DE FAN RESTAURANT BUSINESS PLAN

Transcription

1 DE FAN RESTAURANT BUSINESS PLAN

2 Table of Contents I. EXECUTIVE SUMMARY... 2 II. BUSINESS OVERVIEW... 3 III. COMPANY AND OWNERSHIP STRUCTURE... 4 IV. MANAGEMENT STRUCTURE... 4 V. OPERATIONS... 6 BUSINESS OPERATIONS... 6 SUPPLIERS... 6 LOCATION & OUTLAY... 6 CAPITAL EQUIPMENT REQUIREMENTS... 7 VI. STAFFING... 8 VII. MARKET ANALYSIS... 8 TARGET SEGMENTS... 8 PRICING STRATEGY... 9 SALES, PROMOTION & DISTRIBUTION... 9 COMPETITORS... 9 COMPETITIVE EDGE SWOT ANALYSIS VIII. FINANCIAL ANALYSIS START-UP COST REQUIREMENTS SALES FORECAST FOR YEAR PRO FORMA INCOME STATEMENT (YEARS 1-3) PRO-FORMA CASH FLOW PROJECTIONS (YEAR 1) PRO-FORMA CASH FLOW STATEMENTS (YEARS 1-3) PRO-FORMA BALANCE SHEET (YEARS 1-3) NOTE: This business plan sample was prepared by Greg Newton. Although based on a real plan, company name, financials and other pertinent information has been modified for client privacy and protection. Any similarities with actual companies are purely coincidental.

3 I. Executive Summary Introduction De Fan Restaurant is a specialty Mongolian restaurant which will compete in the Greater Vancouver Area (GTA) restaurant industry in British Columbia. The start-up will stand out from competitors with its unique grilled fish specialty dishes and will cater primarily towards the target audience of Chinese-Canadians living and working in close proximity to the restaurant. Owner, Ms. Wenyan Yip has spent the past 5 years running a small successful chain of restaurants overseas in China: Yu Shang Grill Fish Qiaohua, Yu Shang Grill Fish Wanda and Yu Shang Grill Fish Zhongshan restaurant all located in Hohhot city. All three restaurants are currently in full operation and generate annual revenues of approximately $1.4 million (CAD). Ms. Yip plans to bring her restaurant business experience, cash flow management skills and industry knowledge to the Mongolian restaurant start-up to create a successful business that stands out in the GTA marketplace. The Market According to research firm MarketLine, the Canadian restaurants industry had total revenues of $51.1 billion in 2011, representing a compound annual growth rate (CAGR) of 3.7% between 2007 and The industry's volume is expected to rise to from million employees (2011) to million employees by the end of 2016, representing a CAGR of 1.2% for the period. Additionally, the performance of the industry is forecast to accelerate, with an anticipated CAGR of 4.1% for the five-year period , which is expected to drive the industry to a value of $62.4 billion (an increase of 22.1% since 2011) by the end of De Fan Restaurant will target both Chinese locals and visitors to the city with its authentic Mongolian cuisine. Management will initially open with a penetration pricing strategy to drive trial usage and drive new customers within the first 6 months. Financial Considerations The Company will require total start-up costs of $575,000, and is projected to breakeven in month 4 of its first year. The following is the revenue, expenses and profit projections for the Company s sales over the first 3 years of operations. YR 1 YR 2 YR 3 SALES $2,399,352 $2,886,991 $3,147,774 GROSS MARGIN $625,452 $835,916 $989,615 NET PROFIT $63,007 $155,187 $192,362 This target is seen as attainable through effective promotional efforts and years of management s experience opening profitable restaurant start-ups. This business plan will discuss the tactics and strategies to generate the revenues as stated, and the implementation to successfully become a profitable restaurant in the marketplace. 2

4 II. Business Overview Business Model The proposed company, De Fan Restaurant (The Company) is a Mongolian restaurant start-up, which offers delicious Chinese food and specialty grilled fish dishes with Mongolian flavors unique to the Vancouver restaurant market. The restaurant will be located in the Lower Mainland, and will be owned and managed by Ms. Wenyan Yip, who has spent the past 5 years running a small successful chain of three restaurants overseas in China. Yu Shang Grill Fish Restaurant in Saihan District Hohhot City (open since September 2009) sitting 170 people with total 16 employees Yu Shang Grill Fish Restaurant in Wanda Square, Saihan District- Hohhot City (open since November 2010) sitting 120 people with total 23 employees Yu Shang Grill Fish Restaurant On Zhongshan Road West, Saihan District - Hohhot City (open since April 2011) sitting 350 people with total 25 employees All three restaurants are currently in full operation and generated 1.4 million (CAD) in Prior to this role she was the owner of a fashion store for 4 years from Yip plans to bring her restaurant business experience, cash flow management skills and industry knowledge to the Mongolian restaurant start-up and create a successful business that stands out in the Lower Mainland marketplace. Commercial Viability of the Business Restaurant Growth in Canada According to MarketLine, the Canadian restaurants industry had total revenues of $51.1 billion in 2011, representing a compound annual growth rate (CAGR) of 3.7% between 2007 and The industry's volume is expected to rise to from million employees (2011) to million employees by the end of 2016, representing a CAGR of 1.2% for the period 1. Industry Forecast to Accelerate The performance of the industry is forecast to accelerate, with an anticipated CAGR of 4.1% for the five-year period , which is expected to drive the industry to a value of $62.4 billion (an increase of 22.1 since 2011) by the end of This market research combined with the owner s proven capabilities of generating profits with multiple restaurant locations demonstrates a strong commercial viability for De Fan Restaurant. 1 Restaurants Industry Profile: Canada. (2013). Restaurants Industry Profile: Canada,

5 Management Ms. Wenyan Yip brings 5 years experience owning restaurants and is currently the co-owner of Yu Shang Grill Fish Restaurant, where she holds 45% company shares. The company currently manages 3 successful and well-managed restaurants in China, which generates approximately $1.4 million (CAD) annually in sales. Ms. Yip brings many years of restaurant experience to the start-up and possesses a strong level of both cooking skill and industry experience for the success of De Fan Restaurant. She is excited to bring her skills and experience to the new restaurant, and help generate new employment opportunities for the Canadian hospitality industry through the business. III. Company and Ownership Structure Business Structure De Fan Restaurant will be formed as a limited company, offering services in the hospitality industry. Percent Ownership The company will be owned 100% by Ms. Yip, and will be fully financed by her company s assets. IV. Management Structure Organizational Chart De Fan Restaurant will operate under the following organizational chart, where staffing recruitment will take place between Months 2-3. Owner/Manager Head chef Cooks/Dishwasher/Kitchen staff Bussers/Cleanup Cashiers/Wait staff 4

6 Table 1 - Organizational Chart Owner Manager Chef Bussers Cashiers /Wait Staff Cooks / Diswashers In the first year of operations, total staff will consist of 14 employees (full time and part time), and will grow with sales growth to 20 and 25 employees in Years 2 and 3 respectively. 5

7 V. Operations Business Operations De Fan Restaurant will operate as a typical restaurant business operation, for full dining lunch and dinner service. Patrons will receive exceptional service by waiting staff and will choose from a delicious array of unique Mongolian dishes at a reasonable price closely matched to the quality and size of the meal ordered. Table 2 - Customer Experience Schematic Customer Greeted & Seated Cleanup Staff Cleans Table For Next Customers è ç Order Drinks & Present Menu + Specials Customer Leaves With Warm Service è Customer Orders è ç Finished Customer Pays At Cashier ç Meal is Prepared & Served ê Continued Customer Service Throughout Meal Staff will maintain a continual workflow to match the customer volume, from greeting/waiting on customer tables, to cooking and preparing dishes, to directing the paying customers to the cashier and table cleanup. Everything will be done to maximize pleasure of experience for the customer, and create a consistently exceptional impression of cleanliness, professionalism, with positive and friendly staff interactions at an excellent cost. Food ingredients, cleaning and cooking equipment will all be restocked on a weekly basis to match regular levels of consumption, with a surplus of 10-15% available on hand. Ms. Yip will work to ensure the business runs fluidly with strong cash flow management. Suppliers Food will be sourced from local market to ensure freshness and quality of dishes, while simultaneously supporting local growers and reducing overhead costs. Location & Outlay De Fan Restaurant will require between sq. feet for its restaurant premises, and will be located in a popular area in the Greater Vancouver Area (GTA). Although the exact location has not yet been decided, the cities in order of preference are: Vancouver 6

8 Richmond Burnaby Location will be largely determined by its degree of accessibility and proximity to the major Chinese communities in the GTA. Capital Equipment Requirements Management will form De Fan Restaurant either by creating new restaurant or through purchasing an existing restaurant. The final decision will be determined primarily on management s ability to secure the final location at the lowest price, with the balance between (a) time and costs of renovation and purchasing new equipment versus (b) purchase price of an existing restaurant and staff. Management projects total start-up cost requirements to be $575,000, with the most significant costs being: Cash on hand requirements, start-up inventory, purchase of long-term assets and $75,000 in total start-up expenses. Startup Requirements Startup Expenses Legal $3,000 Menu/Stationary $2,500 Brochures $5,000 Consultants $10,000 Insurance $3,000 Debt Service $5,000 Licenses/Tax/Deposits $12,000 Lease Deposit $15,000 Accounting $2,500 Soft Opening Expense $5,000 Grand Opening Advertising $10,000 Misc. Expenses $2,000 Total Startup Expenses $75,000 Startup Assets Cash Required $50,000 Startup Inventory $50,000 Other Current Assets $0 Long-term Assets $400,000 Total Assets $500,000 Total Requirements $575,000 All start-up expenses will be provided by the applicant and no external funding will be required. 7

9 VI. Staffing Ms. Yip will hire a total of 14 employees in Year 1 in the following roles: chef, bussers, cooks, dishwashers and cashiers. All staff members will be hired between Months 2-3 of operations, and total personnel costs are projected at $233,009 in Year 1, $278,000 in Year 2 and $337,000 in Year 3. Personnel Plan Year 1 Year 2 Year 3 Owner/Manager $60,000 $70,000 $80,000 Chef $48,000 $50,000 $55,000 Cooks/Dishwasher/Kitchen Staff $20,000 $26,000 $32,000 Bussers/Cleanup $33,000 $40,000 $50,000 Servers $42,000 $60,000 $84,000 Cashier $30,000 $32,000 $36,000 Total People Total Payroll $233,000 $278,000 $337,000 VII. Market Analysis Target Segments Management segments its customers into the following target market groups: (a) local residents, (b) guests of nearby hotels, convention centres and visitors to Vancouver, and (c) business workers, or individuals who work nearby and drive a large majority of lunch time sales. 8

10 Breakdown of Local Resident Segment Management identifies its target audiences within the local resident segment as (a) local Chinese demographic individuals who live within 25 minutes drive to De Fan Restaurant, and (b) Vancouver foodies or food enthusiasts. Local Chinese Restaurant-Goers - The primary market for De Fan Restaurant is Chinese Vancouverites (first and second generation) that live within 25 minutes drive to the restaurant. This segment is already familiar and has a certain level of openness and likability to authentic Mongolian foods, and will likely resonate very positively to De Fan Restaurant s opening near their neighbourhood. Vancouver Foodies - Vancouver foodies are adults between the ages who follow food blogs and frequent both new and favourite restaurants in constant search for the their city s best food. They pride themselves on their food quality knowledge, and are very open and expressive with their critiques/reviews on both social media and rating website such as Yelp. This target segment is a highly influential group on the start-up s brand reputation as it enters the marketplace, as reviews gain wide reach of viewers and can significantly affect the attitude of new potential customers. Pricing Strategy Management will open with a penetration pricing strategy, where the restaurant will offer high quality food at a low price. This is selected to maximize food trial and drive initial customers. After 5-6 months, after the restaurant has solidified a customer base, management will gradually increase the price to match the market value of the food, and implement a value-based pricing strategy to maximize potential company profits. Sales, Promotion & Distribution Management s primary marketing and promotion activities will be: print advertisement, internet marketing, coupons, discount cards (for current customers) and Chinese festival promotions. Competitors The Company s competitors include other Mongolian BBQ Grill style restaurants in the GTA. There is currently no restaurant in Vancouver like De Fan Restaurant with grilled fish specialties; Yu Shang Grill Fish restaurant can provide about 100 different kinds of food made by different recipes and condiments. This means that De Fan Restaurant will be a unique restaurant and the first restaurant to serve customers with traditional and authentic Mongolian food. Management identifies its closest type of direct competition as Mongolian BBQ Grill style restaurants throughout the GTA, which serve BBQ meals by frying meats on a large frying pan, however is very different from authentic Mongolian restaurants in China, and from the food that 9

11 will be served by De Fan Restaurant. The following is a list of such Mongolian BBQ Grill style restaurants in the GTA area: 1. Mongo s Stir Fry Grill (Previously Great Wall Mongolian BBQ) Kitsilano - Mongo s allows customers to select the items they want such as beef, chicken, pork and lamb plus fresh vegetables. Customers can add their sauces using a sauce chart, then watch the staff cook the food in front of them. Restaurant offers All-you-can-eat or discounted single bowl options are available. Recently changed its name from Great Wall Mongolian Grill. They are located close to the University of British Columbia 2. Great Han Mongolian BBQ - Located in the Mount Pleasant neighbourhood, Great Han Mongolian BBQ offers an all-you-can-eat Mongolian buffet for $11.95/person. The restaurant recently renovated in early 2013 and garners a large number of positive customer reviews on food quality and cleanliness. 3. Mongolie Grill - Mongolie Grill offers a Mongolian style eatery with two locations in Vancouver and Surrey. It allows customers to choose their own ingredients and have them cooked on a flat grill in front of them. The customer is able to creatively concoct her own meal and pays by weight, and they offer an interesting promotion where if the customer guesses the cost correctly the meal is free. Competitive Edge De Fan Restaurant s competitive edge lies in that it will be the first restaurant to bring authentic Mongolian cuisine of unique grilled fish specialty dishes to the Vancouver restaurant market. Although there are many BBQ Mongolian fried meat restaurants common to Vancouver areas, one can hardly find this type of restaurant in China. Instead, De Fan Restaurant will bring authentic Mongolian foods to Vancouver and will mimic the successful dishes of Yu Shang Grill Fish, which offers approximately 100 different kinds of food made by different recipes and condiments. This means that De Fan Restaurant will be a unique restaurant and the first restaurant to serve customers with traditional and authentic Mongolian food. By bringing this new unique food style to the Vancouver market, the restaurant will provide a memorable, high-quality restaurant experience that is delicious, convenient and enjoyable for the customer. 10

12 SWOT Analysis Strengths Strong management with track record of success with 3 start-up Chinese restaurants overseas Management can leverage its newness factor as a new entrant to the market place, and generate interest, curiosity and excitement as a new Vancouver restaurant Weaknesses New business, and no brand reputation, customer base or familiarity entering the market Being a new entrant can translate into initial inability to secure lower vendors costs, which could negatively impact profits and/or ability to price competitively Opportunities Growing popularity of reality shows such as MasterChef, Man v. Food, Kitchen Nightmares, Hell s Kitchen and Top Chef is increasing both customer awareness and appreciation for quality restaurant experiences, which could lead to increased profits for an exotic Chinese specialty restaurant. In North America people are increasingly time-crunched and moving towards going out for meals rather than cooking at home. This trend will benefit both De Fan Restaurant and the restaurant industry as a whole. Growing Chinese community in the GTA translates into an ever-growing target market for De Fan Restaurant and demand for its Chinese specialty dishes. Threats A growing Canadian public health concern for fish consumption following Japan s nuclear disaster could have a negative impact on demand for the Company s specialty fish dishes. A worsened Canadian economic state could have a negative impact on disposable income levels, economic outlook and spending habits of Canadians. Any of which could negatively affect company profits. 11

13 VIII. Financial Analysis Start-up Cost Requirements The following are the required start-up costs for the business, and throughout the first year of operations. Startup Requirements Startup Expenses Legal $3,000 Menu/Stationary $2,500 Brochures $5,000 Consultants $10,000 Insurance $3,000 Debt Service $5,000 Licenses/Tax/Deposits $12,000 Lease Deposit $15,000 Accounting $2,500 Soft Opening Expense $5,000 Grand Opening Advertising $10,000 Misc. Expenses $2,000 Total Startup Expenses $75,000 Startup Assets Cash Required $50,000 Startup Inventory $50,000 Other Current Assets $0 Long-term Assets $400,000 Total Assets $500,000 Total Requirements $575,000 12

14 Sales Forecast For Year 1 Pro Forma Profit and Loss Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month Sales $132,605 $147,446 $155,638 $167,487 $182,582 $198,240 $212,540 $224,020 $240,731 $240,506 $245,567 $251,990 Direct Cost of Sales $98,023 $108,870 $114,888 $124,730 $134,747 $147,558 $156,760 $165,094 $179,089 $177,353 $181,120 $185,670 Other Total Cost of Sales $98,023 $108,870 $114,888 $124,730 $134,747 $147,558 $156,760 $165,094 $179,089 $177,353 $181,120 $185,670 Gross Margin $34,583 $38,576 $40,750 $42,757 $47,835 $50,683 $55,781 $58,927 $61,642 $63,153 $64,447 $66,320 Gross Margin % 26.08% 26.16% 26.18% 25.53% 26.20% 25.57% 26.24% 26.30% 25.61% 26.26% 26.24% 26.32% Expenses Payroll $17,500 $17,500 $17,500 $17,500 $18,500 $18,500 $19,500 $19,500 $19,500 $22,500 $22,500 $22,500 Sales and Marketing $7,500 $5,000 $7,500 $5,000 $7,500 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 and Other Expenses Depreciation $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 Leased $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 $1,050 Equip/Van/Dispensing Systems Utilities $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Insurance $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 $1,745 Other Taxes $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Payroll Taxes 30% $5,250 $5,250 $5,250 $5,250 $5,550 $5,550 $5,850 $5,850 $5,850 $6,750 $6,750 $6,750 Other Total Operating Expenses $42,045 $39,545 $42,045 $39,545 $43,345 $40,845 $47,145 $47,145 $47,145 $51,045 $51,045 $51,045 Profit Before Interest ($7,463) ($969) ($1,295) $3,212 $4,490 $9,838 $8,636 $11,782 $14,497 $12,108 $13,402 $15,275 and Taxes EBITDA ($2,463) $4,031 $3,705 $8,212 $9,490 $14,838 $13,636 $16,782 $19,497 $17,108 $18,402 $20,275 Interest Expense Taxes Incurred ($2,239) ($242) ($324) $803 $1,123 $2,459 $2,159 $2,945 $3,624 $3,027 $3,351 $3,819 Net Profit ($5,224) ($727) ($971) $2,409 $3,368 $7,378 $6,477 $8,836 $10,873 $9,081 $10,052 $11,456 Net Profit/Sales -3.94% -0.49% -0.62% 1.44% 1.84% 3.72% 3.05% 3.94% 4.52% 3.78% 4.09% 4.55% 13

15 Pro Forma Income Statement (Years 1-3) Pro Forma Income Statement Year 1 Year 2 Year 3 Sales $2,399,352 $2,886,991 $3,147,774 Direct Cost of Sales $1,773,900 $2,051,075 $2,158,159 Other $0 $0 $0 Total Cost of Sales $1,773,900 $2,051,075 $2,158,159 Gross Margin $625,452 $835,916 $989,615 Gross Margin % 26.07% 28.95% 31.44% Expenses Payroll $233,000 $278,000 $337,000 Sales and Marketing and Other Expenses $97,500 $125,000 $150,000 Depreciation $60,000 $60,000 $60,000 Leased Equip/Van/Dispensing Systems $12,600 $12,600 $12,600 Utilities $24,000 $24,000 $24,000 Insurance $20,940 $22,000 $23,000 Other Taxes $24,000 $24,000 $24,000 Payroll Taxes $69,900 $83,400 $101,100 Other $0 $0 $0 Total Operating Expenses $541,940 $629,000 $731,700 Profit Before Interest and Taxes $83,512 $206,916 $257,915 EBITDA $143,512 $266,916 $317,915 Interest Expense $0 $0 $0 Taxes Incurred $20,505 $51,729 $65,553 Net Profit $63,007 $155,187 $192,362 Net Profit/Sales 2.63% 5.38% 6.11% 14

16 Pro-Forma Cash Flow Projections (Year 1) Pro Forma Cash Flow Cash Received Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash from Operations Cash Sales $132,605 $147,446 $155,638 $167,487 $182,582 $198,240 $212,540 $224,020 $240,731 $240,506 $245,567 $251,990 Subtotal Cash from Operations $132,605 $147,446 $155,638 $167,487 $182,582 $198,240 $212,540 $224,020 $240,731 $240,506 $245,567 $251,990 Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received 15.00% $19,891 $22,117 $23,346 $25,123 $27,387 $29,736 $31,881 $33,603 $36,110 $36,076 $36,835 $37,799 $152,496 $169,563 $178,984 $192,610 $209,969 $227,976 $244,421 $257,623 $276,841 $276,582 $282,402 $289,789 Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Expenditures from Operations Cash Spending $180,851 $154,021 $157,627 $169,920 $184,231 $198,673 $210,265 $218,518 $238,854 $224,689 $234,281 $240,084 Bill Payments Subtotal Spent on Operations $180,851 $154,021 $157,627 $169,920 $184,231 $198,673 $210,265 $218,518 $238,854 $224,689 $234,281 $240,084 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing $16,907 $18,799 $19,844 $21,355 $23,279 $25,276 $27,099 $28,563 $30,693 $30,665 $31,310 $32,129 15

17 Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other $0 $0 $0 $0 $0 $10,000 $0 $10,000 $5,000 $0 $5,000 $0 Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent $197,758 $172,820 $177,471 $191,275 $207,510 $233,948 $237,364 $257,080 $274,547 $255,354 $270,591 $272,213 Net Cash Flow ($45,263) ($3,257) $1,513 $1,335 $2,459 ($5,972) $7,057 $543 $2,294 $21,228 $11,811 $17,576 Cash Balance $4,737 $1,480 $2,993 $4,328 $6,787 $815 $7,872 $8,414 $10,708 $31,936 $43,747 $61,323 16

18 Pro-Forma Cash Flow Statements (Years 1-3) Pro Forma Cash Flow Cash Received Year 1 Year 2 Year 3 Cash from Operations Cash Sales $2,399,352 $2,886,991 $3,147,774 Subtotal Cash from Operations $2,399,352 $2,886,991 $3,147,774 Additional Cash Received Sales Tax, VAT, HST/GST Received $359,903 $433,049 $472,166 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 $2,759,255 $3,320,040 $3,619,940 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $2,412,015 $2,683,764 $2,887,018 Bill Payments $0 $0 $0 Subtotal Spent on Operations $2,412,015 $2,683,764 $2,887,018 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $305,917 $368,091 $401,341 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 $30,000 $50,000 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $75,000 $100,000 Subtotal Cash Spent $2,747,932 $3,176,855 $3,388,360 Net Cash Flow $11,323 $143,185 $231,580 Cash Balance $61,323 $204,507 $436,088 17

19 Pro-Forma Balance Sheet (Years 1-3) Pro Forma Balance Sheet Assets Year 1 Year 2 Year 3 Current Assets Cash $61,323 $204,507 $436,088 Inventory $185,670 $197,630 $189,236 Other Current Assets $30,000 $80,000 $80,000 Total Current Assets $276,993 $482,137 $705,324 Long-term Assets Long-term Assets $400,000 $400,000 $400,000 Accumulated Depreciation $60,000 $120,000 $180,000 Total Long-term Assets $340,000 $280,000 $220,000 Total Assets $616,993 $762,137 $925,324 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $0 $0 $0 Current Borrowing $0 $0 $0 Other Current Liabilities $53,985 $118,943 $189,768 Subtotal Current Liabilities $53,985 $118,943 $189,768 Long-term Liabilities $0 $0 $0 Total Liabilities $53,985 $118,943 $189,768 Paid-in Capital $575,000 $575,000 $575,000 Retained Earnings ($75,000) ($86,993) ($31,806) Earnings $63,007 $155,187 $192,362 Total Capital $563,007 $643,194 $735,556 Total Liabilities and Capital $616,993 $762,137 $925,324 Net Worth $563,007 $643,194 $735,556 18