BUSINESS PLAN

BUSINESS PLAN

PREFACE
This report is about the business plan of a social web site which we names as GIG. We have tried to accomplish as many things in this report that will help to establish and organize this web site to be the best one among its competitors. Among our most important goals has been to retain that information which meets the specific content requirements of our project report and to increase out basic knowledge also. It is intended for project submission.

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ACKNOWLEDGEMENT
All thanks to ALLAH who brought us to this stage of life and enable us to complete this innovative technical work within time successfully. We are grateful to our teacher SIR MOHSIN BUTT who encouraged, advised and motivates us to present the project in its final shape. We are also inspired from his indicative effort for providing us Marketing knowledge and appropriate environment, necessary to build professional thinking. He is our respectable teacher from whom we have gained a lot of academic as well as practical knowledge.

May we succeed in our ambition!

Table of contents
1.0 Executive summary

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1.1 Objectives 1.2 Mission 1.3 Key to success 2.0 Company Summary 2.1 Company Ownership 2.2 Start-Up summary 3.0 Services 3.1 Service description 3.2 Competitive Comparison 3.3 Comparison against competitors 3.3.1 Point of perity 3.3.2 Point of difference 3.3.3 Competitors strategy and tactics 3.4 Risk Involved 3.5 Technology 3.6 Future Services 4.0 Market analysis summary 4.1 Market segmentation 4.2 Target market segment strategy 4.2.1 Market needs 4.2.2 Market trends 4.2.3 Maarket growth 4.3 Industry participants 4.3.1 Distribution patterns 4.3.2 Competition and buying patterns 5.0 Web Plan Summary 5.1 Website marketing strategy 5.2 Development requirements 6.0 Strategy and implementation summary 6.1 Value proposition 6.2 Competitive edge 6.3 Marketing strategy 6.3.1 Promotion strategy 6.4 Sales strategy 6.4.1 Sales forecast 7.0 Financial plan 7.1 Start-up funding 7.2 Important assumptions 7.3 Break-even analysis 7.4 Projected profit and loss 7.5 Projected Cash flows 7.6 Projected Balance Sheet

1.0 Executive Summary

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Gig will be a social web site, focusing entirely on the needs of customers. Gig will provide them the single platform to manage their social life while progressing in the future and to increase the public relation in corporate life, which is now very essential to be success full. Another focal point of our website would be knowledge management and its distribution in effective and efficient manner. Individual and corporate customers will be handled separately, according to their diverse needs. Gig will also collaborate with companies in progression of their business.

1.1 Objectives
The objectives for Gig are:

To build an effective and lasting quality-assurance social site. To be the number one preferred site at the 3rd year from its launch. Launch a social website which will cater the needs of customers. Establish relationships with business customers more deeply.

1.2 Mission
Gig will increase its customers by providing them the quality service. Gig will maintain the lasting relationships with its users, by exceeding their expectations. Gig will provide the full integrated environment to constitute the social and professional life in your desired way.

1.3 Keys to Success

To succeed as social website, Gig must:

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Develop relationships with the customers. Create awareness in the masses of their proximity, quality, adaptability and privacy. Respond quickly to requests of users. Get the continuous feedback from users and develop the strategies according to it. Provide security and peace of mind rather than just place for chit chat.

2.0 Company Summary

Gig will establish the new social website with the help of Microsoft. Primarily it will consist on the social web sites users profile which will be required from Microsoft. Gig will offer them quality service and advanced services in highly integrated environment. Gig will offer the more privacy and security then of others. All data related to users will be stored in highly secure environment.

2.1 Company Ownership

Gig will be owned by five members partnership.

2.2 Start-up Summary

Start-up expenses include initial liability insurance premiums, licenses expense to launch a new site. Pre-launch marketing expenses are detailed in the marketing plan and include the creation of a website ($1,000), brochure ($2,500), flyers and ads ($3,500), and other activities, $40,000 in inventory of computers, and other information technology devices plus network devices. Current assets pay for shelves and display cases, a computer and necessary software systems.

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Start up Expense
Legal & Licenses Pre-Launch Marketing

Bills
Insurance Other

Total

$3000 $10,000 $5000 $10,000 $1000 $38,000

Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets

$44,000 $40,000 $20,000 $40,000 $144,000

3.0 Services
Services will be executed by Gig with technical college and professional experience.

Profile making Chat room Group making Web gifts Share point Tagging Group chat Video conferencing Video calls Audio calls Instant messaging Digital library for favorite books

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3.1 Service Description

Web site that provides a virtual community for people interested in a particular subject or just to "hang out" together. Members create their own online "profile" with biographical data, pictures, likes, dislikes and any other information they choose to post. They communicate with each other by voice, chat, instant message, videoconference and blogs, and the service typically provides a way for members to contact friends of other members.

Sites may also serve as a vehicle for meeting in person. The "social networking site" is the 21st century "virtual community," a group of people who use the Internet to communicate with each other about anything and everything. One can find dating sites, friendship sites, and sites with a business purpose and hybrids that offer a combination of these. Globally, hundreds of millions of people have joined one or more social networking sites

3.2 Competitive Comparison

Competitors identification
As considering the advancement in web industry competition has become more though, but there is still need for improvement and going a step ahead to meet the customer expectations. As we are mixing the features of different category so we will first chose the main category which is social website. Now narrowing down the plan we will mix the feature of search engines, messengers plus website for social purpose, so its a new experiment. Face book Social site Tagged Web community

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Detailed analysis of website

Web features
1) Website would be dynamic in nature 2) At our home page following major links would be provided, All of bellow will be handled as major sources, and our point of difference start from this place.

Gig Corporate
Gig corporate page will be designed to facilitate the need of corporate world, their social relation requirements, to do the business smoothly. Gig corporate is a source of income for us mainly, as we will make the deals with companies.

Gig Sniffer
Gig snifffer will act as a search engine, and efficiently and effectively show the stored information. Large data base will be maintained for it; especially it would be link to data warehouse. Snifers will perform the data mining here.

Gig chatter
Following features with high quality will be provided in it

Video conference Chatting Calls facility E mail

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To be Gig
Profile making and other such attributes would be provided in it, which will show the real image of that person, and what he wants to be.

Colors
Main Home page Gig corporate Gig sniffers Gig Chatter To be Gig Pink, blue, Orange Brown, white, blue Sky blue, light pink Orange, Yellow, Red Colors Of user choice

Web design
3D views would be used as point of difference Ads would be placed in following structures
BANNERS

WIDE SKYSCRAPPER

BUTTONS

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SPONSORSHIP

SKYSCRAPPER

Users feedback on each page

3.3 Comparison of your website against your competitors

3.3.1 Point Of Parity
Facilities Gig Face book Profile Making chatting Profile Designing Groups Yes Yes Yes No yes yes yes No Yes No No Yes Yes Yes Yes Yes Yes Yes Orkut Tagged Twitter

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3.3.2 Point Of Difference

GIG Mail:
GIG mail will provide its users to create a separate mail on GIG for GIG account.

Privacy
Encryption code will be provided that will protect the ID from hacking.

Share Point
More helpful for corporate sector to place their important data in one share point from where allowed members can access the database.

Image Making
Allow the users to draw what ever they want to see on screen. it provide different tools for it.

Application Designing
Allow the user to make applications of their own requirement against minimum cost. API application programming interface software developer can make programs of their own choice.

Video Conference
It allows the users to video calling in group.

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Digital Library
It facilitates the user to make digital library of books of his/her own choice.

Music Library
Website facilitates the background music to its users according to their taste.

Web Assistants
They will guide the new users by providing the call facility on webpage.

Gig Pakistan

It will enhance the good will image of Pakistan.

Voice Chat
It also provides its user with option to have voice chat with friends.

Fake IDs:
Every time when a person is creating new ID, his/her CNIC would be entered so that a person cannot create any fake IDs.

Uploading:
GIG will facilitate its users by giving them opportunity to upload any thing of their choice either pictures, audios, videos, or any other data.

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Typing Master
For very new users GIG have the typing master which will help them to type effectively and efficiently.

Islamic Forum
This forum will protect the site from any non Islamic data to be entered.

Competition Based Incentives

GIG will promote its usage by different competitions in which the winner will be provided with any monetary or other rewards to encourage them as well.

GIG gender forum :

This forum includes separate chat rooms for males and females in addition to formal mix chatting.

3.3.3 Competitors strategy and tactics online Competitors

TACTICS:

Face book is focusing on youth and increasing their customers by providing free services as their message is JOIN FACEBOOK,ITS FREE AND WILL ALWAYS BE FREE..

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Tagged is a social site like face book but it is not specifically for youth. Their main feature is the facility given to design and change the profile accordingly ones choice.

3.4 Risks Involved:

URL spoofing. URL spoofing involves one website posing as another website for

malicious reasons. Eg: People create fake Facebook pages.

Phishing. Phishing refers to high tech scams using fake websites with actual brands

created in order to steal valuable personal information.

Botnet attacks. Botnet attacks are very serious. A botnet creator is able to control

an army of infected computers secretly via a means eg: Facebook.

Identity theft. Identity theft is literally a way of stealing someone else's identity and

using it for a variety of purposes including financial.

Storm worm attacks. A storm worm attack can be used to trick people by providing

fake information about the FBI and Facebook.

Child identity theft. Child identity theft is literally stealing the identity of a child

and using it for your own personal gains.

Trojans. Trojans plant themselves on the user's computer, and the moment you log

onto a social networking site, it sends automatic invitations to everybody on the users contact list.

Cyber stalking. Cyber stalking is literally harassing and following another person

online. Social networking sites open up many doors for cyber stalking.

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3.5 Technology
19" Black Infinity Industrial Server, 4 HE, 5 Slots, ATX

Router

Router functions to forward packets across different networks. Router maintains a routing table. The routing table contains IP addresses of other networks routers. In a static router the routing table is configured manually, while a dynamic router can communicate with other routers and configure the routing table according to information it receives from other routers.
Network Adapter

Network adapter works as an interface between a computer or device and a network. You may need Ethernet, Wi-Fi, Home PNA, or Home Plug network adapter depending on the type of network your computer is connecting to. Network adapter converts a computer message into electrical or optical signals for transmission across the network. A network adapter is identified in a network through a MAC address that is hard-coded onto the

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hardware

by

its

manufacturer.

Figure:

Network

Adapters

Internal or external network adapter attaches a computer (desktop PC or laptop) to a LAN.

Built-in integrated

network with a

adapter

is

computer network

motherboard.

Internal

adapter is installed inside a computer on an expansion slot. It is often called NIC (network interface card) usually inserted into a PCI slot in a PC or a mini PCI slot in a notebook. External network adapter is a separate device that is connected to a computer via serial port, parallel port, and mostly USB port. External adapter also comes in the forms of PC Card (PCMCIA card) for notebooks, CF card for PDAs, or SD (Secure Digital) card for consumer electronics (such as digital camera).

3.6 Future Services

We are working to provide our customers with a Gig USB which the users can take along with them anywhere.

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4.0 Market Analysis Summary

Gig will attract the users plus business community, with the goal of being potential leader of social website being used worldwide. The market ranges from individuals browsing the web to highly professional companys managers. We will be focusing on small to medium sized projects for business. We will be targeting businesses that are in a hurry (2-10 week turnaround time) to get the quality of their (or their clients) software assured and primarily Our focus will be on software systems for the financial and telecom sectors on the other hand fully social environment would be created for typical users.

4.1 Market Segmentation

The market for Gig services in social website has been broken down into the segments shown in the Market Analysis. There growth rate is expected to be quite good because Gig is customizing the needs, which means delivering the value. That value will generate the loyal users and attract them as well. Corporate clients Social circle seekers Chatting buddies

Market Analysis

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Expected Customers
Corporate clients 25% Chating buddies 40% Social circle seekers 35%

4.2 Target Market Segment Strategy:

On the focusing on our targeted customers we design product features like marketing forum, joined ventures, public relation and promotion needs manufacturing, ordering and searching clients, so they can chat. The different features on which the Gig focusing that they have easily access to make their groups on the basis of educational, religion, sports, profession etc. Gig is serving their customers to make them delighted, if they will be delighted and cheerful due to free services they would love to rush towards us and this free of cost service will attract the prospects. It is easily accessible even to all individual beside this, it is also being accessed corporate business and the social clients will also have accessible. You just need to login once then its your own forum.

4.2.1 Market Needs:

People were desired and seeking a place where they can easily do their businesses in a better way. Gig is a place through which the people can flourish their businesses. Those

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Individuals who are just fed up from the already existing forum sites the Gig is very helpful to them to cheers once again. Those individuals who are looking for new forum and ventures as Gig is not just like a conventional site its more than just a site.

4.2.2 Market Trends:

Bull market is waiting for gig. Nowadays people switch towards internet because if they come on the internet there is no place constraint, no time limitations as any time you can come and access, searching cost low, psychic cost low, monetary cost low etc. It is faster mode of doing business.

4.2.3 Market Growth:

We have launch Gig for the small to medium size business on a very affordable cost. As it will cater the customer or the prospects with very efficient services so demand will automatically increases and people would be more inclined towards Gig so, there is a big scope waiting for Gig.

4.3 Industry Participants:

Industry participants for the Gig are; IT industry Media Telecommunication Print media

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4.3.1 Distribution Patterns:

It is easily accessible on the internet to all individuals and businesses, beside this Gig are offering businesses with special packages and it is providing the physical services to our major customer.

5.0 Web Plan Summary

The website IS simple yet classy, well designed, and easy to use by members and all visitors. The key to the website strategy will be combining a very well designed front end, with a back end capable of processing membership applications, as well as being part of our online marketing program. In addition, we expect to partner with our event providers with links on our website to theirs.

5.1 Website Marketing Strategy

The adds of GIG are placed as banners on other website. All communications materials will include the GiG website address. For the media, an online press kit will be available which will include downloadable photos, PR releases, stories of interest, testimonials, bios of key management and reproducible logos. Special PR will promote our website. We will host online "events" for our customers. We may support a charity' fund-raising activities. This will provide us with opportunities for media coverage.

5.2 Development Requirements

Our team will work with a contracted Web Master to develop the site. We will also employ a writer with marketing experience to enhance the wording and overall site appearance. Moreover, the writer and Web Master will work with a graphic artist to come up with the

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website logo and the website graphics. The maintenance of the site will be done by the Management Team with assistance from the Web Master for future development.

6.0 Strategy and Implementation Summary

Emphasize service
GIG is a service company. Thus, we will differentiate ourselves with customer service. We will establish our event offerings as a clear and practical alternative for our target market, a clear difference from the scores of single dating services.

Build a relationship-oriented business

Build long-term relationships with customers. GIG will become our member's choice for events in a relaxing atmosphere; a better way to meet other singles.

Focus on target markets

We need to focus our events and membership on specific population groups as the key market segment we should own. We do not want to compete for the matchmaking crowd, but to offer an alternative to that scene; and as a supplement to those who use dating services.

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6.1 Value Proposition

Our value proposition is offering our customers refresh ness and enjoyment at reasonable prices ensuring peace of both body and mind. Hence we intend to: Market the benefit, not the product. Ensure customer satisfaction. Develop long relationships. Market the company.

This value proposition shall be communicated through advertisements, personal selling, sales literature and catalogues, and referrals that emphasize how the company is able to provide refreshment, enjoyment and fulfillment to the customers

6.2 Competitive Edge

GIGs' competitive edge is the relaxed atmosphere provided at events for singles to meet without the hassles of matchmaking. We believe the combination of worry-free events, a focus on food, and fun, plus a relaxed environment will lead to interesting conversations and friendships. GIGs competitive edge lies with its differences from other single organizations. These differences added together make us unique and include: Upscale events related to food and fun (with a high degree of variety) No matchmaking or dating (no pressure on members) Extensive customer service (e-mail event directions, personal greetings at events, name tags, follow-up on all questions/problems)

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6.3 Marketing Strategy

The main objective of our strategy is to position GIG as the premier niche singles' social event provider. The marketing strategy will seek to create customer awareness regarding the services offered, develop the customer base, and work toward building customer loyalty and recommendations. This objective will be communicated using several different methods. The first method will be through the use of GIG' website. The website will be a rich source of information detailing our events offered, previous events held, links, etc. The second method of communication will be through networking with various media and business people. The networking activities will be important and fruitful as a significant amount of business gets conducted through these channels. By being active in networking we believe our membership will increase, our events will be better recognized, and our reputation as a superior provider of single social events will become known. The last method of communication will be through written promotional material. Brochures, business cards, press releases, e-mails, and the like are an excellent venue for generating awareness of the company because most or all the material stays with individuals for a time Moreover, much of this material can be passed on to other contacts (indirect referrals). Lastly, specific advertising will be used when possible; taking into consideration price, target audience that it will reach, and potential pay back.

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6.3.1 Promotion Strategy

Our promotion strategy will be based primarily on informing potential customers of our existence and making the right information available to our target customer. Since we shall be targeting different segments, the promotional tools and messages may vary slightly to match the intended market. . We intend to leverage our presence using quality brochures and other sales literature, including promotional material such as pens, complimentary slips and stickers. Due to the fact that our products are in the introductory phase on the market, promotional expenses are high in order to generate customer attention and knowledge of our products existence. We promote our websites through the following Advertising Events Direct Marketing

6.4 Sales Strategy

For potential members GIG will emphasize the relaxed atmosphere of our events. Our strategy will be to differentiate ourselves from other singles groups. Our website will have FAQs (Frequently Asked Questions) for interested members. In addition, the website will indicate our niche in the market that of meeting other singles without the pressure of matchmaking. For people signing up as members, the website has an online membership form. The company is signed up with Merchant Services through our bank and we accept Visa, MasterCard.

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To track members the company uses ACT! database that provides details on each member. This information is used for event ideas as well as seating arrangements at event dinners in order to put similar people together (based on parameters such as age, gender, and interests). In order to acquire additional members, current members will be given incentives to bring in new people. Guest is encouraged through current members and if they join the current member gets additional months of membership. In addition, if we needed more members, we would give additional incentives for joining.

6.4.1 Sales Forecast Memberships are expected to grow at a rate of 20 people per month. While we feel this number is conservative based on the Restaurant Raconteurs, our population is smaller. In future years we anticipate an 80 percent renewal rate plus 25 new members per month. With expected marketing we believe these numbers will be easily attainable. The main driving forces for membership will be marketing, customer satisfaction, and networking. Gross revenue is based on number of events per month. In the beginning and during the first year of holding events, we expect to do no more than four events per month. During the second and third years we expect to do five or six events per month. Again, these numbers are based on data. Profit from events is expected to be zero to a few hundred dollars per event in the beginning. With more events, more members, and better margins we expect profits to

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approach $500 to $1,000 per event (2011 - 2012). The main driving forces for profit are the number of events per month and event margins. As the company becomes better known in the business community and with greater member numbers, we expect our margins to increase. Costs that are not directly related to events include marketing, sales, office, and related items. Many of these are fixed costs. However, marketing costs are expected to level off in future years with networking and word-of-mouth becoming more prominent. The overall numbers for membership are in line with the total population in our area . We believe our
events for singles and their presentation are unique to this area. With good networking and customer satisfaction plus sufficient press coverage we expect to beat these forecasts.

7.0 FINANCIAL PLAN:

In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. We are able to launch this site on base of our savings and a significant long-term loan, as described in the start-up funding description. After this point, the business will show healthy profits and cash balance to be able to grow with its own cash flow. Steady growth is expected, requiring additional staff, but still using the same basic assets (store, inventory, equipment, etc.) for the most part. We have kept healthy cash balance in the business for emergencies and will withdraw additional cash as dividends. The Financial Planning activity involves the following tasks:

Assess the business environment Confirm the business vision and objectives

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Identify the types of resources needed to achieve these objectives Quantify the amount of resource (labor, equipment, materials) Calculate the total cost of each type of resource Summarize the costs to create a budget Identify any risks and issues with the budget set

Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps to set financial targets for the organization, and reward staff for meeting objectives within the budget set.

7.1 Start-up Funding

Gig corporate will invest significant startup funding out of his savings and from a credit card line-of-credit to launch the business (current borrowing on the Start-up Funding table). A business loan is sought against the assets of the business to be repaid over the first three years of operation.

Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required

$32,750 $144,250 $177,000

Assets

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Non-cash Assets from Start-up Cash Requirements from Start-up

$100,000 $44,250

Cash Balance on Starting Date Total Assets

$44,250 $144,250

Liabilities and Capital

Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) $10,000 $70,000 $20,000

Total Liabilities

$100,000

Capital

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Planned Investment Owner Other Additional Investment Requirement Total Planned Investment $77,000 $0 $0 $77,000

Loss at Start-up (Start-up Expenses) Total Capital

($32,750) $44,250

Total Capital and Liabilities

$144,250

Total Funding

$177,000

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7.2 Important Assumptions:

There is a wealth of information being published on sophisticated planning techniques, but there is very little information on the fundamental attributes of a good financial plan. No one will deny that a financial plan (or any plan for that matter) is only as good as the assumptions upon which it is built. The core inflation rate assumption should be the cornerstone for many of the other assumptions. The most important reason to start with the core inflation assumption is that it is readily available, subject to minimal manipulation, and a high degree of correlation exits between other inflation rates. The availability of potential staff due to a favorable job market and the availability of storefronts to launch the business.

7.3 Break-even Analysis

With a monthly break-even shown in the table below the business is expected to reach break-even from a profit perspective in the seventh month of the first year.

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Break-even Analysis

Monthly Revenue Break-even

$25,681

Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost 35% $16,713

7.4 Projected Profit and Loss

The primary operating expenses for the business will be marketing and promotion which will include advertising, producing direct mail pieces, ongoing website hosting and maintenance and attending events.

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Depreciation of long-term assets includes equipment in the store and tools for services, including both the equipment and tools purchased at start-up and allowances for additional purchases (which are shown on the cash flow statement). Insurance and bonding includes ongoing insurance payment for general liability for the store and work at client sites and the van, as well as renewals of the surety bond each year. Payroll taxes includes payments for health insurance for full-time employees. Store supplies includes all supplies (not inventory) which are expensed immediately for store cleaning, maintenance, and operation. Training and education includes subscriptions and course work.

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Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales $497,991 $173,918 $0 $173,918 Year 2 $647,388 $223,195 $0 $223,195 Year 3 $809,235 $278,994 $0 $278,994

Gross Margin Gross Margin %

$324,073 65.08%

$424,193 65.52%

$530,242 65.52%

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Expenses Payroll Marketing/Promotion Depreciation Rent Utilities Insurance & Bonding Payroll Taxes Store Supplies $99,000 $36,000 $18,000 $24,000 $2,400 $3,600 $0 $6,000 $139,000 $40,000 $18,000 $26,000 $2,500 $3,800 $0 $10,000 $195,000 $50,000 $18,000 $28,000 $2,600 $4,000 $0 $15,000

Training and Education

$6,000

$8,000

$15,000

Total Operating Expenses

$200,550

$254,500

$335,400

Profit Before Interest and Taxes

$123,523

$169,693

$194,842

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EBITDA Interest Expense Taxes Incurred

$141,523 $7,354 $34,851

$187,693 $5,010 $49,405

$212,842 $3,670 $57,352

Net Profit Net Profit/Sales

$81,318 16.33%

$115,278 17.81%

$133,820 16.54%

7.5 Projected Cash Flow

Cash flow will become consistently positive by month 6, removing the need for additional funding to get the store and business off the ground. The business will attempt to keep a healthy cash balance in reserve for the potential that equipment or other assets must be repaired or replaced. Steady investments in the assets of the business have been worked in to these projections to account for the gradual replacement of equipment. The cash flow table shows a budget for the purchase of additional tools and equipment as they become worn out, broken, or lost, and for purchasing tools to install and maintain new types of security devices as they are released to the market so business can remain up to date. The owner will take out dividends from the business when cash flow can support it, while keeping a cash reserve of around $50,000 at any given time in the second and third year in the business. The borrowing on credit cards will be paid off over the first year.

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Pro Forma Cash Flow Year 1 Cash Received Year 2 Year 3

Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations $373,493 $83,703 $457,196 $485,541 $149,609 $635,150 $606,927 $189,051 $795,977

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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 $0 $0 $0 $0 $0 $0 $457,196 $0 $0 $0 $0 $0 $0 $0 $635,150 $0 $0 $0 $0 $0 $0 $0 $795,977

Expenditures

Year 1

Year 2

Year 3

Expenditures from Operations Cash Spending Bill Payments $99,000 $279,896 $139,000 $407,988 $195,000 $465,862

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Subtotal Spent on Operations

$378,896

$546,988

$660,862

Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $13,400 $8,000 $15,000 $45,000 $628,388 $0 $0 $0 $13,400 $10,000 $20,000 $65,000 $769,262

Principal Repayment of Current Borrowing $10,000 Other Liabilities Principal Repayment $0

Long-term Liabilities Principal Repayment $13,200 Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent $6,000 $3,000 $0 $411,096

Net Cash Flow Cash Balance

$46,100 $90,350

$6,762 $97,112

$26,715 $123,828

7.6 Projected Balance Sheet

The business will pay off its current borrowing in its first year of operation and its longterm liabilities over the first three years. Aside from a contingency fund, the business will not retain a great deal of cash in the business, but will pay profits out as dividends for the

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most part. Net worth will grow steadily, but not radically, over the first three years of operation for this reason.

Pro Forma Balance Sheet Year 1 Assets Year 2 Year 3

Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets $90,350 $40,795 $83,869 $26,000 $241,014 $97,112 $53,033 $62,147 $34,000 $246,292 $123,828 $66,291 $75,666 $44,000 $309,785

Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets $43,000 $18,000 $25,000 $266,014 $58,000 $36,000 $22,000 $268,292 $78,000 $54,000 $24,000 $333,785

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Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities $83,646 $0 $0 $83,646 $29,046 $0 $0 $29,046 $39,118 $0 $0 $39,118

Long-term Liabilities Total Liabilities

$56,800 $140,446

$43,400 $72,446

$30,000 $69,118

Paid-in Capital Retained Earnings Earnings Total Capital

$77,000 ($32,750) $81,318 $125,568

$77,000 $3,568 $115,278 $195,847

$77,000 $53,847 $133,820 $264,667

BUSINESS PLAN

43

Total Liabilities and Capital

$266,014

$268,292

$333,785

Net Worth

$125,568

$195,847

$264,667