Business Plan

GS3 Consulting Sean Georget Josh Safronetz Dana Stoughton Dave Sullivan

February 2008

Live Xtreme

• Industry Analysis•Goals and Objectives•Operations Plan•Human Resource Plan•Marketing Plan• Finance Plan• Conclusion

Agenda

“Clark’s Xtreme Sports Company is committed to being the premier Extreme Sporting Goods Store in Saskatoon and area, by serving the alternative sport enthusiasts and providing merchandise of exceptional quality and value in a friendly, service-oriented environment.”

Mission Statement

Establish an image and name High end alternative sporting goods Support local Extreme Sport athletes Maximizes sales at $480,000 by year 5 Monthly sales of $20 per square foot of retail space

20% return on equity

Goals and Objectives

• Location• Store Floor Plan• Average Business Cycles• Supply Analysis• Capital Budget•Operational Expenses

Operations Plan

Floor Plan

• Average Business Cycles• Average Day• Average Week• Average Month• Average Year

• Supply Analysis

Operations Plan

DescriptionRemodeling $4,000Sales Equipment

Shelves, racks, displays $5,000Cash Register $800Check-out Counter $500Offi ce Equipment $1,000

Total Sales Equipment Costs $7,300Working Capital

Overhead 7,560 Labour and Manager 8,471 Marketing 5,258

Inventory $80,000Accounts Payable $19,048

Total Net Working Capital $82,241Total Capital Required $93,541

Estimated Costs

Capital Budget

Variable Overhead CostsMaintenance $300

Total Variable Overhead $300

Fixed Overhead Costs Rent $24,000Utilities $2,400Insurance $5,000Business License $200Capital Cost Allowance $1,015Telephone $600

Total Fixed Overhead $33,215

Total Overhead $33,515

Operating Expense

Human Resource PlanJob Description• General Manager• Direct Sales Staff

• Scheduling• Training• Labour Costs

Human Resource PlanLabour Costs

2008 2009 2010 2011 2012General ManagerSalary 42,000 47,355 48,539 49,752 50,996

Benefits 3,688 4,158 4,262 4,368 4,477

Total 45,688 51,513 52,801 54,121 55,474

Direct Sales EmployeesWages 48,000 49,200 50,430 51,691 52,983Benefits 7,958 8,157 8,361 8,570 8,785

Total 55,958 57,357 58,791 60,261 61,768

Total Salary and Wages Paid 101,646 108,870 111,592 114,382 117,241

Products- High end quality sports merchandise

Pricing- Premium pricing Promotion- Strategic advertising Place- Broadway district

Marketing Plan

Live Extreme

Segmentation, Targeting, & Position◦ Saskatoon and area residents◦ Above average income◦ Serious competitors◦ Health and wellness◦ Sports teams

Marketing Plan

http://youtube.com/watch?v=WCNk9u2p3PI

Projected Sales Revenues and Marketing Expenses

2007 2008 2009 2010 2011 -

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Sales Revenue

Marketing Salaries

Marketing Expenses

Year

$

Market Analysis

Socc

er/R

ugby

Snow

boar

ds

Bike

s

Skat

eboa

rds

Fris

bee

Appa

rel

Skis

Cros

s Co

untr

y

Long

boar

ds

Snow

shoe

s

Wak

eboa

rds

Kite

Sur

fing

Strength Weakness

Clark's Xtreme Industry x x x x x x x x x x x x Highest qual i ty,

High End y y y y y y y y y y y y best brands

Sportchek Industry x x x x x x x x National Brand, low pricePoor service, low qual i ty

High End

Ski & Bike Industry x x x x x x x High qual i ty Poor Location

High End y y y y y y y

Al Anderson's Industry x x x x Selection Poor location

High End x

Olympian Industry x x Known for Apparel Poor location

High End y

Bike Doctor Industry x High qual i ty Not Divers ifi ed

High End y

Soccer Locker Industry x Focus on Soccer Poor location

High End

Spoke N' Sport Industry x x x x x Diverse products ; qual i ty

High End y y and price

Xtratime Sports Industry x Growing Industry Not Divers ifi ed

High End y

Outtabounds Industry x x x Bikes and Snowboards Poor Location

High End y y y

Backs ide Boards Industry x x x x x High End, High Qual i ty Poor Location

High End y y y y

Undergrind Industry x x x High End, Good Location Smal l Store

High End y y y

Advertising

Year 1 Year 2 Year 3 Year 4 Year 5

Billboards 3,600 3,690 3,782 3,877 3,974 Radio Ads 20,000 20,500 21,013 21,538 22,076 Brochures 2,000 2,205 2,431 2,680 2,955

Newspaper ads 1,500 1,538 1,576 1,615 1,656 Webpage 1,000 360 369 378 388

Posters (Captive Audience) 2,000 2,050 2,101 2,154 2,208 Total Marketing Expense 30,100 30,383 31,313 32,284 33,299

◦ $30,000 Equity◦ $60,000 Long Term Debt◦ $10,000 Cash on hand

Finances

Year 2008 2009 2010 2011 2012

Sales Revenue 400,000 430,500 451,000 471,500 492,000

Cost of Goods Sold 228,571 244,000 253,563 262,804 271,512

Gross Margin 171,429 186,500 197,437 208,696 220,488

Total Expenses 169,701 179,448 184,443 190,189 196,200

Net Income Before

Taxes 1,728 7,052 12,994 18,507 24,289

Income Taxes 322 1,278 2,355 3,353 4,401

Net Income(Loss) 1,406 5,774 10,639 15,153 19,887

Net Cash Flows to

Equity 17,853 4,218 5,675 7,430 54,546

Net Present Value

(NPV) 16,595

IRR 38%

Cost of Debt Markup Labour Wage Sales Inventory-20%

0%

20%

40%

60%

80%

100%

120%

103%

-8%

16%

-5%

88%

62%

-4%

8%

-3%

26%

IRR = 0% NPV = 0

Sensitivity Analysis

Variable Base Case Worst Case Best Case

Sales (Year 1) 400,000 300,000 500,000

Mark up 75% 65% 85%

Wage/hr 12.00 15.00 10.00

Interest Rates 7.4% 10.0% 5.0%

Scenario NPV IRRAvg Annual

Cash Flow

Avg Annual

Net Income

Base Case 16,595 38% 8,808 10,572

Worst Case (297,500) n/a (65,926) (63,582)

Best Case 283,203 249% 72,204 73,502

Scenario Analysis

Contingency Plan Low sales – lay off staff◦ Lowers the breakeven point $330,000 – Manager + 1 staff $265,000 - Manager

Low sales for extended period – liquidate

Conclusion Business is viable

◦IRR= 38% Incorporate

◦Limit liability◦Tax implications

Sales are critical!◦Brand image◦Reputation◦Premium Product

Questions?