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Keith's Sporting Goods (KSG) will be in the business of selling athletic equipment to people at every fitness level, from aspiring college athletes to weekend warriors. With our knowledgeable staff we will provide an environment where everyone feels comfortable coming in and asking for training advice and discussing equipment needs. Based in Eugene, KSG wants to be a recognized sporting goods store. An exact location has yet to be set, but owners are avidly searching for a high foot traffic location. Ideally that location would be in central Eugene where anyone can travel a short distance to find our store. We fully expect to grow quickly. Many businesses start under the same assumption but due to work ethic, desire, job enjoyment, KSG is expecting to make a profit in the early stages of its life. Sales are forecasted to be conservative in the first month but are expected to increase by 2% each month thereafter, with a first year growth rate of 12%. This assumption appears to be accurate given the fact that the sporting goods wholesale industry is growing at an 11.5% annual rate. Keith's Sporting Goods will be filed as an S Corporation where owners will be protected from various forms of liability and tax shields. In the early stages of business, we will be primarily debt financed through a local bank and the Small Business Association (SBA). We have forecasted the need for 60% debt, the owner and operator will invest the rest. Depending on the timing of financing, we expect to have the store open by January next year and to produce strong profits by the end of that same year.
The primary objectives for the store are: 1. Brand recognition. KSG will be a recognized sporting goods and fitness store in Eugene. 2. To be operating at a profit by the end of the first year of business. 3. Achieve a 15% growth rate in sales from years one and two, and then maintain no less than a 11.5% growth rate thereafter.
1 Company Ownership With the intent to operate the store I will be considered the owner of Keith's Sporting Goods. A large portion of the initial investment will be spent on beginning inventory (83%). until he has recouped his initial investment. and encouraging the additional education of our employees will be constantly emphasized by store management. Company Summary KSG intends to provide customers with the quality products they need to maximize athletic performance and accomplish their physical and mental goals. at which time the owner has reserved the option of buying out his shares. A local investor will have equal shares in the business. We will be located in Eugene where there is a high concentration of health conscious individuals and a devoted following to both high school and college athletics. Working within the community. 1.2 Mission KSG strives toward building long-term relationships with our customers and employees. Total assets will amount to 93. A local bank will provide the debt while the equity will be provided by an equal combination of owner investment and an angel investor. The investor will receive dividends starting in year 2.2 Start-up Summary Keith's Sporting Goods will be financed through a combination of 60% debt and 40% equity. sales will be able to grow faster than total costs. while also maintaining an atmosphere where our employees have the opportunity to improve as individuals. I will not be the only one with a capital investment in the company. We will provide our customers with a knowledgeable staff that enjoys working in an athletic atmosphere and helping others. and the fact that the investment is a relatively small undertaking. promoting community service. However. If we are able to do this and keep costs fixed. and the rest will be debt financed.4% of the initial investment. KSG will be filed as an S Corporation.4. 2. The ownership will be split up evenly between myself and the other investor. Maintain a constant gross margin of 40%. . which we forecast to be sold within the first two months. 2. We feel it is extremely important to give back to the community that supports our operations. Under these circumstances.
610 $8.000 $0 $6.000 $300 $0 $0 $0 $0 $4.390 $100.000 $1.000 $93.489 $93.310 $1.Start-up Requirements Start-up Expenses Legal Operating Assets Brochures Consultants Insurance Rent Marketing/ Advertising .390 .901 $8.390 $100.Grand Opening Renovation Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $6.610 $93.000 $84.489 $82.901 $0 $2.489 $0 $8.
000 ($6.000 $20.Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Owner/Operator Angel Investor Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital $0 $60.000 $0 $0 $60. KSG will be designed to supply athletes with the essential products that are necessary for active lives. It is the location of the University of Oregon.390 Total Capital and Liabilities Total Funding $93. we will also carry training equipment like: • • • • Polymeric boxes Medicine balls Health supplements Training literature Market Analysis Summary The Eugene community is very active and has a great athletic heritage. Eugene .000 Products Keith's Sporting Goods will be a high quality fitness store that focuses on athletic performance and maximization of athletic potential.000 $0 $40. and has a youth athletic center called Kidsports. In other words.610) $33. home to many running and hiking trails.390 $100. The core products we will carry are: • Shoes • Apparel • Athletic equipment To complement these goods.000 $20.
Taking these factors into consideration. KSG will focus on three main groups.046 7.560 CAGR 17. personal relationships with our customers.205 107. We will stock a variety of goods for the wide variety of our customers.750 Year 2 3.003 Year 5 5.000 79. we will provide a marketplace that satisfies the needs of each group.904 8.500 16. there is a broad range of markets for the company to target. we will need to attract customers at young ages. • Young parents with children active in youth sports • College students • Active adults These groups comprise the majority of athletes in the city.050 55.also happens to be a growing community that has always supported the small entrepreneurs.612 Year 4 5.000 50.150 3.01% 25. 4. . At KSG.500 87.686 4.00% 7.625 17.65% 4. We strive to build long-term.600 15.2 Target Market Segment Strategy Because there are so many different sports and levels at which to compete.00% 10.313 5.550 97. and we find them to be the ones with the disposable income to spend on athletic apparel. Therefore. in order to do this.789 19.236 Year 3 4. our primary target market will be parents with young children.1 Market Segmentation • • • • Parents (Elementary & Middle School) High School Athletes College Students Middle-aged Adults (35+) Market Analysis Year 1 Potential Customers Growth Parents 17% High School Athletes 25% College Students 7% Middle-aged Adults 10% Total 10.65% 3.00% 10.174 60.376 66.000 71.031 18.662 73.
We want them to know all the information about what they are buying and what is best for them. 5. The type of equipment that KSG will provide will also be a source of competitive edge. We want to be seen as a business that cares for our customers and wants to see them accomplish all of their goals. Trendy shoes are not a sign of high quality. If customers have a good experiences with what they purchase. not only will they more likely be repeat customers.1 Competitive Edge The number one competitive edge KSG enjoys is providing customers with unparalleled service. innovative products that might help reach peak performance. Data has indicated that youth sports has the highest growth rate of any segment within the athletic industry. Young parents and high school students will not be the only groups that we will focus on because they also make up the smallest population. we will use a marketing strategy of developing long-term relationships with our customers. For example. we may be able to maintain a family right up through the child's college years. Once this trust is built our competitive advantage can be sustained. having the correct athletic equipment is integral. It will be important to target these groups because youth sports are growing at an incredible rate. Copeland's tries to sell products more on a cost basis using their capitol power to sell products at the lowest price.3 Competition and Buying Patterns To an athlete who is serious about achieving particular goals. In either case. Being seen at various sporting events will be an integral part of getting our name out in the community. 4. Focusing on college students and active adults will also be key. 5. We want our customers to have complete trust in what our employees are saying. but also protect joints from over use. For example.By building a trust relationship.2 Sales Strategy . In fact the only way one can buy high-quality equipment is through catalogs. As a smaller operation it will be impossible to compete with Copeland's and Play it Again sports on a price basis. As a smaller company we intend to provide customers the support and knowledge they need to fulfill their goals. it is tough to find polymeric equipment. Capturing the market at a young age will lead to future sales when athletes spend more money on their athletic needs. they sacrifice the customer service and support that many athletes are looking for. KSG will provide quality equipment and will be able to educate customers on why certain equipment is better than the typical mainstream brand equipment. In the sporting goods retailing many companies compete in different ways. Stores like Copeland's tend to only sell shoes that are trendy. Somebody who runs many miles over the course of a week needs to have shoes that not only last over time. they are a sign of great marketing. Providing a group of knowledgeable employees who enjoy what they are doing is the only way that KSG can provide the best customer service. the athlete is looking for the best equipment and is always open to try new. but also they will tell friends about the quality of operations at KSG. It is the same for many types of shoes. Much of the equipment found at Keith's will not be found at larger chain stores. Strategy and Implementation Summary At KSG. When doing this. It is the same for a basketball player who needs to wear light clothing that allows him/her to move freely.
KSG will carry a relatively low amount of inventory and have frequent order repurchases in an attempt to maintain inventory levels and storage costs. Employees will be paid on an hourly wage with no commissions at the beginning of operations. We want to build customer relationships without discriminating other potential future customers. We expect strong growth in the first year due to intense marketing and exposure in the Eugene market. but we forecast shoes and apparel to drive sales. We will also sell equipment. After the store has a history.50% per year. Finally. .2. Forecasted sales are expected to increase by 2% from month to month in the first year and then grow at the industry average of 11. sales people will take care of customers on a first come first serve basis. supplements. Many of the activities that our store is promoting impacts the human body. 5. and health literature. all sales will be in cash to prevent the problems brought along by late accounts receivable payments. a commission package based on sales and education advancement can be implemented.1 Sales Forecast The primary products at KSG will include athletic shoes and apparel. With that in mind.Our sales strategy will be built around fully educating customers about their purchases. It is important for the customer to be fully aware of the repercussions of the activity and how each piece of equipment effects him/her.
and will be looked upon as an integral part of the operation. includes benefits (paid sick time. The philosophy behind the workforce will be one of total customer satisfaction and education.802 $471. Personnel Plan . Employees will make $8/hr. we just need to fill the extra 51 hours.818 Apparel $144.934 $156.316 Direct Cost of Sales Year 1 Year 2 Year 3 Shoes $115. below.851 $150. and will have the weekends off. The manager will work closely with the owner. employees will be encouraged to continually gain new knowledge and insight. We plan on starting with one full time employee who will be the store manager. KSG will need an estimated 51 man-hours over the course of the week. The owner will work the weekend with the other employees. The owner/operator will have a base salary of $3. Since many customers are not aware of the many repercussions brought on by athletics. and insurance coverage).681 $282.1 Personnel Plan Keith's Sporting Goods will begin operations with a relatively small work crew with the intention to grow as the business grows. There is no estimated number of employees needed. 6.552 $452. The manager's salary.418 $251.000/mo and that will be a fixed expense.Sales Forecast Year 1 Sales Shoes Apparel Total Sales Year 2 Year 3 $193. Aside from the owner and manager.971 Subtotal Direct Cost of Sales $260.619 $434.747 $125.790 Management Summary The owner of KSG will also be the operator and decision maker.697 $241. they will work closely implementing new strategies and making store changes.880 $120. The manager will work 40 hours per week.134 $201.245 $209. holidays. During slow hours.731 $271.557 $261.
00% 25.00% 10.000 5 6 6 $101.42% 0 7.00% 25.00% 10.000 $111.000 $46.42% 0 Year 2 2 10. All sales will be in cash leading to positive cash flows whenever asset acquisition is maintained. and apparel 24 items/day @ $25 each • Growth will be steady throughout the year. Profits will be reinvested into the business in hopes of future product and store expansions.000 $43.032 $24.1 Important Assumptions Key assumptions: • Growth rate of 2% per month • Daily sales: shoes six per day @ $80 each.000 $36. 7.00% 10.000 $40.000 Financial Plan Keith's Sporting Goods will regularly monitor all financial statements because they have a direct correlation with the health of our business.2 Break-even Analysis The following table and chart show our break-even point.00% 25. We have forecasted into the future with a steady but moderate growth rate where sales will grow by 2% every month. If no appropriate investment opportunities present themselves excess cash will be placed into the market through a respected financial consultant.00% 0 Year 3 3 10.000 $25.Owner Operator Manager Employees Total People Total Payroll Year 1 Year 2 Year 3 $36.200 $45.232 $105.000 $22. . General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Year 1 1 10.
540 60% $13.016 7. we will adjust the amounts spent on marketing and other long-term assets that will add value to our business.Break-even Analysis Monthly Revenue Break-even Assumptions: Average Percent Variable Cost Estimated Monthly Fixed Cost $32.3 Projected Profit and Loss Due to working with low overhead. we predict early profits in the life of our business. Depending on the accuracy of our forecasts. .
821 40.731 $0 $260.00% Expenses Payroll Sales and Marketing and Other Expenses Depreciation Utilities Rent Payroll Taxes Other Total Operating Expenses $101.526 40.790 $188.552 $260.760 $0 $0 $159.232 $21.760 $0 $0 $165.600 $0 $9.681 $0 $271.681 $181.960 $111.960 .000 $21.600 $0 $9.00% Year 2 $452.600 $23.316 $282.600 $23.600 $0 $9.731 $173.802 $271.600 $23.760 $0 $0 $156.790 $0 $282.000 $21.00% Year 3 $471.Pro Forma Profit and Loss Sales Direct Cost of Sales Other Total Cost of Sales Gross Margin Gross Margin % Year 1 $434.121 40.192 $105.
Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Subtotal Cash from Operations Additional Cash Received Sales Tax.552 Year 1 $0 $0 $0 $0 $0 $0 $0 $452.13% $21.161 $21.980 .980 $456. 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 Year 2 Year 3 $434.4 Projected Cash Flow As a retailer.316 $0 $0 $0 $0 $0 $0 $0 $434.629 $17.973 $14.236 2.802 $471.161 $4.566 $22. but all of our invetory purchases are made on account.Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $17.042 $9.721 2.350 $3.566 $3.901 $442. we do not sell on credit.000 $345.552 $452.802 Year 2 $0 $0 $0 $0 $0 $0 $0 $471.316 $471.000 $4.552 $434. Our net cash outflows are largely a result of repaying the initial loan.435 $339.667 $105.200 $4. VAT.232 $238.802 $452.316 Year 3 $101.593 3.901 $111.240 $12.81% $22.629 $5.10% 7.000 $337.
000 $119.000 $2.980 $102.000 $52.509 Paid-in Capital $40.099) $79.374 $0 $0 $0 $12.962 $106.335 $0 $0 $29.347 $49.347 $49.000 $2.940 .962 $108.667 $82.962 $108.593 Total Capital $42.000 $0 $0 $0 $2.449 Year 1 Year 2 Year 3 $29.980 $100. Without cash we will be unable to react to market changes or survive through tough economic cycles.275 $0 $0 $0 $12.000 $0 $0 $10.374) ($4.509 $0 $0 $28.721 $14.980 ($7.653) Earnings $9. cash will be of particular importance to our organization.236 $12.000 $40.335 $27.885 $91.000 $2.626 $45. Our net worth will improve as we grow and pay off the initial loan.633 $36. VAT.000 $2.626 $45.664) $71.000 $77.611 $26.633 $28.940 Total Liabilities and Capital $119.374 $79.980 $102.838 $0 $0 $0 $117.5 Projected Balance Sheet Among the importance of monitoring liabilities and assets.000 $464.Additional Cash Spent Sales Tax.509 $24.449 Net Worth $42.633 $0 $0 $27.449 $2.335 $48. Pro Forma Balance Sheet Year 1 Assets Current Assets Cash Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Year 2 Year 3 $91. We will monitor this section of the Balance Sheet constantly.588 $27.610) ($7. HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $12.000 $0 $0 $10.705 $28.000 $63.275 $71.000 Retained Earnings ($6.000 $40.611 7.901 ($12.000 $478.000 $0 $0 $0 $351.
General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab.25% 39.81% 10.81 0.06% 100.39% 41.00% 24.10% 18.62 10.67% 100.97 0.89 9.84% 100.53% 25.80% 19.00% 40.00% 40.20% n.00% 44.22% 1.81% 28.a 8.13 27 3.00% 27.a n.16% 0.20% 22.00% 98.a n.00% 98.60% 1.47% 28.43% 51.25% 48.a n.940 7.a n.30% 81.05% 3.33% 1.00% 22.95% 100.51 51.00% 25.39% 37.a 1.10% 29.66% 4.13% 21.05 0.42% 0.00% 31. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Year 1 0.626 3.00% 1.15% 0.01% 64.70% 3.11 64.40 0.24% Year 1 2.85% 4.79% 100.00% 40.17 30 4.02 3.60 n.90% 1.70% 13.a .28 24% 0.52 2.00% Year 2 4.70% 42.40% 15.77% 4.75 57.47% 35.87 58.00% 98.52 n.a 0.83% 23.40% 8.17 31 4.67% 3.16% 1.54 n.24 25% 0.67% 100.a n.21% 0.50% 0.01 12.38 1.90% 100.61% 28.40% 4.00 12.30 $79.15 10.20% Year 3 4.75% 40.05% 1. as determined by the Standard Industry Classification (SIC) Index.45% 40.36% 33.a $88.6 Business Ratios The table below contains important business ratios from the sporting goods shops industry (5491).7.43 1.20% 24.30% 100.10% Year 3 3.00% 33.00% 21.347 5. Ratio Analysis 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 Percent of Sales Sales Gross Margin Selling.00% 57.87 2.56% Year 2 2.a n.09% Industry Profile 4.a n.04 $71.03% 58.18% 19.22 28% n.
19 0.79 2.a n.a .99 0.51 9.11 10.44 0.87 9.Acid Test Sales/Net Worth Dividend Payout 3.69 n.00 2.a n.
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