web Developer $3,400 $25,000 $60,000
Keith/Hired in Oct $16,228 $23,000 $27,000
Developer #2/Hired in Feb $10,944 $21,000 $25,000
Developer #3/Hired in Apr $7,920 $21,000 $25,000
Other $0 $0 $0
Subtotal $38,492 $90,000 $137,000
Sales and Marketing Personnel
Dave/Marketing $3,400 $25,000 $60,000
Sales Position #1/Hired in Oct $16,504 $23,000 $25,000Sales Position #2/Hired in Feb $10,096 $21,000 $23,000
Other $0 $0 $0
Subtotal $30,000 $69,000 $108,000
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Ibrio, Inc.
7.0 Financial Plan
Ibrio's financials summarize the following areas:
Important Assumptions. Key Financial Indicators. Break-even Analysis. Projected Profit and Loss.
Projected Cash Flow. Projected Balance Sheet. Business Ratios.
7.1 Important Assumptions
Our financial assumptions are based on a steady economy and standard numbers for a business
in our industry.
Table: General 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 13.00% 13.00% 13.00%
Tax Rate 25.42% 25.00% 25.42%
Other 0 0 0
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Ibrio, Inc.
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Ibrio, Inc.
7.3 Break-even Analysis
The following table and chart summarize our break-even analysis. With two developers and two
salesmen we plan on developing eight sites in November and once the two new hires are fullytrained doubling the number to 16 sites a month. (We don't plan on that happening until March2001).
The average variable cost is an aggregate measure for all the types of services which will be
offered.
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Ibrio, Inc.
7.4 Projected Profit and Loss
Our projected profit and loss is shown on the following table. Some highlights are the Gross
Margin at 67% for our first year and steadily increasing. Our Net Profit/Sales starting at 26% andincreasing by approximately 10% the following two years to reach 45% by our third year.
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Ibrio, Inc.
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Ibrio, Inc.
Table: Profit and Loss
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $164,520 $514,900 $1,194,500
Direct Cost of Sales $15,550 $50,000 $127,600
Production Payroll $38,492 $90,000 $137,000
Other $0 $0 $0
Total Cost of Sales $54,042 $140,000 $264,600
Gross Margin $110,478 $374,900 $929,900Gross Margin % 67.15% 72.81% 77.85%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $30,000 $69,000 $108,000
Advertising/Promotion $2,790 $3,500 $10,000
Travel $1,020 $3,000 $7,000
Miscellaneous $0 $1,000 $2,500
T otal Sales and Marketing Expenses $33,810 $76,500 $127,500
Sales and Marketing % 20.55% 14.86% 10.67%
General and Administrative Expenses
General and Administrative Payroll $0 $0 $0
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $3,180 $5,000 $12,000
Rent $4,500 $12,000 $24,000
Depreciation $0 $2,000 $4,000
Leased Equipment $0 $0 $0
Util ities $805 $2,000 $5,000Insurance $0 $2,500 $5,000
Payroll Taxes $8,219 $19,080 $29,400
Other General and Admini strative $0 $0 $0
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7.5 Projected Cash Flow
Cash flow projections for the first half of the year are slightly declining and in May they begin
to raise sufficiently. We may need to borrow against our accounts receivables but are projectingthat the initial capital raised should cover us until our cash becomes fluid.
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Table: Cash Flow
Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $54,292 $169,917 $394,185
Cash from Receivables $70,969 $261,372 $638,141
Subtotal Cash from Operations $125,260 $431,289 $1,032,326
Addit ional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabil ities (interest-free) $0 $0 $0
New Long-term Liabil ities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $10,700 $0 $0
Subtotal Cash Received $135,960 $431,289 $1,032,326
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $68,492 $159,000 $245,000
Bill Payments $40,764 $156,598 $379,881
Subtotal Spent on Operations $109,256 $315,598 $624,881
Addit ional Cash Spen t
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0Other Liabil ities Principal Repayment $0 $0 $0
Long-term Liabili ties Principal Repayment $0 $4,589 $5,222
Purchase Other Current Assets $0 $0 $0
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7.6 Projected Balance Sheet
The balance sheet in the following table shows managed but sufficient growth of net worth,
and a suff iciently healthy financial position. The monthly est imates are included in the appendix.
Table: Balance Sheet
Pro Forma Bal ance SheetYear 1 Year 2 Year 3
Assets
Current Assets
Cash $43,704 $134,806 $517,029
Accounts Receivabl e $39 ,260 $122,871 $285,045
Other Current Assets $7,650 $7,650 $7,650
Total Current Assets $90,614 $265,327 $809,724
Long-term AssetsLong-term Assets $0 $20,000 $40,000
Accumulated Deprecia tion $3,180 $8,180 $20,180
Total Long-term Assets ($3,180) $11,820 $19,820
Total Assets $87,434 $277,147 $829,544
Liabil ities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payab le $9,050 $13 ,213 $32,836
Current Borrowing $0 $0 $0Other Current Liabili ties $0 $0 $0
Subtotal Current Liabil ities $9,050 $13,213 $32,836
L t Li bi li ti $20 000 $15 411 $10 189
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7.7 Business Ratios
The following table shows the projected businesses ratios. We expect to maintain healthy
ratios for profitability, risk, and return. The Industry Profile ratios, shown for comparison, arebased on Standard Industrial Classification (SIC) code 7375, Information Retrieval Services.
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Table: RatiosRatio Anal ysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 212.97% 131.99% 9.70%
Percent of Total Assets
Accounts Receivabl e 44.90% 44.33% 34.3 6% 25.00%
Other Current Assets 8.75% 2.76% 0.92% 46.30%
Total Current Assets 103.64% 95.74% 97.61% 76.60%
Long-term Assets -3.64% 4.26% 2.39% 23.40%Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabil i ties 10.35% 4.77% 3.96% 49.40%
Long-term Liabili ties 22.87% 5.56% 1.23% 21.20%
Total Liabili ties 33.23% 10.33% 5.19% 70.60%
Net Worth 66.77% 89.67% 94.81% 29.40%
Percent of Sal es
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 67.15% 72.81% 77.85% 0.00%Selling, General & Administrative Expenses 41.00% 35.88% 32.56% 78.10%
Advertising Expenses 1.70% 0.68% 0.84% 0.90%
Profit Before Interest and Taxes 36.45% 49.68% 60.53% 1.90%
Main Ratios
Current 10.01 20.08 24.66 1.57
Quick 10.01 20.08 24.66 1.19
Total Debt to Total Assets 33.23% 10.33% 5.19% 70.60%
Pre-tax Return on Net Worth 98.25% 102.01% 91.71% 4.10%
Pre-tax Return on Assets 65.61% 91.47% 86.96% 13.80%
Addit ional Ratios Year 1 Year 2 Year 3
Net Profit Margin 26.16% 36.93% 45.04% n.a
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Appendix
Page 1
Table: Sales Forecast
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Website Development 0% $0 $0 $4,800 $5,400 $7,200 $8,400 $8,400 $11,200 $14,000 $19,200 $19,200 $19,200
Result-based Marketing 0% $0 $0 $0 $0 $0 $0 $1,750 $2,100 $2,800 $3,500 $4,200 $4,900
Maintenance 0% $0 $0 $110 $280 $510 $750 $1,010 $1,350 $1,790 $2,290 $2,810 $3,330
Hosting 0% $0 $0 $200 $300 $540 $780 $1,020 $1,340 $1,740 $2,200 $2,700 $3,220
Total Sales $0 $0 $5,110 $5,980 $8,250 $9,930 $12,180 $15,990 $20,330 $27,190 $28,910 $30,650
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
Website Development $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Result-based Marketing $0 $0 $0 $0 $0 $0 $900 $1,080 $1,440 $1,800 $2,160 $2,520
Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Hosting $0 $0 $350 $350 $350 $350 $350 $1,100 $700 $700 $700 $700
Subtotal Direct Cost of Sales $0 $0 $350 $350 $350 $350 $1,250 $2,180 $2,140 $2,500 $2,860 $3,220
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Appendix
Page 2
Table: Personnel
Personnel Plan
Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12
Production Personnel
Brandon/Web Developer $0 $200 $200 $200 $300 $300 $300 $300 $400 $400 $400 $400
Keith/Hired in Oct $0 $0 $1,836 $1,152 $1,584 $1,440 $1,584 $1,512 $1,840 $1,680 $1,760 $1,840
Developer #2/Hired in Feb $0 $0 $0 $0 $0 $1,440 $1,584 $1,512 $1,656 $1,512 $1,584 $1,656
Developer #3/Hired in Apr $0 $0 $0 $0 $0 $0 $0 $1,512 $1,656 $1,512 $1,584 $1,656
Other $0 $ 0 $0 $ 0 $0 $ 0 $0 $ 0 $0 $0 $0 $0
Subtotal $0 $200 $2,036 $1,352 $1,884 $3,180 $3,468 $4,836 $5,552 $5,104 $5,328 $5,552
Sales and Marketing Personnel
Dave/Marketing $0 $200 $200 $200 $300 $300 $300 $300 $400 $400 $400 $400
Sales Position #1/Hired in Oct $0 $0 $1,904 $1,080 $1,440 $1,680 $1,680 $1,680 $1,760 $1,760 $1,760 $1,760
Sales Position #2/Hired in Feb $0 $0 $0 $0 $0 $1,120 $1,232 $1,176 $1,288 $1,760 $1,760 $1,760
Other $0 $ 0 $0 $ 0 $0 $ 0 $0 $ 0 $0 $0 $0 $0
Subtotal $0 $200 $2,104 $1,280 $1,740 $3,100 $3,212 $3,156 $3,448 $3,920 $3,920 $3,920
General and Administrative Personnel
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Personnel
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
N/A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 0 2 4 4 4 6 6 7 7 7 7 7
Total Payroll $0 $400 $4,140 $2,632 $3,624 $6,280 $6,680 $7,992 $9,000 $9,024 $9,248 $9,472
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Appendix
Page 3
Table: General Assumptions
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 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%
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
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Appendix
Page 4
Table: Profit and Loss
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 $0 $0 $5,110 $5,980 $8,250 $9,930 $ 12,180 $15,990 $20,330 $27,190 $28,910 $30,650
Direct Cost of Sales $0 $0 $350 $350 $350 $350 $1,250 $2,180 $2,140 $2,500 $2,860 $3,220
Production Payroll $0 $200 $2,036 $1,352 $1,884 $3,180 $3,468 $4,836 $5,552 $5,104 $5,328 $5,552
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $200 $2,386 $1,702 $2,234 $3,530 $4,718 $7,016 $7,692 $7,604 $8,188 $8,772
Gross Margin $0 ($200) $2,724 $4,278 $6,016 $6,400 $7,462 $8,974 $12,638 $19,586 $20,722 $21,878
Gross Margin % 0.00% 0.00% 53.31% 71.54% 72.92% 64.45% 61.26% 56.12% 62.16% 72.03% 71.68% 71.38%
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll $0 $200 $2,104 $1,280 $1,740 $3,100 $3,212 $3,156 $3,448 $3,920 $3,920 $3,920
Advertising/Promotion $0 $0 $230 $230 $230 $300 $300 $300 $300 $300 $300 $300
Travel $0 $0 $60 $60 $60 $120 $120 $120 $120 $120 $120 $120
Miscellaneous $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales and Marketing
Expenses
$0 $200 $2,394 $1,570 $2,030 $3,520 $3,632 $3,576 $3,868 $4,340 $4,340 $4,340
Sales and Marketing % 0.00% 0.00% 46.85% 26.25% 24.61% 35.45% 29.82% 22.36% 19.03% 15.96% 15.01% 14.16%
General and Administrative Expenses
General and Administrative Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales and Marketing and Other
Expenses
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation $0 $0 $300 $300 $300 $300 $330 $330 $330 $330 $330 $330
Rent $0 $0 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $0 $0 $55 $70 $70 $80 $80 $90 $90 $90 $90 $90
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Taxes 12% $0 $48 $497 $316 $435 $754 $802 $959 $1,080 $1,083 $1,110 $1,137
Other General and Administrative
Expenses
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total General and Administrative
Expenses
$0 $48 $1,302 $1,136 $1,255 $1,584 $1,662 $1,829 $1,950 $1,953 $1,980 $2,007
General and Administrative % 0.00% 0.00% 25.48% 18.99% 15.21% 15.95% 13.64% 11.44% 9.59% 7.18% 6.85% 6.55%
Other Expenses:
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Appendix
Page 5
Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Operating Expenses $0 $248 $3,696 $2,706 $3,285 $5,104 $5,294 $5,405 $5,818 $6,293 $6,320 $6,347
Profit Before Interest and Taxes $0 ($448) ($972) $1,572 $2,731 $1,296 $2,168 $3,569 $6,820 $13,293 $14,402 $15,531
EBITDA $0 ($448) ($672) $1,872 $3,031 $1,596 $2,498 $3,899 $7,150 $ 13,623 $ 14,732 $ 15,861
Interest Expense $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217 $217
Taxes Incurred ($65) ($166) ($297) $339 $629 $270 $488 $838 $1,651 $3,269 $3,546 $3,829
Net Profit ($152) ($499) ($891) $1,017 $1,886 $810 $1,464 $2,514 $4,953 $9,807 $10,639 $11,486
Net Profit/Sales 0.00% 0.00% -17.44% 17.00% 22.86% 8.16% 12.02% 15.72% 24.36% 36.07% 36.80% 37.47%
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Appendix
Page 6
Table: Cash Flow
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 $0 $0 $1,686 $1,973 $2,723 $3,277 $4,019 $5,277 $6,709 $8,973 $9,540 $10,115
Cash from Receivables $0 $0 $0 $114 $3,443 $4,057 $5,565 $6,703 $8,246 $10,810 $13,774 $18,256
Subtotal Cash from Operations $0 $0 $1,686 $2,088 $6,166 $7,334 $9,584 $11,980 $14,955 $19,783 $23,315 $28,370
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 $10,700 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $1,686 $2,088 $6,166 $7,334 $20,284 $11,980 $14,955 $19,783 $23,315 $28,370
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditures from Operations
Cash Spending $0 $400 $4,140 $2,632 $3,624 $6,280 $6,680 $7,992 $9,000 $9,024 $9,248 $9,472
Bill Payments $5 $150 $147 $1,577 $2,045 $2,443 $2,579 $3,754 $5,184 $6,114 $8,051 $8,715
Subtotal Spent on Operations $5 $550 $4,287 $4,209 $5,669 $8,723 $9,259 $11,746 $14,184 $15,138 $17,299 $18,187
Additional Cash Spent
Sales Tax , VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $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 $5 $550 $4,287 $4,209 $5,669 $8,723 $9,259 $11,746 $14,184 $15,138 $17,299 $18,187
Net Cash Flow ($5) ($550) ( $2,601) ( $2,121) $497 ($1,389) $11,025 $234 $771 $4,645 $6,016 $10,183
Cash Balance $16,995 $16,445 $13,844 $11,723 $12,219 $10,830 $21,855 $22,089 $22,860 $27,505 $33,521 $43,704
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Appendix
Page 7
Table: Balance Sheet
Pro Forma Balance Sheet
Mon th 1 Mo nth 2 Mo nth 3 Month 4 Month 5 Mon th 6 Mon th 7 Mon th 8 Mon th 9 Month 10 Month 11 Month 12
Assets Starting Balances
Curren t Assets
Cash $17,000 $16,995 $16,445 $13,844 $11,723 $12,219 $10,830 $21,855 $22,089 $22,860 $27,505 $33,521 $43,704
Accounts Receivable $0 $0 $0 $3,424 $7,316 $9,401 $11,996 $14,592 $18,602 $23,977 $31,384 $36,980 $39,260
Other Current Assets $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650
Total Current Assets $24,650 $24,645 $24,095 $24,918 $26,689 $29,270 $30,476 $44,097 $48,341 $54,487 $66,540 $78,151 $90,614
Long -term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depr eciation $0 $0 $0 $300 $600 $900 $1,200 $1,530 $1,860 $2,190 $2,520 $2,850 $3,180
Total Long-term Assets $0 $0 $0 ($300) ($600) ($900) ($1,200) ($1,530) ($1,860) ($2,190) ($2,520) ($2,850) ($3,180)
Total Assets $24,650 $24,645 $24,095 $24,618 $26,089 $28,370 $29,276 $42,567 $46,481 $52,297 $64,020 $75,301 $87,434
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $147 $95 $1,509 $1,964 $2,359 $2,456 $3,583 $4,982 $5,846 $7,761 $8,403 $9,050
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $147 $95 $1,509 $1,964 $2,359 $2,456 $3,583 $4,982 $5,846 $7,761 $8,403 $9,050
Long-term Liabilities $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Total Liabilities $20,000 $20,147 $20,095 $21,509 $21,964 $22,359 $22,456 $23,583 $24,982 $25,846 $27,761 $28,403 $29,050
Paid-in Capital $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $7,300 $18,000 $18,000 $18,000 $18,000 $18,000 $18,000
Retained Earnings ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650) ($2,650)
Earnings $0 ($152) ($650) ($1,542) ($525) $1,361 $2,171 $3,635 $6,149 $ 11,101 $ 20,909 $ 31,548 $ 43,034
Total Capital $4,650 $4,498 $4,000 $3,108 $4,125 $6,011 $6,821 $18,985 $21,499 $26,451 $36,259 $46,898 $58,384
Total Liabilities and Capital $24,650 $24,645 $24,095 $24,618 $26,089 $28,370 $29,276 $42,567 $46,481 $52,297 $64,020 $75,301 $87,434
Net Worth $4,650 $4,498 $4,000 $3,108 $4,125 $6,011 $6,821 $18,985 $21,499 $26,451 $36,259 $46,898 $58,384