Business Plan for Blue Investments

8/7/2019 Business Plan for Blue Investments

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BUSINESS PLAN FOR BLUE

INVESTMENTS.

12/10/2010

PRISCILLA ASARE 10250832MARY ADJEI 10255318


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Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Blue Investments in thisbusiness plan is confidential; therefore, reader agrees not to disclose it without the expresswritten permission of Blue Investments.

It is acknowledged by reader that information to be furnished in this business plan is in allrespects confidential in nature, other than information which is in the public domain throughother means and that any disclosure or use of same by reader may cause serious harm or damageto Blue Investments.

Upon request, this document is to be immediately returned to Blue Investments.

___________________ Signature

Priscilla Asare

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. Executive Summary .................................................................................................. 52. Objectives ................................................................................................................. 6

3. Mission ..................................................................................................................... 64. Keys to Success ........................................................................................................ 75. Company Summary ................................................................................................... 76. Company Ownership ................................................................................................. 77. Start-up Summary ..................................................................................................... 88. Company Locations and Facilities ............................................................................. 89. Services .................................................................................................................... 910. Service Description ................................................................................................... 911. Competitive Comparison ......................................................................................... 1012. Fulfillment .............................................................................................................. 1013. Technology ............................................................................................................. 1114. Future Services ....................................................................................................... 1115. Market Analysis Summary ...................................................................................... 1116. arket Segmentation .................................................................................................. 1117. Target Market Segment Strategy ............................................................................. 1318. Market Needs .......................................................................................................... 1319. Market Trends ......................................................................................................... 1320. Market Growth ........................................................................................................ 1421. Service Business Analysis ....................................................................................... 1422. Competition and Buying Patterns ............................................................................ 1423. Main Competitors ................................................................................................... 1524. Web Plan Summary ................................................................................................ 1525. Website Marketing Strategy .................................................................................... 15

26. Development Requirements .................................................................................... 1527. Strategy and Implementation Summary ................................................................... 1528. SWOT Analysis ...................................................................................................... 1629. Strengths ................................................................................................................. 1630. Weaknesses ............................................................................................................. 1631. Opportunities .......................................................................................................... 1632. Threats .................................................................................................................... 1633. Value Proposition .................................................................................................... 17

34. Competitive Edge .................................................................................................... 1735. Marketing Strategy .................................................................................................. 1736. Positioning Statement .............................................................................................. 1737. Promotion Strategy ................................................................................................. 1738. Distribution Strategy ............................................................................................... 1839. Marketing Programs ................................................................................................ 18


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Table of Contents

49. Financial Plan ......................................................................................................... 2350. Start-up Funding ..................................................................................................... 24

51. Important Assumptions ........................................................................................... 2552. Key Financial Indicators ........................................... Error! Bookmark not defined. 53. Break-even Analysis ................................................. Error! Bookmark not defined. 54. Projected Profit and Loss .......................................... Error! Bookmark not defined. 55. Projected Cash Flow ................................................. Error! Bookmark not defined. 56. Projected Balance Sheet ............................................ Error! Bookmark not defined. 57. Business Ratios ......................................................... Error! Bookmark not defined. 58.


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Blue Financial Services

1. Executive SummaryExecutive Summary

Blue Investments (BI) is a financial service company that focuses on stocks of companies especiallyenvironmentally responsible companies, mutual funds, treasury bills, cash and fixed deposits, land andreal estate(property.) and other investment instruments. The East Legon-based L.L.C. is lead by CharlesOtoo, Leslie Okyere, Hamida Issaka and Princess Mary Adjei. BI has Strategic African Securities

(SAS) Ltd and EDC Investments Ltd as its fund managers and will enter into partnership withother financial institutions.

Services

BI has developed a criteria-based marker system which is easy and effective in evaluating a wide rangeof different companies on their environmental impact. Only financially prudent/performing companiesare evaluated, ensuring that its recommendations make both financial and environmental sense.

Competitive Edge

BI will leverage the proprietary evaluation system to quickly gain market share. The system isconvenient and based on extensive research, providing a streamlined overview of the environmentalperformance of the companies.

Market

BI will concentrate on the unserved niche of investing within the financial services market. BI facesdirect competition from already established financial houses, which does a similar job in providinginvestment portfolios.

Management Team

BI is lead by four undergraduate student managers, Charles Otoo, Hamida Issaka, Leslie Okyere andPrincess Mary Adjei. All four managers are final year students at the University of Ghana. Charles isoffering psychology, Hamida is offering French and Psychology, Leslie is also offering sociology andpolitical science and Princess Mary offers marketing.


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Chart: Highlights

2. Obj ectives

The objectives of BI are to reach a minimum of 100,000 GH Cedi cash and achieve an asset value of 500,000 Gh Cedes in 5 years.

Subsequent objectives include:

y Investment in growth companiesy To make the members understand and make use of investment opportunitiesy To inculcate the habit of investing into the members.y That all members shall be financially independent


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4 . K eys to Success

The keys to the success for BI are:y The creation of an unique, innovative, upscale atmosphere that will be Bay leafs hallmark in the

world of investmenty The creation of equal investment opportunities for all, from high profile clients to low-income

workers.y To always put the client first

5 . Company Summary

Blue Investment, is located in East Legon Plateau close, NTHC Estate, House No. 2.The company isengaged in the provision of investment portfolio, provide quality investment education and first classcustomer service.BI will also provide customers with a unique and innovative environment ininvestment especially in the payment, withdrawal and checking of statement.

BI is a start-up limited liability company consisting of four principle officers. The company wasformed to take advantage of the perceived weakness and inadequacies of other financial services interms of quality and customer satisfaction. BI will be in partnership with other asset managementcompanies. The principles in the company will be investing significant amounts of their own capital intothe company's current and future growth.

BI will appeal to individuals of all ages and backgrounds. The instructional Investment classes, and thehelpful staff that BI provides, will appeal to the audience that does not associate themselves with theinvestment age. This educational aspect will attract younger and elderly members of the community whoare rapidly gaining interest in the unique resources that investment has to offer.

6 . Company Ow nership

BI is a privately held Limited Liability Company. Charles Otoo, the founder of BI, Hamida Issaka, co-founder, Leslie Okyere and Princess Mary Adjei all hold equal stock positions as investors.


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7 . Start-up Summary

The company founders, Mr. Charles Otoo, Ms. Hamida Issaka, Ms. Princess Mary Adjei and Mr. LeslieOkyere, will handle day-to-day operations of the business and will work collaboratively to ensure thatthis business venture is a success.

It is estimated that the start-up costs will be $81,000 (including legal costs, insurance,licensees, advertising, and related expenses).The start-up costs are to be financed in equal portions bythe owners' personal funds.

Table: Start-up

Start-up

Requirements

Start-up ExpensesLegal $5,000Stationery etc. $500Brochures $500Licenses $2,000Insurance $500Research and Development $9,000Other $2,500Total Start-up Expenses $20,000

Start-up AssetsCash Required $79,000Other Current Assets $7,000Long-term Assets $19,000Total Assets $105,000

Total Requirements $125,000

8. Company Locations and Facilities


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9 . Services

BI is a financial service company that offers investment advice specifically for stocks. BI is also intothe purchase and sale of shares, bonds and securities, etc. (herein collectively referred to as stocks). BIcurrently has Strategic Africa Securities (SAS) and Ecobank Developmental Corporation (EDC) as itsfund managers, both is two most respected firms in the market. In addition to solid financialperformance criteria, BI has developed a set of environmental markers by which it can analyze andgrade the attractiveness of the environmental impact that a company has.

As mentioned earlier, the economic performance of a company is rated by the financial firms SAS and

EDC. BI purchases from SAS and EDC based on recognition and research. The confidence of theresearch is quite high because of the firms performance.

BI has developed a comprehensive set of environmental markers for which a company and their environmental impact can be evaluated. The following areas are evaluated:

y Energy usagey Water usagey Recycling programy Paper consumption and procurementy Chemical cleaning usagey Ground maintenance impacty Formal environmental policyy Recycling rate

All of the markers include current, next stage, and long run benchmarks.

BI takes the list of recommended investments from SAS and EDC and then applies environmentalmarker criteria to narrow the list down. The result is a list of possible investments (stocks) that arerecommended because of their fiscal and environmental performance. BI attempts to make evaluationsof companies in a wide range of sectors allowing the customer to make the choice as to what type of company/industry that they would like to invest in.

Blue Investment service charge is similar to a typical brokerage fee system based on a percentage. Fees

are a little higher than other standard financial services companies since additional research is required.The variance is not that material, particularly to customers that want good performing stocks but onlywant to invest with environmentally sound companies.

Several well respected studies indicate that "Blue" stocks are not inherently under performing. Actuallyit is just the reverse, companies that make decisions with environmental considerations in mind


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y Bondsy Treasury billsy

Stocks, mutual fundsy Insurance policiesy Annuitiesy IRAs

Within the industry, customers are served by a wide range of service providers including:

y Franchisesy Individual firmsy Online brokers

Buying decisions are often based on the familiarity that the person may have with a specific company.Most of the service providers can provide a similar menu of investment options.

Fee structures vary from firm to firm. Many are percentage based on the amount of money the clientinvestments. Some firms charge hourly rates while other firms charge a quarterly management fee. Thefee structures are set in stone for some service providers while others take a more flexible approach andare willing to work with the customer to set up special arrangements.

11 . Competitive Comparison

The financial sector is very competitive. The barriers to entry and exit in this market are very highmaking this an industry with a few numbers of rival firms with high turnover rates. Buyers do not have asignificant amount of power since they have a few numbers of companies to choose from.Moreover, services are undifferentiated, which means that customer loyalty is usually low. Investmentcompanies must compete on quality and timeliness of service, customer relations, and price.

Our main competitors are the already established investment houses. Although they are householdnames, they fail to do intensive research and understand their customers. We compete against them asexperts when it comes to understanding our customers.

12. Fulfillment

The key fulfillment and delivery will be provided by the principals of the business The real core value


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13 . Technology

Blue Investments will use the Invest Plus software developed by Yenkrom to record, track and evaluateinvestment contributions. The software will also also have an online web application component thatwill enable clients access customer care information and monitor their investments online.

14 . Future Services

Blue Investments will expand its investment activities after five years of operation, by adding a bank and brokerage firm. In addition BI is already working on contingency plans for adding more facilities inthe other universities.

After the fifth year Bay leaf plans to branch into the hospitality and fashion industry

15 . Market Analysis Summary

BI has identified two distinct groups of target customers. These two groups of customers aredistinguished by their educational status and income level. They have been grouped as customers with1thousand in household wealth. The main characteristic that makes thesegroups so attractive is their desire to make a difference in the world by making investment decisions thattake into account environmental factors.

The financial services industry has many different niches. Some advisors provide general investmentservices. Others will only offer one type of investments, maybe just mutual funds or might concentrateon bonds. Other service providers will concentrate on a specific niche like technology or sociallyresponsible companies.

16 . Market Segmentation

BI has segmented the target market into two distinct groups. The groups can be differentiated by their difference in income, income of 1 thousand Ghana cedes.

y 1 thousand Ghana cedes (income): These customers are middle class people who have aconcern for the environment and are taking personal action through their choosing of stock investments based on companies with both strong economic and environmental performance


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y Many of the people commute by bike, car pool or use public transportation whenpossible.

y

Retail purchases are made.

For recreational sports, particularly outdoor sports, the people are more likely to enjoy walking, running,football, and other human powered activities instead of golf, long tennis

Table: Market Analysis

M arket

AnalysisYear 1 Year 2 Year 3 Year 4 Year 5

PotentialCustomers

Growth CAGR

$1 millionworthcustomers

7% 223,090 238,706 255,415 273,294 292,425 7.00%

Total 7.85% 1,455,090 1,569,266 1,692,420 1,825,259 1,968,547 7.85%

Market Analysis (Pie)


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17 . Target Market Segment Strategy

Blue Investments has chosen the previously mentioned target market segments because of theideological beliefs and the fact that these beliefs translate into the customer groups needing servicesthat BI can provide. While the people can always purchase shares of an environmentally responsiblemutual fund, a way that they can exercise their beliefs, mutual funds are just one type of investments.The downsides of investments are their relatively low rate of return (relative to good stocks) and theinability to receive personalized service and the ability to make custom choices beyond the type of mutual fund.

Therefore, BI has chosen these specific customer segments because it is a market group that has unmetneeds. These groups have the money and willingness for an environmental investment, yet their onlycurrent choice is a mutual fund. BI has chosen to distinguish the four market segments by householdworth since this characteristic provides useful behavioral information regarding the different people.

18. Market Needs

Blue Investment is providing its customers with comprehensive financial services for middle to upper income customers, senior high and tertiary.BI seeks to fulfill the following benefits that are important toits customers.

y Comprehensiveness: The full selection of services offered, as well as full-detail research isappreciated by customers who would prefer to get all the relevant information and services fromone entity.

y Expertise: Customers demand expertise as they trust their money and financial futures to their financial planners.

y Customer Satisfaction: Because the customers trust so much to the planners, it is important thatthey feel completely satisfied by all interactions.

y Service oriented firms: The market suffers from a lack of service oriented firms. The marketneeds an investment firm that values and understand the customer as its number one priority

19 . Market Trends

The market trend can best be evaluated by the Ghana Stock Exchange (GSE) when it comes to stockssince companies listed on the market are found there. Although, the Ghana Stock Exchange (GSE) has


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20. Market Gro w th

The market for investments is expected to grow. Increased competition for wealth creation will fuelthis growth. Despite the revolution in technology, the effect of a customer receiving a Thank Younote in the mail is still an elegant way to say your patronage is appreciated. Customer loyalty isbuilt this way, and no suitable alternatives are in sight

21. Service Business Analysis

Blue Investments participates within the financial service industry. This multi-billion dollar industryservices a wide range of people with wealth creation such as investments. There are many differenttypes of investments offered including but not limited to:

y Bondsy Treasury billsy Stocks, mutual fundsy Insurance policiesy Fixed deposity Call accountsy Cash deposits

Within the industry, customers are served by a wide range of service providers including:

y Franchisesy Individual firmsy Online brokers

Buying decisions are often based on who you know or familiarity that the person may have with aspecific company. Most of the service providers can provide a similar menu of investment options.

Fee structures vary from firm to firm. Many are percentage based on the amount of money the clientinvestments. Some firms charge hourly rates while other firms charge a quarterly management fee. Thefee structures are set in stone for some service providers while others take a more flexible approach andare willing to work with the customer to set up special arrangements.

22. Competition and Buying Patterns

The competitors that BI faces typical are the range of financial advisors and already established firms.These direct competitors provide customers with a wide range of different investment options They


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23 . Main Competitors

The main competitors are:

y Established financial firmsy Brokerage companiesy Banks

24

. We b Plan Summary

The website will be used as a marketing tool to provide interested people with information regarding BIand the services they provide. The site will be fairly basic, an introduction to BI

25 . We b site Marketing Strategy

The website will be marketed via spoken word of BI personnel, on printed literature, as well assubmission to popular Internet search engines such as Google!

26 . Development Requirements

The development requirements for the website will not be significant due to the simple nature of the siteacting as an informational site as opposed to more complex websites that include ecommerce activitiesor more interactive features. A computer science student will be used for the design and construction of the site

27 . Strategy and Implementation Summary

Emphasize service

We will differentiate ourselves with SERVICE! We will establish our business offering as a clear andviable alternative for our target market.

Build a relationship-oriented business


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BI will also work toward establishing community involvement programs that will demonstrate how thebusiness can contribute to a better quality of community life. Such as: Community projects to help civic

groups obtain their financial goals (by offering fund raising events). Schools, churches, and other groups will be welcomed and will be shown how the facility can be used to help raise funds for their needs.

28. SW O T Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company and theopportunities and threats that the industry faces.

Blue Investment has a valuable inventory of strengths that will help it succeed. These strengths include:Strong relationship-selling techniques and a proven business model with a customer-centric focus .Strengths are valuable, but it is also important to realize the weaknesses Bay leaf investment mustaddress. These weaknesses include: Low brand power, a function of being a start-up company, thedifficulty generating brand equity with a limited marketing budget and low or no financial expertise,

both practical and educationalBIs strengths will help it capitalize on emerging opportunities. These opportunities include,Participation within a stable, growing industry, the true need for financial advisors by the majority of people, and locating the business within a growing metropolitan area. Threats that BI should be awareof include, the proliferation of financial advisor chains, collapse of industry, and credit and inflation risk

29 . Strengths

y Strong relationship-selling techniques.

y A proven business model with a customer-centric focus

3 0. Weaknesses

y Low brand power, a function of being a start-up company.y The difficulty generating brand equity with a limited marketing budget.y Low or no financial expertise, both practical and educational.

3 1. O pportunities


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y Credit and inflation risk

33 . Value Proposition

Blue Investments will build the most modern and technologically advanced software in Africa. Thecenters will be designed to fulfill the entire investment needs of our target audience.

Although our prime targeted customer is the middle income, senior high and tertiary our centers of business can and should entices and appease all walks of life. That is why our centers will bemarketed to everyone. While concentrating on making each individuals experience as fun and completeas possible.

34 . Competitive Edge

BI will leverage the proprietary evaluation system to quickly gain market share. The system isconvenient and based on extensive research, providing a streamlined overview of the environmentalperformance of the companies

35 . Marketing Strategy

Within the entire financial service market, BI will concentrate on four distinct market segments. BI hasresearched these four market segments and will use the captured information to better understand how toserve these segments, their specific needs, and how Blue investment can best communicate with them.

36 . Positioning Statement

W e will automatically position ourselves as the top, exclusive financial service in Africa.

37 . Promotion Strategy


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3 8. Distri b ution Strategy

Blue Investments uses a direct sales force, relationship selling, and sales/support lines to reach its

markets. These channels are most appropriate because each customer has special demands and needs tobe treated differently. After the initial contact, by brochures, referral, or email, the customer is assessedand assigned a sales rep and tech support person to help them and to familiarize themselves with eachindividual needs and history.


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First $ million account 1/1/2003 4/15/2004 $0 Charles SalesProfitability 1/1/2003 6/1/2005 $0 Issac Accounting

Revenue of $250K 1/1/2003 9/15/2004 $0 Charles SalesTotals $0

4 0. Sales Strategy

The competitive edge will be marketed by using the mantra of "think globally, act locally." Thismarketing slogan will encourage people to do their part in regards to helping the environment throughresponsible investing. The sales campaign will rely on metrics that indicate environmental investmentscan help.

The sales strategy will rely on using quantitative evidence. It will concentrate on that by making smartBI, you can achieve better than average returns on your money. A sales packet will be assembled and

distributed to prospective customers that show the better than average historic returns that BlueInvestments recommended companies enjoy.

4 1. Sales Forecast

The sales forecast is being done in a conservative fashion to avoid any inflated expectations that mightnot be able to be obtained. The first several months will be slow. BI has projected steady, incrementalgrowth in sales. This can be explained as a function of the increased proficiency in terms of sales for BIas well as an increased awareness of BI by the target customers.

Sales Forecast Year 1 Year 2 Year 3

Sales1 thousand Ghana cedi worth customers $22,889 $73,633 $83,766Total Sales $77,635 $230,298 $261,991

Direct Cost of Sales Year 1 Year 2 Year 3


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4 2. Sales Programs

BI has identified several milestones which will act as ambitious yet achievable goals for theorganization. By establishing the goals, the need to reach them will develop an implicit incentive for allorganizational members to work hard to achieve the milestones.

y Business plan completion: The business plan is the roadmap for the organization. There is valuein the process of the writing of the business plan, forcing the writers to analyze a multitude of issues.

y First account of over 1 million invested: This would be a significant amount of money for anindividual account and the organization will strive to achieve many of these customers.

y Profita b ility: An eventual necessity.y Revenue of $2 5 0,000 : With the achievement of this milestone and the previous one, there will

be a clear reaffirmation that the business model is successful.y Seminars and conferencesy Hall weeks


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44 . Milestones

The Blue Investment management team has established some basic milestones to keep the business planpriorities in place. Responsibility for implementation falls on the shoulders of Princess Mary. ThisMilestones Table below will be updated as the year progresses using the actual tables. New milestoneswill be added as the first year of operations commences.

MilestonesM ilestones

Milestone Start Date End Date Budget Manager DepartmentBusiness plancompletion

1/1/2003 2/1/2003 $0 PrincessMary

Planning

First $ million account 1/1/2003 4/15/2004 $0 Charles SalesProfitability 1/1/2003 6/1/2005 $0 Issac AccountingRevenue of $250K 1/1/2003 9/15/2004 $0 Charles Sales

Totals $0

45 . Management Summary

BI will be lead by the founding team of Charles Otoo, Hamida Issaka, Leslie and Princess MaryAdjei. Charles is a psychology major at the University of Ghana and is currently in his fourth year,

Hamida is also a level 400 student in University of Ghana and is offering French and (currently inFrance for her year abroad). Leslie is an undergraduate in the University of Ghana offering. LastlyPrincess Mary Adjei is a student of the University of Ghana Business School offering Marketing in her final year.

46 . O rganizational Structure

The company will follow a hierarchical structure with Mr. Charles Otoo is at the top as president/CEOand Mr. Leslie Okyere, Ms. Hamida Issaka and Ms. Princess Mary Adjei are managerial heads o andMr. Michael Kruger as department heads. The accounting and contracting department along with other positions will consist of only those individuals until such time as growth of the company will requiremore people. This is anticipated to occur in year three to five.


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Leslie Okyere is part of an event organizing group known as the Visa. He is final year student offeringsociology and political science Princess Mary Adjei is a final year student offering marketing. She was asales representative for First Banc Financial Services .

Blue Investment will generate 230,000 and 261,000 in sales in year two and three respectively.

4 8. Personnel Plan

Customer service is paramount in our business and our business plan. The management teamwill accomplish this goal by targeting employees who are willing to be trained and by providingencouragement and employee incentive programs. BI will contract with an employee leasingprogram to help provide the full-time staff with such things as:

o Health care insurance;o Dental care insurance;o Life insurance;o Vacation timeo Discount passes for staff family members;o Retirement plans;o Blue shares.

Our Personnel Plan reflects how we intend to utilize our peoples' assets. Most of them will be crosstrained and the management team of BI believes that an employee who is happy at work will enjoyworking. It is always easier to please customers with a staff that cares, a facility that is clean and

equipment that is kept in proper working order.Our personal plan also reflects how we must intend spending on Marketing and Research. By employingthe tool for Integrated Marketing Communication (IMC) tools we can build a household name for BI. This strategy will make it easier for as to position ourselves in the minds of our target audience. Wewill also spend much in research so as to understand the changing or dynamic needs of our target marketand the market in general (market trends).

y

Charles: administrative work Company research, development of markers, sales.y Hamida : Publicity, Public Relations.y Leslie:y Princess Mary: Marketing and Research, Secretary, Bookkeepingy Account manager: Customer support for their investment accounts.y Ultimate Advertising: Handle all Advertising and Branding materials


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Personnel Plan FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Services Personnel Charles $600 $720 $840 $960 $1,080Hamida $600 $720 $840 $960 $1,080Investment $3,600 $6,000 $12,000 $24,000 $36,000Accountant $600 $600 $600 $600 $600Marketing and Research $12,000 $12,000 $12,000 $12,000 $15,000Su b total $17,400 $20,040 $26,280 $38,520 $53,760

Sales and MarketingPersonnel Leslie $600 $720 $840 $960 $1,080Princess Mary $600 $720 $840 $960 $1,080Employee (Sales Force) $12,000 $1,440 $2,500 $2,500 $3,000Ultimate Advertisers $1,570 $24,500 $30,000 $30,000 $30,000Su b total $14,770 $27,380 $34,180 $34,420 $35,160

General and AdministrativePersonnel Logistics $18,000 $18,000 $18,000 $18,000 $18,000Internet $6,000 $6,600 $7,000 $7,000 $7,000Communication $1,200 $1,200 $1,200 $1,200 $1,200Su b total $25,200 $25,800 $26,200 $26,200 $26,200

O ther Personnel O thers $6,000 $8,920 $5,000 $5,000 $5,000Miscellaneous $6,000 $6,000 $6,000 $6,000 $6,000Su b total $12,000 $14,920 $11,000 $11,000 $11,000

Total People 10 15 15 15 15

Total Payroll $69,370 $88,140 $97,660 $110,140 $126,120

49 . Financial Plan

The following sections will outline important financial information.


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5 0. Start-up Funding

The following equipment will be needed for start up:

y Phone system (4 lines).y Workstation computers (4), back end server, DSL Internet connection, and laser printer.y Office furniture, meeting room and waiting room furniture.y Fax machine, copier, lighting, and assorted office supplies.y

Branding Materials

Table: Start-up Funding

Start-up Funding Start-up Expenses to Fund $20,000

Start-up Assets to Fund $105,000Total Funding Required $125,000

AssetsNon-cash Assets from Start-up $26,000Cash Requirements from Start-up $79,000Additional Cash Raised $0Cash Balance on Starting Date $79,000Total Assets $105,000

Liabilities and Capital

LiabilitiesCurrent Borrowing $0Long-term Liabilities $0Accounts Payable (Outstanding Bills) $0Other Current Liabilities (interest-free) $0Total Liabilities $0

Capital


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Total Capital and Liabilities $105,000

Total Funding $125,000

5 1. Important Assumptions

The following table details important Financial Assumptions

Table: General Assumptions

General Assumptions Year 1 Year 2 Year 3

Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 30.00% 30.00% 30.00%O ther 0 0 0

5 2. Break-even Analysis

The Break-even Analysis is shown in the following table and chart. Chart: Break-even Analysis


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Table: Break-even Analysis

B reak-even Analysis

Monthly Revenue Break-even $15,225

Assumptions:Average Percent Variable Cost 15%Estimated Monthly Fixed Cost $12,941

53. Projected Profit and Loss

The following table will indicate Projected Profit and Loss.

Chart: Gross Margin Monthly


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Chart: Profit Monthly

Chart: Profit Yearly


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Sales $77,635 $230,298 $261,991Direct Cost of Sales $11,645 $34,545 $39,299Other Costs of Sales $0 $0 $0Total Cost of Sales $11,645 $34,545 $39,299

Gross Margin $65,990 $195,753 $222,692Gross Margin % 85.00% 85.00% 85.00%

Expenses

Payroll $120,250 $152,000 $152,000Sales and Marketing and Other Expenses

$0 $0 $0

Depreciation $3,804 $317 $317Rent $7,800 $7,800 $7,800Utilities $1,800 $1,800 $1,800Insurance $1,800 $1,800 $1,800Payroll Taxes $18,038 $22,800 $22,800

Other $1,800 $1,800 $1,800

Total Operating Expenses $155,292 $188,317 $188,317

Profit Before Interest and Taxes ($89,301) $7,436 $34,375EBITDA ($85,497) $7,753 $34,692

Interest Expense $73 $220 $120Taxes Incurred $0 $2,165 $10,277

Net Profit ($89,374) $5,051 $23,979Net Profit/Sales -115.12% 2.19% 9.15%

54 . Cash Flo w

The following table and chart will indicate Projected Cash Flow.

Table: Cash Flow

P ro Forma Cash FlowYear 1 Year 2 Year 3

Bl Fi i l S i


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New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0Subtotal Cash Received $80,635 $230,298 $261,991

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $120,250 $152,000 $152,000Bill Payments $38,394 $71,497 $84,646Subtotal Spent on Operations $158,644 $223,497 $236,646

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $300 $1,000 $1,000Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $158,944 $224,497 $237,646

Net Cash Flow ($78,308) $5,801 $24,345Cash Balance $692 $6,492 $30,837

Chart: Cash

Bl Fi i l S i


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55 . Balance Sheet

The following table will indicate the Projected Balance Sheet.

Table: Balance Sheet

P ro Forma B alance Sheet Year 1 Year 2 Year 3

Assets

Current AssetsCash $692 $6,492 $30,837Other Current Assets $7,000 $7,000 $7,000Total Current Assets $7,692 $13,492 $37,837

Long-term AssetsLong-term Assets $19,000 $19,000 $19,000

Accumulated Depreciation $3,804 $4,121 $4,438Total Long-term Assets $15,196 $14,879 $14,562Total Assets $22,888 $28,371 $52,399

Liabilities and Capital Year 1 Year 2 Year 3

Current LiabilitiesAccounts Payable $4,561 $5,994 $7,043Current Borrowing $2,700 $1,700 $700Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $7,261 $7,694 $7,743

Long-term Liabilities $0 $0 $0Total Liabilities $7,261 $7,694 $7,743

Paid-in Capital $125,000 $125,000 $125,000Retained Earnings ($20,000) ($109,374) ($104,323)Earnings ($89,374) $5,051 $23,979Total Capital $15,626 $20,677 $44,656Total Liabilities and Capital $22,888 $28,371 $52,399



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Table: Ratios

R atio AnalysisYear 1 Year 2 Year 3 Industry

ProfileSales Growth n.a. 196.64% 13.76% 8.79%

Percent of Total AssetsOther Current Assets 30.58% 24.67% 13.36% 44.18%

Total Current Assets 33.61% 47.56% 72.21% 76.27%Long-term Assets 66.39% 52.44% 27.79% 23.73%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 31.73% 27.12% 14.78% 38.61%Long-term Liabilities 0.00% 0.00% 0.00% 13.60%Total Liabilities 31.73% 27.12% 14.78% 52.21%Net Worth 68.27% 72.88% 85.22% 47.79%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 85.00% 85.00% 85.00% 100.00%Selling, General & AdministrativeExpenses

200.12% 82.81% 75.85% 82.68%

Advertising Expenses 0.00% 0.00% 0.00% 1.66%Profit Before Interest and Taxes -115.03% 3.23% 13.12% 1.37%

Main RatiosCurrent 1.06 1.75 4.89 1.59Quick 1.06 1.75 4.89 1.22Total Debt to Total Assets 31.73% 27.12% 14.78% 3.09%Pre-tax Return on Net Worth -571.95% 34.90% 76.71% 60.22%Pre-tax Return on Assets -390.49% 25.43% 65.37% 7.76%

Additional Ratios Year 1 Year 2 Year 3Net Profit Margin -115.12% 2.19% 9.15% n.aReturn on Equity -571.95% 24.43% 53.70% n.a

Activity Ratios



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Net Working Capital $430 $5,798 $30,094 n.aInterest Coverage -1,231.74 33.80 286.46 n.a

Additional RatiosAssets to Sales 0.29 0.12 0.20 n.aCurrent Debt/Total Assets 32% 27% 15% n.aAcid Test 1.06 1.75 4.89 n.aSales/Net Worth 4.97 11.14 5.87 n.aDividend Payout 0.00 0.00 0.00 n.a

Appendix


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Page 1

Table: Sales Forecast

Sales Forecast

Month1 Month2 Month3 Month4 Month5 Month6 Month7 Month8 Month9 Month10 Month11 Month12Sales$1 million worthcustomers

0% $0 $0 $0 $0 $0 $2,136 $2,763 $2,977 $3,513 $3,552 $3,880 $4,068

Total Sales $0 $0 $0 $2,500 $3,545 $6,681 $8,641 $9,312 $10,987 $11,110 $12,135 $12,724

Direct Cost of Sales Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

$1 million worthcustomers

$0 $0 $0 $0 $0 $320 $414 $447 $527 $533 $582 $610

Su b total Direct Costof Sales

$0 $0 $0 $375 $532 $1,002 $1,296 $1,397 $1,648 $1,667 $1,820 $1,909

Appendix


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Page 2

Table: Personnel

P ersonnel P lan

Month1

Month2

Month3

Month4 Month5 Month6 Month7 Month8 Month9 Month10 Month11 Month12

Sarah 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Steve 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Account Manager 0% $0 $0 $1,500 $2,000 $2,500 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000AdministrativeAssistant

0% $0 $0 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

Bookkeeper 0% $0 $0 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000Research Assistant 0% $0 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750Total People 2 3 6 6 6 6 6 6 6 6 6 6

Total Payroll $5,000 $5,750 $9,750 $10,250 $10,750 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250

Appendix


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Page 3

Table: General Assumptions

G eneral

Assumptions Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Plan Month 1 2 3 4 5 6 7 8 9 10 11 12Current InterestRate

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-termInterest Rate

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%O ther 0 0 0 0 0 0 0 0 0 0 0 0

Appendix

T bl P fi d L


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Page 4

Table: Profit and Loss

P ro FormaP

rofit and LossMonth

1Month

2Month 3 Month 4 Month 5 Month

6Month

7Month

8Month

9Month

10Month

11Month

12Sales $0 $0 $0 $2,500 $3,545 $6,681 $8,641 $9,312 $10,987 $11,110 $12,135 $12,724Direct Costof Sales

$0 $0 $0 $375 $532 $1,002 $1,296 $1,397 $1,648 $1,667 $1,820 $1,909

Other Costs

of Sales

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Costof Sales

$0 $0 $0 $375 $532 $1,002 $1,296 $1,397 $1,648 $1,667 $1,820 $1,909

GrossMargin

$0 $0 $0 $2,125 $3,013 $5,679 $7,345 $7,916 $9,339 $9,444 $10,315 $10,816

GrossMargin %

0.00% 0.00% 0.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%

ExpensesPayroll $5,000 $5,750 $9,750 $10,250 $10,750 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250Sales andMarketingand Other Expenses

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Depreciation

$317 $317 $317 $317 $317 $317 $317 $317 $317 $317 $317 $317

Rent $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650Utilities $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150PayrollTaxes

15%

$750 $863 $1,463 $1,538 $1,613 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688 $1,688

Other $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150

Appendix


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Page 5

TotalOperatingExpenses

$7,167 $8,030 $12,630 $13,205 $13,780 $14,355 $14,355 $14,355 $14,355 $14,355 $14,355 $14,355

ProfitBeforeInterest andTaxes

($7,167)

($8,030)

($12,630)

($11,080)

($10,766)

($8,676) ($7,010)

($6,439)

($5,016)

($4,911)

($4,040)

($3,539)

EBITDA ($6,850)

($7,713)

($12,313)

($10,763)

($10,449)

($8,359) ($6,693)

($6,122)

($4,699)

($4,594)

($3,723)

($3,222)

Interest

Expense

$0 $0 $0 $0 $0 $0 $0 $0 $0 $25 $25 $23

TaxesIncurred

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit ($7,167)

($8,030)

($12,630)

($11,080)

($10,766)

($8,676) ($7,010)

($6,439)

($5,016)

($4,936)

($4,065)

($3,561)

NetProfit/Sales

0.00% 0.00% 0.00% -443.18%

-303.70%

-129.85

%

-81.13%

-69.14%

-45.65%

-44.43%

-33.50%

-27.99%

Appendix

Table: Cash Flow


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Page 6

Table: Cash Flow

P ro Forma

Cash Flow Month1

Month2

Month 3 Month 4 Month 5 Month6

Month7

Month8

Month9

Month10

Month11

Month12

CashReceived

Cash fromOperations

Cash Sales $0 $0 $0 $2,500 $3,545 $6,681 $8,641 $9,312 $10,987 $11,110 $12,135 $12,724SubtotalCash fromOperations

$0 $0 $0 $2,500 $3,545 $6,681 $8,641 $9,312 $10,987 $11,110 $12,135 $12,724

AdditionalCashReceivedSales Tax,VAT,HST/GSTReceived

0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewCurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $0 $0

New Other Liabilities(interest-free)

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Appendix

Current


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Page 7

CurrentAssetsSales of Long-term

Assets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewInvestmentReceived

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCashReceived

$0 $0 $0 $2,500 $3,545 $6,681 $8,641 $9,312 $10,987 $14,110 $12,135 $12,724

Expenditures Month1 Month2 Month 3 Month 4 Month 5 Month 6 Month7 Month8 Month9 Month10 Month11 Month12

Expenditures fromOperationsCashSpending

$5,000 $5,750 $9,750 $10,250 $10,750 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250 $11,250

BillPayments

$62 $1,854 $1,983 $2,578 $3,020 $3,262 $3,799 $4,087 $4,193 $4,437 $4,484 $4,636

SubtotalSpent onOperations

$5,062 $7,604 $11,733 $12,828 $13,770 $14,512 $15,049 $15,337 $15,443 $15,687 $15,734 $15,886

AdditionalCash SpentSales Tax,VAT,HST/GSTPaid Out

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PrincipalRepaymentof CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300

Appendix

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0


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Page 8

Other LiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-termLiabilitiesPrincipalRepayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseOther CurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseLong-termAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0SubtotalCash Spent

$5,062 $7,604 $11,733 $12,828 $13,770 $14,512 $15,049 $15,337 $15,443 $15,687 $15,734 $16,186

Net Cash

Flow

($5,062

)

($7,604

)

($11,733

)

($10,328

)

($10,225

)

($7,831

)

($6,409

)

($6,025

)

($4,456

)

($1,577

)

($3,599

)

($3,461

)CashBalance

$73,938 $66,335 $54,602 $44,275 $34,049 $26,218 $19,809 $13,785 $9,329 $7,752 $4,153 $692

Appendix

Table: Balance Sheet


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Page 9

P ro FormaB alanceSheet

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Assets StartingBalances

CurrentAssetsCash $79,000 $73,938 $66,335 $54,602 $44,275 $34,049 $26,218 $19,809 $13,785 $9,329 $7,752 $4,153 $692Other CurrentAssets

$7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000

TotalCurrent

Assets

$86,000 $80,938 $73,335 $61,602 $51,275 $41,049 $33,218 $26,809 $20,785 $16,329 $14,752 $11,153 $7,692

Long-termAssetsLong-termAssets

$19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000 $19,000

AccumulatedDepreciation

$0 $317 $634 $951 $1,268 $1,585 $1,902 $2,219 $2,536 $2,853 $3,170 $3,487 $3,804

TotalLong-termAssets

$19,000 $18,683 $18,366 $18,049 $17,732 $17,415 $17,098 $16,781 $16,464 $16,147 $15,830 $15,513 $15,196

TotalAssets

$105,000

$99,621 $91,701 $79,651 $69,007 $58,464 $50,316 $43,590 $37,249 $32,476 $30,582 $26,666 $22,888

Appendix

Liabilities Month Month Month Month Month Month Month Month Month Month Month Month


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Page 10

and Capital 1 2 3 4 5 6 7 8 9 10 11 12

CurrentLiabilitiesAccountsPayable

$0 $1,788 $1,897 $2,477 $2,912 $3,136 $3,663 $3,947 $4,045 $4,288 $4,330 $4,478 $4,561

CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,000 $3,000 $2,700

Other CurrentLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCurrentLiabilities

$0 $1,788 $1,897 $2,477 $2,912 $3,136 $3,663 $3,947 $4,045 $4,288 $7,330 $7,478 $7,261

Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalLiabilities

$0 $1,788 $1,897 $2,477 $2,912 $3,136 $3,663 $3,947 $4,045 $4,288 $7,330 $7,478 $7,261

Paid-inCapital

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

$125,000

RetainedEarnings

($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)

Earnings $0 ($7,167)

($15,197)

($27,826)

($38,906)

($49,672)

($58,347)

($65,357)

($71,796)

($76,812)

($81,748)

($85,813)

($89,374)

TotalCapital

$105,000

$97,833 $89,804 $77,174 $66,095 $55,328 $46,653 $39,643 $33,204 $28,188 $23,252 $19,187 $15,626

TotalLiabilitiesand Capital

$105,000

$99,621 $91,701 $79,651 $69,007 $58,464 $50,316 $43,590 $37,249 $32,476 $30,582 $26,666 $22,888

Net Worth $105,000

$97,833 $89,804 $77,174 $66,095 $55,328 $46,653 $39,643 $33,204 $28,188 $23,252 $19,187 $15,626

Appendix


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Page 11

Reference

Business Plan Pro Premier, 2007 version

Tim Berry, Palo Alto Software, Inc., 1995 2009

Business Plan for Blue Investments

Documents

Transcript of Business Plan for Blue Investments