Consulting Services Business Plan

Acme Consulting - Sample Plan

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Copyright © Palo Alto Software, Inc., 1995-2007.

All rights reserved.

Confidentiality Agreement The undersigned reader acknowledges that the information provided by _________________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _________________________. Upon request, this document is to be immediately returned to _________________________. ___________________ Signature ___________________Name (typed or printed) ___________________Date This is a business plan. It does not imply an offering of securities.

Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 2 3

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Company Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 3 5

3.0

Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Service Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Competitive Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Sales Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6 Future Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 5 6 6 6 7 7

4.0

Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Business Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Distribution Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.3 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.4 Main Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 7 8 8 9 9 9 9

5.0

Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Untitled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 10 11 12

6.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 13 13 14

7.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 15 15 16 17 18 20 20

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Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

22

Acme Consulting 1.0 Executive Summary

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Acme Consulting will be formed as a consulting company specializing in the marketing of hightechnology products in international markets. It will offer high-tech manufacturers a reliable, high-quality alternative to in-house resources for business development, market development, and channel development on an international scale. It will be formed as a California C corporation based in Santa Clara County and will be owned and operated by its principal investors.

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Acme will provide high-technology companies with the expertise they need to develop new product distribution channels and establish new segments in new markets. These services can take the form of high-level retainer consulting, market research reports, or project-based consulting. The initial focus will be development of the European and Latin American markets, or for European clients doing business in U.S. markets. Acme Consulting's founders are welltrained to provide these services, being former marketers of consulting services, personal computers, and market research, all in international markets. The office will be in A-quality office space in Santa Clara County - the "Silicon Valley" area of California and the heart of the U.S. high-tech industry.

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Target customers in the U.S. and Europe are mainly large manufacturing corporations such as HP, IBM and Microsoft. Our secondary target will be the medium-sized companies in high growth areas such as multimedia and software. Industry competition comes in several forms:

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• The most significant competition comes from companies that choose to do business development and market research in-house. • There are also large, well known management consulting firms such as Arthur Anderson, Boston Consulting Group, etc. These companies are generalist in nature and do not focus on a niche market. Furthermore, they are often hampered by a flawed organizational structure that does not provide the most experienced people for the client's projects. • Finally, there are various market research companies, such as Dataquest and Stanford Research Institute. Acme Consulting has advantages over all these competitors in that Acme provides high-level consulting from experts in the field who will help integrate market research data with the companies' goals.

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In the future, Acme expects to broaden its coverage by expanding into additional markets, including all of Latin America, the Far East and Western Europe. In addition, we anticipate expanding into additional product areas, such as telecommunications and technology integration.

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Acme Consulting will be priced at the upper edge of what the market will bear, competing directly with the name-brand consultants. This pricing strategy fits with the general positioning of Acme as a provider of high-level expertise. Projected sales estimates show revenues of nearly $600,000 in year one, increasing to over $1 million by year three. These revenues translate into profits of $65,000 by year three with a net profit margin of 6%. The company plans on taking $130,000 in current debt and raising an additional $50,000 in long-term debt for investments in long-term assets. One possible source of additional funding may come from an additional partner with expertise in the field and a desire to help establish one of the premier consulting firms in the industry.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 1

Acme Consulting

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Highlights

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$1,200,000 $1,000,000 $800,000

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$600,000 $400,000

$0

Net Profit

1999

2000

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1998

1.1 Objectives

Sales of $550,000 in 1998 and $1 million by 2000. Gross margin higher than 70%. Net income more than 10% of sales by 1998.

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1. 2. 3.

Gross Margin

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$200,000

Sales

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1.2 Mission

Acme Consulting offers high-tech manufacturers a reliable, high-quality alternative to in-house resources for business development, market development, and channel development on an international scale. A true alternative to in-house resources offers a very high level of practical experience, know-how, contacts, and confidentiality.

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Clients must know that working with Acme is a more professional, less risky way to develop new areas even than working completely in-house with their own people. Acme must also be able to maintain financial balance, charging a high value for its services, and delivering an even higher value to its clients. Initial focus will be development in the European and Latin American markets, or for European clients in the U.S. market.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 2

Acme Consulting

2. 3.

Excellence in fulfilling the promise--completely confidential, reliable, trustworthy expertise and information. Developing visibility to generate new business leads. Leveraging from a single pool of expertise into multiple revenue generation opportunities: retainer consulting, project consulting, market research, and market research published reports.

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1.3 Keys to Success

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2.0 Company Summary

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Acme Consulting is a new company providing high-level expertise in international high-tech business development, channel development, distribution strategies, and marketing of hightech products. It will focus initially on providing two kinds of international triangles:

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• Providing United States clients with development for European and Latin American markets. • Providing European clients with development for the United States and Latin American markets.

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As it grows it will take on people and consulting work in related markets, such as the rest of Latin America, the Far East, and similar markets. It will also look for additional leverage by taking brokerage positions and representation positions to create percentage holdings in product results.

2.1 Company Ownership

Acme Consulting will be created as a California C corporation based in Santa Clara County, owned by its principal investors and principal operators. As of this writing, it has not been chartered yet and is still considering alternatives of legal formation.

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2.2 Start-up Summary

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Total start-up expense (including legal costs, logo design, stationery and related expenses) comes to $18,350. Start-up assets required include $32,000 in short-term assets (office furniture, etc.) and $25,000 in initial cash to handle the first few months of consulting operations as sales and accounts receivable play through the cash flow. The details are included in Table 2-2.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 3

Acme Consulting Table: Start-up

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Start-up

Start-up Assets Needed Cash Balance on Starting Date Other Current Assets Total Current Assets

$25,000 $7,000 $32,000

Long-term Assets Total Assets Total Requirements

$0 $32,000 $50,350

Funding

$20,000 $20,000 $10,000 $50,000

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Long-term Liabilities Total Liabilities

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Investment Investor 1 Investor 2 Other Total Investment Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Current Liabilities

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$1,000 $3,000 $5,000 $5,000 $350 $3,000 $1,000 $18,350

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Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Expensed equipment Other Total Start-up Expenses

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Requirements

$0 $350

($18,350) $31,650 $32,000

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Loss at Start-up Total Capital Total Capital and Liabilities

$350 $0 $0 $350

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 4

Acme Consulting

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Start-up

$50,000

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$45,000 $40,000 $35,000 $30,000

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$25,000 $20,000 $15,000 $10,000

$0

Assets

Investment

Loans

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Expenses

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$5,000

2.3 Company Locations and Facilities

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The initial office will be established in A-quality office space in the Santa Clara County "Silicon Valley" area of California, the heart of the U.S. high tech industry.

3.0 Services

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Acme offers the expertise a high-technology company needs to develop new product distribution and new market segments in new markets. This can be taken as high-level retainer consulting, market research reports, or project-based consulting.

3.1 Service Description

Retainer consulting: We represent a client company as an extension of its business development and market development functions. This begins with complete understanding of the client company's situation, objectives, and constraints. We then represent the client company quietly and confidentially, sifting through new market developments and new opportunities as is appropriate to the client, representing the client in initial talks with possible allies, vendors, and channels. Project consulting: Proposed and billed on a per-project and per-milestone basis, project consulting offers a client company a way to harness our specific qualities and use our expertise to solve specific problems, develop and/or implement plans, and develop specific information. Market research: Group studies available to selected clients at $5,000 per unit. A group study is a packaged and published complete study of a specific market, channel, or topic. Examples might be studies of developing consumer channels in Japan or Mexico, or implications of changing margins in software.

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1.

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2.

3.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 5

Acme Consulting 3.2 Competitive Comparison

The most significant competition is no consulting at all, companies choosing to do business development, channel development and market research in-house. Their own managers do this on their own, as part of their regular business functions. Our key advantage in competition with in-house development is that managers are already overloaded with responsibilities, they don't have time for additional responsibilities in new market development or new channel development. Also, Acme can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in ways that the corporate managers can't. The high-level prestige management consulting: McKinsey, Bain, Arthur Anderson, Boston Consulting Group, etc. These are essentially generalists who take their namebrand management consulting into specialty areas. Their other very important weakness is the management structure that has the partners selling new jobs, and inexperienced associates delivering the work. We compete against them as experts in our specific fields, and with the guarantee that our clients will have the top-level people doing the actual work. The third general kind of competitor is the international market research company: International Data Corporation (IDC), Dataquest, Stanford Research Institute, etc. These companies are formidable competitors for published market research and market forums, but cannot provide the kind of high-level consulting that Acme will provide. The fourth kind of competition is the market-specific smaller house. For example: Nomura Research in Japan, Select S.A. de C.V. in Mexico (now affiliated with IDC). Sales representation, brokering, and deal catalysts are an ad-hoc business form that will be defined in detail by the specific nature of each individual case.

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3.3 Sales Literature

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The competition comes in several forms:

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The business will begin with a general corporate brochure establishing the positioning. This brochure will be developed as part of the start-up expenses. Literature and mailings for the initial market forums will be very important.

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3.4 Fulfillment 1.

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2.

The key fulfillment and delivery will be provided by the principals of the business. The real core value is professional expertise, provided by a combination of experience, hard work, and education (in that order). We will turn to qualified professionals for freelance back-up in market research and presentation and report development, which are areas that we can afford to subcontract without risking the core values provided to the clients.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 6

Acme Consulting 3.5 Technology

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Complete e-mail facilities on the Internet, Compuserve, America-Online, and Applelink, for working with clients directly through e-mail delivery of drafts and information. Complete presentation facilities for preparation and delivery of multimedia presentations on Macintosh or Windows machines, in formats including on-disk presentation, live presentation, or video presentation. Complete desktop publishing facilities for delivery of regular retainer reports, project output reports, marketing materials, and market research reports.

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Acme Consulting will maintain the latest Windows and Macintosh capabilities including:

3.6 Future Services

4.0 Market Analysis Summary

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In the future, Acme will broaden the coverage by expanding into coverage of additional markets (e.g., all of Latin America, Far East, Western Europe) and additional product areas (e.g., telecommunications and technology integration). We are also studying the possibility of newsletter or electronic newsletter services, or perhaps special on-topic reports.

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Acme will be focusing on high-technology manufacturers of computer hardware and software, services, and networking, who want to sell into markets in the United States, Europe, and Latin America. These are mostly larger companies, and occasionally medium-sized companies. Our most important group of potential customers are executives in larger corporations. These are marketing managers, general managers, sales managers, sometimes charged with international focus and sometimes charged with market or even specific channel focus. They do not want to waste their time or risk their money looking for bargain information or questionable expertise. As they go into markets looking at new opportunities, they are very sensitive to risking their company's name and reputation.

4.1 Market Segmentation

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Large manufacturer corporations: Our most important market segment is the large manufacturer of high-technology products, such as Apple, Hewlett-Packard, IBM, Microsoft, Siemens, or Olivetti. These companies will be calling on Acme for development functions that are better spun off than managed in-house, for market research, and for market forums. Medium-sized growth companies: particularly in software, multimedia, and some related highgrowth fields, Acme will offer an attractive development alternative to the company that is management constrained and unable to address opportunities in new markets and new market segments.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 7

Acme Consulting

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Market Analysis (Pie)

U.S. High Tech Latin America Other

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European High Tech

Table: Market Analysis

Growth 10% 15% 35% 2% 6.27%

1998 5,000 1,000 250 10,000 16,250

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Market Analysis Potential Customers U.S. High Tech European High Tech Latin America Other Total

1999 5,500 1,150 338 10,200 17,188

2000 6,050 1,323 456 10,404 18,233

2001 6,655 1,521 616 10,612 19,404

2002 7,321 1,749 832 10,824 20,726

CAGR 10.00% 15.00% 35.07% 2.00% 6.27%

4.2 Target Market Segment Strategy

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As indicated by the previous table and Illustration, we must focus on a few thousand wellchosen potential customers in the United States, Europe, and Latin America. These few thousand high-tech manufacturing companies are the key customers for Acme.

4.3 Service Business Analysis

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The consulting "industry" is pulverized and disorganized, with thousands of smaller consulting organizations and individual consultants for every one of the few dozen well-known companies.

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Consulting participants range from major international name-brand consultants to tens of thousands of individuals. One of Acme's challenges will be establishing itself as a real consulting company, positioned as a relatively risk-free corporate purchase.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 8

Acme Consulting 4.3.1 Business Participants

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At the highest level are the few well-established major names in management consulting. Most of these are organized as partnerships established in major markets around the world, linked together by interconnecting directors and sharing the name and corporate wisdom. Some evolved from accounting companies (e.g. Arthur Andersen, Touche Ross) and some from management consulting (McKinsey, Bain). These companies charge very high rates for consulting, and maintain relatively high overhead structures and fulfillment structures based on partners selling and junior associates fulfilling. At the intermediate level are some function-specific or market-specific consultants, such as the market research firms (IDC, Dataquest) or channel development firms (ChannelCorp, Channel Strategies, ChannelMark).

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Some kinds of consulting are little more than contract expertise provided by somebody who, while temporarily out of work, offers consulting services.

4.3.2 Distribution Patterns

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Consulting is sold and purchased mainly on a word-of-mouth basis, with relationships and previous experience being, by far, the most important factor. The major name-brand houses have locations in major cities and major markets, and executive-level managers or partners develop new business through industry associations, business associations, chambers of commerce and industry, etc., and in some cases social associations such as country clubs.

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The medium-level houses are generally area specific or function specific, and are not easily able to leverage their business through distribution.

4.3.3 Competition and Buying Patterns

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The key element in purchase decisions made at the Acme client level is trust in the professional reputation and reliability of the consulting firm.

4.3.4 Main Competitors

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1. The high-level prestige management consulting: Strengths: International locations managed by owner-partners with a high level of presentation and understanding of general business. Enviable reputations which make purchase of consulting an easy decision for a manager, despite the very high prices.

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Weaknesses: General business knowledge doesn't substitute for the specific market, channel, and distribution expertise of Acme, focusing on high-technology markets and products only. Also, fees are extremely expensive, and work is generally done by very junior-level consultants, even though sold by high-level partners. 2. The international market research company: Strengths: International offices, specific market knowledge, permanent staff developing market research information on permanent basis, good relationships with potential client companies.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 9

Acme Consulting Weaknesses: Market numbers are not marketing, not channel development nor market development. Although these companies compete for some of the business Acme is after, they cannot really offer the same level of business understanding at a high level.

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3. Market specific or function specific experts:

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Strengths: Expertise in market or functional areas. Acme should not try to compete with Nomura or Select in their markets with market research, or with ChannelCorp in channel management. Weaknesses: The inability to spread beyond a specific focus, or to rise above a specific focus, to provide actual management expertise, experience, and wisdom beyond the specifics.

Sa

4. Companies do in-house research and development:

Strengths: No incremental cost except travel; also, the general work is done by the people who are entirely responsible, the planning is done by those who will implement it.

nP

ro

Weaknesses: Most managers are terribly overburdened already, unable to find incremental resources in time and people to apply to incremental opportunities. Also, there is a lot of additional risk in market and channel development done in-house from the ground up. Finally, retainer-based antenna consultants can greatly enhance a company's reach and extend its position into conversations that might otherwise never have taken place.

5.0 Strategy and Implementation Summary

Pla

Acme will focus on three geographical markets, the United States, Europe, and Latin America, and in limited product segments: personal computers, software, networks, telecommunications, personal organizers, and technology integration products.

5.1 Untitled

ess

The target customer is usually a manager in a larger corporation, and occasionally an owner or president of a medium-sized corporation in a high-growth period.

Bu

sin

Acme Consulting will be priced at the upper edge of what the market will bear, competing with the name-brand consultants. The pricing fits with the general positioning of Acme as providing high-level expertise. Consulting should be based on $5,000 per day for project consulting, $2,000 per day for market research, and $10,000 per month and up for retainer consulting. Market research reports should be priced at $5,000 per report, which will, of course, require that reports be very well planned, focused on very important topics, and very well presented.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 10

Acme Consulting 5.2 Sales Strategy

le

The sales forecast monthly summary is included in the appendix. The annual sales projections are included here in Table 5.2.

mp

Sales by Year

$1,200,000

Sa

$1,000,000 $800,000 $600,000

ro

$400,000 $200,000

1998

Sales Forecast Sales Retainer Consulting Project Consulting Market Research Strategic Reports Other Total Sales

1999

Strategic Reports Other

1998 $200,000 $270,000 $122,000 $0 $0 $592,000

1999 $350,000 $325,000 $150,000 $50,000 $0 $875,000

2000 $425,000 $350,000 $200,000 $125,000 $0 $1,100,000

1998 $30,000 $45,000 $84,000 $0 $0 $159,000

1999 $38,000 $56,000 $105,000 $20,000 $0 $219,000

2000 $48,000 $70,000 $131,000 $40,000 $0 $289,000

Bu

sin

ess

Direct Cost of Sales Retainer Consulting Project Consulting Market Research Strategic Reports Other Subtotal Direct Cost of Sales

Market Research

2000

Pla

Table: Sales Forecast

Project Consulting

nP

$0

Retainer Consulting

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 11

Acme Consulting

le

Sales Monthly $90,000

mp

$80,000 $70,000 $60,000

Retainer Consulting Project Consulting

$50,000

Sa

$40,000 $30,000 $20,000

$0

Other

Jul Aug Sep Oct Nov Dec

nP

Jan Feb Mar Apr May Jun

Strategic Reports

ro

$10,000

Market Research

5.3 Milestones

Pla

Our detailed milestones are shown in the following table and chart. The related budgets are included with the expenses shown in the projected Profit and Loss statement, which is in the financial analysis that comes in Chapter 7 of this plan.

Milestones

ess

Business plan

Logo design

Retainer contracts

Stationery

sin

Brochures

Financial backing presentations Initial mailing

Bu

Office location

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

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 12

Acme Consulting Table: Milestones

4/1/1998

9/15/1998

6/1/1998 1/15/1998 1/15/1998 1/1/1998

7/1/1998 2/9/1998 2/19/1998 12/31/1998

Budget $5,000 $2,000 $10,000 $500 $2,500

Manager HM TAJ HM JD TAJ

Department Devpt Marketing Sales G&A Marketing

$10,000

HM

Devpt

$5,000 $5,000 $12,500 $10,000 $62,500

HM JD JD ABC

Sales G&A G&A Department

le

End Date 11/19/1997 2/1/1998 12/31/1998 4/15/1998 4/15/1998

mp

Start Date 10/1/1997 1/1/1998 2/1/1998 3/1/1998 3/1/1998

Sa

Milestones Milestone Business plan Logo design Retainer contracts Stationery Brochures Financial backing presentations Initial mailing Office location Office equipment Other Totals

6.0 Management Summary

ro

The initial management team depends on the founders themselves, with little back-up. As we grow, we will take on additional consulting help, plus graphic/editorial, sales, and marketing.

nP

6.1 Organizational Structure

Acme should be managed by working partners, in a structure taken mainly from Smith Partners. In the beginning we assume 3-5 partners: Ralph Sampson. At least one, probably two, partners from Smith and Jones. One strong European partner, based in Paris. The organization has to be very flat in the beginning, with each of the founders responsible for his or her own work and management. • One other strong partner.

Pla

• • • •

ess

6.2 Management Team

Bu

sin

The Acme business requires a very high level of international experience and expertise, which means that it will not be easily leveragable in the common consulting company mode in which partners run the business and make sales, while associates fulfill. Partners will necessarily be involved in the fulfillment of the core business proposition, providing the expertise to the clients. The initial personnel plan is still tentative. It should involve 3-5 partners, 1-3 consultants, one strong editorial/graphic person with good staff support, one strong marketing person, an office manager, and a secretary. Later, we add more partners, consultants, and sales staff. Refer to the attached founders' resumes for detail on our experience and expertise.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 13

Acme Consulting 6.3 Personnel Plan

Table: Personnel Personnel Plan 1998 $144,000 $0 $18,000 $20,000 $0 $7,500 $5,250 $0 $0 7 $194,750

1999 $175,000 $50,000 $22,000 $50,000 $30,000 $30,000 $20,000 $0 $0 14 $377,000

2000 $200,000 $63,000 $26,000 $55,000 $33,000 $33,000 $22,000 $0 $0 20 $432,000

Bu

sin

ess

Pla

nP

ro

Sa

Partners Consultants Editorial/graphic VP Marketing Sales people Office Manager Secretarial Other Other Total People Total Payroll

mp

le

The detailed monthly personnel plan for the first year is included in the appendix. The annual personnel estimates are included here.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 14

Acme Consulting 7.0 Financial Plan

mp

le

Our financial plan is based on conservative estimates and assumptions. We will need to plan on initial investment to make the financials work.

7.1 Important Assumptions

Table: General Assumptions General Assumptions 1998 1 8.00% 10.00% 25.42% 100.00% 0

1999 2 8.00% 10.00% 25.00% 100.00% 0

2000 3 8.00% 10.00% 25.42% 100.00% 0

7.2 Key Financial Indicators

nP

ro

Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other

Sa

Table 7.1 summarizes key financial assumptions, including 45-day average collection days, sales entirely on invoice basis, expenses mainly on net 30 basis, 35 days on average for payment of invoices, and present-day interest rates.

Pla

The following benchmark chart indicates our key financial indicators for the first three years. We foresee major growth in sales and operating expenses, and a bump in our collection days as we spread the business during expansion.

Benchmarks

2.0

ess

1.5 1.0

0.0

1998 1999 2000

Bu

sin

0.5

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 15

Acme Consulting 7.3 Break-even Analysis

le

Table 7.3 summarizes the break-even analysis, including monthly units and sales break-even points.

mp

Break-even Analysis $10,000

$5,000

Sa

$0

($5,000)

$0

ro

($10,000) $4,000

$8,000

$12,000

$16,000

$20,000

nP

Monthly break-even point Break-even point = where line intersects with 0

Pla

Table: Break-even Analysis

12,500 $12,500

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

$1.00 $0.20 $10,000

Bu

sin

ess

Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 16

Acme Consulting 7.4 Projected Profit and Loss

le

The detailed monthly pro-forma income statement for the first year is included in the appendix. The annual estimates are included here. Table: Profit and Loss

mp

Pro Forma Profit and Loss

2000 $1,100,000 $289,000 $0 -----------$289,000 $811,000 73.73%

$194,750 $162,000 $0 $6,000 $12,000 $3,600 $18,000 $0 $27,265 $0 -----------$423,615 $9,385 $6,800 ($524) $3,109 0.53%

$377,000 $137,000 $0 $7,000 $12,000 $2,000 $0 $0 $52,780 $0 -----------$587,780 $68,220 $11,400 $14,205 $42,615 4.87%

$432,000 $195,000 $0 $7,000 $12,000 $2,000 $0 $0 $60,480 $0 -----------$708,480 $102,520 $15,400 $22,143 $64,977 5.91%

ro

Bu

sin

ess

Pla

Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales

1999 $875,000 $219,000 $0 -----------$219,000 $656,000 74.97%

nP

Total Cost of Sales Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Other Payroll Taxes Other

1998 $592,000 $159,000 $0 -----------$159,000 $433,000 73.14%

Sa

Sales Direct Cost of Sales Other

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 17

Acme Consulting 7.5 Projected Cash Flow

Cash $60,000

Sa

$50,000

mp

le

Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here as Table 7.5. Detailed monthly numbers are included in the appendix.

$40,000 $30,000 $20,000

ro

$10,000 $0 ($10,000)

Cash Balance

nP

($20,000)

Net Cash Flow

($30,000)

Jul Aug Sep Oct Nov Dec

Bu

sin

ess

Pla

Jan Feb Mar Apr May Jun

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 18

Acme Consulting Table: Cash Flow Pro Forma Cash Flow 1999

2000

$0 $828,630 $828,630

$0 $1,063,133 $1,063,133

le

1998

$0 $495,000 $495,000

Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

$0 $30,000 $0 $50,000 $0 $0 $0 $575,000

$0 $100,000 $0 $0 $0 $0 $0 $928,630

$0 $0 $0 $0 $0 $0 $0 $1,063,133

1998

1999

2000

$92,012 $467,603 $559,615

$100,651 $728,952 $829,603

$135,545 $888,243 $1,023,788

$0 $0 $0 $0 $0 $0 $0 $559,615

$0 $0 $0 $0 $0 $0 $0 $829,603

$0 $0 $0 $0 $0 $0 $0 $1,023,788

$15,385 $40,385

$99,027 $139,412

$39,346 $178,758

Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations

Bu

sin

ess

Net Cash Flow Cash Balance

Pla

nP

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

ro

Sa

mp

Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 19

Acme Consulting 7.6 Projected Balance Sheet

le

The balance sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the appendix. Pro Forma Balance Sheet

7.7 Business Ratios

$0 $0 $0 $289,782

$0 $0 $0 $365,995

1998 $29,627 $30,000 $0 $59,627

1999 $32,409 $130,000 $0 $162,409

2000 $43,644 $130,000 $0 $173,644

2000 $178,758 $180,236 $7,000 $365,995

$50,000 $109,627

$50,000 $212,409

$50,000 $223,644

$50,000 ($18,350) $3,109 $34,759 $144,385 $34,759

$50,000 ($15,241) $42,615 $77,374 $289,782 $77,374

$50,000 $27,374 $64,977 $142,351 $365,995 $142,351

Pla

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$0 $0 $0 $144,385

nP

Long-term Liabilities Total Liabilities

1999 $139,412 $143,370 $7,000 $289,782

ro

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

1998 $40,385 $97,000 $7,000 $144,385

Sa

Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

mp

Table: Balance Sheet

Bu

sin

ess

The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. The industry comparisons are for SIC 8742, management consulting services.

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 20

Acme Consulting Table: Ratios Ratio Analysis Industry Profile 8.60%

67.18% 0.00% 4.85% 100.00% 0.00% 100.00%

49.48% 0.00% 2.42% 100.00% 0.00% 100.00%

49.25% 0.00% 1.91% 100.00% 0.00% 100.00%

24.40% 3.80% 46.70% 74.90% 25.10% 100.00%

56.05% 17.25% 73.30% 26.70%

47.44% 13.66% 61.11% 38.89%

42.80% 17.20% 60.00% 40.00%

100.00% 73.14% 72.81% 6.08% 1.59%

100.00% 74.97% 70.10% 4.57% 7.80%

100.00% 73.73% 67.79% 4.00% 9.32%

100.00% 0.00% 83.50% 1.20% 2.60%

2.42 2.42 75.93% 7.44% 1.79%

1.78 1.78 73.30% 73.44% 19.61%

2.11 2.11 61.11% 61.20% 23.80%

1.59 1.26 60.00% 4.40% 10.90%

1998 0.53% 8.94%

1999 4.87% 55.08%

2000 5.91% 45.65%

n.a n.a

6.10 43 0.00 16.77 18 4.10

6.10 30 0.00 22.58 8 3.02

6.10 54 0.00 20.61 15 3.01

n.a n.a n.a n.a n.a n.a

3.15 0.54

2.75 0.76

1.57 0.78

n.a n.a

$84,759 1.38

$127,374 5.98

$192,351 6.66

n.a n.a

0.24 41% 0.79 17.03 0.00

0.33 56% 0.90 11.31 0.00

0.33 47% 1.07 7.73 0.00

n.a n.a n.a n.a n.a

41.30% 34.63% 75.93% 24.07%

ro

Pla

Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

nP

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes

Additional Ratios Net Profit Margin Return on Equity

2000 25.71%

Sa

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

1999 47.80%

Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover

ess

Debt Ratios Debt to Net Worth Current Liab. to Liab.

sin

Liquidity Ratios Net Working Capital Interest Coverage

Bu

Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

le

Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets

1998 0.00%

mp

Sales Growth

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Page 21

Appendix Appendix Table: Sales Forecast Sales Forecast Sales Retainer Consulting Project Consulting Market Research Strategic Reports Other Total Sales Direct Cost of Sales Retainer Consulting Project Consulting Market Research Strategic Reports Other Subtotal Direct Cost of Sales

u B

Jan $10,000 $0 $0 $0 $0 $10,000

Feb $10,000 $0 $0 $0 $0 $10,000

Mar $10,000 $10,000 $0 $0 $0 $20,000

Apr $10,000 $20,000 $4,000 $0 $0 $34,000

May $20,000 $30,000 $8,000 $0 $0 $58,000

Jun $20,000 $40,000 $15,000 $0 $0 $75,000

Jan $2,500 $0 $0 $0 $0 $2,500

Feb $2,500 $0 $0 $0 $0 $2,500

Mar $2,500 $1,500 $0 $0 $0 $4,000

Apr $2,500 $3,500 $2,000 $0 $0 $8,000

May $2,500 $5,000 $6,000 $0 $0 $13,500

Jun $2,500 $6,500 $10,000 $0 $0 $19,000

n i s

s e

P s

n la

r P

Jul $20,000 $20,000 $10,000 $0 $0 $50,000

Aug $20,000 $10,000 $5,000 $0 $0 $35,000

S o Jul $2,500 $3,500 $6,000 $0 $0 $12,000

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Sep $20,000 $30,000 $20,000 $0 $0 $70,000

m a

Aug $2,500 $1,500 $4,000 $0 $0 $8,000

Sep $2,500 $5,000 $14,000 $0 $0 $21,500

e l p Oct $20,000 $45,000 $20,000 $0 $0 $85,000

Nov $20,000 $50,000 $20,000 $0 $0 $90,000

Dec $20,000 $15,000 $20,000 $0 $0 $55,000

Oct $2,500 $7,500 $14,000 $0 $0 $24,000

Nov $2,500 $8,500 $14,000 $0 $0 $25,000

Dec $2,500 $2,500 $14,000 $0 $0 $19,000

Page 22

Appendix Appendix Table: Personnel Personnel Plan Partners Consultants Editorial/graphic VP Marketing Sales people Office Manager Secretarial Other Other Total People Total Payroll

140% 125% 120% 110% 110% 110% 110% 110%

u B

Jan $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

n i s

Feb $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

s e

Mar $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

P s

Apr $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

May $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

n la

Jun $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

r P

Jul $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

S o

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Aug $12,000 $0 $0 $0 $0 $0 $0 $0 $0 3 $12,000

e l p

Sep $12,000 $0 $0 $5,000 $0 $0 $0 $0 $0 5 $17,000

m a

Oct $12,000 $0 $6,000 $5,000 $0 $2,500 $1,750 $0 $0 7 $27,250

Nov $12,000 $0 $6,000 $5,000 $0 $2,500 $1,750 $0 $0 7 $27,250

Dec $12,000 $0 $6,000 $5,000 $0 $2,500 $1,750 $0 $0 7 $27,250

Page 23

Appendix Appendix Table: General Assumptions General Assumptions Jan 1 8.00% 10.00% 30.00% 100.00% 0

Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other

u B

n i s

Feb 2 8.00% 10.00% 25.00% 100.00% 0

s e

Mar 3 8.00% 10.00% 25.00% 100.00% 0

Apr 4 8.00% 10.00% 25.00% 100.00% 0

P s

May 5 8.00% 10.00% 25.00% 100.00% 0

n la

Jun 6 8.00% 10.00% 25.00% 100.00% 0

Jul 7 8.00% 10.00% 25.00% 100.00% 0

r P

Aug 8 8.00% 10.00% 25.00% 100.00% 0

S o

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

Sep 9 8.00% 10.00% 25.00% 100.00% 0

e l p

Oct 10 8.00% 10.00% 25.00% 100.00% 0

m a

Nov 11 8.00% 10.00% 25.00% 100.00% 0

Dec 12 8.00% 10.00% 25.00% 100.00% 0

Page 24

Appendix Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Leased Equipment Utilities Insurance Rent Other Payroll Taxes Other

14%

Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales

u B

n i s

Jan $10,000 $2,500 $0 -----------$2,500 $7,500 75.00%

Feb $10,000 $2,500 $0 -----------$2,500 $7,500 75.00%

Mar $20,000 $4,000 $0 -----------$4,000 $16,000 80.00%

Apr $34,000 $8,000 $0 -----------$8,000 $26,000 76.47%

May $58,000 $13,500 $0 -----------$13,500 $44,500 76.72%

Jun $75,000 $19,000 $0 -----------$19,000 $56,000 74.67%

Jul $50,000 $12,000 $0 -----------$12,000 $38,000 76.00%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 ($22,980) $417 ($7,019) ($16,378) -163.78%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 ($22,980) $417 ($5,849) ($17,548) -175.48%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 ($14,480) $550 ($3,758) ($11,273) -56.36%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 ($4,480) $550 ($1,258) ($3,773) -11.10%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 $14,020 $550 $3,368 $10,103 17.42%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 $25,520 $617 $6,226 $18,678 24.90%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 $7,520 $617 $1,726 $5,178 10.36%

s e

P s

n la

r P

S o

Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com

e l p

Aug $35,000 $8,000 $0 -----------$8,000 $27,000 77.14%

Sep $70,000 $21,500 $0 -----------$21,500 $48,500 69.29%

Oct $85,000 $24,000 $0 -----------$24,000 $61,000 71.76%

Nov $90,000 $25,000 $0 -----------$25,000 $65,000 72.22%

Dec $55,000 $19,000 $0 -----------$19,000 $36,000 65.45%

$12,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $1,680 $0 -----------$30,480 ($3,480) $617 ($1,024) ($3,073) -8.78%

$17,000 $13,500 $0 $500 $1,000 $300 $1,500 $0 $2,380 $0 -----------$36,180 $12,320 $617 $2,926 $8,778 12.54%

$27,250 $13,500 $0 $500 $1,000 $300 $1,500 $0 $3,815 $0 -----------$47,865 $13,135 $617 $3,130 $9,389 11.05%

$27,250 $13,500 $0 $500 $1,000 $300 $1,500 $0 $3,815 $0 -----------$47,865 $17,135 $617 $4,130 $12,389 13.77%

$27,250 $13,500 $0 $500 $1,000 $300 $1,500 $0 $3,815 $0 -----------$47,865 ($11,865) $617 ($3,120) ($9,361) -17.02%

m a

Page 25

Appendix Appendix Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

0.00%

Jan

Feb

Mar

Apr

May

Jun

Jul

$0 $0 $0

$0 $5,333 $5,333

$0 $10,000 $10,000

$0 $15,333 $15,333

$0 $27,467 $27,467

$0 $46,800 $46,800

$0 $67,067 $67,067

$0 $0 $0 $50,000 $0 $0 $0 $50,000

$0 $0 $0 $0 $0 $0 $0 $5,333

$0 $20,000 $0 $0 $0 $0 $0 $30,000

$0 $0 $0 $0 $0 $0 $0 $15,333

$0 $0 $0 $0 $0 $0 $0 $27,467

$0 $10,000 $0 $0 $0 $0 $0 $56,800

$0 $0 $0 $0 $0 $0 $0 $67,067

May

Jun

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Aug

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Sep

m a

Oct

Nov

Dec

$0 $61,667 $61,667

$0 $42,000 $42,000

$0 $53,667 $53,667

$0 $78,000 $78,000

$0 $87,667 $87,667

$0 $0 $0 $0 $0 $0 $0 $61,667

$0 $0 $0 $0 $0 $0 $0 $42,000

$0 $0 $0 $0 $0 $0 $0 $53,667

$0 $0 $0 $0 $0 $0 $0 $78,000

$0 $0 $0 $0 $0 $0 $0 $87,667

Jul

Aug

Sep

Oct

Nov

Dec

S o

Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations

Jan

Feb

Mar

Apr

$3,467 $12,810 $16,277

$3,467 $22,737 $26,204

$4,398 $24,088 $28,486

$6,023 $26,502 $32,525

$8,554 $31,099 $39,654

$10,661 $38,331 $48,991

$7,786 $44,819 $52,605

$6,098 $38,187 $44,285

$10,461 $38,349 $48,810

$11,137 $60,702 $71,838

$11,637 $64,204 $75,841

$8,324 $65,775 $74,099

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0 $0 $0 $0 $0 $0 $0 $16,277

$0 $0 $0 $0 $0 $0 $0 $26,204

$0 $0 $0 $0 $0 $0 $0 $28,486

$0 $0 $0 $0 $0 $0 $0 $32,525

$0 $0 $0 $0 $0 $0 $0 $39,654

$0 $0 $0 $0 $0 $0 $0 $48,991

$0 $0 $0 $0 $0 $0 $0 $52,605

$0 $0 $0 $0 $0 $0 $0 $44,285

$0 $0 $0 $0 $0 $0 $0 $48,810

$0 $0 $0 $0 $0 $0 $0 $71,838

$0 $0 $0 $0 $0 $0 $0 $75,841

$0 $0 $0 $0 $0 $0 $0 $74,099

($20,870) $37,853

$1,514 $39,367

($17,192) $22,175

($12,187) $9,988

$7,809 $17,797

$14,462 $32,258

$17,382 $49,640

($6,810) $42,830

($18,172) $24,658

$2,159 $26,817

$13,568 $40,385

Net Cash Flow Cash Balance

s e $33,723 $58,723

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Appendix Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

Starting Balances $25,000 $0 $7,000 $32,000

Jan $58,723 $10,000 $7,000 $75,723

Feb $37,853 $14,667 $7,000 $59,519

Mar $39,367 $24,667 $7,000 $71,033

Apr $22,175 $43,333 $7,000 $72,508

May $9,988 $73,867 $7,000 $90,855

Jun $17,797 $102,067 $7,000 $126,863

$0 $0 $0 $32,000

$0 $0 $0 $75,723

$0 $0 $0 $59,519

$0 $0 $0 $71,033

$0 $0 $0 $72,508

$0 $0 $0 $90,855

$0 $0 $0 $126,863

Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$350 $0 $0 $350

Jan $10,451 $0 $0 $10,451

Feb $11,795 $0 $0 $11,795

Mar $14,581 $20,000 $0 $34,581

Apr $19,829 $20,000 $0 $39,829

May $28,072 $20,000 $0 $48,072

Long-term Liabilities Total Liabilities

$0 $350

$50,000 $60,451

$50,000 $61,795

$50,000 $84,581

$50,000 $89,829

$50,000 ($18,350) $0 $31,650 $32,000 $31,650

$50,000 ($18,350) ($16,378) $15,272 $75,723 $15,272

$50,000 ($18,350) ($33,925) ($2,275) $59,519 ($2,275)

$50,000 ($18,350) ($45,198) ($13,548) $71,033 ($13,548)

$50,000 ($18,350) ($48,970) ($17,320) $72,508 ($17,320)

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

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Jul $32,258 $85,000 $7,000 $124,258

Aug $49,640 $58,333 $7,000 $114,973

S o

e l p

Sep $42,830 $86,333 $7,000 $136,163

Oct $24,658 $117,667 $7,000 $149,325

Nov $26,817 $129,667 $7,000 $163,484

Dec $40,385 $97,000 $7,000 $144,385

m a

$0 $0 $0 $124,258

$0 $0 $0 $114,973

$0 $0 $0 $136,163

$0 $0 $0 $149,325

$0 $0 $0 $163,484

$0 $0 $0 $144,385

Jun $35,404 $30,000 $0 $65,404

Jul $27,621 $30,000 $0 $57,621

Aug $21,409 $30,000 $0 $51,409

Sep $33,821 $30,000 $0 $63,821

Oct $37,594 $30,000 $0 $67,594

Nov $39,364 $30,000 $0 $69,364

Dec $29,627 $30,000 $0 $59,627

$50,000 $98,072

$50,000 $115,404

$50,000 $107,621

$50,000 $101,409

$50,000 $113,821

$50,000 $117,594

$50,000 $119,364

$50,000 $109,627

$50,000 ($18,350) ($38,868) ($7,218) $90,855 ($7,218)

$50,000 ($18,350) ($20,190) $11,460 $126,863 $11,460

$50,000 ($18,350) ($15,013) $16,637 $124,258 $16,637

$50,000 ($18,350) ($18,085) $13,565 $114,973 $13,565

$50,000 ($18,350) ($9,308) $22,342 $136,163 $22,342

$50,000 ($18,350) $81 $31,731 $149,325 $31,731

$50,000 ($18,350) $12,470 $44,120 $163,484 $44,120

$50,000 ($18,350) $3,109 $34,759 $144,385 $34,759

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