Convenience Store Business Plan 4i624k
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Convenience Store Business Plan Executive Summary Introduction MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will continue to exist into the future - the need for speed. MillenniumMart will be the first fully automated, 24 hour convenience store that is more like an enormous dispensing machine than the traditional store. The company expects to capture market share by becoming the low cost leader in the convenience store industry by significantly reducing one of the primary expenses, which is labor. Through our completely automated shopping experience, customers will have the chance to shop for everyday items at reduced prices, thus undercutting competition such as 7-11, AmPm, Circle K, and other local convenience store chains. The possibilities for expansion are excellent not only in the local area, but in neighboring communities as well. The Company The company is a t venture start-up company between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated as a class C corporation in the state of Delaware with all shares held by private investors. Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a further 11% shares based on growth and profitability after the first five years. MillenniumMart is expected to open its first store in downtown Manhattan in March of Year 1. The company will be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO. The Products/Services MillenniumMart will sell the same products as other convenience stores in the same packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies, pet supplies, paper products, toothpaste, etc. All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to create personal s that can display preferred items, retain shopping lists and other services. An automated, interactive "customer service rep" will be able to answer questions and on comments to the company's management.
In addition, the company is looking into ways to sell restricted items such as beer, wine and cigarettes and to set up a separate Internet area for remote access to the Web and email for its customers. The Market Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area. Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast. Financial Considerations Our start-up requirements come to $453,000, which are largely single time fees associated with opening the store. These costs are financed by both private investors and the investment of Martin-Bower. It should be noted that we expect to be operating at a loss for the first six months before advertising begins to take effect and draw in customers. MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during the first two years as it strives toward sustainable profitability. Almost all of this funding has been arranged through lending institutions and private investors already. We do not anticipate any cash flow problems during the next three years.
1.1 Objectives These are the goals for the next three years for MillenniumMart: • • • •
Achieve profitability by July Year 1; Earn approximately $200,000 in sales by Year 3; Start paying dividends by Year 3; Start up second store by Year 4.
1.2 Mission MillenniumMart's primary objective is to create a new and revolutionary distribution outlet that will significantly reduce prices for its customers and provide greater services with an equal level of quality. The company seeks to be first to market with this daring new idea so as to capture market share and create greater than average profits.
1.3 Keys to Success In order to survive and expand, MillenniumMart must keep the following issues in mind: • • •
We must attain a high level of visibility through the media, billboards, and other advertising. We must establish rigid procedures for cost control and incentives for maintaining tight control. We must expend a significant amount on R&D in order to constantly be able to offer better and greater products and services.
Company Summary Automated stores such as MillenniumMart are not new, they have existed in Asia, especially in Japan for a number of years now and have been quite successful there. Mr. James Bean, MillenniumMart's founder and the driving force behind the t venture, has been intrigued with the idea of bringing this new type of store to the U.S. since it can significantly reduce costs and the ability of an automated store to provide products and services is only limited to the imagination of management. The company is a t venture start-up company between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated in the state of Delaware with all shares held by private investors.
2.1 Company Ownership We will be structured as a C-Corporation which operates as a standard corporation. This form was chosen by the Board of Directors because of various tax advantages. Retained earnings will not be distributed as dividends for at least five years, thus
enabling the early retirement of the debt. Additionally, the corporate structure offers limited personal liability. The company is a t venture start-up between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated in the state of Delaware with all shares held by private investors. Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a further 11% shares based on growth and profitability after the first five years. MillenniumMart is expected to open its first store in downtown Manhattan in March of 2003. The company will be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.
2.2 Start-up Summary Our start-up expenses come to $453,000, which are largely single time fees associated with opening the store. These costs are financed by both private investors and the investment of Martin-Bower.
Start-up Requirements Start-up Expenses Legal Pre-sale advertising/marketing Land location and finders fee Consultants Insurance Rent Research and Development Expensed Equipment Initial store facilities Other Total Start-up Expenses
$2,400 $8,000 $8,000 $4,000 $1,780 $12,000 $10,000 $50,000 $150,000 $3,000 $249,180
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets
$113,820 $10,000 $8,000 $72,000 $203,820
Total Requirements
$453,000
Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
$249,180 $203,820 $453,000
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
$90,000 $113,820 $0 $113,820 $203,820
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities s Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities
$15,000 $100,000 $8,000 $10,000 $133,000
Capital Planned Investment Private Investors Martin-Bower management Other Additional Investment Requirement Total Planned Investment
$150,000 $110,000 $60,000 $0 $320,000
Loss at Start-up (Start-up Expenses) Total Capital
($249,180) $70,820
Total Capital and Liabilities
$203,820
Total Funding
$453,000
Products As the most progressive company in the industry, MillenniumMart plans to offer a greater number of products and services in the future so as to create another dimension of competitive advantage. So that our customers will feel secure, we will subscribe to the security services offered by the shopping center of which we are a
part. This will cut down on graffiti and loitering and insure the safety of both employees and customers. MillenniumMart will sell the same products as other convenience stores in the same packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies, pet supplies, paper products, toothpaste, etc. All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to create personal s that can display preferred items, retain shopping lists and other services. An automated, interactive "customer service rep" will be able to answer questions and on comments to the company's management.
Market Analysis Summary Our market is booming. Convenience store industry sales rose 8.6% for 2002. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area. Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.
4.1 Market Segmentation Our target market for our test store encomes a five mile radius in which the approximate population is 150,000 (based on census information). The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic (19%) with occupations classified as professional/technical, homemaker, or retired. The majority of household incomes range from $20,000 - $30,000 (50.3%), yet there are also affluent household incomes ranging from $50,000 - $100,000 (15.4%).
The median income in this area is $48,096, compared to the whole New York area which is $34,248. The typical "head of household" age is 25 - 34 (22.4%) or age 34 44 (23.1%) with a median age of 44.4 years old and an average age of 32 years old. Target market segments Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items.
Market Analysis Potential Customers Late night shoppers Quick shoppers Other Total
Year 1 Year 2 Year 3 Year 4 Year 5 Growth CAGR 3% 78,000 80,340 82,750 85,233 87,790 3.00% 2% 42,000 42,840 43,697 44,571 45,462 2.00% 3% 30,000 30,840 31,704 32,592 33,505 2.80% 2.68% 150,000 154,020 158,151 162,396 166,757 2.68%
4.2 Industry Analysis Convenience store industry sales rose 8.6% to $86.3 billion for 2002. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%). The 2002 results confirm that a new, upward trend is emerging. This upward trend is based on several factors, and occurred along with a slow rebound in the general economy. Merchandise sales per customer increased 7.4% in 2000 suggesting that convenience stores are placing higher priority in filling the customers' needs. Companies that align themselves properly to fill those needs will be successful in the future.
4.2.1 Competition and Buying Patterns 7-11 holds approximately 30% of the industry market, and in 1999 their net income was $160 million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery establishments on the east coast.
Strategy and Implementation Summary MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers. The most critical element of MillenniumMart's success will be its marketing and advertising. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio ments to capture customers. Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. We expect an average 27% increase in sales from year to year. This may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative.
5.1 Competitive Edge MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers. In the convenience store industry, low cost and availability are the two success criteria. We plan to create these advantages in a new, high-tech environment that will retain customers.
5.2 Marketing Strategy The most critical element of MillenniumMart's success will be its marketing and advertising. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio ments to capture customers. Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. Since automated shopping is still in its infancy, the firm expects to invest a great deal of its available cash and revenues in marketing efforts.
5.3 Sales Strategy Since our store will be a stand-alone, remote facility, there is little in the way being able to directly influence how we close the sales other than to have an attractive
storefront with our low prices and easy-to-use system. We believe that this in itself is its own seller. One critical procedure to ensure top customer service and reliability will be establishing a method for keeping enough inventory of all our products. We will be using industry data on inventory for other convenience store chains to assist us.
5.3.1 Sales Forecast Based on a 20% mark-up, our forecasted sales for years one, two, and three respectively are: $2,480,106; $3,149,735; $4,000,163. This gives us an average 27% increase from year to year. This may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative. These sales figures are based on a conglomerate of commuter and walk-by traffic with an average $3.00 purchase amount conforming to industry averages. The target profit margin was defined as an average net profit of all merchandise.
Sales Forecast Year 1
Year 2
Year 3
Sales Drinks Snacks Magazines/newspapers General grocery items Other Total Sales
$978,070 $873,277 $209,586 $279,449 $139,724 $2,480,106
Direct Cost of Sales Drinks Snacks Magazines/newspapers General grocery items Other Subtotal Direct Cost of Sales
Year 1 Year 2 Year 3 $753,114 $956,455 $1,214,697 $672,423 $853,977 $1,084,551 $161,382 $204,955 $260,292 $215,175 $273,273 $347,056 $107,588 $136,636 $173,528 $1,909,682 $2,425,296 $3,080,125
$1,242,149 $1,109,061 $266,175 $354,900 $177,450 $3,149,735
$1,577,529 $1,408,508 $338,042 $450,723 $225,361 $4,000,163
Management Summary As stated earlier, MillenniumMart will be a t venture between Mr. Wallace Bean and his associates and the management of Martin-Bower, a large food distribution company. The company officers will include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru Takeda, who will be operations manager. Since the firm is a start-up, there will be little in the way of formal structure at first. The company also plans to hire three technicians who will service the automated store and a office manager. Additional personnel will be added once more stores are set up. Mr. Wallace Bean is a graduate of the University of Texas, Austin's school of business. He has worked for more than twelve years in the food distribution and grocery store industry, including positions as vice president of marketing for Fry's Food and Drug, director of special projects for Giant Foods and more recently, senior vice president for Martin-Bower. Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight years experience working for various companies. Her last job was as a financial analyst for Circle K corporation. Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been operational manager for Kiyama Inc. for the past six years which operates approximately six hundred automated convenience stores throughout Japan. Mr. Takeda has moved to the United States for the express purpose of bringing this new type of store to this country.
6.1 Personnel Plan Initially the company will only have a small staff including upper management, an operations technician and office manager. All other services, such as bookkeeping, will be outsourced. Personnel Plan Year 1
Year 2
Year 3
Mr. Bean Mrs. Tuck Mr. Takeda Office manager Technicians Total People
$42,000 $42,000 $30,000 $20,400 $33,000 7
$48,000 $48,000 $40,000 $22,000 $56,000 7
$52,000 $52,000 $48,000 $28,000 $58,000 7
Total Payroll
$167,400 $214,000 $238,000
Financial Plan The following tables illustrate our financial projections over the next three years. Please note that we expect to be operating at a loss for the first six months before advertising begins to take effect and draw in customers. As retained earnings increase, a debt retirement fund will be established to encourage early repayment, thus relieving interest expense. Also, a 30-day payment period for purchases will be used to avoid incurring liabilities.
7.1 Important Assumptions MillenniumMart is basing its assumptions on a stable growth market using average interest rates over the past ten years. General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Year 1 Year 2 Year 3 1 2 3 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 30.00% 30.00% 30.00% 0 0 0
7.2 Break-even Analysis The following table and chart show our Break-even Analysis. Although our breakeven point seems quite high, we are expecting to have higher than average fixed costs during the period of this plan due to customer "creation costs," R&D costs, higher rent in a premier spot, higher percentage of payroll costs to overall fixed costs with a small company, and the need to import and pay for the store facilities. We expect to have a more reasonable positive retained earnings point around year 5.
Break-even Analysis
Monthly Revenue Break-even $165,326 Assumptions: Average Percent Variable Cost 77% Estimated Monthly Fixed Cost $38,025
7.3 Projected Profit and Loss The following table explains our itemized costs and determines gross and net margin. Please note that these predictions are weighted toward having higher costs in comparison to revenues in case unexpected hidden costs arise. The charts give a visual representation of the data.
Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales
$2,480,106 $1,909,682 $0 $1,909,682
Year 2 $3,149,735 $2,425,296 $0 $2,425,296
Year 3 $4,000,163 $3,080,125 $0 $3,080,125
Gross Margin Gross Margin %
$570,424 23.00%
$724,439 23.00%
$920,037 23.00%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased equipment Rent Utilities ing/bookeeping Insurance Payroll Taxes Other
$167,400 $60,000 $7,200 $50,000 $84,000 $28,800 $6,500 $14,400 $0 $38,000
$214,000 $130,000 $7,200 $60,000 $84,000 $30,000 $9,000 $14,400 $0 $45,000
$238,000 $130,000 $7,200 $60,000 $84,000 $30,000 $9,000 $14,400 $0 $45,000
Total Operating Expenses
$456,300
$593,600
$617,600
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
$114,124 $121,324 $16,250 $29,362
$130,839 $138,039 $16,400 $34,332
$302,437 $309,637 $14,650 $86,336
Net Profit Net Profit/Sales
$68,512 2.76%
$80,107 2.54%
$201,451 5.04%
7.4 Projected Cash Flow MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during the first two years as it strives toward sustainable profitability. Almost all of this funding has been arranged through lending institutions and private investors already. We do not anticipate any cash flow problems during the next three years.
Pro Forma Cash Flow Year 1
Year 2
Year 3
Cash Received Cash from Operations Cash Sales
$2,480,106
$3,149,735
$4,000,163
Subtotal Cash from Operations
$2,480,106
$3,149,735
$4,000,163
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 $5,000 $0 $50,000 $0 $0 $54,000 $2,589,106
$0 $0 $0 $0 $0 $0 $78,000 $3,227,735
$0 $0 $0 $0 $0 $0 $0 $4,000,163
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations
$167,400 $2,177,877 $2,345,277
$214,000 $3,134,865 $3,348,865
$238,000 $3,620,688 $3,858,688
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 $2,345,277
$0 $7,000 $0 $5,000 $0 $0 $0 $3,360,865
$0 $13,000 $0 $10,000 $0 $30,000 $50,000 $3,961,688
Net Cash Flow Cash Balance
$243,829 $357,649
($133,130) $224,519
$38,475 $262,994
7.5 Projected Balance Sheet The following table shows the Projected Balance Sheet for MillenniumMart. Pro Forma Balance Sheet Year 1
Year 2
Year 3
Assets Current Assets Cash Inventory Other Current Assets Total Current Assets
$357,649 $371,402 $8,000 $737,050
$224,519 $471,680 $8,000 $704,199
$262,994 $599,034 $8,000 $870,027
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets
$72,000 $7,200 $64,800 $801,850
$72,000 $14,400 $57,600 $761,799
$102,000 $21,600 $80,400 $950,427
Liabilities and Capital Current Liabilities s Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities
Year 1
$428,518 $20,000 $10,000 $458,518
Year 2
$242,359 $13,000 $10,000 $265,359
Year 3
$302,537 $0 $10,000 $312,537
Long-term Liabilities Total Liabilities
$150,000 $608,518
$145,000 $410,359
$135,000 $447,537
Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital
$374,000 ($249,180) $68,512 $193,332 $801,850
$452,000 ($180,668) $80,107 $351,439 $761,799
$452,000 ($150,561) $201,451 $502,891 $950,427
Net Worth
$193,332
$351,439
$502,891
7.6 Business Ratios We are using the industry standard business ratios for independent convenience store chains as a comparison to our own. There are some significant differences between the two since we have a completely different storefront than our competitors. First of all our s receivable are very different as we expect to have higher sales using credit cards than other stores, due to the convenience of using credit cards and cash cards at our facility. There is generally a three day waiting period to receive funds from the credit card company. This is a short period of time compared to a normal collection day period of 30 days, but it is still something we need to factor for. In addition, we expect higher percentages in inventory as we will be operating only one store initially and even many independent convenience store owners often have two or more facilities. Our long-term assets are low since we are only renting our facilities. Ratio Analysis Year 1
Year 2
Year 3 Industry Profile 2.27%
Sales Growth
0.00%
27.00%
27.00%
Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets
46.32% 1.00% 91.92% 8.08% 100.00%
61.92% 1.05% 92.44% 7.56% 100.00%
63.03% 0.84% 91.54% 8.46% 100.00%
22.18% 26.81% 56.12% 43.88% 100.00%
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
57.18% 18.71% 75.89% 24.11%
34.83% 19.03% 53.87% 46.13%
32.88% 14.20% 47.09% 52.91%
26.39% 24.87% 51.26% 48.74%
Percent of Sales Sales Gross Margin Selling, General & istrative Expenses Advertising Expenses Profit Before Interest and Taxes
100.00% 23.00% 20.26% 0.00% 4.60%
100.00% 23.00% 20.10% 0.00% 4.15%
100.00% 23.00% 17.78% 0.00% 7.56%
100.00% 23.55% 16.21% 0.85% 1.02%
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
1.61 0.80 75.89% 50.63% 12.21%
2.65 0.88 53.87% 32.56% 15.02%
2.78 0.87 47.09% 57.23% 30.28%
1.68 0.71 4.63% 57.28% 10.83%
Additional Ratios Net Profit Margin Return on Equity
2.76% 35.44%
Year 1 2.54% 22.79%
Year 2 5.04% 40.06%
Year 3 n.a n.a
Activity Ratios Inventory Turnover s Payable Turnover Payment Days Total Asset Turnover
10.91 6.06 27 3.09
5.75 12.17 42 4.13
5.75 12.17 27 4.21
n.a n.a n.a n.a
Debt Ratios Debt to Net Worth Current Liab. to Liab.
3.15 0.75
1.17 0.65
0.89 0.70
n.a n.a
Liquidity Ratios Net Working Capital Interest Coverage
$278,532 7.02
$438,839 7.98
$557,491 20.64
n.a n.a
Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
0.32 57% 0.80 12.83 0.00
0.24 35% 0.88 8.96 0.00
0.24 33% 0.87 7.95 0.25
n.a n.a n.a n.a n.a
Appendix Sales Forecast Month Month Month Month Month Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 1 2 3 10 11
Month 12
Sales Drinks Snacks
$28,00 0 $25,00 0% 0 0%
$33,04 0 $29,50 0
Magazines/newspap 0% $6,000 $7,080 ers General grocery 0% $8,000 $9,440 items Other 0% $4,000 $4,720 $71,00 $83,78 Total Sales 0 0 Direct Cost of Sales Drinks Snacks Magazines/newspap ers General grocery items Other Subtotal Direct Cost of Sales
$38,98 $105,24 $46,005 $54,286 $64,057 $75,588 $89,193 7 8 $34,81 $41,076 $48,469 $57,194 $67,489 $79,637 $93,971 0
$124,19 3 $110,88 6
$146,54 7 $130,84 6
$172,92 6 $154,39 8
$8,354 $9,858 $11,633 $13,727 $16,197 $19,113 $22,553 $26,613 $31,403 $37,056 $11,13 9 $5,570 $98,86 0
$13,144 $15,510 $18,302 $21,596 $25,484 $30,071 $35,484 $41,871 $49,407 $6,572 $7,755 $9,151 $10,798 $12,742 $15,035 $17,742 $20,935 $24,704 $116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Month Month Month Month Month Month Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 1 2 3 10 11 12 $21,56 $25,44 $30,02 $112,84 $133,15 $35,424 $41,800 $49,324 $58,202 $68,679 $81,041 $95,628 0 1 0 1 3 $19,25 $22,71 $26,80 $100,75 $118,88 $31,628 $37,321 $44,039 $51,966 $61,320 $72,358 $85,382 0 5 4 1 7 $4,620 $5,452 $6,433 $7,591 $8,957 $10,569 $12,472 $14,717 $17,366 $20,492 $24,180 $28,533 $6,160 $7,269 $8,577 $10,121 $11,943 $14,093 $16,629 $19,623 $23,155 $27,322 $32,240 $38,044 $3,080 $3,634 $4,289 $5,061 $5,971 $7,046 $8,315 $9,811 $11,577 $13,661 $16,120 $19,022 $54,67 $64,51 $76,12 $105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 $89,825 0 1 3 3 2 5 0 7 6 4 8
Personnel Plan Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month Month 10 11
Month 12
Mr. Bean Mrs. Tuck Mr. Takeda Office manager Technicians Total People
0% 0% 0% 0% 0%
Total Payroll
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $3,000 6
$3,500 $3,500 $2,500 $1,700 $3,000 6
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700
General Assumptions
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss Month Month Month Month Month Month Month Month Month 4 5 6 7 8 9 10 11 12 $116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 $71,000 $83,780 $98,860 5 3 1 8 9 9 7 2 1 $105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 $54,670 $64,511 $76,123 $89,825 3 2 5 0 7 6 4 8 Month 1 Month 2 Month 3 Sales Direct Cost of Sales Other Costs of Goods
$0
Total Cost of Sales
$54,670 $64,511 $76,123 $89,825
Gross Margin
$16,330 $19,269 $22,738 $26,831 $31,660 $37,359 $44,084 $52,019 $61,382 $72,431 $85,469
Gross Margin %
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased equipment Rent Utilities ing/bookee ping Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
Net Profit Net Profit/Sales
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 3 2 5 0 7 6 4 8
$100,85 3 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00%
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $6,000 $7,000 $2,400
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$750
$750
$1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 15 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 % $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $4,000 $5,000 $10,000 $35,400 $35,400 $35,400 $35,400 $35,400 $35,400 $36,900 $36,900 $39,400 $40,400 $41,650 $48,650 ($19,07 0) ($18,47 0) $958
($16,13 1) ($15,53 1) $1,375
($12,66 2) ($12,06 2) $1,375
($8,569 ) ($7,969 ) $1,375 ($2,983 ($6,008) ($5,252) ($4,211) )
($3,740 ) ($3,140 ) $1,375 ($1,534 )
$1,959 $7,184 $15,119 $21,982 $32,031 $43,819 $52,203 $2,559 $7,784 $15,719 $22,582 $32,631 $44,419 $52,803 $1,375 $1,375 $1,375 $1,417 $1,417 $1,417 $1,417 $175
$1,743 $4,123 $6,170 $9,184 $12,721 $15,236
($14,02 ($12,25 ($6,961 ($3,580 ($9,826) $409 $4,066 $9,621 $14,396 $21,430 $29,681 $35,550 0) 4) ) ) -19.75% -14.63% -9.94% -5.97% -2.60% 0.25% 2.12% 4.25% 5.39% 6.80% 7.99% 8.11%
Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
Cash Received Cash from Operations Cash Sales
$71,000 $83,780 $98,860
$116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Subtotal Cash from Operations
$71,000 $83,780 $98,860
$116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Additional Cash Received Sales Tax, VAT, 0.00 $0 HST/GST % Received New Current $0 Borrowing New Other Liabilities $0 (interestfree) New Longterm $0 Liabilities Sales of Other $0 Current Assets Sales of Long-term $0 Assets New Investment $0 Received Subtotal Cash $71,000 Received Expenditure s Expenditure s from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$5,000 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000 $0
$0
$0
$0
$0
$0
$4,000
$133,78 $116,65 $187,65 $162,43 $191,66 $226,16 $271,87 $314,91 $371,60 $442,49 $98,860 0 5 3 1 8 9 9 7 2 1
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700 $12,062
$120,91 $108,73 $126,06 $146,51 $170,63 $198,68 $232,29 $272,23 $319,73 $375,95 $94,045 4 4 6 8 7 0 3 9 4 5
$24,762
$133,61 $106,74 $121,43 $138,76 $159,21 $184,83 $212,88 $247,99 $287,93 $335,43 $391,65 4 5 4 6 8 7 0 3 9 4 5
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $133,61 $106,74 $121,43 $138,76 $159,21 $184,83 $212,88 $247,99 $287,93 $335,43 $391,65 4 5 4 6 8 7 0 3 9 4 5
$24,762
$46,238 $166
($7,885) ($4,779) $48,887 $3,212 $6,831 $13,289 $23,886 $26,979 $36,168 $50,835
$160,05 $160,22 $152,34 $147,56 $196,44 $199,66 $206,49 $219,78 $243,66 $270,64 $306,81 $357,64 8 5 0 1 8 1 2 0 7 5 3 9
Pro Forma Balance Sheet Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Assets
Month 10
Month 11
$270,64 5 $266,73 5
$306,81 3 $314,74 7
Month 12
Starting Balance s
Current Assets $113,82 $160,05 $160,22 $152,34 $147,56 $196,44 $199,66 0 8 5 0 1 8 1 $116,59 $137,57 Inventory $10,000 $60,137 $70,962 $83,735 $98,807 2 9 Other Current $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 Assets Total $131,82 $228,19 $239,18 $244,07 $254,36 $321,04 $345,23 Current 0 5 6 4 8 0 9 Assets Cash
Longterm Assets Longterm $72,000 Assets Accumula ted $0 Depreciati on Total Long$72,000 term Assets Total $203,82 Assets 0 Liabilities and Capital
$206,49 2 $162,34 3
$219,78 0 $191,56 5
$243,66 7 $226,04 7
$357,64 9 $371,40 2
$8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $376,83 $419,34 $477,71 $545,38 $629,56 $737,05 5 5 3 0 1 0
$72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000
$600
$1,200 $1,800 $2,400 $3,000 $3,600 $4,200 $4,800 $5,400 $6,000 $6,600 $7,200
$71,400 $70,800 $70,200 $69,600 $69,000 $68,400 $67,800 $67,200 $66,600 $66,000 $65,400 $64,800 $299,59 $309,98 $314,27 $323,96 $390,04 $413,63 $444,63 $486,54 $544,31 $611,38 $694,96 $801,85 5 6 4 8 0 9 5 5 3 0 1 0
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
Current Liabilities s $117,79 $104,55 $121,20 $140,86 $164,05 $190,98 $223,27 $261,64 $307,28 $361,17 $428,51 $8,000 $90,440 Payable 5 4 9 2 2 1 1 3 0 9 8 Current $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000 $20,000
Borrowin g Other Current $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 Liabilities Subtotal $142,79 $115,44 $129,55 $146,20 $165,86 $189,05 $215,98 $248,27 $291,64 $337,28 $391,17 $458,51 Current $33,000 5 0 4 9 2 2 1 1 3 0 9 8 Liabilities Longterm Liabilities Total Liabilities Paid-in Capital Retained Earnings
$100,00 $100,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 0 0 0 0 0 0 0 0 0 0 0 0 0 $133,00 $242,79 $265,44 $279,55 $296,20 $315,86 $339,05 $365,98 $398,27 $441,64 $487,28 $541,17 $608,51 0 5 0 4 9 2 2 1 1 3 0 9 8 $320,00 0 ($249,1 80)
$320,00 0 ($249,1 80) ($14,02 0)
$320,00 0 ($249,1 80) ($26,27 4)
$320,00 0 ($249,1 80) ($36,10 0)
$320,00 0 ($249,1 80) ($43,06 1)
$370,00 0 ($249,1 80) ($46,64 1)
$370,00 0 ($249,1 80) ($46,23 2)
$370,00 0 ($249,1 80) ($42,16 6)
$370,00 0 ($249,1 80) ($32,54 5)
$370,00 0 ($249,1 80) ($18,15 Earnings $0 0) Total $102,67 $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 Capital 0 Total Liabilities $203,82 $299,59 $309,98 $314,27 $323,96 $390,04 $413,63 $444,63 $486,54 $544,31 and 0 5 6 4 8 0 9 5 5 3 Capital Net Worth $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275
$370,00 0 ($249,1 80)
$370,00 0 ($249,1 80)
$374,00 0 ($249,18 0)
$3,280 $32,962 $68,512 $124,10 $153,78 $193,33 0 2 2 $611,38 $694,96 $801,85 0 1 0
$102,67 $124,10 $153,78 $193,33 0 0 2 2
In addition, the company is looking into ways to sell restricted items such as beer, wine and cigarettes and to set up a separate Internet area for remote access to the Web and email for its customers. The Market Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area. Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast. Financial Considerations Our start-up requirements come to $453,000, which are largely single time fees associated with opening the store. These costs are financed by both private investors and the investment of Martin-Bower. It should be noted that we expect to be operating at a loss for the first six months before advertising begins to take effect and draw in customers. MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during the first two years as it strives toward sustainable profitability. Almost all of this funding has been arranged through lending institutions and private investors already. We do not anticipate any cash flow problems during the next three years.
1.1 Objectives These are the goals for the next three years for MillenniumMart: • • • •
Achieve profitability by July Year 1; Earn approximately $200,000 in sales by Year 3; Start paying dividends by Year 3; Start up second store by Year 4.
1.2 Mission MillenniumMart's primary objective is to create a new and revolutionary distribution outlet that will significantly reduce prices for its customers and provide greater services with an equal level of quality. The company seeks to be first to market with this daring new idea so as to capture market share and create greater than average profits.
1.3 Keys to Success In order to survive and expand, MillenniumMart must keep the following issues in mind: • • •
We must attain a high level of visibility through the media, billboards, and other advertising. We must establish rigid procedures for cost control and incentives for maintaining tight control. We must expend a significant amount on R&D in order to constantly be able to offer better and greater products and services.
Company Summary Automated stores such as MillenniumMart are not new, they have existed in Asia, especially in Japan for a number of years now and have been quite successful there. Mr. James Bean, MillenniumMart's founder and the driving force behind the t venture, has been intrigued with the idea of bringing this new type of store to the U.S. since it can significantly reduce costs and the ability of an automated store to provide products and services is only limited to the imagination of management. The company is a t venture start-up company between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated in the state of Delaware with all shares held by private investors.
2.1 Company Ownership We will be structured as a C-Corporation which operates as a standard corporation. This form was chosen by the Board of Directors because of various tax advantages. Retained earnings will not be distributed as dividends for at least five years, thus
enabling the early retirement of the debt. Additionally, the corporate structure offers limited personal liability. The company is a t venture start-up between the principals, Mr. Bean and his associates, and the management of Martin-Bower, one of the country's largest and most successful food distributors. The company will be incorporated in the state of Delaware with all shares held by private investors. Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a further 11% shares based on growth and profitability after the first five years. MillenniumMart is expected to open its first store in downtown Manhattan in March of 2003. The company will be set up with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.
2.2 Start-up Summary Our start-up expenses come to $453,000, which are largely single time fees associated with opening the store. These costs are financed by both private investors and the investment of Martin-Bower.
Start-up Requirements Start-up Expenses Legal Pre-sale advertising/marketing Land location and finders fee Consultants Insurance Rent Research and Development Expensed Equipment Initial store facilities Other Total Start-up Expenses
$2,400 $8,000 $8,000 $4,000 $1,780 $12,000 $10,000 $50,000 $150,000 $3,000 $249,180
Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets
$113,820 $10,000 $8,000 $72,000 $203,820
Total Requirements
$453,000
Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required
$249,180 $203,820 $453,000
Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets
$90,000 $113,820 $0 $113,820 $203,820
Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities s Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities
$15,000 $100,000 $8,000 $10,000 $133,000
Capital Planned Investment Private Investors Martin-Bower management Other Additional Investment Requirement Total Planned Investment
$150,000 $110,000 $60,000 $0 $320,000
Loss at Start-up (Start-up Expenses) Total Capital
($249,180) $70,820
Total Capital and Liabilities
$203,820
Total Funding
$453,000
Products As the most progressive company in the industry, MillenniumMart plans to offer a greater number of products and services in the future so as to create another dimension of competitive advantage. So that our customers will feel secure, we will subscribe to the security services offered by the shopping center of which we are a
part. This will cut down on graffiti and loitering and insure the safety of both employees and customers. MillenniumMart will sell the same products as other convenience stores in the same packaging sizes, quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices, sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups, microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies, pet supplies, paper products, toothpaste, etc. All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant, Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash, stamps, Lotto and phone cards and other coupons and will have the ability to create personal s that can display preferred items, retain shopping lists and other services. An automated, interactive "customer service rep" will be able to answer questions and on comments to the company's management.
Market Analysis Summary Our market is booming. Convenience store industry sales rose 8.6% for 2002. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. Therefore we have segmented our market into night shoppers, quick shoppers, and others. Growth rates for these three segments match the population growth for the surrounding area. Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.
4.1 Market Segmentation Our target market for our test store encomes a five mile radius in which the approximate population is 150,000 (based on census information). The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic (19%) with occupations classified as professional/technical, homemaker, or retired. The majority of household incomes range from $20,000 - $30,000 (50.3%), yet there are also affluent household incomes ranging from $50,000 - $100,000 (15.4%).
The median income in this area is $48,096, compared to the whole New York area which is $34,248. The typical "head of household" age is 25 - 34 (22.4%) or age 34 44 (23.1%) with a median age of 44.4 years old and an average age of 32 years old. Target market segments Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items.
Market Analysis Potential Customers Late night shoppers Quick shoppers Other Total
Year 1 Year 2 Year 3 Year 4 Year 5 Growth CAGR 3% 78,000 80,340 82,750 85,233 87,790 3.00% 2% 42,000 42,840 43,697 44,571 45,462 2.00% 3% 30,000 30,840 31,704 32,592 33,505 2.80% 2.68% 150,000 154,020 158,151 162,396 166,757 2.68%
4.2 Industry Analysis Convenience store industry sales rose 8.6% to $86.3 billion for 2002. Overall U.S. retail sales grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience store industry has become a powerful force in U.S. retailing. Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%). The 2002 results confirm that a new, upward trend is emerging. This upward trend is based on several factors, and occurred along with a slow rebound in the general economy. Merchandise sales per customer increased 7.4% in 2000 suggesting that convenience stores are placing higher priority in filling the customers' needs. Companies that align themselves properly to fill those needs will be successful in the future.
4.2.1 Competition and Buying Patterns 7-11 holds approximately 30% of the industry market, and in 1999 their net income was $160 million. Other competitors include Circle K, Fastrip, and any of the 85 chain grocery establishments on the east coast.
Strategy and Implementation Summary MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers. The most critical element of MillenniumMart's success will be its marketing and advertising. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio ments to capture customers. Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. We expect an average 27% increase in sales from year to year. This may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative.
5.1 Competitive Edge MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel purchasing experience that will draw shoppers. In the convenience store industry, low cost and availability are the two success criteria. We plan to create these advantages in a new, high-tech environment that will retain customers.
5.2 Marketing Strategy The most critical element of MillenniumMart's success will be its marketing and advertising. Convenience stores serve the entire purchasing population of its geographical area but focuses on customers who need to purchase items outside of normal working hours such as swing shift employees and quick shoppers looking for snacks and related items. In order to capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news, and radio ments to capture customers. Many of the initial customers will be drawn to the unique nature of the store and will then have the opportunity to realize the cost savings of MillenniumMart. Since automated shopping is still in its infancy, the firm expects to invest a great deal of its available cash and revenues in marketing efforts.
5.3 Sales Strategy Since our store will be a stand-alone, remote facility, there is little in the way being able to directly influence how we close the sales other than to have an attractive
storefront with our low prices and easy-to-use system. We believe that this in itself is its own seller. One critical procedure to ensure top customer service and reliability will be establishing a method for keeping enough inventory of all our products. We will be using industry data on inventory for other convenience store chains to assist us.
5.3.1 Sales Forecast Based on a 20% mark-up, our forecasted sales for years one, two, and three respectively are: $2,480,106; $3,149,735; $4,000,163. This gives us an average 27% increase from year to year. This may seem very high, but considering the level of initial sales and the growth possibilities, management actually considers this to be conservative. These sales figures are based on a conglomerate of commuter and walk-by traffic with an average $3.00 purchase amount conforming to industry averages. The target profit margin was defined as an average net profit of all merchandise.
Sales Forecast Year 1
Year 2
Year 3
Sales Drinks Snacks Magazines/newspapers General grocery items Other Total Sales
$978,070 $873,277 $209,586 $279,449 $139,724 $2,480,106
Direct Cost of Sales Drinks Snacks Magazines/newspapers General grocery items Other Subtotal Direct Cost of Sales
Year 1 Year 2 Year 3 $753,114 $956,455 $1,214,697 $672,423 $853,977 $1,084,551 $161,382 $204,955 $260,292 $215,175 $273,273 $347,056 $107,588 $136,636 $173,528 $1,909,682 $2,425,296 $3,080,125
$1,242,149 $1,109,061 $266,175 $354,900 $177,450 $3,149,735
$1,577,529 $1,408,508 $338,042 $450,723 $225,361 $4,000,163
Management Summary As stated earlier, MillenniumMart will be a t venture between Mr. Wallace Bean and his associates and the management of Martin-Bower, a large food distribution company. The company officers will include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru Takeda, who will be operations manager. Since the firm is a start-up, there will be little in the way of formal structure at first. The company also plans to hire three technicians who will service the automated store and a office manager. Additional personnel will be added once more stores are set up. Mr. Wallace Bean is a graduate of the University of Texas, Austin's school of business. He has worked for more than twelve years in the food distribution and grocery store industry, including positions as vice president of marketing for Fry's Food and Drug, director of special projects for Giant Foods and more recently, senior vice president for Martin-Bower. Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight years experience working for various companies. Her last job was as a financial analyst for Circle K corporation. Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been operational manager for Kiyama Inc. for the past six years which operates approximately six hundred automated convenience stores throughout Japan. Mr. Takeda has moved to the United States for the express purpose of bringing this new type of store to this country.
6.1 Personnel Plan Initially the company will only have a small staff including upper management, an operations technician and office manager. All other services, such as bookkeeping, will be outsourced. Personnel Plan Year 1
Year 2
Year 3
Mr. Bean Mrs. Tuck Mr. Takeda Office manager Technicians Total People
$42,000 $42,000 $30,000 $20,400 $33,000 7
$48,000 $48,000 $40,000 $22,000 $56,000 7
$52,000 $52,000 $48,000 $28,000 $58,000 7
Total Payroll
$167,400 $214,000 $238,000
Financial Plan The following tables illustrate our financial projections over the next three years. Please note that we expect to be operating at a loss for the first six months before advertising begins to take effect and draw in customers. As retained earnings increase, a debt retirement fund will be established to encourage early repayment, thus relieving interest expense. Also, a 30-day payment period for purchases will be used to avoid incurring liabilities.
7.1 Important Assumptions MillenniumMart is basing its assumptions on a stable growth market using average interest rates over the past ten years. General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Year 1 Year 2 Year 3 1 2 3 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 30.00% 30.00% 30.00% 0 0 0
7.2 Break-even Analysis The following table and chart show our Break-even Analysis. Although our breakeven point seems quite high, we are expecting to have higher than average fixed costs during the period of this plan due to customer "creation costs," R&D costs, higher rent in a premier spot, higher percentage of payroll costs to overall fixed costs with a small company, and the need to import and pay for the store facilities. We expect to have a more reasonable positive retained earnings point around year 5.
Break-even Analysis
Monthly Revenue Break-even $165,326 Assumptions: Average Percent Variable Cost 77% Estimated Monthly Fixed Cost $38,025
7.3 Projected Profit and Loss The following table explains our itemized costs and determines gross and net margin. Please note that these predictions are weighted toward having higher costs in comparison to revenues in case unexpected hidden costs arise. The charts give a visual representation of the data.
Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales
$2,480,106 $1,909,682 $0 $1,909,682
Year 2 $3,149,735 $2,425,296 $0 $2,425,296
Year 3 $4,000,163 $3,080,125 $0 $3,080,125
Gross Margin Gross Margin %
$570,424 23.00%
$724,439 23.00%
$920,037 23.00%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased equipment Rent Utilities ing/bookeeping Insurance Payroll Taxes Other
$167,400 $60,000 $7,200 $50,000 $84,000 $28,800 $6,500 $14,400 $0 $38,000
$214,000 $130,000 $7,200 $60,000 $84,000 $30,000 $9,000 $14,400 $0 $45,000
$238,000 $130,000 $7,200 $60,000 $84,000 $30,000 $9,000 $14,400 $0 $45,000
Total Operating Expenses
$456,300
$593,600
$617,600
Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
$114,124 $121,324 $16,250 $29,362
$130,839 $138,039 $16,400 $34,332
$302,437 $309,637 $14,650 $86,336
Net Profit Net Profit/Sales
$68,512 2.76%
$80,107 2.54%
$201,451 5.04%
7.4 Projected Cash Flow MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during the first two years as it strives toward sustainable profitability. Almost all of this funding has been arranged through lending institutions and private investors already. We do not anticipate any cash flow problems during the next three years.
Pro Forma Cash Flow Year 1
Year 2
Year 3
Cash Received Cash from Operations Cash Sales
$2,480,106
$3,149,735
$4,000,163
Subtotal Cash from Operations
$2,480,106
$3,149,735
$4,000,163
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 $5,000 $0 $50,000 $0 $0 $54,000 $2,589,106
$0 $0 $0 $0 $0 $0 $78,000 $3,227,735
$0 $0 $0 $0 $0 $0 $0 $4,000,163
Expenditures
Year 1
Year 2
Year 3
Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations
$167,400 $2,177,877 $2,345,277
$214,000 $3,134,865 $3,348,865
$238,000 $3,620,688 $3,858,688
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 $2,345,277
$0 $7,000 $0 $5,000 $0 $0 $0 $3,360,865
$0 $13,000 $0 $10,000 $0 $30,000 $50,000 $3,961,688
Net Cash Flow Cash Balance
$243,829 $357,649
($133,130) $224,519
$38,475 $262,994
7.5 Projected Balance Sheet The following table shows the Projected Balance Sheet for MillenniumMart. Pro Forma Balance Sheet Year 1
Year 2
Year 3
Assets Current Assets Cash Inventory Other Current Assets Total Current Assets
$357,649 $371,402 $8,000 $737,050
$224,519 $471,680 $8,000 $704,199
$262,994 $599,034 $8,000 $870,027
Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets
$72,000 $7,200 $64,800 $801,850
$72,000 $14,400 $57,600 $761,799
$102,000 $21,600 $80,400 $950,427
Liabilities and Capital Current Liabilities s Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities
Year 1
$428,518 $20,000 $10,000 $458,518
Year 2
$242,359 $13,000 $10,000 $265,359
Year 3
$302,537 $0 $10,000 $312,537
Long-term Liabilities Total Liabilities
$150,000 $608,518
$145,000 $410,359
$135,000 $447,537
Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital
$374,000 ($249,180) $68,512 $193,332 $801,850
$452,000 ($180,668) $80,107 $351,439 $761,799
$452,000 ($150,561) $201,451 $502,891 $950,427
Net Worth
$193,332
$351,439
$502,891
7.6 Business Ratios We are using the industry standard business ratios for independent convenience store chains as a comparison to our own. There are some significant differences between the two since we have a completely different storefront than our competitors. First of all our s receivable are very different as we expect to have higher sales using credit cards than other stores, due to the convenience of using credit cards and cash cards at our facility. There is generally a three day waiting period to receive funds from the credit card company. This is a short period of time compared to a normal collection day period of 30 days, but it is still something we need to factor for. In addition, we expect higher percentages in inventory as we will be operating only one store initially and even many independent convenience store owners often have two or more facilities. Our long-term assets are low since we are only renting our facilities. Ratio Analysis Year 1
Year 2
Year 3 Industry Profile 2.27%
Sales Growth
0.00%
27.00%
27.00%
Percent of Total Assets Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets
46.32% 1.00% 91.92% 8.08% 100.00%
61.92% 1.05% 92.44% 7.56% 100.00%
63.03% 0.84% 91.54% 8.46% 100.00%
22.18% 26.81% 56.12% 43.88% 100.00%
Current Liabilities Long-term Liabilities Total Liabilities Net Worth
57.18% 18.71% 75.89% 24.11%
34.83% 19.03% 53.87% 46.13%
32.88% 14.20% 47.09% 52.91%
26.39% 24.87% 51.26% 48.74%
Percent of Sales Sales Gross Margin Selling, General & istrative Expenses Advertising Expenses Profit Before Interest and Taxes
100.00% 23.00% 20.26% 0.00% 4.60%
100.00% 23.00% 20.10% 0.00% 4.15%
100.00% 23.00% 17.78% 0.00% 7.56%
100.00% 23.55% 16.21% 0.85% 1.02%
Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets
1.61 0.80 75.89% 50.63% 12.21%
2.65 0.88 53.87% 32.56% 15.02%
2.78 0.87 47.09% 57.23% 30.28%
1.68 0.71 4.63% 57.28% 10.83%
Additional Ratios Net Profit Margin Return on Equity
2.76% 35.44%
Year 1 2.54% 22.79%
Year 2 5.04% 40.06%
Year 3 n.a n.a
Activity Ratios Inventory Turnover s Payable Turnover Payment Days Total Asset Turnover
10.91 6.06 27 3.09
5.75 12.17 42 4.13
5.75 12.17 27 4.21
n.a n.a n.a n.a
Debt Ratios Debt to Net Worth Current Liab. to Liab.
3.15 0.75
1.17 0.65
0.89 0.70
n.a n.a
Liquidity Ratios Net Working Capital Interest Coverage
$278,532 7.02
$438,839 7.98
$557,491 20.64
n.a n.a
Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
0.32 57% 0.80 12.83 0.00
0.24 35% 0.88 8.96 0.00
0.24 33% 0.87 7.95 0.25
n.a n.a n.a n.a n.a
Appendix Sales Forecast Month Month Month Month Month Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 1 2 3 10 11
Month 12
Sales Drinks Snacks
$28,00 0 $25,00 0% 0 0%
$33,04 0 $29,50 0
Magazines/newspap 0% $6,000 $7,080 ers General grocery 0% $8,000 $9,440 items Other 0% $4,000 $4,720 $71,00 $83,78 Total Sales 0 0 Direct Cost of Sales Drinks Snacks Magazines/newspap ers General grocery items Other Subtotal Direct Cost of Sales
$38,98 $105,24 $46,005 $54,286 $64,057 $75,588 $89,193 7 8 $34,81 $41,076 $48,469 $57,194 $67,489 $79,637 $93,971 0
$124,19 3 $110,88 6
$146,54 7 $130,84 6
$172,92 6 $154,39 8
$8,354 $9,858 $11,633 $13,727 $16,197 $19,113 $22,553 $26,613 $31,403 $37,056 $11,13 9 $5,570 $98,86 0
$13,144 $15,510 $18,302 $21,596 $25,484 $30,071 $35,484 $41,871 $49,407 $6,572 $7,755 $9,151 $10,798 $12,742 $15,035 $17,742 $20,935 $24,704 $116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Month Month Month Month Month Month Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 1 2 3 10 11 12 $21,56 $25,44 $30,02 $112,84 $133,15 $35,424 $41,800 $49,324 $58,202 $68,679 $81,041 $95,628 0 1 0 1 3 $19,25 $22,71 $26,80 $100,75 $118,88 $31,628 $37,321 $44,039 $51,966 $61,320 $72,358 $85,382 0 5 4 1 7 $4,620 $5,452 $6,433 $7,591 $8,957 $10,569 $12,472 $14,717 $17,366 $20,492 $24,180 $28,533 $6,160 $7,269 $8,577 $10,121 $11,943 $14,093 $16,629 $19,623 $23,155 $27,322 $32,240 $38,044 $3,080 $3,634 $4,289 $5,061 $5,971 $7,046 $8,315 $9,811 $11,577 $13,661 $16,120 $19,022 $54,67 $64,51 $76,12 $105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 $89,825 0 1 3 3 2 5 0 7 6 4 8
Personnel Plan Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month Month 10 11
Month 12
Mr. Bean Mrs. Tuck Mr. Takeda Office manager Technicians Total People
0% 0% 0% 0% 0%
Total Payroll
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $1,500 5
$3,500 $3,500 $2,500 $1,700 $3,000 6
$3,500 $3,500 $2,500 $1,700 $3,000 6
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$3,500 $3,500 $2,500 $1,700 $4,500 7
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700
General Assumptions
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Month Month Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 0 0 0 0 0 0 0 0 0 0 0 0
Pro Forma Profit and Loss Month Month Month Month Month Month Month Month Month 4 5 6 7 8 9 10 11 12 $116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 $71,000 $83,780 $98,860 5 3 1 8 9 9 7 2 1 $105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 $54,670 $64,511 $76,123 $89,825 3 2 5 0 7 6 4 8 Month 1 Month 2 Month 3 Sales Direct Cost of Sales Other Costs of Goods
$0
Total Cost of Sales
$54,670 $64,511 $76,123 $89,825
Gross Margin
$16,330 $19,269 $22,738 $26,831 $31,660 $37,359 $44,084 $52,019 $61,382 $72,431 $85,469
Gross Margin %
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Leased equipment Rent Utilities ing/bookee ping Insurance Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
Net Profit Net Profit/Sales
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$105,99 $125,07 $147,58 $174,15 $205,49 $242,48 $286,13 $337,63 3 2 5 0 7 6 4 8
$100,85 3 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00%
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $4,000 $7,000 $2,400
$600 $6,000 $7,000 $2,400
$500
$500
$500
$500
$500
$500
$500
$500
$500
$500
$750
$750
$1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 15 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 % $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $4,000 $5,000 $10,000 $35,400 $35,400 $35,400 $35,400 $35,400 $35,400 $36,900 $36,900 $39,400 $40,400 $41,650 $48,650 ($19,07 0) ($18,47 0) $958
($16,13 1) ($15,53 1) $1,375
($12,66 2) ($12,06 2) $1,375
($8,569 ) ($7,969 ) $1,375 ($2,983 ($6,008) ($5,252) ($4,211) )
($3,740 ) ($3,140 ) $1,375 ($1,534 )
$1,959 $7,184 $15,119 $21,982 $32,031 $43,819 $52,203 $2,559 $7,784 $15,719 $22,582 $32,631 $44,419 $52,803 $1,375 $1,375 $1,375 $1,417 $1,417 $1,417 $1,417 $175
$1,743 $4,123 $6,170 $9,184 $12,721 $15,236
($14,02 ($12,25 ($6,961 ($3,580 ($9,826) $409 $4,066 $9,621 $14,396 $21,430 $29,681 $35,550 0) 4) ) ) -19.75% -14.63% -9.94% -5.97% -2.60% 0.25% 2.12% 4.25% 5.39% 6.80% 7.99% 8.11%
Pro Forma Cash Flow Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
Cash Received Cash from Operations Cash Sales
$71,000 $83,780 $98,860
$116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Subtotal Cash from Operations
$71,000 $83,780 $98,860
$116,65 $137,65 $162,43 $191,66 $226,16 $266,87 $314,91 $371,60 $438,49 5 3 1 8 9 9 7 2 1
Additional Cash Received Sales Tax, VAT, 0.00 $0 HST/GST % Received New Current $0 Borrowing New Other Liabilities $0 (interestfree) New Longterm $0 Liabilities Sales of Other $0 Current Assets Sales of Long-term $0 Assets New Investment $0 Received Subtotal Cash $71,000 Received Expenditure s Expenditure s from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$5,000 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$50,000 $0
$0
$0
$0
$0
$0
$4,000
$133,78 $116,65 $187,65 $162,43 $191,66 $226,16 $271,87 $314,91 $371,60 $442,49 $98,860 0 5 3 1 8 9 9 7 2 1
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
$12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700 $12,062
$120,91 $108,73 $126,06 $146,51 $170,63 $198,68 $232,29 $272,23 $319,73 $375,95 $94,045 4 4 6 8 7 0 3 9 4 5
$24,762
$133,61 $106,74 $121,43 $138,76 $159,21 $184,83 $212,88 $247,99 $287,93 $335,43 $391,65 4 5 4 6 8 7 0 3 9 4 5
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $133,61 $106,74 $121,43 $138,76 $159,21 $184,83 $212,88 $247,99 $287,93 $335,43 $391,65 4 5 4 6 8 7 0 3 9 4 5
$24,762
$46,238 $166
($7,885) ($4,779) $48,887 $3,212 $6,831 $13,289 $23,886 $26,979 $36,168 $50,835
$160,05 $160,22 $152,34 $147,56 $196,44 $199,66 $206,49 $219,78 $243,66 $270,64 $306,81 $357,64 8 5 0 1 8 1 2 0 7 5 3 9
Pro Forma Balance Sheet Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Assets
Month 10
Month 11
$270,64 5 $266,73 5
$306,81 3 $314,74 7
Month 12
Starting Balance s
Current Assets $113,82 $160,05 $160,22 $152,34 $147,56 $196,44 $199,66 0 8 5 0 1 8 1 $116,59 $137,57 Inventory $10,000 $60,137 $70,962 $83,735 $98,807 2 9 Other Current $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 Assets Total $131,82 $228,19 $239,18 $244,07 $254,36 $321,04 $345,23 Current 0 5 6 4 8 0 9 Assets Cash
Longterm Assets Longterm $72,000 Assets Accumula ted $0 Depreciati on Total Long$72,000 term Assets Total $203,82 Assets 0 Liabilities and Capital
$206,49 2 $162,34 3
$219,78 0 $191,56 5
$243,66 7 $226,04 7
$357,64 9 $371,40 2
$8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $376,83 $419,34 $477,71 $545,38 $629,56 $737,05 5 5 3 0 1 0
$72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000
$600
$1,200 $1,800 $2,400 $3,000 $3,600 $4,200 $4,800 $5,400 $6,000 $6,600 $7,200
$71,400 $70,800 $70,200 $69,600 $69,000 $68,400 $67,800 $67,200 $66,600 $66,000 $65,400 $64,800 $299,59 $309,98 $314,27 $323,96 $390,04 $413,63 $444,63 $486,54 $544,31 $611,38 $694,96 $801,85 5 6 4 8 0 9 5 5 3 0 1 0
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10
Month 11
Month 12
Current Liabilities s $117,79 $104,55 $121,20 $140,86 $164,05 $190,98 $223,27 $261,64 $307,28 $361,17 $428,51 $8,000 $90,440 Payable 5 4 9 2 2 1 1 3 0 9 8 Current $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000 $20,000
Borrowin g Other Current $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 Liabilities Subtotal $142,79 $115,44 $129,55 $146,20 $165,86 $189,05 $215,98 $248,27 $291,64 $337,28 $391,17 $458,51 Current $33,000 5 0 4 9 2 2 1 1 3 0 9 8 Liabilities Longterm Liabilities Total Liabilities Paid-in Capital Retained Earnings
$100,00 $100,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 $150,00 0 0 0 0 0 0 0 0 0 0 0 0 0 $133,00 $242,79 $265,44 $279,55 $296,20 $315,86 $339,05 $365,98 $398,27 $441,64 $487,28 $541,17 $608,51 0 5 0 4 9 2 2 1 1 3 0 9 8 $320,00 0 ($249,1 80)
$320,00 0 ($249,1 80) ($14,02 0)
$320,00 0 ($249,1 80) ($26,27 4)
$320,00 0 ($249,1 80) ($36,10 0)
$320,00 0 ($249,1 80) ($43,06 1)
$370,00 0 ($249,1 80) ($46,64 1)
$370,00 0 ($249,1 80) ($46,23 2)
$370,00 0 ($249,1 80) ($42,16 6)
$370,00 0 ($249,1 80) ($32,54 5)
$370,00 0 ($249,1 80) ($18,15 Earnings $0 0) Total $102,67 $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 Capital 0 Total Liabilities $203,82 $299,59 $309,98 $314,27 $323,96 $390,04 $413,63 $444,63 $486,54 $544,31 and 0 5 6 4 8 0 9 5 5 3 Capital Net Worth $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275
$370,00 0 ($249,1 80)
$370,00 0 ($249,1 80)
$374,00 0 ($249,18 0)
$3,280 $32,962 $68,512 $124,10 $153,78 $193,33 0 2 2 $611,38 $694,96 $801,85 0 1 0
$102,67 $124,10 $153,78 $193,33 0 0 2 2
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