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T'square

The Ideal Kids Clothing Retail Store


Prepared by:
Tay Ju Tzen
Gregory Thian Chia Chow
Kelvin Tieu Shen Loong
Anslem Tay Guan Lim

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Kids Clothing Store Business Plan
Plan Outline
1.0 Executive Summary Page 3
Mission Page 3
Objectives Page 3
Keys of Success Page 3
2.0 Company Summary Page 4
Company Ownership Page 4
Start-up Summary Page 4&5
Company Locations and Facilities Page 5
3.0 Products Page 6
Products Description Page 6
Competitive Comparison Page 6
Sales Literature Page 6
Sourcing Page 7
Technology Page 7
Future Product Page 7
4.0 Market Analysis Summary Page 8
Market Segmentation Page 9
Market Analysis Page 9
Target Market Segment Strategy Page 9&10
Market Needs Page 10
Market Growth Page 10
Industry Analysis Page 10
Financial Risks and Contingencies Page 10, 11&12
5.0 Strategy and Implementation Summary Page 13
Competitive Edge Page 13
Marketing Strategy Page 13&14
Sales Strategy Page 14
Sales Forecast Page 15
6.0 Management Summary Page 16
Organisational Structure Page 16
Management Team Page 16
Personnel Plan Page 16&17
7.0 Financial Plan Page 17
Important Assumptions Page 17
Break-even Analysis Page 17
Projected Profit and Loss Page 18

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1.0 Executive Summary
Young parents, whether father or mother, are interested about the latest trends
therefore they want their kids to look smart and beautiful by wearing dresses of the
latest design. In order to fulfil young parents' expectations and demands for clothes that
suit their kids whether boys of girls, T'square will be the ideal concept store. T'square is
a new firm will be started-up to provide good quality and latest trend of children's
clothing. We present an extensive range of kids wear that are manufactured using
different fabrics such as Cotton, Silk, Wool and others. Available in a wide range of
gorgeous colours, designs and prints ,these apparels are designed keeping in mind the
most up-to-date fashion trends. The target customers are parents who pamper their
children of aged 0-12years old with trendy clothes.

Mission
The mission of T'square is to deliver good quality and latest trend children's clothing at
affordable prices. To accomplish this, we focus on exceptional design, innovation,
quality, convenience and interactive communication.

Objectives
The objectives of T'square are as following:
To offer products at affordable price for the customers.
To provide and deliver good quality and latest trend clothing to customers.
To expand and sustain a high level of customer satisfaction.
To build branded franchise initially within local area community.
To satisfy the need and demand of the shareholders.

Keys to Success
Accessible store where you always find something new that you want.
Excellent vendor relationship that facilitate quick shipment of orders.
Establish an effective strategy for advertising to our target customers.
Create a store image that our target customers sees as both attractive and
trendy.

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2.0 Company Summary
T'square will be providing good quality and trendy kids products and clothing that are
found in the large urban areas but not currently available locally. T'square will also
create a cost-effective operation that will quickly bring new alternative clothing and
products to customers.

Company Ownership
T'square will be a private limited company. The board of director consists of Chief
Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating
Officer(COO), Chief Technical Officer(CTO) and shareholders.

Company Structure

Chief Executive Officer


(CEO)

Chief Chief Chief Chief


Operating Technical Financial Marketing
Officer Officer Officer Officer
(COO) (CTO) (CFO) (CMO)

Production Technical Receivable Sales


assistant 1 assistant clerk executive

Production Administrativ Marketing


Payable clerk
assistant 2 e assistant 1 executive

Production Administrative Public


assistant 3 assistant 2 Payroll clerk relation
officer

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Start-up Summary
The start-up costs of T'square are as following:

Start-up Requirements

Start-up Expenses
Legal $58,823.53
Stationery etc $5,882.353
Store Floor Setup $294,117.60
Insurance $58,823.53
Rent $117,647
Other 0
Total Start-up Expenses $535,294

Start-up Assets
Cash Required 294,117.60
Start-up Inventory 1,764,706
Other Current Assets 52,941.18
Long-term Assets
(included factory cost) 2,352,941
Total Assets $4,464,706

Total Requirement $5,000,000

Start-up Funding

Start-up Expenses to Fund $535,294


Start-up Assets to Fund $4,464,706
Total Funding Requirement $5,000,000

Assets
Non-cash Assets from Start-up $2,111,765
Cash Requirements from Start-up $2,352,941
Additional Cash Raised $0
Cash Balance on Starting Date $2,352,941
Total Assets $4,464,706

Liabilities and Capital


Liabilities
Current Borrowing $0
Long-term Liabilities $2,941,176
Account Payables (Outstanding Bills) $1,470,588
Other Current Liabilities (Interest-free) $0
Total Liabilities $4,411,765

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Capital
Planned Investments
Investor 1 $294,117
Investor 2 $294,117
Other $0
Additional Investment Requirement $0
Total Planned Investment $588,235
Loss of Start-up (Start-up Expenses) ($535,294)
Total Capital $52,941
Total Capital and Liabilities $4,464,706

Total Funding $5,000,000

Company Locations and Facilities


T'square will be located at CityONE Megamall Kuching, Jalan Song, 93350 Kuching,
Sarawak, Malaysia. This location is central-epic to the geographical location for the
local community. We feel it is essential to our initial ongoing success that we located
ourselves in the heartbeat of the community. We also strive to create an atmosphere of
acceptance and community, as well as a retail environment where individual can
identify and bond with their culture. All business deliveries and shipments will be
handled through the store. The company office will also be housed at this location.

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3.0Products
The products of the retail shop will be good quality clothes for children (boys and girls)
aged 0-12 years old.

Products Descriptions
T'square will offer young customers the following kids clothing:
Shoes.
Jackets.
Sweaters.
Shirts.
Pants.
Bags.
Hats.
T-shirts.
Dresses and skirts.
Shorts.
All the kids clothing and product above are in-house branded.

Future Products
As we achieve and exceed our sales and profitability goals, T'square will be open chain
store to more areas and our own personal in-house label of clothing that will also be
expanded to add on to the collection of T'square kids clothing. We will expand our line
of brands with those that have been repeatedly requested by our customers. An e-
commerce website will also be expanded to increase our distribution channels so that
our customer base can be expanded.

SWOT Analysis
Strengths: Weaknesses:
Huge product line with variations. New in business as compare to
Business will have longer hours and rivals.
better prices as compared to Marketing expenses in the start will
competitors. be huge to establish.
Discounts are available for bundle
buying.
Expertise in providing new
products to the customers quickly.
Online selling could be a
competitive edge over similar
rivals.
Opportunities: Threats:
Fast growing sector in the state and Rapid changing fashion trends.
in the area. Rising production costs will reduce
Huge demand for kids apparel. profit margins.
High birth rate.

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Competitive Comparison
T'square has a number of advantages that will allow us to build our image, add value to
our merchandise and build a loyal customer base while standing apart from our
competitors.

We will be the largest kids apparel retailer in Kuching,Sarawak.


The 'T'square Shopper Card' will entitle customers to a 10% discount after two
purchases.
We will offer clothing to fit plus-size girls and big and tall boys.
We will create a sense of culture and bonding with the community by offering
products that good quality and trendy.
Our location is central to our target customer base.
We will maintain a detailed record on each customer, logging addresses, their
purchases, size, and brand for customer follow-up for in-house promotional
purposes.

Sales Literature
T'square will use a targeted advertising and sales program to generate publicity and
build a customer base.
2,500 full-colour postcard flyers with a 10% coupon will be distributed
throughout shopping mall, two weeks prior to the grand opening event.

200 grand opening invites will be mailed to potential new customers two weeks
before the grand opening. The invitation will also include a promotional 10%
coupon off a customer's first purchase. The customer mailing list has been
compiled from contacts the owners have made while in the community.

5,000 business cards with a T'square Frequent Shopper Card on the reverse side
entitling the customer to a 10% discount after five purchases.

Sourcing
We will be manufacturing our own kids clothing and products. Therefore, a factory will
be built at the outskirt of Kuching. By building factory at the outskirt of Kuching, we
determine whether how the products are going to be made. A group of expert worker
who have great experience in this field will be hired to operate the new machines. A
manager will be hired to take in charge the operation in the factory. The following is the
overall cost incurred in the factory.

Capital investment
Land $550,000
Building $300,000
Architect and consultant fees $50,000
Developer's fees $350,000
Contractor $155,000
New machines $505,000
Power, phone, security and data wiring $25,000
Legal $65,000
Other $0
Total $2,000,000

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Technology
T'square will be providing online pre-order for customers that are unable to reach our
door step. In order to fulfil the need of online pre-order, we will be setting up a website
on the net to allow customers that are interested in our products. The delivery cost will
be covered by the us if the customers purchases more than five products. Discount will
also be given to customers based on how many purchases have being made by the
customers.

4.0 Market Analysis Summary


Retailing kids clothing in Malaysia is projected to increase, with a positive outlook for
the forecast five years, with more retailers planning to expand their outlet numbers,
which will assist in further boosting sales. Despite slow economic conditions being
forecast in Malaysia, consumers will continue to be encouraged to purchase by various
promotional activities by retailers. The Malaysian government will demonstrate
continuous efforts to promote retailing activities through organising activities such as
1Malaysia Mega Sale Carnival. Events such as these will allow retailers to conduct price
reduction promotions in stores, which in turn will help to stimulate the performance of
retailing.

According to the Malaysian Census Bureau the population of teens (age 0-12), in 2013
was 26.0 million, which represents 14.6% of the total Malaysia population. Specialty
youth clothes and products is a billion dollar niche in the clothing industry. Over the
past ten years, there has been a profound change in population dynamics in the
Malaysia. The non-metropolitan population has been growing at the almost the same
rate as the urban population. This has created a small market niche for businesses to
sell clothing and products.

Currently, only a few regional malls offer access to the good quality and trendy clothing
products that young people want. Unfortunately, the focus of these mall stores is only on
the mainstream of the youth market.

It is T'square plan to bring these new alternative fashion and products to its target
customer groups.

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Market Segmentation
The Sarawakian population is concentrated heavily in the urban part of the city
therefore leading to the highest concentration of our customer base.

The Kuching community, which is a growing population in the community in which the
store is located, has statistically shown to be loyal to the certain brands.

The last area of potential customers is labeled as "other." Because T'square offers a
variety of apparel, along with accessories and gifts we feel that we will attract many
curious shoppers. Our ambience and customer service will make them repeat customers.

Percentage of Sarawak Community Acquiring


Apparel in the year 2012
15% 5%
35%
Newborn
4-6 years old
7-10 years old
11-14years old

45%

Market Analysis

Potential Year Year 2009 Year 2010 Year 2011 Year 2012
Customers Growth
Newborn 20% 18,247 19,981 21,879 23,958
4-6 18% 9,682 11,134 12,804 14,725
7-10 13% 3,724 4,096 4,506 4,957
11-14 8% 1,276 1,386 2,048 2,147
Total 59% 32,929 36,597 41,237 45,787

Target Market Segment Strategic


The target market are the parents of children in Sarawak. The retail store will be
located in CityONE Megamall in Kuching. The place is ideally situated and is easily
accessible from any area. A description of CityONE Megamall provides a link to the
objectives of the new firm. CityONE Megamall has been described as the largest
commercial development in Sarawak with gross development value (GDV) of RM300
million, CityONE Megamall offers a variety of products catering to every whim and
fancy.

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While no specific figures have been found on the high quality clothing sector, the
average weekly spend on clothing in the Sarawak was high. This provides an indication
of how much could be targeted in terms of the clothing market for children, and for
high quality products.

Market Needs
There are several important needs in the kids apparel business that are being either
underserved or not met at all. T'square plans to meet and service those needs.

T'square will provide a large assortment of sizes to compliment the various body
shapes and sizes of the local community. This is a size segment that is missing
throughout the kids wear apparel retailers in the city.
Focus and attention to customer's personal preferences and customer retention
will be given high priority. Because of the high rate of employee turnover at
major mass retailers, customer service and personal detail has been lost.

Market Growth
Market growth is in an upward motion, despite some of the latest economic downturns
in Sarawak. According to a report by the Malaysia Economy & Trade, Sarawak ranked
second in the rate of job growth among the nation's 10 largest cities during 2010.

Kuching has also been designated as the best city in the Sarawak to start a new business.
For three consecutive years, Sarawak has ranked first in the nation in new business
growth, according to Malaysia Business Information. The most recent survey shows
that more than 20,000 new local businesses were started in Kuching. For these reasons
and more, Sarawak is considered an economic leader in East Malaysia.

Industry Analysis
Kids wear apparel retailers are made of several kinds of stores:
Small Speciality Stores: The majority of kids wear apparel is sold through small
family-run speciality stores that are located in or near neighbourhood
communities. 85% of the purchasing statistics for kids apparel is derived from
these locations.

Large Multi-owned Apparel Retailers: These large stores mass market and sell
to hardcore enthusiasts as well as the local tourists and those who purchase only
during festive season.

Financial Risks and Contingencies


As with any start-up business, T'square is subject to certain risks, both known and
unknown, including changes to general economic conditions, changes in the level of
consumer spending on or preferences in apparel, the company's ability to successfully
implement various new supply chain and merchandising systems in a timely and cost
effective manner, unseasonable weather trends, and greater than planned operating
expenses. Some of the more predominant risks include:

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Style Piracy: Because design and styling ideas are such important competitive weapons,
they are often stolen. Fashion piracy is so common that it is considered an integral part
of the garment trade. While trademarks and names can be registered, laws against style
piracy are of little practical value.
Copying creative work is standard practice for some firms, especially the smaller and
budget houses. A style produced by many manufacturers and "knocked-off" at
successively lower price levels is often referred to as a "ford." This term is often
applied to runaway best-sellers as well.
To mitigate risk from style piracy, T'square will ensure that all of its designs are
copyright protected. To date, this is the best solution to design piracy because the
application process is cheap and expeditious, and the copyright protects the creative
works of fashion designers for a limited term under copyright law. Due to the short life
span of apparel designs, patent protection is neither available nor appropriate.

Market Risk: Market risk is the risk of loss due to adverse changes in investment from
market fluctuations directly related to T'square' products, services, and market
segments. As the complexity of the business increases, risk management becomes
increasingly important and difficult. Market fluctuations could adversely affect the
results of T'square' operations and financial conditions. To mitigate exposure to
market risk, T'square will use various econometric and statistical analysis tools to
monitor the movement of the market interest, perform analyses on the current trends,
and forecast results. In this manner, management can make the necessary adjustments
in the asset and liability structure of the company.

Economic Stability Risk: Changes in the economy will require that the company adjust
its operations to account for financial and economical fluctuations. T'square will
pursue various business strategies, including horizontal integration and economies of
scale, geared toward reducing economic risk. To ensure continued profits during
economic instability, the company will control the environment in which it operates by
reducing uncertainty, minimizing expensive competition, and capturing a larger share
of the market.

Operational Risk: T'square, like all large companies is exposed to many types of
operational risks, including the risk of fraud by employees or outsiders, unauthorized
transactions, and errors relating to computer or telecommunications systems. To
mitigate operational risks, T'square will maintain a system of controls that is designed
to keep operating risk at a minimum, such as limiting authority to conduct business
activities to the appropriate functional departments/branches .

Supply Chain/Merchandising Risk: Due to recent events, such as terrorist attacks and
political instability in third world countries, supply chain risks have been introduced or
heightened, with pressure to enhance productivity, eliminate waste, remove supply
chain duplication, and drive for cost improvement. To mitigate supply chain risk,
management will construct and optimize "what if" scenarios about the company's
future. These "what if" scenarios will serve as models by which T'square can refine
and extend managerial intuition about major strategic decisions. Statistical models and
methods for developing long-term, supply chain forecasts will support these scenarios.

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Early Stage Business: As a start-up company, T'square has limited operating history
beyond the industry. To mitigate risks relating to inexperience, the company will
leverage the experience of external advisors to provide support for management
decisions, as well as industry expertise and day-to-day operations.

Brand Identity: Since brands do not live in vaults without time or threat, brand risk is
threatened by the loss of value due to a change in consumers' perceptions of the
company. Establishing, building, strengthening, and maintaining T'square' brand,
regardless of product or service, is important to its ability to attract and retain
customers. Brand recognition is key to the success of T'square in local, regional,
national, and international markets. To mitigate the risk associated with brand,
T'square will ensure that the company's brand is clear, specific, and unique to its
product and service offerings, and will build brand strength through leadership,
stability, market, geography, trend, support, and protection.

Intellectual Property: T'square' copyrights, trade-marks, trade secrets, methodologies,


practices, tools, and other intellectual property rights are critical to success. The
company relies on a combination of trademark and copyright laws, trade secret
protection, nondisclosure agreements, and other contractual agreements with its
employees, affiliates, clients, strategic partners, acquisition targets, and
others. T'square' management will prudently monitor the company's intellectual
property and ensure that adequate measures are taken to protect intellectual property
belonging to the company.

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5.0 Strategy and Implementation Summary
T'square will focus on becoming the favourable place in Kuching to shop for alternative
clothes, shoes, and youth-oriented products.

Competitive Edge
T'squares' competitive advantage is offering product lines that make a statement but
won't leave you broke. T'square offers products that are just ahead of the curve and so
affordable that our customers will return to the store often to check out what's new.

Another competitive factor is that products for this age group are part of a lifestyle
statement. T'square is focused on serving the demand and expectation of young parents.
We want to represent their style and life choices for their kids. We believe that we will
create a loyal customer base that will see T'square as part of their lives.

Furthermore, we also come out with a way for the company and the customers. Since
kids grow up very quickly and many clothing will be unable to wear, in order to help
customers to reduce the burden of piling up a bunch of unused clothing in their house,
we suggest that customers trade in their old clothes back to us and buy new clothes out
from our store just by paying some extra money. So that the old clothes will not be
wasted. By doing this the customers can be happy and we also will be happy. This is
because we will be taking the old clothes traded in by the customers and donor it out to
the orphanage houses as an charity activities. By doing this, we can help to boost our
image in the eye of the community. This will created a win-win situation for us and the
customers.

Marketing Strategy
In this section defines the strategy and tactics of the marketing programme. The 5Ps of
marketing are used as the structure to present the programme.

A. Product line
Strategy Introduce the new range of high quality affordable clothing to the
market.
Tactics Utilise current network of shareholders and introduce the product
to the market.
Position the product as high quality but at affordable prices.

The quality of the products sold will be monitored closely to ensure the high quality
image of the retail store and brand. A quality assessment will be conducted regularly by
the management to ensure that the clothes meet the requirements.

B. Pricing
Strategy Introduce the children's clothing at above the low-priced products
to reflect the high quality value of the products.
Tactics Provide pricing range that high quality clothing seekers will find
affordable and attractive.
Potentially, price the products at lower than planned margins in
order to encourage the purchase of the products as it increase
exposure in the market.
Provide discounts to large buyers.

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C. Place
Strategy Establish base/headquarters for the retail store to develop overall
brand and image.
Tactics Utilise planned retail store in CityONE Megamall as the base.
Develop retail store as key presence in CityONE Megamall for
must-see visit of visitors in the area.

As the retail store will be big-sized in the first instance, the store will only occupy a two-
floor retail shop. The floor plan will be defined once a retail store has been identified .

D. Promotion

Strategy Build up the brand and the new children's clothing product range
to target market.
Tactics Work locally to promote products including in local newspapers.
Encourage word-of-mouth build-up of the brand and products
through the initial customers.
Utilise website to increase exposure to the target market.

The promotions programme will be dynamic and will require the use of research to
validate assumptions. This will be done through data from sales, questionnaires and
surveys provided to customers, and other external research.

E. People

Strategy Tap people with common objectives as the new firm.


Tactics Hire people with a passion for the local area community to ensure
delivery of good customer services in retail store.
Liaise with local government to build ways to expose the retail
store with the CityONE Megamall links.

Sales Strategy
T'squares' strategy will be three track.
T'square will advertise in the local daily newspapers such as Sin Chew Jit Poh,
See Hua Daily News, Utusan Sarawak, The Borneo Post and The Star, which is
focused on T'square target customer groups.
We will utilize the Retail ICE POS software with every sales transaction. With
each purchase the software will record and maintain in its database the
customer's name, address and purchases. This information will be used with our
direct mailing program to focus on our top 50% of customers.
We will offer a 3 day return/exchange policy to build trust with our customers
and maintain retention and loyalty.

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Sales Forecast

Year 1 Year 2 Year 3


Units Sales
Clothing 5,175 6,728 8,746
Sweaters & Hats 285 371 482
Bags and shoes 560 728 946
Total Units Sales 6,020 7,826 10,173

Unit Prices Year 1 Year 2 Year 3


Clothing $50.00 $50.00 $50.00
Sweaters & Hats $50.00 $50.00 $50.00
Bags and shoes $20.00 $20.00 $20.00

Sales
Clothing S258.750 $336,375 $437,288
Sweaters & Hats $14,250 $18,525 $24,083
Bags and shoes $11,200 $14,560 $18,920
Total Sales $284,200 $369,460 $480,290

Direct Unit Costs Year 1 Year 2 Year 3


Clothing $25.00 $25.00 $25.00
Sweaters & Hats $25.00 $25.00 $25.00
Bags and shoes $10.00 $10.00 $10.00

Direct Cost of Sales


Clothing $129,375 $168,188 $218,644
Sweaters & Hats $7,125 $9,263 $12,041
Bags and shoes $5,600 $7,280 $9,460
Subtotal Direct Cost of Sales $142,100 $184,730 $240,145

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6.0 Management Summary
Employees will be encouraged to work within their creative, physical, and intellectual
boundaries. All duties will be divided and delegated according to strengths and
weaknesses. At T'square we will expect a high degree of customer service skills and
personality as this is essential to our success.

Anslem Tay will assess the productivity and perform informal employees evaluations of
all employees every six months. These bi-annual evaluations are conducive to the
continued growth of our business.

Organisational Structure
T'square is a big business and therefore requires a functional organization structure.
Tay Ju Tzen will act a Chief Executive Officer(CEO). Kelvin Tieu will act as a Chief
Financial Officer(CFO). Gregory Thian will act as Chief Technical Officer(CTO).
Anslem Tay will act as Chief Operating Officer(COO). An expert in marketing field will
be hired to uphold the position of Chief Marketing Officer(CMO). All decisions are
made in-line with the company objectives. Employee tasks are delegated based upon
their level of expertise, creativity, strengths and weaknesses.

Management Team
Tay Ju Tzen, general manager will be responsible for managing the store. Kelvin Tieu
will be responsible for all administrative functions, purchasing, inventory control, and
promotions. He has spent over 10 years in accounting, finance and operations
management. He has extensive background in purchasing, inventory control, and
marketing. Gregory Thian will be responsible for the technological instruments in the
store and office. He also receive order from the ecommerce website. Anslem Tay will be
responsible for the production site, delivery of the order and shipment of the stocks.

Personnel Plan
The personnel plan is included in the following table below. There will be two full-time
employee and two part-time employees working 20-30 hours per week. The two full-
time employee will be paid at a rate of $10.00 per hour and the two part-time
employees will be paid at a rate of $8.00 per hour. All employee's will benefit from a one
day paid holiday on their respective birthdays and one week of paid vacation after
twelve months of employment.

At this time medical benefits will not be offered to employees. As profits increase in the
future medical benefits will be offered to all employees.

Personnel plan for worker in the concept store

Year 1 Year 2 Year 3


Full-time position $20,400 $22,440 $24,684
Part-time position $12,240 $13,464 $14,810
Total People 4 4 4
Total Payroll $32,640 $35,904 $39,494

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Personnel plan for workers in the factory

Year 1 Year 2 Year 3


Full-time position $61,200 $67,320 $74,052
Part-time position $36,720 $40,392 $44,430
Total People 15 15 15
Total Payroll $97,920 $107,712 $118,482

7.0 Financial Plan


The growth of T'square will be moderate and the cash balance will always be positive.
Being a retail environment we will not be selling on credit. We will accept cash, checks,
and all major credit cards. Marketing and advertising will remain at or below 5% of
sales. We will continue to reinvest residual profits into company expansion, and
personnel.

Important Assumptions
T'square does not sell on credit nor do we offer layaways at this time. We accept cash
and Visa, MasterCard and American Express. All sales paid via credit cards will be
deposited in our business checking account within 48 hours. Our business checking
account will be with Standard Chartered.

Break-even Analysis
A break-even analysis are an estimation of all running cost. The graph of break-even
analysis is as following:
400000

300000

200000 150000
100000
100000 50000
0
0 -50000
-100000
-100000 -150000

-200000 -200000

-300000

-400000
10000 20000 30000 40000 50000 60000 70000 80000
Costs -150000 -100000 -50000 0 50000 100000 150000 200000
Sales -200000 -150000 -100000 -50000 0 50000 100000 150000

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Projected Profit and Loss

Year 1 Year 2 Year 3


Sales $5,000,000 $6,000,000 $7,000,000
Direct Cost of Sales $400,000 $550,000 $680,000
Other $50,000 $60,000 $75,000
Total Cost of Sales $450,000 $610,000 $755,000
Gross Margin $4,550,000 $5,390,000 $6,245,000
Gross Margin(%) 91.00% 89.83% 89.21%
Expenses
Payroll $500,000 $600,000 $700,000
Depreciation $7,000 $7,000 $7,000
Utilities $6,000 $6,000 $6,000
Insurance $2,000 $2,000 $2,000
Rent $24,000 $24,000 $24,000
Payroll Taxes $80,100 $90,300 $100,500
Total Operating $619,100 $729,300 $839,500
Expenses
Profit Before Interest $3,930,900 $4,660,700 $5,405,500
and Taxes
Taxes Incurred $1,000,000 $1,200,000 $1,400,000
Net Profit $2,930,900 $3,460,700 $4,005,500

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