Acknowledgement

Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped me in completing this business plan to the best of my ability. Being a part of this project has certainly been a unique and a very productive experience on my part. I am really thankful to xxxxxxxxxxxxxx for guiding and helping me to solve all kinds of quarries regarding the project work. His systematic way of working and incomparable guidance has inspired the pace of the project to a great extentI would like to thanks to all the colleague who have directly or indirectly helped me with their moral support for the completion of my business plan.

Decleration

This is to certify that this business plan of Tops Bit Web Solutions embodies the original work done by xxxxxx during this business plan submission as a partial fulfillment of the requirement of Master of Business Administration IV Semester, Department of Business Administration, University of Lucknow, Lucknow.

xxxxxxx MBA IV Semester Finance

Table of Contents

Serial No.TittlesPage No.

011.01.21.3Executive Summery Objectives Keys of Success Mission04040505

022.12.22.3Company Summery Company Ownership Start-up Summery Company Location and Facilities06060608

033.13.23.33.43.5Services Service Description Sales Literature Fulfillment Technology Future Services090910111111

044.14.2Market Analysis Summery Target Market Segment Strategy Service Business Analysis131314

055.15.25.35.4Strategy and Implementation Summery Competitive Edge Market Strategy Sales Strategy 1616161820

066.16.26.3Management Summery Organizational Structure Management Team Gaps Personnel Plan21212122

077.17.27.37.47.57.6Financial Plan Important Assumptions Key Financial Indicators Break-even Analysis Projected Profit and Loss Projected Cash Flow Projected Balance Sheet23232324252628

Executive Summary

Tops Bit Web Solutions is a small start-up firm located in Hazaratganj, the district of Lucknow, Uttar Pradesh. We offer Internet and Web-related services to small businesses in the North-East reason of the country. The services we offer include website development and design, hosting, maintenance, marketing, and analysis.Given our experience and expertise in both commercial Web development and business-to-business sales, we believe we can offer a unique and superior service to small business owners, in comparison to what is currently available.The demand and growth rate for Web development and marketing services in the small business market is at an all time high and shows no sign of slowing anytime soon. Even more astonishing is the fact that very few Web development companies have taken advantage of the opportunity, as there are no dominating participants in this huge market.We believe the reason for this virtually untapped marketis due to expensive project costs, the highest profit margins in Web development today are in servicing large- and medium-sized corporations.We have developed a system that dramatically reduces steep project costs and henceforth will allow us to offer the same high-end Web development services as larger companies receive at a much lower cost to the client.This business plan will highlight many aspects of our system and our business. It will detail market growth and demand, and it will outline our projected cash flow and profit margins over the next three years. All numbers regarding our projected company growth are based on previous information gathered by activity in the company over the last few months of operation.

1.1 Objectives1. Revenues of Rs.900,000 by month 10.2. Net Profit of 20%inyear oneand 35% in year two.3. 60% Gross margin bymonth 10.

1.2 Keys to Success1. Offering high-end Web services to small businesses in a way that they can understand and afford.2. Build a strong residual income through secondary subscription-based servicestailored for small business (website hosting, marketing, maintenance, consulting).3. Establishing strategic partnerships with area Internet service providers and computer consulting companies to refer small business website projects to us in exchange for high payoffs.

1.3 MissionOur mission is to provide affordable, accessible, and streamlined Internet and Web services to small businesses. We have developed a system for offering many different types of Web services(site development, hosting, marketing, and maintenance) that are exclusively tailored to fit the needs and resources of small companies.

Company Summary

Tops Bit Web Solutions is a start-up company that will provide high-end, affordable Internet related services to small businesses that are looking to expand their existing marketing efforts to reach the Web. We have a system established that will allow us to offer website development, hosting, marketing, and maintenance of the same caliber that large companies take advantage of, at a very affordable rate.The logo for Tops Bit Web Solutions have been designed by us like:

2.1 Company OwnershipTops Bit Web Solutions has been stablished in Hazaratganj, Lucknow as of April 2016. The corporation is privately owned by Girijesh Kumar, chief operations officer and Dharmendra Kumar, chief technology officer.

2.2 Start-up SummaryOur start-up plan is a well thought out base to propel us forward with the proper equipment, marketing tools, and personnel to startour venture. An initial cash investment by the owners in the amount of rupees 200,000 to purchase office furniture, computer equipment, and software has been made. Both owners have also invested a combined time of rupees 100,000 working hours toward the start-up of Tops Bit Web Solutions.The cash requirement of rupees 350,000 are funds that we need to provide the capital to run our business for the first few months. This capital willfund two employees payroll and equipment/supplies to get them started. It will cover business expenses for a few months until our cash flow takes over.The four-year rupees 500,000 loan hasbeen secured from the ICICI bank interest rate @ 15 % to supply the needed capital explained above.

Start-up (in Rupees)

Requirements

Start-up Expenses

Phone Line Install 2,000

Computer Monitor60,000

Office Rent (lease)40,000

Office Equipment & Rent60,000

Dedicated Server Setup Fee4,900

Company Registration Fees11,000

Total Start-up Expenses177,900

Start-up Assets

Cash Required 350,000

Other Current Assets200,000

Long-term Assets0

Total Assets550,000

Total Requirements727,900

Start-up Funding

Start-up Expenses to Fund177,900

Start-up Assets to Fund550,000

Total Funding Required727,900

Assets

Cash Requirements from Start-up350,000

Non- Cash Asset on Start 200,000

Cash Balance on Starting Date350,000

Total Assets550,000

2.3 Company Locations and FacilitiesWe have an established commercial office space in Hazaratganj, Lucknow under a one year lease on the rent of Rs. 10,000 per month that will expire in may of 2017 with an option to renew every 30 days thereafter. There is approximately 1,100 sq. ft. capable of housing workstations for up to 5 workers. This company has been registered by the website as mycompanyregistration.com at the rate of Rs.11,000.

Services

Tops Bit Web Solutions. is a full-service Internet solutions provider for small businesses. We focus mainly on the Web, offering the following as our key 'Bread & Butter' website services: Design and development. Marketing and analysis. Hosting and maintenance.We currently offer the following secondary services: E-commerce development. Website renovations and upgrades. Application development (i.e. chat rooms, message boards, online polling, live-feed audio/video, etc.). Website maintenance training. Internet/website education seminars. Database construction.We have plans to offer the following services within the next year: Internet access service for small businesses. Local Area Network (LAN)installation. Intranet setup and installation. Result-based website marketing.

3.1 Service Description

Website Design and Development:The service that we offer to small businesses is modeled after the service that larger Web development firms offer Fortune 1000 companies in the sense that it is completely customized and unique to each individual client.

Website Marketing and Analysis:After we build the website for our client, or a new client introduces us to their pre-existing site, we offer this service. As experts of the Web, we can analyze and test a website based on an established set of standards that account for the website's aesthetic value, scalability, functionality, ease-of-use, and main customer base. After an analysis has been made, we then explore and present to the client a detailed list of the most efficient Internet marketing tools and methods available to them within the constraints of their budget. This type of service is pertinent to our company given the fact that a very large percentage of our clients are on a tight budget and can only afford to take advantage of marketing efforts that are targeted directly at their desired demographic.

Website Hosting and Maintenance:This service is offered for two reasons. The first reason is because they are both ongoing, continual services that we can use to establish and maintain a strong residual income. The second reason for offering these services is to allow for packaging together with other services either Tops Bit Web Solutions. offers, or services an outside company can provide, hence allowing us to expand our range of small business Internet services.

3.2 Sales LiteratureTops Bit Web Solutions. currently distributes a sales folder with all the pertinent information about our company and services. This folder includes our strong points, history, portfolio examples, and pricing packages info. It also contains facts based on the growth and popularity of the Internet for small businesses.Tops Bit Web Solutions. currently operates and maintains a fully-functioning website that provides information about the company, plus a variety of helpful resources for small business owners which we will be constantly updating.In the next six months, we plan to produce and distribute bulk mail and fax flyers promoting our Web development and hosting services to small businesses .We have plans tooffer a more compact version of our main sales folder in a brochure format. This brochure will be available both as a mailer to interested parties and as a sales solicitation in area businesses.

3.3 FulfillmentFor the website design, development, marketing, analysis, and maintenance we will employ industry professionals to handle our clients' needs. Working for the company presently is Dharmendra Kumar, a professional website development engineer and strategist with two years of experience in the commercial Web development industry. To keep employee costs low, we have designed a "team" development system that will consist of one full-time sales person and two full-time Web developers. Of the Web developers, one position will be filled by a highly-qualified senior Web professional and one lesser-qualified, lower paid developers. All two will work full-time on separate projects provided to them by the sales person. However, the senior developer will have the duty of maintaining the same high quality level of work in the junior developers' projects, that our clients have learned to expect from us now.For the website hosting services we offer, Tops Bit Web Solutions. has formed several alliances with industry leaders to provide top-rate, reliable hosting solutions. Forming the alliances hasallowed us much flexibility in important hosting features, customizability, and it has drovecosts down dramatically. All these benefits are crucial to preserving the integrity of our company as being a 'fully-rounded Internet solutions provider' for small businesses.

3.4 TechnologyIt is a given that technology and keeping up with new innovations strongly influence our business. We operate a Windows basedLocal Area Network (LAN) in the office that is equipped with the most current software and hardware tools available to meet our project requirements. Within the next year, we will be investing in additional tools that will extend our capabilities in handling various types of program files. We also have plans to purchase licensing agreements with our major software vendors to allow for automatic upgrades in new software tools.

3.5 Future Services

Local Area Network Installation: These days, a quickly increasing number of small businesses are using computers as a necessary tool in the everyday operations of the company. We would like to be able to expand our current services to meet this new demand. We will handle every aspect of setting up a small business with an internal network of computers from purchasing, installing, and configuring the machines to software integration and educating the employees on proper usage and operating functions.

Intranet Setup Installation:In our plan, after developing an Internet website for outside marketing purposes, we would like to offer the service of implementing the website into the network for use in all the business day-to-day operations. This would include extensive product/service cataloging, vital employee and management information, sharing of accounting and inventory details, etc., all intended for strictly company uses.

Internet Access for Small Business:This feature would act as another residual, packageable service. We would target small businesses exclusivelyallowing us to provide more flexibility and affordability to our clients through discounted high volume rates, value added service packages, and much more aggressive technical support services.

Result-based Marketing:This is a service that no small business can turn down. We have plans to offer aggressive, intensified marketing services with the fees based solely on results. To achieve this, we are in the process of forming multiple partnerships and alliances with industry specific Internet websites and various other software and service-oriented companies that provide specific marketing services and tools based on results achieved. We feel as though offering this rare service will dramatically increase our portfolio of clients.

Market Analysis Summary

Tops Bit Web Solutions will initially focus almost exclusively on small companies looking to develop an Internet presence for the first time. We will market our services to small business owners as a "step-by-step" process, initially starting out with a small, simple website, then graduallyimproving and adding to the site and their entire online marketing efforts.Although we plan to bring on many clients who simply will need an online presence and nothing more, our most important and sought after clients will be those business owners who are ready to implement alarger percentage of their company onto the Internet. This type of client will traditionally need one of the following services: E-commerce/shopping cart. Database driven websites. Dynamic content and website features. Aggressive online website marketing.

4.1 Target Market Segment StrategyTops Bit Web Solutions. will focus the majority of sales and marketing efforts toward attracting small businesses. The reason for this decision is simply the low amount of services available for a market with such a high demand. In addition to the very promising supply and demand ratio, it is also technically easier and less expensive to market to and attract small website projects than larger projects.4.1.1 Market NeedsThe need for small business Internet services has existed for several years.Small businesses and start-up businesses alike are migrating onto the Web at an astonishing rateand making their online presence ahigher priority than in earlier years. We have noticed an enormous hole however in the small business services that are currently available.Without a doubt, there is a need for custom, high-end, dynamic services designed exclusively for small businesses. At this point, the majority of our competitors are offering services tailored around big business, to small business owners, or they are offering the exact opposite and one-dimensional.While every small business has now recognized the need for having a presence on the Internet, many do not know where to start, how much it will cost, or even how it will benefit their company.It has been our experience by talking to small business owners that the decision to take advantage of the Web is not a matter of 'if' but a matter of 'when.'4.1.2 Market TrendsAn important market trend right now is the one toward aggressive online and website marketing. Although many small businesses are still waiting to gain an Internet presence, those who already have are beginning to look for more options along the lines of improving their existing efforts. We believe that in the upcoming years, small companies especially, will start to look for more ways to increase the traffic to their websites.Another important trend is the overall merging of daily business operations with the Internet and World Wide Web. Just as the majority of large companies have already started to use the Web to handle inter office tasks, we believe that many smaller companies will begin to realize the time and money saving advantages to this strategy.

4.2 Service Business AnalysisWeb services and development companies vary greatly in the type of service they offer and the type of client they attract.Tops Bit Web Solutions. will be relatively unique in the fact that we are marketing exclusively to small businesses.This industry consists of many small Web development firms usually less than 10 years old that generally start out offering services to smaller companies but with long-term goals ofcatering to large, corporate Web accounts.

4.2.1 Main Competitors

1.ZIDDI, Vidhan Sabha Marg:Located approximately 4 Kms from our office, they offer Web development and graphic services.

Strengths:To provide good services as per international quality standards, company have employed a team of talented, qualified and experienced professionals. They are in touch with our customers through quality, performance, service and assistance.

Weaknesses: ZIDDI Graphics requires all clients who operate an e-commerce website to pay his company a commission on the revenue generated by the site, this is paid on top of the development fee that ZIDDI charges.

2. Prosolvis Technologies Pvt. Ltd., Hazaratganj:Located approximately 3 Kms from our office, they offer Web development services to small businesses in the Lucknow.

Strengths:It invite to learn more about their services Software Development, Web Development, IT Consultancy, Database Migration, Data Warehousing, Office Automation System, Hardware & Network, Full Flash Website/Flash Animation and CMS Blog Website. IT follow Industry Certified Process to deliver quality services to our offshore clients from the U.S., Europe, Australia, New Zealand, Japan and Dubai.

Weaknesses:Prosolvis Technologies Pv.Ltd. is a young company with very high overhead. Their very high pricesdo not in any way reflect the needs of small business owners. It is also our opinion, after reviewing Prosolvis Technologies' portfolio that they lack a certain level of technical and aesthetic design knowledge that so many small businesses are beginning to demand.

4.2.2 Business ParticipantsThe Web services and development industry consists mainly of three different types of firms.The first type are the very large, high revenue companies who service larger Fortune 1000 corporations and well-funded Internet based start-ups exclusively. In this category are only a few worldwide participants that dominate.The second type of firm offers pre-fabricated, all-in-one, proprietary type Web services to any size company at a very low cost or without any cost. The participants in this category consist of a few dominating companies that mainly all have additional sources of revenue and only offer Web services as a value-added service or additional attraction.The third type of firm is our classification, that is the smaller, usually very young companies that market to small- and medium-sized businesses in their local area. Currently there are a large number of participants in this category, but no dominating forces.

Strategy and Implementation Summary

Tops Bit Web Solutions will initially focus all marketing and sales efforts toward the North-East area in the country. We will market ourselves as an Internet and Web services organization devoted to offering high-end services to small businesses exclusively. Our target customer will be the owners of any small or home-based company whoare looking to implement their business into the Web.

5.1 Competitive EdgeWe have a valuable competitive edge over our local competitors based on the fact that we have streamlined all our services into the small business market. Through setting up several strategic partnerships with various Internet and Web-related companies, we are able to offer our clients an affordable and efficient proprietary Web package that will meet all their related needs.Tops Bit Web Solutions. also has as its lead development manager, Dharmendra Kumar,a main principal in the company. Dharmendra Kumar has two years of commercial Web development experience and has been recognized as a leader and innovator in the graphic design and layout areas of website development.

5.2 Marketing StrategySuccessful marketing of Web services to small business owners depends on how you approach and follow-up every potential client. It is very important to deliver our marketing pitch in a clear, no non-sense method. Details of the Internet and Web are still relatively unknown by many small business owners, giving it the tendency to confuse and intimidate easily.

5.2.1 Marketing ProgramsWe plan on doing a large scale marketing project during this month including (May 5 - June 5, 2016): Ad in newspapers Radio advertising (FM). Ad placement in local trade publications. Billboard Ads to promote wide-spread name recognition.

5.2.2 Pricing StrategyFor most small business owners, cost, both residual and one-time are huge influences on the decisions they make regarding everyday operations of their company. Even though we offer 100% customized services and our pricing is based on an hourly fee, to make it easier and less confusing for the clients, Webgrow has established a packaged pricing system. Budget Domain Website Package(Rs.5000): For simple, information based websites. Popular with companies who just need to gain an Internet presence.

Mid-Level Website Package(Rs.12000): Information based websites with a large amount of content. Popular with companies that have a large services/products list and/or want to implement more of their business into the Web.

Catalog Website Package(Rs.65000): Usually reserved for product-oriented websites that are e-commerce enabled. Popular with companies that have a desire tomarket heavily on the Internet or sell their products/services directly from the Web.

Website Hosting(from Rs.200 to Rs.300 per month): Depending on the type and size of the website, the price for hosting can vary greatly. The average cost of hosting for most clientsis Rs.250 per month.

Website Maintenance(Rs.300 per hour): We charge a set fee of Rs.300 per hour billed in 10 minute increments. If a client feels as though they will need their website updated or maintained on a regular basis, packages are available at a discount rate.

5.2.3 Promotion StrategyOur target client is part of a very specific demographic, for this reason, we market and promote our services in a direct and specifically targeted manner.

Print Ads: Currently we advertise in eight separate area yellow page directories.All our ads appear under either theInternet ServicesorWebsite Designheadings. Tops Bit Web Solutions. also has an ad listing in a national business directory under the heading ofWeb Developers. Newspaper advertisement will be purchased during the first three months of business until a clientele is built.

Direct Mail and Fax: We have sent out targeted bulk mail flyers promoting special offerings by our company. We have participated in targeted broadcast fax promotions to small businesses in our area. In the near future we will begin a new aggressive, ongoing bulk mail campaign to promote our Web development and hosting services.

Mass Media Ads: We will begin advertising on a broader scale within the next six months.Radio spots will be continuously played during local area talk shows and news programs, this placement is intended to reach the highest percentage of our target client possible. Billboard ad placement will be the second mass media marketing campaign we will implement into our marketing efforts.Billboard ads will be intended as 'name recognition' advertising.

5.3 Sales StrategyOur clients are small business owners, most are very protective of their company, and almost all of them are salesmen themselves. We sell value, service, and quality when we talk to business owners. We need to convince them that they can look past all of the hype surrounding the Internet and still see why having a website is worth the money spent.We currently utilize a database system specifically targeted toward our desired demographic to establish our first contact with every potential client. It has proven a successful method for soliciting new business directly due to the method in which we approach the first call. The salesman always requests to speak to the business owner, asking for him by his first name only, and when asked who is calling, responds by providing simply his first name as well. Once on the phone with the business owner, there is absolutely no script and the salesman clearly identifies himself and asks the business owner if he has ever considered having a website developed for his company, no matter what the response, a brief conversation will always pursue, sometimes leading to an appointment, and sometimes to a follow-up call.Because we have full confidence in our services, and recognize that business owners are generally open to the idea of utilizing the Internet and most even consider it a necessity, we take a very low-pressure, non-abrasive approach to direct selling. We will normally present the information about our company, portfolio, strengths, and pricing to the client and let them make the decision on their own. This method has proven successful provided that we keep our follow-up calls consistent and regular until we receive either a yes or no answer.

5.3.1 Sales ForecastThe following table and chart summarize our forecast sales. We expect the first month of operations (May) to be spent training the new developer and new salesman. June will be our first month of operation and we expect to grow steadily in the following months.Website development sales will be the largest portion of our revenue with result-based marketing following. Maintenance and hostingrevenuewill be built upslowly but are the residual base we will stand on in the future.

Sales Forecast (In Rupees)

Year 1Year 2Year 3

Sales

Website Development650,5001100,6501560,550

Result-based Marketing160,200198,200310050

Maintenance96,300130,600221,300

Hosting93,000120,550208,100

Total Sales10,000001550,00023,00000

Direct Cost of SalesYear 1Year 2Year 3

Website Development000

Result-based Marketing64,650106,050121,200

Maintenance000

Hosting35,90043,95059,320

Subtotal Direct Cost 100,550150,000180,520

5.3.2 Sales ProgramsThe following is a summary of the our sales programs from the Milestones table:June 9-16:Hiring first salesman.We will be training this employee this month to make telephone calls to business owners in the area and set appointments to meet with them and show them what we have to offer.Starting in mid-June he/she will begin meeting with clients alone.June 23 July 2:We will be updating our sales literature including creating brochures, and printing leaflets to be placed in our presentation folders.

5.4 Strategic AlliancesCurrently, we do not participate in any co-marketing or co-development efforts with outside companies. However, we have specific plans to establish several strategic partnership programs with area ISPs (Internet Service Providers) and computer consulting companies. These partnerships are intended to attract more sub-contracting work from potential competitors, in exchange for a commission to be paid for each lead and resulting new client.

Management Summary

Tops Bit Web Solutions. is owned and operated by two partners withequal equity in the company, and both directors in the corporation.Girijesh Kumar has completed Master of Business Administration with specialization of Finance from Departmrnt of Business Administration, University of Lucknow, Lucknow Uttar Pradesh. He has also an experience in Internet and Web-related languages.Dharmendra Kumar is an experienced website developer and strategist with over two years of commercial Web and Internet services experience, plus numerous attendance to various related seminars and educational classes.6.1 Organizational StructureTops Bit Web Solutions. will depend on the two main principals, Girijesh Kumar and Dharmendra Kumar, for all management responsibilities. This will include office management, accounts receivable and payable, marketing, and talent recruitment.Girijesh Kumar will serve as chief operations officer and finance manager. He will supervise all salesmen and all sales promotions, financial position and projects. He will also be holding the office of the treasurer therefore will be responsible for all financial related matters.Dharmendra Kumar willserve as chief technology officer and lead Web developer. He will be directly supervising all Web development (employee and sub-contracting projects), and will also be responsible for any necessary training in the same department.

6.2 Management Team GapsThe current management team will require support in both the business development and administrative departments. Both managers have had prior experience in these fields, but feel as though their experience is limited given the fact that prior working environments rarely required this type of support. Our finance and accounting firm, to provide expert advised and counseling in both the business development and administrative support departments. This strategy will allow the partners of Tops Bit Web Solutions. to lend the majority of their time to their respective areas of the company.6.3 Personnel PlanWe visualize implementing a "team" development system that will consist of two full-time sales person and two full-time Web developers. Of the Web developers, one position will be filled by a highly-qualified senior Web professional and one lesser-qualified, lower paid developers. All two will work full-time on separate projects provided to them by the sales person. However, the senior developer will have the duty of maintaining the same high quality level of work in the junior developers' projects, that our clients have learned to expect from us now.The followingtable shows how we plan on making the above a reality.Personnel Plan (In Rupees)

Year 1Year 2Year 3

Production Personnel

Dharmendra / Web Developer80,500100,000120,200

Developer #1/Hired in Oct120,000180,000216,000

Developer #2/Hired in Dec96,000180,000216,000

Other000

Subtotal296,000460,000552,200

Finance and Marketing Personnel

Girijesh80,500100,000120,200

Sales Position #1/Hired in June160,000192,000240,000

Other000

Subtotal240500292,000240,000

Total People555

Total Payroll536,500752,000912,400

Financial PlanTops bit IT Solution's financials summarize the following areas: Important Assumptions. Key Financial Indicators. Break-even Analysis. Projected Profit and Loss. Projected Cash Flow. Projected Balance Sheet.

7.1 Important AssumptionsOur financial assumptions are based on a steady economy and standard numbers for a business in our industry.

General Assumptions

Year 1Year 2Year 3

Plan Month123

Current Interest Rate10.00%10.00%10.00%

Long-term Interest Rate15.00%15.00%15.00%

Tax Rate25%25%25%

Other000

7.2 Key Financial IndicatorsThe following chart indicates our key financial indicators over the next three years.

7.3 Break-even AnalysisThe following table and chart summarize our break-even analysis. With two developers and two salesmen we plan on developing eight sites in June and once the two new hires are fully trained doubling the number to 16 sites a month.The averagevariable cost is an aggregate measure for all the types of services which will be offered.

Break-even Analysis

Monthly Revenue Break-even4,649

Assumptions:

Average Percent Variable Cost9%

Estimated Monthly Fixed Cost4,210

7.4 Projected Profit and LossOur projected profit and loss is shown on the following table. Some highlights are the Gross Margin at 60% for our first year and steadily increasing. Our Net Profit/Sales starting at 20% and increasing by approximately 8% the following two years to reach 35% by our third year.

Pro Forma Profit and Loss (In rupees)

Year 1Year 2Year 3

Sales1000,0001550,0002300,000

Direct Cost of Sales100,550150,000180,520

Production Payroll296,000460,000552,200

Other000

Total Cost of Sales396,550610,000732,720

Gross Margin603,450940,0001567,280

Gross Margin %60.34%61.77%68.14%

Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll240,500292,000360,200

Advertising/Promotion12,00013,50014,500

Travel5,0006,0007,500

Miscellaneous000

Total Sales and Marketing Expenses257,500311,500382,200

General and AdministrativeExpenses

General and Administrative Payroll000

Rent10,00013,00016,000

Utilities5,0007,00010,000

Insurance5,0006,00010,000

Payroll Taxes28,65050,200132,480

Other General and Administrative Expenses000

Total General and Administrative Expenses48,65076,200168,480

Total Expenses702,700997,70012,83,400

Profit Before Interest and Taxes297,300552,30010,16,600

Interest Expense @15%75,00060,00030,000

Taxes Incurred22,23049,230197,320

Net Profit200,070443,070789,280

Net Profit/Sales20.01%28.58%34.32%

7.5 Projected Cash FlowCash flow projections for the first half of the year are slightly declining and in October they begin to raise sufficiently. We may need to borrow against our accounts receivables but are projecting that the initial capital raised should cover us until our cash becomes fluid.

Pro Forma Cash Flow

Year 1Year 2Year 3

Cash Received

Cash from Operations

Cash Sales280,650475,200650,500

Cash from Receivables560,500920,8001190,500

Subtotal Cash from Operations841,15013,96,00018,41,000

Additional Cash Received

Sales of Long-term Assets000

New Investment Received000

Subtotal Cash Received841,15012,96,00018,41,000

ExpendituresYear 1Year 2Year 3

Expenditures from Operations

Cash Spending536,500752,000912,400

Bill Payments182,20050,700310,920

Subtotal Spent on Operations718,700802,70012,23,320

Additional Cash Spent

Long-term Liabilities Principal Repayment000

Purchase Other Current Assets000

Purchase Long-term Assets0500,000500,000

Subtotal Cash Spent718,700132,70017,23,320

Net Cash Flow122,45093,300117,680

Cash Balance472,450565,750683,430

7.6 Projected Balance SheetThe balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.

Pro Forma Balance Sheet

Year 1Year 2Year 3

Assets

Current Assets

Cash472,450565,750683,430

Accounts Receivable132,770410,200650,550

Other Current Assets200,000200,000200,000

Total Current Assets805,22011,75,95015,33,980

Long-term Assets

Long-term Assets120,000190,000420,000

Accumulated Depreciation6,00015,00063,000

Total Long-term Assets112,000175,000357,000

Total Assets925,22012,83,95018,90,980

Liabilities and CapitalYear 1Year 2Year 3

Current Liabilities

Accounts Payable53,05068,710130,800

Current Borrowing000

Other Current Liabilities000

Subtotal Current Liabilities53,05068,710130,800

Long-term Liabilities500,000400,000200,000

Total Liabilities553,050565,710630,800

Paid-in Capital350,000350,000350,000

Retained Earnings(177,900)22,170420,900

Earnings200,070443,070789,280

Total Capital372,170815,24015,60,180

Total Liabilities and Capital925,22012,83,95018,90,980

Net Worth372,170815,24015,60,180

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