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Table of Contents
1.0 Executive Summary.............................................................................................................................1
Chart: Highlights ......................................................................................................................2
1.1 Mission........................................................................................................................................2
1.2 Objectives ...................................................................................................................................2
2.0 Company Summary.............................................................................................................................2
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..................................................................................................................5
4.1 Market Segmentation ................................................................................................................6
Chart: Market Analysis (Pie) ..................................................................................................6
Table: Market Analysis ...........................................................................................................6
4.2 Target Market Segment Strategy.............................................................................................6
4.3 Industry Analysis .........................................................................................................................7
5.0 Strategy and Implementation Summary ............................................................................................7
5.1 Competitive Edge ......................................................................................................................7
5.2 Sales Strategy............................................................................................................................8
5.2.1 Sales Forecast ..............................................................................................................8
Chart: Sales Monthly......................................................................................................9
Table: Sales Forecast ...................................................................................................9
5.3 Milestones ................................................................................................................................10
Table: Milestones..................................................................................................................10
6.0 Management Summary ....................................................................................................................10
6.1 Personnel Plan.........................................................................................................................10
Table: Personnel ...................................................................................................................11
7.0 Financial Plan ....................................................................................................................................11
7.1 Important Assumptions............................................................................................................11
Table: General Assumptions ...............................................................................................11
7.2 Break-even Analysis................................................................................................................12
Chart: Break-even Analysis .................................................................................................12
Table: Break-even Analysis .................................................................................................12
7.3 Projected Profit and Loss .......................................................................................................13
Table: Profit and Loss ..........................................................................................................13
7.4 Projected Cash Flow...............................................................................................................14
Chart: Cash ...........................................................................................................................14
Table: Cash Flow..................................................................................................................15
7.5 Projected Balance Sheet ........................................................................................................16
Table: Balance Sheet ...........................................................................................................16
7.6 Business Ratios .......................................................................................................................16
Table: Ratios .........................................................................................................................17
Table: Sales Forecast ...............................................................................................................................1
Table: Personnel ........................................................................................................................................2
Table: General Assumptions ....................................................................................................................3
Table: Profit and Loss ...............................................................................................................................4
Page 1

Table of Contents
Table: Cash Flow .......................................................................................................................................5
Table: Balance Sheet ................................................................................................................................6

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The Basket of Goodies

1.0 Executive Summary
Introduction
Basket of Goodies (BOG) is a premier gift basket retailer. BOG is concentrating on making
gourmet gift baskets out of a wide range of high-quality ingredients. In addition to having
several flagship baskets, BOG will also offer the option of a custom basket allowing the
customer to choose the ingredients themselves. BOG will be selling to individuals as well as
corporations. Initially the bulk of BOG's business will be generated by individuals from word-ofmouth referrals, but as time passes, corporations will bec ome a growing percentage of sales.
Once up and running with some momentum, BOG will be steadily producing profits. It is projected
that BOG will be making a profit by December. By the end of year three, it is projected that
BOG will be generating a net profit of approximately $21,000.
The Company
The Basket of Goodies' mission is to create the finest gift baskets available. BOG, soon to be
loc ated in Salem, OR, will be hand assembling our products out of premier ingredients, loc al when
possible. The business will be based out of Susan Presento's home. Although this will be a
home-based business, toward the end of year one Susan will have an employee.
Susan Presento, founder and owner, managed a flower shop in Salem for three years and this
has given her insight to the gift giving prac tices of Oregonians. The primary gift baskets that will
be offered are: smoked fish basket, fruit basket, pasta dinner basket, and picnic basket that has
caviar, crac kers, fruit, and smoked fish. BOG also offers a custom basket which allows customers
to pick items from a list and BOG will assemble the basket with its custom ingredients.
The Market
The purchasing of gift baskets is very "seasonal." More than half of the gift basket purchasing
oc curs during a wide variety of holidays.
BOG's competitive advantage will be based on two fac tors, low overhead which allows
reasonable prices, and an unrelenting desire for the highest quality product and service.
1.
2.

Low overhead.
Highest quality product and service.

BOG's sales strategy will be targeted at obtaining both the individual and corporate clients
through word-of-mouth referrals. Customers will be able to plac e an order at the office, over the
phone or via the website.
Financials
BOG's start-up costs will include all the equipment needed for the home-based office, legal
fees, website creation, and start-up advertising. The home office equipment will be the largest
chunk of the start-up expenses. This equipment includes a computer system, fax mac hine, office
supplies, cellular phone, and pager. Additionally, there will be the installation of a broadband
connection, and furniture for the home office. Total start-up expenses are expec ted to be
$28,000, all of which will be provided through Susan Presento's own equity.
The Break-even Analysis indicates BOG will need to sell approximately $4,900 per month to break
even. BOG expec ts to earn approximately $14,000 in year two and $21,000 in year three.
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The Basket of Goodies

1.1 Mission
The Basket of Goodies' mission is to create the finest gift baskets available. We exist
to attrac t and maintain c ustomers. When we adhere to this maxim, everything else will fall into
plac e. Our products and services will exceed the expec tations of our customers.

1.2 Objectives
The objectives for the first three years of operation include:
1.
2.
3.

To create a home-based company whose primary goal is to exceed customer's

expec tations.
To increase the number of clients served by at least 20% per year through superior
performance and word-of-mouth referrals.
To develop a sustainable home business, surviving off its own c ash flow.

2.0 Company Summary

BOG, soon to be loc ated in Salem, OR will offer a wide range of gourmet gift baskets,
production as well as custom units. BOG will be hand assembling the baskets out of premier
ingredients, loc al when possible. The business will be based out of Susan Presento's
home. Although this will be a home-based business, toward the end of year one Susan will
have an employee. If the business goes per the forecasted plan, the business will ac hieve profits
by the end of year one.

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The Basket of Goodies

2.1 Company Ownership
The Basket of Goodies will be a sole proprietorship, owned by Susan Presento.

2.2 Start-up Summary

BOG's start-up costs will include all the equipment needed for the home-based office, legal
fees, website creation, and start-up advertising. The home office equipment will be the largest
chunk of the start-up expenses. This equipment includes a computer system, fax mac hine, office
supplies, cellular phone, and pager. The computer should have a 500 megahertz Celeron/
Pentium proc essor, 64 megabytes of RAM (preferably 128), 6 gigabyte hard drive, and a
rewritable CD-ROM for bac king up the system. Additionally, there will be the expense
installation of a broadband c onnection. While a broadband c onnection is not totally nec essary, it
only costs between $40-50 per month for service and will make working on the Internet
significantly faster and easier.
The home office will also require a few pieces of furniture such as a desk, chair, and bookshelf to
transform a standard room into an office. Lastly, an additional land phone line will be required.
The legal fees are used for the formation of the business as well as for reviewing/
generating standard client contrac ts. The Web creation fees at start-up costs are for design
and creation of the website. The start-up advertising will be the production of broc hures.

Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Brochures
Consultants
Office Supplies

$300
$100
$200
$1,500
$100

General Supplies
Website Creation
Mailings

$250
$500
$400

Total Start-up Expenses

$3,350

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets

$22,650
$0
$0

Long-term Assets
Total Assets

$2,000
$24,650

Total Requirements

$28,000

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The Basket of Goodies

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

$3,350
$24,650
$28,000

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

$2,000
$22,650
$0
$22,650

Total Assets

$24,650

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
Other
Additional Investment Requirement

$28,000
$0
$0

Total Planned Investment

$28,000

Loss at Start-up (Start-up Expenses)

($3,350)

Total Capital

$24,650

Total Capital and Liabilities

$24,650

Total Funding

$28,000

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The Basket of Goodies

3.0 Products
BOG sells gourmet, hand-assembled gift baskets. Their premier baskets are: smoked fish
basket, fruit basket, pasta dinner basket, and picnic basket that has caviar, crac kers, fruit,
and smoked fish. BOG also offers a custom basket which allow customers to pick items from a list
and BOG will assemble the basket with their custom ingredients.
For the customer baskets, BOG will provide a list of options grouped into four
different categories. The customer then chooses two items from eac h of the four categories and
the gift basket is made for them. BOG highlights four previously mentioned premier baskets. In
addition to these, BOG will typically have one or two spec ials, often seasonally based.

4.0 Market Analysis Summary

BOG will be going after two distinct market segments, individuals and corporations. Both groups
buy gift baskets as a goodwill gesture, typically for different reasons. Individuals typically buy
the baskets as a present with over half of sales oc cur during holidays. Corporations buy the
baskets as presents as well, but usually for events unrelated to the holidays. By going after both
of these groups, sales will be less seasonal (relative to if only the individuals were targeted).
There are many different "gift basket" retailers in Salem. BOG will differentiate themselves
through the use of premium ingredients in their baskets. The gourmet baskets, coupled with a
custom option and reasonable prices (attributed to low overhead) will spell success for BOG.

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The Basket of Goodies

4.1 Market Segmentation
BOG's has two distinct groups of customers, individuals and corporate customers:
1.

2.

Individuals- The individuals are people who are looking to give a friend, relative,
colleague, etc., a gift basket as a gesture of goodwill. These customers typically do
not have a specific type of gift basket in mind when they look at BOG's product offerings,
they just want to give a gift.
Corporate- The corporate customer is typically buying the basket for a colleague at
work, either as a sign of appreciation, for a special event, or as a thank you for a
customer. The corporate market can be further broken down to banks, health c are,
employment gifts, real estate, apartments, special events/promotions, corporate
headquarters, hotels/vac ation resorts, and automobile dealerships.

Table: Market Analysis

Market Analysis
Potential Customers
Individuals
Corporations
Total

Growth
8%
12%
8.09%

Year 1

Year 2

Year 3

Year 4

Year 5

14,258
298
14,556

15,399
334
15,733

16,631
374
17,005

17,961
419
18,380

19,398
469
19,867

CAGR
8.00%
12.01%
8.09%

4.2 Target Market Segment Strategy

BOG is foc using on individuals and corporate customers bec ause they are the largest segments
of purchasers for gift baskets. Individuals are the target purchaser of gift baskets. They
purchase baskets typically as a thank you in response for something the recipient did or just to
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The Basket of Goodies

be nice. The gift basket is unmistakingly a gift so upon receipt there is no ambiguity why it was
sent or at least what it is trying to ac complish. Within the individual category, women are 69%
more likely to be the purchaser of a gift basket compared to men. This is not to say that
women more often purchase gifts, it just indicates women are more likely to buy gift baskets.
BOG is foc using on the corporate customers as they currently represent approximately a third
of the purchasers of gift baskets. The corporate customer could be buying the basket for
someone within their company, or they could be buying it for a customer, vendor, etc. The trend
for the corporation to purchase gifts is not a new phenomenon and therefore would appear to be
a solid market segment to pursue.

4.3 Industry Analysis

There are many different forms of competition in the gift basket business:
1.

2.
3.

4.

5.

6.

Similar gift basket type retail stores: There are several of these stores loc ated in
Salem. These competitors offer a wide range of gift baskets, however none of them are
concentrating on the higher end, gourmet product line.
Nut/fruit companies: There are several stores that concentrate on nuts and or fruit
baskets.
Bath product gift basket companies: There is currently one gift basket company that
concentrates on bath products. Bath products have a slightly smaller population of people
who appreciate these products (as women predominately appreciate bath products
more then men do).
Regional gift basket: There is one retailer that sells gift baskets composed of loc al
products. These type of baskets tend to appeal to people that are buying gifts for people
that are not from this area.
Candy gift baskets: There are several candy stores that offer, as one on their
products, a candy gift basket. Similar to the bath products basket, candy typically
appeals to women a bit more so then men.
Florists: Flowers are a similar product that competes with gift baskets. Once again
flowers tend to appeal to women more so then men.

The purchasing of gift baskets is very "seasonal." More than half of the gift basket
purchasing oc curs during a wide variety of holidays.

5.0 Strategy and Implementation Summary

BOG's marketing and sales strategy will be based on two different types of media, broc hures
and a website. Through these two tools, customers will bec ome familiar with BOG's
products. BOG will also heavily rely on word-of-mouth referrals for business. BOG does not
anticipate any difficulties in developing these referrals as BOG's mission is customer
oriented. Everything they do revolves around developing a happy customer.

5.1 Competitive Edge

BOG's competitive advantage will be based on two fac tors, low overhead which allows
reasonable prices, and an unrelenting desire for the highest quality product and service.
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The Basket of Goodies

1.

2.

BOG's overhead is particularly low bec ause it is a home-based business. Most of the
competition is based in retail shopping areas. While they receive more walk-by traffic
and therefore higher sales numbers, their rent is a large monthly expense. BOG avoids this
large expense by having the business run out of Susan's home. Additionally, Susan will
be using a modified version of just-in-time (JIT) inventory and assembling. Susan's
husband passes by the 90% of Susan's vendors on his way home from work and is able
to pick up needed inventory. This significantly lowers shipping and carrying costs for
inventory. BOG will have some of the standard baskets in stoc k for walk-by orders, but
will try not to have large amount in overhead.
Unrelenting desire for the highest quality product and service. This market space is
already crowded, a medioc re gift basket service will not succeed, so there must be
some sort of differentiation. Susan only uses the finest quality ingredients and can
afford to bec ause of her low overhead. Additionally, she always follows the maxim that
the customer must be 100% satisfied. That means she is willing to lose money in the
short run if nec essary to please a customer, confident that in the long run that this is
a wise business dec ision.

5.2 Sales Strategy

BOG's sales strategy will be targeted at obtaining both the individual and corporate clients. It
is our belief that the individual customers will be primarily obtained through word-of-mouth
referrals. It is likely that they will have spoken to a previous client about BOG and the referral
of our services will speak for itself. Our sales strategy will be to use an emphasis on our value
and high quality when trying to close the sale of the prospec t. The prospec tive client can get
a similar product from a number of different vendors. BOG will attempt to close the sale by
showing the high quality of the basket by highlighting some of the individual ingredients. BOG's
expec tation is that once they are impressed with the quality of the basket, they will then be
surprised that it is priced the same as competing products. The combination of the perception of
higher quality and the recognition of value should turn a lead into a customer.
Additionally, we provide several ways to proc ure the baskets. One way is for the customer to
come by the office and plac e the order. The customer can also plac e the order through a
phone call. Either they have ordered before, or are looking at a broc hure and know what they
want, or they can visit our website for a complete catalog of our products. To receive the
product, they can pick up the product, or they may have it shipped via UPS. BOG believes that
by providing the customer a wide range of options, they will feel that they are spec ial as we
will do a wide range of services to ac commodate them. Our sales strategy for individuals and
particularly corporations will be based on our Web presence in c onjunction with our printed
catalog. Both media will have detailed information about our service offerings.
Through our marketing efforts we will be driving people to our website and/or catalog. Once on
our website, people will see the wide range of product offerings we have and then can contac t
us. The website will be espec ially useful for someone out of town who is need of a gift for
someone. BOG expec ts the corporate customers to utilize the website as a catalog, as well as
an order taker, bec ause it takes less time for them to order on the Web then it does from them
to do in person.

5.2.1 Sales Forecast

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The Basket of Goodies

The first month will be spent setting up the business. It is unlikely that there will be much
sales ac tivity. In addition to dealing with legal and ac counting issues, equipment will need to
be purchased, an office created, and an assembly/inventory room set up in the basement. Susan
will be developing a system for assembly within the first month as a way to streamline the
entire proc ess, as well as working on having the website designed and set up. This will require
a bit of time spent with her Web designer to perfect the look and feel of the site as well as to
set up the option of taking orders online.
Month two or three will begin to see some sales ac tivity. BOG recognizes that it will take a bit of
time to really ramp up the sales. Susan will be doing a lot of networking in an attempt to
spread awareness about BOG's products and services. Susan will also be doing some direct
mailing to some loc al corporations in an attempt to drive in some corporate business. Susan
has a friend who works at a large company and she will serve as a consultant for ways of
increasing corporate purchases. Because Susan's husband will be helping out with picking up
some of the materials, Susan will not need an employee until near the end of year one.

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Sales
Individuals
Corporations
Total Sales

$33,640
$9,905
$43,545

$64,575
$28,744
$93,319

$78,452
$31,458
$109,910

Direct Cost of Sales

Individuals
Corporations
Subtotal Direct Cost of Sales

Year 1
$11,484
$3,505
$14,989

Year 2
$18,474
$7,854
$26,328

Year 3
$24,124
$9,898
$34,022

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The Basket of Goodies

5.3 Milestones
BOG will have several milestones early on:
1.

2.
3.
4.
5.

Business plan completion. This will be done as a road map for the company. While BOG
does not need a business plan to raise capital, it will be an indispensable tool for the
ongoing performance and improvement of the company.
Set up office.
Production of broc hure and website.
BOG's 100th basket.
BOG's first profitable month.

Table: Milestones
Milestones
Milestone
Business plan completion
Set-up office
Production of brochure and
website
BOG's 100th basket
Totals

Start Date
1/1/2001
1/1/2001
1/1/2001

End Date
1/1/2001
1/1/2001
2/1/2001

Budget
$0
$0
$0

Manager
Susan
Susan
Susan

Department
Marketing
Department
Department

3/1/2001

3/1/2001

$0
$0

Susan

Department

6.0 Management Summary

BOG will be formed as a sole proprietorship, owned and operated by Susan Presento. There is
no compelling need to incorporate. The advantage of incorporation would be limited liability,
yet the disadvantage would be the set-up costs and maintenance (tax disadvantages). A
comprehensive insurance policy should cover any liability that BOG is exposed to.
Susan Presento, founder and owner, has a degree in c ommunications from the University of
Portland. During her undergraduate years, Susan worked at Nothstroms, perfecting her
customer-centric perspective. After graduation, Susan managed a flower shop in Salem. It was
during these three years that Susan gained her insight to the gift giving prac tices of
Oregonians. Susan also gained valuable management experience in her work at the florist.
Susan will be relying on Robert Presento, her husband to help out in the pick up of the
ingredients of her products. In addition to Robert's help, Susan will be using Jennifer Simon
who works in the purchasing department of a large corporation. Jennifer will ac t as a
consultant regarding the purchasing habits of corporations, a niche of the industry that Susan
would like to be a part of.

6.1 Personnel Plan

The staff of BOG will consist of Susan working full time. Susan's husband Robert will help with
inventory proc urement but will not be listed on the payroll. Robert will be picking up inventory on
his way home from work oc casionally and will not be billing BOG for his work. Jennifer Simon will
be a consultant for BOG for insight into the corporate market. By month eight Susan will bring on
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The Basket of Goodies

board a part-time employee. This employee will be used for the assembly of the baskets.

Table: Personnel
Personnel Plan
Susan
Part-time employee
Other
Total People

Year 1
$24,000
$7,500
$0
2

Year 2
$24,000
$15,000
$0
2

Year 3
$24,000
$15,000
$0
2

Total Payroll

$31,500

$39,000

$39,000

7.0 Financial Plan

The following sections will outline the important financial data.

7.1 Important Assumptions

The following table details important financial assumptions for BOG.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate

Year 1
1
10.00%

Year 2
2
10.00%

Year 3
3
10.00%

Long-term Interest Rate

Tax Rate
Other

10.00%
25.42%
0

10.00%
25.00%
0

10.00%
25.42%
0

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The Basket of Goodies

7.2 Break-even Analysis
The Break-even Analysis indicates BOG will need to sell approximately $4,900 in baskets per
month to break even.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$4,915

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

34%
$3,223

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The Basket of Goodies

7.3 Projected Profit and Loss
The following table will indicate projected profit and loss.

Table: Profit and Loss

Pro Forma Profit and Loss
Sales
Direct Cost of Sales
Other
Total Cost of Sales

Year 1
$43,545
$14,989
$0
$14,989

Year 2
$93,319
$26,328
$0
$26,328

Year 3
$109,910
$34,022
$0
$34,022

Gross Margin
Gross Margin %

$28,556
65.58%

$66,991
71.79%

$75,888
69.05%

Expenses
Payroll
Sales and Marketing and Other Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent

$31,500
$1,200
$655
$0
$0
$600
$0

$39,000
$1,200
$672
$0
$0
$600
$0

$39,000
$1,200
$672
$0
$0
$600
$0

$4,725
$0

$5,850
$0

$5,850
$0

$38,680

$47,322

$47,322

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($10,124)
($9,469)
$0
$0

$19,669
$20,341
$0
$4,917

$28,566
$29,238
$0
$7,261

Net Profit
Net Profit/Sales

($10,124)
-23.25%

$14,752
15.81%

$21,305
19.38%

Payroll Taxes
Other
Total Operating Expenses

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The Basket of Goodies

7.4 Projected Cash Flow
The following chart and table will indicate projected cash flow.

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The Basket of Goodies

Table: Cash Flow
Pro Forma Cash Flow
Year 1

Year 2

Year 3

$43,545
$43,545

$93,319
$93,319

$109,910
$109,910

$0

$0

$0

$0
$0
$0
$0
$0
$0
$43,545

$0
$0
$0
$0
$0
$0
$93,319

$0
$0
$0
$0
$0
$0
$109,910

Year 1

Year 2

Year 3

$31,500
$18,916
$50,416

$39,000
$42,516
$81,516

$39,000
$47,978
$86,978

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing

$0
$0

$0
$0

$0
$0

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment
Purchase Other Current Assets

$0
$0
$0

$0
$0
$0

$0
$0
$0

Purchase Long-term Assets

Dividends
Subtotal Cash Spent

$0
$0
$50,416

$0
$0
$81,516

$0
$0
$86,978

Net Cash Flow

Cash Balance

($6,871)
$15,779

$11,803
$27,582

$22,932
$50,515

Cash Received
Cash from Operations
Cash Sales
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

Page 15

The Basket of Goodies

7.5 Projected Balance Sheet
The following table will indicate the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet
Year 1

Year 2

Year 3

Current Assets
Cash
Inventory
Other Current Assets
Total Current Assets

$15,779
$3,507
$0
$19,286

$27,582
$4,283
$0
$31,865

$50,515
$4,072
$0
$54,587

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets

$2,000
$655
$1,345
$20,631

$2,000
$1,327
$673
$32,539

$2,000
$1,999
$1
$54,588

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities

$6,105
$0
$0

$3,261
$0
$0

$4,004
$0
$0

Subtotal Current Liabilities

$6,105

$3,261

$4,004

Long-term Liabilities
Total Liabilities

$0
$6,105

$0
$3,261

$0
$4,004

$28,000

$28,000

$28,000

($3,350)
($10,124)
$14,526

($13,474)
$14,752
$29,278

$1,278
$21,305
$50,584

Total Liabilities and Capital

$20,631

$32,539

$54,588

Net Worth

$14,526

$29,278

$50,584

Assets

Liabilities and Capital

Current Liabilities

Paid-in Capital
Retained Earnings
Earnings
Total Capital

7.6 Business Ratios

The ratios table compares BOG's estimated growth, balance and profit ratios to the industry
standard for Misc ellaneous personal services (Standard Industry Code #7299).

Page 16

The Basket of Goodies

Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
114.30%

Year 3
17.78%

Industry Profile
17.90%

17.00%
0.00%
93.48%
6.52%
100.00%

13.16%
0.00%
97.93%
2.07%
100.00%

7.46%
0.00%
100.00%
0.00%
100.00%

4.60%
37.10%
52.80%
47.20%
100.00%

29.59%
0.00%
29.59%
70.41%

10.02%
0.00%
10.02%
89.98%

7.34%
0.00%
7.34%
92.66%

33.90%
28.00%
61.90%
38.10%

Percent of Sales
Sales
Gross Margin

100.00%
65.58%

100.00%
71.79%

100.00%
69.05%

100.00%
0.00%

Selling, General & Administrative Expenses

Advertising Expenses
Profit Before Interest and Taxes

88.87%
0.00%
-23.25%

55.98%
0.00%
21.08%

49.55%
0.00%
25.99%

72.70%
2.20%
4.00%

3.16

9.77

13.63

1.81

2.58
29.59%
-69.69%
-49.07%

8.46
10.02%
67.18%
60.45%

12.61
7.34%
56.47%
52.33%

1.33
61.90%
6.30%
16.60%

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

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

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-23.25%
-69.69%

15.81%
50.38%

19.38%
42.12%

n.a
n.a

10.80
4.10
27
2.11

6.76
12.17
43
2.87

8.14
12.17
27
2.01

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

0.42
1.00

0.11
1.00

0.08
1.00

n.a
n.a

$13,181
0.00

$28,605
0.00

$50,582
0.00

n.a
n.a

0.47
30%
2.58
3.00
0.00

0.35
10%
8.46
3.19
0.00

0.50
7%
12.61
2.17
0.00

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

Activity Ratios
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 17

Appendix
Table: Sales Forecast
Sales Forecast
Sales
Individuals
Corporations
Total Sales
Direct Cost of Sales
Individuals
Corporations
Subtotal Direct Cost of Sales

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

$1,245

$1,854

$1,987

$2,854

$3,254

$3,475

$3,654

$3,758

$4,014

$7,545

0%

$0
$0

$0
$0

$75
$1,320

$187
$2,041

$421
$2,408

$564
$3,418

$745
$3,999

$887
$4,362

$998
$4,652

$1,014
$4,772

$1,645
$5,659

$3,369
$10,914

Month 1
$0
$0
$0

Month 2
$0
$0
$0

Month 3
$621
$35
$656

Month 4
$751
$64
$815

Month 5
$812
$158
$970

Month 6
$1,354
$225
$1,579

Month 7
$1,547
$354
$1,901

Month 8
$1,354
$321
$1,675

Month 9
$1,345
$351
$1,696

Month 10
$1,345
$352
$1,697

Month 11
$154
$658
$812

Month 12
$2,201
$987
$3,188

Page 1

Appendix
Table: Personnel
Personnel Plan
Month 1
$2,000
$0
$0

Month 2
$2,000
$0
$0

Month 3
$2,000
$0
$0

Month 4
$2,000
$0
$0

Month 5
$2,000
$0
$0

Month 6
$2,000
$0
$0

Month 7
$2,000
$0
$0

Month 8
$2,000
$1,500
$0

Month 9
$2,000
$1,500
$0

Month 10
$2,000
$1,500
$0

Month 11
$2,000
$1,500
$0

Month 12
$2,000
$1,500
$0

Total People

Total Payroll

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

Susan
Part-time employee
Other

0%
0%
0%

Page 2

Appendix
Table: General Assumptions
General Assumptions
Plan Month
Current Interest Rate

Month 1
1
10.00%

Month 2
2
10.00%

Month 3
3
10.00%

Month 4
4
10.00%

Month 5
5
10.00%

Month 6
6
10.00%

Month 7
7
10.00%

Month 8
8
10.00%

Month 9
9
10.00%

Month 10
10
10.00%

Month 11
11
10.00%

Month 12
12
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
Other

30.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

25.00%
0

Page 3

Appendix
Table: Profit and Loss
Pro Forma Profit and Loss
Month 1
$0
$0

Month 2
$0
$0

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$656

$815

$970

$1,579

$1,901

$1,675

$1,696

$1,697

$812

$3,188

$0
0.00%

$0
0.00%

$664
50.30%

$1,226
60.07%

$1,438
59.72%

$1,839
53.80%

$2,098
52.46%

$2,687
61.60%

$2,956
63.54%

$3,075
64.44%

$4,847
85.65%

$7,726
70.79%

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$55
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$0
$50
$0

$300

$300

$300

$300

$300

$300

$300

$525

$525

$525

$525

$525

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,505

$2,505

$2,505

$2,505

$2,505

$2,505

$2,505

$4,230

$4,230

$4,230

$4,230

$4,230

Profit Before Interest and Taxes

($2,505)

($2,505)

($1,841)

($1,279)

($1,067)

($666)

($407)

($1,543)

($1,274)

($1,155)

$617

$3,496

EBITDA
Interest Expense

($2,450)
$0

($2,450)
$0

($1,786)
$0

($1,224)
$0

($1,012)
$0

($611)
$0

($352)
$0

($1,488)
$0

($1,219)
$0

($1,100)
$0

$672
$0

$3,551
$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

($2,505)
0.00%

($2,505)
0.00%

($1,841)
-139.44%

($1,279)
-62.64%

($1,067)
-44.29%

($666)
-19.47%

($407)
-10.17%

($1,543)
-35.36%

($1,274)
-27.38%

($1,155)
-24.19%

$617
10.91%

$3,496
32.04%

Sales
Direct Cost of Sales

Gross Margin
Gross Margin %

Month 3
$1,320
$656

Month 4
$2,041
$815

Month 5
$2,408
$970

Month 6
$3,418
$1,579

Month 7
$3,999
$1,901

Month 8
$4,362
$1,675

Month 9
$4,652
$1,696

Month 10
$4,772
$1,697

Month 11
$5,659
$812

Month 12
$10,914
$3,188

Expenses
Payroll
Sales and Marketing and Other
Expenses
Depreciation
Leased Equipment
Utilities
Insurance
Rent
Payroll Taxes
Other
Total Operating Expenses

Taxes Incurred
Net Profit
Net Profit/Sales

15%

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

$0
$0

$0
$0

$1,320
$1,320

$2,041
$2,041

$2,408
$2,408

$3,418
$3,418

$3,999
$3,999

$4,362
$4,362

$4,652
$4,652

$4,772
$4,772

$5,659
$5,659

$10,914
$10,914

Cash Received
Cash from Operations
Cash Sales
Subtotal 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

New Other Liabilities (interest-free)

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$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

Sales of Long-term Assets
New Investment Received

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

Subtotal Cash Received

$0

$0

$1,320

$2,041

$2,408

$3,418

$3,999

$4,362

$4,652

$4,772

$5,659

$10,914

Expenditures

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations

Cash Spending

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$3,500

$3,500

$3,500

$3,500

$3,500

Bill Payments
Subtotal Spent on Operations

$15
$2,015

$450
$2,450

$496
$2,496

$1,815
$3,815

$1,454
$3,454

$1,618
$3,618

$2,699
$4,699

$2,685
$6,185

$2,111
$5,611

$2,393
$5,893

$2,316
$5,816

$863
$4,363

Additional Cash Spent

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

Purchase Other Current Assets

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$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

$2,015

$2,450

$2,496

$3,815

$3,454

$3,618

$4,699

$6,185

$5,611

$5,893

$5,816

$4,363

Net Cash Flow

($2,015)

($2,450)

($1,176)

($1,774)

($1,046)

($200)

($700)

($1,823)

($959)

($1,121)

($157)

$6,551

Cash Balance

$20,635

$18,185

$17,009

$15,235

$14,189

$13,989

$13,289

$11,466

$10,507

$9,385

$9,228

$15,779

Subtotal Cash Spent

0.00%

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

Starting Balances

Current Assets
Cash
Inventory

$22,650
$0

$20,635
$0

$18,185
$0

$17,009
$722

$15,235
$907

$14,189
$1,067

$13,989
$1,737

$13,289
$2,091

$11,466
$1,843

$10,507
$1,866

$9,385
$1,867

$9,228
$1,055

$15,779
$3,507

Other Current Assets

Total Current Assets

$0
$22,650

$0
$20,635

$0
$18,185

$0
$17,731

$0
$16,142

$0
$15,256

$0
$15,726

$0
$15,380

$0
$13,308

$0
$12,372

$0
$11,252

$0
$10,283

$0
$19,286

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$0

$55

$109

$164

$218

$273

$327

$382

$436

$491

$546

$600

$655

$2,000
$24,650

$1,945
$22,580

$1,891
$20,076

$1,836
$19,567

$1,782
$17,923

$1,727
$16,983

$1,673
$17,399

$1,618
$16,998

$1,564
$14,872

$1,509
$13,881

$1,455
$12,706

$1,400
$11,682

$1,345
$20,631

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable

$0

$435

$435

$1,767

$1,402

$1,528

$2,609

$2,615

$2,031

$2,314

$2,294

$653

$6,105

Current Borrowing
Other Current Liabilities

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Subtotal Current Liabilities

$0

$435

$435

$1,767

$1,402

$1,528

$2,609

$2,615

$2,031

$2,314

$2,294

$653

$6,105

Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Liabilities

$0

$435

$435

$1,767

$1,402

$1,528

$2,609

$2,615

$2,031

$2,314

$2,294

$653

$6,105

Paid-in Capital

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

$28,000

Retained Earnings

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

($3,350)

Earnings
Total Capital

$0
$24,650

($2,505)
$22,145

($5,009)
$19,641

($6,850)
$17,800

($8,128)
$16,522

($9,195)
$15,455

($9,860)
$14,790

($10,267)
$14,383

($11,809)
$12,841

($13,083)
$11,567

($14,237)
$10,413

($13,620)
$11,030

($10,124)
$14,526

Total Liabilities and Capital

$24,650

$22,580

$20,076

$19,567

$17,923

$16,983

$17,399

$16,998

$14,872

$13,881

$12,706

$11,682

$20,631

Net Worth

$24,650

$22,145

$19,641

$17,800

$16,522

$15,455

$14,790

$14,383

$12,841

$11,567

$10,412

$11,030

$14,526

Page 6