Ahsanullah University of Science and Technology

Assignment on “Business Plan”

Submitted To:
Mr. Md. Shak Forid
Assistant Professor
School Of Business
Ahsanullah University of Science and Technology

Submitted By:
Md. Sajjad Hossain Kurban
ID: 170202077
Course Code: BBA325
Year: 3rd year 2st semester
Section: B
 Name of Business: Gents World BD

Address Owner of Business

Tejgaon Industry Area Md. Sajjad Hossain Kurban
Phone: 01911311314 Tejagon Rail Gate
Email: Md.ridoy571@gmail.com Phone: 01911311314
Email: Md.ridoy571@gmail.com
Executive Summary
Gents World BD is an enrolled sneakers store that will be situated in perhaps the busiest road in Tejgaon –
Dhaka. I have had the option to rent an office that is sufficiently large to find a way into the sort of Sneakers
store that I mean dispatching.

Gents World BD will retail a wide scope of men's, youngsters' shoes, and different sorts of shoes from
various brands in Bangladesh. I'm set to support a wide scope of customers in and around Tejgaon – Dhaka.

I'm mindful that there are a few shoe outlets around Tejgaon – Dhaka, which is the reason I invested energy
and assets to direct an intensive plausibility study and market study to well rival every one of our rivals. I
have an online help choice for my clients, and my outlet has different installment alternatives.

Gents World BD will guarantee that every one of my clients are given top of the line treatment at whatever
point they visit our store. I have CRM programming that will empower me to deal with a one on one
relationship with my clients regardless of how huge they may develop.

Gents World BD will consistently exhibit the obligation to supportability, both separately and as a firm, by
effectively partaking in our networks and incorporating feasible strategic approaches at every possible
opportunity. I will guarantee that I consider myself responsible to the best expectations by addressing my
clients' requirements absolutely and totally at whatever point they belittle our items.

Gents World BD is claimed by Sajjad Hossain. Sajjad Hossain has a BBA understudy of Ahsanullah
University of Science and Technology, with more than 3 years of involvement with the shoe stores industry,
working for a portion of the main brands in Bangladesh. Albeit the business is jump starting out with only
one outlet in Tejgaon – Dhaka, there is an arrangement to open different outlets in significant urban
communities in Bangladesh.

Page 2
 Table of Contents
Executive Summary.........................................................................................2
2 Mission and Vision Statement....................................................................4
3 Success Factors...........................................................................................4
4 Description of Business:..............................................................................4
4.1 Business Name & Location:..............................................................................................................................4
4.2 Legal Form........................................................................................................................................................4
4.3 My Business Structure......................................................................................................................................4
4.4 Products and Services......................................................................................................................................5

5 Market Analysis.................................................................................................6
5.1 Market Trends..................................................................................................................................................6
5.2 My Target Market............................................................................................................................................7
5.3 Marketing Objectives:......................................................................................................................................7
5.4 My Competitive advantage:.............................................................................................................................7
5.5 Unique selling propositions..............................................................................................................................8

6 Strategy & Implementation..............................................................................9

6.1 Marketing Strategy and Sales Strategy.............................................................................................................9
6.2 Publicity and Advertising Strategy..................................................................................................................10
6.3 Pricing Strategy..............................................................................................................................................10
6.4 Payment Options............................................................................................................................................11

7 SWOT analysis:.................................................................................................11
7.1 Strength:.........................................................................................................................................................12
7.2 Weakness:......................................................................................................................................................12
7.3 Opportunities:................................................................................................................................................12
7.4 Threat:............................................................................................................................................................12

8 Financial Plan & Projections...........................................................................13

8.1 Start-up Expenses & Funding.........................................................................................................................13
8.2 Sales Forecast.................................................................................................................................................14
8.3 3-Year Sales Forecast......................................................................................................................................16
8.4 Profit and Loss Projection...............................................................................................................................18
8.5 Balance Sheet.................................................................................................................................................19
8.6 3-Year Cash Flow............................................................................................................................................20
8.7 Business Budget.............................................................................................................................................21
8.8 Break-Even Analysis........................................................................................................................................22

Page 3
1 Mission and Vision Statement

 My vision is to come to be one of the main manufacturers in the sneaker enterprise in Bangladesh and
to set up a one cease sneaker shop at Tejgaon– Dhaka and in different key cities in the Bangladesh
 • My mission is to set up a world – category sneaker shop commercial enterprise that will make
reachable a vast vary of sneakers from pinnacle shoe manufacturing manufacturers at low priced
expenditures to the residents of Dhaka.

2 Success Factors

Gents World BD is uniquely qualified to succeed for the following reasons:

 There is currently no high-end sneaker store in the community I’m entering. In addition, I have
surveyed the local population and received extremely positive feedback saying that they explicitly
want to frequent my business when launched.
 My location is in a high-volume area with little direct traffic, and will thus be highly convenient to
significant numbers of passersby each day.
 The management team has a track record of success in the clothing business.
 The sneaker business is a proven business and has succeeded in communities throughout the
Bangladesh.

3 Description of Business:
3.1 Business Name & Location:

My business name is “Gents World BD”, located at Tejgaon industry area is a new sneaker store focused on
upscale men’s fashioned.

3.2 Legal Form

The Gents World BD will be shaped as an on the online and manual shop entirely claimed by Mr. Sajjad
Hossain and allot lawful Trade License from neighborhood authority.

3.3 My Business Structure

The Business model and design I mean setting up is with the end goal that can uphold the development of the
business particularly as it identifies with opening chains of outlets. The way that I will likewise offer our
clients the chance to make buy online implies that me simply have the put the correct business design and
establishment set up.

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I will ensure that I employ individuals that are qualified, legit, client driven and are prepared to attempt to
help us fabricate a prosperous business that will profit all the partners. Actually, benefit sharing course of
action will be made accessible to all our senior administration staff and it will be founded on their exhibition
for a time of ten years or more.

Considering that, I have chosen to employ qualified and skillful hands to involve the accompanying
positions;

 CEO(Owner)
 Store Manager
 Human Resources and Admin Manager
 Merchandize Manager
 Sales and Marketing Manager
 Information Technologist
 Accountants/Cashiers
 Sales Agents/Customer Services Executive
 Cleaners

3.4 Products and Services

Gents World BD is in the sneaker business to service a vast range of clients and of course to make profits,
which is why i will ensure i go all the way to make handy a vast range of sneakers and other athletic shoes
from top manufacturing brands in the Dhaka.

My product offerings are listed below;

 Retailing children’s sneakers

 Retailing men’s sneakers
 Retailing athletic shoes (including sport-specific shoes like cleats and bowling shoes)

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4 Market Analysis

4.1 Market Trends

On the off chance that you are acquainted with the Shoe Stores Industry, you will very concur that the
adjustments in discretionary cash flow, shopper assessment, and truly changing patterns are significant
development drivers for deals around here. Most likely, a gigantic ascent in purchaser certainty has likewise
contributed in aiding the business experience momentous development, however lopsided execution in these
drivers has prompted somewhat compelled income development for the Shoe business.
So likewise, the rising interest for stylish Sneakerss, because of expanding discretionary cash flow and buyer
slant, will bring about income development, however net revenues will deteriorate as shoe stores keep costs
low to draw in more deals in the midst of developing rivalry.
A nearby watch on industry exercises uncovers that focus has expanded marginally in the course of recent
years, as consolidation and procurement movement has gotten more unmistakable. Moreover, organizations
that have sufficient assets to put resources into multichannel tasks have profited more than more modest
administrators with negligible assets.
This pattern has been outlined by articulations made by Gents World BD – CEO Sajjad Hossain on a few
events. As a feature of promoting techniques, shoe stores participate in monstrous closeouts and markdown
deals to draw in clients. It is a system that causes them invite new clients and furthermore builds up the
dedication of old clients.
The shoe store scene has seen huge changes over the most recent years; it has developed from the more
modest outlets to a more coordinated and sweeping endeavor. The presentation of establishments and online
stores makes it simpler for a retailer to contact a bigger market a long ways past the regions where his actual
shoe store is found.

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4.2 My Target Market
Conceivably it will be protected to present that the Sneakers stores industry has the most stretched out scope
of clients; nearly everyone on planet earth need one type of footwear or the other particularly on the off
chance that they can bear the cost of it.
Considering that, I have situated my Sneakers store to support the inhabitants of Dhaka and each and every
other area where my establishment stores will be found. i have directed my statistical surveying and
possibility studies and I have thoughts of what our objective market would anticipate from us. I'm ready to
go to retail a wide scope of Sneakerss to the accompanying gatherings of individuals;
 Men
 Households
 Bachelors and Spinsters
 Students
 Sports men
 Tourists

4.3 Marketing Objectives:

Publicizing and displaying is passing on the significance of a thing, organization, or brand to customers
when thinking about progressing or advancing that thing, organization, or brand. Advancing and exhibiting
methodologies fuse choosing target business areas in light of market assessment despite market division,
alongside understanding customer lead and publicizing another thing's motivation for the customer.
Advancing satisfies these necessities despite needs through exchange measures and making long stretch
associations.
4.4 My Competitive advantage:
A nearby investigation of the athletic shoe industry uncovers that the market has gotten substantially more
strongly serious in the course of the most recent decade. In actuality, I must be profoundly imaginative,
client driven and proactive on the off chance that I need make due in this industry. I'm mindful of the
hardened rivalry and we are set up to contend well with other driving Sneakers stores in Dhaka.
One thing is sure; I will guarantee that I have a wide scope of Sneakerss and other athletic shoes from
driving makers accessible in my store consistently. It will be hard for clients to visit my Sneakers store and
not see the sort of Sneakers that are searching for.
One of our business objectives is to make Gents World BD, one sneaker shoe shop in the city. My amazing
client support culture, online store, different installment alternatives and exceptionally got office will fill in
as an upper hand for me.

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Ultimately, my workers will be all around dealt with, and their government assistance bundle will be among
the awesome my class in the business implying that they will be more than able to assemble the business
with me and help convey our set objectives and accomplish every one of our points and goals. I will likewise
give great working conditions and commissions to independent deals specialists that we will enroll every
now and then.

4.5 Unique selling propositions

As per Chartered Institute of Marketing,( 2009)„USP‟ methods special selling suggestion. It is one of the
rudiments of viable showcasing and business that has stood the trial of time A Unique Selling Propositions
can help clients by saving them time when they are thinking about purchasing an item or administration. By
expressing basically and unmistakably why your item or administration is extraordinary, it will stand apart
from the opposition. You can utilize diverse Unique Selling Propositions for each item or administration
inside your reach (Chartered Institute of Marketing, 2009). Gents World BD will utilize an exceptional
selling system that will clearly upgrade the business' present moment and long haul targets, its items will
profit each individual, unwavering quality, accessibility, sensible value, a wide scope of items, and simple
use will be the foundation that drives our novel selling suggestion.

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5 Strategy & Implementation

5.1 Marketing Strategy and Sales Strategy

Before choosing a location to launch Michael Adamson® Sneaker Store, Inc., we conducted a thorough
market survey and feasibility studies in order for us to be able to penetrate the available market and become
the preferred choice in Westchester County – New York.

We hired experts who have good understanding of the sneaker industry to help us develop marketing
strategies that will help us achieve our business goal of winning a larger percentage of the available market
in Westchester County – New York.

In summary, Michael Adamson® Sneaker Store, Inc. will adopt the following sales and marketing approach
to win customers over;

 Open our sneaker store in a grand style with a party for all
 Introduce our sneaker store by sending introductory letters alongside our brochure to households and
key stake holders in Westchester County – New York
 Ensure that we have a wide range of sneakers from different brands at all times.
 Make use of attractive hand bills to create awareness and also to give direction to our sneakers store
 Position our signage/flexi banners at strategic places around Westchester County – New York
 Position our greeters to welcome and direct potential customers
 Create a loyalty plan that will enable us reward our regular customers
 Engage on roadshows within our neighborhood to create awareness for our sneakers store.
 List our business and products on yellow pages’ ads (local directories)
 Leverage on the internet to promote our business
 Engage in direct marketing and sales
 Encourage the use of Word of mouth marketing (referrals)

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5.2 Publicity and Advertising Strategy
Despite the fact that our sneaker store is well located, we will still go ahead to intensify publicity for the
business. Michael Adamson® Sneaker Store, Inc. has a long term plan of opening outlets in various locations
in the United States which is why we will deliberately build our brand to be well accepted in Westchester
County before venturing out.

Here are the platforms we intend leveraging on to promote and advertise Michael Adamson® Sneaker Store,
Inc.;

 Place adverts on community based newspapers, radio and TV stations.

 Encourage the use of word of mouth publicity from our loyal customers
 Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter,
LinkedIn, Snapchat, Google+ and other platforms to promote our business.
 Ensure that our we position our banners and billboards in strategic positions all around Westchester
County – New York
 Distribute our fliers and handbills in target areas in and around our neighborhood
 Advertise our sneaker store business in our official website and employ strategies that will help us
pull traffic to the site
 Brand all our official cars and trucks and ensure that all our staff members wear our branded shirt or
cap at regular intervals.

5.3 Pricing Strategy

Aside from quality, pricing is one of the key factors that gives leverage to a sneaker store, it is normal for
consumers to go to shoe retail outlets where they can get sneakers at cheaper price which is why big player
in the industry like Design Shoe Warehouse (DSW), Foot Locker Inc., Brown Shoe Company, Payless Shoes
and co will attract loads of clients.

We know we don’t have the capacity to compete with the big names, but we will ensure that the prices and
quality of all the sneakers that are available in our store are competitive with what is obtainable amongst
sneakers stores within our level.

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5.4 Payment Options
The payment policy adopted by Michael Adamson® Sneaker Store, Inc. is all inclusive because we are quite
aware that different customers prefer different payment options as it suits them but at the same time, we will
ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Michael Adamson® Sneaker Store, Inc. will make available to her clients;

 Payment with cash

 Payment via Bikash
 Payment via Nogod
 Payment via mobile money transfer

In view of the above, we have chosen banking platforms that will enable our clients make payment for
sneakers purchase without any stress on their part. Our bank account numbers will be made available on our
website and promotional materials.

6 SWOT analysis:

I mean beginning with only one sneaker store to empower itself drive the business for a time of 1 years to
know whether we will put away more cash, extend the business and afterward open different outlets.

I'm very mindful that there are a few sneaker stores, shoe stores and game shops that retail Sneakerss all over
Dhaka and surprisingly in a similar area where I plan finding ins, which is the reason I am following the fair
treatment of building up a business.

I realize that if an appropriate SWOT examination is directed for my business, I will actually want to situate
my business to expand my solidarity, influence on the chances that will be accessible to me, alleviate
business chances and be prepared to face my dangers.

Gents World BD utilized the administrations of a specialist HR and Business Analyst with predisposition in
retailing to help me lead a careful SWOT examination and to assist me with making a plan of action that will
assist me with accomplishing our business objectives and targets. This is the outline of the SWOT
examination that was led for Gents World BD.

Page 11
6.1 Strength:

My area, the plan of action I will be working on both (actual store and online store), assortments of
installment choices, a wide scope of Sneakerss and other athletic shoes from various brands, and our superb
client care culture will consider a solid strength for Gents World BD

6.2 Weakness:

A significant shortcoming that may represent a mark against us is the way that I am another Sneakers store
outlet nearby – Dhaka and I don't have the monetary ability to rival worldwide shoe outlets like Design Shoe
Warehouse (DSW), Foot Locker Inc., Brown Shoe Company, Payless Shoes and co with regards to retailing
at an absolute bottom costs.

6.3 Opportunities:

The reality that I am going to be working our sneaker shop in one of the most visited purchasing shops in
Dhaka affords us with limitless possibilities to promote our sneakers to a massive range of customers. I have
been capable to behavior thorough feasibility research and market survey and i comprehend what our viable
purchasers will be searching for when they go to our sneaker store; I am properly placed to take on the
possibilities that will come our way.

6.4 Threat:

Very much like some other business, one of the significant dangers that we are likely going to confront is a
financial plunge. The financial slump influences buying/spending power. Another danger that may probably
defy us is the appearance of another shoe retail outlet in similar area where ins is found. So additionally,
ominous government arrangements may likewise represent a danger to our business.

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7 Financial Plan & Projections

7.1 Start-up Expenses & Funding

Start-up Expenses
Fixed Costs
Legal and Permits 5,000৳
Stationery and Supplies - ৳
Insurance - ৳
Rent 5,000৳
Offi ce Equipment and designing 20,000৳
Website Development 12,000৳
Facebook boosting Advertisements 5,000৳
Brochures - ৳
Total Fixed Costs 47,000৳
Average Monthly Costs
Rent 5,000৳
Utilities 10,000৳
Salaries / Wages 12,000৳
Total Average Monthly Costs 27,000৳
x Number of Months: 12৳
Total Monthly Costs 324,000৳
Total Startup Expenses 371,000৳

Start-up Assets
Owner Funding
Owner 1 Cash 100,000৳
Owner 2 Cash - ৳
Other
Total Owner Funding 100,000৳
Loans
Bank Loan 1 - ৳
Bank Loan 2 - ৳
Other - ৳
Total Loans - ৳
Other
Grant 1 - ৳
Grant 2 - ৳
Other 15,000৳
Total Other Funding 15,000৳
Total Start-up Assets 115,000৳

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7.2 Sales Forecast
1-Year Monthly Sales Forecast

Units Sold Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Total Units Sold
Sneaker shoes 200 250 300 350 400 450 500 300 600 400 550 600 4900

Unit Price Avg Unit Price

Sneaker shoes $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00

Sales Grow th Rate Avg Grow th Rate

Sneaker shoes 0% 25% 20% 17% 14% 13% 11% -40% 100% -33% 38% 9% 16%

Revenue Total Revenue

Sneaker shoes $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 $300,000 $600,000 $400,000 $550,000 $600,000 $4,900,000
Total Revenue $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 $500,000 $300,000 $600,000 $400,000 $550,000 $600,000 $4,900,000

Unit COGS Avg COGS

Sneaker shoes $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00

Margin Per Unit Avg Margin

Sneaker shoes $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $90.00 $100.00 $265.83

Gross Profit Total

Sneaker shoes $60,000 $75,000 $90,000 $105,000 $120,000 $135,000 $150,000 $90,000 $180,000 $120,000 $49,500 $60,000 $1,234,500
Total Gross Profit $60,000 $75,000 $90,000 $105,000 $120,000 $135,000 $150,000 $90,000 $180,000 $120,000 $49,500 $60,000 $1,234,500
12-Month Sales Forecast
Month Month Month Month Month Month Month Month Month Month Month Month
Product 1 2 3 4 5 6 7 8 9 10 11 12
Sneaker shoes 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000
Total 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000

80,000 12-Month Sales Forecast

70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
th
1
th
2
th
3
th
4
th
5
th
6
th
7
th
8
th
9 10 11 12
h th th
on on on on on on on on on ont on on
M M M M M M M M M M M M

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7.3 3-Year Sales Forecast
Number of Sales Year 1 Year 2 Year 3
Sneaker shoes 200 250 350
Total 200 250 350

Unit Price Year 1 Year 2 Year 3

Sneaker shoes $1,000 $1,100 $1,100
Total $1,000 $1,100 $1,100

Unit Cost of Sales Year 1 Year 2 Year 3

Sneaker shoes $700 $750 $750
Total $700 $750 $750

Total Sales Year 1 Year 2 Year 3

Sneaker shoes $200,000 $275,000 $385,000
Total $200,000 $275,000 $385,000

Total Costs Year 1 Year 2 Year 3

Sneaker shoes $140,000 $187,500 $262,500
Total $140,000 $187,500 $262,500

TOTAL NET SALES Year 1 Year 2 Year 3

Sneaker shoes $60,000 $87,500 $122,500
Total $60,000 $87,500 $122,500

$450,000 3-Year Sales Forecast

$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Year 1 Year 2 Year 3
 Year 1 Year 2 Year 3 Yr 2 vs Yr 1 Yr 3 vs Yr 2
Total Units Sold % Change
Sneaker shoes 4900 5000 6000 2% 20%

Avg Unit Price Difference

Sneaker shoes $1,000.00 $1,100.00 $1,100.00 $100.00 $0.00

Avg Sales Grow th Rate Difference

Sneaker shoes 16% 17% 17% 1% 0%

Total Revenue Difference

Sneaker shoes $4,900,000 $5,500,000 $6,600,000 $600,000 $1,100,000
Total Revenue $4,900,000 $5,500,000 $6,600,000 $600,000 $1,100,000

Avg Unit COGS Difference

Sneaker shoes $700.00 $720.00 $720.00 $20.00 $0.00

Avg Margin Per Unit Difference

Sneaker shoes $265.83 $380.00 $380.00 $114.17 $0.00

Total Gross Profit Difference

Sneaker shoes $1,302,583 $1,900,000 $2,280,000 $597,417 $380,000
Total Gross Profit $1,302,583 $1,900,000 $2,280,000 $597,417 $380,000

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7.4 Profit and Loss Projection
INCOME 1st year % of OI 2nd year % of OI 3rd year % of OI
Operating Income
Sneaker shoes $4,900,000 100.0% $5,500,000 100.0% $6,600,000 100.0%
Total Operating Income (OI) $4,900,000 100.0% $5,500,000 100.0% $6,600,000 100.0%
Non-Operating Income
Interest Income $0 $0 $0
Rental Income $0 $0 $0
Gifts Received $0 $0 $0
Donations $0 $0 $0
Total Non-Operating Income $0 $0 $0
Total INCOME $4,900,000 100.0% $5,500,000 100.0% $6,600,000 100.0%
EXPENSES
Operating Expenses
Accounting and Legal $100,000 2.0% $150,000 2.7% $155,000 2.3%
Advertising $500,000 10.2% $700,000 12.7% $720,000 10.9%
Depreciation $50,000 1.0% $60,000 1.1% $70,000 1.1%
Dues and Subscriptions $50,000 1.0% $70,000 1.3% $100,000 1.5%
Insurance $0 - $0 - $0 -
Interest Expense $200,000 4.1% $250,000 4.5% $275,000 4.2%
Maintenance and Repairs $10,000 0.2% $12,000 0.2% $12,500 0.2%
Offi ce Supplies $1,500,000 30.6% $9,600 0.2% $10,000 0.2%
Payroll Expenses $5,000 0.1% $5,500 0.1% $6,000 0.1%
Postage $500,000 10.2% $737,150 13.4% $750,000 11.4%
Rent $6,000 0.1% $7,000 0.1% $8,000 0.1%
Research and Development $1,000,000 20.4% $1,500,000 27.3% $1,560,000 23.6%
Salaries and Wages $5,000 0.1% $8,000 0.1% $10,000 0.2%
Taxes and Licenses $15,000 0.3% $25,000 0.5% $0 -
Telephone $500 0.0% $550 0.0% $700 0.0%
Travel $94,800 1.9% $250,000 4.5% $1,800 0.0%
Utilities $2,300 0.0% $3,000 0.1% $3,200 0.0%
Web Hosting and Domains $800 0.0% $500,000 9.1% $300,000 4.5%
Total Operating Expenses $4,039,400 82.4% $4,287,800 78.0% $3,982,200 60.3%
Non-Recurring Expenses
Furniture, Equipment & Software $0 - $0 - $0 -
Gifts Given $0 - $0 - $0 -
Total Non-Recurring Expenses $0 - $0 - $0 -
Total EXPENSES $4,039,400 82.4% $4,287,800 78.0% $3,982,200 60.3%
Net Income Before Taxes $860,600 $1,212,200 $2,617,800
Income Tax Expense
NET INCOME $860,600 $1,212,200 $2,617,800
Owner Distributions / Dividends $16,000 $23,000 $23,500
Adjustment to Retained Earnings $844,600 $1,189,200 $2,594,300

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7.5 Balance Sheet
Assets 1st year 2nd year
Current Assets
Cash $175,200 $685,950
Accounts receivable $20,000 $27,500
Inventory $33,600 $45,000
Prepaid expenses $0 $0
others $500,000 $600,000
Total current assets $728,800 $1,358,450
Fixed (Long-Term) Assets
Long-term investments $0
Property, plant, and equipment $70,000 $85,000
(Less accumulated depreciation) -$10,000 -$10,500
Intangible assets
Total fixed assets $60,000 $74,500
Other Assets
Deferred income tax
Other (preliminary expense) $371,000
Total Other Assets $371,000 $0
Total Assets $1,159,800 $1,432,950

Liabilities and Owner's Equity

Current Liabilities
Accounts payable $25,200 $33,750
Short-term loans
Income taxes payable
Accrued salaries and wages
Unearned revenue
Current portion of long-term debt
Total current liabilities $25,200 $33,750
Long-Term Liabilities
Long-term debt $120,000 $140,000
Deferred income tax
Total long-term liabilities $120,000 $140,000
Owner's Equity
Owner's investment $115,000
paid up capital $55,000 $70,000
Retained earnings $844,600 $1,189,200
Total owner's equity $1,014,600 $1,259,200
Total Liabilities and Owner's Equity $1,159,800 $1,432,950
{42}
Common Financial Ratios
Debt Ratio (Total Liabilities / Total Assets) 0.13 0.12
Current Ratio (Current Assets / Current Liabilities) 28.92 40.25
Working Capital (Current Assets - Current Liabilities) 703,600 1,324,700
Assets-to-Equity Ratio (Total Assets / Owner's Equity) 1.14 1.14
Debt-to-Equity Ratio (Total Liabilities / Owner's Equity) 0.14 0.14

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7.6 3-Year Cash Flow
CASH BALANCE 1st year 2nd year 3 year
Date Ending 9/3/2015 9/3/2016 9/3/2017
Cash at Beginning of Period $115,000 $175,200 $685,950
Cash at End of Period $175,200 $685,950 $1,206,200

CASH INFLOWS 1st year 2nd year 3 year

Cash from Operations
Receipts from Customers $180,000 $247,500 $346,500
Others $500,000 $600,000 $650,000
Total Cash from Operations $680,000 $847,500 $996,500
Cash from Financing
Issuance of Stock
Borrowing $120,000 $140,000 $0
Total Cash from Financing $120,000 $140,000 $0
Cash from Investing
Sale of Property and Equipment $0 $0 $0
Additional investment $55,000 $70,000 $100,000
Total Cash from Investing $55,000 $70,000 $100,000
Total Cash Inflows $855,000 $1,057,500 $1,096,500

CASH OUTFLOWS 1st year 2nd year 3 year

Operations
Wages $5,000 $8,000 $10,000
Inventory Purchases (85%) $142,800 $191,250 $267,750
General Operating Expenses $0 $0 $0
Interest $200,000 $250,000 $275,000
Income Taxes $0 $0 $0
Total Outflows from Operations $347,800 $449,250 $552,750
Financing
Repayment of Loans
Repurchase of Stocks
Dividends Paid $16,000 $23,000 $23,500
Total Outflows from Financing $16,000 $23,000 $23,500
Investing
Purchase of Property and Equipment $60,000 $74,500 $0
Making Loans to Other Entities
Purchase of other preliminary assets $371,000 $0 $0
Total Outflows from Investing $431,000 $74,500 $0
Total Cash Outflows $794,800 $546,750 $576,250

NET CASH FLOW $60,200 $510,750 $520,250

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7.7 Business Budget
INCOME Actual Budget Difference
Operating Income
Sneaker shoes $4,900,000 $5,000,000 -$100,000
Total Operating Income $4,900,000 $5,000,000 -$100,000
Non-Operating Income
Interest Income $0
Rental Income $0
Gifts Received $0
Donations $0
Total Non-Operating Income $0 $0 $0
Total INCOME $4,900,000 $5,000,000 -$100,000
EXPENSES
Operating Expenses
Accounting and Legal $100,000 $150,000 -$50,000
Advertising $500,000 $500,000 $0
Depreciation $50,000 $20,000 $30,000
Dues and Subscriptions $50,000 $50,000 $0
Insurance $0 $50,000 -$50,000
Interest Expense $200,000 $100,000 $100,000
Maintenance and Repairs $10,000 $50,000 -$40,000
Offi ce Supplies $1,500,000 $1,000,000 $500,000
Payroll Expenses $5,000 $10,000 -$5,000
Postage $500,000 $500,000 $0
Rent $6,000 $10,000 -$4,000
Research and Development $1,000,000 $500,000 $500,000
Salaries and Wages $5,000 $10,000 -$5,000
Taxes and Licenses $15,000 $20,000 -$5,000
Telephone $500 $1,000 -$500
Travel $94,800 $100,000 -$5,200
Utilities $2,300 $10,000 -$7,700
Web Hosting and Domains $800 $1,000 -$200
Total Operating Expenses $4,039,400 $3,082,000 $957,400
Non-Recurring Expenses
Furniture, Equipment and Software $0 $20,000 -$20,000
Gifts Given $0
Total Non-Recurring Expenses $0 $20,000 -$20,000
Total EXPENSES $4,039,400 $3,102,000 $937,400
Net Income Before Taxes $860,600 $1,898,000 -$1,037,400
Income Tax Expense $0
NET INCOME $860,600 $1,898,000 -$1,037,400

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7.8 Break-Even Analysis

Selling Price (per unit) $1,000.00

FIXED COSTS
Advertising $500,000.00
Accounting
Insurance
Manufacturing $50,000.00
Payroll $5,000.00
Rent $6,000.00
Supplies $1,500,000.00
Taxes
Utilities $2,300.00
Other (specify)
Total Fixed Costs $2,063,300.00

VARIABLE COSTS Per Unit

Variable Costs based on dollar amount per unit
Cost of Goods Sold $700.00
Direct Labor $0.00
Overhead $0.00
Other (specify)
Total $700.00

Variable Costs based on percentage per unit

Commissions 10.00%
Other (specify)
Total 0

Total Variable Cost per Unit $800.00

Contribution Margin per Unit $200.00
Contribution Margin Ratio 20.00%

Break-Even Point
Break-Even Units 10,317 units
Break-Even Sales $10,316,500.00

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