Coffee Roaster Business Plan

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This sample business plan has been made available to users of Business Plan Pro®, business planning software published by Palo Alto Software, Inc. Names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted 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 resell, 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., 1995-2009 All rights reserved.

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Table of Contents

1.0 Executive Summary .................................................................................................................... 1 Chart: Highlights .......................................................................................................................... 2 1.1 Mission .......................................................................................................................................... 2 1.2 Objectives.................................................................................................................................... 2 1.3 Keys to Success ........................................................................................................................ 2 2.0 Company Summary ..................................................................................................................... 3 2.1 Company Ownership ............................................................................................................... 3 2.2 Start-up Summary ................................................................................................................... 3 Table: Start-up.............................................................................................................................. 3 Table: Start-up Funding ............................................................................................................ 4 Chart: Start-up ............................................................................................................................. 5 3.0 Products ........................................................................................................................................... 5 4.0 Market Analysis Summary ........................................................................................................ 6 4.1 Market Segmentation ............................................................................................................. 6 Table: Market Analysis ............................................................................................................... 7 Chart: Market Analysis (Pie) .................................................................................................... 8 4.2 Target Market Segment Strategy ...................................................................................... 8 4.3 Industry Analysis ...................................................................................................................... 9 4.3.1 Competition and Buying Patterns ............................................................................ 11 5.0 Strategy and Implementation Summary .......................................................................... 11 5.1 Competitive Edge ................................................................................................................... 11 5.2 Marketing Strategy ................................................................................................................ 12 5.3 Sales Strategy ......................................................................................................................... 12 5.3.1 Sales Forecast.................................................................................................................. 13 Table: Sales Forecast ........................................................................................................... 13 Chart: Sales Monthly ............................................................................................................ 14 Chart: Sales by Year ............................................................................................................. 14 5.4 Milestones.................................................................................................................................. 15 Table: Milestones ....................................................................................................................... 15 Chart: Milestones ....................................................................................................................... 15 6.0 Web Plan Summary ................................................................................................................... 16 6.1 Website Marketing Strategy ............................................................................................... 16 6.2 Development Requirements ............................................................................................... 16 7.0 Management Summary ............................................................................................................ 16 7.1 Personnel Plan ......................................................................................................................... 17 Table: Personnel ......................................................................................................................... 17 8.0 Financial Plan ............................................................................................................................... 18 8.1 Important Assumptions ....................................................................................................... 18 Table: General Assumptions .................................................................................................. 18 8.2 Break-even Analysis .............................................................................................................. 19 Table: Break-even Analysis.................................................................................................... 19 Chart: Break-even Analysis ................................................................................................... 19 8.3 Projected Profit and Loss ..................................................................................................... 20 Table: Profit and Loss ............................................................................................................... 20 Page 1

Table of Contents

Chart: Profit Monthly ................................................................................................................ 21 Chart: Profit Yearly .................................................................................................................... 21 Chart: Gross Margin Yearly .................................................................................................... 22 8.4 Projected Cash Flow .............................................................................................................. 23 Table: Cash Flow ........................................................................................................................ 23 Chart: Cash .................................................................................................................................. 24 8.5 Projected Balance Sheet ...................................................................................................... 25 Table: Balance Sheet ................................................................................................................ 25 8.6 Business Ratios ....................................................................................................................... 25 Table: Ratios ................................................................................................................................ 26 Table: Sales Forecast ......................................................................................................................... 1 Table: Personnel ................................................................................................................................... 2 Table: Personnel ................................................................................................................................... 2 Table: General Assumptions ............................................................................................................ 3 Table: General Assumptions ............................................................................................................ 3 Table: Profit and Loss ......................................................................................................................... 4 Table: Profit and Loss ......................................................................................................................... 4 Table: Cash Flow .................................................................................................................................. 5 Table: Cash Flow .................................................................................................................................. 5 Table: Balance Sheet .......................................................................................................................... 6

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Beanisimo Coffee

1.0 Executive Summary Beanisimo Coffee is a start up Salem, Oregon based coffee roaster that has developed a line of premium coffees and espressos. Beanisimo Coffee has been formed as an Oregon S Corporation by the founder Frank Jones. Frank has brought old world Italian traditions and recipes to meet the market need for premium coffees. Keys to Success Beanisimo Coffee has identified three keys that will be instrumental to its success. The first is the need to develop the finest coffee available. The second requirement to develop a top notch customer service organization that exceeds customer expectations. The last element is to employ strict financial controls. The development and implementation of finance and accounting controls will help ensure fiscal success. Target Market Segments Beanisimo Coffee has identified three distinct customer segments that it will actively pursue. The first group is made up of coffee houses, drive thru establishments, and espresso carts. This customer segment has 187 potential customers and is growing at a 7% annual rate. The second group is restaurants with 107 possible customers and is growing at an 8% annual rate. The last segment is grocery stores that sell unprepared beans to their customers in either whole bean or ground forms. This segment has 97 potential customers and a 7% growth rate. Management Beanisimo Coffee is being lead by Frank Jones. Frank has a strong educational background and a wealth of applicable industry experience. Frank received his Bachelor degree and MBA from Willamette University. Frank has worked at several coffee shops, and has worked in Italy as a coffee roaster under the wing of an Italian master roaster. Through a combination of a solid business model, strong educational credentials, and proprietary coffee roasting techniques, Frank will be able to turn Beanisimo Coffee from a startup business to a significant market player in the high-end coffee market in the Willamette River Valley. Sales for year two are forecasted to be $312,000 rising to $355,000 in year three. Net profit is projected to be 7.58% for year two and will jump to 9.58% in year three.

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Beanisimo Coffee

Chart: Highlights

1.1 Mission It is Beanisimo Coffee's mission to offer the finest selection of coffees. By using the customs from a 54-year-old Italian master roaster, Beanisimo Coffee's products will surpass all of its competition. A strong customer service ethic will support the fantastic product. 1.2 Objectives Beanisimo Coffee's objectives are to build brand awareness and customer service excellence, while increasing sales. Beanisimo Coffee intends to utilize the following strategies to achieve these objectives:   

Develop a high-quality menu of different coffee blends. Provide an excellent service experience, anticipating the needs of the customers and delivering the best service. Leverage the old traditional Italian roasting methods to increase market penetration with the finest product available.

1.3 Keys to Success Beanisimo Coffee has identified several keys which will be instrumental in the success of the company.   

Develop the finest product. Exceed customer expectations. Employ strict financial controls.

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Beanisimo Coffee

2.0 Company Summary Beanisimo Coffee is a start up Salem, Oregon based coffee roaster that has developed a line of premium coffees and espressos. Beanisimo Coffee has been formed as an Oregon S Corporation by the founder Frank Jones. Frank has brought old world Italian traditions and recipes to meet the market need for premium coffees. 2.1 Company Ownership Beanisimo Coffee is an Oregon S Corporation. The primary stockholder and founder is Frank Jones. 2.2 Start-up Summary The following equipment will be needed for the start up of the company:         

Three workstation computers and one central file server. Two laser printers. Computer software: Microsoft Office, and Peachtree Accounting. Assorted office furniture and equipment. Assorted buckets, labels, bags, labels, and hooks. Topre Izmir perforated drum roaster. Heat based bag sealer. Hobart scale. Van.

Table: Start-up

Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Research and Development Total Start-up Expenses

$5,000 $500 $1,000 $1,500 $3,000 $11,000

Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets

$116,000 $0 $0 $78,000 $194,000

Total Requirements

$205,000

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Beanisimo Coffee

Table: Start-up Funding Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required

$11,000 $194,000 $205,000

Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets

$78,000 $116,000 $0 $116,000 $194,000

Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities

$0 $0 $0 $0 $0

Capital Planned Investment Investor 1 Investor 2 Other Additional Investment Requirement Total Planned Investment

$80,000 $65,000 $60,000 $0 $205,000

Loss at Start-up (Start-up Expenses) Total Capital

($11,000) $194,000

Total Capital and Liabilities

$194,000

Total Funding

$205,000

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Beanisimo Coffee

Chart: Start-up

3.0 Products Beanisimo Coffee offers a wide range of specially blended and roasted coffees. Beanisimo Coffee will be using customs passed down from a 54 year old Italian master coffee roaster. Beanisimo Coffee first will select and cup the coffee, then blend different beans before roasting. The key to a wonderful bag of roasted beans is the blending of different coffee beans. Coffee beans are a global commodity. There are many different types of beans, distinctive in the genre of plant that the bean comes from as well as the region that the bean is grown. Beyond these distinctions, beans are still a commodity. Blending different types of beans makes huge differences. Beanisimo Coffee is privy to decades old blending recipes from old world Italy.The roasting technique also plays a role in the taste of the coffee. Beanisimo Coffee will offer a wide range of coffees including:          

Italian Roast French Roast Columbian Dark African Roast Sumatra Bistro Blend Kona Kenya Decaf- available in the following blends: Bistro, Sumatra, French and Italian Roasts Espresso and Decaf Espresso

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Beanisimo Coffee

Each coffee is available in one pound and five pound packages, in both whole bean and ground versions. Every product that Beanisimo Coffee produces attempts to be the best in its respective product category based on quality and taste. 4.0 Market Analysis Summary Beanisimo Coffee has decided to concentrate on three distinct customer segments. The first is coffee houses/drive thru/espresso carts, restaurants, and the last is grocery stores. Each of the customers is distinct. The first segment prepares beverages for their clients, as does the second group along with meals, and the third segment sells the whole bean and ground coffee unprepared to their customers. While the coffee industry as a whole has been stagnate for a while, the high-end gourmet coffee market is still growing. This can be attributed to a number of factors including the maturing and increased sophistication of the American palette. Beanisimo Coffee faces competition from several competitors who focus on convenience or price as opposed to product quality which is the strength of Beanisimo Coffee. 4.1 Market Segmentation Beanisimo Coffee has segmented their market into three distinct customer segments: 1. Coffee houses/drive thrus/carts: These customers are purchasing coffee beans for the preparation and sale of coffee and espresso based drinks. Their establishments serve a wide variety of coffee and espresso beverages to customers that visit the coffee houses, drive thrus, or cart based servers. 2. Restaurants: These establishments are purchasing coffee and espresso to serve to their retail food customers. 3. Grocery Stores: These customers are purchasing the beans for either prepackaged, or bulk, resale to their customers. The grocers do not prepare the drinks for the customers like the other customer segments, they only sell the Beanisimo product as is purchased from Beanisimo Coffee. Below is some demographic information of the end consumers of the above customer segments.

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Beanisimo Coffee

U.S. Demographic Coffee Consumption Patterns 2001- 2002 U.S. Coffee Drinking Trends Survey (according to the National Coffee Association): 2002 107 million 57 million

U.S. adults who drank coffee every day U.S. adults who drank coffee occasionally Gender:    

2003 108.7 million 52 million

Men and women consume the same number of cups per day. Women are more excited about varieties and source of relaxation (social). Men like that coffee helps them "get things done." Women are more price conscious than men.

Age:  

18-25: prefer high caffeine, hot or iced drinks, all high octane, richer blends. 30-60: prefer premium and espresso with half the caffeine. Lite blends and half-caffeinated grew approximately 7% in 2001.

Other:    

64% of all coffee is consumed at breakfast; 28% between meals; 8% at all other meals. Sweetened or plain: 35% drink coffee black; 65% add sweetener and/or creamer. The average daily coffee drinker consumes 3.1 cups per day. In 2002, there were 29 million people who drank gourmet coffee every day. Gourmet is defined as specialty coffee (premium), espresso-based beverages (cappuccino, latte, café mocha, espresso), or frozen and iced coffee beverages.

Table: Market Analysis

Market Analysis

Potential Customers

Growth

Coffee houses, etc. Restaurants Grocery stores Total

7% 8% 7% 13.88%

Year 1

Year 2

Year 3

Year 4

Year 5

120 107 97 324

128 207 104 439

137 224 111 472

147 242 119 508

157 261 127 545

CAGR 6.95% 24.97% 6.97% 13.88%

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Beanisimo Coffee

Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy Beanisimo Coffee will be focusing on the three previously mentioned customer segments because of their desire of having a high-quality product. The coffee shops/drive thrus/carts segment often appreciates the finest quality coffee/espresso product. Restaurants are another customer segment that is attractive because they have a constant need for coffee and coffee/espresso is a common beverage served with meals, especially when people eat out. Additionally, restaurants are a year round business that serves coffee at all times during the day. Lastly, Beanisimo Coffee will target grocery stores which sell coffee in unprepared forms to a wide range of customers. Grocery stores are a natural customer since many people buy the bulk of the food they consume during the week from a grocery store, including coffee.

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Beanisimo Coffee

4.3 Industry Analysis Global Coffee Market: Coffee is the second-largest commodity traded after oil, with the worldwide retail coffee market being a $56 billion industry. The coffee belt is roughly bounded by the Tropics of Cancer and Capricorn and is mainly comprised of 28 countries. The top-ten coffee-producing countries are, in descending order: Brazil, Vietnam, Columbia, Indonesia, Mexico, Ethiopia, India, Guatemala, Ivory Coast, and Uganda. During the 1990's, Vietnam moved from fourth largest to second largest producer of coffee in the world, with most of its production in robusta beans. Coffee is available in several forms: bean, ground, liquid, and soluble: powdered, granules, freeze-dried. Worldwide, with the exception of North America, people prefer instant coffee and coffee is mainly prepared at home. Top coffee-importing countries as a % of world supplies: USA Germany Japan France Italy Spain Holland UK Sweden

55.6% 14.0% 7.7% 7.5% 6.2% 3.8% 3.4% 3.4% 2.2%

Top coffee-consuming regions (by pounds consumed per capita per year): Northern Europe* Central Europe South America Southern Europe North America Australia Japan * Does not include the UK, which only

23 16 7 10 10 5 5 consumes 5 pounds per capita per year.

U.S. Coffee Market: The total U.S. coffee market is projected to exceed $25 billion in 2002:

Revenues

1993 $13 B

1999 $18.5 B

2001 $20.7 B

The overall U.S. consumption of coffee has stagnated in recent years. However, consumers' purchase of gourmet coffee (specialty and premium) is increasing, according to the National Coffee Association.

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Beanisimo Coffee

Consumers are choosing to drink higher-grade coffees, moving away from price-based purchasing to trends that focus on increased quality in a wide variety of products. In the U.S., the coffee market has been segmented into two major categories: mass-market and specialty coffees. 1. Mass-Market: Mainly lower-priced product sold through grocery retail outlets and convenience stores. Mass-market coffee consumption is declining approximately 5% per year as people of all ages embrace out-of-home specialty coffees. Grocery retail outlets are providing the consumer with more premium coffee choices and are partnering with specialty coffee roasters capturing an increasing share of the mass-market sales channels. 2. Specialty Coffee: Characterized by a quality grade product with branding, historically sold only through coffee shops. Five years ago, there was a clear line between mass-market and specialty coffees in quality, price and distribution channels. Today, there are two subcategories that make the positioning more blurred: Premium and Specialty coffees. Specialty coffee retailers sell higher quality coffee at premium prices. Now, premium coffees have been introduced into other distribution channels to sell below specialty coffee retailer prices, undercutting the exclusive advantage coffee retailers once had. Specialty coffee sales grew 38% from $7.76 billion in 2000 to $10.71 billion in 2001, comprising 30% of the total U.S. coffee market. The specialty coffee market is characterized by being high fragmented with one large player, several mid-tier companies, and thousands of small regional companies. Before the success of the specialty coffee retailers in the 90's, coffee was a breakfast drink and choices were caffeinated or decaffeinated. The incredible success of the specialty coffee retailer can be attributed to introducing coffee as a social drink and providing the consumer with new unimagined choices of coffee drinks while introducing and conditioning the consumer to the taste of specialty coffees. Trends within the Industry: 

In the U.S., Specialty coffee sales grew 38% from $7.76 billion in 2000 to $10.71 billion in 2001, comprising 30% of the market. Thanks in large part to the marketing efforts of Starbucks, specialty coffee has become mainstream. It is the primary growth driver in the otherwise flat or declining coffee industry. Specialty coffee, which was once limited to coffee shops, is now available in a wide variety of mass-market channels.



Specialty coffee is moving into mass-market channels. Coffee is no longer being viewed as just a breakfast beverage; it is now a social beverage, and people like to drink premium branded coffee throughout the day. This has spurred partnerships with convenience stores and service companies that provide coffee to offices and throughout the hospitality industry. There is also a change in the type and quality of vending machines. Coffee vending companies are converting their vending machines to branded coffee.

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Beanisimo Coffee

4.3.1 Competition and Buying Patterns Beanisimo Coffee several different competitors: 

Allan Brothers: This Oregon based company operates as both a roaster as well as running coffee houses in Salem, Eugene, and Corvalis. The price point for their coffee is midway. The quality is decent, particularly at its price point.



Caffetto: This company widely distributes their roasted coffee throughout the Willamette River Valley. The quality and price point is pretty low. This company's coffees are attractive if the customer is very price sensitive and need an inexpensive product.



Assorted varieties distributed by food service vendors (e.g., Food Service of America and Sysco): These varieties are offered at a mid-price point with a low product quality. What you do get with these offerings is individual serving sizes. For a lot of restaurants this is advantageous, but the costs is carried over to the customer for this feature.

The buying patterns for customers is based on convenience, cost, and quality. Some customers are willing to pay more for the convenience of individual sized servings and the benefit of buying coffee from their existing food product vendor. For others coffee is just one more thing on the menu and quality is not that important. Lastly, there are many companies that recognize high quality coffee and espresso and will not settle for anything less. 5.0 Strategy and Implementation Summary Beanisimo Coffee will leverage its competitive edge of the highest quality product to quickly gain market penetration. This competitive edge is sustainable because it is based on the traditional roasting techniques of an old Italian master roaster. Beanisimo Coffee's marketing effort will be based on the communications that assert that Beanisimo Coffee has by far the best products. Beanisimo Coffee will be vocal in their assertion of the message that while its coffee costs a bit more, the variance is not material and the difference in quality is immeasurable. The sales strategy will work on converting perspective customers into long-term customers by emphasizing high-quality products and high levels of customer service. This strategy recognizes the fact that even though the company may have the best product, without excellent customer service the organization will not succeed. 5.1 Competitive Edge Beanisimo Coffee's competitive edge is its market leading product quality. By leveraging personal relationships, Beanisimo Coffee has gained the recipes and knowledge of an old Italian master roaster. Part of Beanisimo Coffee's secret is the old world roasting techniques, part of the winning formula is the art of blending different green beans to come up with special recipes. Green coffee beans are a commodity, therefore any variations in one company's coffee to another is based on roasting techniques if they are using the same types of beans. Beanisimo Coffee is able to stand out among its competitors by using time tested blends of different green beans to come up with compelling final products. This competitive edge is sustainable in the sense that this information that Beanisimo Coffee possesses is a trade secret and not available to other roasters. This will ensure Beanisimo Coffee will always have the finest products.

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Beanisimo Coffee

5.2 Marketing Strategy Beanisimo Coffee's marketing strategy will communicate to the target customer segments that its product clearly exceeds all of the competitors. The strategy will employ several methods to communicate the message. The first will be a print advertising campaign. Several different sources will be used including a local restaurant industry journal as well as a regional coffee shop trade publication. Advertisements in these publications will be effective in reaching the target audience. A second method that Beanisimo Coffee will use to "get out the word" will be by having several different cuppings. A cupping is analogous to a wine tasting where many different varieties are tasted, compared, and analyzed. The cuppings will be a perfect opportunity for Beanisimo Coffee to have prospective customers taste the difference between its products and the competition. To develop awareness of the superior product offerings, Beanisimo Coffee must offer a superior level of customer service to support the products. Beanisimo Coffee recognizes that you cannot solely compete on product alone, that much of the transaction involves excellent customer service. 5.3 Sales Strategy The sales strategy recognizes the need for the company as a whole to back up its superior product offerings with excellent service. This mantra is important because if there was not a service organization to back up the product, there would be no customers after the second or third purchase. Consequently, the sales strategy will focus on customer support and making the customer's experience with Beanisimo Coffee as positive as possible. This strategy will use account managers that look after individual customers, ensuring that their needs are being met. The account managers will be responsible for a certain number of existing accounts as well as will be provided the resources to attract new accounts.

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Beanisimo Coffee

5.3.1 Sales Forecast The sales forecast, described graphically in the following charts, is conservative in order to prevent unrealistic expectations and to help ensure the achievement of these goals. Sales will grow slowly but incrementally. As a start-up organization, it is realistic to expect that it will take time to grow the customer base so that it is at a sustainable level. As mentioned in the previous section, account managers will be used to service existing customers as well as generate new accounts. Having account managers with a vested interest in the satisfaction of the customers will help ensure disciplined sales growth. Without account managers, the management believes that it would be too easy for customers to "fall through the cracks." Table: Sales Forecast

Sales Forecast Year 1

Year 2

Year 3

Coffee houses Restaurants Grocery stores Total Sales

$35,824 $22,211 $24,360 $82,395

$136,004 $84,322 $92,483 $312,809

$154,545 $95,818 $105,091 $355,454

Direct Cost of Sales Coffee houses Restaurants Grocery stores Subtotal Direct Cost of Sales

Year 1 $11,822 $7,330 $8,039 $27,190

Year 2 $44,881 $27,826 $30,519 $103,227

Year 3 $51,000 $31,620 $34,680 $117,300

Sales

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Beanisimo Coffee

Chart: Sales Monthly

Chart: Sales by Year

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Beanisimo Coffee

5.4 Milestones Beanisimo Coffee has developed several milestones that will serve as a goal to which the entire organization will strive to achieve. All of the milestones are measurable allowing the responsible department to track progress and assess their ability to reach the milestone.    

Business plan completion. First major account: This will be the first large account that provides the company with a material recurring revenue stream. Profitability: For the accounting/finance department, this is a significant milestone. Revenue exceeding $300,000.

Table: Milestones

Milestones

Milestone Business plan completion First major account Profitability Revenue >$500,000 Totals

Start Date 1/1/2004 1/1/2004 1/1/2004 1/1/2004

End Date 2/15/2004 6/15/2004 10/30/2005 6/15/2006

Budget $0 $0 $0 $0

Manager Frank Sales Manager Frank Sales Manager

Department Operations Sales Accounting Sales

$0

Chart: Milestones

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Beanisimo Coffee

6.0 Web Plan Summary A website will be used to provide information regarding Beanisimo Coffee and the offered products to current and prospective customers. The site will be used for informational purposes, it will be not initially used for commerce purposes. Once the organization has been operating for a while they will reconsider the demand for coffee to be sold via the website. 6.1 Website Marketing Strategy The marketing strategy for the website will attempt to develop awareness for the website thereby directing people to the site for more information regarding the complete line of coffees and espressos that Beanisimo Coffee offers. Beanisimo Coffee will make submissions to search engines such as Google! to ensure that when a perspective customer types in "gourmet coffee" or some other such key word that Beanisimo Coffee's site is high up on the list of hits. In addition to search engine submissions, all of Beanisimo Coffee's promotional material will have the URL for the website, encouraging people to visit the site. 6.2 Development Requirements As mentioned before, the website will be used as a source of information. Because it will not, at least initially, have an e-commerce component to it, the development requirements will not be that significant. Beanisimo Coffee will leverage the technical expertise of a computer science graduate student (who typically work at below market wages) to develop the informational site. 7.0 Management Summary Frank Jones, the founder and driving force of Beanisimo Coffee will be the main component of the management team. Frank received his Bachelor of Arts and MBA from Willamette University. Frank has worked as a barista at several different coffee houses, and with an Italian master roaster who took him under his wing and showed him all aspects of the business. After one year in Italy Frank returned to the states and began to work on a business plan for a coffee roasting company.

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Beanisimo Coffee

7.1 Personnel Plan Responsibilities within Beanisimo Coffee will be delegated as follows: 

Frank: Business development, some accounting, some sales, and roasting.



Sales manager: This person is responsible for the sales effort and will be the account manager for all of the accounts initially and will develop new sales accounts as well.



Sales: As the business grows a sales person will be hired for account management responsibilities as well as some new sales development.



Shipping: One person will be hired for the position of shipping and delivery. For delivery within the Willamette River Valley, deliveries will be made by the company vehicle. Other shipments that are of greater distance from Beanisimo Coffee will be sent via UPS. This position will coordinate all aspects of order fulfillment.



Support staff: This position will employ initially one person in a capacity of supporting operations in a multitude of ways based on need. At times they will help support production and shipping.



Administrative support: This position will help with some of the accounting activities as well as other administrative support functions.

Table: Personnel

Personnel Plan Year 1

Year 2

Year 3

Frank Sales manager Sales Support Shipping Administration Total People

$24,000 $20,000 $10,500 $11,520 $7,680 $10,240 6

$24,000 $24,000 $18,000 $15,360 $15,360 $15,360 6

$30,000 $30,000 $18,000 $15,360 $15,360 $15,360 6

Total Payroll

$83,940

$112,080

$124,080

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Beanisimo Coffee

8.0 Financial Plan The following sections will outline important financial information. 8.1 Important Assumptions The following table details important Financial Assumptions. Table: General Assumptions

General Assumptions

Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other

Year 1

Year 2

Year 3

1 10.00% 10.00% 30.00% 0

2 10.00% 10.00% 30.00% 0

3 10.00% 10.00% 30.00% 0

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Beanisimo Coffee

8.2 Break-even Analysis The Break-even Analysis indicates that approximately $19,000 will be needed in monthly revenue to reach the break-even point. Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even

$19,170

Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost

33% $12,844

Chart: Break-even Analysis

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Beanisimo Coffee

8.3 Projected Profit and Loss The following table will indicate Projected Profit and Loss. Table: Profit and Loss

Pro Forma Profit and Loss Year 1

Year 2

Year 3

Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales

$82,395 $27,190 $0 $27,190

$312,809 $103,227 $0 $103,227

$355,454 $117,300 $0 $117,300

Gross Margin Gross Margin %

$55,205 67.00%

$209,582 67.00%

$238,154 67.00%

$83,940 $8,394 $15,600 $14,400 $7,800 $9,000 $12,591 $2,400

$112,080 $11,208 $15,600 $14,400 $7,800 $9,000 $16,812 $2,400

$124,080 $12,408 $15,600 $14,400 $7,800 $9,000 $18,612 $2,400

Total Operating Expenses

$154,125

$189,300

$204,300

Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred

($98,920) ($83,320) $0 $0

$20,282 $35,882 $0 $6,085

$33,854 $49,454 $0 $10,156

Net Profit Net Profit/Sales

($98,920) -120.06%

$14,198 4.54%

$23,698 6.67%

Expenses Payroll Sales and Marketing and Other Expenses Depreciation Rent Utilities Insurance Payroll Taxes Other

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Beanisimo Coffee

Chart: Profit Monthly

Chart: Profit Yearly

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Beanisimo Coffee

Chart: Gross Margin Yearly

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Beanisimo Coffee

8.4 Projected Cash Flow The following table and chart will detail information regarding Cash Flow. Table: Cash Flow

Pro Forma Cash Flow Year 1

Year 2

Year 3

$20,599 $43,327 $63,926

$78,202 $182,958 $261,161

$88,863 $257,031 $345,895

$0 $0 $0 $0 $0 $0 $0 $63,926

$0 $0 $0 $0 $0 $0 $20,000 $281,161

$0 $0 $0 $0 $0 $0 $0 $345,895

Year 1

Year 2

Year 3

$83,940 $77,036 $160,976

$112,080 $178,464 $290,544

$124,080 $193,667 $317,747

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 $0 $0 $0 $0 $0 $160,976

$0 $0 $0 $0 $0 $0 $0 $290,544

$0 $0 $0 $0 $0 $0 $0 $317,747

Net Cash Flow Cash Balance

($97,050) $18,950

($9,383) $9,567

$28,148 $37,715

Cash Received

Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent

Page 23

Beanisimo Coffee

Chart: Cash

Page 24

Beanisimo Coffee

8.5 Projected Balance Sheet The following table displays the Projected Balance Sheet. Table: Balance Sheet

Pro Forma Balance Sheet Year 1

Year 2

Year 3

$18,950 $18,469 $4,722 $0 $42,141

$9,567 $70,118 $17,927 $0 $97,612

$37,715 $79,677 $20,372 $0 $137,763

$78,000 $15,600 $62,400 $104,541

$78,000 $31,200 $46,800 $144,412

$78,000 $46,800 $31,200 $168,963

Year 1

Year 2

Year 3

Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$9,461 $0 $0 $9,461

$15,135 $0 $0 $15,135

$15,988 $0 $0 $15,988

Long-term Liabilities Total Liabilities

$0 $9,461

$0 $15,135

$0 $15,988

$205,000 ($11,000) ($98,920) $95,080 $104,541

$225,000 ($109,920) $14,198 $129,277 $144,412

$225,000 ($95,723) $23,698 $152,975 $168,963

$95,080

$129,277

$152,975

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 Liabilities and Capital Current Liabilities

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

8.6 Business Ratios The following table shows important Business Ratios, specific to Beanisimo as well as the industry as a whole.

Page 25

Beanisimo Coffee

Table: Ratios

Ratio Analysis Year 1 n.a.

Year 2 279.64%

Year 3 13.63%

Industry Profile -2.25%

17.67% 4.52% 0.00% 40.31% 59.69% 100.00%

48.55% 12.41% 0.00% 67.59% 32.41% 100.00%

47.16% 12.06% 0.00% 81.53% 18.47% 100.00%

20.65% 16.07% 21.35% 58.07% 41.93% 100.00%

9.05% 0.00% 9.05% 90.95%

10.48% 0.00% 10.48% 89.52%

9.46% 0.00% 9.46% 90.54%

21.87% 19.28% 41.15% 58.85%

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

100.00% 67.00% 187.06% 0.00% -120.06%

100.00% 67.00% 62.46% 0.00% 6.48%

100.00% 67.00% 60.33% 0.00% 9.52%

100.00% 32.41% 21.65% 1.81% 1.84%

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

4.45 3.95 9.05% -104.04% -94.62%

6.45 5.27 10.48% 15.69% 14.04%

8.62 7.34 9.46% 22.13% 20.04%

2.24 1.31 3.37% 45.32% 6.17%

Additional Ratios Net Profit Margin Return on Equity

Year 1 -120.06% -104.04%

Year 2 4.54% 10.98%

Year 3 6.67% 15.49%

n.a n.a

3.35 55 10.91 9.14 27 0.79

3.35 69 9.12 12.17 24 2.17

3.35 103 6.13 12.17 29 2.10

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

0.10 1.00

0.12 1.00

0.10 1.00

n.a n.a

$32,680 0.00

$82,477 0.00

$121,775 0.00

n.a n.a

1.27 9% 2.00 0.87 0.00

0.46 10% 0.63 2.42 0.00

0.48 9% 2.36 2.32 0.00

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

Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth

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

Page 26

Appendix Table: Sales Forecast

Sales Forecast Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0 $0 $0

$0 $0 $0

$0 $0 $0

$2,500 $1,550 $1,700

$2,656 $1,647 $1,806

$2,899 $1,797 $1,971

$3,365 $2,086 $2,288

$3,989 $2,473 $2,713

$4,545 $2,818 $3,091

$4,989 $3,093 $3,393

$5,225 $3,240 $3,553

$5,656 $3,507 $3,846

$0

$0

$0

$5,750

$6,109

$6,668

$7,740

$9,175

$10,454

$11,475

$12,018

$13,009

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Coffee houses

$0

$0

$0

$825

$876

$957

$1,110

$1,316

$1,500

$1,646

$1,724

$1,866

Restaurants

$0

$0

$0

$512

$543

$593

$688

$816

$930

$1,021

$1,069

$1,157

Grocery stores

$0

$0

$0

$561

$596

$651

$755

$895

$1,020

$1,120

$1,172

$1,269

Subtotal Direct Cost of Sales

$0

$0

$0

$1,898

$2,016

$2,200

$2,554

$3,028

$3,450

$3,787

$3,966

$4,293

Sales Coffee houses Restaurants Grocery stores Total Sales

Direct Cost of Sales

0% 0% 0%

Page 1

Appendix Table: Personnel

Personnel Plan

Frank Sales manager Sales Support Shipping Administration Total People

Total Payroll

0% 0% 0% 0% 0% 0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$2,000 $0 $0 $0 $0 $0

$2,000 $0 $0 $0 $0 $0

$2,000 $2,000 $0 $0 $0 $0

$2,000 $2,000 $0 $1,280 $0 $0

$2,000 $2,000 $0 $1,280 $0 $1,280

$2,000 $2,000 $1,500 $1,280 $0 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

$2,000 $2,000 $1,500 $1,280 $1,280 $1,280

1

1

2

2

3

5

6

6

6

6

6

6

$2,000

$2,000

$4,000

$5,280

$6,560

$8,060

$9,340

$9,340

$9,340

$9,340

$9,340

$9,340

Page 2

Appendix Table: General Assumptions

General Assumptions Month 1 Plan Month

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

1

2

3

4

5

6

7

8

9

10

11

12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Tax Rate

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

0

0

0

0

0

0

0

0

0

0

0

0

Other

Page 3

Appendix Table: Profit and Loss

Pro Forma Profit and Loss Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$0

$0

$0

$5,750

$6,109

$6,668

$7,740

$9,175

$10,454

$11,475

$12,018

$13,009

Direct Cost of Sales

$0

$0

$0

$1,898

$2,016

$2,200

$2,554

$3,028

$3,450

$3,787

$3,966

$4,293

Other Costs of Goods

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$0

$1,898

$2,016

$2,200

$2,554

$3,028

$3,450

$3,787

$3,966

$4,293

Gross Margin

$0

$0

$0

$3,853

$4,093

$4,467

$5,185

$6,147

$7,004

$7,688

$8,052

$8,716

0.00%

0.00%

0.00%

67.00%

67.00%

67.00%

67.00%

67.00%

67.00%

67.00%

67.00%

67.00%

$2,000

$2,000

$4,000

$5,280

$6,560

$8,060

$9,340

$9,340

$9,340

$9,340

$9,340

$9,340

$200

$200

$400

$528

$656

$806

$934

$934

$934

$934

$934

$934

Depreciation

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

$1,300

Rent

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

$650

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

$750

$300

$300

$600

$792

$984

$1,209

$1,401

$1,401

$1,401

$1,401

$1,401

$1,401

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$6,600

$6,600

$9,100

$10,700

$12,300

$14,175

$15,775

$15,775

$15,775

$15,775

$15,775

$15,775

Profit Before Interest and Taxes

($6,600)

($6,600)

($9,100)

($6,848)

($8,207)

($9,708)

($10,590)

($9,628)

($8,771)

($8,087)

($7,723)

($7,059)

EBITDA

Gross Margin %

Expenses Payroll Sales and Marketing and Other Expenses

Utilities Insurance Payroll Taxes Other

Total Operating Expenses

15%

($5,300)

($5,300)

($7,800)

($5,548)

($6,907)

($8,408)

($9,290)

($8,328)

($7,471)

($6,787)

($6,423)

($5,759)

Interest Expense

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Taxes Incurred

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($6,600)

($6,600)

($9,100)

($6,848)

($8,207)

($9,708)

($10,590)

($9,628)

($8,771)

($8,087)

($7,723)

($7,059)

0.00%

0.00%

0.00%

-119.09%

-134.35%

-145.59%

-136.82%

-104.94%

-83.91%

-70.48%

-64.27%

-54.26%

Net Profit Net Profit/Sales

Page 4

Appendix Table: Cash Flow

Pro Forma Cash Flow Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Sales

$0

$0

$0

$1,438

$1,527

$1,667

$1,935

$2,294

$2,613

$2,869

$3,004

$3,252

Cash from Receivables

$0

$0

$0

$0

$144

$4,321

$4,596

$5,028

$5,841

$6,913

$7,866

$8,620

Subtotal Cash from Operations

$0

$0

$0

$1,438

$1,671

$5,988

$6,530

$7,321

$8,454

$9,782

$10,870

$11,872

Cash Received Cash from Operations

Additional Cash Received Sales Tax, VAT, HST/GST Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$0

$0

$1,438

$1,671

$5,988

$6,530

$7,321

$8,454

$9,782

$10,870

$11,872

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$2,000

$2,000

$4,000

$5,280

$6,560

$8,060

$9,340

$9,340

$9,340

$9,340

$9,340

$9,340

$110

$3,300

$3,317

$3,943

$8,054

$6,607

$7,247

$8,098

$8,696

$9,057

$9,293

$9,314

$2,110

$5,300

$7,317

$9,223

$14,614

$14,667

$16,587

$17,438

$18,036

$18,397

$18,633

$18,654

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,110

$5,300

$7,317

$9,223

$14,614

$14,667

$16,587

$17,438

$18,036

$18,397

$18,633

$18,654

Expenditures

0.00%

Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent

Subtotal Cash Spent Net Cash Flow

($2,110)

($5,300)

($7,317)

($7,786)

($12,943)

($8,679)

($10,056)

($10,117)

($9,582)

($8,615)

($7,762)

($6,782)

Cash Balance

$113,890

$108,590

$101,273

$93,487

$80,544

$71,865

$61,809

$51,692

$42,110

$33,495

$25,732

$18,950

Page 5

Appendix Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$116,000 $0 $0 $0 $116,000

$113,890 $0 $0 $0 $113,890

$108,590 $0 $0 $0 $108,590

$101,273 $0 $0 $0 $101,273

$93,487 $4,313 $2,087 $0 $99,887

$80,544 $8,750 $2,217 $0 $91,512

$71,865 $9,430 $2,420 $0 $83,715

$61,809 $10,639 $2,809 $0 $75,257

$51,692 $12,492 $3,330 $0 $67,514

$42,110 $14,492 $3,795 $0 $60,396

$33,495 $16,185 $4,165 $0 $53,845

$25,732 $17,332 $4,362 $0 $47,427

$18,950 $18,469 $4,722 $0 $42,141

$78,000 $0 $78,000 $194,000

$78,000 $1,300 $76,700 $190,590

$78,000 $2,600 $75,400 $183,990

$78,000 $3,900 $74,100 $175,373

$78,000 $5,200 $72,800 $172,687

$78,000 $6,500 $71,500 $163,012

$78,000 $7,800 $70,200 $153,915

$78,000 $9,100 $68,900 $144,157

$78,000 $10,400 $67,600 $135,114

$78,000 $11,700 $66,300 $126,696

$78,000 $13,000 $65,000 $118,845

$78,000 $14,300 $63,700 $111,127

$78,000 $15,600 $62,400 $104,541

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

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 Liabilities and Capital

Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities

$0 $0 $0 $0

$3,190 $0 $0 $3,190

$3,190 $0 $0 $3,190

$3,673 $0 $0 $3,673

$7,835 $0 $0 $7,835

$6,367 $0 $0 $6,367

$6,978 $0 $0 $6,978

$7,809 $0 $0 $7,809

$8,394 $0 $0 $8,394

$8,747 $0 $0 $8,747

$8,983 $0 $0 $8,983

$8,988 $0 $0 $8,988

$9,461 $0 $0 $9,461

Long-term Liabilities Total Liabilities

$0 $0

$0 $3,190

$0 $3,190

$0 $3,673

$0 $7,835

$0 $6,367

$0 $6,978

$0 $7,809

$0 $8,394

$0 $8,747

$0 $8,983

$0 $8,988

$0 $9,461

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

$205,000 ($11,000) $0 $194,000 $194,000

$205,000 ($11,000) ($6,600) $187,400 $190,590

$205,000 ($11,000) ($13,200) $180,800 $183,990

$205,000 ($11,000) ($22,300) $171,700 $175,373

$205,000 ($11,000) ($29,148) $164,853 $172,687

$205,000 ($11,000) ($37,355) $156,645 $163,012

$205,000 ($11,000) ($47,062) $146,938 $153,915

$205,000 ($11,000) ($57,652) $136,348 $144,157

$205,000 ($11,000) ($67,280) $126,720 $135,114

$205,000 ($11,000) ($76,051) $117,949 $126,696

$205,000 ($11,000) ($84,138) $109,862 $118,845

$205,000 ($11,000) ($91,861) $102,139 $111,127

$205,000 ($11,000) ($98,920) $95,080 $104,541

Net Worth

$194,000

$187,400

$180,800

$171,700

$164,853

$156,645

$146,938

$136,348

$126,720

$117,949

$109,862

$102,139

$95,080

Page 6