shwetang business plan

8/8/2019 Shwetang Business Plan

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A

Business Plan of

Online Service Business Plan

a part of

Financial Management

Prepared By:

Shwetang Panchal 09MBA22

Mayur Patel 09MBA32

Nisarg Shah 09MBA46

Tapan Khamar 09MBA13

Submitted to

Mrs Vaishali shah

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Serial Number Particulars Page Numbers

1 Executive Summary 3

2 Mission

Start Up Summary

4

3

Financial risk &

contingencies

Service Discription6

4 Secondary features

Future Services

8

5

Market Analysis

Summary

Brief Look10

6

Market

Segmentation

Customer buying criteria

12

7 Market Analysis 13

8

Service Business Analysis

Strength

Weaknesses

Barriers to entry

Small business

Corporate

Individuals

14

15

16

9 Sales Forcast 17

10 Marketing Strategy 18

11 Pricing Strategy 19

12

Value Preposition

Strategic Alliances

20

13 Financial Plan & Analysis 23

Online Services Business Plan

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Executive Summary

Exzcel Technologies Private Limited (India) is a start-up company thatis designed to offer Web-based business management Exzcel Technologies. Exzcel Technologies Private Limited (India) has

developed an Internet-based application called Online Office Manager,for which a patent is pending. Online Office Manager allows businessesand individuals to keep in touch even when working in differentlocations. Online Office Manager provides Exzcel Technologies whichreplace the physical office. With Online Office Manager, your officemoves with you at all times, and you have 24-hour access to it. Userscan get Online Office Manager by subscribing to our server on theInternet.

As with any start-up company, Exzcel Technologies Private Limited(India)recognizes its risks. We are a new company and as such, we will

need to meet market acceptance. To that end, the company is workingto determine trends in the industry, the needs of the customer, andhow best to address the needs of the customer.

We expect to compete as a thriving company in the computer ExzcelTechnologies software industry. The software market has long beenone of the computer industry's fastest growing segments. Revenues forthe worldwide software market reached $122 billion two years ago, up15% from the year before that, according to estimates by InternationalData Corporation (IDC), a market research firm in Framingham,Massachusetts. Revenues continued to show robust growth last year.IDC projects that revenues will grow at a compound annual rate ofapproximately 12% for the next several years, surpassing $220 billionthree years from now.

The company is seeking a moderate start-up investment. Thecompany's revenue projections for year one are for a 10-fold growth.Exzcel Technologies Private Limited (India)expects to achieveprofitability within six months of beginning operations.

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1.1 Mission

At Web Exzcel Technologies, our mission is to provide an online officesystem that links workers in different locations to their mothercompany. Exzcel Technologies Private Limited (India). was establishedin 1998 to provide a Web-based business application with features that

give users the ability to remain in touch with operations at all timesfrom anywhere in the world. The company was formed by Mr.Shwetang Panchal and is a India incorporated S-Corporation.

2.1 Start-up Summary

Start-up costs, expenses and funding sources are laid out in the tablesand chart below.

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Start-up Funding

Start-up Expenses to Fund $60,100

Start-up Assets to Fund $57,500

Total Funding Required $117,600

Assets

Non-cash Assets from Start-up $5,000

Cash Requirements from Start-up $52,500

Additional Cash Raised $0

Cash Balance on Starting Date $52,500

Total Assets $57,500

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0Accounts Payable (Outstanding Bills) $1,000

Other Current Liabilities (interest-free) $0

Total Liabilities $1,000

Capital

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Planned Investment

Investor 1 $15,000

Investor 2 $101,600

Other $0

Additional Investment Requirement $0

Total Planned Investment $116,600

Loss at Start-up (Start-up Expenses) ($60,100)

Total Capital $56,500

Total Capital and Liabilities $57,500

Total Funding $117,600

Start-up

Requirements

Start-up Expenses

Legal $500

Stationery etc. $300

Sales Campaign $5,000

Dynamic Communications fees $4,200

Phone Lines $800

Rent $800Hardware $23,500

Software $25,000

Total Start-up Expenses $60,100

Start-up Assets

Cash Required $52,500

Other Current Assets $5,000

Long-term Assets $0

Total Assets $57,500

Total Requirements $117,600

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have quick access to folders in an organization, and the ability tocreate and maintain an address book.

3. Messaging. Users will be able to send text messages to othersonline. This feature will receive and log messages giving a "whileyou were out" type application.

4. Schedules. Scheduling meetings can be done en-mass, i.e.users select a group of users and request a meeting. They canalso specify which users must be present for the meeting tooccur, and which are optional. When confirmations are receivedfor all those required, a message is placed on everyone'scalendar. The user will also be able to set up scheduledreminders that fire off at a certain time. The system can maintaina database of resources. For the individual users, they can storetheir own personal schedule.

5. Document Management. Users can store different documentson the system. Checked-in documents are saved in a manner

which will allow for easy retrieval at a later time. Documentsearching can be done using a keyword, and the document canbe viewed in a number of different formats without having toinstall any software.

Secondary Features

Online bill payments. This service will be name branded fromservices like Checkfree. It will allow users to electronically pay

bills all in one location. Threaded bulletin board. This allows users to leave messages

and multiple individuals to respond, leave their own message,and track the history.

Package tracking. Users can view the status of packages thatare being shipped with FedEx, UPS, etc.

Travel planner. Will allow users to make travel arrangementsand get discounts. Users can create travel profiles and itinerariesonline.

Credit check services. This will allow users to check creditratings of potential business partners or vendors.

Conduct surveys. Users can create a survey and distribute it onthe system. Responses can be given and returned to the systemwhere they will be tabulated and maintained.

Online Office Manager comes in three packages and customers canchoose the one with the Exzcel Technologies that best suit their needs.

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3.2 Future Services

In the future, we will implement Phase 2 of our plan. Our research anddevelopment (R&D) will yield innovation with input from customers and

the marketplace. Given below is a detailed look at the future ExzcelTechnologies that will be a part of the Phase 2 program. The biggestand most complex application of Phase 2 will be the telephone/faxservice.

Telephone/Fax services.

A full-blown phone messaging service will be provided, and users canget a number on our phone network from which they can getmessages. The existence of messages will be indicated in the usermailbox and the user can play them over the computer (sound cardand speakers are required). The same number can also be used toreceive faxes. Faxes will be received and stored in one centrallocation, then placed in the user mailbox. The user can then retrievethem in an image, forward them to a real fax machine, or forwardthem to an email address. The user will also be able to fax documentsover the Internet through our system. They can drag and drop adocument on the fax button, give a phone number, and the document

will be routed to our system and automatically faxed to the desirednumber (long distance charges will be added to the bill). The servicewill allow two people to connect over the Internet using microphoneand speakers as a Web-phone (this will provide great savings on longdistance phone calls).

Other Future Exzcel Technologies

Work flow--Enables sales representatives in the field to initiate

customer orders with auto routing approval and notificationmanagement.

Company activities planner--Increase access to informationabout company activities.

Online purchasing system--For order entry, inventory tracking,and office supplies and equipment.

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Time sheet reporting--Enables employees to fill out daily timesheets online and route them into responsible department usingproject name or unique ID.

Knowledge-based application--Provides a discussion database forsharing knowledge and information that is valuable within the

company. Vacation request--Individuals can request vacation time and

managers can approve or reject the request online. While you were out application--Will enable messages to be

taken and sent to user's mailbox. Account tracking application--For sales persons, this feature will

provide a process for tracking customer information andcompetitive opportunities.

Job postings--Enables people to browse various categories andsub-categories of ads and submit resumes.

Market Analysis Summary

We expect to compete as a thriving company in the computer Exzcel

Technologies software industry. Exzcel Technologies software arecomputer programs designed to accomplish user tasks, such as wordprocessing, graphic design, desktop publishing, inventory control, andmore. The software industry consists of three general marketsegments: application solutions, application tools, and systemssoftware. The software market has long been one of the computerindustry's fastest growing segments. Revenues for the worldwidesoftware market reached $122 billion in 1997, up about 15% from1996 according to estimates by IDC. Revenues continued to showrobust growth in 1998. IDC projects that revenues will grow at acompound annual rate of approximately 12% for the next several

years, surpassing $220 billion by 2002.

Exzcel Technologies software includes programs that perform specificindustry or business functions. The worldwide market for ExzcelTechnologies software increased to $56 billion in 1997, a 17% rise over1996, and is expected to grow 15% annually through 2001, toapproximately $98 billion.

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software component of the World Wide Web. The securitysegments are needed to ensure the safety of networks andtransactions. Security Dynamics Technology Inc. (1998 salesof $41 million) has taken the lead in providing authentication andencryption products.

Services. Internet service providers (ISPs) offer a way for peopleto enter the Internet. According to IDC, India Onlinehas approximately 43% share of the total subscribers in the ISPsegment, followed by Microsoft's MSN, and AT&T's WorldNet.

Destinations. Destinations are websites that people can go tofor information, entertainment, or commerce.

4.2 Brief Look at the Computer Industry

In the first six months of 1997, a total of 37 million personal computers(PC) were shipped worldwide. That figure rose to 40 million during thesame time period in 1998 and, according to IDC, this figure is expectedto rise by 16% in 1999. PC growth in 1997 and 1998 was boosted bythe introduction of the sub-$1,000 PC. This price point is due in largepart to the sharp drop in prices of the major components that go intothe PC. Another way PC makers have addressed lower price points isthrough cost-reduction efforts made possible by new manufacturingand distribution strategies. Two important initiatives are underway:

Build to order (BTO). Under BTO, PC's are assembled by themanufacturer.

Channel assembly. Under channel assembly, distributors orresellers build and configure the machines.

In both cases, the building or configuring occurs when an order isreceived. By using these methods, indirect PC vendors hope to keepinventories lower and, through the cost savings achieved, offer morecompetitive prices to customers. Compaq, Dell, IBM, and HewlettPackard dominate the computer industry.

4.3 Market Segmentation

A review of all of our markets is given below:

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1. Small businesses. According to trends, the Internet will nolonger be just a marketing vehicle; it will become the backboneof a company's business infrastructure. Companies use theInternet to set up home pages that describe their products andlines of business. This gives them an excellent medium to raise

their profile, advertise products, and recruit employees.2. Individuals. As of year-end 1998, almost 100 million usersaccessed the Internet regularly, up from 69 million at the end of1997, according to IDC. A key factor in the recent growth of theInternet is the popularity of the sub-$1,000 PC. Computers soldat or below $1,000 have appealed to first-time PC users andlower-income families. In the United States, less than one-third ofthe population is connected, leaving plenty of room for growth.When consumers are asked why they purchased a PC, the mostcommon answer is to connect to the Internet. Individualinvestors have been attracted in growing numbers to the ease

and convenience provided by online investing websites such asE*Trade and eSchwab.

3. Corporations. Half of the total number of large U.S. andEuropean organizations have developed corporate Intranets,which use the infrastructure and standards of the Internet forinternal company networks that link employees. Corporationshave discovered that the technologies employed by the Internet,particularly the infrastructure and standards of the World WideWeb, are an inexpensive and powerful alternative to other formsof internal corporate communication.

4. Telecommuters. Telecommuting seems to be on a steady

growth curve, with approximately 11 million telecommuters inthe U.S. today, according to the latest survey from FIND/SVP, aresearch and consulting firm. Telecommuting will continue togrow because there are frequent references to productivity gainsin the range of 15-25% for telecommuters.

Customer Buying Criteria

Customers are expected to use our services based on traditional

factors:

Price. Pricing is one of our competitive advantages. We offerprices that are lower than those of any of our competitors.

Service. Customers not only expect the best service but valuefor money, which is what we give them in our product.

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Market Analysis

Year 2 Year 2 Year 3 Year 4 Year 5

PotentialGrowth

Growth CAGR

Small Business 10 % 500000 550,000 605,000 665,500 732,050 10.00%

Individual 35 % 1000000 1,350,000 1,822,500 2,460,375 3,321,506 35.00%

Corporations 10 % 500000 550,000 605,000 665,500 732,050 10.00%

Telecommuters 25 % 750000 937,500 1,171,875 1,464,844 1,831,055 25.00%

Total 24.55 % 2750000 3,387,500 4,204,375 5,256,219 6,616,661 24.55%

4.4 The Y2K Issue

One of the more pressing issues facing the computer industry is theYear 2000 problem, also referred to as "Y2K" and "the millennium

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bug." Unless addressed properly, this problem will cause manycomputers worldwide to stop functioning properly. Y2K arises from thefact that until the mid-1980s or so, programmers used two-digitnumbers to represent years. For example, "97" was used to representthe year 1997. While this design saved computer storage space, which

was expensive and in limited supply, it also produced the situation inwhich all dates input in these computers refer to the twentieth century.The Gartner Group, a Connecticut-based information technology (IT)consulting firm, estimates the worldwide repair bills in the $300 billion- $600 billion range, but this includes only the cost of fixing programswritten in Cobol. Software Productivity Research, a Massachusettsbased software-consulting firm, has made a broader estimate thatincludes repairs, damages, and litigation. This group estimates that thetotal cost from 1994 to 2005 will top $3.6 trillion.

Our products will not be affected by the Y2K problem.

4.5 Service Business Analysis

CompetitionThere is one major company with whom we will be competing and thatis Hot Office Technology. Its product, Hot Office, is a low-end businessplanner that focuses on the basic business structure. Other companiescompete in the industry, but they only specialize on one of the many

features we offer.

HotOffice TechnologyHotOffice Technologies, Inc. is a Web-based Intranet Service providerfor small business, especially those with collaboration needs, multipleoffices, mobile workers, telecommuters, and virtual offices. HotOfficeoffers small businesses an affordable, secure Intranet solution at afraction of the cost of purchasing and maintaining a traditional Intranetor Extranet. This subscription service provides a large, powerful suiteof collaboration and communication tools in one simple, easy-to-useinterface accessible anytime, anywhere. From any PC with Internet

access, HotOffice provides instant connection via the Web to email,calendar, documents, bulletin boards, online conference rooms,business centers, and more.

StrengthsLarge penetration to the main channels. At the time of this writing,they have the first entry to market. We plan on taking a significant part

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of that market share within a few months by providing additionalfeatures that will be more attractive for users.

Weaknesses

Low-end products. Their products are only aimed at businessusers. We offer a product for personal users as well, and ourproduct with its advanced features will surpass that of HotOffice.

No programming facilities. Their products have no capabilities forprogramming.

Other companies.

These companies form a large group of firms that offer one formof the many Exzcel Technologies that we offer. They eitherspecialize in selling hard drive space or email functions.

Barriers to Entry

Exzcel Services pvt ltd will benefit from several significant barriers toentry which include:

Development Team. We have a development team that is up to

date with the latest industry Exzcel Technologies. With this team,we feel confident that we will be a dominant player in theindustry and continue to produce and enhance our product withtime.

Diversification. Anyone coming into the market will find it difficultto duplicate what we have because of our diversification. Weoffer a product with multi-dimensional Exzcel Technologies.

Market penetration. Once we are in the market and established,it will be difficult for someone to break into a market wheresomeone is already operating successfully.

We intend to become the leader and most creative provider of Web-based business management Exzcel Technologies on the market. Weaim to create a user-friendly application that will be an integralcomponent in any personal or business environment. We will do this by

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developing an innovative and progressive development andmanagement team. We will also accomplish our goal by usingcustomer input to further develop our products and services.

We will leverage this new product in the computer software industry to

dominate the growing Web-based Exzcel Technologies market,especially the small businesses. We have a premium, value-addedproduct with three different packages from which the user can choosethe one that best suits their needs. These strategic product lines willenable domination of the target market. The products all share thecore Exzcel Technologies but differ in range of services.

As a company, we feel that there are a number of opportunities we cancapitalize on and they include:

Small Businesses

Better communication. Businesses will be able to set upmeetings without incurring travel costs. Our products breakdown the walls that are created by the distance separating teamor group members.

Alternative for office network. With our product and its Exzcel Technologies, there will be no need for businesses to set upoffice networks or purchase additional hardware.

Cost effective. It is cost effective in that only a monthly fee isrequired, as opposed to huge amounts of money for set up costsand servers.

Corporate

Setting up on main branch office. We will help companies to setup the system and ease the transition with no delay in orderingequipment and daily operations.

Control sales team activities. Our product will give those in thesales department the ability to get quick approvals and closedeals faster.

No laptop needed. All user information will be placed online andkept in various departments. This will eliminate the need to carry

laptops when traveling, thus reducing the chance of laptop theft,which is high in airports.

Individuals

Eliminate need for multiple software packages. All ExzcelTechnologies needed are in one place and more can be added

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per user request, thus eliminating the need of purchasingindividual software packages.

Portable personal information manager (PIM). Even as you travel,your own PIM on the server will be at work taking messages andputting them in the desired folders. The PIM becomes a personal

secretary keeping you informed of special events. No laptop needed. All user information will be placed online and

kept in various departments. This will eliminate the need to carrylaptops when traveling, thus reducing the chance of laptop theft,which is high in airports.

We will outsource all sales operations to a company to be named.

5.1 Sales Forecast

We are confident that our Online Office Manager will be eagerlyembraced by mobile computer using businesses and e-commercebusinesses. We are forecasting a 10-fold revenue increase over theyears covered in this plan, as shown in the table and charts below.

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Sales Forecast

Year 1 Year 2 Year 3

Sales

Online Office Manager $200,000 $1,500,000 $2,200,000Other $0 $0 $0

Total Sales $200,000 $1,500,000 $2,200,000

Direct Cost of Sales Year 1 Year 2 Year 3

Online Office Manager $100,000 $300,000 $400,000

Other $0 $0 $0

Subtottal Direct Cost ofSales

$300,000 $400,000

5.2 Marketing Strategy

We will outsource all marketing operations to Dynamic CommunicationSolutions because we feel that they have stability and marketingchannels that will be effective for our product.

The message associated with our product is value-added ExzcelTechnologies. Dynamic Communication Solutions has identified a brief

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5.4 Value Proposition

Exzcel Services pvt ltdoffers the following value propositions forcustomers.

Collaboration. Users can work on the same document at thesame time from different locations. Both will be able to edit thedocument and work on the cosmetics simultaneously. Thiscollaboration ability eliminates the need to send the samedocument back and forth, saving time for both users.

Communication. Exzcel Technologies allow all users to keep intouch in real time and make any necessary business decisionsthere and then without holding down the other party involved.Communication can be through several different Exzcel Technologies that are offered. This allows for rapid decision-making, helping managers and sales teams make and close

deals with greater ease. This will also help speed up the approvalprocess when placing orders.

Document management. This product allows documents to bestored, viewed, and searched at any given time. Users can createand arrange folders in a manner that will make it easy to retrievedocuments. Basically, they have the ability to create their ownfiling system online.

Information sharing. With features such as online chat,information can be shared quickly and easily. In the event thatsensitive information is being shared, users do not have to worrybecause security measures have been taken to safeguard all

information from outsiders. Personal virtual office. With each personal office space, users

will have the ability to keep track of all daily tasks. Users haveaccess to their office at anytime, from anywhere.

5.5 Strategic Alliances

The company plans to form strategic alliances with DynamicCommunication Solutions, For Sale By Internet, and a sales company tobe announced. The company may develop research alliances to furtherrefine the product and adapt it to new markets in different industries.

Below is an explanation of key relationships:

Dynamic Communication Solutions. This is a company withover ten years of experience in marketing and marketingmanagement. We will outsource all marketing operations toDynamic Communication Solutions because we feel that theyhave stability and marketing channels that will be effective for

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our product. This relationship will eliminate the need to developour own marketing team.

For Sale By Internet. This company develops and managescompany websites on a contract basis. The company is located inKirkland, Washington and boasts a Webmaster with over seven

years experience in the field. We will benefit from thisrelationship by having an experienced company handle alldesign and website management. Also, this will allow us to focuson developing Exzcel Technologies for other industries.

Sales. We will outsource all sales operations to a company to benamed later.

Management Summary

Our management philosophy is based on responsibility and mutualrespect. At Web Exzcel Technologies, we have an environment thatencourages creativity and achievement. Exzcel Services pvtltdmanagement is highly experienced and qualified. Its keymanagement team includes Mr. Shwetang Panchal and Mr. Mayur Patel

6.1 Management Team

Mr. Swetang Panchal - President and CEO

Mr. Mayur Patel - COO/CFO

Mr. Nisarg shah - Managing Director

Mr.Tapan Khamar CMO

Personnel Plan


Mr. SwetangPanchal

$34,788 $43,478 $52,174

Mr. Mayur Patel $34,788 $43,478 $52,174

Service Manager $26,076 $32,609 $34,788

Other $0 $46,087 $95,647

Total People 3 5 7

Total Payroll $165,652 $165,652 $234,783

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6.2 Outside Support

For Sale By Internet - Website Developer

For Sale By Internet is led by Webmaster, Mr. Tapan Khamar. Havingattended the University of Washington between 1983 and 1987, TapanKhamargraduated with a Bachelor of Science degree in BusinessAdministration & Philosophy in the honors program. Altogether, TapanKhamar has eight years of experience in the planning, creation, andmanagement of website development. He started his computer careeras a Microsoft Contractor at ComputerLand in 1983. As a PC RepairAssistant Manager, he designed and instigated innovative techniques

of operation that would further satisfy the customer. As a SoftwareInstall Manager for Entex, Tapan Khamar managed the New SoftwareInstallation Group that consisted of 12 install technicians.Responsibilities included writing and investigating new databases, andoperating parameters to speed up install and delivery time of new PCs.Between July, 1994 and December, 1995, Tapan Khamar was a topsalesman for Microrim Software, selling relational databases andaccounting software. He then went on to work for CARA testingMicrosoft's IE30 Web browser for JavaScript and VBscript bugs. FromOctober, 1996 to this present day, Tapan Khamar has be a Webmasterfor For Sale By Internet. Through this company, Tapan Khamar

develops and manages websites on a contract basis.

Dynamic Communication Solutions - Marketing

This is a company with over ten years of experience in marketing andmarketing management. We will outsource all marketing operations toDynamic Communication Solutions because we feel that they havestability and marketing channels that will be effective for our product.

To be announced - Sales

We will outsource all sales operations to a company to be named.

To be announced - Customer service

We will outsource this department to an answering service

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Financial Plan

Funding Requirements and Uses

Based on our projections, we feel an investment in our company is asound investment. In order to proceed, we are requesting aninvestment of $101,600 by June, 1999. The funds will be used topurchase equipment and to cover initial operating expenses. The$101,600 will be used to implement Phase 1 of our operations. Oncethe company is in full operation, we will require an additional capitalinvestment to fund Phase 2 of our operations.

Phase 2

We will be in discussion with developers on the best direction to takeand what cost savings we can achieve. The specific details for Phase 2are still to be determined, but three major areas (server, small PBX,and business development funds) will require approximately $30,000by January, 2000.

Exit/Payback Strategy

We can provide an exit for this investment within three years by adividend of excess profits. The increase in profits generated by salesrevenue will provide funds to repay the investment.

Conclusion

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Based on our projections, we feel an investment to Exzcel Services pvtltdis a sound business investment. In order to proceed, we arerequesting an investment of $101,600 as soon as possible.

7.1 Break-even Analysis

With average first year fixed monthly costs and an average margin asshown below, Exzcel Services pvt ltdcalculates it will break even at thesales volume presented in the table and chart. The companymanagement plans to reach such level by the end of 2000.

Break-even Analysis

Monthly Revenue Break-even $25,333Assumptions:

Average Percent Variable Cost 50%

Estimated Monthly Fixed Cost $12,667

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7.2 Important Assumptions

The following chart contains assumptions important to the success ofthe company.

General Assumptions


Plan Month 1 2 3

Current InterestRate

10.00% 10.00% 10.00%

10.00% 10.00% 10.00%

25.42% 25.00% 25.42%

0 0 0

7.3 Projected Profit and Loss

The projected income statement for Exzcel Services pvt ltdis shownbelow. The company is basing its revenue projections on anticipatedsales of products

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Pro Forma Profit and Loss


Sales $200,000 $1,500,000 $2,200,000

Direct Cost of Sales $100,000 $300,000 $400,000

Other $5,000 $10,000 $15,000

Total Cost of Sales $105,000 $310,000 $415,000

Gross Margin $95,000 $1,190,000 $1,785,000

Gross Margin % 47.50% 79.33% 81.14%

Expenses

Payroll $95,652 $165,652 $234,783Sales and Marketingand Other Expenses

$23,400 $47,000 $80,000

Depreciation $0 $0 $0

Research andDevelopment

$15,000 $25,000 $40,000

Utilities $600 $800 $1,000

Insurance $600 $800 $1,000

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Rent $2,400 $3,000 $5,000

Payroll Taxes $14,348 $24,848 $35,217

Other $0 $0 $0

Total OperatingExpenses

$152,000 $267,100 $397,000

Profit BeforeInterest and Taxes

($57,000) $922,900 $1,388,000

EBITDA ($57,000) $922,900 $1,388,000

Interest Expense $0 $0 $0

Taxes Incurred $0 $230,725 $352,783

Net Profit ($57,000) $692,175 $1,035,216

Net Profit/Sales -28.50% 46.15% 47.06%

7.4 Projected Cash Flow

The cash flow statement can be found in the chart and table below.

Pro Forma Cash Flow


Cash Received

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Cash from

Operations

Cash Sales $50,000 $375,000 $550,000

Cash fromReceivables

$120,500 $933,250 $1,546,750

Subtotal Cash fromOperations

$170,500 $1,308,250 $2,096,750

Additional Cash

Received

$0 $0 $0

Sales Tax, VAT,HST/GST Received

$0 $0 $0

New CurrentBorrowing

$0 $0 $0

New OtherLiabilities (interest-free)

$0 $0 $0

New Long-termLiabilities

$0 $0 $0

Sales of OtherCurrent Assets

$0 $0 $0

Sales of Long-termAssets

$0 $0 $0

New InvestmentReceived

$36,000 $0 $0

Subtotal CashReceived

$206,500 $1,308,250 $2,096,750

Expenditures Year 1 Year 2 Year 3

Expenditures fromOperations

Cash Spending $95,652 $165,652 $234,783

Bill Payments $147,562 $604,177 $906,344

Subtotal Spent onOperations

$243,214 $769,829 $1,141,127

Additional Cash

Spent

Sales Tax, VAT,HST/GST Paid Out

$0 $0 $0

Principal

Repayment ofCurrent Borrowing

$0 $0 $0

Other LiabilitiesPrincipalRepayment

$0 $0 $0

Long-termLiabilities PrincipalRepayment

$0 $0 $0

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Purchase OtherCurrent Assets

$0 $0 $0

Purchase Long-termAssets

$10,000 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $253,214 $769,829 $1,141,127Net Cash Flow ($46,714) $538,421 $955,623

Cash Balance $5,786 $544,207 $1,499,830

7.6 Business Ratios

The following table outlines some of the more important ratios from the ComputerProgramming Services industry. The final column, Industry Profile, details specific ratios

based on the industry as it is classified by the Standard Industry Classification (SIC)code, 7371.

Ratio Analysis

Year 1 Year 2 Year 3 Profile

Sales Growth 0.00% 650% 46.6% 10.4%

Percent of Total AssetsAccounts Receivable 58.6% 28.35% 17.6% 24.1%

Other Current Assets 9.94% 0.64% 0.27% 42.9%

Total Current Assets 80.1% 98.7% 99.4% 71.1%

Long-term Assets 19.8% 1.28% 0.54% 28.9%

Total Assets 100.% 100.% 100.% 100.%

Current Liabilities 29.4% 6.76% 4.16% 47.8%

Long-term Liabilities 0.00% 0.00% 0.00% 19.1%

Total Liabilities 29.4% 6.76% 4.1% 66.9%

Net Worth 70.6% 93.2% 95.8% 33.1%

Percent of Sales

Sales 100.00% 100.% 100.% 100.%Gross Margin 47.50% 79.33% 81.14% 0.00%

Selling, General &

Administrative Expenses 76.00% 33.1% 33.8% 82.1%

Advertising Expenses 9.00% 2.67% 3.18%1.20%

Profit Before Interest and Taxes -28.50% 61.53% 63.09% 2.00%

31


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Main Ratios Current 2.72 14.60 23.93 1.30

Quick 2.72 14.60 23.93 1.03

Total Debt to Total Assets 29.40% 6.76% 4.16% 66.9%

Pre-tax Return on Net Worth -160.56% 126.83% 78.73% 3.10%

Pre-tax Return on Assets -113.35% 118.25% 75.46% 9.30%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -28.50% 46.15% 47.06% n.a

Return on Equity -160.56% 95.12% 58.72% n.a

Activity Ratios

Accounts Receivable Turnover 5.08 5.08 5.08 n.a

Collection Days 57 41 60 n.a

Accounts Payable Turnover 10.91 12.17 12.17 n.a

Payment Days 27 19 25 n.a

Total Asset Turnover 3.98 1.92 1.20 n.a

Debt RatiosDebt to Net Worth 0.42 0.07 0.04 n.a

Current Liab. to Liab. 1.00 1.00 1.00n.a

Liquidity Ratios

Net Working Capital $25,500 $717,675 $1,752,892 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.25 0.52 0.84 n.a

Current Debt/Total Assets 29% 7% 4% n.a

Acid Test 0.73 10.41 19.69 n.a

Sales/Net Worth 5.63 2.06 1.25 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Pro Forma Balance Sheet


AssetsCurrent Assets

Cash $5,786 $544,207 $1,499,830Accounts Receivable $29,500 $221,250 $324,500Other Current Assets $5,000 $5,000 $5,000Total Current Assets $40,286 $770,457 $1,829,330Long-term AssetsLong-term Assets $10,000 $10,000 $10,000AccumulatedDepreciation

$0 $0 $0

32


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Total Long-termAssets

$10,000 $10,000 $10,000

Total Assets $50,286 $780,457 $1,839,330Liabilities and Capital Year 1 Year 2 Year 3Current Liabilities

Accounts Payable $14,786 $52,781 $76,438Current Borrowing $0 $0 $0Other CurrentLiabilities

$0 $0 $0

Subtotal CurrentLiabilities

$14,786 $52,781 $76,438

Long-term Liabilities $0 $0 $0Total Liabilities $14,786 $52,781 $76,438Paid-in Capital $152,600 $152,600 $152,600Retained Earnings ($60,100) ($117,100) $575,075Earnings ($57,000) $692,175 $1,035,216

Total Capital $35,500 $727,675 $1,762,892Total Liabilities andCapital

$50,286 $780,457 $1,839,330

Net Worth $35,500 $727,675 $1,762,892

Appendix

Sales Forecast

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month12

Sales

OnlineOfficeManager

0%

$5,000

$10,000

$10,000

$15,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

Other 0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

33


34/43

%

TotalSales

$5,000

$10,000

$10,000

$15,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

$20,000

DirectCost ofSales

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month12

OnlineOfficeManager

$2,500

$5,000

$5,000

$7,500

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalDirectCost ofSales

$2,500

$5,000

$5,000

$7,500

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

Personnel Plan

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Shwetang

PanchalAndrew

s

0%

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

34


35/43

DwightAustion

0%

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

$2,899

ServiceManage

r

0

%

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,1

73

$2,17

3

Other0%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalPeople

3 3 3 3 3 3 3 3 3 3 3 3

TotalPayroll

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

$7,971

General Assumptions

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

PlanMonth

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-termIntere

stRate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

35


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TaxRate

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Profit and Loss

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Sales $5,000$10,0

00$10,0

00$15,0

00$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00

DirectCost ofSales

$2,500$5,00

0$5,00

0$7,50

0$10,0

00$10,0

00$10,0

00$10,0

00$10,0

00$10,0

00$10,0

00$10,0

00

Other $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $600

Total Costof Sales

$2,900$5,40

0$5,40

0$7,90

0$10,4

00$10,4

00$10,4

00$10,4

00$10,4

00$10,4

00$10,4

00$10,6

00

GrossMargin

$2,100$4,60

0$4,60

0$7,10

0$9,60

0$9,60

0$9,60

0$9,60

0$9,60

0$9,60

0$9,60

0$9,40

0

GrossMargin %

42.00%46.00

%46.00

%47.33

%48.00

%48.00

%48.00

%48.00

%48.00

%48.00

%48.00

%47.00

%

Expenses

Payroll $7,971 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97 $7,97

36


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1 1 1 1 1 1 1 1 1 1 1

Sales andMarketingand Other

Expenses

$1,950$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0$1,95

0

Depreciation

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

ResearchandDevelopment

$1,250$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0$1,25

0

Utilities $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50

Insurance $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50

Rent $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

PayrollTaxes

15%

$1,196$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6$1,19

6

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalOperatingExpenses

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

$12,667

ProfitBeforeInterestand Taxes

($10,567)

($8,067)

($8,067)

($5,567)

($3,067)

($3,067)

($3,067)

($3,067)

($3,067)

($3,067)

($3,067)

($3,267)

EBITDA($10,5

67)($8,06

7)($8,06

7)($5,56

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,26

7)

37


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InterestExpense

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TaxesIncurred

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit($10,5

67)($8,06

7)($8,06

7)($5,56

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,06

7)($3,26

7)

NetProfit/Sales

-211.33

%

-80.67

%

-80.67

%

-37.11

%

-15.33

%

-15.33

%

-15.33

%

-15.33

%

-15.33

%

-15.33

%

-15.33

%

-16.33

%

Pro Forma Cash Flow

Month1

Month2

Month3

Month4

Month5

Month 6

Month7

Month 8

Month9

Month10

Month11

Month12

CashReceived

Cash fromOperations

CashSales

$1,250

$2,500 $2,500$3,75

0$5,00

0$5,00

0$5,00

0$5,00

0$5,00

0$5,00

0$5,00

0$5,00

0

Cash from

Receivables $0 $125 $3,875

$7,50

0

$7,62

5

$11,3

75

$15,0

00

$15,0

00

$15,0

00

$15,0

00

$15,0

00

$15,0

00

SubtotalCash fromOperations

$1,250

$2,625 $6,375$11,2

50$12,6

25$16,3

75$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00$20,0

00

38


39/43

AdditionalCash

Received

Sales Tax,VAT,

HST/GSTReceived

0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewCurrent

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 ofOther

CurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales ofLong-term

Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

NewInvestment Received

$0 $0 $0 $0 $0$6,00

0$0

$30,000

$0 $0 $0 $0

SubtotalCash

Received

$1,250

$2,625 $6,375$11,2

50$12,6

25$22,3

75$20,0

00$50,0

00$20,0

00$20,0

00$20,0

00$20,0

00

Expenditures

Month1

Month2

Month3

Month4

Month5

Month 6

Month7

Month 8

Month9

Month10

Month11

Month12

39


40/43

Expenditures from

Operation

s

CashSpending

$7,971

$7,971 $7,971$7,97

1$7,97

1$7,97

1$7,97

1$7,97

1$7,97

1$7,97

1$7,97

1$7,97

1

BillPayments

$1,253

$7,679$10,09

6$10,1

79$12,6

79$15,0

96$15,0

96$15,0

96$15,0

96$15,0

96$15,0

96$15,1

02

SubtotalSpent onOperation

s

$9,224

$15,650

$18,067

$18,150

$20,650

$23,067

$23,067

$23,067

$23,067

$23,067

$23,067

$23,073

AdditionalCashSpent

Sales Tax,VAT,

HST/GST

Paid Out

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PrincipalRepaymen

t ofCurrent

Borrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

OtherLiabilitiesPrincipal

Repaymen

t

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-termLiabilitiesPrincipal

Repayment

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

40


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PurchaseOther

CurrentAssets

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

PurchaseLong-term

Assets$0 $0 $0 $0 $0 $0 $0

$10,000

$0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCashSpent

$9,224

$15,650

$18,067

$18,150

$20,650

$23,067

$23,067

$33,067

$23,067

$23,067

$23,067

$23,073

Net CashFlow

($7,974)

($13,025)

($11,692)

($6,900)

($8,025)

($692)

($3,067)

$16,933

($3,067)

($3,067)

($3,067)

($3,073)

CashBalance

$44,526

$31,501

$19,809

$12,909

$4,884

$4,193

$1,126

$18,059

$14,993

$11,926

$8,859

$5,786

Pro Forma Balance Sheet

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

Assets

StartingBalances

Current

Assets

Cash$52,50

0$44,52

6$31,50

1$19,80

9$12,90

9$4,884 $4,193 $1,126

$18,059

$14,993

$11,926

$8,859 $5,786

41


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AccountsReceivable

$0 $3,750$11,12

5$14,75

0$18,50

0$25,87

5$29,50

0$29,50

0$29,50

0$29,50

0$29,50

0$29,50

0$29,50

0

OtherCurrent

Assets

$5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000

TotalCurrentAssets

$57,500

$53,276

$47,626

$39,559

$36,409

$35,759

$38,693

$35,626

$52,559

$49,493

$46,426

$43,359

$40,286

Long-termAssets

Long-termAssets

$0 $0 $0 $0 $0 $0 $0 $0$10,00

0$10,00

0$10,00

0$10,00

0$10,00

0

AccumulatedDepreciation

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalLong-termAssets

$0 $0 $0 $0 $0 $0 $0 $0$10,00

0$10,00

0$10,00

0$10,00

0$10,00

0

TotalAssets

$57,500

$53,276

$47,626

$39,559

$36,409

$35,759

$38,693

$35,626

$62,559

$59,493

$56,426

$53,359

$50,286

LiabilitiesandCapital

Month1

Month2

Month3

Month4

Month5

Month6

Month7

Month8

Month9

Month10

Month11

Month12

CurrentLiabilities

AccountsPayable

$1,000 $7,342 $9,759 $9,759$12,17

6$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,78

6

42


43/43

CurrentBorrowing

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

OtherCurrentLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

SubtotalCurrentLiabilities

$1,000 $7,342 $9,759 $9,759$12,17

6$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,59

2$14,78

6

Long-termLiabilities

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

TotalLiabilities $1,000 $7,342 $9,759 $9,759 $12,176 $14,592 $14,592 $14,592 $14,592 $14,592 $14,592 $14,592 $14,786

Paid-inCapital

$116,600

$116,600

$116,600

$116,600

$116,600

$116,600

$122,600

$122,600

$152,600

$152,600

$152,600

$152,600

$152,600

RetainedEarnings

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

($60,100)

Earnings $0($10,5

67)($18,6

33)($26,7

00)($32,2

67)($35,3

33)($38,4

00)($41,4

67)($44,5

33)($47,6

00)($50,6

67)($53,7

33)($57,00

0)

TotalCapital

$56,500

$45,933

$37,867

$29,800

$24,233

$21,167

$24,100

$21,033

$47,967

$44,900

$41,833

$38,767

$35,500

TotalLiabilitiesandCapital

$57,500

$53,276

$47,626

$39,559

$36,409

$35,759

$38,693

$35,626

$62,559

$59,493

$56,426

$53,359

$50,286

Net Worth$56,50

0$45,93

3$37,86

7$29,80

0$24,23

3$21,16

7$24,10

0$21,03

3$47,96

7$44,90

0$41,83

3$38,76

7$35,50

0