Greeting Card Business Plan

Business Plan
Business Plan Prepared By

Chris Straka, President
45 Industry Road
Seaside, StateA 50011
(090) 555-2400
(090) 555-2492 Mobile
cstraka@email.com
Date Prepared
January, 200B
First Class Greetings LLC Business Plan
Table of Contents
Executive Summary ..........................................................................................................................5
Management and Organization .....................................................................................................7
Management team ...................................................................................................................................7
Compensation and ownership .................................................................................................................8
Contracts and franchise agreements ........................................................................................................8
Board of directors/advisory council .........................................................................................................8
Infrastructure ...........................................................................................................................................9
Insurance..................................................................................................................................................9
Employee stock option plan and other incentives .................................................................................10
Organization charts ...............................................................................................................................10
Product and Service Plan ..............................................................................................................11

Purpose of the product or service ..........................................................................................................11
Unique features......................................................................................................................................11
Stage of development ............................................................................................................................11
Future research and development ..........................................................................................................12
Trademarks, patents, copyrights, licenses, royalties................................................................................12
Government approvals...........................................................................................................................12
Product and service limitations..............................................................................................................12
Product liability .....................................................................................................................................13
Related services and spin-offs................................................................................................................13
Production .............................................................................................................................................13
Facilities.................................................................................................................................................13
Suppliers ................................................................................................................................................14
Environmental factors............................................................................................................................14
Marketing Plan ..................................................................................................................................15

Industry profile ......................................................................................................................................15
Current size .....................................................................................................................................15
Growth potential .............................................................................................................................15
Geographic location ........................................................................................................................15
Industry trends ................................................................................................................................15
Seasonality factors ...........................................................................................................................16
Profit characteristics ........................................................................................................................16
Distribution channels ......................................................................................................................17
Basis of competition ........................................................................................................................17
Competition profile ...............................................................................................................................17
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Customer profile....................................................................................................................................18
Target market profile .............................................................................................................................18
Pricing profile ........................................................................................................................................18
Gross margin on products .....................................................................................................................18
Break-even analysis................................................................................................................................19
Market penetration ................................................................................................................................19
Distribution channels ......................................................................................................................19
Sales representatives ........................................................................................................................19
Direct sales force..............................................................................................................................19
Direct mail/telemarketing................................................................................................................19
Advertising and promotion....................................................................................................................20
Packaging and labeling ..........................................................................................................................20
Service and warranties ...........................................................................................................................20
Trade shows ...........................................................................................................................................20
Future markets .......................................................................................................................................20
Operating and Control Systems..................................................................................................21

Administrative policies, procedures, and controls..................................................................................21
Receiving orders ..............................................................................................................................21
Billing the customers .......................................................................................................................21
Paying the suppliers.........................................................................................................................21
Collecting the accounts receivable...................................................................................................21
Reporting to management...............................................................................................................21
Staff development............................................................................................................................22
Inventory control .............................................................................................................................22
Handling warranties and returns .....................................................................................................22
Monitoring the company budgets ...................................................................................................22
Security systems...............................................................................................................................23
Documents and paper flow....................................................................................................................23
Planning chart .......................................................................................................................................23
Product development.......................................................................................................................24
Manufacturing .................................................................................................................................24
Financial requirements ....................................................................................................................24
Marketing flow chart.......................................................................................................................24
Market penetration..........................................................................................................................24
Sales Representatives .......................................................................................................................25
Management and infrastructure ......................................................................................................25
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Risk analysis...........................................................................................................................................25
Salvaging assets......................................................................................................................................26
Growth Plan .......................................................................................................................................27
New offerings to market ........................................................................................................................27
Capital requirements..............................................................................................................................27
Personnel requirements..........................................................................................................................28
Exit strategy...........................................................................................................................................28
Financial Plan ....................................................................................................................................29
Sales Projections ....................................................................................................................................29
Income Projections ................................................................................................................................29
Cash Requirements................................................................................................................................29
Sources of Financing .............................................................................................................................29
Projected Financial Statements
Projected Cash Flow Statements
Projected Year-End Income Statements
Projected Year-End Balance Sheet
Ratio Analysis
Supporting Documents .................................................................................................APPENDIX

Historical Balance Sheet
Sales Projections
Inventory Projections
Operating Expenses Projections
Depreciation Schedules
Capital Budget Projection
Equity & Debt Worksheet
Amortization Table
4
Executive Summary
Venture History
First Class Greetings, LLC continues to impact the national stationery market with patent pending,
innovative, stamped and ready-to-mail greeting cards. The First Class Greetings’ card line includes the
major greeting card categories of birthday, thank-you, seasonal holidays and general humor. First Class
Greetings offers a full selection of original artwork, photographs and seasonal images by numerous
artists with national and international recognition. First Class Greetings competes within the mid-
market price range at $2.75 with a first class postage stamp affixed, creating an added sense of value.
Venture Description
The uniqueness of the First Class Greetings concept is simple. Each greeting card is stamped and
ready to mail. An envelope, with its corner removed, reveals the stamp affixed to the greeting card.
The obvious benefit to the consumer is convenience. The consumer is spared the hassle of searching for
a stamp to send the greeting card. This added value makes it an attractive product for targeted
locations such as airports, hotels, card shops and cafés.
Venture Organization
The management of the company will be the responsibility of Chris Straka. Chris Straka has over
seven years of business development and analysis experience. Chris served as the business analyst for
the national Hoofin’ Joe’s Restaurant chain, and was a founding partner in Enviro-Juice, a $1,500,000
four-unit company in the Seaside area.
Venture Market
First Class Greetings’ product line is positioned in the 7 billion dollar a year U.S. greeting card industry.
Greeting cards can be found in over 100,000 retail outlets in the United States. Over 90% of American
households participated in the greeting card industry in 200A, with the average household purchasing
35 individual cards per year. This successful national market business model can be applied to
international markets for continued growth.
For marketing and distribution, First Class Greetings is enlisting sales representatives nationwide. First
Class Greetings selected 20 representatives to cover the Western regions of the United States, and it
will soon add over 80 additional sales reps to cover the remainder of the nation.
5
Venture Operations
First Class Greetings is seeking a $300,000 loan in order to implement the second phase of its business
plan. The funding will help to secure an office/shipping location, increase the current line from 100
images to over 300, provide working capital, attract an experienced marketing director from within the
greeting card industry, and market at national tradeshows and in industry trade magazines. Current test
locations support the business plan assumptions and project gross income by year three at nearly
$4,000,000.
Venture Financing
The marketing advantage created from the patent pending greeting card system will position First Class
Greetings as an attractive candidate for acquisition within the competitive greeting card industry. The
long-term strategy is to concentrate on building value in the company through increasing cash flow and
to harvest this value by merging with a larger competitor or by taking the company public. Consistent
with these end goals, considerable attention will be placed on business fundamentals as outlined in the
plan. Investor distributions are planned in year three, assuming projections are realized and market
saturation and reinvestment needs begin to level off. Following year three, new limited partners will
replace limited partners wishing to withdraw capital from the company, or, if prudent, their equity will
be purchased by the company.
6
Management and Organization

Management team
The following three individuals of the management team comprise the original members of First Class
Greetings, LLC, and will continue to take an active role in the leadership of the organization as
additional management staff persons are added.
Chris Straka — All initial First Class Greetings operations, including marketing distribution, advance
planning and business analysis will be under Chris Straka’s direction. Chris Straka is the founder of
First Class Greetings with over 6 years of business development and analysis experience. Chris Straka
recently served as the business analyst for Hoofin’ Joe’s Restaurants—voted America’s number one
eatery in the 1990s—a $300 million restaurant chain with 101 restaurants nationwide. Chris Straka also
brings to the table a successful entrepreneurial background as a founding partner in Enviro-Juice, a $1.5
million four-unit restaurant chain in the Seaside area. Under Chris Straka’s direction, Enviro-Juice
received national recognition including a write-up in Blue Planet Magazine and was voted best Seaside
area juice chain in 1999. The first Enviro-Juice was profitable after only three months of operation,
while the Suntown, StateA, location was profitable from day one. The restaurants were sold to a larger
corporation at a multiplier of nearly three times net.
Jody Arbek — Jody Arbek serves as a part-time art director. Jody is owner and founder of Startling
Visions art gallery, located in Conch Ville, StateA. Since founding Startling Visions art gallery in 1980,
Jody has been responsible for the production of over 60 original art shows showcasing as many artists.
Jody has also received awards and recognition for contribution to the arts. All First Class Greetings
original art procurement will be under Jody Arbek’s direction.
Shaun Patrick — Shaun Patrick serves as a part-time marketing consultant to First Class Greetings.
Shaun brings over six years of marketing and tradeshow experience. Shaun was instrumental in the
start-up months of First Class Greetings, seeing the company through its initial product rollout as well
as the first two tradeshows.
Marketing Director — The marketing director position is currently open. The director will be fully
responsible for all marketing aspects of the business including full implementation and revisions of the
marketing plan, tradeshow organization, sales rep negotiations, brand promotion and market expansion.
During the early stages of the business, the current management group will manage these functions.
As funding permits, a qualified candidate from within the greeting card industry will be sought to fill
the position.
During 200B, the primary management of the company will be Chris Straka’s responsibility. Chris will
build a management team focused on issues of marketing, finance and distribution beginning in 200C.
Up to 12 additional production positions will be hired for shipping and order fulfillment. All other
jobs, such as printing, bookkeeping and accounting will be subcontracted out. As the business matures
beyond its entrepreneurial beginnings, long-term objectives include seeking experienced and seasoned
personnel from within the greeting card industry.
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Compensation and ownership
Compensation at the management level will be achieved through salary, while shipping and order
fulfillment personnel will be paid on an hourly basis. Cash bonuses tied to profitability will be awarded
throughout the company.
Majority ownership will remain with member, Chris Straka. Minority ownership positions will be
made available to investors and employees.
Contracts and franchise agreements

First Class Greetings has employed Lea Liu, Attorney at Law, to provide legal counsel concerning
contracts and other legal matters. Ms. Liu has developed several contractual agreements to aid in the
operations between vendors, suppliers, artists, manufacturer’s representatives, and employees. These
contracts are designed to protect the assets of First Class Greetings and its members. At this time,
there are no plans for franchising or licensing.
Board of directors/advisory council

The following advisors will form an informal advisory council to the management of First Class
Greetings. Throughout the year, the management team will call on the advisors asking for their viewpoint
and expertise on strategic matters. At least once each year, all advisors will be invited to an advisory
council meeting where a more formal discussion of the following year’s goals and strategies will take place.
Stefanie Samuelsen — Stefanie Samuelsen is a Clinical Professor of Finance and Management at

Western-Thomas Graduate School of Management, Western University. She has also been an
Entrepreneur-in-Residence at the Foundation for Advancement in America since 1994. In 1998,
Commerce Weekly named her one of the top 12 entrepreneurship professors at graduate business schools
in the U.S. In 200A, Wallace and Timberton Accounting Firm selected her as Entrepreneur of the Year.
Her guidance and feedback in the areas of financial strategies and entrepreneurship will be immeasurable.
James Task, Ph.D. — James Task is vice president of the Center for Entrepreneurs at the Foundation
for Advancement in America in Center City. James Task was selected as one of the Entrepreneurs of
the Year in 1998 for his work in support of entrepreneurship. James has great insights and experiences
to share concerning strategic assessment, planning and entrepreneurship.
Rashaun Gamberden — Rashaun Gamberden is currently the president and CEO of Hoofin’ Joe’s
Restaurant chain. Rashaun has already offered his support and business experience to First Class
Greetings throughout the start-up. In addition, Rashaun’s personal ties to Mary Ann Sparkington,
CFO of Mugga Coffee, have proven to be advantageous for acquiring industry trend information
concerning the retail coffee industry. This connection is important for the marketing of the Coffee
Notes line of cards.
8
Sandra Wu — CPA MS-Tax — Sandra Wu, owner of Accounting Specialists, Inc., is handling the
accounting and capital growth needs of the company. Sandra Wu will use many business resources,
contacts and knowledge to help secure capital and bank financing for First Class Greetings.
Daniel Renkin – Daniel Renkin is the senior director of business finance and analysis for Hoofin’ Joe’s
Restaurant. With over 15 years of business analysis experience, Daniel Renkin’s knowledge of corporate
business strategy and financial models will help guide anticipated growth.
Infrastructure
Many outside advisors will be relied upon for their contracted services, among them:
Cara Cuthbert — Insurance advice and coverage, paid for through policies obtained.
Lea Liu, Attorney at Law — Legal services as needed, paid hourly or by project.
Michelle Norris — Mailbox/display rack designs and all marketing and tradeshow displays and
materials, paid by the project.
W. J. Peete, ITS — Computer and information technology services as needed, paid hourly.
Sandra Wu, CPA MS-Tax — Accounting and tax services provided quarterly and yearly paid by the
project.
Insurance
All LLC members of First Class Greetings will have an individual life insurance policy owned by the
LLC. In the unfortunate occurrence of a member’s death, the proceeds of the life insurance policy will
be used to purchase that member’s portion of the equity ownership in the company—as established by a
valuation calculation previously agreed upon. This ownership portion will be distributed based on the
then-current percentages of ownership in the company.
Other insurance needs, as outlined by Cara Cuthbert, insurance agent, specializing in commercial
company protection, include:
■ General liability
■ Product liability
■ Equipment and Property coverage
■ Employee health insurance – as deemed necessary
9
Employee stock option plan and other incentives
Members and employees of the LLC will receive yearly cash bonuses tied to profitability. In 200D, and
every year after, investors will receive profit distributions. Various incentive programs encourage outside
(non-employee) involvement in the company. Sales representatives are offered a commission based on
gross sales (15%) and artists are offered a commission for their artwork based on gross sales associated
with their artwork (6%).
Organization charts
Chris Straka, Member

President
Director Position Director Position Director Position Jody Arbek, Member

Operations, Distribution, Finance Sales and Marketing Art Director
Art Procurement Beginning 200C Beginning 200B Beginning 200A
Beginning 200C
Shaun Patrick, Member

Distribution Marketing Consultant
Staff Beginning 200A
Beginning 200C
Production Advisory Council

Staff Members
Beginning 200C
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Product and Service Plan

Purpose of the product or service
The company’s objective is to develop, market and distribute postage pre-paid greeting cards to selected
upscale card shops, airports, hotels and coffeehouse locations. The First Class Greetings’ product line is
positioned in the high-quality, mid-price range of the market. The company’s product line
differentiates itself by offering consumers a greeting card that is stamped and ready to mail. First Class
Greetings will also further differentiate its product through unique, high-quality artwork.
Unique features
Card Designs and Images
The First Class Greetings’ card line includes the major greeting card categories of birthday, thank-you,
seasonal, holidays and general humor. The line consists of original artwork from a number of different
artists. Different styles include watercolors, oils, photography and other mediums to help diversify and
keep the line fresh, original and appealing to varied demographics and tastes. The initial Coffee Notes
line consisted of 15 coffee-related images. The second run produced 15 additional images including
seasonal and general designs. An additional 88 images debuted at the Stationery Show of America,
May 200A, in New York. These 118 images will help solidify First Class Greetings as a viable
stationery company.
Envelope Design
The envelope is a patent pending original design that incorporates functional and aesthetic features.
The original feature of the envelope design is that the top right hand corner is cut off to reveal a
postage stamp adhered directly to the note card rather than the envelope.
Display Racks
First Class Greetings can be displayed from a variety of customized counter-top, floor-spinners and wall
display racks. The original rack design is a patent pending counter-top model, designed with a mailbox
built into the display. Floor-spinners and wall racks have recently been added to the display line to
offer space saving alternatives as well as the ability to hold a larger number of the upgraded cards.
Stage of development
First Class Greetings is a new business operating as a limited liability company. After considerable
product/market research and product design, First Class Greetings began Phase One-Start-Up
operations the first quarter 200A. During Phase One, efforts were concentrated on proving
marketability and profitability of the concept. Since the feasibility of the concept was established, First
Class Greetings is moving into Phase Two-Operations. The initial Coffee Notes line of cards now
contains 30 coffee-related images. Another 88 images debuted at the Stationery Show of America,
May 200A, in New York.
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Future research and development
Continual research concerning trends in the greeting card industry and artwork preferences will have a
large impact on the salability of future card lines. Jody Arbek, Art Director beginning in 200A, will
continue to serve as an art consultant to First Class Greetings. Jody will offer guidance based on her
considerable experience procuring artwork for her gallery, Startling Visions. In addition, experienced
and seasoned personnel from within the greeting card industry will be sought as the business matures.
Trademarks, patents, copyrights, licenses, royalties

First Class Greetings has trademarked its logo, which appears on the backs of all cards and envelopes.
This trademark will become recognized by consumers as a sign of quality and convenience and will help
to establish First Class Greetings as a superior greeting card company.
The envelope is a patent pending original design that incorporates utility functions as well as aesthetic
features. The patent approval process should be completed in 200B.
All artwork created under contract for First Class Greetings is held as copyrighted material by First
Class Greetings, not the artist. The artist is compensated through commissions based on gross sales
associated with the specific artwork.
Governmental approvals
Since First Class Greetings is an already established limited liability company, all governmental
approvals have been satisfied for its start-up—including local, state, and federal registrations. In
addition to these regular necessary approvals, the U.S. Postmaster of San Morton, StateA, has tested
First Class Greetings, finalizing its compatibility with the U.S. postal system and its machinery. To
date, all envelopes sold have successfully passed through the postal system.
Product and service limitations

One product limitation could be additional pilfering and shoplifting of the product because of the
added value of having a stamp affixed to the card. The patent pending design will limit stealing of the
envelopes, since the stamp is affixed to the card itself. A stamped note card is less likely to be stolen
due to its perceived higher value ($2.75 value) than a stamped envelope. In addition, the cut envelope
corner renders the envelope useless since no stamp can be adhered to it in the appropriate place.
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Product liability
Product liability risk was discussed at length with people from the greeting card industry, the advisory
council members, legal counsel, and the insurance broker. The product does not in and of itself create
extreme risk above and beyond what is deemed reasonable. Therefore, the insurance and legal status of
the company should be sufficient to cover the unlikely risk associated with the product.
Related services and spin-offs

First Class Greetings can easily grow from the current marketing strategy and spin-off product lines to
include stationery, wrapping paper, boxed note cards, postcards, etc. Of these related products,
postcards would be the most likely choice since they are consistent with the current marketing
strategy—a postage-ready product that provides convenience to the customer.
Another option for future growth is to enter the e-market on the Internet. Several card companies have
experienced phenomenal growth, in terms of visitors, in the last year. In most cases, e-cards are made
available for free to visitors. Advertising spots shown while visitors are selecting cards are meant to
bring in the profits. As of yet, profitability is often sought after but not attained on the Internet.
Opportunities will be evaluated for profitability to make cards available in this medium.
Production
The two main components for production are the greeting cards and the envelopes. In the Seaside area
alone 12 major printing companies are capable of producing the quality and quantity needs projected.
The two vendors currently being used were selected in consideration of quality and price.
Beachcombers Printing and Lithograph out of Seaside publishes the greeting cards, while Mid-
Continent Envelope out of Midtown manufactures the patent pending envelope. Since there are many
companies that can provide this service, First Class Greetings has developed relationships with back-up
production companies as well.
Facilities
Currently, First Class Greetings operates out of a 1,300-square-foot facility in Seaside that provides
adequate space for current operations. Members and employees work both virtually from their remote
location and from the Seaside facility. Each Wednesday, all members work at the Seaside facility. As
sales top $4 million (anticipated in 200E), the business will move all offices, storage and shipping
facilities to one central location in San Morton, StateA. San Morton has been chosen for its proximity
to current printing, employee and financial resources.
13
Suppliers
Since production is handled by subcontractors, the most pressing concern is to have enough artists to
supply artwork to grow the product line from 100 images to 300—the average number of images an
established, mid-sized greeting card company carries. It will be necessary to attract artists with
different styles including watercolors, oils, photography and other mediums to help diversify and keep
the line appealing to the intended customers. Jody Arbek, Art Director beginning in 200A, will use her
background, network, and expertise to establish a group of artists that will meet these needs. Many
incentive programs, including commissions on sold cards, will be employed to keep the artists interested
in the potential of working with First Class Greetings.
Environmental factors
All paper used in the production of note cards and envelopes are created from recycled products. In
addition, environmentally safe printing and manufacturing practices by subcontractors are assured
through state and county requirements and regulations.
14
Marketing Plan
Industry profile
Current size
First Class Greetings’ product line is positioned in the $7 billion a year U.S. greeting card industry.
Large companies command nearly 85 percent of the market share (Market Group Research, Inc.).
Given that these companies have greater financial resources, market penetration, and brand recognition,
First Class Greetings will target the remaining $1+ billion market currently divided between as many as
1,700 small- to medium-sized independent card companies.
Growth potential
Annual growth in the greeting card industry is expected to remain at 1% to 3% throughout the year
200G. This growth comes from two sources. The first is based on the number of consumers in the
marketplace. Greeting cards are primarily purchased by women between the ages of 35 and 65—baby
boomers. The number of this customer segment is expected to remain the same until the year 200G.
The second source is greeting card prices, which are expected to increase at a rate slightly higher than
the rate of inflation (Cards and Gifts Magazine, January 200B). First Class Greetings’ growth
projections are based on these findings and new market sales.
Geographic locations
Greeting card sales are highly relational to population figures. Therefore, the highest populated geographic
areas will generate the highest sales. Due to First Class Greetings’ unique offering, geographic locations
with high tourism and travel will be targeted. These areas will have the highest concentration of potential
customers that will respond to a more convenient greeting card—one with the postage already affixed.
Industry trends
Many of the marketing and card design decisions will be guided by the following greeting card
industry trends:
■ Of total greeting cards purchased annually, roughly half is from seasonal sales and the
remaining half is from everyday card sales. Sales of non-occasion cards are on the increase
(USA Research Plus, July 200A).
■ Major card selling holidays are, in order, Christmas, Valentines Day, Easter, Mother’s Day,
Father’s Day, and Graduation (USA Research Plus, July 200A).
■ Women between ages 35 and 65 purchase over 80 percent of all greeting cards (Cards and
Gifts Magazine, January 200B).
■ The average person receives 30 cards per year, eight of which are birthday cards. In fact,
nine in 10 Americans aged 16 to 69 received at least one card on their last birthday (Global
Marketing, Spring 200A).
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■ The number of substitutable products for greeting cards is dramatically increasing with
technology, including e-mail, e-cards, telephone, mobile phones, digital technology, etc.
First Class Greetings will respond to these trends in the following ways: Due to the special offering of
First Class Greetings—a convenient card with postage affixed—everyday cards, including birthday
cards, will be produced. Limited selections of holiday cards may be made available in holiday point-of-
purchase displays for established retail customers. Cards will be designed to appeal primarily to women
between the ages of 35 to 65. In addition, a larger demographic group including men and women
concerned with time and convenience will be targeted. In the future, cards appealing to young men and
women will also be developed to begin to harvest this future market of potential customers.
Seasonality factors
Of the total greeting cards purchased annually, roughly half are seasonal while the remaining half are
everyday card-sending situations. The most popular everyday card-sending situation is still birthday,
which accounts for nearly 60 percent of everyday cards sold. First Class Greetings would like to
concentrate on everyday cards in an effort to stabilize revenues and output. A limited selection of
holiday cards may be made available for established retail customers.
Profit characteristics
Net profit margins in the greeting card industry (SIC 2771) have shown some consistency in the last
four years. (Figures listed from most recent to least recent.) The lowest profit percentage year, 1.4% net
profit, reveals the impact on greeting card sales during a dramatic shift in distribution towards card sales
in large discount retailers.
Net Profit for Greeting Card Companies
8.0%
6.0%
4.0%
2.0%
S1
0.0%
1 2 3 4
Series1 6.7% 7.2% 1.4% 5.8%
Years Previous to 200B
(Statistics taken from the RMA Annual Reports for the cited years)
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Distribution channels
Distribution channels within the greeting card industry are experiencing many changes. Over the past
ten years, the typical card shop distribution channel has shrunk from about 40% of industry sales to less
than 30% today. The main cause is increased distribution of cards in mass-merchandisers such as
grocery stores, discount stores, etc. This trend is expected to continue into 200E when this distribution
is expected to maintain 15-20% of sales. The number of cards distributed through specialty shops and
trendy gift shops has increased slightly.
A newer distribution channel, the Internet, will also create many changes. This channel is highly
speculative at this point. Some companies are willing to spend the money to attract the next wave of
consumers—the 20-somethings. These Internet efforts are expected to bring losses of some magnitude
for the next three to 10 years (Gift Shop Manager Magazine, August 200A).
Basis of competition
Since the large greeting card companies command nearly 85 percent of the market share, First Class
Greetings will compete for the market share of smaller alternative card companies such as Special Arts,
E-notes, Century and Sunset Publications, and Green Living Products, Inc. The greeting card industry
is extremely competitive; therefore, it is critical to long-term success to establish First Class Greetings
in as many locations and in as short a time as possible. The National Association for Greeting Card
Producers (NAGCP) estimates as many as 2,000 greeting card publishers in America, ranging from
major corporations to small family organizations.
Similar to the competitors, First Class Greetings addresses the largest segment of consumers by
providing images that appeal to the largest group of consumers—women. First Class Greetings will set
itself apart from the competition by appealing to an even larger demographic group including men and
women concerned with time and convenience. First Class Greetings can better service this sector over
larger competitors by tailoring the product, offerings, prices, distribution, promotional efforts, and
services towards that particular market segment.
Competition profile
One competitor worth close examination is Green Living Products (GLP). GLP is a publicly traded
company that specializes in wildlife and nature related greeting cards and grosses over $3 million
annually. The company is similar in size and revenue to First Class Greetings’ budget figures. GLP
utilizes 130 independent sales reps to support and service 5,200 national retail locations (Source: GLP
SEC filing). A complete list of direct competitors is included in the Appendix.
One of First Class Greetings’ greatest marketing advantages is the originality of a greeting card that is
stamped and ready to mail. At this time, no other greeting card company has attempted this combination.
This allows First Class Greetings a brief window of opportunity to rapidly gain market share and saturation.
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Customer profile
Although people of all ages and types exchange greeting cards, women, aged 35 to 65 still purchase over
80 percent of all greeting cards. This demographic will define the primary target customer for most
product lines. In addition, First Class Greetings will focus on an even larger demographic group
including men and women concerned with time and convenience. Potential customers will be found in
hotel gift shops, airports, tourist locations, cafés, card shops, etc.
Target market profile

Greeting cards can be found in over 100,000 retail outlets in the United States. Over 90 percent of
American households participated in the greeting card industry in 200A, with the average household
purchasing 35 individual cards per year. First Class Greetings seeks entrance into this retail market
through
■ Airport concession/retail companies.
■ Hotel gift shops.
■ Unique card and gift shops.
■ Cafés.
A complete list of potential target markets appears in the Appendix.
Pricing profile
First Class Greetings will compete near the mid-price range within the market. While greeting cards
range in price from $0.38 to $10.00, the average counter card retails for around $2.65. Most of the
First Class Greetings’ cards retail at $2.75 with a first class postage stamp already affixed, creating an
added sense of value.
Gross margin on products

The gross margin for the industry ranges from 52 to 57 percent.
First Class Greetings’ gross margin will have little fluctuation since the costs are based on raw paper
goods and postage stamps. Goods are subcontracted out at a set price and quantity, which can be
controlled through competitive bidding. First Class Greetings’ gross margin is 46.4 percent in 200B.
The gross margin will rise slightly by year 200D to 52.3 percent. This increase is attributed to
established ordering patterns and batch quantity increases.
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Break-even analysis
To determine break-even sales, First Class Greetings uses this formula:
Fixed costs = $227,029 = $746,806

Gross Margin % - Commissions % (46.4% - 16%)
Since sales of $835,169 are projected for year 200B, First Class Greetings will exceed break-even in
200B. The break-even number of card sales in units can also be calculated. This number can be very
helpful in initial communication, goal setting, and evaluation of sales representatives.
Fixed costs = $227,029 = 281,814 cards

Unit Gross Margin - Unit Commissions (1.23 - .43)
This amount is the equivalent of 23,385 cards sold per month and 5,871 cards sold per week.
Market penetration
Distribution channels
There are two main channels for product sales and distribution. The first plan is to integrate First
Class Greetings into as many locations as quickly as possible through national independent sales
representatives. The second channel targets specialized stationery, hotel, and coffee tradeshows.
Sales representatives
Independent sales representatives provide the best mode for distribution in order to maintain pricing
controls and higher margins. Independent sales reps are not full-time employees of First Class Greetings,
thus benefits are not necessary. Independent sales reps receive a flat commission based on gross sales.
First Class Greetings’ sales reps are set at a commission rate of 15% of gross sales. The average sales rep
can service up to 40 accounts with the average location generating around $1,000 per year.
Twenty independent sales reps covering 13 states sell the company’s product. The company anticipates
adding over 80 additional sales reps to cover the remainder of the United States. In addition to field
calls, sales reps will represent the product line at all regional tradeshows, with the marketing director
attending all national tradeshows.
Direct-sales force
A direct-sales force will not be used to sell the greeting cards at this time.
Direct mail/telemarketing
Direct mail and telemarketing efforts will not be used to sell the greeting cards at this time.
19
Advertising and promotion
The company will use various methods to promote its product at the retail level as well as to the end
consumer—for example, tradeshows, point-of-sale materials, and the website (www.firstclasscards.com).
In addition, sales materials will be produced at the beginning of each season featuring new products and
merchandising programs. One of the company’s most effective forms of retail advertising is the visual
point-of-purchase display in retail stores.
Packaging and labeling

Two important packaging and labeling issues face First Class Greetings. First, the card and envelope
must be manufactured and arranged in an attractive, appealing way. Since each card is stamped and
ready to mail, an envelope with its corner removed will be packaged with each card to be sold together.
The second packaging issue is the way in which First Class Greetings cards are displayed. The cards
can be displayed from a variety of customized counter-top, floor-spinners and wall display racks. The
original point-of-purchase rack design is an award-winning patent pending counter-top model,
designed with a mailbox built into the display.
Service and warranties

First Class Greetings retail accounts have the option of exchanging slow-selling images for new images.
This pledge will encourage first-time orders. This exchange is handled via UPS’s three-day service in
order to help keep customers’ inventory on the racks.
Trade shows
Trade shows are an essential strategy to the future success of First Class Greetings and are the most
efficient means of acquiring new accounts as well as new sales reps. A tradeshow presence also helps to
secure brand awareness within the industry. Tradeshows offer a targeted market of owners and buyers
looking for new items for their businesses. With proper marketing and booth location, new accounts
will be obtained. The first 60 Coffee Notes accounts were located through two regional coffee-related
tradeshows.
Future markets
First Class Greetings will focus on national sales while keeping an eye on international potential.
Greeting cards have international acceptance, meaning the concept could have similar potential
overseas. One of the major markets, the U.S. coffeehouse itself, is a carryover from Europe. A recent
study released in the United Kingdom indicates that five percent of the British population is passionate
about greeting cards. Consumer research findings show that more avid enthusiasts are sending cards for
a wide range of occasions (National Association for Greeting Card Producers—NAGCP).
20
Operating and Control Systems

Administrative policies, procedures, and controls
Receiving orders
After receiving faxed orders from sales reps, the orders are shipped via UPS Ground to their final
destination. The main exceptions are orders from Hawaii and Alaska, which are shipped through the
U.S. postal system. Current orders are shipped directly from the home office in Seaside, StateA. All
First Class Greetings retail accounts also have the option of exchanging slow-selling images for new
images. This exchange is also handled via UPS but on the faster three-day service in order to help keep
customer’s inventory on the racks.
Billing the customers

A packing slip is included with all shipments. This packing slip can be used by the customer to
compare what is received with the original order and the invoice when it arrives. The invoice is mailed
after the shipment is sent. New account collections are COD and 30-day net for established accounts.
If the invoice is not paid within 30 days, a reminder statement is sent and a late fee charged.
Paying the suppliers

All suppliers will be paid upon their payment terms. Most vendors allow 30 days to pay. Any advance
payment discounts will be evaluated and utilized when appropriate. In order to process payment, the
original invoice must be attached to the internal approval form with an account number (for
categorizing expenses) and approval signature on it.
Collecting the accounts receivable

The first attempt to collect a late receivable is to send a statement that lists the late invoice and adds a
late fee to the total. One of the keys to keeping accounts receivable current is to provide payment terms
only to those customers who fill out a credit application. The credit application requests basic financial
information including the name of their bank and credit references. All applications will go through an
approval process that includes calling the references to establish the customer’s payment patterns.
Collection agencies will be used for accounts over 90 days past due.
Reporting to management
Because of the current virtual operations of the company, excellent communication systems are being
put into place. These systems, including e-mail, project manager software, and a budding intranet, will
provide the foundation for clear communication as the company grows.
21
Staff development
Certain training and development of staff will be beneficial to the overall efficiency of business
operations. Computer training, equipment training, and personal development will all be sought and
encouraged by management.
Inventory control
Inventory will be ordered as needed so that stock is held for a very short time before it is sent on to the
customer. Therefore, our inventory turn will be shorter than six weeks. One inventory challenge is the
inevitable postal increases. Given the frequency of postal increases in recent years, it is necessary to stay
ahead of the rate increases so that inventory with non-compliant postage is not left on the market. The
best way to handle this issue is through advance planning. The post office usually gives unofficial notice
of a rate increase at least a year in advance. The best-case scenario is to begin placing the proper
postage in advance of the change. The next rate increase will occur mid-200B by one cent. Because the
new stamp is not yet available, First Class Greetings has already begun to apply the stamp that is
currently available—two cents above the current rate of first class postage. Although the extra cent will
raise the cost of goods for the product, this one-cent increase is preferable to the costs associated with
directly exchanging merchandise already distributed to current accounts. In a direct exchange, First
Class Greetings loses the cost of the exchanged card which ranges from $.16-$.20. The cost of the
invalidated stamp can be recovered from the post office, but the card is destroyed. Direct exchange is
the least desirable option.
Handling warranties and returns

First Class Greetings’ retail accounts have the option of exchanging slow-selling images for new images.
This exchange is handled via UPS on the three-day service in order to help keep customers’ inventory
on the racks. Returns are accepted for damaged or incorrectly shipped merchandise.
Monitoring the company budgets

Budgets will be prepared yearly to determine benchmarks for:
■ Revenue
■ Inventory
■ Sales and Marketing Expenses
■ Administrative Expenses
■ General Expenses
■ Capital Expenditures
22
The budgets will be used to establish benchmarks and then to review actual performance against the
benchmarks.
Security systems
A sophisticated security system is established for the inventory and equipment areas within the office
space. This system includes 24-hour surveillance.
Documents and paper flow

At this time all documents are scanned into the computer system and stored digitally. This system
supports the virtual operations of the company and aids in security and storage.
Planning Chart
Phase One (Complete): First-Round Financing – Start-up
Total Finance: $128,000 Investor contribution
Minimum Investment: $150,000 Original member contribution
Time Line: 2 months start-up, 10 complete months of sales figures
Goals: 1) Generate actual business plan figures.

2) Establish a viable test market composed of 20 units.
Analyze budget revenues, costs, sales distribution and
product mix.
Phase Two (Current): Second-Round Financing – Operations

Finance: $300,000 debt financing
Goals: 1) Provide free display racks to help secure rapid market share.
2) Introduce 200 new images (300 minimum total).
3) Implement business plan.
23
Product development
The product line will be developed from 100 images to 300—the average number of images an
established, mid-sized greeting card company carries. It will be necessary to attract artists with different
styles including watercolors, oils, photography and other mediums to help diversify and keep the line
appealing to the intended customers. Jody Arbek, Art Director beginning in 200A, will use her
background, network, and expertise to establish a group of artists that will meet these needs. Many
incentive programs, including commissions on sold cards, will be employed to keep the artists interested
in the potential of working with First Class Greetings.
Manufacturing
Few factors limit the physical manufacturing of the product. The two main products for production are
the greeting cards and the envelopes. In the Seaside area alone, 12 major printing companies are
capable of producing the quality and quantity needs projected. Beachcombers Printing and Lithograph
out of Seaside publishes the greeting cards, while Mid-Continent Envelope out of Midtown
manufactures the patent pending envelope.
Financial requirements
First Class Greetings has raised close to $130,000 from individuals in exchange for an overall equity
position of 40%. The second phase funding will help to secure an office/shipping location, increase the
current line from 100+ images to over 300, provide working capital, and help attract an experienced
marketing director from within the greeting card industry.
Marketing flow chart

For marketing and distribution, First Class Greetings is enlisting the service of sales representatives
nationwide. First Class Greetings selected 20 representatives that cover the Western regions of the
United States, and will soon add over 80 additional sales reps to cover the remainder of the nation.
Efforts will be made to recruit and evaluate enough sales reps to secure the services of 10 representatives
each month until 100-120 sales representatives are selling the products.
Market penetration
There are two main channels for product sales and distribution. The first plan is to integrate First
Class Greetings into as many locations as quickly as possible through national independent sales
representatives. This plan is well on its way with 20 sales representatives currently selling the products
and more than 80 to be added within the next year. The second plan for distribution is through
specialized stationery, hotel, and coffee tradeshows. These tradeshows will be held in May, July, and
September of each year.
24
Sales representatives
Independent sales representatives provide the best mode for distribution in order to maintain pricing
controls and higher margins. Independent sales reps are not full-time employees of First Class Greetings,
thus benefits are not necessary. Independent sales reps receive a flat commission based on gross sales.
First Class Greetings’ sales reps are set at a commission rate of 15% of gross sales. The average sales rep
can service up to 40 accounts with the average location generating around $1,000 per year.
In addition to field calls, sales reps will represent the product line at all regional tradeshows, with the
marketing director attending all national tradeshows.
Management and infrastructure

Three individuals from the original team of members in the LLC comprise the current management
team. This team will add a marketing director by May 200B. This management position will be fully
responsible for all marketing aspects of the business. The expanded management team will include a
director of operations, distribution and art procurement, and a director of finance. These two positions
will be added in 200C.
The management team relies heavily on the infrastructure and advisory council for certain contracted
services and advice on the strategic direction of the company.
Risk analysis
Despite all planned mitigation, there are always inherent risks especially with a start-up company. The
major risks are identified and addressed as follows:
1. Unique stamped and ready to mail concept is not accepted.

■ The public can be fickle and unsure of new items introduced to the market. Educating the
public through marketing, and providing them with as traditional a product as possible
should help to integrate the acceptance of the new product. Non-acceptance is perceived as
one of the greatest risks. If there is a public inability to adapt to the new envelope and
concept, First Class Greetings can always drop the stamp from the product and form a
standard greeting card company with the remaining inventories. The company would operate
under a new name and logo to help shed any ghosts in a post First Class Greetings closet.
2. Too few images are published, or public does not respond to the images.
■ Established, mid-sized greeting card companies carry an average of 300 different images.
First Class Greetings already has 100 images ready to debut at the National Stationery
Tradeshow. In addition, First Class Greetings will closely follow the trends in the market
place such as category types (e.g. Christmas), popular images (e.g. flowers), and colors/hues
(e.g. vibrant or pastels).
25
3. A lack of funding undermines flexibility.
■ Critical to the success of First Class Greetings is proper funding. The majority of the
funding will go towards display racks and in-store point-of-purchase marketing material to
help educate the public on the new concept. Free displays are essential to quick market
penetration. Should First Class Greetings be unable to secure the necessary financing, the
option remains to charge retail accounts for the display racks. This action will severely limit
the ability of First Class Greetings to quickly expand and take advantage of the new product
in a timely fashion.
4. Better-financed competitor overtakes market share.

■ This risk can also turn to First Class Greetings’ favor. If other companies begin to challenge
First Class Greetings for the stamped greeting card market they will, in effect raise
awareness of the concept as a whole. This turn could lead to attracting investors or bankers
to loan money to the concept originator. In addition, First Class Greetings will pursue any
company that violates the pending patents.
Salvaging assets
If the risks became too excessive for continued involvement in the greeting card industry, many options
exist. The two primary options are:
1. Sell the business to another greeting card company. The amount would be determined
through a valuation assessment at the time of sale.
2. Sell the artwork and inventory to another greeting card company and liquidate the assets of
the company. The amount would be determined by market value of the assets at the time of
sale.
26
Growth Plan
New offerings to market
New Offerings – First Class Greetings can easily grow from the current marketing strategy and spin-off
product lines to include stationery, wrapping paper, boxed note cards, postcards, etc. Of these related
products, postcards would be the most likely choice since they are consistent with the current marketing
strategy—postage-ready products that provide convenience to the customer. It is anticipated that the
market for postcards would bring a 50% increase in sales volume.
New Markets – Greeting cards have international acceptance, meaning the concept could have similar
potential overseas. One of the major markets, the U.S. coffeehouse itself, is a carryover from Europe.
The viability of these markets will be assessed.
Capital requirements
Providing new offerings to market will be similar to building our initial inventory of greeting cards.
Therefore, many of the same costs apply. The costs associated with entering international markets have
yet to be assessed.
Sources and Uses (New Offerings)

Sources:
Financing $200,000
Uses:
Working Capital $75,000
300 new images $90,000
Marketing (Tradeshows/Advertising) $35,000
27
Personnel requirements
Additional personnel requirements include support functions such as order entry, order fulfillment, etc.
The management team included in this plan is sufficient to incorporate additional growth without
added management personnel.
Exit strategy
The marketing advantage created from the patent pending greeting card system will position First Class
Greetings as an attractive acquisition candidate within the competitive greeting card industry. The
long-term strategy is to concentrate on building value in the company through increasing cash flow and
to harvest this value by merging with a larger competitor or by taking the company public. Consistent
with these end goals, considerable attention will be placed on the business fundamentals as outlined in
the plan. Partner distributions are planned in year three, assuming projections are realized and market
saturation and reinvestment needs begin to level off. Following year three, new limited partners will
replace limited partners wishing to withdraw capital from the company, or, if prudent, their equity will
be purchased by the company.
28
Financial Plan
Sales Projections
Sales for the next three years are projected to be $744,106, $2,450,000, and $3,877,594. In year 200A,
First Class Greetings increased their independent sales force from 10 representatives to 20. The plan is
to add approximately 80-100 additional sales reps to cover the United States in year 200B (the first year
for the plan). It is estimated that each representative can service 40 locations with an average sales
volume of $1,000. By Year 3 of the plan, each of those sales reps will be selling $40,000.
Income Projections
Net income projections for the next three years are $(68,715), $381,606, and $849,789. The company
is not currently profitable, but expects to be profitable in Year 2 of the plan. The large, national sales
force is expected to integrate First Class Greetings into as many retail locations as possible, allowing for
relatively quick market penetration and growth.
Cash Requirements
First Class Greetings has received $278,000 in start-up funds to date. The original owner has
contributed $150,000, and investors have supplied the remaining $128,000 of capital. An additional
$330,000 will be required to fund working capital requirements, additional personnel, additional
artwork images, and marketing/trade show.
The growth plan could include spin-off product lines to include stationery, wrapping paper, boxed note
cards, post cards, and expansion into the international market. Many of the same types of costs would
apply, and an additional $200,000 in financing would be required to improve working capital, acquire
additional images, and promote the new offerings.
Sources of Financing
First Class Greetings expects to obtain an additional $30,000 in equity financing and is seeking a 3-year
business loan in the amount of $300,000. It is estimated that the interest rate on the loan will be 8%.
29
First Class Greetings LLC
Cash Flow Statement
200B Pre Start-up JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash In
Cash Sales - - - - - - - - - - - - -
Collections from Accounts Receivables 108,129 31,679 45,264 38,370 23,904 54,147 49,534 72,637 82,385 72,685 89,102 75,393 743,228
Equity Received - - - - - - - - - - - - 30,000 30,000
Loans Received - - 300,000 - - - - - - - - - - 300,000
Other Cash In (receipts from other assets) - - - - - - - - - - - - -
Other Cash In (interest, royalties etc.) - - - - - - - - - - - - -
Total Cash In - 108,129 331,679 45,264 38,370 23,904 54,147 49,534 72,637 82,385 72,685 89,102 105,393 1,073,228
Total Cash Available 44,412 152,541 440,761 400,810 388,613 371,726 352,029 336,586 320,939 313,914 298,803 293,738 315,526 1,117,640
Cash Out
Inventory Expenditures
Inventory/Raw Material (Cash) - - - - - - - - - - - - - -
Inventory/Raw Material (Paid on Account) - - 24,468 20,697 13,105 29,292 26,944 39,379 44,553 39,441 48,168 40,957 54,611 381,615
Production Expenses - - - - - - - - - - - - - -
Operating Expenses
Advertising - - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - - -
Dues & Subscriptions - - - - - - - - - - - - - -
Insurance - 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - - -
Marketing & Promotion - 250 400 1,000 500 6,600 1,000 6,750 1,000 6,500 400 200 500 25,100
Meals & Entertainment - - - - - - - - - - - - - -
Miscellaneous - - - - - - - - - - - - - -
Office Expense - - - - - - - - - - - - - -
Office Supplies - 250 400 500 450 750 750 750 750 750 750 750 750 7,600
Outside Services - - - - - - - - - - - - - -
Payroll Expenses
Salaries & Wages - 12,998 15,837 14,359 11,385 21,227 20,306 25,178 27,205 25,203 28,622 25,797 31,146 259,262
Payroll Taxes - 1,562 1,562 1,562 1,562 2,437 2,437 2,438 2,438 2,438 2,438 2,438 2,438 25,750
Benefits - - - - - - - - - - - - - -
Professional Fees - 750 400 400 750 500 500 750 425 425 750 425 425 6,500
Property Taxes - - - - - - - - - - - - - -
Rent - 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
Repairs & Maintenance - - - - - - - - - - - - - -
Shipping & Delivery - - - - - - - - - - - - - -
Telephone - 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Training & Development - - - - - - - - - - - - - -
Travel - 150 150 150 150 150 150 150 150 150 150 150 200 1,850
Utilities - 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - - -
Other - 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - - -
Other - - - - - - - - - - - - - -
Paid on Account - - - - - - - - - - - - - -
Non-operating Costs
Capital Purchases - 25,000 39,500 - - - - - - - - - - 64,500
Estimated Income Tax Payments - - - - - - - - - - - - - -
Interest Payments - - - 2,000 1,951 1,901 1,851 1,801 1,750 1,699 1,648 1,596 1,544 17,741
Loan Principal Payments - - - 7,401 7,450 7,500 7,550 7,600 7,651 7,702 7,753 7,805 7,857 76,269
Owner's Draw - - - - - - - - - - - - - -
Other Cash Out - - - - - - - - - - - - - -
Total Cash Out - 43,458 85,215 50,567 40,791 73,845 64,976 88,284 89,410 87,796 94,167 83,606 102,959 905,073
Monthly Cash Flow (cash in - cash out) - 64,670 246,464 (5,303) (2,421) (49,941) (10,829) (38,750) (16,774) (5,410) (21,482) 5,496 2,434 168,155
Beginning Cash Balance 44,412 44,412 109,082 355,546 350,243 347,822 297,881 287,052 248,302 231,528 226,118 204,636 210,133 44,412
Ending Cash Balance 44,412 109,082 355,546 350,243 347,822 297,881 287,052 248,302 231,528 226,118 204,636 210,133 212,567 212,567
Cash Flow Statement
200C JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash In
Cash Sales - - - - - - - - - - - - -
Collections from Accounts Receivables 100,829 104,303 149,033 126,333 78,703 178,282 163,094 239,160 271,257 239,320 293,372 248,235 2,191,920
Equity Received - - - - - - - - - - - - -
Loans Received - - - - - - - - - - - - -
Total Cash In 100,829 104,303 149,033 126,333 78,703 178,282 163,094 239,160 271,257 239,320 293,372 248,235 2,191,920
Total Cash Available 313,396 314,493 325,614 330,716 307,751 318,725 315,719 340,946 380,635 362,657 408,170 442,116 2,404,486
Cash Out
Inventory/Raw Material (Cash) - - - - - - - - - - - - -
Inventory/Raw Material (Paid on Account) 55,000 80,562 68,146 43,149 96,445 88,715 129,657 146,693 129,862 158,596 134,853 179,810 1,311,488
Production Expenses - - - - - - - - - - - - -
Operating Expenses
Advertising - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - -
Dues & Subscriptions - - - - - - - - - - - - -
Insurance 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - -
Marketing & Promotion 250 400 1,000 500 6,600 1,000 6,750 1,000 6,500 400 200 500 25,100
Meals & Entertainment - - - - - - - - - - - - -
Miscellaneous - - - - - - - - - - - - -
Office Expense - - - - - - - - - - - - -
Office Supplies 750 750 750 750 750 750 750 750 750 750 750 750 9,000
Outside Services - - - - - - - - - - - - -
Payroll Expenses
Salaries & Wages 31,969 41,314 36,449 26,656 47,537 44,508 60,548 67,223 60,628 71,886 62,584 80,198 631,500
Payroll Taxes 2,437 2,437 2,437 2,437 2,437 2,437 2,438 2,438 2,438 2,438 2,438 2,438 29,250
Benefits - - - - - - - - - - - - -
Professional Fees 750 400 400 750 500 500 750 425 425 750 425 425 6,500
Property Taxes - - - - - - - - - - - - -
Rent 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
Repairs & Maintenance - - - - - - - - - - - - -
Shipping & Delivery - - - - - - - - - - - - -
Telephone 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Training & Development - - - - - - - - - - - - -
Travel 150 150 150 150 150 150 150 150 150 150 150 200 1,850
Utilities 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - -
Other 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Paid on Account - - - - - - - - - - - - -
Non-operating Costs
Capital Purchases - - - - - - - - - - - - -
Estimated Income Tax Payments - - - 14,388 - 15,151 - - 43,655 - - 60,368 133,562
Interest Payments 1,492 1,439 1,386 1,332 1,279 1,224 2,170 1,115 1,060 1,004 948 892 15,341
Loan Principal Payments 7,909 7,962 8,015 8,069 8,122 8,177 7,231 8,286 8,341 8,397 8,453 8,509 97,471
Owner's Draw - - - - - - - - - - - 11,448 11,448
Other Cash Out - - - - - - - - - - - - -
Total Cash Out 103,205 137,912 121,231 101,669 167,308 166,099 213,933 231,568 257,297 247,859 214,289 349,026 2,311,396
Monthly Cash Flow (cash in - cash out) (2,376) (33,609) 27,802 24,664 (88,605) 12,183 (50,839) 7,592 13,959 (8,540) 79,083 (100,791) (119,476)
Beginning Cash Balance 212,567 210,190 176,581 204,383 229,048 140,442 152,626 101,787 109,379 123,338 114,798 193,881 212,567
Ending Cash Balance 210,190 176,581 204,383 229,048 140,442 152,626 101,787 109,379 123,338 114,798 193,881 93,090 93,090
Cash Flow Statement
200D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Cash In
Cash Sales - - - - - - - - - - - - -
Collections from Accounts Receivables 333,793 165,079 235,873 199,946 124,563 282,166 258,127 378,516 429,315 378,769 464,317 392,879 3,643,344
Equity Received - - - - - - - - - - - - -
Loans Received - - - - - - - - - - - - -
Total Cash In 333,793 165,079 235,873 199,946 124,563 282,166 258,127 378,516 429,315 378,769 464,317 392,879 3,643,344
Total Cash Available 426,883 349,720 382,346 405,796 364,223 392,533 377,421 428,523 498,974 457,564 537,072 597,968 3,736,435
Cash Out
Inventory/Raw Material (Cash) - - - - - - - - - - - - -
Inventory/Raw Material (Paid on Account) 181,090 127,505 107,854 68,291 152,643 140,408 205,208 232,170 205,531 251,008 213,431 284,583 2,169,722
Production Expenses - - - - - - - - - - - - -
Operating Expenses
Advertising - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - -
Insurance 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - -
Miscellaneous - - - - - - - - - - - - -
Office Expense - - - - - - - - - - - - -
Office Supplies 750 750 750 750 750 750 750 750 750 750 750 750 9,000
Payroll Expenses
Salaries & Wages 44,916 59,706 52,006 36,506 76,221 71,427 96,814 107,377 96,941 114,759 100,036 127,914 984,623
Payroll Taxes 2,437 2,437 2,437 2,437 4,103 4,103 4,103 4,103 4,103 4,103 4,103 4,103 42,572
Benefits - - - - - - - - - - - - -
Property Taxes - - - - - - - - - - - - -
Rent 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
Telephone 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Travel 150 150 150 150 150 150 150 150 150 150 150 200 1,850
Utilities 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - -
Other 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Paid on Account - - - - - - - - - - - - -
Non-operating Costs
Capital Purchases - - - - - - - - - - - - -
Estimated Income Tax Payments - - - 43,862 - 42,013 - - 92,890 - - 118,661 297,426
Interest Payments 835 778 721 663 604 546 487 427 368 307 247 186 6,169
Loan Principal Payments 8,566 8,623 8,680 8,738 8,797 8,855 8,914 8,974 9,033 9,094 9,154 9,215 106,643
Owner's Draw - - - - - - - - - - - 38,241 38,241
Other Cash Out - - - - - - - - - - - - -
Total Cash Out 242,243 203,247 176,496 166,136 253,856 273,239 327,414 358,864 420,179 384,809 331,983 588,265 3,726,732
Monthly Cash Flow (cash in - cash out) 91,550 (38,168) 59,377 33,810 (129,293) 8,926 (69,286) 19,652 9,136 (6,040) 132,333 (195,386) (83,388)
Beginning Cash Balance 93,090 184,640 146,473 205,850 239,660 110,367 119,293 50,007 69,658 78,795 72,755 205,088 93,090
Ending Cash Balance 184,640 146,473 205,850 239,660 110,367 119,293 50,007 69,658 78,795 72,755 205,088 9,703 9,703
Year-End
Income Statement (Projected)
200B 200C 200D
Net Sales (less returns & allowances) 744,106 2,450,000 3,877,594
Cost of Goods Sold 398,841 1,261,750 1,849,612
Gross Margin $ 345,265 $ 1,188,250 $ 2,027,982
Operating Expenses
Advertising - - -
Bad Debt Expense 7,441 24,500 38,776
Bank Charges - - -
Depreciation & Amortization 23,849 24,717 24,717
Dues & Subscriptions - - -
Insurance 456 456 456
Licenses & Fees - - -
Marketing & Promotion 25,100 25,100 25,100
Meals & Entertainment - - -
Miscellaneous - - -
Office Expense - - -
Office Supplies 7,600 9,000 9,000
Outside Services - - -
Payroll Expenses
Salaries & Wages 259,262 631,500 984,623
Payroll Taxes 25,750 29,250 42,572
Benefits - - -
Professional Fees 6,500 6,500 6,500
Property Taxes - - -
Rent 15,600 15,600 15,600
Repairs & Maintenance - - -
Shipping & Delivery - - -
Telephone 14,130 14,130 14,130
Training & Development - - -
Travel 1,850 1,850 1,850
Utilities 3,900 3,900 3,900
Vehicle - - -
Other 4,800 4,800 4,800
Other - - -
Other - - -
Total Operating Expenses $ 396,239 $ 791,303 $ 1,172,023
Operating Income $ (50,974) $ 396,947 $ 855,958
Interest Expense 17,741 15,341 6,169

Other Income (interest, royalties, etc.) - - -
Income Before Taxes $ (68,715) $ 381,606 $ 849,789
Income Taxes (if C Corp) - - -
Net Income $ (68,715) $ 381,606 $ 849,789

Year-End
Balance Sheet (Projected)
200B 200C 200D
Assets
Current Assets
Cash & Equivalents 212,567 93,090 9,703
Accounts Receivable 101,887 335,467 530,941
Inventory 141,986 317,814 743,444
Security Deposits - - -
Other Current Assets - - -
Total Current Assets $ 456,440 $ 746,372 $ 1,284,088
Fixed Assets
Property, Plant & Equipment 107,763 107,763 107,763
Less: Accumulated Depreciation (35,263) (59,980) (84,697)
Other Non-Current Assets - - -
Total Non-Current Assets $ 72,500 $ 47,783 $ 23,066
Total Assets $ 528,939 $ 794,155 $ 1,307,154
Liabilities
Current Liabilities
Accounts Payable 122,240 248,330 353,850
Line of Credit - - -
Other Current Liabilities - - -
Total Current Liabilities $ 122,240 $ 248,330 $ 353,850
Long-term Liabilities
Loans 223,731 126,260 19,617
Mortgages - - -
Other Non-Current Liabilities - - -
Total Non-Current Liabilities $ 223,731 $ 126,260 $ 19,617
Total Liabilities $ 345,971 $ 374,590 $ 373,467
Equity
Equity Investments 308,000 308,000 308,000
Retained Earnings (125,032) 256,575 1,106,364
Less: Owner's & Investor's Draws - (145,010) (480,677)
Total Equity $ 182,968 $ 419,564 $ 933,687
Total Liabilities and Equity $ 528,939 $ 794,155 $ 1,307,154

Financial Ratios
200B 200C 200D
Profitability Ratios
Gross Margin Gross Income 46.40% 48.50% 52.30%

Net Sales
Operating Margin Operating Income -6.85% 16.20% 22.07%

Net Sales
Net Margin Net Income -9.23% 15.58% 21.92%

Net Sales
Return on Assets (ROA) Net Income -12.99% 48.05% 65.01%

Total Assets
Return on Equity (ROE) Net Income -37.56% 90.95% 91.01%

Shareholders' Equity
Liquidity Ratios
Current Ratio Total Current Assets 3.73 3.01 3.63

Total Current Liabilities
Quick Ratio Current Assets - Inventory 2.57 1.73 1.53

Current Liabilities
Risk Ratios
Debt Ratio Total Liabilities 0.65 0.47 0.29

Total Assets
Debt to Equity Total Liabilities 1.89 0.89 0.40

Shareholders' Equity
Efficiency Ratios
Inventory Turnover Cost of Goods Sold 2.81 3.97 2.49

Inventory
Days Sales Outstanding (DSO) Accounts Receivable 49.98 49.98 49.98

Net Sales/365
Investment Turnover Ratio Net Sales 1.41 3.09 2.97

Total Assets
Supporting Documents
Appendix
30
HISTORICAL BALANCE SHEET
12/31/02
Assets
Current Assets
Cash & Equivalents 44,412
Accounts Receivable 108,450
Inventory 104,212
Security Deposits -
Other Current Assets -
Total Current Assets $ 257,074
Fixed Assets
Property, Plant & Equipment
Computer Equipment 34,215
Equipment/Machinery -
Furniture & Fixtures 9,048
Vehicles -
Leasehold Improvements -
Building -
Land -
Less: Accumulated Depreciation (Do not enter a negative number) 11,414
Other Non-current Assets -
Total Non-current Assets $ 31,849
Total Assets $ 288,923
Liabilities
Current Liabilities
Accounts Payable 67,240
Line of Credit -
Other Current Liabilities -
Total Current Liabilities $ 67,240
Long-term Liabilities
Loans -
Real Estate Loans -
Other Non-current Liabilities -
Total Long-term Liabilities $ -
Total Liabilities $ 67,240
Equity
Owners Equity 278,000
Retained Earnings (Enter a negative number for a loss) (56,317)
Less: Owner's & Investor's Draws (Not for use by C Corporations) -
Total Equity $ 221,683
Total Liabilities and Equity $ 288,923
Appendix
SALES PROJECTIONS
Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Sales Budget
Product/Service Category A 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 101,887 744,106
YEAR 1
Product/Service Category B - - - - - - - - - - - - -
Product/Service Category C - - - - - - - - - - - - -
Product/Service Category D - - - - - - - - - - - - -
Product/Service Category E - - - - - - - - - - - - -
YEAR 1
Product/Service Category F - - - - - - - - - - - - -
Product/Service Category G - - - - - - - - - - - - -
Gross Sales 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 101,887 744,106
YEAR 1
Less: Returns & Allowances - - - - - - - - - - - - -

Net Sales 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 101,887 744,106
Other Income - - - - - - - - - - - - -
Total Income 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 101,887 744,106
Credit Management
YEAR 1
Sales (cash) - - - - - - - - - - - - -
Sales (credit) 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 101,887 744,106
Received on Account 108,450 32,135 45,650 38,614 24,450 54,650 50,269 73,468 83,121 73,584 89,866 76,412 750,669
Bad Debt Expense 321 457 386 245 547 503 735 831 736 899 764 1,019 7,441
Year 1 Assumptions
Product/Service Category A Sales are based on total number of sales reps, minimum sales orders and seasonally adjusted cards sold.
Product/Service Category B
YEAR 1
Product/Service Category C
Product/Service Category D
Product/Service Category E
YEAR 1
Product/Service Category F
Product/Service Category G
Less: Returns & Allowances
Other Income
YEAR 1
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
SALES PROJECTIONS
Sales Budget
Product/Service Category A 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 335,467 2,450,000
YEAR 2
YEAR 2
Gross Sales 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 335,467 2,450,000
YEAR 2

Net Sales 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 335,467 2,450,000
Other Income - - - - - - - - - - - - -
Total Income 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 335,467 2,450,000
Credit Management
YEAR 2
Sales (cash) - - - - - - - - - - - - -
Sales (credit) 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 335,467 2,450,000
Received on Account 101,887 105,806 150,305 127,138 80,503 179,937 165,513 241,896 273,679 242,278 295,888 251,590 2,216,420
Bad Debt Expense 1,058 1,503 1,271 805 1,799 1,655 2,419 2,737 2,423 2,959 2,516 3,355 24,500
Year 2 Assumptions
YEAR 2
YEAR 2
Other Income
YEAR 2
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
SALES PROJECTIONS
Sales Budget
Product/Service Category A 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 530,941 3,877,594
YEAR 3
YEAR 3
Gross Sales 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 530,941 3,877,594
YEAR 3

Net Sales 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 530,941 3,877,594
Other Income - - - - - - - - - - - - -
Total Income 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 530,941 3,877,594
Credit Management
YEAR 3
Sales (cash) - - - - - - - - - - - - -
Sales (credit) 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 530,941 3,877,594
Received on Account 335,467 167,458 237,886 201,221 127,411 284,785 261,956 382,847 433,150 383,452 468,299 398,189 3,682,120
Bad Debt Expense 1,675 2,379 2,012 1,274 2,848 2,620 3,828 4,331 3,835 4,683 3,982 5,309 38,776
Year 3 Assumptions
YEAR 3
YEAR 3
Other Income
YEAR 3
Sales (cash)
Sales (credit)
Received on Account
Bad Debt Expense
Appendix
INVENTORY PROJECTIONS
Inventory Management
Inventory Purchases 24,468 20,697 13,105 29,292 26,944 39,379 44,553 39,441 48,168 40,957 54,611 55,000 436,615
Inventory/ Raw Material Purchases (Cash) - - - - - - - - - - - - -
Inventory/ Raw Material Purchases (Credit) 24,468 20,697 13,105 29,292 26,944 39,379 44,553 39,441 48,168 40,957 54,611 55,000 436,615
YEAR 1
Payment on Account - 24,468 20,697 13,105 29,292 26,944 39,379 44,553 39,441 48,168 40,957 54,611 381,615
YEAR 1
Production Expenses
Freight-in & Trucking - - - - - - - - - - - - -
Insurance - - - - - - - - - - - - -
Payroll Expenses - production
Salaries & Wages - - - - - - - - - - - - -
YEAR 1
Employee Benefits - - - - - - - - - - - - -
Payroll Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
YEAR 1
Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities - - - - - - - - - - - - -
Other Production Expenses - - - - - - - - - - - - -
Inventory Production Expenses - - - - - - - - - - - - -
Inventory Balance
Beginning Inventory Balance 104,212 111,456 107,684 100,092 116,279 113,931 126,365 131,540 126,428 135,155 127,943 141,598 104,212
Inventory Purchased 24,468 20,697 13,105 29,292 26,944 39,379 44,553 39,441 48,168 40,957 54,611 55,000 436,615
Inventory Production - - - - - - - - - - - - -
YEAR 1
(Cost of Goods Sold) (17,224) (24,468) (20,697) (13,105) (29,292) (26,944) (39,379) (44,553) (39,441) (48,168) (40,957) (54,611) (398,841)
Ending Inventory Balance 111,456 107,684 100,092 116,279 113,931 126,365 131,540 126,428 135,155 127,943 141,598 141,986 141,986
Year 1 Assumptions
YEAR 1
Inventory/ Raw Material Purchases Inventory will be ordered as needed so that stock is held for a very short time before it is shipped. The inventory turn should be shorter than six weeks.
Freight-in & Trucking
Insurance
YEAR 1

Salaries & Wages
Employee Benefits
Payroll Taxes
YEAR 1
Rent
Repairs & Maintenance
Rework
Subcontracting
Utilities
Other Production Expenses
Appendix
Inventory Purchases 80,562 68,146 43,149 96,445 88,715 129,657 146,693 129,862 158,596 134,853 179,810 181,090 1,437,578
Inventory/ Raw Material Purchases (Credit) 80,562 68,146 43,149 96,445 88,715 129,657 146,693 129,862 158,596 134,853 179,810 181,090 1,437,578
YEAR 2
Payment on Account 55,000 80,562 68,146 43,149 96,445 88,715 129,657 146,693 129,862 158,596 134,853 179,810 1,311,488
Production Expenses
YEAR 2

Insurance - - - - - - - - - - - - -
Salaries & Wages - - - - - - - - - - - - -
YEAR 2
Payroll Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
YEAR 2

Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities - - - - - - - - - - - - -
Inventory Balance
Inventory Purchased 80,562 68,146 43,149 96,445 88,715 129,657 146,693 129,862 158,596 134,853 179,810 181,090 1,437,578
YEAR 2
(Cost of Goods Sold) (54,490) (77,407) (65,476) (41,459) (92,668) (85,239) (124,577) (140,945) (124,773) (152,382) (129,569) (172,766) (1,261,750)
Year 2 Assumptions
YEAR 2
Insurance
YEAR 2

Salaries & Wages
Employee Benefits
Payroll Taxes
YEAR 2
Rent
Rework
Subcontracting
Utilities
Appendix
Inventory Purchases 127,505 107,854 68,291 152,643 140,408 205,208 232,170 205,531 251,008 213,431 284,583 286,610 2,275,242
Inventory/ Raw Material Purchases (Credit) 127,505 107,854 68,291 152,643 140,408 205,208 232,170 205,531 251,008 213,431 284,583 286,610 2,275,242
YEAR 3
Payment on Account 181,090 127,505 107,854 68,291 152,643 140,408 205,208 232,170 205,531 251,008 213,431 284,583 2,169,722
Production Expenses
YEAR 3

Insurance - - - - - - - - - - - - -
Salaries & Wages - - - - - - - - - - - - -
YEAR 3
Payroll Taxes - - - - - - - - - - - - -
Rent - - - - - - - - - - - - -
YEAR 3

Rework - - - - - - - - - - - - -
Subcontracting - - - - - - - - - - - - -
Utilities - - - - - - - - - - - - -
Inventory Balance
Inventory Purchased 127,505 107,854 68,291 152,643 140,408 205,208 232,170 205,531 251,008 213,431 284,583 286,610 2,275,242
YEAR 3
(Cost of Goods Sold) (79,877) (113,471) (95,982) (60,775) (135,843) (124,953) (182,618) (206,613) (182,907) (223,378) (189,936) (253,259) (1,849,612)
YEAR 3
Year 3 Assumptions
Insurance
YEAR 3

Salaries & Wages
Employee Benefits
Payroll Taxes
YEAR 3
Rent
Rework
Subcontracting
Utilities
Appendix
OPERATING EXPENSE PROJECTIONS
Operating Expenses
Advertising - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - -
YEAR 1
Insurance 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - -
YEAR 1
Miscellaneous - - - - - - - - - - - - -
Office Expense (postage) - - - - - - - - - - - - -
Office Supplies 250 400 500 450 750 750 750 750 750 750 750 750 7,600
YEAR 1
Payroll Expenses
Salaries & Wages 12,998 15,837 14,359 11,385 21,227 20,306 25,178 27,205 25,203 28,622 25,797 31,146 259,262
Payroll Taxes 1,562 1,562 1,562 1,562 2,437 2,437 2,438 2,438 2,438 2,438 2,438 2,438 25,750
Benefits - - - - - - - - - - - - -
YEAR 1
Property Taxes - - - - - - - - - - - - -
Rent 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
YEAR 1

Telephone 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Travel 150 150 150 150 150 150 150 150 150 150 150 200 1,850
YEAR 1
Utilities 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - -
Other 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 18,458 21,247 20,469 18,285 35,152 28,631 39,504 35,456 38,954 36,598 33,248 38,947 364,948
Assumptions - Year 1
Advertising
Bank Charges
Dues & Subscriptions
YEAR 1
Insurance Insurance estimates provided by Cara Cuthbert, insurance broker.

Licenses & Fees
Marketing & Promotion Print costs for brochues, mailers, etc. Trade shows 3 @ $6K each in May, July, and September.
Meals & Entertainment
YEAR 1
Miscellaneous
Office Expense (postage)
Office Supplies Estimates for basic office supplies and computer supplies.
Outside Services
YEAR 1
Payroll Expenses
Salaries & Wages Sales commission @ 15% of sales, artist commission @ 6% of sales, Mktg Dir @ $42K/yr starting May 200B, Mgr @ $40K/yr & support @ $35K/yr
Payroll Taxes 25% of non-commission payroll
Benefits
YEAR 1
Professional Fees General legal representation and bookeeping and tax preparation
Property Taxes
Rent Based on 1,300 quare foot office/storage facilities at $1/sq ft.
YEAR 1

Shipping & Delivery
Telephone Telephone system lease, local service, long-distance service, 1-800 service, and mobile phone charges.
Training & Development
YEAR 1
Travel
Utilities Utilities for rental property based on 25% of rent.
Vehicle
Other Contingency for additional costs not considered.
Other
Other
Appendix
Operating Expenses
Advertising - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - -
YEAR 2
Insurance 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - -
YEAR 2
Miscellaneous - - - - - - - - - - - - -
Office Supplies 750 750 750 750 750 750 750 750 750 750 750 750 9,000
YEAR 2
Payroll Expenses
Salaries & Wages 31,969 41,314 36,449 26,656 47,537 44,508 60,548 67,223 60,628 71,886 62,584 80,198 631,500
Payroll Taxes 2,437 2,437 2,437 2,437 2,437 2,437 2,438 2,438 2,438 2,438 2,438 2,438 29,250
Benefits - - - - - - - - - - - - -
YEAR 2
Property Taxes - - - - - - - - - - - - -
Rent 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
YEAR 2

Telephone 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Travel 150 150 150 150 150 150 150 150 150 150 150 200 1,850
YEAR 2
Utilities 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - -
Other 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 38,804 47,949 43,684 34,731 61,462 52,833 74,874 75,474 74,379 79,862 70,035 87,999 742,086
Advertising
Bank Charges
YEAR 2

Licenses & Fees
YEAR 2
Miscellaneous
Outside Services
YEAR 2
Payroll Expenses
Salaries & Wages Sales & artists commissions (15% & 6%), Mktg Dir @ $42K/yr, Mgr @ $40K/yr & support @ $35K/yr
Benefits
YEAR 2
Property Taxes
YEAR 2

Shipping & Delivery
YEAR 2
Travel
Vehicle
Other
Other
Appendix
Operating Expenses
Advertising - - - - - - - - - - - - -
Bank Charges - - - - - - - - - - - - -
YEAR 3
Insurance 38 38 38 38 38 38 38 38 38 38 38 38 456
Licenses & Fees - - - - - - - - - - - - -
YEAR 3
Miscellaneous - - - - - - - - - - - - -
Office Supplies 750 750 750 750 750 750 750 750 750 750 750 750 9,000
YEAR 3
Payroll Expenses
Salaries & Wages 44,916 59,706 52,006 36,506 76,221 71,427 96,814 107,377 96,941 114,759 100,036 127,914 984,623
Payroll Taxes 2,437 2,437 2,437 2,437 4,103 4,103 4,103 4,103 4,103 4,103 4,103 4,103 42,572
Benefits - - - - - - - - - - - - -
YEAR 3
Property Taxes - - - - - - - - - - - - -
Rent 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 1,300 15,600
YEAR 3

Telephone 435 435 435 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 1,425 14,130
Travel 150 150 150 150 150 150 150 150 150 150 150 200 1,850
YEAR 3
Utilities 325 325 325 325 325 325 325 325 325 325 325 325 3,900
Vehicle - - - - - - - - - - - - -
Other 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Other - - - - - - - - - - - - -
Other - - - - - - - - - - - - -
Total Operating Expenses 51,751 66,341 59,241 44,581 91,812 81,418 112,805 117,293 112,357 124,400 109,152 137,380 1,108,531
Advertising
Bank Charges
YEAR 3

Licenses & Fees
YEAR 3
Miscellaneous
Outside Services
YEAR 3
Payroll Expenses
Salaries & Wages Sales & artists (15% & 6%), Mktg Dir @ $42K/yr, Mgr @ $40K/yr & support @ $35K/yr, & directors of operations & finance in May @40k/yr
Benefits
YEAR 3
Property Taxes
YEAR 3

Shipping & Delivery
YEAR 3
Travel
Vehicle
Other
Other
Appendix
DEPRECIATION SCHEDULES
Year 1 Existing Assets JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Set-up Assets (no detail entered) - - - - - - - - - - - - -
Set-up Assets (detail entered) 776 776 776 776 776 776 776 776 776 776 776 776 9,312
Start-up Purchases - - - - - - - - - - - - -
Total 776 776 776 776 776 776 776 776 776 776 776 776 9,312
Year 2 Existing Assets
Total 776 776 776 776 776 776 776 776 776 776 776 776 9,312
Year 3 Existing Assets
Total 776 776 776 776 776 776 776 776 776 776 776 776 9,312
Year 1 New Purchases JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Computer Equipment - 25,000 - - - - - - - - - - 25,000
Computer Equipment Depreciation - 694 694 694 694 694 694 694 694 694 694 694 7,639
Equipment/Machinery - - - - - - - - - - - - -
Equipment Depreciation - - - - - - - - - - - - -
Furniture - 14,500 - - - - - - - - - - 14,500
Furniture Depreciation - 173 173 173 173 173 173 173 173 173 173 173 1,899
Leasehold Improvements 25,000 - - - - - - - - - - - 25,000
Leasehold Depreciation 417 417 417 417 417 417 417 417 417 417 417 417 5,000
Vehicles - - - - - - - - - - - - -
Vehicle Depreciation - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Building Depreciation - - - - - - - - - - - - -
Year 2 New Purchases
Computer Equipment - - - - - - - - - - - - -
Computer Equipment Depreciation 694 694 694 694 694 694 694 694 694 694 694 694 8,333
Furniture - - - - - - - - - - - - -
Furniture Depreciation 173 173 173 173 173 173 173 173 173 173 173 173 2,071
Leasehold Improvements - - - - - - - - - - - - -
Vehicles - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Year 3 New Purchases
Computer Equipment - - - - - - - - - - - - -
Computer Equipment Depreciation 694 694 694 694 694 694 694 694 694 694 694 694 8,333
Furniture - - - - - - - - - - - - -
Furniture Depreciation 173 173 173 173 173 173 173 173 173 173 173 173 2,071
Leasehold Improvements - - - - - - - - - - - - -
Vehicles - - - - - - - - - - - - -
Building - - - - - - - - - - - - -
Appendix
CAPITAL BUDGET PROJECTIONS
YEAR 1
Capital Budget
Owner's Draw - - - - - - - - - - - - -
Investor's Draw - - - - - - - - - - - - -
YEAR 1
Dividends Paid - - - - - - - - - - - - -
Security Deposits - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
Depreciation (existing assets) 776 776 776 776 776 776 776 776 776 776 776 776 9,312
YEAR 1
Capital Asset Purchases 25,000 39,500 - - - - - - - - - - 64,500

Depreciation (new purchases) 417 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 14,538
Land - - - - - - - - - - - - -
Year 1 Total Depreciation 23,849
Owner's Draw
YEAR 1
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 1
Equipment
Equipment Depreciation
Furniture
YEAR 1
Furniture Depreciation
Leasehold Improvements
Leasehold Depreciation
Vehicles
YEAR 1
Vehicle Depreciation
Building
Building Depreciation
Land
Appendix
YEAR 2
Capital Budget
Owner's Draw - - - - - - - - - - - 11,448 11,448
Investor's Draw - - - - - - - - - - - - -
YEAR 2
Dividends Paid - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
YEAR 2
Capital Asset Purchases - - - - - - - - - - - - -

Depreciation (new purchases) 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 15,405
Land - - - - - - - - - - - - -
Owner's Draw
YEAR 2
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 2
Equipment
Furniture
YEAR 2
Vehicles
YEAR 2
Building
Land
Appendix
YEAR 3
Capital Budget
Owner's Draw - - - - - - - - - - - 25,494 25,494
Investor's Draw - - - - - - - - - - - 12,747 12,747
YEAR 3
Dividends Paid - - - - - - - - - - - - -
Amortization - - - - - - - - - - - - -
YEAR 3
Capital Asset Purchases - - - - - - - - - - - - -

Depreciation (new purchases) 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 1,284 15,405
Land - - - - - - - - - - - - -
Owner's Draw
YEAR 3
Investor's Draw
Dividends Paid
Security Deposits
Amortization
YEAR 3
Equipment
Furniture
YEAR 3
Vehicles
YEAR 3
Building
Land
Appendix
Equity Investment
First Class Greetings LLC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - - - - - - - - - - - 30,000 30,000
Year 2 - - - - - - - - - - - - -
Year 3 - - - - - - - - - - - - -
Real Estate Loans

Existing Balance -
New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - - - - - - - - - - - - -
Outstanding balance - - - - - - - - - - - -
Year 2 - - - - - - - - - - - - -
Year 3 - - - - - - - - - - - - -
Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - principal - - - - - - - - - - - - -
Year 1 - interest - - - - - - - - - - - - -
Year 2 - principal - - - - - - - - - - - - -
Year 2 - interest - - - - - - - - - - - - -
Year 3 - principal - - - - - - - - - - - - -
Year 3 - interest - - - - - - - - - - - - -
Traditional Business Loan and/or other Long-term Loans

Loan 1
Existing Balance -
New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - 300,000 - - - - - - - - - - 300,000
Outstanding balance - 300,000 292,599 285,149 277,649 270,099 262,499 254,848 247,146 239,393 231,588 223,731
Year 2 - - - - - - - - - - - - -
Outstanding balance 215,822 207,860 199,845 191,776 183,654 175,477 168,246 159,960 151,619 143,222 134,769 126,260
Year 3 - - - - - - - - - - - - -
Outstanding balance 117,694 109,071 100,391 91,653 82,856 74,001 65,087 56,113 47,080 37,986 28,832 19,617
Year 1 - principal - - 7,401 7,450 7,500 7,550 7,600 7,651 7,702 7,753 7,805 7,857 76,269
Year 1 - interest - - 2,000 1,951 1,901 1,851 1,801 1,750 1,699 1,648 1,596 1,544 17,741
Year 2 - principal 7,909 7,962 8,015 8,069 8,122 8,177 7,231 8,286 8,341 8,397 8,453 8,509 97,471
Year 2 - interest 1,492 1,439 1,386 1,332 1,279 1,224 2,170 1,115 1,060 1,004 948 892 15,341
Year 3 - principal 8,566 8,623 8,680 8,738 8,797 8,855 8,914 8,974 9,033 9,094 9,154 9,215 106,643
Year 3 - interest 835 778 721 663 604 546 487 427 368 307 247 186 6,169
Loan 2
Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - - - - - - - - - - - - -
Year 2 - - - - - - - - - - - - -
Year 3 - - - - - - - - - - - - -
Year 1 - principal - - - - - - - - - - - - -
Year 1 - interest - - - - - - - - - - - - -
Year 2 - principal - - - - - - - - - - - - -
Year 2 - interest - - - - - - - - - - - - -
Year 3 - principal - - - - - - - - - - - - -
Year 3 - interest - - - - - - - - - - - - -
Line of Credit
Existing Balance -
Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
Year 1 - - - - - - - - - - - - -
Year 2 - - - - - - - - - - - - -
Year 3 - - - - - - - - - - - - -
Year 1 - principal - - - - - - - - - - - - -
Year 1 - interest - - - - - - - - - - - - -
Year 2 - principal - - - - - - - - - - - - -
Year 2 - interest - - - - - - - - - - - - -
Year 3 - principal - - - - - - - - - - - - -
Year 3 - interest - - - - - - - - - - - - -
Year 1 - total principal paid 76,269

Year 1 - total interest paid 17,741
Appendix
Amount of Loan 300,000
Annual Interest Rate 8.0%
Term of Loan (in months) 36
Monthly Outstanding
Month Payment Principal Interest Balance
300,000.00
1 $9,400.91 7,400.91 2,000.00 292,599.09
2 9,400.91 7,450.25 1,950.66 285,148.84
3 9,400.91 7,499.92 1,900.99 277,648.92
4 9,400.91 7,549.92 1,850.99 270,099.01
5 9,400.91 7,600.25 1,800.66 262,498.76
6 9,400.91 7,650.92 1,749.99 254,847.84
7 9,400.91 7,701.92 1,698.99 247,145.92
8 9,400.91 7,753.27 1,647.64 239,392.65
9 9,400.91 7,804.96 1,595.95 231,587.69
10 9,400.91 7,856.99 1,543.92 223,730.70
11 9,400.91 7,909.37 1,491.54 215,821.32
12 9,400.91 7,962.10 1,438.81 207,859.22
13 9,400.91 8,015.18 1,385.73 199,844.04
14 9,400.91 8,068.62 1,332.29 191,775.42
15 9,400.91 8,122.41 1,278.50 183,653.02
16 9,400.91 8,176.56 1,224.35 175,476.46
17 9,400.91 8,231.07 1,169.84 167,245.40
18 9,400.91 8,285.94 1,114.97 158,959.46
19 9,400.91 8,341.18 1,059.73 150,618.28
20 9,400.91 8,396.79 1,004.12 142,221.49
21 9,400.91 8,452.77 948.14 133,768.72
22 9,400.91 8,509.12 891.79 125,259.60
23 9,400.91 8,565.85 835.06 116,693.76
24 9,400.91 8,622.95 777.96 108,070.81
25 9,400.91 8,680.44 720.47 99,390.37
26 9,400.91 8,738.31 662.60 90,652.06
27 9,400.91 8,796.56 604.35 81,855.50
28 9,400.91 8,855.21 545.70 73,000.29
29 9,400.91 8,914.24 486.67 64,086.05
30 9,400.91 8,973.67 427.24 55,112.38
31 9,400.91 9,033.49 367.42 46,078.89
32 9,400.91 9,093.72 307.19 36,985.17
33 9,400.91 9,154.34 246.57 27,830.83
34 9,400.91 9,215.37 185.54 18,615.46
35 9,400.91 9,276.81 124.10 9,338.65
36 9,400.91 9,338.65 62.26 (0.00)
Appendix

Greeting Card Business Plan

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Greeting Card Business Plan

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Business Plan

Business Plan Prepared By

Product and Service Plan ..............................................................................................................11

Marketing Plan ..................................................................................................................................15

Operating and Control Systems..................................................................................................21

Supporting Documents .................................................................................................APPENDIX

Management and Organization

Contracts and franchise agreements

Board of directors/advisory council

Stefanie Samuelsen — Stefanie Samuelsen is a Clinical Professor of Finance and Management at

■ Equipment and Property coverage

■ Employee health insurance – as deemed necessary

Chris Straka, Member

Director Position Director Position Director Position Jody Arbek, Member

Shaun Patrick, Member

Production Advisory Council

Product and Service Plan

Trademarks, patents, copyrights, licenses, royalties

Product and service limitations

Related services and spin-offs

Net Profit for Greeting Card Companies

Target market profile

■ Airport concession/retail companies.

■ Hotel gift shops.

■ Unique card and gift shops.

A complete list of potential target markets appears in the Appendix.

Gross margin on products

Fixed costs = $227,029 = $746,806

Fixed costs = $227,029 = 281,814 cards

Packaging and labeling

Service and warranties

Operating and Control Systems

Billing the customers

Paying the suppliers

Collecting the accounts receivable

Handling warranties and returns

Monitoring the company budgets

■ Sales and Marketing Expenses

Documents and paper flow

Phase One (Complete): First-Round Financing – Start-up

Total Finance: $128,000 Investor contribution

Minimum Investment: $150,000 Original member contribution

Time Line: 2 months start-up, 10 complete months of sales figures

Goals: 1) Generate actual business plan figures.

Phase Two (Current): Second-Round Financing – Operations

Marketing flow chart

Management and infrastructure

1. Unique stamped and ready to mail concept is not accepted.

4. Better-financed competitor overtakes market share.

Sources and Uses (New Offerings)

300 new images $90,000

Marketing (Tradeshows/Advertising) $35,000

Operating Income $ (50,974) $ 396,947 $ 855,958

Interest Expense 17,741 15,341 6,169

Income Before Taxes $ (68,715) $ 381,606 $ 849,789

Income Taxes (if C Corp) - - -

Net Income $ (68,715) $ 381,606 $ 849,789

Total Assets $ 528,939 $ 794,155 $ 1,307,154

Total Liabilities $ 345,971 $ 374,590 $ 373,467

Total Liabilities and Equity $ 528,939 $ 794,155 $ 1,307,154

Gross Margin Gross Income 46.40% 48.50% 52.30%

Operating Margin Operating Income -6.85% 16.20% 22.07%

Net Margin Net Income -9.23% 15.58% 21.92%

Return on Assets (ROA) Net Income -12.99% 48.05% 65.01%