August 2001

August 2001

This sample business plan has been made available to users of Business Plan Pro™, business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright Palo Alto Software, Inc., 1995-2002

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Table of Contents 1.0

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0

Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Locations and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Past Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Future Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 2 2 3 3

3.0

Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Product Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Product Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Future Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 4 5 5

4.0

Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Market Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.2 Marketing Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5 6 6 7 8 8 10 11 11

5.0

Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.1 Key Components of the Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.2 Strategic Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.0

Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.0

Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

8.0

Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 General Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Key Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

15 16 17 18 19 20 22 22

Equipment Rental 1.0 Executive Summary Equipment Rental, Inc. (ER) is a Breaux Bridge, Tennessee company that sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers as well as small home use and construction equipment such as tillers, augers, and chain saws. ER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, ProCut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment and Komatsu Forklifts. ER has a world-class management team with direct knowledge of the industry, extensive research experience, and unique administrative skills. Its team includes Mr. David James and Mrs. Sally James. Having lived in Denton Parish for six years, and worked throughout the state, as well as parts of Texas, Mississippi, Alabama, and Georgia, President/CEO, Mr. James has compiled an extensive list of customers/potential customers, vendors, and contacts for equipment consignment. The company plans to employ two people from the area, in positions within the shop. By employing local individuals, ER would be contributing toward the development of the area. Funds would remain in the area thereby boosting the economy and contributing to the community as a whole. Loyal customers help to expand the company's business area by wordof-mouth and a pocketful of ER's business cards. A key component of the company's strategy is to continue to add to its ever-increasing product line which currently includes homeowner equipment from Echo and Interstate Batteries, commercial, equipment from Ramrod, Compact S/I Technology, and industrial equipment from Komatsu. The company is seeking a loan/credit line in the amount of $300,000 for the purpose of expanding the business. Expansion plans include the purchase of additional land and construction of a larger shop/service area, increase rental inventory, purchase of delivery truck, and the hiring of additional personnel including a mechanic and delivery driver. Projected revenues for 2000 to 2002 are $210,000, $420,000, and $840,000, respectively.

Highlights

$900,000 $800,000 $700,000 $600,000

Sales

$500,000

Gross Margin

$400,000

Net Profit

$300,000 $200,000 $100,000 $0 2000

2001

2002

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Equipment Rental 1.1 Mission ER's mission is to become THE exclusive full-service equipment rental, sales, and service company in upper and lower Denton Parish with the ability to service the surrounding parishes of Memphis, Knoxville, Grand Prairie, Plano, Garland, Irvine, and Riverside. Therefore the company's strategy is to create a limited geographical niche for itself where there are no potential competitors. ER's vision is to continue to expand its service to other areas. The company's coverage area is constantly increasing, as the areas are becoming aware of the company's presence.

2.0 Company Summary ER began its operations on May 2, 1997 with little capital investment. The company combined 10 years of experience in the sales and rental field to generate a large customer base. After eight months of operations at the present facility, the company has increased its customer list by 100% and its vendor list by 75%. ER takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.

2.1 Company Ownership ER was founded in Memphis, Tennessee in May 1997 to sell and rent heavy equipment, small home use machines, and construction equipment. The company was formed by Mr. David James and Mrs. Sally James. ER is a Tennessee S-Corporation, with principal offices located in Memphis, TN.

2.2 Locations and Facilities The company has one office currently in Memphis, TN. ER is located 1/2 mile from the Interstate (I-65) with easy access and a large turnaround area for larger vehicles used in pick up and delivery of equipment. ER is not inside any municipal jurisdiction which would restrict the type of business being conducted. The location also benefits from easy access to hotels (1/2 mile), banks (less than 1/4 mile), groceries (1/8 mile), repair shops (1/4 mile), service stations (1/8 mile), and a parts supply house (1/3 mile). Currently, there are no environmental concerns, but the company hopes to be able to have a repair shop located on the premises at which time any environmental concerns will be seen to. ER's current hours of operation are from 8:00 a.m. until 5:00 p.m. However, the company does receive after hours calls and provides assistance as needed. Work hours have sometimes extended from 5:00 a.m. to later than 6:00 p.m. as needed.

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Equipment Rental 2.3 Past Performance The following is the company's past three years of performance since start-up. Table: Past Performance Past Performance 1997 $49,000 $32,830 67.00% $33,810 0 4.00

1998 $57,000 $42,351 74.30% $39,330 0 4.00

1999 $100,000 $86,500 86.50% $69,000 0 4.00

1997 $3,500 $6,000 $8,000 $2,500 $20,000

1998 $1,500 $7,000 $14,000 $5,000 $27,500

1999 $2,500 $9,000 $19,000 $6,000 $36,500

$5,200 $0 $5,200 $25,200

$6,400 $0 $6,400 $33,900

$8,000 $0 $8,000 $44,500

Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

1997 $5,500 $8,000 $4,000 $17,500

1998 $7,000 $9,000 $3,400 $19,400

1999 $9,000 $9,500 $3,700 $22,200

Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Capital and Liabilities

$10,000 $27,500 $0 ($2,300) $0 ($2,300) $25,200

$12,000 $31,400 $0 $2,500 $0 $2,500 $33,900

$10,000 $32,200 $0 $12,300 $0 $12,300 $44,500

1997 60 $0 0.00

1998 45 $0 0.00

1999 45 $0 0.00

Sales Gross Margin Gross Margin % Operating Expenses Collection Period (days) Inventory Turnover Balance Sheet Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Capital Assets Accumulated Depreciation Total Long-term Assets Total Assets Capital and Liabilities

Other Inputs Payment Days Sales on Credit Receivables Turnover

2.4 Future Facilities There is 1/2 - 1 acre of additional property directly to the north side and is available for the construction of a storage/equipment yard if necessary. Mr. James has worked with a steel building construction company and is able to purchase items to construct a building at cost or at a sufficient discount that it would not be necessary to use the greater portion of the loan for building needs. The estimated cost of building is expected to be between $10,000 and $13,500. ER has access to a main highway with concrete entrances to and from the property.

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Equipment Rental 3.0 Products ER sells and rents heavy equipment such as dozers, backhoes, excavators, and trenchers, as well as small home use, and construction equipment such as tillers, augers, and chain saws. ER takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products. ER has obtained the authorization to be a distributor for Hancor Pipe, Stone Equipment, ProCut Diamond Products, Echo Lawn Care, Compact Excavators, and Skid Steer Loaders. The company is the only authorized distributor for the South-Tennessee area for Ramrod Equipment and Komatsu Forklifts.

3.1 Product Summary Interstate ER carries a range of Interstate equipment including: • • • • • • • • • • •

Megatron Plus - 72 month; Megatron - 60 month; Light truck and van (LTV); Interstate - 50 month; Extreme performance; Interstate - 50 month (imported cars); Special use - lawn and garden, etc.; Marine/RV - 12 volt; Commercial - Very HD 12 volt; Commercial - 6 volt; Commercial - 8 volt special duty.

Komatsu ER carries gasoline, diesel, LPG, and electric forklifts from Komatsu. The benefits of Komatsu products include: • • • • •

Low noise designs reduce operator fatigue; Non-asbestos brakes; Open mast designs for excellent visibility; Heavy-duty air filtration systems with high air intake for extended engine life; Easy access to mechanical components.

Ramrod ER carries a series of Ramrod Taskmaster products that are designed for any task. They include: • • • • • • • • • •

The post hole auger (9" and 12") - can dig up to 60 holes in one hour; 32" forks - mini fork lift; Leveller - for back landscaping; The trencher - the attachment of choice for digging trenches; Hay and mower fork - horse and cattle stall cleanup; Scattrack. ER carries a series of mini excavators and skid steer loaders with various attachments; Hydraulic breakers - for breaking concrete, rock, or other hard surfaces; Trenchers - for installing electric lines and underground cables; Pallet fork - for handling heavy palletized material; Grapples - for clean up of loose, bulky, or baled materials; Page 4

Equipment Rental • • • • • • • • • •

Augers - for digging holes and wide trenches in tight areas; Angle blade - for grading; Mini excavator - for construction, landscaping, and utility applications; Trimmers and bushcutters and accessories; Tiller/Cultivator; Power blowers and accessories; Hedge clippers; Power pruners and accessories; Chain saws; Safety accessories.

3.1.1 Product Support ER is also listed on the bidder list for several states and receive bid packages by mail, fax, and email which is checked daily. The company is currently on the Atchafalaya Basin Development Committee mailing list and is working with the Henderson Area Committee.

3.1.2 Future Products ER plans to increase its current inventory and suppliers while adding new product lines available on the market. ER also plans to be able to offer specials such as manufacturer's discounts that would entice potential customers to ER, while at the same time retaining a good working capital within the company. Stone ER anticipates carrying a series of Stone products including: • • • • •

Stomper; WolfPac asphalt rollers; Rhino ride-on vibratory dirt rollers; Bulldog trench rollers; Hydroblend continuous mixers.

4.0 Market Analysis Summary The company expects to participate in a variety of different industries, including commercial and residential construction and farm machinery. The following sections will describe the industries in which ER hopes to compete.

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Equipment Rental 4.1 Target Market Segment Strategy ER currently has customers in the industrial and commercial fields, petro-chemical plants, contractors, sub-contractors, oil fields, and municipalities, with expansion potential in other areas. The Market Analysis table below gives the total potential number of businesses that could rent or buy our equipment in the local area. Table: Market Analysis Market Analysis Potential Customers Petro-chemical clients Contractors and subcontractors Municipalities Farmers Industrial clients Other Total

Growth 1% 10%

2000 5 160

2001 5 176

2002 5 194

2003 5 213

2004 5 234

CAGR 0.00% 9.97%

1% 3% 4% 2% 5.86%

8 127 86 40 426

8 131 89 41 450

8 135 93 42 477

8 139 97 43 505

8 143 101 44 535

0.00% 3.01% 4.10% 2.41% 5.86%

Market Analysis (Pie)

Petro-chemical clients Contractors and subcontractors Municipalities Farmers Industrial clients Other

4.2 Market Growth Most of ER's client industries such as the petro-chemical and farm industries have flat or very slow growth because these are mature or declining industries. However, often times there are other factors that make them attractive in the long run. The farming industry is heavily subsidized by the government and many of the farms in the local area are small plots with less than 100 acres. This means that most are poorly capitalized and seasonally require heavy equipment for planting and harvesting. This makes for an excellent cash-cow type client. The one industry that can be counted on to grow significantly for the short-term is the contractor/commercial construction industry. The housing boom of the past five years has produced annual growth rates ranging from 5-10%. In evaluating our total market we plan to concentrate on this industry as our primary target market. Page 6

Equipment Rental 4.3 Industry Analysis Industry Description (information provided by imarketinc.com) Market size statistics - Industrial trucks and tractors Establishments primarily engaged in manufacturing industrial trucks, tractors, trailers, stackers (truck type), and related equipment used for handling materials on floors and paved surfaces in and around industrial and commercial plants, depots, docks, airports, and terminals. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

1,004 37,854 $13,004 million 38 $16 million

Market size statistics - Farm machinery and equipment Establishments primarily engaged in manufacturing farm machinery and equipment including soil preparation machinery, for use in the preparation and maintenance of the soil, planting and harvesting of the crop, preparing crops for market on the farm, or for use in performing other farm operations and processes. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

2,594 79,978 $30,474 million 31 $13.3 million

Market size statistics - Construction machinery Establishments primarily engaged in manufacturing heavy machinery and equipment, such as bulldozers, concrete mixers, cranes. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

2,266 125,081 $58,196 million 57 $34.3 million

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Equipment Rental 4.3.1 Competition and Buying Patterns ER's closest competitors are located in Memphis Parish. They include the following five companies: • • • • •

CBC Equipment; Northern Equipment; Jones Rental Service; Rental Service Center; Memphis Rental.

Being located in or near Memphis, they charge a drop off and/or pick up fee. ER can, in most cases, wave this fee which will allow the customer more funds to purchase/rent additional equipment.

4.3.2 Market Statistics Market Description (information provided by S&P and imarketinc.com) The market in ER's area is very large with new construction being at an all-time high. ER is in need of inventory to be able to supply the local area and neighboring communities. The company has been able to sub-rent some equipment but would like to obtain certain items to put into its fleet thereby increasing profit margins. ER plans on offering a substantial line of equipment for rental and sales to meet customer needs as well as service for the equipment and those owned by others in the area. The housing industry has proceeded at a red-hot pace for several years running. An all-time record was set in 1998, when 886,000 new-site single family homes were sold. That represented a 10% gain from the robust total of 804,000 homes sold in 1997, and an 8.1% rise from the prior record of 819,000 units in 1977. Single-family housing construction accounted for $47,539 million of the total $124,953 million generated in the industry. Home sales were strengthened even further during most of 1999's first 10 months. In that period, new single-family home sales increased by 4.8% on a year-to-year basis, to 791,000 units, according to the U.S. Department of Commerce. Through October 1999, seasonally adjusted sales had exceeded 800,000 on an annualized basis in every month since the start of 1998. The record setting string of home sales since the second half of 1997 has forced builders to pick up the pace of their construction activity. During 1998, total starts increased by 9.7% to 1.62 million units. Starts for single family units moved up 12% for the year, and those of multifamily units were ahead by 1.5%. As an indication of building activity at year-end 1999, housing starts in November 1999 came in at a seasonally adjusted annual rate of 1.6 million units. Market size statistics - Single-family housing construction General contractors primarily engaged in construction of single-family houses. Estimated number of U.S. establishments Average people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

218,276 831,158 $124,953 million 4 $.6 million

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Equipment Rental Market size statistics - Residential construction, nec General contractors primarily engaged in construction (including new work additions, alterations, remodeling, and repair) of residential buildings other than single-family houses. This includes hotels, motels, apartments, and multi-family homes. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

25,201 114,523 $25,545 million 5 $1.1 million

Market size statistics - Heavy construction, nec General and special trade contractors primarily engaged in the construction of heavy projects not elsewhere classified. This includes canal, drainage system, athletic and recreation facilities, land preparation, rock removal, waste water and sewage treatment plant, and trenching construction. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

16,914 211,440 $50,637 million 13 $3.2 million

Market size statistics - Bridge, tunnel, and elevated highway construction General contractors primarily engaged in the construction of bridges, viaducts, elevated highways, and pedestrian and railway tunnels. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

1,414 43,889 $14,047 million 34 $12.9 million

Market size statistics - Highway and street construction General and special trade contractors primarily engaged in the construction of roads, streets, alleys, public sidewalks, guardrails, parkways, and airports. Estimated number of U.S. establishments Total people employed in this industry Total annual sales in this industry Average employees per establishment Average sales per establishment

19,694 302,944 $66,045 million 16 $13.3 million

Market size statistics - Nonresidential construction, nec General contractors primarily engaged in the construction (including new work additions, alterations, remodeling, and repair) of nonresidential buildings other than industrial buildings and warehouses. This includes commercial, institutional, religious, and amusement and recreational buildings. Estimated number of U.S. establishments Total people employed in this industry

44,505 540,550

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Equipment Rental Total annual sales in this industry Average employees per establishment Average sales per establishment

$205,214 million 12 $4.9 million

4.4 Marketing The overall marketing plan for ER's products and services is based on the following fundamentals: • The segment of the market(s) planned to reach. • Distribution channels planned to be used to reach market segments: television, radio, sales associates, and mailings. • Share of the market expected to capture over a fixed period of time. Market Responsibilities ER is committed to an extensive promotional campaign. This will be done aggressively and on a broad scale. To accomplish initial sales goals, the company will require an extremely effective promotional campaign to accomplish two primary objectives: 1. 2.

Attract quality sales/service personnel that have a desire to be successful. Attract customers that will constantly look to ER for their projects.

In addition, ER plans to advertise in magazines, newspapers, television, radio, and on billboards throughout the state. Promotion In addition to standard advertisement practices, ER will gain considerable recognition through these additional promotional mediums: • Press releases sent to major radio stations, newspapers, and magazines. • Radio advertising on secondary stations. • Incentives. As an extra incentive for customers and potential customers to ER's name, the company plans to distribute coffee mugs, T-shirts, pens, and other advertising specialties with the company logo. This will be an ongoing program for the company, when appropriate and where it is identified as beneficial. • Brochures. The objective of brochures is to portray ERs' goals and products as an attractive functionality. It is also to show customers how to use the latest in technology as it relates to construction and building services. ER will develop three brochures: one to be used to promote sales, one to use to announce the product in a new market, and the other to recruit sales associates. Investment in Advertising and Promotion For the first year of operation, advertising, and promotion is budgeted at a combined total of $14,000. A fixed amount of sales revenues will go toward the state ER advertisement campaign. On an ongoing basis, ER feels that it can budget advertising expenses at less than 10% of revenues to ER.

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Equipment Rental 4.4.1 Pricing Currently, ER maintains a commercial credit department for business customers with a 1% net 30-day limit. This loan will enable the company to establish its lending ability but will be structured so as not to hamper its ability to assist other customers (due on receipt with approved credit references). Most of ER's customers choose to deal with their own financial sources, however ER does have several financial sources to choose from, thereby giving them references should it become necessary to do so. The company offers competitive prices, which are subject to review when necessary. ER has done sufficient work in this area to know that it can place a markup on merchandise and still retain sufficient funds to be competitive. Knowledge of market and competitor prices gives ER the advantage of pricing in-line with competitors. ER suppliers have and will continue to supply products that enable the company to meet the customers price range. Most companies have a 15-20% markup on their merchandise. Having worked for most of the larger companies in the area, Mr. James has an advantage of knowing which companies are firm with the prices and how much others will decrease their prices. Several companies do not have a working list of rental prices and change with the market thereby causing a delay of several hours or even days to allow for a check of existing rental rates. At ER, pricing is derived from an American Rental Association (ARA) formula used to price sales and rental items in relation to cost and resale/use value.

4.4.2 Marketing Communications The company's promotional plan is diverse and includes a range of marketing communications: • Trade shows. Company representatives will attend and participate in several trade shows, such as Lagcoe. • Print advertising. The company's print advertising program includes advertisements in the Denton Parish newspaper, church bulletin, Denton Economics 101 directory, and restaurant menus in Memphis and Denton Parish. • Festivals. The company plans to take part in various local shows. • Additional methods include: • Yard signs - changed on a two week rotating schedule. • Magnetic signs - for trucks. • Business cards. • Sponsoring baseball and soccer teams.

5.0 Strategy and Implementation Summary The company plans to rapidly develop marketing alliances with industry leaders and pursue new sales of homeowner, commercial, and industrial equipment. The market strategy is to capitalize on ER's ever-increasing customer base and contacts by offering the latest products and personalized service. The company's goal in the next year is to obtain financing which will allow for expanding the shop/service area with up-to-date servicing equipment, hiring additional employees, and obtaining a delivery truck as well as rental and sales inventory for all aspects of the company's customer base.

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Equipment Rental The company's goal in the next two to five years is to hire additional employees, concentrate on customer service, and promote the company and the environment that has allowed for this increase in service by way of discounts and promotional specials that will benefit the company and the customer.

5.1 Key Components of the Strategy • Obtain financing. The company is currently working to obtain financing that will enable it to carry out its operations. • Expansion. ER is currently in need of property for expansion and display, rental and sale, and to increase its product line. Storage is a constant problem without a building and additional land to met ER's current needs. • Purchase additional equipment. Most previous equipment purchases have been for resale/consignment, and the markup has not allowed for a great increase in supplies. • Hire more employees. The company plans to employ two people from the area, in positions within the shop. They will be responsible for maintenance, repair, and delivery. This will enable Mr. and Mrs. James to focus on the core of the business. • Increase advertising. The company is currently working to expand its advertising campaigns. The company has designed a tri-fold brochure that will make people in the area aware of its product offering and how it can meet their needs. • Establish more alliances. ER has contacts with several companies with floor plans, which will enable the company to stock several of their items for resale. The company plans to purchase some of their products, leaving them to furnish the display equipment.

5.2 Strategic Relationships The company has strategic alliances with the ARA. This alliance is valuable to ER because the company gets to air television ads, and they are valuable to the ally firms because they are promoting a local company and this helps in community development. ER plans to also form strategic alliances with Internet sites, area publications, and other equipment dealers.

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Equipment Rental 6.0 Sales Forecast The following table and charts show the Projected Sales Forecast for Equipment Rental. Table: Sales Forecast Sales Forecast Sales Sales and Rentals Other Total Sales Direct Cost of Sales Sales and Rentals Other Subtotal Direct Cost of Sales

2000 $210,000 $0 $210,000

2001 $420,000 $0 $420,000

2002 $840,000 $0 $840,000

2000 $31,500 $3,000 $34,500

2001 $60,000 $6,000 $66,000

2002 $150,000 $12,000 $162,000

Sales Monthly $30,000 $25,000 $20,000

Sales and Rentals

$15,000

Other $10,000 $5,000 $0 Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

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Equipment Rental

Sales by Year

$900,000 $800,000 $700,000 $600,000 $500,000

Sales and Rentals

$400,000

Other

$300,000 $200,000 $100,000 $0 2000

2001

2002

7.0 Management Summary The company's management philosophy is based on responsibility and mutual respect. ER maintains an environment and structure that encourages productivity and respect for customers and fellow employees.

7.1 Personnel Plan ER's management is highly experienced and qualified. Its key management team includes Mr. David James and Mrs. Sally James. Jointly, they are responsible for processing quotes, arranging financing, as needed, scheduling invoices for pickup and delivery, and contract sales/rentals. Descriptions of the management team and responsibilities are as follows. Mr. David James. Mr. James has 10 years of marketing experience, 15 years rental/sales experience, and 15 years mechanical experience. Mr. James makes all decisions concerning equipment purchases, as this is his area of expertise. Mr. James is in charge of obtaining all equipment for sales and rentals, completing contracts, working up quotes, setting up delivery of merchandise, arranging financing as needed, contacting customers, and verifying pickup and delivery. Mrs. Sally L. James. Mrs. James has 10 years secretarial experience and 12 years accounts payable and receivable experience. Mrs. James answers the phone, faxes, does all the computer work, files any monthly or quarterly tax forms, compiles correspondence as needed, accounts receivable, accounts Page 14

Equipment Rental payable, meets with a bookkeeper for end of year tax return, keeps all office needs running smoothly, filing, typing, copies, and is majority stock holder in the company (45%). Future plans call for the hiring of a mechanic and shopman with hopes of adding a truck and delivery driver shortly there after from the area, with additional office/shop personnel to be added as needed. On occasion part-time personnel will be used and job training provided through the area schools for those interested in this area of the job market. Table: Personnel Personnel Plan Sales/Rental Associate Sales/Rental Associate Sales/Rental Associate Maintenance/Technician Maintenance Technician Total People Total Payroll

2000 $19,200 $19,200 $19,200 $0 $0 5 $57,600

2001 $19,200 $19,200 $19,200 $5,010 $0 6 $62,610

2002 $19,200 $19,200 $19,200 $9,500 $6,000 7 $73,100

8.0 Financial Plan ER was capitalized with $5,000 when it was formed in May 1997. A strong knowledge of the area and supply and demand needs led to the formation of the company. Most items purchased to this date (truck, trailer, computer, office supplies, envelopes, and stationery) have been financed through personal funds, and a $4,000 line of credit with Hibernia Bank. ER's first sales placed $5,145 into the business account, most of which was used to pay off initial purchases with the balance being used for office and truck expenses such as telephone bill, postage, and fuel. As of April 1, 2000, the truck has been paid in full along with several of the smaller home use items. The company has generated sales in the amount of $52,490 with cost being $38,870 and a profit of $13,620 (97-98 Income Tax Return). Funding Requirements and Uses The company is seeking a loan/credit line in the amount of $300,000 for the purpose of expanding the business. Expansion plans include the purchase of additional land and construction of a larger shop/service area, increase rental inventory, and hiring of additional personnel including a mechanic and delivery driver. The table below provides a breakdown of the use of funds. Use of Funds Purchase land 25' X 175' on the north side of existing building Erect shop area 25' X 32' on land w/concrete slab, office area Shop equipment Rental inventory Consolidate regions loan, Hibernia L. O. C., current equipment purchases Bosch electric breaker, 3.0 KW generator, shop items Advertising

$7,000 $10,000 $14,000 $60,000 $50,000 $7,000

Page 15

Equipment Rental Balance for working capital, employee training, office equipment modernization, maintenance inventory (i.e.: oil, air, and hydraulic filters), unforeseen building/maintenance expense

$152,000

Shop equipment to include: air compressor, air tools and accessories, blow torch, welding machine and accessories, 1 1/2 ton chain hoist, oil/water separator, holding tank, assorted hand tools, washing vat, chain saw sharpener and repair accessories. Rental inventory to include: Trash and diaphragm pumps 2 ea. 2" and 3", 3/4" submersible pump and accessories, 3 hp. concrete vibrator, 2-48" concrete power trowels, Case 580L or JD 310 Backhoe, small trailer and larger trailer, 1-ton Ford F350 or F450 Diesel delivery truck, air compressor, 90 lb. air hammer and accessories, rotovator for tractor, 1 push mower, 1 lawn tractor.

8.1 General Assumptions The following table lists the general assumptions. Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other Calculated Totals Payroll Expense Sales on Credit New Accounts Payable Inventory Purchase

2000 1 10.00% 10.00% 30.00% 80.00% 0.00%

2001 2 10.00% 10.00% 30.00% 80.00% 0.00%

2002 3 10.00% 10.00% 30.00% 80.00% 0.00%

$57,600 $168,000 $167,387 $21,250

$62,610 $336,000 $326,460 $70,293

$73,100 $672,000 $624,916 $176,609

Page 16

Equipment Rental 8.2 Key Financial Indicators The following chart shows the important benchmarks for Equipment Rental.

Benchmarks 10.0 8.0 6.0

1997

4.0

1998

2.0

1999

0.0

2000 2001 2002

Page 17

Equipment Rental 8.3 Break-even Analysis The table and chart below contain the Break-even Analysis for Equipment Rental. Table: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even

3 $19,714

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

$6,000.00 $2,500.00 $11,500

Break-even Analysis $30,000 $20,000 $10,000 $0 ($10,000) ($20,000) $0

$12,000

$24,000

$36,000

$48,000

$60,000

Monthly break-even point Break-even point = where line intersects with 0

Page 18

Equipment Rental 8.4 Projected Profit and Loss The Projected Profit and Loss can be seen in the following table and charts. Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other Production Expenses Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Supplies and equipment Utilities Telephone Insurance Repairs and Maintenance Services Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes

2000 $210,000 $34,500 $3,000 -----------$37,500 $172,500 82.14%

2001 $420,000 $66,000 $42,000 -----------$108,000 $312,000 74.29%

2002 $840,000 $162,000 $126,000 -----------$288,000 $552,000 65.71%

$57,600 $14,000 $0 $9,924 $1,602 $7,812 $14,448 $10,932 $2,832 $12,420 $8,640 $0 -----------$140,210 $32,290 $29,938 $706 $1,646 0.78%

$62,610 $31,000 $0 $19,851 $2,403 $7,810 $21,688 $20,397 $2,833 $12,420 $9,392 $0 -----------$190,404 $121,597 $23,065 $29,559 $68,972 16.42%

$73,100 $82,598 $0 $39,702 $3,604 $7,810 $32,533 $30,596 $2,833 $12,420 $10,965 $0 -----------$296,161 $255,839 $18,365 $71,242 $166,232 19.79%

TRUE

TRUE

TRUE

Gross Margin Yearly

$600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2000

2001

2002

Page 19

Equipment Rental

Profit Yearly

$180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2000

2001

2002

8.5 Cash Flow The following table and chart are the Projected Cash Flow figures for Equipment Rental.

Page 20

Equipment Rental Table: Cash Flow Pro Forma Cash Flow

2000

2001

2002

Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations

$42,000 $157,400 $199,400

$84,000 $316,400 $400,400

$168,000 $632,800 $800,800

Additional Cash Received Non Operating (Other) Income 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

$0 $0 $149,000 $0 $151,000 $0 $0 $0 $499,400

$0 $0 $20,000 $0 $0 $0 $0 $0 $420,400

$0 $0 $20,000 $0 $0 $0 $0 $0 $820,800

Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations

2000

2001

2002

$27,716 $170,423 $198,139

$28,862 $326,213 $355,075

$63,461 $617,470 $680,931

Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent

$0 $0 $45,248 $0 $29,100 $58,000 $91,000 $65,000 $486,487

$0 $0 $30,000 $0 $19,000 $2,000 $4,000 $10,000 $420,075

$0 $0 $60,000 $0 $25,000 $22,000 $9,000 $20,000 $816,931

$12,913 $15,413

$325 $15,738

$3,869 $19,606

Net Cash Flow Cash Balance

Cash $300,000 $250,000 $200,000 $150,000

Net Cash Flow

$100,000

Cash Balance

$50,000 $0 ($50,000) ($100,000) Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

Page 21

Equipment Rental 8.6 Projected Balance Sheet ER's projected balance sheets for 2000-2002. Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

2000 $15,413 $19,600 $5,750 $64,000 $104,763

2001 $15,738 $39,200 $10,043 $66,000 $130,981

2002 $19,606 $78,400 $24,652 $88,000 $210,658

$99,000 $0 $99,000 $203,763

$103,000 $0 $103,000 $233,981

$112,000 $0 $112,000 $322,658

Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

2000 $5,964 $113,252 $3,700 $122,916

2001 $6,211 $103,252 $3,700 $113,163

2002 $13,656 $63,252 $3,700 $80,608

Long-term Liabilities Total Liabilities

$131,900 $254,816

$112,900 $226,063

$87,900 $168,508

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$0 ($52,700) $1,646 ($51,054) $203,763 ($51,054)

$0 ($61,054) $68,972 $7,918 $233,981 $7,918

$0 ($12,082) $166,232 $154,150 $322,658 $154,150

Liabilities and Capital

8.7 Business Ratios Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7359, [Equipment Rental and Leasing, nec], are shown for comparison.

Page 22

Equipment Rental Table: Ratios Ratio Analysis Sales Growth

2000 110.00%

2001 100.00%

2002 100.00%

Industry Profile 6.96%

Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets

9.62% 2.82% 31.41% 51.41% 48.59% 100.00%

16.75% 4.29% 28.21% 55.98% 44.02% 100.00%

24.30% 7.64% 27.27% 65.29% 34.71% 100.00%

5.39% 3.90% 28.39% 37.68% 62.32% 100.00%

1.82% 64.73% 64.73% 35.27%

1.58% 48.25% 48.25% 51.75%

1.15% 27.24% 27.24% 72.76%

19.17% 29.21% 48.38% 51.62%

Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes

100.00% 82.14% 81.03% 3.33% 15.38%

100.00% 74.29% 57.70% 5.71% 28.95%

100.00% 65.71% 45.84% 6.90% 30.46%

100.00% 59.31% 39.09% 2.75% 1.59%

Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

0.85 0.81 125.06% -4.61% 1.15%

1.16 1.07 96.62% 1244.37% 42.11%

2.61 2.31 52.23% 154.05% 73.60%

1.26 0.87 54.38% 3.27% 7.17%

2000 $42,000

2001 $70,000

2002 $120,000

Industry $156,054 67.68%

2000 0.78% 0.00%

2001 16.42% 871.06%

2002 19.79% 107.84%

8.57 60 2.99 28.06 42 1.03

8.57 32 8.36 52.56 82 1.80

8.57 32 9.34 45.76 70 2.60

n.a n.a n.a n.a

0.00 0.48

28.55 0.50

1.09 0.48

n.a n.a

($18,154) 1.08

$17,818 5.27

$130,050 13.93

n.a n.a

0.97 60% 0.65 0.00 39.49

0.56 48% 0.72 53.04 0.14

0.38 25% 1.33 5.45 0.12

n.a n.a n.a n.a n.a

Current Liabilities Long-term Liabilities Total Liabilities Net Worth

Business Vitality Profile Sales per Employee Survival Rate Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout

n.a n.a

n.a

Page 23

Appendix Appendix Table: Sales Forecast Sales Forecast Sales Sales and Rentals Other Total Sales Direct Cost of Sales Sales and Rentals Other Subtotal Direct Cost of Sales

Jan $10,000 $0 $10,000

Feb $10,000 $0 $10,000

Mar $11,200 $0 $11,200

Apr $14,400 $0 $14,400

May $17,500 $0 $17,500

Jun $20,400 $0 $20,400

Jul $28,000 $0 $28,000

Aug $29,000 $0 $29,000

Sep $26,000 $0 $26,000

Oct $18,500 $0 $18,500

Nov $15,000 $0 $15,000

Dec $10,000 $0 $10,000

Jan $1,500 $250 $1,750

Feb $1,500 $250 $1,750

Mar $1,680 $250 $1,930

Apr $2,160 $250 $2,410

May $2,625 $250 $2,875

Jun $3,060 $250 $3,310

Jul $4,200 $250 $4,450

Aug $4,350 $250 $4,600

Sep $3,900 $250 $4,150

Oct $2,775 $250 $3,025

Nov $2,250 $250 $2,500

Dec $1,500 $250 $1,750

Page 1

Appendix Appendix Table: Personnel Personnel Plan Sales/Rental Associate Sales/Rental Associate Sales/Rental Associate Maintenance/Technician Maintenance Technician Total People Total Payroll

Jan $1,600 $1,600 $1,600 $0 $0 5 $4,800

Feb $1,600 $1,600 $1,600 $0 $0 5 $4,800

Mar $1,600 $1,600 $1,600 $0 $0 5 $4,800

Apr $1,600 $1,600 $1,600 $0 $0 5 $4,800

May $1,600 $1,600 $1,600 $0 $0 5 $4,800

Jun $1,600 $1,600 $1,600 $0 $0 5 $4,800

Jul $1,600 $1,600 $1,600 $0 $0 5 $4,800

Aug $1,600 $1,600 $1,600 $0 $0 5 $4,800

Sep $1,600 $1,600 $1,600 $0 $0 5 $4,800

Oct $1,600 $1,600 $1,600 $0 $0 5 $4,800

Nov $1,600 $1,600 $1,600 $0 $0 5 $4,800

Dec $1,600 $1,600 $1,600 $0 $0 5 $4,800

Page 2

Appendix Appendix Table: Profit and Loss Pro Forma Profit and Loss Sales Direct Costs of Goods Other Production Expenses Cost of Goods Sold Gross Margin Gross Margin % Expenses: Payroll Sales and Marketing and Other Expenses Depreciation Supplies and equipment Utilities Telephone Insurance Repairs and Maintenance Services Rent Payroll Taxes Other Total Operating Expenses Profit Before Interest and Taxes Interest Expense Taxes Incurred Net Profit Net Profit/Sales Include Negative Taxes

15%

Jan $10,000 $1,750 $0 -----------$1,750 $8,250 82.50%

Feb $10,000 $1,750 $0 -----------$1,750 $8,250 82.50%

Mar $11,200 $1,930 $0 -----------$1,930 $9,270 82.77%

Apr $14,400 $2,410 $0 -----------$2,410 $11,990 83.26%

May $17,500 $2,875 $0 -----------$2,875 $14,625 83.57%

Jun $20,400 $3,310 $0 -----------$3,310 $17,090 83.77%

Jul $28,000 $4,450 $0 -----------$4,450 $23,550 84.11%

Aug $29,000 $4,600 $0 -----------$4,600 $24,400 84.14%

Sep $26,000 $4,150 $1,000 -----------$5,150 $20,850 80.19%

Oct $18,500 $3,025 $750 -----------$3,775 $14,725 79.59%

Nov $15,000 $2,500 $500 -----------$3,000 $12,000 80.00%

Dec $10,000 $1,750 $750 -----------$2,500 $7,500 75.00%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,184) $2,663 ($1,754) ($4,093) -40.93%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,184) $2,663 ($1,754) ($4,093) -40.93%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($2,164) $2,663 ($1,448) ($3,379) -30.17%

$4,800 $2,417 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$12,934 ($944) $2,643 ($1,076) ($2,511) -17.44%

$4,800 $2,417 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$12,934 $1,691 $2,623 ($280) ($653) -3.73%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $5,656 $2,604 $916 $2,136 10.47%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $12,116 $2,584 $2,860 $6,672 23.83%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $12,966 $2,565 $3,120 $7,281 25.11%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $9,416 $2,442 $2,092 $4,882 18.78%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $3,291 $2,296 $298 $696 3.76%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 $566 $2,151 ($476) ($1,110) -7.40%

$4,800 $917 $0 $827 $134 $651 $1,204 $911 $236 $1,035 $720 $0 -----------$11,434 ($3,934) $2,043 ($1,793) ($4,184) -41.84%

Page 3

Appendix Appendix Table: Cash Flow Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Non Operating (Other) Income 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 Expenditures Expenditures from Operations: Cash Spending Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Non Operating (Other) Expense Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

0.00%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$2,000 $4,500 $6,500

$2,000 $2,517 $4,517

$2,240 $10,250 $12,490

$2,880 $8,032 $10,912

$3,500 $9,045 $12,545

$4,080 $11,603 $15,683

$5,600 $14,077 $19,677

$5,800 $16,523 $22,323

$5,200 $22,427 $27,627

$3,700 $23,120 $26,820

$3,000 $20,600 $23,600

$2,000 $14,707 $16,707

$0 $0 $149,000 $0 $151,000 $0 $0 $0 $306,500

$0 $0 $0 $0 $0 $0 $0 $0 $4,517

$0 $0 $0 $0 $0 $0 $0 $0 $12,490

$0 $0 $0 $0 $0 $0 $0 $0 $10,912

$0 $0 $0 $0 $0 $0 $0 $0 $12,545

$0 $0 $0 $0 $0 $0 $0 $0 $15,683

$0 $0 $0 $0 $0 $0 $0 $0 $19,677

$0 $0 $0 $0 $0 $0 $0 $0 $22,323

$0 $0 $0 $0 $0 $0 $0 $0 $27,627

$0 $0 $0 $0 $0 $0 $0 $0 $26,820

$0 $0 $0 $0 $0 $0 $0 $0 $23,600

$0 $0 $0 $0 $0 $0 $0 $0 $16,707

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$1,676 $5,081 $6,758

$4,876 ($20,374) ($15,497)

$5,907 ($2,225) $3,682

$4,692 $20,377 $25,069

$1,704 $39,912 $41,616

$1,399 $20,822 $22,221

$1,917 $18,325 $20,242

$1,659 $22,754 $24,413

$1,419 $20,438 $21,857

$920 $18,199 $19,119

$861 $13,841 $14,702

$686 $13,272 $13,957

$0 $0 $0 $0 $0 $10,000 $0 $5,417 $22,174

$0 $0 $0 $0 $0 $12,000 $30,000 $5,417 $31,919

$0 $0 $0 $0 $0 $25,000 $27,000 $5,417 $61,099

$0 $0 $0 $0 $2,350 $4,000 $34,000 $5,417 $70,836

$0 $0 $0 $0 $2,350 $7,000 $0 $5,417 $56,383

$0 $0 $0 $0 $2,350 $0 $0 $5,417 $29,988

$0 $0 $0 $0 $2,350 $0 $0 $5,417 $28,009

$0 $0 $0 $0 $2,350 $0 $0 $5,417 $32,179

$0 $0 $12,416 $0 $2,350 $0 $0 $5,417 $42,040

$0 $0 $12,416 $0 $5,000 $0 $0 $5,417 $41,952

$0 $0 $12,416 $0 $5,000 $0 $0 $5,417 $37,534

$0 $0 $8,000 $0 $5,000 $0 $0 $5,417 $32,374

$284,326 $286,826

($27,403) $259,423

($48,609) $210,814

($59,924) $150,890

($43,837) $107,052

($14,305) $92,747

($8,331) $84,416

($9,857) $74,559

($14,413) $60,146

($15,132) $45,014

($13,934) $31,080

($15,667) $15,413

Page 4

Appendix Appendix Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Sales on Credit % Other Calculated Totals Payroll Expense Sales on Credit New Accounts Payable Inventory Purchase

Jan 1 10.00% 10.00% 30.00% 80.00% 0.00%

Feb 2 10.00% 10.00% 30.00% 80.00% 0.00%

Mar 3 10.00% 10.00% 30.00% 80.00% 0.00%

Apr 4 10.00% 10.00% 30.00% 80.00% 0.00%

May 5 10.00% 10.00% 30.00% 80.00% 0.00%

Jun 6 10.00% 10.00% 30.00% 80.00% 0.00%

Jul 7 10.00% 10.00% 30.00% 80.00% 0.00%

Aug 8 10.00% 10.00% 30.00% 80.00% 0.00%

Sep 9 10.00% 10.00% 30.00% 80.00% 0.00%

Oct 10 10.00% 10.00% 30.00% 80.00% 0.00%

Nov 11 10.00% 10.00% 30.00% 80.00% 0.00%

Dec 12 10.00% 10.00% 30.00% 80.00% 0.00%

$4,800 $8,000 $10,666 $0

$4,800 $8,000 $7,466 $0

$4,800 $8,960 $6,742 $0

$4,800 $11,520 $9,809 $0

$4,800 $14,000 $13,914 $340

$4,800 $16,320 $18,170 $4,615

$4,800 $22,400 $22,831 $7,870

$4,800 $23,200 $20,510 $5,050

$4,800 $20,800 $18,349 $2,800

$4,800 $14,800 $13,859 $0

$4,800 $12,000 $13,324 $575

$4,800 $8,000 $11,748 $0

Page 5

Appendix Appendix Table: Balance Sheet Pro Forma Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets

Starting Balances $2,500 $9,000 $19,000 $6,000 $36,500

Jan $286,826 $12,500 $17,250 $16,000 $332,576

Feb $259,423 $17,983 $15,500 $28,000 $320,906

Mar $210,814 $16,693 $13,570 $53,000 $294,077

Apr $150,890 $20,181 $11,160 $57,000 $239,231

May $107,052 $25,136 $8,625 $64,000 $204,813

Jun $92,747 $29,853 $9,930 $64,000 $196,530

Jul $84,416 $38,176 $13,350 $64,000 $199,942

Aug $74,559 $44,853 $13,800 $64,000 $197,213

Sep $60,146 $43,227 $12,450 $64,000 $179,823

Oct $45,014 $34,907 $9,425 $64,000 $153,346

Nov $31,080 $26,307 $7,500 $64,000 $128,887

Dec $15,413 $19,600 $5,750 $64,000 $104,763

$8,000 $0 $8,000 $44,500

$8,000 $0 $8,000 $340,576

$38,000 $0 $38,000 $358,906

$65,000 $0 $65,000 $359,077

$99,000 $0 $99,000 $338,231

$99,000 $0 $99,000 $303,813

$99,000 $0 $99,000 $295,530

$99,000 $0 $99,000 $298,942

$99,000 $0 $99,000 $296,213

$99,000 $0 $99,000 $278,823

$99,000 $0 $99,000 $252,346

$99,000 $0 $99,000 $227,887

$99,000 $0 $99,000 $203,763

Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$9,000 $9,500 $3,700 $22,200

Jan $14,585 $158,500 $3,700 $176,785

Feb $42,425 $158,500 $3,700 $204,625

Mar $51,391 $158,500 $3,700 $213,591

Apr $40,823 $158,500 $3,700 $203,023

May $14,824 $158,500 $3,700 $177,024

Jun $12,171 $158,500 $3,700 $174,371

Jul $16,677 $158,500 $3,700 $178,877

Aug $14,434 $158,500 $3,700 $176,634

Sep $12,345 $146,084 $3,700 $162,129

Oct $8,004 $133,668 $3,700 $145,372

Nov $7,488 $121,252 $3,700 $132,440

Dec $5,964 $113,252 $3,700 $122,916

Long-term Liabilities Total Liabilities

$10,000 $32,200

$161,000 $337,785

$161,000 $365,625

$161,000 $374,591

$158,650 $361,673

$156,300 $333,324

$153,950 $328,321

$151,600 $330,477

$149,250 $325,884

$146,900 $309,029

$141,900 $287,272

$136,900 $269,340

$131,900 $254,816

Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$0 $12,300 $0 $12,300 $44,500 $12,300

$0 $6,883 ($4,093) $2,791 $340,576 $2,791

$0 $1,467 ($8,185) ($6,719) $358,906 ($6,719)

$0 ($3,950) ($11,564) ($15,514) $359,077 ($15,514)

$0 ($9,367) ($14,075) ($23,442) $338,231 ($23,442)

$0 ($14,783) ($14,728) ($29,511) $303,813 ($29,511)

$0 ($20,200) ($12,591) ($32,791) $295,530 ($32,791)

$0 ($25,617) ($5,919) ($31,536) $298,942 ($31,536)

$0 ($31,033) $1,362 ($29,671) $296,213 ($29,671)

$0 ($36,450) $6,244 ($30,206) $278,823 ($30,206)

$0 ($41,867) $6,940 ($34,927) $252,346 ($34,927)

$0 ($47,283) $5,830 ($41,453) $227,887 ($41,453)

$0 ($52,700) $1,646 ($51,054) $203,763 ($51,054)

Liabilities and Capital

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