Cover Page

Free Ecommerce Business plan for Gift and handicraft

Please Visit: www.Enterslicellp.com

Free Download

Requests for Investor Ready Business plan with deck and projections
in excel , Business valuation , SEED / Series A funding. Please email
your questions / request to the Startup support department of
Enterslice Value advisors LLP at info@enterslicellp.com. For product
information, visit our Website: www.enterslicellp.com or call at
91-9810688728

Copyright © Enterslice, LLP., 2013-2016 All rights reserved.

Noida: California
Legal Page

Confidentiality Agreement

The undersigned reader acknowledges that the information provided in this business plan is
confidential; therefore, reader agrees not to disclose it without express written permission.
It is acknowledged by reader that information to be furnished in this business plan is in all respects
confidential in nature, other than information which is in the public domain through other means
and that any disclosure or use of same by reader, may cause serious harm or damage to
.
Upon request, this document is to be immediately returned to .

Signature

Name (typed or printed)

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

1.1 Executive Summary.............................................................................................................................1

Chart: Highlights..................................................................................................................................1
1.2 Objectives..........................................................................................................................................1
1.3 Mission...............................................................................................................................................2
1.4 Keys to Success.................................................................................................................................2
2.1 Company Summary................................................................................................................................2
2.2 Company Ownership.........................................................................................................................2
2.3 Startup Summary...............................................................................................................................2
Table: Startup.......................................................................................................................................3
Chart: Startup.......................................................................................................................................4
2.4 Company Locations and Facilities.....................................................................................................4
3.1 Products................................................................................................................................................4
3.2 Product Description...........................................................................................................................5
3.3 Competitive Comparison...................................................................................................................5
3.4 Sales Literature..................................................................................................................................5
3.5 Sourcing.............................................................................................................................................5
3.6 Technology........................................................................................................................................5
3.7 Future Products..................................................................................................................................5
4.1 Market Analysis Summary.................................................................................................................5
4.2 Market Segmentation.........................................................................................................................5
Table: Market Analysis........................................................................................................................6
Chart: Market Analysis (Pie)...............................................................................................................6
4.3 Target Market Segment Strategy.......................................................................................................6
4.3.1 Market Needs..............................................................................................................................6
4.3.2 Market Trends.............................................................................................................................7
4.3.3 Market Growth............................................................................................................................7
4.4 Industry Analysis...............................................................................................................................7
4.4.1 Industry Participants...................................................................................................................7
4.4.2 Distribution Patterns...................................................................................................................7
4.4.3 Competition and Buying Patterns...............................................................................................7
4.4.4 Main Competitors.......................................................................................................................7
5.1 Web Plan Summary.............................................................................................................................7
5.2 Website Marketing Strategy..............................................................................................................8
5.3 Development Requirements...............................................................................................................8
6.1 Strategy and Implementation Summary...........................................................................................8
6.2 SWOT Analysis.................................................................................................................................8
6.2.1 Strengths.....................................................................................................................................8
6.2.2 Weaknesses.................................................................................................................................8
6.2.3 Opportunities..............................................................................................................................8
6.2.4 Threats........................................................................................................................................8
6.3 Strategy Pyramid................................................................................................................................8
6.4 Value Proposition..............................................................................................................................8
6.5 Competitive Edge..............................................................................................................................8
6.6 Marketing Strategy............................................................................................................................9
6.6.1 Positioning Statement.................................................................................................................9
6.6.2 Pricing Strategy...........................................................................................................................9
6.6.3 Promotion Strategy.....................................................................................................................9
Page 1
 Table of Contents

6.6.4 Distribution Strategy...................................................................................................................9

6.6.5 Marketing Programs...................................................................................................................9
6.7 Sales Strategy.....................................................................................................................................9
6.7.1 Sales Forecast...........................................................................................................................10
Table: Sales Forecast.....................................................................................................................10
Chart: Sales Monthly.....................................................................................................................10
Chart: Sales by Year......................................................................................................................11
6.7.2 Sales Programs..........................................................................................................................11
6.8 Strategic Alliances...........................................................................................................................11
6.9 Milestones........................................................................................................................................11
Table: Milestones...............................................................................................................................11
Chart: Milestones...............................................................................................................................12
7.1 Management Summary.....................................................................................................................12
7.2 Organizational Structure..................................................................................................................12
Org. Chart: Organizational Chart.......................................................................................................13
7.3 Management Team..........................................................................................................................13
7.4 Management Team Gaps.................................................................................................................13
7.5 Personnel Plan..................................................................................................................................13
Table: Personnel................................................................................................................................13

....................................................................................................................................................................13
8.1 Financial Plan.....................................................................................................................................14
8.2 Startup Funding................................................................................................................................14
Table: Startup Funding......................................................................................................................14

8.3 Important Assumptions....................................................................................................................15

8.4 Key Financial Indicators..................................................................................................................15
Chart: Benchmarks.............................................................................................................................15
8.5 Break-even Analysis........................................................................................................................16
Table: Break-even Analysis...............................................................................................................16
Chart: Break-even Analysis...............................................................................................................16
8.6 Projected Profit and Loss.................................................................................................................17
Table: Profit and Loss........................................................................................................................17
Chart: Profit Monthly.........................................................................................................................18
Chart: Profit Yearly...........................................................................................................................18
Chart: Gross Margin Monthly............................................................................................................19
Chart: Gross Margin Yearly...............................................................................................................19
8.7 Projected Cash Flow........................................................................................................................20
Table: Cash Flow...............................................................................................................................20
Chart: Cash.........................................................................................................................................21
8.8 Projected Balance Sheet...................................................................................................................22
Table: Balance Sheet.........................................................................................................................22

................................................................................................................................................................22
8.9 Business Ratios................................................................................................................................23
Table: Ratios......................................................................................................................................23

Page 2
 Table of Contents

8.10.....................................................................................................................The Investment Offering

.........................................................................................................................................................24
Table: Investment Offering................................................................................................................24

8.11 Valuation........................................................................................................................................25
Table: Investment Analysis...............................................................................................................25

8.12 Use of Funds..................................................................................................................................26

Table: Use of Funds...........................................................................................................................26

8.13 Payback..........................................................................................................................................26
Table: Payback...................................................................................................................................26
Chart: Payback Period.......................................................................................................................27
Table: Sales Forecast...................................................................................................................................1

......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2

......................................................................................................................................................................2
Table: Profit and Loss..................................................................................................................................3

......................................................................................................................................................................4
Table: Cash Flow.........................................................................................................................................5

......................................................................................................................................................................6
Table: Balance Sheet....................................................................................................................................7

Page 3
Table of Contents

Page 1
 www.enterslicellp.com

1.1 Executive Summary

Classique Gifts Etc. is a start-up retail store offering fine gifts, collectible dolls and doll
accessories. The store will be located in Lexington, Kentucky, catering to the middle- and
upper-class consumers who look beyond the congested retail malls for the special shopping
experience. In addition to offering a wide array of unique, quality products, the consumer will
enjoy friendly and knowledgeable customer service and a convenient, uncongested location.
This business plan is prepared to obtain financing in the amount of $50,000 to
purchase inventory and to help cover expenses in the first year of operations. We are also
asking for a credit line of $10,000 to be used as necessary in low cash flow periods. Brenda and
Charles Gajdik will own and operate the store together as a team. They will provide $40,000 in
cash as an equity investment to be used in start-up costs, equipment purchases, and operating
capital.
The sales forecasts used in this plan are very conservative compared to a similar business now
operating in Lexington. Brenda has observed the strengths and weaknesses of this store and
is convinced it can be done better.

Chart: Highlights

1.2 Objectives

 To develop Classique Gifts Etc. into the premier gift retail store in Central Kentucky.
 To begin and maintain a gross profit margin above 40% for the first year.
 To acquire a customer base of 4,000 by the end of the second year by using
personal customer service and marketing.
 To achieve a substantial net profit by the end of Year 3.

Page 1
 www.enterslicellp.com

1.3 Mission

Classique Gifts Etc.will be a retail gift store specializing in fine gifts, collectible dolls and doll
accessories. We want to provide products from quality suppliers and provide professional
customer service in a friendly environment.

1.4 Keys to Success

To succeed in this business, we must:

 Sell products the customer desires and are of the highest quality.
 Provide friendly customer service.
 Establish excellent vendor/supplier relations that will facilitate quick shipment of orders.
 Advertise and promote our store immediately to take advantage of the current
Christmas shopping season.
 Continuously review our inventory and sales and adjust our inventory levels based on
detailed records.

2.1 Company Summary

Classique Gifts Etc. is proposed to be a sole-proprietorship company operated by Brenda and

Charles Gajdik and is a newly established retail store offering unique gifts and elegant
collectible dolls.
Located in Lexington, Kentucky, we will cater to special consumers who are interested in
finding unique items to supplement their doll collection or finding a gift that cannot be found in
the national chain store in the very busy, very congested shopping mall.
We intend to expand our business by carefully building a repeat customer base and provide the
products and merchandise they wish to purchase. We feel it is important to offer personal
customer support and services to achieve our business philosophy.

2.2 Company Ownership

Classique Gifts Etc. will begin operation as a sole-proprietorship. The company will be owned by
Charles and Brenda Gajdik.

2.3 Startup Summary

Total current and long-term assets will make up 78% of start-up requirements. Start-up
expenses, which are detailed in the following start-up table comprise the remaining 22% at
$20,058
Funding
As detailed in the start-up funding table, $90,000 with a $10,000 line of credit will be required
to fund Classique Gifts Etc. This proposal is to be accomplished as follows:
 Owners' investment from Charles and Brenda of $40,000
 Commercial loan of $50,000, calculated at 7% for seven years
 Line of credit of $10,000 to be used as necessary

Details of other start-up expenses include:

Page 2
  Research and Development:

Buying trip expenses to Columbus, OH. $133

Buying trip expenses to Atlanta, GA. $430
Internet provider service paid in July, for the Year 1 $120
Total $683
 1st Month Rent & Deposit (proposed location):

Rent = $9.50/square foot $1425/mo. $17,100/yr.

Common Area Maintenance (CAM) = $1.50/square
$225/mo. $2700/yr.
foot
Total Rent and CAM $1650/mo. $19,800/yr.
 Leasehold Improvements:
Slatwall Panels and Accessories 50 panels @ $50 each $2500
Ceiling Tiles 1,400 sq ft @ $.50/sq ft $700
Carpet with Pad 1,400 sq ft @ 2.50/sq ft $3500
Carpenter Estimate Display Risers and Counter $300
Total $7,000
 Phone line installation: Single line installation $100
 Insurance: Medical insurance for Brenda and Charles $650 first month

 Advertising & Promotion:

$76/week for 26 weeks (Community Section on

Newspaper $1976
Wednesday)
TV Shopping with Santa in the Bluegrass $1500
Total $3476

Table: Startup

Startup

Requirements

Startup Expenses
Utility Deposits (gas, water, electric) $600
Legal $250
Advertising & Promotion $3,500
Consultants $200
Insurance: Store Liability $2,400
 Medical Insurance 1st Month $650
Office Supplies, Gift Wrap and Packaging $1,500
Leasehold Improvements $7,000
1st Month Rent & Deposit $3,075
Phone line installation $100
Research and Development $683
Business Plan Development $100
Total Startup Expenses $20,058

Startup Assets
Cash Required $12,185
Other Current Assets $12,757
Long-term Assets $0
Total Assets $24,942

Total Requirements $45,000

Chart: Startup

2.4 Company Locations and Facilities

3.1 Products

Classique Gifts Etc. plans to carry special occasion gifts and merchandise from the San
Francisco Music Box Company, Swarovski crystal, Lennox crystal, Outback Chair Company,
Traditions Artglass Company, children's books from Harvest House and other suppliers who
 display their products at the Atlanta International Gift Market or the Columbus Marketplace for
Gift, Garden and Home.

We will also purchase merchandise from the most well-known collectible doll manufacturers and
suppliers in the United States, including Steiff, Madame Alexander, Turner Dolls, Lee Middleton,
Wendy Lawton, Susan Wakeen, Kish Dolls, Lloyd Middleton and others that provide the quality
products that our customers wish to purchase.

3.2 Product Description

3.3 Competitive Comparison

3.4 Sales Literature

3.5 Sourcing

3.6 Technology

3.7 Future Products

4.1 Market Analysis Summary

According to Pam Danziger, President of Unity Marketing, the collectible doll industry generated
$3 billion in retail sales in 2000. The gift industry, which includes general gifts, collectibles,
stationery and greeting cards, generated $54 billion in sales in 2002. As predicted by Unity
Marketing, "the future of the gifts and home accents market is positive for the next
several years." Source:Unity Marketing, The Home Report 2001:The Market, The
Competitors, The Trends

4.2 Market Segmentation

The ideal customer we expect to serve is:

 Middle to Upper Class
 Primarily Female
 30-75 Years of Age
 Educated
 Homeowner
 Quality Conscious
 Value Conscious
 Family Oriented

We will attract these customers by offering unique and uncommon product selections not found
in the mass-market retail stores.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Recreational Artists 15% 5,000 5,750 6,613 7,605 8,746 15.00%
Serious Artists 10% 2,000 2,200 2,420 2,662 2,928 10.00%
Total 13.64% 7,000 7,950 9,033 10,267 11,674 13.64%

Chart: Market Analysis (Pie)

4.3 Target Market Segment Strategy

4.3.1 Market Needs

4.3.2Market Trends

4.3.3Market Growth

4.4 Industry Analysis

 More and more consumers are seeking independent retailers that offer them the feel
of home with a more personalized shopping experience.
 As consumers become more time-deprived, they are looking to shop at stores whose service
offerings are as equal in quality and value to their products.

4.4.1 Industry Participants

4.4.2Distribution Patterns

4.4.3Competition and Buying Patterns

Brand name products sell well in stores that maintain a good selection, good location, and
knowledgeable, friendly employees. These are the most important factors when selling
collectibles and gifts.
There is only one store in the Lexington area that carries a wide variety of collectible dolls.
However, the doll inventory only makes up about 25% of the total inventory. We do not
consider this store serious competition because their lease for the 4800 sq. ft. store expires in
March, 2004, and it is rumored the business will not renew the lease.
Other stores in the Central Kentucky area carry one or two lines of dolls but do not offer a wide
variety of collectible doll lines. We intend to offer many different doll lines, doll accessories,
personalized knowledgeable service, and a variety of other unique gift merchandise.
The Internet offers dolls at discount prices. However, most of the merchandise is retired or
discontinued lines that the manufacturers sell in bulk at discount wholesale prices. These are
not the products we intend to carry in Classique Gifts Etc.
We intend to develop a web page at some point, probably in year three to market
our merchandise on the Internet.

4.4.4Main Competitors

5.1 Web Plan Summary

5.2 Website Marketing Strategy

5.3 Development Requirements

6.1 Strategy and Imlpementation Summary

Classique Gifts Etc. will develop product offerings and marketing strategy to increase its
customer base while driving sales and profit. The following sections review the various
strategies that will support this effort.

6.2 SWOT Analysis

6.2.1 Strengths

6.2.2Weaknesses

6.2.3Opportunities

6.2.4Threats

6.3 Strategy Pyramid

6.4 Value Proposition

6.5 Competitive Edge

Classique Gifts Etc. will establish itself competitively as a unique retail environment through
product offering and friendly, personal customer service. With St. Joseph Hospital, medical
offices, the Kentucky Inn, the University of Kentucky and the Campbell House all located within
 1/2 mile of the proposed site, we will attempt to offer items that appeal to this diverse
population as well as the doll collector.

6.6 Marketing Strategy

Classique Gifts Etc. will focus its marketing efforts by advertising in the Lexington Herald-
Leader and Insight Media Advertising on cable TV.
We will also increase consumer awareness, retain the existing customer base and promote sales
via seasonal postcard and newsletter mailings. The mailings will announce special events or
holiday specials during the year. These events will be used to sell slow-moving products and
vendor special promotions. This means our marketing resources will be centered around both
sales promotions (events, displays) and personal sales (customer service, friendly atmosphere).
Classique Gifts Etc. will offer $5 coupons for every $100 spent. The coupon can be used by the
customer on future visits to the store.

6.6.1 Positioning Statement

6.6.2Pricing Strategy

6.6.3Promotion Strategy

6.6.4Distribution Strategy

6.6.5Marketing Programs

6.7 Sales Strategy

Classique Gifts Etc. will approach sales from a salesperson-customer relationship basis. All
customers will be assisted in a very personal manner. Gathering key customer information and
seeking performance feedback on the products and services offered will assist us in the
following ways:

 Targeting our marketing efforts more effectively.

 Developing product offers and merchandising formats that will increase sales.
 Developing services that enhance the shopping experience.
 Increase awareness of Classique Gifts Etc. within the retail consumer marketplace.
 Develop future sales opportunities that allow for continued growth of the business.
6.7.1 Sales Forecast

Sales in the retail gift and collectible doll industry is enhanced by seasonal holidays and special
gift giving occasions. The following sales forecast is from direct retail sales and does not include
miscellaneous income. The figures also include dips in sales for those slow periods the business
usually experiences in the summer months.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Dolls & Accessories $72,105 $80,758 $90,449
Gifts $71,405 $79,974 $89,570
Total Sales $143,510 $160,731 $180,019

Direct Cost of Sales Year 1 Year 2 Year 3

Dolls & Accessories $40,871 $42,915 $45,060
Gifts $40,885 $42,929 $45,076
Subtotal Direct Cost of Sales $81,756 $85,844 $90,136

Chart: Sales Monthly

 Chart: Sales by Year

6.7.2Sales Programs

6.8Strategic Alliances

6.9 Milestones

The following table lists important milestone dates.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business Plan 01-11-2003 18-11-2003 $0 Charles Department
Secure Funding 18-11-2003 31-12-2003 $0 Charles Department
Negotiate and Sign Lease 18-11-2003 31-12-2003 $0 Charles Department
Business Setup 18-11-2003 31-12-2003 $0 Charles Department
Leasehold Improvements 18-11-2003 31-12-2003 $0 Charles Department
Purchase Start-up
18-11-2003 31-12-2003 $0 Charles Department
Equipment
Advertising Developed 01-01-2004 01-02-2004 $0 Charles/Brenda Department
Store Open For Business 01-02-2004 02-02-2004 $0 Charles/Brenda Department
 Totals $0

Chart: Milestones

7.1 Management Summary

Classique Gifts Etc. will be managed and operated on a daily basis by Brenda and Charles
Gajdik, a husband and wife team.

Brenda will manage merchandising, sales, customer relations, and all part-time staff. She will
also provide the information necessary to develop a marketing plan to attract repeat customers.
Brenda has been employed for three years at Schwab's Collectibles, a retail collectible and gift
store in Lexington. She is currently the assistant store manager which she has held for two
years. Some of her management duties include shipping and receiving, merchandising, and
sales. She has always served the public in most every position she has previously held. She
understands what customer service is and has a loyal following of repeat customers.

Charles will manage the finances and financial records, operations, data processing and assist
in all other areas of the business. Charles has 14 years experience in accounting and nearly 15
years experience in information technology as an Information Systems (IS) Support Specialist.
He also maintains the financial records for a family owned business and has some experience
in retail sales.

7.2 Organizational Structure

 Org. Chart: Organizational Chart

7.3 Management Team

7.4 Management Team Gaps

7.5 Personnel Plan

The personnel plan is included in the following table. It shows the owners' salaries along with
one part-time employee used as needed.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Brenda Owner/Manager-Sales & Merchandising $14,600 $16,000 $16,000
Charles Owner/Manager-Operations & Finance $9,000 $14,000 $14,000
Part-Time as Needed ($7 per hour) $3,120 $4,120 $5,120
Total People 3 3 3

Total Payroll $26,720 $34,120 $35,120

8.1 Financial Plan

 Growth will be moderate.

 Costs will be managed and forecasts for future needs will be performed on a regular basis.
 Finding the right product, at the right price will enable the business to meet
planned margins and maintain inventory at an acceptable level.

8.2Startup Funding

Table: Startup Funding

Startup Funding
Startup Expenses to Fund $20,058
Startup Assets to Fund $24,942
Total Funding Required $45,000

Assets
Non-cash Assets from Startup $12,757
Cash Requirements from Startup $12,185
Additional Cash Raised $45,000
Cash Balance on Starting Date $57,185
Total Assets $69,942

Liabilities and Capital

Liabilities
Current Borrowing $0
Long-term Liabilities $50,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $50,000

Capital

Planned Investment
Charles & Brenda Gajdik $40,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $40,000

Loss at Startup (Startup Expenses) ($20,058)

 Total Capital $19,942

Total Capital and Liabilities $69,942

Total Funding $90,000

8.3Important Assumptions

Key assumptions are:

 We do not sell anything on credit.

 We assume the continued popularity of collectibles.
 We assume access to financing sufficient to maintain our financial plan as shown in
the tables.

8.4Key Financial Indicators

Chart: Benchmarks
8.5 Break-even Analysis

The following table and chart show our estimated monthly revenue break-even point.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $11,013

Assumptions:
Average Percent Variable Cost 57%
Estimated Monthly Fixed Cost $4,739

Chart: Break-even Analysis

8.6Projected Profit and Loss

The following table shows our planned three-year profit and loss estimates. We expect to
have a gross margin percent above 40% our first year, which will continue to grow in years
two and three.

The associated charts show that we will have a negative profit/sales percentage for the first two
years with a positive net profit by year three.

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $143,510 $160,731 $180,019
Direct Cost of Sales $81,756 $85,844 $90,136
Other Costs of Goods $0 $0 $0
Total Cost of Sales $81,756 $85,844 $90,136

Gross Margin $61,754 $74,887 $89,883

Gross Margin % 43.03% 46.59% 49.93%

Expenses
Payroll $26,720 $34,120 $35,120
Sales and Marketing and Other Expenses $600 $1,200 $2,400
Depreciation $0 $0 $0
Rent and CAM Expense $18,150 $18,150 $18,150
Utilities $3,600 $3,600 $3,600
Liability Insurance:Store $0 $2,400 $2,400
Insurance (medical Brenda & Charles) $7,800 $7,150 $7,150
Payroll Taxes $0 $0 $0
Other $0 $0 $0

Total Operating Expenses $56,870 $66,620 $68,820

Profit Before Interest and Taxes $4,884 $8,267 $21,063

EBITDA $4,884 $8,267 $21,063
Interest Expense $3,156 $2,549 $1,915
Taxes Incurred $518 $1,716 $5,745

Net Profit $1,209 $4,003 $13,404

Net Profit/Sales 0.84% 2.49% 7.45%
Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

8.7 Projected Cash Flow

The following table and chart represents the projected cash flow.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $143,510 $160,731 $180,019
Subtotal Cash from Operations $143,510 $160,731 $180,019

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $143,510 $160,731 $180,019

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $26,720 $34,120 $35,120
Bill Payments $105,306 $122,806 $130,765
Subtotal Spent on Operations $132,026 $156,926 $165,885

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $9,060 $9,060 $9,060
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $141,086 $165,986 $174,945

Net Cash Flow $2,424 ($5,254) $5,074

Cash Balance $59,609 $54,355 $59,429
Chart: Cash
8.8Projected Balance Sheet

The following table shows our projected Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $59,609 $54,355 $59,429
Other Current Assets $12,757 $12,757 $12,757
Total Current Assets $72,366 $67,112 $72,186

Long-term Assets
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $0
Total Assets $72,366 $67,112 $72,186

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $10,275 $10,077 $10,808
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $10,275 $10,077 $10,808

Long-term Liabilities $40,940 $31,880 $22,820

Total Liabilities $51,215 $41,957 $33,628

Paid-in Capital $40,000 $40,000 $40,000

Retained Earnings ($20,058) ($18,849) ($14,846)
Earnings $1,209 $4,003 $13,404
Total Capital $21,151 $25,154 $38,558
Total Liabilities and Capital $72,366 $67,112 $72,186

Net Worth $21,151 $25,154 $38,558

8.9Business Ratios

The following table outlines some of the more important ratios from the Gift Shop industry. The
final column, Industry Profile, details specific ratios based on the industry as it is classified by
the Standard Industry Classification (SIC) code 5947.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 12.00% 12.00% 3.34%

Percent of Total Assets

Other Current Assets 17.63% 19.01% 17.67% 23.99%
Total Current Assets 100.00% 100.00% 100.00% 80.29%
Long-term Assets 0.00% 0.00% 0.00% 19.71%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 14.20% 15.02% 14.97% 36.19%

Long-term Liabilities 56.57% 47.50% 31.61% 15.42%
Total Liabilities 70.77% 62.52% 46.58% 51.61%
Net Worth 29.23% 37.48% 53.42% 48.39%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 43.03% 46.59% 49.93% 37.74%
Selling, General & Administrative Expenses 44.22% 47.15% 45.12% 23.72%
Advertising Expenses 0.00% 0.00% 0.00% 2.14%
Profit Before Interest and Taxes 3.40% 5.14% 11.70% 1.65%

Main Ratios
Current 7.04 6.66 6.68 1.98
Quick 7.04 6.66 6.68 0.74
Total Debt to Total Assets 70.77% 62.52% 46.58% 3.65%
Pre-tax Return on Net Worth 8.17% 22.73% 49.66% 58.19%
Pre-tax Return on Assets 2.39% 8.52% 26.53% 8.72%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 0.84% 2.49% 7.45% n.a
Return on Equity 5.72% 15.91% 34.76% n.a

Activity Ratios
Accounts Payable Turnover 11.25 12.17 12.17 n.a
Payment Days 27 30 29 n.a
Total Asset Turnover 1.98 2.39 2.49 n.a
 Debt Ratios
Debt to Net Worth 2.42 1.67 0.87 n.a
Current Liab. to Liab. 0.20 0.24 0.32 n.a

Liquidity Ratios
Net Working Capital $62,091 $57,034 $61,378 n.a
Interest Coverage 1.55 3.24 11.00 n.a

Additional Ratios
Assets to Sales 0.50 0.42 0.40 n.a
Current Debt/Total Assets 14% 15% 15% n.a
Acid Test 7.04 6.66 6.68 n.a
Sales/Net Worth 6.78 6.39 4.67 n.a
Dividend Payout 0.00 0.00 0.00 n.a

8.10 The Investment Offering

Table: Investment Offering

Investment Offering Seed Round 1 Round 2 Exit

Proposed Year: 1 2 3 7

Valuation, Investment, Shares

Investment Amount $0 $0 $0
Equity Share Offering Percentage 0.00% 0.00% 0.00%
Valuation $0 $0 $0 $0
Investor Exit Payout $0 $0 $0
Investor Years Until Exit 6 5 4
Investor IRR 0.00% 0.00% 0.00%

Share Ownership Year 1 Year 2 Year 3 Year 7

Founders' Shares 0 0 0 0
Stock Split Multiple 0 0 0
Stock Options Issued 0 0 0 0
Investor Shares Issued 0 0 0
Price per share $0.00 $0.00 $0.00 $0.00
Options Holders' Shares 0 0 0 0
Year 1 Investors' Shares 0 0 0 0
 Year 2 Investors' Shares 0 0 0
Year 3 Investors' Shares 0 0
Total Shares Outstanding 0 0 0 0

Equity Ownership Percentage Year 1 Year 2 Year 3 Year 7

Founders' Equity 0.00% 0.00% 0.00% 0.00%
Option Holders' Equity 0.00% 0.00% 0.00% 0.00%
Year 1 Investors' Equity 0.00% 0.00% 0.00% 0.00%
Year 2 Investors' Equity 0.00% 0.00% 0.00%
Year 3 Investors' Equity 0.00% 0.00%
Total Equity 0.00% 0.00% 0.00% 0.00%
Investors' Equity 0.00% 0.00% 0.00% 0.00%
Founders' & Employees' Equity 0.00% 0.00% 0.00% 0.00%

8.11 Valuation

Table: Investment Analysis

Investment Analysis
Start Year 1 Year 2 Year 3
Initial Investment
Investment $40,000 $0 $0 $0
Dividends $0 $0 $0 $0
Ending Valuation $0 $0 $0 $126,000
Combination as Income Stream ($40,000) $0 $0 $126,000
Percent Equity Acquired 35%
Net Present Value (NPV) $49,696
Internal Rate of Return (IRR) 47%

Assumptions
Discount Rate 10.00%
Valuation Earnings Multiple 10 10 10
Valuation Sales Multiple 2 2 2

Investment (calculated) $40,000 $0 $0 $0

Dividends $0 $0 $0
Calculated Earnings-based Valuation $10,000 $40,000 $130,000
Calculated Sales-based Valuation $290,000 $320,000 $360,000
 Calculated Average Valuation $150,000 $180,000 $245,000

8.12 Use of Funds

Table: Use of Funds

Use of Funds

Use Amount
Name $0
Name $0
Name $0
Name $0
Total $0

8.13 Payback

Table: Payback

Payback

Projected Payback Calculation

Investment Year 1 Year 2 Year 3 Year 4 Year 5
Investment $500,000
Cash Returns by Year $100,000 $100,000 $100,000 $100,000 $100,000
Combination as Income Stream ($500,000) $100,000 $100,000 $100,000 $100,000 $100,000
Cumulative Net Cash Flow to
($500,000) ($400,000) ($300,000) ($200,000) ($100,000) $0
Investors
Payback Period 5 years
Chart: Payback Period
 Appendix

Table: Sales Forecast

Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales
Dolls & Accessories 0% $7,400 $7,900 $5,350 $5,230 $5,600 $5,850 $6,475 $5,500 $5,400 $5,450 $5,700 $6,250
Gifts 0% $7,400 $7,900 $5,250 $5,230 $5,500 $5,750 $6,375 $5,400 $5,300 $5,450 $5,600 $6,250
Total Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

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

Dolls & Accessories $3,900 $4,243 $2,690 $2,759 $3,425 $3,550 $3,988 $2,988 $3,150 $3,125 $3,150 $3,903

Gifts $3,900 $4,250 $2,690 $2,759 $3,425 $3,550 $3,998 $2,988 $3,150 $3,125 $3,150 $3,900

Subtotal Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Page 1
Table: Personnel

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Brenda Owner/Manager-Sales &
0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,300 $1,300
Merchandising
Charles Owner/Manager-Operations &
0% $0 $0 $900 $900 $900 $900 $900 $900 $900 $900 $900 $900
Finance
Part-Time as Needed ($7 per hour) 0% $280 $560 $0 $0 $0 $300 $300 $320 $320 $320 $320 $400
Total People 3 3 2 2 2 3 3 3 3 3 3 3

Total Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Direct Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $7,800 $8,493 $5,380 $5,518 $6,850 $7,100 $7,986 $5,976 $6,300 $6,250 $6,300 $7,803

Gross Margin $7,000 $7,307 $5,220 $4,942 $4,250 $4,500 $4,864 $4,924 $4,400 $4,650 $5,000 $4,697

Gross Margin % 47.30% 46.25% 49.25% 47.25% 38.29% 38.79% 37.85% 45.17% 41.12% 42.66% 44.25% 37.58%

Expenses

Payroll $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600
Sales and Marketing and
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $300
Other Expenses
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rent and CAM Expense $0 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650 $1,650

Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300

Liability Insurance:Store $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Insurance (medical Brenda
$650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650 $650
& Charles)
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $2,430 $4,360 $4,700 $4,700 $4,700 $5,000 $5,000 $5,020 $5,020 $5,020 $5,420 $5,500

Profit Before Interest and

$4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)
Taxes
EBITDA $4,570 $2,947 $520 $242 ($450) ($500) ($136) ($96) ($620) ($370) ($420) ($803)
 Interest Expense $287 $283 $278 $274 $270 $265 $261 $256 $252 $248 $243 $239

Taxes Incurred $1,285 $799 $72 ($10) ($216) ($230) ($119) ($106) ($262) ($185) ($199) ($313)

Net Profit $2,998 $1,865 $169 ($22) ($504) ($536) ($278) ($247) ($610) ($432) ($464) ($729)

Net Profit/Sales 20.26% 11.80% 1.60% -0.21% -4.54% -4.62% -2.16% -2.26% -5.70% -3.97% -4.11% -5.83%
Table: Cash Flow

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received

Cash from Operations

Cash Sales $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Subtotal Cash from Operations $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $14,800 $15,800 $10,600 $10,460 $11,100 $11,600 $12,850 $10,900 $10,700 $10,900 $11,300 $12,500

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 $1,480 $1,760 $2,100 $2,100 $2,100 $2,400 $2,400 $2,420 $2,420 $2,420 $2,520 $2,600

Bill Payments $344 $10,384 $12,047 $8,333 $8,420 $9,511 $9,769 $10,661 $8,732 $8,891 $8,923 $9,290

Subtotal Spent on Operations $1,824 $12,144 $14,147 $10,433 $10,520 $11,911 $12,169 $13,081 $11,152 $11,311 $11,443 $11,890

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
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
Other Liabilities Principal
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment
Long-term Liabilities Principal
$755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755 $755
Repayment
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $2,579 $12,899 $14,902 $11,188 $11,275 $12,666 $12,924 $13,836 $11,907 $12,066 $12,198 $12,645

Net Cash Flow $12,221 $2,901 ($4,302) ($728) ($175) ($1,066) ($74) ($2,936) ($1,207) ($1,166) ($898) ($145)

Cash Balance $69,406 $72,307 $68,005 $67,277 $67,103 $66,036 $65,962 $63,026 $61,819 $60,653 $59,755 $59,609
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting Balances

Current Assets
Cash $57,185 $69,406 $72,307 $68,005 $67,277 $67,103 $66,036 $65,962 $63,026 $61,819 $60,653 $59,755 $59,609
Other Current Assets $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757 $12,757
Total Current Assets $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Assets $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $0 $9,978 $11,769 $8,053 $8,103 $9,187 $9,411 $10,370 $8,436 $8,594 $8,615 $8,936 $10,275
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Current Liabilities $0 $9,978 $11,769 $8,053 $8,103 $9,187 $9,411 $10,370 $8,436 $8,594 $8,615 $8,936 $10,275

Long-term Liabilities $50,000 $49,245 $48,490 $47,735 $46,980 $46,225 $45,470 $44,715 $43,960 $43,205 $42,450 $41,695 $40,940
Total Liabilities $50,000 $59,223 $60,259 $55,788 $55,083 $55,412 $54,881 $55,085 $52,396 $51,799 $51,065 $50,631 $51,215

Paid-in Capital $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Retained Earnings ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058) ($20,058)
Earnings $0 $2,998 $4,863 $5,032 $5,009 $4,506 $3,970 $3,692 $3,446 $2,835 $2,403 $1,939 $1,209
Total Capital $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151
Total Liabilities and Capital $69,942 $82,163 $85,064 $80,762 $80,034 $79,860 $78,793 $78,719 $75,783 $74,576 $73,410 $72,512 $72,366

Net Worth $19,942 $22,940 $24,805 $24,974 $24,951 $24,448 $23,912 $23,634 $23,388 $22,777 $22,345 $21,881 $21,151