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Business Plan

Accessorize Me
123 Any Street Suite# 786 Any City, Any State, 12345 Telephone Fax E-Mail

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Table of Contents

I.Table of Contents...........................................................................................2 II.Executive Summary......................................................................................3 III.General Company Description......................................................................6 IV.Products and Services..................................................................................7 V.Marketing Analysis Summary........................................................................8 VI.Strategy and Implementation Summary....................................................12 VII.Management Summary.............................................................................15 VIII.Personal Financial Statement...................................................................19 IX.Startup Expenses and Capitalization..........................................................20 X.Financial Plan..............................................................................................21 XI.Appendices................................................................................................ 24 XII.Refining the Plan.......................................................................................25

These specialists will provide services such as Style Assessments. Style Concierges are individuals who are highly trained in the jewelry industry and will be available to customers as needed. Accessorize Me will be focusing on one distinct group of customers. and special ordering to customers during store hours and by personal appointments. The company’s jewelry selections and exclusive personal style services will ensure that the customers are well accessorized. and pendants. Accessorize Me’s innovative Style Assessments and educational emphasis in helping women develop their personal styles will enhance our reputation as a truly unique boutique. Personal Shopping. In order to grow and achieve the desired level of market penetration. Accessory Analysis. All of the products are designed and manufactured by using the most up-to-date fashion trends.Page 3 of 27 II. and will be the exclusive home of the AMC (Accessorize Me Contemporary) Line. and UMC (Unique Me Contemporary) Line. Unique & innovative The jewelry industry is highly fragmented with thousands of artisans competing for distribution contracts. Accessorize Me makes many different designs in the form of rings. bracelets. In addition to these fabulous exclusive lines. Accessorize Me will feature many other choice selections. while others have national distribution systems set up. earrings. The end consumer will be interacting directly with the Style Concierges at the Accessorize Me locations. Jewelry for stylish women Accessorize Me will carry Ready-to-Wear fashionable and contemporary accessories for women. The Accessorize Me customer is a professional woman who enjoys the boutique fashions and wants a place where she can go to get services that meet her lifestyle. . Some artists will design products for larger companies to manufacture. the company has outlined the following marketing/production goals over the next three years: • • The expansion of Accessorize Me locations in at least four different cities by 2012. Some work and distribute locally. Overview Executive Summary Accessorize Me is an upscale women’s designer & manufacturer of unique accessories and will be opening in October of 2010. others will design and make the pieces themselves. The End Consumer. MMC (Modern Me Contemporary) Line. Increase the number of items offered by 8% per year.

The company will pass the break-even point within the first year of business.2 Mission . Conservative projections based on sales over the next three years yield an annual revenue of $75. The company expects its cash account to remain healthy. * Increase the number of items offered by 8% per year * To develop a profitable/sustainable industry-based company. 2. 2.000 by Year Three.Page 4 of 27 Financial Considerations Accessorize Me will be completely financed by equity capital provided by the owners. * The expansion of Accessorize Me locations in at least four different cities by 2012.1 Objectives The objectives for the first three years of operation include: * To create an upscale women’s designer and manufacturer of jewelry whose primary goal is to exceed customer's expectations.

and innovative items of jewelry. 2.3 Keys to Success * Having locations in high-traffic shopping areas * Quality products and excellent relationships with vendors * Outstanding customer service 2.4 Objectives * To maintain profit margins at 25-30% through close attention to expenses and cost of goods sold * To drive awareness and build sales through mentions via various advertisement avenues * To market new items effectively and generate $1000 in sales per square foot . The company will be in existence to attract and maintain customers. When the company adheres to this maxim.Page 5 of 27 Accessorize Me’s mission is design and manufacture upscale. everything else will fall in to place and the services will exceed the expectations of all customers. unique.

Accessorize Me carries beautiful designer jewelry for professional women. General Company Description Accessorize Me is an upscale women's jewelry boutique that intends to open in San Diego in October of this year. such as the sophisticated and exclusive AMC Line. The Start-up Period for this plan runs from March through October. The company’s unique selections and exclusive personal style services will ensure that all customers are always well styled.2 Company Ownership Accessorize Me has been established as a Limited Liability Partnership due to the ease of formation.Page 6 of 27 III. simplicity of the structure and tax record keeping. the company will look at forming an S Corporation when other locations are opened. Accessorize Me will open on October 15. In the future. 3. 2010. . 3.1 Start-up Summary This business plan will be used for three purposes: * To map out all the necessary components to create a successful and well-run boutique * To provide management with a blueprint to follow * To secure financing through private investors Start-up Funding will consist primarily of owner investment. and project real sales beginning in November of Year 1.

Page 7 of 27 IV.Featured Item . MMC .g. If a customer is pressed for time.This will list all the additional style services that Accessorize Me has to offer * Jewelry Tags . style icons and clothing styles appropriate for her.Modern Me Contemporary Line.How to Wear .Services . Accessorize Me will also carry many other choice selections. The company will carry three main Ready-to-Wear lines (AMC .This will show a profile of one of the items . style words. modern) to choose from along with tips on what jewelry works well for her style personality.Each jewelry tag will have the corresponding Style Personality numbers listed to help customers determine which pieces are best for them * Style Concierges – Accessorize Me believes in bringing the best service to all customers. special orders and personal shopping. a simple phone call is needed to set up an appointment and there will be someone there to assist beyond normal business hours.This will show how to wear a particular item for work. 4.1 Exclusive Style Assessment Personality Style Assessment The Style Assessment is a one-page quiz that helps women determine the appropriate styles for their personalities.Coming Soon . As such. wardrobe planning. The assessment helps a customer define her personality by providing her style words (e. Style Icons are also provided to help her visualize the appropriate look. all sales specialists are called Style Concierges. she will receive a laminated Accessorize Me wallet card to carry around as a shopping reminder that lists her style personality type. Full and Self-Service * "What's New" Bulletin . After each customer completes the quiz in the studio section of the boutique. All Style Concierges will be highly trained and educated in the jewelry industry. Products and Services Accessorize Me will carry Ready-to-Wear fashionable and contemporary accessories for all women. . weekend and going out .Beside the coffee bar area there will be a bulletin board that is frequently updated and displays the following details: .This will feature items coming into the boutique soon . romantic.Unique Me Contemporary Line. engaging. They will be available to assist customers with their Style Assessments. and UMC .Accessorize Me Contemporary Line.

The individuals that are typically attracted to this type of high end items are women with exquisite styles. According to Women's Wear Daily.1 Market Segmentation Accessorize Me has targeted only one distinct group of customers. 5. The End User." .2 Target Market Segment Strategy San Diego is rated amongst the top U. as clearly indicated by the successful 2009 results for Coach. or mail. particularly for accessories and footwear. Tiffany and Saks. people don't shop when they are not feeling good. it is direct from Accessorize Me to the end consumer. due to the high-end brands it will carry. Close to 50% have a bachelor's degree and 40% of these professionals hold a postgraduate degree. the San Diego professional is highly affluent. the strong Euro and slowdown in wealth creation are big concerns and managing a balanced quality-price ratio is the key to success for luxury retailers.903 and a median home value of $622. luxury firms forecast a strong 2011. Although they can't compete on quality. markets in economic and educational achievements. Marketing Analysis Summary There are various economic forces that affect retailers. Unemployment also has an effect. phone. the luxury goods market. At an average age of 40. The individual would then view the different available items at the store or on the website and place the order via the Web. However. Sears and Wal-Mart) are now working with top designers to bring jewelry to the masses. has remained recession-proof. their continued development of the trend could have a direct impact on retailers who sell designer jewelry during tough economic times.S. the large discounters (Target. The End Consumer.Luxury Consumer 5. of which Accessorize Me is a part of. in person. The margins for individual sales are greater because there is not a distribution layer involved. or some other avenue. in that fewer women out in the workforce means less disposable income for high-end quality jewelry. word of mouth.Page 8 of 27 V. Accessorize Me customers will learn about the boutique through the following sources: . with an average family household income of $180. Consumer confidence is the most important.170. Fortunately.These buyers are familiar with Accessorize Me either from stumbling across the website. "Fashion is a requirement for those who are high in their success. Thus. fax.

Many times she shops to "browse. and looks for quality over quantity Customer needs.Page 9 of 27 * San Diego Storefronts * Friends & Customers (word of mouth and email) * Personal shoppers and stylists * Women's Fashion Magazines articles and reviews * Local press mentions & ads * Travel and shopping books and websites The Primary Customer The primary Accessorize Me customer is a professional woman with a household income over $100K. She wants fun and catered shopping events in the evening and also enjoys receiving special notices on sales and participating in trunk shows to garner more savings. core items * Would like more time or help in understanding what jewelry is right for her * She wants to look her best because she wants to feel good about herself as well as make a good impression at her job Shopping Behaviors * Spends over $3. Accessorize Me will be able to grab a larger share of her wardrobe budget. expectations and buying patterns The Accessorize Me customer loves to shop and enjoys going to boutiques." By offering fashionable jewelry. enjoys fashion. She enjoys being left alone but also enjoys the special touches of personal shopping assistance and having the ability to special order items. She is knowledgeable about designer fashions and tends to shop for seasonal wardrobes twice a year plus picks up various fashion and basic pieces throughout the year.500 for clothes each year * Shops at Boutiques and various high-end stores * She cares about how she presents herself.000 * College-educated * Lives in a higher-income LA neighborhood Psychographics * Looks for bargains (seasonal fashion) but willing to spend money on quality. She is used to coming into the store and browsing through the items and trying on what interests her. Her main characteristics are listed below: Demographics * Professional woman (ages 30-55) * Household income over $100. .

On a macro-economic level. Accessorize Me has stiff local and online competition with the many boutiques in the California area. Economic. colors. sees the jewelry piece. Some work and distribute locally. consumer confidence. Rising unemployment. In this case the plan is to make a purchase. it is just not known what or where . The Clothing & Accessories Stores subsector of Retail has seen sales growth of 19% over the last five years. The retail sector is the second-largest industry in the United States. holiday shopping. Indirect competitors are those boutiques in the California area that focus on a different target market or do not carry lines that Accessorize Me will carry. interest rates and inflation rates all have an effect. It is also one of the largest industries worldwide. Cultural. both in number of establishments and number of employees. 5. and Environmental Conditions Weather. The buying patterns of consumers fall into typically two types: gifts and impulse purchases. California tourism. Businesses in the Clothing and Accessories Stores subsector sell new clothing and accessories merchandise from fixed point-of-sale locations. the jewelry industry is composed of thousand upon thousands of people.1 Competition and Buying Patterns As previously stated. Establishments in this subsector have similar display equipment and staff that is knowledgeable regarding fashion trends and the proper match of styles. seasonal events. others have national distribution systems set up. Some artists will design products for larger companies to manufacture.3 Service Business Analysis Accessorize Me is considered a luxury boutique within the Women's Clothing & Jewelry Industry. competitor marketing.3. The retail sector employs over 23 million Americans and generates more than $3 trillion in retail sales annually. Direct competitors include those boutiques that carry some of the brands that Accessorize Me plans on carrying or could move easily into carrying. others will design and make the pieces themselves. and the strength of the dollar can all affect the performance of Accessorize Me. A gift purchase occurs when the buyer is looking for a gift for someone. and then purchases it.Page 10 of 27 5. political concerns and deflation also pose risks. and combinations of clothing and accessories to the characteristics and tastes of the customer.

you are immediately disregarded. Someone will be shopping and they are not in need of anything. This is critical if you are going to present it to funding sources. The other buying pattern is an impulse purchase. It appears that if you don't look a certain way or show that you have money when you walk in. .Page 11 of 27 that purchase will be made. will see the item and want it.and the plan. One last pattern that occurs less frequently is if someone was looking for an "accessory" that would match an outfit and happens to come across the piece of jewelry and buys it. as browsers are routinely ignored. are knowledgeable in fashion . There are some retailers who do get it right . carry the right mix of merchandise. Accessorize Me’s own comparative analysis of the boutiques reveals that very few are successful in delivering high-quality customer service. buying it on the spot.they have strong customer relationships.

Provide customers with a sense of access to "inside information" and harness the power of a woman's personal network by leveraging marketing collateral designed for sharing and encouraging referrals. A significant proportion of the target market lives in this area. Build awareness of brand and services to exemplify strong store reputation. Accessorize Me will have two specialists. Accessorize Me will launch in October 2010 and have a website presence where fashionable customers throughout the country can go to learn more about the boutique. Additionally. Pricing Accessorize Me is committed to bringing high quality accessories to women and will cater to all budgets. the sales pressure from an associate can be a huge turn-off to a potential customer as it doesn't allow a customer to browse and get to know the store's products at their own pace. and make personal shopping appointments. the company will negotiate and focus on obtaining an average 61% retail markup for all merchandise classifications. the company will provide personal shopping services and special ordering for all customers. Additionally. 6. evening and weekend. as many sales associates can come across rude. Special Orders are a huge benefit as Accessorize Me obtains full-price sell-through and there is no floor space needed to sell the article. Location Accessorize Me will be located in an upscale neighborhood in the San Diego area. the following marketing strategies will be employed: • • • • Develop strong relationships with customers by utilizing Style Assessment and offering services to help each woman determine the right accessories for her. Accessorize Me will carry various merchandise in fashion and wardrobe accessories. .1 Sales Strategy Product/Service Selection To overcome seasonality concerns. how to wear certain items for day. the Style Assessment. Strategy and Implementation Summary Based on extensive research conducted on women's shopping behaviors. or "style concierges" at all times during the business hours. Utilize personal referrals and stylists to build traffic.Page 12 of 27 VI. The company will work with the local merchants association as well as local publications to generate PR and shopping in the neighborhood. Style Concierges Most women are intimidated by upscale fashion boutiques. To maintain profit margins of 25-30%. Accessorize Me will also attract women from throughout other neighborhoods as well as the customers who come from out of town to shop.

innovative.2 Competitive Edge Although Accessorize Me will bring high-quality accessories and value to all women. Our main competitive advantage is the unique Style Assessment and education emphasis in helping women develop their personal style. will utilize a different mix of marketing programs. stylists and customers Unique visual displays in storefront on a weekly basis PR (local and national) Direct mail such as postcard notices that are targeted specifically to the customer Sales Promotion such as store events and bi-annual sales Web Site Other important marketing strategies. stylish and educational. gather with their friends. We are a shop that educates. to our very own unique Style Concierges. the most significant competitive advantage the company will have over all competitors is dedication to providing an approachable retail atmosphere with top-notch customer service. We help women learn about the designers. refreshing. Promotion The following promotional tactics for generating buzz and awareness about Accessorize Me will be implemented: • • • • • • Personal selling and word of mouth via networks of friends. customer-oriented.Page 13 of 27 6. The boutique is a place where women can go to transform themselves with beautiful accessories and take advantage of the Style Assessment and other services that help them determine the right items for their unique selves. to personalized Style Assessments. . BRAND PERSONALITY Innovative | Stylish | Contemporary | Modern | Fresh | Approachable | Elegant The overall brand personality of Accessorize Me aspires to be fashionable. Accessorize Me’s unique selling proposition is the integrated concept of personal style services: from events and bios that educate shoppers on new designs. and have fun during the process. such as developing strong customer relationships (retention).3 Marketing Strategy Positioning Statement Accessorize Me provides women with upscale accessories and exclusive personal services. 6.

PR Media Kits and Local/National PR outreach October 14 -.Holiday Hair Workshop.Style Assessment Workshop December 4 -.Mother-Daughter Night. Style Assessment Workshop .Fashion Show November 7 -.Grand Opening November 5 -. Style Assessment Workshop December 10 -.October -.4 Milestones Marketing Calendar: Date and Tactic • • • • • • • August .Page 14 of 27 6.Launch Party and Event October 15 -.

Much of this experience was spent "in the trenches. Known as the Shopping Sherpa. and develop strong creative problem-solving skills. Team of Advisors Lisa Bakke. and strong work ethic. Her five years as a Financial Service Representative at two banks directly benefit the day-to-day operations of the boutique. Magen understands how to create successful communications and marketing strategies and have experience marketing fashion for top retailers. meet individual needs through listening. She has an understanding of what it takes to work in a retail environment. Management Summary Management Expertise Vrootje Magen | Owner Vrootje Magen has 20 years of work experience that is directly relevant to managing and operating a successful clothing boutique. She has led successful teams. to ringing up a sale and counting back cash. Lisa Bakke has helped people look and feel great for fifteen years. finance. Her current efforts toward opening De Kliek Style Studio have heavily depended on all the skills and abilities that she has developed in her past professional lives. she is dedicated to leading people to their style destination. Ms. With a successful and award-winning career in corporate marketing for the last 12 years. Ms. and management. and the last 12 years have been dedicated to a professional career in marketing. and her current training within the Association of Image Consultants International for the last two years has solidified her expertise.Page 15 of 27 VII. and most importantly. Certified Image Professional As a personal stylist. Magen is extremely dedicated and motivated to creating a thriving clothing boutique and feels confident in succeeding based on her well-rounded experience. The first eight years of her professional work experience were spent in retail sales and banking. established sound vendor and customer relationships. Much of this work involved developing and maintaining high profile campaigns that were structured around generating increased customer sales within the store environment and through sales associate training." developing practical skills on the floor at retailers including JCPenney. The sum of these experiences truly integrates the key disciplines for running a successful business: sales. Gottshchalks and Ann's Boutique. reading a customer. Lisa was . Her combined skills and knowledge of the right types of clothing a woman should wear based on her body type and personality are enhanced by her retail experience. which involved qualified and thoughtful selection of employees and consultants to help ensure the success of a project. from stocking the sales floor and utilizing loss prevention skills. such as Levi Strauss and Gap Inc. Ms. Magen's initial experiences in retail and business sales were formative insofar as they helped her early on to understand how to best work with all types of personalities.

CPA Schulden Kopff has been a CPA for more than ten years and is certified in two states (California & Missouri).A.] Mr. Rilke was the Creative Director at COmpany X. and modernization of existing secondary educational facilities. Smore. . She is also the editor of a 12-page publication for image consultants. Creative Director & Principal. By 1989.P.. Much of his current work includes design and construction administration of renovation. contracts. discerning "eye" for beauty and detail and started winning national art awards at age twelve. Attorney Fanny Packer.A. Lisa served as president of a prestigious international organization for image consultants. In 2000-2001.A. J. Lisa played a key role in launching a women's ready-to-wear line by designing. intellectual property. M. C. Rilke Szanku has found that her best work has harnessed the power of striking visuals grounded in solid strategy to meet client objectives. Rilke Szanku.D.B. Lisa regularly shops for clients in Paris. as well as planning and inventory management. civic. from Florida State University in 1991 and his Masters in Architecture from the University of Florida in 1997. as well as several residential projects. including educational. Her core legal competencies are in corporate. Kopff currently operates his own tax practice in Los Angeles. Her work for top clients has been widely acclaimed. His focus is to enable merchants to make merchandising decisions that keep a healthy cash flow with maximum profitability as the main goal of business operations. It was then that she recognized women wanted one-on-one attention in helping them determine their optimal clothing designs and colors. marketing and selling it via hugely successful trunk shows. Gordon Grido. working with LA Area retailers similar to De Kliek. Fanny Packer. Gordon has been with Retail Merchandising Service Automation (RMSA) for 17 years.. [Private information removed for confidentiality.Page 16 of 27 born with a remarkable. Nicco Q. She founded Blue42 to provide cutting edge print and web design. Since 1998 he has worked for Big Architecture in California and has been involved in the design and construction of diverse project types. Lisa graduated from Colorado College in 1979 with a bachelor's degree in art and education. Today. Blue42 Throughout her 15 years of experience in the design industry.. and has been heavily involved in sophisticated business transactions and major business contract negotiations in various roles for over 20 years. and religious facilities. VP Merchandising Analyst. Schulden F. Prior to founding Blue42. and commercial real estate law. Architecture & Design Nicco Smore received his B. RMSA De Kliek is working with Merchandising Analyst Gordon Grido to develop a specific plan that will guide the company through making purchasing decisions. Fanny is an experienced professional who has worked in the legal profession since 1998. Kopff. is an attorney in independent practice who provides business law counseling and transactional support to entrepreneurs and growing business organizations.

Read more: http://www. Include position descriptions for key employees. Who will manage the business on a day-to-day basis? What experience does that person bring to the business? What special or distinctive competencies? Is there a plan for continuation of the business if this person is lost or incapacitated? If you’ll have more than 10 employees. Academy of Art Mr. Enmity has spent over 20 years in retail as an executive with a leading traditional department store (Macy's). Hugh Enmity. sportswear. off-price chain (Ross Stores) and mall-based chain store (Footlocker). include resumes of owners and key m#ixzz0nqw03AFL .Page 17 of 27 RMSA has maintained its status as the leading provider of inventory management and forecasting tools for retail businesses nationwide. His background is primarily in Menswear with extensive experience in tailored clothing. Astrix Komma has been a lead creator on high profile marketing campaigns. If you are seeking loans or investors. Professional and Advisory Support List the following: • • • Board of directors Management advisory board Attorney . Copywriter/Creative Consultant With nearly 20 years of solid direct response. RMSA Forecasting is a merchandise planning service that combines information from a retailer's sales and inventory with RMSA's extraordinary retail database to help retailers forecast and improve the performance of their retail operations. shoes. Fashion & Merchandising Instructor. Astrix Komma. including multiple John Caples awards. dress furnishings and basic Her creative work has won numerous industry awards including a Clio and Communication Arts award and a host of direct marketing accolades. create an organizational chart showing the management hierarchy and who is responsible for key functions.bplans. activewear. advertising and Web experience for agency powerhouses up and down the West Coast.

Page 18 of 27 • • • • • Accountant Insurance agent Banker Consultant or consultants Mentors and key advisors .

Personal Financial Statement Include personal financial statements for each owner and major stockholder. Owners will often have to draw on personal assets to finance the business. and these statements will show what is available. showing assets and liabilities held outside the business and personal net worth. Bankers and investors usually want this information as well. .Page 19 of 27 VIII.

Page 20 of 27 IX. we recommend a rule of thumb that contingencies should equal at least 20 percent of the total of all other start-up expenses. Talk to others who have started similar businesses to get a good idea of how much to allow for contingencies. It’s important to estimate these expenses accurately and then to plan where you will get sufficient capital. and the more thorough your research efforts. This is the approach we recommend. There are two ways to make allowances for surprise expenses. amounts. Also explain in detail how much will be contributed by each investor and what percent ownership each will have. however. called contingencies. is that it destroys the accuracy of your carefully wrought plan. This is a research project. Give sources. . The first is to add a little “padding” to each item in the budget. to account for the unforeseeable. The problem with that approach. If you cannot get good information. Startup Expenses and Capitalization You will have many expenses before you even begin operating your business. the less chance that you will leave out important expenses or underestimate them. Explain your research and how you arrived at your forecasts of expenses. The second approach is to add a separate line item. however. opening a new business has a way of costing more than you anticipate. and terms of proposed loans. Even with the best of research.

For each item. determine when you actually expect to receive cash (for sales) or when you will actually have to write a check (for expense items). Profit projections should be accompanied by a narrative explaining the major assumptions used to estimate company income and expenses. for preliminary expenses. Research Notes: Keep careful notes on your research and assumptions. Financial Plan The financial plan consists of a 12-month profit and loss projection. keep notes of your key assumptions. you shouldn’t be taken by surprise. or perhaps negotiate a loan. Four-Year Profit Projection (Optional) The 12-month projection is the heart of your financial plan. Projected Cash Flow If the profit projection is the heart of your business plan. Together they constitute a reasonable estimate of your company's financial future. You should keep updating it and using it afterward. But foremost. Of course. More important. This is where you put it all together in numbers and get an idea of what it will take to make a profit and be successful. There is no great trick to preparing it: The cash-flow projection is just a forward look at your checking account.Page 21 of 27 X. and profit month-by-month for one year. Your sales projections will come from a sales forecast in which you forecast sales. It will enable you to foresee shortages in time to do something about them—perhaps cut expenses. operating expenses. a four-year profit and loss projection (optional). so that you can explain them later if necessary. and also so that you can go back to your sources when it’s time to revise your plan. The point of this worksheet is to plan how much you need before startup. but none of it means a thing if you run out of cash. the process of thinking through the financial plan will improve your insight into the inner financial workings of your company. Every part of your business plan is important. and a break-even calculation. cost of goods sold. Businesses fail because they cannot pay their bills. expenses. 12-Month Profit and Loss Projection Many business owners think of the 12-month profit and loss projection as the centerpiece of their plan. This section is for those who want to carry their forecasts beyond the first year. a cash-flow projection. and reserves. . a projected balance sheet. cash flow is the blood. especially about things that you expect will change dramatically after the first year.

upon delivery. do you pay in advance. equipment purchases. that should be budgeted? Loan payments. Clearly. Expressed as a formula.Page 22 of 27 You should track essential operating data. Your cash flow will show you whether your working capital is adequate. when do you actually collect the cash? When you buy inventory or materials.) . such as sales and inventory purchases.Variable Costs (Where fixed costs are expressed in dollars. You should also track cash outlays prior to opening in a pre-startup column. Then detail how you calculated the account balances on your opening day balance sheet. You should have already researched those for your startup expenses plan. In other words. if you make a sale in month one. the remainder is owners’ equity. Optional: Some people want to add a projected balance sheet showing the estimated financial position of the company at the end of the first year. at a given price. When liabilities are subtracted from assets. And of course. This plan will also predict just when and how much you will need to borrow. but variable costs are expressed as a percent of total sales. such as quarterly tax payments. which is not necessarily part of cash flow but allows you to track items that have a heavy impact on cash flow. required to recover total costs. break-even is: Breakeven Sales = Fixed Costs 1. and owner's draws usually do not show on profit and loss statements but definitely do take cash out. and what its debts are (liabilities). Use a startup expenses and capitalization spreadsheet as a guide to preparing a balance sheet as of opening day. especially those that make the cash flow differ from the Profit and Loss Projection. or much later? How will this affect cash flow? Are some expenses payable in advance? When? Are there irregular expenses. or seasonal inventory buildup. Be sure to include them. Break-Even Analysis A break-even analysis predicts the sales volume. Explain your major assumptions. This is especially useful when selling your proposal to investors. if your projected cash balance ever goes negative. depreciation does not appear in the cash flow at all because you never write a check for it. Opening Day Balance Sheet A balance sheet is one of the fundamental financial reports that any business needs for reporting and financial management. maintenance and repairs. it’s the sales level that is the dividing line between operating at a loss and operating at a profit. A balance sheet shows what items of value are held by the company (assets). you will need more start-up capital. For example.

Page 23 of 27 Include all assumptions upon which your break-even calculation is based. .

for example: • • • • • • • • • • • Brochures and advertising materials Industry studies Blueprints and plans Maps and photos of location Magazine or other articles Detailed lists of equipment owned or to be purchased Copies of leases and contracts Letters of support from future customers Any other materials needed to support the assumptions in this plan Market research studies List of assets available as collateral for a loan . Appendices Include details and studies used in your business plan.Page 24 of 27 XI.

which will help cash flow.Page 25 of 27 XII. and they expect to share in the rewards: o o o o o o o o o Funds needed short-term Funds needed in two to five years How the company will use the funds. Estimated return on investment Exit strategy for investors (buyback. sale. and what this will accomplish for growth. and a list of all existing liens against collateral o For Investors • Investors have a different perspective. or IPO) Percent of ownership that you will give up to investors Milestones or conditions that you will accept Financial reporting to be provided Involvement of investors on the board or in management . Refining the Plan The generic business plan presented above should be modified to suit your specific type of business and the audience for which the plan is written. Collateral offered. You will probably not have much negotiating room on interest rate but may be able to negotiate a longer repayment term. For Raising Capital For Bankers • Bankers want assurance of orderly repayment. If you intend using this plan to present to lenders. They are looking for dramatic growth. include: o o o o Amount of loan How the funds will be used What this will accomplish—how will it make the business stronger? Requested repayment terms (number of years to repay).

and markets? Will you be on the cutting edge with your products and services? • . and collections policies and procedures Strategy for keeping client base High Technology Companies • Economic outlook for the industry • Will the company have information systems in place to manage rapidly changing prices. • • • • • • • • • What are the key competitive factors in this industry? Your prices Methods used to set prices System of production management Quality control procedures.Page 26 of 27 For Type of Business Manufacturing • Planned production levels • Anticipated levels of direct production costs and indirect (overhead) costs—how do these compare to industry averages (if available)? Prices per product line Gross profit margin. overall and for each product line Production/capacity limits of planned physical plant Production/capacity limits of equipment Purchasing and inventory management procedures New products under development or anticipated to come online after startup • • • • • • Service Businesses • Service businesses sell intangible products. They are usually more flexible than other types of businesses. payment. How will you measure labor productivity? Percent of work subcontracted to other firms. Standard or accepted industry quality standards. but they also have higher labor costs and generally very little in fixed assets. costs. Will you make a profit on subcontracting? Credit.

competitive. do you really need to.Page 27 of 27 • What is the status of research and development? And what is required to: o o Bring product/service to market? Keep the company competitive? • How does the company: o o o o Protect intellectual property? Avoid technological obsolescence? Supply necessary capital? Retain key personnel? High-tech companies sometimes have to operate for a long time without profits and sometimes even without sales. And your assumptions must be well documented and well argued. Inventory level: Find industry average numbers for annual inventory turnover rate (available in RMA book). Location: Does it give the exposure that you need? Is it convenient for customers? Is it consistent with company image? Promotion: Methods used. • • Customer service policies: These should be competitive and in accord with company image. and do you factor the cost into prices? • • . and in accordance with company image. • Inventory: o o Selection and price should be consistent with company image. Prices should be profitable. If it is not. you may not have enough budgeted for startup inventory. but your story must be very good. Venture capitalists may invest. a banker probably will not want to lend to you. cost. Does it project a consistent company image? Credit: Do you extend credit to customers? If yes. Retail Business • Company image • Pricing: o o Explain markup policies. Multiply your initial inventory investment by the average turnover rate. You must do longer-term financial forecasts to show when profit take-off is expected to occur. If this fits your situation. The result should be at least equal to your projected first year's cost of goods sold.

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