executive search rescue

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January 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 marketing@paloalto.com. 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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Confidentiality Agreement

 

The undersigned reader acknowledges that the information provided by _________________________ in this business plan is confidential; therefore, reader agreesnot to disclose it without the express written permission of _________________________.

It is acknowledged by reader that information to be furnished in this business plan is in allrespects confidential in nature, other than information which is in the public domain throughother means and that any disclosure or use of same by reader, may cause serious harm or

damage to _________________________.

Upon request, this document is to be immediately returned to _________________________.

 ___________________Signature

 ___________________

Name (typed or printed)

 ___________________Date

This is a business plan. It does not imply an offering of securities.

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.3 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Table of Contents

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1.0 Executive Summary

Introduction

The Executive Search & Rescue Placement Firm (Executive) is an executive search firm thatspecializes in emerging companies, with an emphasis on high technology firms. Executive willbe serving metropolitan Portland, an active, growing market. Through a well connectednetwork of colleagues in the emerging company market niche, and a sophisticated predictivescreening system, The Executive Search & Rescue Placement Firm will steadily gain marketshare.

To achieve the desired growth and profitability of the company, management goals are tohave at least four of the top 10 fastest growing Oregon companies utilizing Executive'sservices, and to increase the number of clients served by 20% through superior service.

The Company

Executive is an Oregon registered corporation, founded and owned by Mr. Dan Bloodhound.Mr Bloodhound has over ten years experience in the emerging company and high tech market

with excellent contacts that he will leverage into future clients. Executive plans to place awide range of executive positions, including programmers, project managers, CEO's andCFO's. Executive will work on a contingency basis, meaning that they will be paid onplacement. This arrangement allows them to work for many different clients at the same time.

The staff will consist of Mr. Bloodhound working full time. Executive will hire a full-timesecretary/receptionist in month two, a part-time generalist in month three, and a full-timeaccount executive in month four. From month four until the foreseeable future, theorganization will be able to survive with a four person headcount.

The Market

The Executive Search & Rescue Placement Firm will be targeting the emerging companymarket in the Portland metropolitan market. Portland will be targeted because 1) it is whereMr. Bloodhound's network is located 2) Portland is a prime place for emerging companies, itis part of the silicon forest and has the most VC money on the West coast behind Seattle andthe Bay area.

Executive is concentrating on emerging companies for the reason that emerging companiesneed executives more often than less growth oriented companies. As a company grows, thereis an increased demand for leadership.

Within the emerging market, Executive will be targeting both high-technology firms and non-high-technology firms. The high tech firms make up the largest group of emergingcompanies, up to 80% of the market. Although most emerging companies are high tech, notll d E ti till id l dd d i f th i d ill t

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month eight and will earn $48,000 in revenues based on $212,000 in sales by year three.The Break-even Analysis indicates $11,000 is needed in monthly revenue to pay for the firm'sfixed costs. The company will have no variable costs.

($50,000)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2001 2002 2003

Sales

Gross Margin

Net Profit

Highlights

1.1 Objectives

The objectives for the first three years include:

1. To create a service-based company whose primary goal is to exceed customers'expectations.

2. The utilization of Executive in at least four of the top 10 fastest growing Oregoncompanies as listed by the Business Journal of Portland.

3. To increase the number of clients served by 20% through superior service.4. To become profitable within the first year of operation.

1.2 Mission

The Executive Search & Rescue Placement Firm's mission is to service emerging companiesith t t di ti W i t t tt t d i t i t Wh dh t

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2.0 Company Summary

Executive, soon to be located in downtown Portland, is an executive search firm for emergingcompanies. While the majority of Executive's clients will be high technology clients, Executivewill be able to serve any type of fast growing company.

Executives' extensive networking system will allow them to have a high placement ratio.Additionally, Executives sophisticated screening system will ensure that the placements willbe long lived.

2.1 Company Ownership

Executive is an Oregon Corporation, founded and owned by Dan Bloodhound.

2.2 Start-up Summary

Executive will have the following start-up costs:

• Legal fees. For the formation of the business form as well as generation and reviewof assorted contracts.

• Office equipment. This includes desks, chairs, filing cabinets and couches, etc.• Computer system. This will include the necessary computer equipment for a server

and three workstations. Also needed will be a printer, CD-RW, and a DSL connection.• Web creation fees. Executive will have a website and these are the costs associated

with the development of the site.• Advertising costs.

The assets that are used for more than a year will be listed as long-term assets anddepreciated using the straight-line method.

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Table: Start-up

Start-up

Requirements

Start-up ExpensesLegal $1,000Stationery etc. $250Brochures $0Website Development $500Insurance $0Rent $0

Research and Development $0Expensed Equipment $0Other $0Total Start-up Expenses $1,750

Start-up Assets NeededCash Balance on Starting Date $20,750Other Current Assets $0Total Current Assets $20,750

Long-term Assets $2,500Total Assets $23,250Total Requirements $25,000

Funding

InvestmentDan $25,000Investor 2 $0Other $0Total Investment $25,000

Current Liabilities

  Accounts Payable $0Current Borrowing $0Other Current Liabilities $0Current Liabilities $0

Long-term Liabilities $0Total Liabilities $0

Loss at Start-up ($1,750)Total Capital $23,250Total Capital and Liabilities $23,250

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$0

$5,000

$10,000

$15,000

$20,000

$25,000

Expenses Assets Investment Loans

Start-up

3.0 Services

Executive will provide a wide range of placement services. Executive will specialize in thehigh-tech niche of emerging companies, but is equally competent for non-high tech

companies. Executive can place a wide range of executive positions from CEO's to CFO's.

Executive works on a contingency basis, meaning that they are paid on placement. Thisarrangement allows them to work for many different clients at the same time.

Currently, there are approximately six different executive search firms in Portland. BecausePortland is a part of the silicon forest, a hot bed of emerging technology firms, the market isgrowing at exciting rates.

4.0 Market Analysis Summary

The Executive Search & Rescue Placement Firm will be targeting the emerging companymarket in the Portland metropolitan market. Portland will be targeted because 1) it is whereDan's network is located 2) Portland is a prime place for emerging companies it is part of the

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4.1 Market Segmentation

Our customers can be divided into two different groups:

1. High-tech firms. The high-tech firm deals with some aspect of technology, it couldbe design, or manufacturing. These firms currently make up over 80% of the top 20fastest growing companies in Oregon.

2. Non-high-tech firms. While this category of emerging companies is far smaller then

high-tech companies, it should by no means be neglected. There are plenty of fastgrowing companies in this segment and Executive will be able to serve them.

High-tech Firms

Non-high-tech Firms

Other 

Market Analysis (Pie)

Table: Market Analysis

Market AnalysisPotential Customers Growth 2001 2002 2003 2004 2005 CAGRHigh-tech Firms 14% 245 279 318 363 414 14.01%Non-high-tech Firms 10% 126 139 153 168 185 10.08%Other 0% 0 0 0 0 0 0.00%Total 12.72% 371 418 471 531 599 12.72%

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4.2 Target Market Segment Strategy

Executive is concentrating on emerging companies for the intuitive reason that emergingcompanies need executives more often then more stagnant companies. As a company grows,there is an increased demand for leadership.

Within the emerging company label, there are predominantly high technology companies.While this has been tempered somewhat by the recent economic slowdown these companiesare growing at astronomical rates.

An example at just how fast some companies are growing is a non-Oregon (for illustrativepurposes) company called eBay. eBay's CEO Meg Whitman used to be a executive at HasboroToys. After two years at eBay, Meg was worth more (from eBay stock) than the entireHasboro family after over 30 years of business. Recently tech stocks have been hit, and eBayis no exception, however, they were hit less as they are a profitable Internet company. Thepoint is that a lot of these companies are growing very fast and this is the perfect time andplace for an executive search firm to fuel this growth.

4.3 Service Business Analysis

There are two business models for executive search firms:

1. Retainer firms. These firms typically command 30-35% of the executives first yearsalary. The firm is paid regardless of finding a candidate. The benefit of using this firmis that the search firm is under extra pressure to find the right candidate and willspend extra time to get the person that "fits the bill." This setup at the same time

limits the number of positions that the search firm can look for at once, as they havean obligation to find the executive for the retainer fee. This is a more unusual set up.

2. Contingency firms. This is the more common arrangement where a fee is paid whenthe search firm finds an appropriate candidate. The advantage to the client is thatthey only pay if services are rendered. This creates an economic incentive to perform,but when the company is in a hurry to find someone, the incentive is lost to somedegree regarding speed. This set up is advantageous to the search firm because itallows them to search for a wide range of clients at once. The margins for the

contingency model are generally the same as the retainer firms.

4.3.1 Competition and Buying Patterns

Portland currently has about six to 10 executive search firms. There are other search firms

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applying for the stated position.

5.2 Sales Strategy

Executive's sales strategy will be based on attracting emerging companies to sign us up as aservice provider. Secondarily, we will need to be attractive enough to the prospectiveexecutives that they are coming to us to help them find a job.

Developing attraction to the emerging companies will be based on Executive's ability to

communicate their competitive advantages and how they translate those into finding qualifiedexecutives. This will be done by showing how truly "connected" Dan is in the emergingcompany industry. It is somewhat unusual for someone to start out in the industry and thenopen up a search firm. People from the recruitment industry do not often come from theindustry they are searching for. They typically come from a sales or personnel background.Dan's background provides him with additional contacts that are appealing to the companies.

Executive's strategy will also be to show how effective the structured behavioral interviewsare. If this can be done then this will be a significant advantage because it signals thatExecutive can pick more successful candidates through their screening process.

Having a long list of industry clients is helpful in attracting executives to The ExecutiveSearch & Rescue Placement Firm. If the executive feels that The Executive Search & RescuePlacement Firm is well connected in the industry and has an accomplished list of clients, thenthey will feel more confident that Executive will have a higher chance in finding them a job.

5.2.1 Sales Forecast

The first month will be spent setting up the office. It is unlikely that there will be much salesactivity. In addition to dealing with legal and advertising issues, time will be spent with thephysical assembly of the office and the development of the systems for the back endstructure.

Additionally, during the first month Dan will be developing the structured behavioral interviewsystem. By the second month the office will open and ready to go. Dan will be working with

both emerging clients as well as bringing in executives and running them through thescreening process once he knows what positions he is looking to fill.

Sales will steadily grow from month two. Executives expects to have a surge by month fourand will respond by bringing on board an account executive to help handle the accounts.

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$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

High-tech Firms

Non-high-tech Firms

Sales Monthly

Table: Sales Forecast

Sales ForecastSales 2001 2002 2003High-tech Firms $96,730 $156,478 $181,547Non-high-tech Firms $22,930 $25,654 $31,254Total Sales $119,660 $182,132 $212,801

Direct Cost of Sales 2001 2002 2003High-tech Firms $0 $0 $0Non-high-tech Firms $0 $0 $0Subtotal Direct Cost of Sales $0 $0 $0

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5.3 Milestones

The Executive Search & Rescue Placement Firm will have several milestones early on:

1. Business plan completion. This will be done as a road map for the organization.While we do not need a business plan to raise capital, it will be an indispensable toolfor the ongoing performance and improvement of the company.

2. Set-up office. 3. Development of the structured behavioral interview processes. 4. Bringing on an account executive.

Table: Milestones

MilestonesMilestone Start Date End Date Budget Manager DepartmentBusiness Plan Completion 1/1/01 2/1/01 $0 DanOffice Set-up 1/1/01 2/1/01 $0 DanStructured Behavioral InterviewDevelopment

1/1/01 2/1/01 $0 Dan

Bringing on an Account Executive 1/1/01 4/1/01 $0 DanTotals $0

6.0 Management Summary

The Executive Search & Rescue Placement Firm is owned by Dan Bloodhound. Dan receivedhis undergraduate degree from the University of Portland, majoring in communications andcomputer science. Dan spent his first three years at a then emerging company calledTektronix. At Tektronix Dan did business-to-business sales. This experience was particularly

valuable as it was his first introduction to sales in an emerging company. At the end of thethree years, Dan was longing for a position that offered him more responsibility, so he movedto Mentor Graphics and took on a supervisory role in the sales department. The MentorGraphics position was valuable because it gave Dan more interaction with the otherdepartments in the company. Dan was responsible for coordinating the sales program withthe different departments.

After Mentor Graphics, Dan fell into a wonderful opportunity at Timberline Software thatprovided him with even more responsibility within the company. The new responsibilities that

Dan had, coupled with being introduced to an new sector in the high-tech community becamequite an asset for Dan. He finally decided with his experience in the emerging businessindustry, in addition to his incredible network of colleagues, it made perfect sense to start hisown executive search firm.

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Table: Personnel

Personnel Plan2001 2002 2003

Dan $30,000 $35,000 $40,000Secretary/Receptionist $16,500 $18,000 $18,000Part-time Employee $8,000 $9,600 $9,600

  Account Executive $28,800 $38,400 $40,000Total People 4 4 4Total Payroll $83,300 $101,000 $107,600

7.0 Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details some of the important financial assumptions.

Table: General Assumptions

General Assumptions2001 2002 2003

Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 25.00% 25.00% 25.00%Sales on Credit % 85.00% 85.00% 85.00%

Other 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $83,300 $101,000 $107,600Sales on Credit $101,711 $154,812 $180,881New Accounts Payable $117,395 $147,010 $159,792

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7.3 Projected Profit and Loss

The following table will indicate projected profit and loss.

Table: Profit and Loss

Pro Forma Profit and Loss2001 2002 2003

Sales $119,660 $182,132 $212,801Direct Cost of Sales $0 $0 $0Other $0 $0 $0

------------ ------------ ------------Total Cost of Sales $0 $0 $0Gross Margin $119,660 $182,132 $212,801Gross Margin % 100.00% 100.00% 100.00%Expenses:Payroll $83,300 $101,000 $107,600Sales and Marketing and Other Expenses $2,400 $2,400 $2,400Depreciation $828 $828 $828Leased Equipment $0 $0 $0Utilities $2,100 $2,100 $2,100Insurance $1,500 $1,500 $1,500

Rent $18,000 $18,000 $18,000Payroll Taxes $12,495 $15,150 $16,140Other $0 $0 $0

------------ ------------ ------------Total Operating Expenses $120,623 $140,978 $148,568Profit Before Interest and Taxes ($963) $41,154 $64,233Interest Expense $0 $0 $0Taxes Incurred $0 $10,289 $16,058Net Profit ($963) $30,866 $48,175Net Profit/Sales -0.80% 16.95% 22.64%Include Negative Taxes FALSE TRUE TRUE

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7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow.

($10,000)

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$10,000

$15,000

$20,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Net Cash Flow

Cash Balance

Cash

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Table: Cash Flow

Pro Forma Cash Flow 2001 2002 2003

Cash ReceivedCash from Operations:Cash Sales $17,949 $27,320 $31,920Cash from Receivables $83,657 $145,386 $176,254

Subtotal Cash from Operations $101,606 $172,706 $208,174

 Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $0 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0

Subtotal Cash Received $101,606 $172,706 $208,174

Expenditures 2001 2002 2003Expenditures from Operations:Cash Spending $2,400 $3,429 $4,006Payment of Accounts Payable $114,755 $145,878 $159,158

Subtotal Spent on Operations $117,155 $149,307 $163,164

 Additional Cash SpentNon Operating (Other) Expense $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0Purchase Other Current Assets $0 $0 $0Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0

Subtotal Cash Spent $117,155 $149,307 $163,164

Net Cash Flow ($15,549) $23,399 $45,010Cash Balance $5,201 $28,600 $73,610

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7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

 AssetsCurrent Assets 2001 2002 2003Cash $5,201 $28,600 $73,610

  Accounts Receivable $18,054 $27,480 $32,107Other Current Assets $0 $0 $0Total Current Assets $23,255 $56,080 $105,718Long-term AssetsLong-term Assets $2,500 $2,500 $2,500

  Accumulated Depreciation $828 $1,656 $2,484Total Long-term Assets $1,672 $844 $16Total Assets $24,927 $56,924 $105,734

Liabilities and Capital2001 2002 2003

  Accounts Payable $2,640 $3,772 $4,406Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $2,640 $3,772 $4,406

Long-term Liabilities $0 $0 $0Total Liabilities $2,640 $3,772 $4,406

Paid-in Capital $25,000 $25,000 $25,000Retained Earnings ($1,750) ($2,713) $28,153Earnings ($963) $30,866 $48,175Total Capital $22,287 $53,153 $101,327Total Liabilities and Capital $24,927 $56,924 $105,734Net Worth $22,287 $53,153 $101,327

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Appendix Table: Sales Forecast

Sales Forecast

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecHigh-tech Firms $0 $4,500 $6,454 $7,154 $7,985 $8,125 $8,678 $9,125 $9,654 $10,854 $11,547 $12,654Non-high-tech Firms $0 $0 $2,250 $2,154 $2,500 $2,458 $2,154 $2,254 $2,414 $2,345 $2,256 $2,145Total Sales $0 $4,500 $8,704 $9,308 $10,485 $10,583 $10,832 $11,379 $12,068 $13,199 $13,803 $14,799

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecHigh-tech Firms $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Non-high-tech Firms $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Appendix

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Appendix Table: Personnel

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecDan $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500Secretary/Receptionist $0 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500Part-time Employee $0 $0 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800  Account Executive $0 $0 $0 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200Total People 1 2 3 4 4 4 4 4 4 4 4 4Total Payroll $2,500 $4,000 $4,800 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000

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Appendix Table: General Assumptions

General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPlan Month 1 2 3 4 5 6 7 8 9 10 11 12Current 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 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%Sales on Credit % 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00% 85.00%Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $2,500 $4,000 $4,800 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000Sales on Credit $0 $3,825 $7,398 $7,912 $8,912 $8,996 $9,207 $9,672 $10,258 $11,219 $11,733 $12,579New Accounts Payable $4,675 $6,400 $7,320 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000

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Appendix Table: Profit and Loss

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSales $0 $4,500 $8,704 $9,308 $10,485 $10,583 $10,832 $11,379 $12,068 $13,199 $13,803 $14,799Direct Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

-- -- -- --- --- - --- --- -- -- - - --- --- -- -- - -- --- -- -- --- - --- --- -- -- - -- --- -- -- --- - --- --- -- -- - -- --- -- -- --- -- --- -- -- --- - --- --- --- -- -- --- --- --- - -- -- -- --- -- -Total Cost of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Gross Margin $0 $4,500 $8,704 $9,308 $10,485 $10,583 $10,832 $11,379 $12,068 $13,199 $13,803 $14,799Gross Margin % 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Expenses:Payroll $2,500 $4,000 $4,800 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000Sales and Marketing and Other Expenses $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200Depreciation $69 $69 $69 $69 $69 $69 $69 $69 $69 $69 $69 $69Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Utilities $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $175

Insurance $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125Rent $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500Payroll Taxes 15% $375 $600 $720 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

-- -- -- --- --- - --- --- -- -- - - --- --- -- -- - -- --- -- -- --- - --- --- -- -- - -- --- -- -- --- - --- --- -- -- - -- --- -- -- --- -- --- -- -- --- - --- --- --- -- -- --- --- --- - -- -- -- --- -- -Total Operating Expenses $4,944 $6,669 $7,589 $11,269 $11,269 $11,269 $11,269 $11,269 $11,269 $11,269 $11,269 $11,269Profit Before Interest and Taxes ($4,944) ($2,169) $1,115 ($1,961) ($784) ($686) ($437) $110 $799 $1,930 $2,534 $3,530Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit ($4,944) ($2,169) $1,115 ($1,961) ($784) ($686) ($437) $110 $799 $1,930 $2,534 $3,530Net Profit/Sales 0.00% -48.20% 12.81% -21.07% -7.48% -6.48% -4.03% 0.97% 6.62% 14.62% 18.36% 23.85%Include Negative Taxes

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Appendix Table: Cash Flow

Pro Forma Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash ReceivedCash from Operations:Cash Sales $0 $675 $1,306 $1,396 $1,573 $1,587 $1,625 $1,707 $1,810 $1,980 $2,070 $2,220Cash from Receivables $0 $0 $2,040 $5,731 $7,672 $8,445 $8,957 $9,108 $9,455 $9,984 $10,771 $11,493

Subtotal Cash from Operations $0 $675 $3,346 $7,127 $9,245 $10,033 $10,581 $10,815 $11,265 $11,964 $12,841 $13,713

 Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales 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 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $0 $675 $3,346 $7,127 $9,245 $10,033 $10,581 $10,815 $11,265 $11,964 $12,841 $13,713

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecExpenditures from Operations:Cash Spending $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200Payment of Accounts Payable $2,875 $5,560 $7,320 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000 $11,000

Subtotal Spent on Operations $3,075 $5,760 $7,520 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200

 Additional Cash SpentNon Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $3,075 $5,760 $7,520 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200 $11,200

Net Cash Flow ($3,075) ($5,085) ($4,174) ($4,073) ($1,955) ($1,167) ($619) ($385) $65 $764 $1,641 $2,513Cash Balance $17,675 $12,590 $8,416 $4,343 $2,388 $1,220 $602 $217 $283 $1,047 $2,688 $5,201

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Appendix Table: Balance Sheet

Pro Forma Balance Sheet

 AssetsCurrent Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCash $20,750 $17,675 $12,590 $8,416 $4,343 $2,388 $1,220 $602 $217 $283 $1,047 $2,688 $5,201  Accounts Receivable $0 $0 $3,825 $9,183 $11,364 $12,604 $13,155 $13,405 $13,969 $14,771 $16,006 $16,968 $18,054Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $20,750 $17,675 $16,415 $17,599 $15,707 $14,992 $14,375 $14,007 $14,186 $15,054 $17,053 $19,656 $23,255Long-term AssetsLong-term Assets $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500  Accumulated Depreciation $0 $69 $138 $207 $276 $345 $414 $483 $552 $621 $690 $759 $828Total Long-term Assets $2,500 $2,431 $2,362 $2,293 $2,224 $2,155 $2,086 $2,017 $1,948 $1,879 $1,810 $1,741 $1,672Total Assets $23,250 $20,106 $18,777 $19,892 $17,931 $17,147 $16,461 $16,024 $16,134 $16,933 $18,863 $21,397 $24,927

Liabilities and Capital

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec  Accounts Payable $0 $1,800 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $1,800 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640

Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Liabilities $0 $1,800 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640 $2,640

Paid-in Capital $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000Retained Earnings ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750) ($1,750)Earnings $0 ($4,944) ($7,113) ($5,998) ($7,959) ($8,743) ($9,429) ($9,866) ($9,756) ($8,957) ($7,027) ($4,493) ($963)Total Capital $23,250 $18,306 $16,137 $17,252 $15,291 $14,507 $13,821 $13,384 $13,494 $14,293 $16,223 $18,757 $22,287Total Liabilities and Capital $23,250 $20,106 $18,777 $19,892 $17,931 $17,147 $16,461 $16,024 $16,134 $16,933 $18,863 $21,397 $24,927Net Worth $23,250 $18,306 $16,137 $17,252 $15,291 $14,507 $13,821 $13,384 $13,494 $14,293 $16,223 $18,757 $22,287

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