January 2003

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 Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.0 Web Plan Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.1 Website Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Development Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

8.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

8.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
 House of Projectors

1.0 Executive Summary

House of Projectors (HOP) is an Ohio based Limited Liability Corporation (L.L.C.) start-up
business that provides Liquid Crystal Display (LCD) computer projectors for rent. The
company has been formed and will be run by John Laaklytte, a veteran of the computer
rental industry. HOP has identified three distinct market segments that they will target. The
first segment is entrepreneurs. Entrepreneurs are often in need of projectors when they are
making presentations to angel and venture capital investors. These days a projector is a
standard for professional presentations, generally PowerPoint based presentations. This
customer segment has a 9% growth rate with 33,243 potential customers. The second
segment is small size companies which can be defined as companies with less than 15
employees. These companies have the need for a projector, but do not use it frequently
enough to justify the high capital expense. The group has a 7% growth rate with 5,423
potential customers. The last group is medium size companies with 15-50 employees who
share similar motivation for projector rentals. This group has a 6% growth rate and 3,433
possible customers.

The Industry
The computer based office equipment rental industry is a $745 million industry. Most players
in the industry rent a wide variety of equipment, not specializing on a specific type of
equipment. While this creates a larger customer base for them, it reduces their ability to offer
a high level of service for every type of technology because of the unique technical nature of
all of the different hardware types. Because the industry is organized primarily as
comprehensive service providers, House of Projectors will be able to excel within their niche
of just offering projector rentals. They will be able to obtain and provide a level of service
(both customer and technical) that is difficult and conceivably impossible to provide by the
comprehensive service providers. This is House of Projectors' niche competitive
edgeindustry benchmarked customer service. House of Projectors believes it can achieve
and maintain this competitive edge for two reasons:
1. The concentration on projectors allows HOP to excel in their chosen niche.
2. Organization wide expectations, actually requirements, that HOP's business model for
all employees will provide this ambitious level of customer support.

Management
John Laaklytte will be leading House of Projectors through their early stages of market
penetration. John received a Bachelor of Science, Business major from Case Western Reserve
University. While in school, John received practical experience as an Assistance Manager of a
local CompUSA retail store. This was where John began to build his business skill set that will
ultimately be used in the growth of his own business. John also worked at the University in
the position of computer lab manager. Lastly, John worked for (name omitted), a large,
national computer rental company. At this corporation, John quickly ascended to the Regional
Manager position.

John will leverage his knowledge and experience to take House of Projectors from a start-up
business to an established player in the computer office hardware industry. By executing a
well thought out business plan and proven business model, John will generate revenues of
$181,000 in year two, increasing to $222,000 in year three. HOP will achieve profitability by
month 22.

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 House of Projectors

Highlights

$250,000

$200,000

$150,000

$100,000 Sales
Gross Margin
$50,000
Net Profit
$0

($50,000)

($100,000)
2003 2004 2005

1.1 Objectives

To become the premier source for rentals of LCD computer projectors.

To develop a significant base of long-term customers.
To reach profitability by the end of year two.

1.2 Mission

It is House of Projectors' mission to become the premier source of computer projectors for
the Cleveland business community. By offering fair prices and ground breaking service,
House of Projectors will quickly establish the reputation as the finest store in its niche.

1.3 Keys to Success

1. Design and employ strict financial controls. This will be pursued as a means to analyze
all aspects of the business.

2. Treat every customer as the most important customer HOP has.

3. Constantly evaluate the market and the needs of the customers, never taking
presuming that HOP always knows what the customer wants. An interactive feedback
mechanism will be just one method used to gain insight into the customers'
preferences.

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 House of Projectors

2.0 Company Summary

House of Projectors is an Ohio based company that participates in the office equipment rental
industry. More specifically the company, founded by John Laaklytte, rents computer
projectors.

2.1 Company Ownership

HOP was founded and is owned by John Laaklytte. The company has been formed as a
Limited Liability Corporation as a means of enjoying personal liability protection while
avoiding the double taxation effect found with the business formation arrangement of
corporations.

2.2 Start-up Summary

HOP has identified the following equipment and services that will be needed as start-up
service provider.

Attorney fees: An attorney will be used for the business formation and registration
as well as review of contracts (such as equipment vendors, and the office lease).

Business consultant: Because of the pricey hourly rates, a business consultant while
quite useful, will be used sparingly.

Four computers, including two laser printers. QuickBooks Pro will be used for
accounting software as well as for customer invoicing. ACT! will be used for customer
database management as well as for the reservation system.

Four desks, chairs, and assorted office/desk supplies.

Fax, paper shredder, phone system with five terminals, and hardware based
voice mail.

Lighting units, shelving units.

Website development, brochures, and stationery.

Rental stock. Initially twenty-five projector units will be purchased, divided

somewhat equally between three different models. Two laptop computers will also be
available.

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 House of Projectors

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $2,000
Stationery etc. $200
Brochures $200
Consultants $3,000
Insurance $0
Rent $0
Research and Development $0
Website Development $1,500
Other $0
Total Start-up Expenses $6,900

Start-up Assets Needed

Cash Balance on Starting Date $68,100
Other Current Assets $0
Total Current Assets $68,100

Long-term Assets $50,000

Total Assets $118,100
Total Requirements $125,000

Funding

Investment
Owner $75,000
Investor 2 $50,000
Other $0
Total Investment $125,000

Current Liabilities
Accounts Payable $0
Current Borrowing $0
Other Current Liabilities $0
Current Liabilities $0

Long-term Liabilities $0
Total Liabilities $0

Loss at Start-up ($6,900)

Total Capital $118,100
Total Capital and Liabilities $118,100

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 House of Projectors

Start-up

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0
Expenses Assets Investment Loans

3.0 Services

House of Projectors rents LCD projectors to a variety of different customers. The projectors
are computer based, projecting the computer display onto a wall or screen. LCD projectors
are quite expensive pieces of equipment, prohibitively expensive for many companies. Only
companies that use the projectors all the time find it cost effective to purchase the equipment
for themselves.

While there are two other local businesses that rent projectors, HOP's services are
differentiated as they offer unbeatable support for the units. Projectors can be somewhat
difficult to configure to individual computers. It typically becomes plug and pray. HOP has
developed a database for configuration for many different laptop computers. Through HOP's
comprehensive research and outstanding support, HOP can assist the customer in configuring
the unit to the individual laptop, typically within five minutes. This is quite unlike the
competitors' service that just provides the customer with necessary cables and instructions
and lets them figure out configuration issues for themselves. So in effect HOP does not just
rent projectors but rather, provides a comprehensive computer support service specific to
their projectors. For those computers that HOP has difficulty configuring, they offer a
complimentary laptop to facilitate a smooth rental.

HOP only rents top-of-the line InFocus projectors. All of the projectors can be attached via a
USB or FireWire port. Three different models are offered to customers. The units differ by the
strength of their projection units, i.e. depends on the size of the room and the distance from
the screen to the projector. The stronger the projector unit, the larger and heavier the actual
unit is and the more it costs to rent. In order to always offer customers state-of-art
machines, HOP will, after a year or two sell the used machines (either from the store front or
over eBay) and purchase new machines. This is part of their attractiveness, the ability to
always offer the best machines.

Through a partnership with InFocus, a U.S. based projector manufacturer, HOP is able to
purchase the projectors direct, avoiding the typical wholesale distribution layer. This special

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 House of Projectors
deal was clinched through the leveraging of a personal relationship with one of the VP's at
InFocus. While InFocus generally does not sell to anyone but wholesalers, they are willing to
sell to HOP, in part because of the personal relationship, in part because HOP agrees to buy a
reasonable number of units, replacing them every few years, and lastly, because HOP is
willing to provide InFocus with customer feedback. This will be quite valuable to InFocus
because of the large number of customers that will be using the machines and HOP's
willingness to collect the information.

4.0 Market Analysis Summary

HOP has identified two distinct customer segments, with one of the two being further divided
into two subgroups. Each customer group will be addressed individually. HOP's competitors
operate in the larger office equipment rental marketplace. HOP will be the first company that
will be concentrating specifically and exclusively on projector rentals.

4.1 Market Segmentation

House of Projectors has identified three fairly distinct market segments. The first segment is
entrepreneurs, the second and third are small and medium size companies.

Entrepreneurs
This segment contains people who have an idea and are attempting to create a business
around their new idea. People in this market segment typically use projectors for
presentations seeking funding (both angel as well as venture capital). Less often the
entrepreneurs will be using the projectors for building sales. Projectors are very useful for
presentations. Generally the presentations are done in PowerPoint or Excel. The
entrepreneurs that use projectors are fairly sophisticated. They recognize the need for a
projector for both the appearance of professionalism as well as the need to communicate
information, typically in a graphical format.

Small size companies

For small size companies, with less than 15 employees, projectors are typically used as a
sales tool. The projectors are not used all that often, and therefore are not cost effective to
purchase. If the presentation is a one on one presentation a projector would not be needed
as the presenter can just let the other person see the screen themselves. But for
presentations where the audience is two or more people, then a projector is an effective
communication tool.

Medium size companies

This customer segment is similar to the small sized business, just differentiated by the size of
the company, between 15-50 employees. The medium size businesses use projectors for
sales presentations as well as for other internal events such as board meetings, HR
presentations, training seminars, and other company events. Although the medium size
companies would not have difficulty springing for the expense of a projector, they would
really need to use it quite often to make the purchase cost effective. By saving the capital
expenditure up front, they are able to hold onto the cash, and not have the expense of
maintenance. Additionally, every time they use the equipment, they are getting a relatively
new, top-of-the-line unit.

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 House of Projectors

Table: Market Analysis

Market Analysis
Potential Customers Growth 2003 2004 2005 2006 2007 CAGR
Entrepreneurs 9% 33,243 36,235 39,496 43,051 46,926 9.00%
Small size companies 7% 5,453 5,835 6,243 6,680 7,148 7.00%
Medium size companies 6% 3,433 3,639 3,857 4,088 4,333 5.99%
Total 8.51% 42,129 45,709 49,596 53,819 58,407 8.51%

Market Analysis (Pie)

Entrepreneurs
Small size companies
Medium size companies

4.2 Target Market Segment Strategy

HOP has targeted the previously named market segments for two interdependent reasons.
The first reason is the need for the services. The three targeted customer segments all use
projectors. As computers and laptops have increasingly become more and more
commonplace and indispensable in modern business transactions, projectors have become a
useful communication tool. While the projectors are not yet ubiquitous, they are quite useful.
Price however, has kept purchase rates a function of cost efficiency relative to how often the
projector is used.

Price then is the second reason why the chosen target markets are so attractive. The
projectors are quite useful to the customers, but they don't use the equipment often enough
to justify the expense. Rentals therefore are an attractive alternative, providing a service that
is highly valued and not likely to decrease significantly anytime soon.

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 House of Projectors

4.3 Service Business Analysis

HOP is operating within the larger industry of office equipment rentals, which includes copier
machines, computers, and other assorted office technological equipment. Companies that
operate in this industry offer rentals as a service. The rentals can be as short as a day or for
a long term of weeks or months. The type of businesses that participate in this industry are
both franchises such as IKON Office Systems and individual companies.

Most rental companies do not rent projectors. This can be explained by the fact that the cost
of the projectors and their technological support needs are high. This is not to say that there
is not a huge market in need of projector rentals, it more accurately reflects the needed
dedication of technical expertise in support of the equipment investment. For this reason
there are not a lot of companies that rent projectors. For companies that offer a wide range
of rentals, there is a higher return on investment if the equipment does not require too much
time or energy in support or maintenance. This logic only applies to companies that have full
service rental facilities. For a company such as HOP that only rents projectors, the cost of
serving a customer is drastically reduced when there is only one type of hardware rented out.

4.3.1 Competition and Buying Patterns

House of Projectors faces three different local competitors that rent out projectors.

IKON Office Systems: This a franchised company that offers a wide range of
business equipment rentals. While IKON rents the units, they are not all that helpful in
terms of hardware support, it becomes a bit of a struggle for the customer to deal
with configuration issues specific to their type of computer.

Reliant Office Rentals: This competitor offers a range of different equipment

rentals. They offer a total of three projectors. Customers do not have a choice of the
unit that they rent, it is first-come/first-served.

AA Office Equipment: This is a retail sales operation that also offers rentals. Their
rental options are not comprehensive. The rental department appears to be run as a
source of supplemental income to their retail sales. Support is quite limited. Because
the rental business unit appears not to be an independent unit, but just supportive of
the sales, it gets little attention.

Buying habits of customers are generally based on convenience. Customers are unable to
significantly shop by price because the three competitors (excluding HOP) charge about the
same rate. Customers make the rental choice based on availability and convenience.

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 House of Projectors

5.0 Strategy and Implementation Summary

HOP strategy will involve a marketing and sales effort that seeks to develop awareness of
their superior service and product offerings and to build a large foundation of long-term
customers. This strategy will be key because it recognizes the fact that it is far more costly to
attract new customers than it is to maintain current ones. Additionally, happy customers as
cheerleaders for the organization are an extremely effective, vocal, and cost effective sales
tool. Lastly, HOP will leverage their competitive edge of benchmarked service to quickly gain
market penetration.

5.1 Competitive Edge

HOP's competitive edge is their benchmarked service provided to all customers. The typical
level of service that customers expect from the competing rental companies is that the store
will determine compatibility of the rental unit and the customer's computer and then rent the
unit. The rental agent will give a few bits of information regarding configuration issues, but
the customer is typically left to their own labor to get it to work. This is the expectation that
has been developed by the industry and instilled in the minds of the customers. This basic
level of service is all that is typically offered because of the great and sometimes
overwhelming amount of knowledge that is required for projector support. Companies that
offer a wide range of rentals, just do not have the time to compile and offer the needed level
of knowledge.

House of Projectors rents only projectors so it is far easier for them to be projector experts.
With this high level of knowledge, it is easy for HOP to offer a standard level of service that is
super deluxe. If a customer had at any point rented from a competitor and then from HOP,
the huge difference in the level of service would be quite obvious. HOP asks the customer to
bring in their specific laptop so that HOP experts can configure the projector for them. HOP
finds it problematic and therefore unacceptable if the customer has to spend any of their own
time wrestling with the unit. HOP therefore offers true plug and play capability, not plug and
pray that the competition offers.

HOP offers 24 hour support for their rentals as well. Customers will find this quite useful,
particularly the customers that are traveling as they are able to get product support any time
that they need to where ever they may be.

5.2 Marketing Strategy

House of Projectors' marketing strategy will be an effort to gain visibility of HOP within the
business community as the premier LCD computer projector rental facility. House of
Projectors will undertake a marketing campaign that will in part use traditional media sources
such as the Cleveland Business Journal, a well read business and Cleveland specific journal.
In addition to the advertising, HOP will launch a networking campaign. The networking
campaign, based on guerrilla marketing principles will seek to gain visibility for the company
by establishing business and personal relationships with many people in the Cleveland
business community.

One specific alliance that House of Projectors will build and emphasize is a relationship with
the Cleveland Entrepreneurs Forum. This organization is run through the Cleveland Chamber
of Commerce and is a support organization for budding entrepreneurs. In effect it is an
organization that attempts to foster an environment that is conducive to start-up

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 House of Projectors
organizations. One aspect of this process, as many of us know all too well is the process of
raising money. House of Projectors will be able to offer value for this process because
projector presentations are almost a standard element of a presentation to sophisticated
angel or venture capital investors. By forming an alliance with this organization and
supporting it with its main activities, House of Projectors will be generating visibility of itself
specifically to one of their key customer segments.

Additional networking will be accomplished by participating in various other business

associations. This will be quite effective as many people have the empirical experience that
much business is conducted among networking contacts.

5.3 Sales Strategy

The sales strategy will be a system of goals and processes that stress the delivery of the
industry's finest service to every customer. The entire sales system is based on the idea that
House of Projectors must do its best to satisfy every customer so that after their first
experience with House of Projectors they have no desire whatsoever to use a different service
provider. By providing the finest service, the customer will have no reason to seek out a
different company. Ideally the customer will praise the outstanding service to their friends. It
is this "friends referral" that can be effective because the praise for the service provider
comes from a friend who has already established a trust relationship with the "audience."

This strategy of providing the finest service as a means for developing a large and loyal
customer base accepts implicitly that projectors are computer hardware and can be difficult
and frustrating for many people to operate. By providing the best support, House of
Projectors is able to remove the element of fear that many people have when they are forced
to interact with technology.

There are two main elements in HOP's delivery of customer support. The first is the task for
making the customer's interaction with the company and the technology as painless as
possible. Each customer should feel like they were treated special and that all of their needs
were looked after by HOP. The second element is crisis management. This involves a
situation where the customer is unhappy or did not receive the best service. All employees
will be trained to be able to survey a situation and correct any issues themselves. While some
issues will have to be elevated to the manager level, the employees are trained to be able to
effectively handle most things themselves.

5.3.1 Sales Forecast

House of Projectors has taken a conservative approach to the sales forecast. This was done
so that it would be more difficult to disappoint and easier to succeed. The sales forecast
displayed in the following table and charts shows that the first few months of business will be
relatively slow. This is a reasonable assumption as the organization is in start-up mode and
very little goodwill among customers and the community has been developed.

House of Projectors believes that sales for the first year will grow incrementally month to
month. HOP will be encouraged if there is a steady increase of sales. With profitability
forecasted to be reached during the second year, HOP will not have the unrealistic
expectation that they will be making a profit immediately, even for that matter within the first
year. HOP recognizes that building a sustainable organization is a slow incremental process.
HOP also recognizes that the sales forecast is just that, an educated guess of the sales
patterns and level of the organization. A lot of time has been invested in the forecast to make
it an accurate prediction based on all available information.

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 House of Projectors

Table: Sales Forecast

Sales Forecast
Sales 2003 2004 2005
Entrepreneurs $18,796 $65,778 $80,943
Companies $33,475 $115,400 $142,005
Total Sales $52,271 $181,178 $222,948

Direct Cost of Sales 2003 2004 2005

Entrepreneurs $0 $0 $0
Companies $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0

Sales Monthly

$10,000

$9,000

$8,000

$7,000

$6,000

$5,000 Entrepreneurs

$4,000 Companies

$3,000

$2,000

$1,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sales by Year

$250,000

$200,000

$150,000
Entrepreneurs
Companies
$100,000

$50,000

$0
2003 2004 2005

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 House of Projectors

5.4 Milestones

House of Projectors has developed a set of milestones which are ambitious yet achievable
goals for the entire organization. The following table enumerates the milestones, the
expected completion timeline and the individuals responsible for the the specific milestones.

Table: Milestones

Milestones
Milestone Start Date End Date Budget Manager Department
Business plan completion 1/1/03 2/15/03 $0 John Business Dev
Development of 1st alliance 1/1/03 4/15/03 $0 John Marketing
$100k in revenue 1/1/03 5/30/04 $0 John Sales
Profitability 1/1/03 10/30/04 $0 John Operations
Totals $0

Milestones

Business plan completion

Development of 1st alliance

$100k in revenue

Profitability

2003 2004

6.0 Web Plan Summary

The website will be used as an informational tool, providing information about House of
Projectors, the company and the services and equipment offered. The site will not have an e-
commerce function at this time. The functionality that will allow customers to make
reservations or place an order online will be reconsidered in the future.

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 House of Projectors

6.1 Website Marketing Strategy

The website will be marketing using two specific activities. The first is the inclusion of the URL
of House of Projectors in all printed literature that is distributed. The second activity is the
submission of the site to several search engines including but not limited to Google and
Yahoo! This will help the people that recognize their need for a projector rental find HOP.

6.2 Development Requirements

The website will be developed by leveraging below market programming skills from graduate
students from the many different nearby universities.

7.0 Management Summary

John Laaklytte graduated from Case Western Reserve University with a Business Degree.
While in school, John worked as an assistant manager at a CompUSA retail store. After for
two years with CompUSA John took the position of computer lab manager at the University
during his last year of schooling. This position provided John with the opportunity to
experience constant interaction with the student lab patrons and develop his customer
service skills.

Upon graduation John went to work for (name omitted) a national company that rents laptop
computers to different sized businesses. Here he improved his business skill set through
performance of his job duties and participation in the company's manager training program.
John spent four years here, beginning as an account manager, moving up to a regional
manager. During the fourth year John began to get a bit restless, wishing that he had more
autonomy in his work.

John recognized that in order to be truly challenged and enjoy the autonomy that he craved,
he would need to be his own boss, that he would need to start his own business. At this time
that John came up with the idea of House of Projectors, recognizing the need for a projector
rental company.

7.1 Personnel Plan

John: His responsibilities include operations, marketing, sales, and any other
functions that are needed. Basically John will be doing a little of everything, learning
all of the responsibilities of every position within the company.

Bookkeeper: This will be a part-time position with the person responsible for both
accounts payable and receivable.

Sales: HOP will utilize two part-time sales staff. These will be account managers
responsible for the maintenance and support of the customers and their accounts.

Customer support: There will be four part-time people responsible for the support of
the technology as it relates to the customers. At least one of the people will be on call
24 hours a day as a resource for customers that encounter difficulty.

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 House of Projectors

Table: Personnel

Personnel Plan
2003 2004 2005
John $24,000 $30,000 $34,000
Bookkeeper $6,800 $7,200 $9,000
Sales $16,900 $24,000 $28,000
Customer support $38,000 $48,000 $48,000
Total People 8 8 8
Total Payroll $85,700 $109,200 $119,000

8.0 Financial Plan

The following section will outline important financial information.

8.1 Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

General Assumptions
2003 2004 2005
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0.00% 0.00% 0.00%
Calculated Totals
Payroll Expense $85,700 $109,200 $119,000
New Accounts Payable $27,255 $48,293 $76,689

8.2 Break-even Analysis

The Break-even Analysis indicates that $13,756 of monthly revenue will be needed to reach
the break-even point.

Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 78
Monthly Revenue Break-even $11,693

Assumptions:
Average Per-Unit Revenue $150.00
Average Per-Unit Variable Cost $0.00
Estimated Monthly Fixed Cost $11,693

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 House of Projectors

Break-even Analysis

$10,000

$5,000

$0

($5,000)

($10,000)

($15,000)
$0 $3,000 $6,000 $9,000 $12,000 $15,000

Monthly break-even point

Break-even point = where line intersects with 0

8.3 Projected Profit and Loss

This projected table and these charts show the Projected Profit and Loss.

Table: Profit and Loss

Pro Forma Profit and Loss

2003 2004 2005
Sales $52,271 $181,178 $222,948
Direct Cost of Sales $0 $0 $0
Production Payroll $0 $0 $0
Other Costs of Sales $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $0 $0 $0
Gross Margin $52,271 $181,178 $222,948
Gross Margin % 100.00% 100.00% 100.00%
Expenses:
Payroll $85,700 $109,200 $119,000
Sales and Marketing and Other Expenses $2,400 $12,846 $17,440
Depreciation $9,996 $9,996 $9,996
Rent $7,800 $8,200 $8,500
Utilities $2,400 $3,000 $3,500
Insurance $1,800 $2,000 $22,000
Payroll Taxes $12,855 $16,380 $17,850
Other $0 $0 $0
------------ ------------ ------------
Total Operating Expenses $122,951 $161,622 $198,286
Profit Before Interest and Taxes ($70,681) $19,556 $24,662
Interest Expense $0 $0 $0
Taxes Incurred $0 $5,867 $7,399
Net Profit ($70,681) $13,689 $17,263
Net Profit/Sales -135.22% 7.56% 7.74%
Include Negative Taxes FALSE TRUE TRUE

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 House of Projectors

Profit Monthly

$0

($1,000)

($2,000)

($3,000)

($4,000)

($5,000)

($6,000)

($7,000)

($8,000)

($9,000)

($10,000)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Profit Yearly

$20,000
$10,000
$0
($10,000)
($20,000)
($30,000)
($40,000)
($50,000)
($60,000)
($70,000)
($80,000)
2003 2004 2005

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 House of Projectors

Gross Margin Monthly

$10,000

$9,000

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Gross Margin Yearly

$250,000

$200,000

$150,000

$100,000

$50,000

$0
2003 2004 2005

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 House of Projectors

8.4 Projected Cash Flow

The following chart and table present the Projected Cash Flow.

Table: Cash Flow

Pro Forma Cash Flow 2003 2004 2005

Cash Received
Cash from Operations:
Cash Sales $52,271 $181,178 $222,948
Cash from Receivables $0 $0 $0
Subtotal Cash from Operations $52,271 $181,178 $222,948

Additional Cash Received

Non Operating (Other) Income $0 $0 $0
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $52,271 $181,178 $222,948

Expenditures 2003 2004 2005

Expenditures from Operations:
Cash Spending $85,700 $109,200 $119,000
Payment of Accounts Payable $24,795 $42,226 $74,723
Subtotal Spent on Operations $110,495 $151,426 $193,723

Additional Cash Spent

Non Operating (Other) Expense $0 $0 $0
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $110,495 $151,426 $193,723

Net Cash Flow ($58,224) $29,752 $29,225

Cash Balance $9,876 $39,628 $68,853

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 House of Projectors

Cash

$70,000

$60,000

$50,000

$40,000

$30,000 Net Cash Flow

Cash Balance
$20,000

$10,000

$0

($10,000)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

8.5 Projected Balance Sheet

The following table displays the Projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Assets
Current Assets 2003 2004 2005
Cash $9,876 $39,628 $68,853
Other Current Assets $0 $0 $0
Total Current Assets $9,876 $39,628 $68,853
Long-term Assets
Long-term Assets $50,000 $50,000 $50,000
Accumulated Depreciation $9,996 $19,992 $29,988
Total Long-term Assets $40,004 $30,008 $20,012
Total Assets $49,879 $69,635 $88,864

Liabilities and Capital

2003 2004 2005
Accounts Payable $2,460 $8,527 $10,493
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $2,460 $8,527 $10,493

Long-term Liabilities $0 $0 $0
Total Liabilities $2,460 $8,527 $10,493

Paid-in Capital $125,000 $125,000 $125,000

Retained Earnings ($6,900) ($77,581) ($63,891)
Earnings ($70,681) $13,689 $17,263
Total Capital $47,419 $61,109 $78,372
Total Liabilities and Capital $49,879 $69,635 $88,864
Net Worth $47,419 $61,109 $78,372

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 House of Projectors

8.6 Business Ratios

Business Ratios for HOP. SIC class/code: Office machine rental, except computers7359.0505

Table: Ratios

Ratio Analysis
2003 2004 2005 Industry Profile
Sales Growth 0.00% 246.61% 23.05% 7.07%

Percent of Total Assets

Accounts Receivable 0.00% 0.00% 0.00% 27.61%
Inventory 0.00% 0.00% 0.00% 3.96%
Other Current Assets 0.00% 0.00% 0.00% 44.65%
Total Current Assets 19.80% 56.91% 77.48% 76.22%
Long-term Assets 80.20% 43.09% 22.52% 23.78%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 4.93% 12.24% 11.81% 33.47%

Long-term Liabilities 0.00% 0.00% 0.00% 16.23%
Total Liabilities 4.93% 12.24% 11.81% 49.70%
Net Worth 95.07% 87.76% 88.19% 50.30%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 100.00% 100.00% 100.00% 100.00%
Selling, General & Administrative Expenses 235.22% 92.44% 92.26% 84.88%
Advertising Expenses 0.00% 0.00% 0.00% 1.01%
Profit Before Interest and Taxes -135.22% 10.79% 11.06% 1.94%

Main Ratios
Current 4.01 4.65 6.56 1.73
Quick 4.01 4.65 6.56 1.33
Total Debt to Total Assets 4.93% 12.24% 11.81% 3.77%
Pre-tax Return on Net Worth -149.05% 32.00% 31.47% 57.72%
Pre-tax Return on Assets -141.70% 28.08% 27.75% 8.92%

Business Vitality Profile 2003 2004 2005 Industry

Sales per Employee $6,534 $22,647 $27,868 $156,054
Survival Rate 67.68%

Additional Ratios 2003 2004 2005

Net Profit Margin -135.22% 7.56% 7.74% n.a
Return on Equity -149.05% 22.40% 22.03% n.a

Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 n.a
Collection Days 0 0 0 n.a
Inventory Turnover 0.00 0.00 0.00 n.a
Accounts Payable Turnover 11.08 5.66 7.31 n.a
Payment Days 28 42 45 n.a
Total Asset Turnover 1.05 2.60 2.51 n.a

Debt Ratios
Debt to Net Worth 0.05 0.14 0.13 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios
Net Working Capital $7,416 $31,101 $58,360 n.a
Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios
Assets to Sales 0.95 0.38 0.40 n.a
Current Debt/Total Assets 5% 12% 12% n.a
Acid Test 4.01 4.65 6.56 n.a
Sales/Net Worth 1.10 2.96 2.84 n.a
Dividend Payout 0.00 0.00 0.00 n.a

Page 20
 Appendix

Appendix Table: Sales Forecast

Sales Forecast
Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Entrepreneurs $0 $0 $285 $513 $855 $1,280 $1,642 $1,918 $2,166 $3,223 $3,363 $3,551
Companies $0 $500 $500 $900 $1,500 $2,245 $2,880 $3,365 $3,800 $5,655 $5,900 $6,230
Total Sales $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Entrepreneurs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Companies $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Page 1
 Appendix

Appendix Table: Personnel

Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
John $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Bookkeeper $400 $400 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Sales $0 $500 $1,000 $1,000 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Customer support $0 $1,000 $2,000 $3,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Total People 2 4 5 6 8 8 8 8 8 8 8 8
Total Payroll $2,400 $3,900 $5,600 $6,600 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400

Page 2
 Appendix

Appendix Table: General Assumptions

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Calculated Totals
Payroll Expense $2,400 $3,900 $5,600 $6,600 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400
New Accounts Payable $1,560 $1,785 $2,040 $2,190 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460

Page 3
 Appendix

Appendix Table: Profit and Loss

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781
Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Production Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Gross Margin $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781
Gross Margin % 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Expenses:
Payroll $2,400 $3,900 $5,600 $6,600 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400
Sales and Marketing and Other Expenses $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Depreciation $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833 $833
Rent $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650
Utilities $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Insurance $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Payroll Taxes 15% $360 $585 $840 $990 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260 $1,260
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $4,793 $6,518 $8,473 $9,623 $11,693 $11,693 $11,693 $11,693 $11,693 $11,693 $11,693 $11,693
Profit Before Interest and Taxes ($4,793) ($6,018) ($7,688) ($8,210) ($9,338) ($8,168) ($7,171) ($6,410) ($5,727) ($2,815) ($2,430) ($1,912)
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($4,793) ($6,018) ($7,688) ($8,210) ($9,338) ($8,168) ($7,171) ($6,410) ($5,727) ($2,815) ($2,430) ($1,912)
Net Profit/Sales 0.00% -1203.60% -979.36% -581.03% -396.52% -231.75% -158.60% -121.33% -95.99% -31.70% -26.23% -19.55%
Include Negative Taxes

Page 4
 Appendix

Appendix Table: Cash Flow

Pro Forma Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash Received
Cash from Operations:
Cash Sales $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781
Cash from Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash from Operations $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781

Additional Cash Received

Non Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $500 $785 $1,413 $2,355 $3,525 $4,522 $5,283 $5,966 $8,878 $9,263 $9,781

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Expenditures from Operations:
Cash Spending $2,400 $3,900 $5,600 $6,600 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400
Payment of Accounts Payable $0 $1,560 $1,785 $2,040 $2,190 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460
Subtotal Spent on Operations $2,400 $5,460 $7,385 $8,640 $10,590 $10,860 $10,860 $10,860 $10,860 $10,860 $10,860 $10,860

Additional Cash Spent

Non Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $2,400 $5,460 $7,385 $8,640 $10,590 $10,860 $10,860 $10,860 $10,860 $10,860 $10,860 $10,860

Net Cash Flow ($2,400) ($4,960) ($6,600) ($7,227) ($8,235) ($7,335) ($6,338) ($5,577) ($4,894) ($1,982) ($1,597) ($1,079)
Cash Balance $65,700 $60,740 $54,140 $46,913 $38,678 $31,343 $25,004 $19,427 $14,533 $12,552 $10,955 $9,876

Page 5
 Appendix

Appendix Table: Balance Sheet

Pro Forma Balance Sheet

Assets
Current Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash $68,100 $65,700 $60,740 $54,140 $46,913 $38,678 $31,343 $25,004 $19,427 $14,533 $12,552 $10,955 $9,876
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $68,100 $65,700 $60,740 $54,140 $46,913 $38,678 $31,343 $25,004 $19,427 $14,533 $12,552 $10,955 $9,876
Long-term Assets
Long-term Assets $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Accumulated Depreciation $0 $833 $1,666 $2,499 $3,332 $4,165 $4,998 $5,831 $6,664 $7,497 $8,330 $9,163 $9,996
Total Long-term Assets $50,000 $49,167 $48,334 $47,501 $46,668 $45,835 $45,002 $44,169 $43,336 $42,503 $41,670 $40,837 $40,004
Total Assets $118,100 $114,867 $109,074 $101,641 $93,581 $84,513 $76,344 $69,173 $62,763 $57,036 $54,221 $51,791 $49,879

Liabilities and Capital

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Accounts Payable $0 $1,560 $1,785 $2,040 $2,190 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $1,560 $1,785 $2,040 $2,190 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $0 $1,560 $1,785 $2,040 $2,190 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460 $2,460

Paid-in Capital $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 $125,000
Retained Earnings ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900) ($6,900)
Earnings $0 ($4,793) ($10,811) ($18,499) ($26,709) ($36,047) ($44,216) ($51,387) ($57,797) ($63,524) ($66,339) ($68,769) ($70,681)
Total Capital $118,100 $113,307 $107,289 $99,601 $91,391 $82,053 $73,884 $66,713 $60,303 $54,576 $51,761 $49,331 $47,419
Total Liabilities and Capital $118,100 $114,867 $109,074 $101,641 $93,581 $84,513 $76,344 $69,173 $62,763 $57,036 $54,221 $51,791 $49,879
Net Worth $118,100 $113,307 $107,289 $99,601 $91,391 $82,053 $73,884 $66,713 $60,303 $54,576 $51,761 $49,331 $47,419

Page 6