Section 5

Team 2
Fall 2021

Business Plan
Business Name: Waterloo Designs
Business Idea: Vertically Integrated design firm specializing in custom mural painting for
residential and commercial settings

Team Member: Signature: Email address:

Andrew Fleetwood Andrew Fleetwood Fleetwaa@dukes.jmu.edu

Christian Holcomb Christian Holcomb Holcomcx@dukes.jmu.edu

Colin Nugent Colin Nugent Nugentcs@dukes.jmu.edu

Sarah Shiflett Sarah Shiflett Shiflesj@dukes.jmu.edu

Sophia Hudak Sophia Hudak Hudaksm@dukes.jmu.edu

Taylor Beck Taylor Beck Beckte@dukes.jmu.edu

Younes Ziewki Younes Ziewki Ziewkiyr@dukes.jmu.edu

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Executive Summary
Waterloo Designs
Sophia Hudak
VIBE Round Rock Office Buildings: 101 E Settlers Blvd, Round Rock, TX
Phone: (443) 895-0085
E-mail: hudaksm@dukes.jmu.edu

customer will decide on the final one. Our company

Management: provides a full-service experience consisting of creating
1 President renderings of our design in their space, projecting the
1 Office Manager design on the wall, and painting a finished product that
Industry: Custom Paint Industry goes above and beyond the customers’ expectations.
Number of Employees: Products/Services: Waterloo provides
End of Year 1 = 11 supplementary services that assist with the successful
End of Year 2 = 12 implementation of the overall service, the mural. These
End of Year 3 = 13 supplementary services include consultations, and the
End of Year 4 = 13 “match-making” of a design team and the customer.
End of Year 5 = 13 Waterloo’s projected sales volume for year one is 170
Amount of Financing Sought: murals, and this is expected to grow at a rate of 7%
Investment Sources: 1 founder, 1 investor, 2 loans yearly. Waterloo is going to be obtaining inventory
$7,000 (Founder), $115,000 (Angel investor), $97,020 from Sherwin-Williams, in Austin, Texas. Sourcing from
(loan year 1), $50,000 (loan year 5) this company allows Waterloo to utilize the 20%
Use of Funds: Salaries, inventory (Raw materials), discount that Sherwin-Williams offers to business-
marketing customers.
Product/service selling price: Competitive Advantage: Waterloo Designs is very
Commercial Jobs: prideful in our competitive advantage of differentiation.
Area in square feet Price per square feet Waterloo also has higher efficiency with more artists
Under 100 $45 on hand, compared to our competitors. Our variety of
100-200 $44 designers have different specialties that can be
200-300 $42 assigned to different jobs based on customer wants
300-350 $40 and expectations. Waterloo’s differentiation is the key
350-550 $38 competitive advantage. Furthermore, Waterloo is
Households Jobs: prideful in the quality assurance measurements that
Under 100 $45 have been put into place, free of charge to the
100-125 $44 customer.
125-150 $42 Markets: Waterloo Designs will be targeting two
150-200 $40 segments in the Travis County area. These two
200-300 $38 segments are business establishments in Austin, Texas
Business Description: Waterloo Designs is a custom with at least 20 employees, and medium-high income
mural design company based in Austin, Texas. households. The Business establishments segment size
Waterloo employs highly skilled designers, as well as consists of 8,479 (Austin Chamber) businesses and has
artists who assist in the physical painting process. We a growth rate of 3.74% (Austin Chamber) per year
give the customer a wide variety of customization over the next 5 years. The medium-high income
options and work through the design details during an household segment size consists of 400,861 (Census
in-person consultation. Waterloo guides the customer Reporter) households, with a growth rate of 2.8%
through every step of our process. First, the customer (Austin Chamber) per year for the next 10 years. Our
will schedule a consultation with one of our five revenue model incorporates the growth of the custom
designers of their choice, based on the variety of mural industry around the Austin area. Revenue
portfolios we provide on our website. The chosen growth rate is projected to be 7% per year.
designer consults with the customer to get an idea of
their vision for the mural. Next, the designer will
create three renderings of the mural on Adobe, and the

Distribution Channels: Waterloo customers will place their order through our main office or personal selling and will receive
the service in person.
Competition: Avery O. designs would be considered direct competition for Waterloo Designs. There aren’t very many direct
competitors to Waterloo in the area. Our service is differentiated by the high level of customization offered to the customer.
Also, Waterloo’s quality assurance structure leaves the customer feeling safe and completely satisfied every step of the way.
Financial Projections (Unaudited)

2022 2023 2024 2025 2026

Revenue : $942,769 $1,008,680 $1,083,577 $1,162,895 $1,246,898

EBIT : $48,076 $29,454 -$268 $54,278 $109,734

 2

Narrative

Elevator Pitch

Waterloo Designs is an innovative design firm that specializes in wall art in both residential

and commercial spaces. We solve a problem many face in mural industry, that is while there

are hundreds of qualified artists it is difficult to find one that matches a customer's vision for

the aesthetic of their space. We eradicate that problem by providing a match-making

service where we ensure each customer works with the designer that best fits their creative

vision. We are asking for $115,000 for 10% of our company. If you choose to invest in

Waterloo Designs, we predict that your ROI by year 5 will be 200% of your initial

investment.

Product/service description

Waterloo Designs is a custom mural painting company for commercial and residential

buildings. We will guide you through the process of designing the best mural for your home

or business in the most efficient manner possible.

Competitive Advantage

Unlike other mural painters in the area, our company is equipped with a team of 5 designers

with different painting expertise. Having such a large team allows us to set ourselves apart

from competitors throughout the entirety of our vertically integrated design process.

Value Proposition

Waterloo Designs will go above and beyond to find the best artist suited for your project, so

you do not have to. Our company does a match-making service to ensure the artists

working for you match your aesthetic

Business Strategy

We rely on service differentiation to provide a unique and valuable experience for our

customers, in an oversaturated market of individual artists. We separate ourselves from our

 3

competitors by providing them with valuable help, finding them the right fit artists for their

projects.

Business Location.

We chose to place our company in Austin, Texas due to its high growth rate of new

businesses and commercial real estate (Census Profile, 2020). There’s also access

to many medium-high income households which is the socio-economic level most

likely to have interest in murals for their homes (Kiers, 2021). Austin also has a high

projected population growth rate over the next 5 years (Population Overview, 2020).

Outsourcing

We chose to partner with Sherwin Williams to supply the paint for our jobs, giving us a 20%

discount on everything we buy (Interior Paint, 2021). To find the price of paint per year we

assumed 1 gallon of paint can paint 400 square feet with a single coat. To estimate cost per

gallon we factored in 2 base coats, 2 coats of paint, and 1 topcoat. This is $280 before the

discount, $244 after it. Our murals will have a total of 5 coats of paint to ensure quality.

Financial Performance

Waterloo Designs is a profitable company with a debt to equity ratio below the industry

average making it a safe investment. By year 5 our profitability ratios exceed industry

average by a large margin indicating high ROI.

Business Flexibility

In a period of high demand, we are capable to bring our part-time designers in for 40 hours on

any given week to nearly double the current capacity of the process. Also, our artist

positions are not overly complex because all the final paintings are done using projectors,

meaning we could hire anyone on short notice to help increase the capacity of the business

in a time of variable demand.

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Exhibit #1: Organizational Structure

Positions By Year 1: President (1), Office Manager (1), Marketing Associate (2), Sales Associate (1), Artist (1), Associate Artist (1), Senior Designer
(1), Designers (4)

Year 1: Full Time Employees: 6 Part Time: 5 Total Employees: 11

Year 2: Full Time Employees: 7 Part Time: 5 Total Employees: 12
Additions to staff: Sales Associate (1)
We added a Sales Associate to help us grow and get more projects.
Year 3: Full Time Employees: 8 Part Time: 5 Total Employees: 13
Addition to staff: Marketing Associate (1)
We added a Marketing Associate to help us grow our brand.
Year 4-5: Full Time Employees: 8 Part Time: 5 Total Employees: 13
No changes needed for staffing
Positions by Year 5: President (1), Office Manager (1), Marketing Associate (2), Sales Associate (2), Senior Designer (1), Designers (4), Associate
Artist (1), Artist (1).

Team Timeline Schedule

Day Task
December 1,2021 Finalize business plan
December 15,2021 Apply for Federal ID number (EIN)
December 23, 2021 Apply for business license
December 26, 2021 Located in Austin, Texas
December 28, 2021 Office found, VIBE Round rock, 101 E Settlers Blvd, Round Rock, TX
January 1,2022 Open bank account, deposit capital and start recording financials
January 2,2022 Begin interviewing for management positions
January 4,2022 Purchase office supplies (computers, printers, editing software, and Microsoft office)
January 9,2022 Begin setting up office for employees and provide them with funds to decorate their workspace
January 31,2022 Bring on President
February 20, 2022 Begin marketing sales plan and create social media
March 2, 2022 Interview process for Designers and start making connections with other painters
March 17,2022 Hire Designers
March 27, 2022 Create group of core Designers
April 1,2022 Start interview process for associate artists and hire to add to team of artists
April 11, 2022 Begin Marketing Promotion through social media and mail in cards to homes and businesses in area
April 16,2022 Buy supplies for painting including drop clothes, brushes, ladders, paints, primers, and cleaning supplies
May 1, 2022 Train employees and team building/orientation
May 21,2022 Service first customer
Secure People and Training
We are going to find our full-time employees via LinkedIn and other contracting groups. We will advertise interviews for people that fit the description
in the Travis County area. Associate artists (part time painters) will be hired based on if they have experience with painting, no degree required for part
time artists since they are filling in the sketch. The Designers will need an extensive background in art and design and their portfolios will need to
match the needs we are looking for. They’re all going to have unique styles, so we need to see that their work sets them apart from other candidates.
They need to be efficient in adobe to create mockups and sketches to project on the wall to sketch. Every employee will go through the same interview
process, where their knowledge and skills are vetted. All designers will be required to have adobe certifications, to make sure they can use the software
for the renderings they’ll be expected to create.

Critical Employees
We have 1 group of key employees in our business which are Designers. The designers are crucial to our business because not only are they required
to paint the project but are also responsible for creating renderings of designs for the customers' space and working with the customer to find the
perfect design for their space.
 5

Exhibit #2: Pay, mandatory deductions, benefits, knowledge, skills, abilities, and
motivation table.
 6

Exhibit #3: Market Segmentation Analysis/Target Market Selection

Segment Name Segment Growth Segment Description Priority Justification for Targeting
size Projection level for
of Segment targeting

Segment 1: 8,479 3.75% per This segment consists of
Business businesses year over business establishments in
Establishments (Austin the next 5 Austin, Texas. In Austin, there
in Austin, Chamber) years are many new businesses on the
Texas with at (Austin rise. The new construction
least 20 Chamber) in Austin, Texas tends to have a
employees more modern look, with mostly
millennial employees. We
decided to narrow down our
segment to businesses with at
least 20 employees. This
includes most of the businesses
in Austin (Austin Chamber),
except for small food places and
mom and pop shops.
Psychographic ally, Businesses
in Austin have a nationally
above average focus on the
aesthetics of their store front
and interior space.
2 Our segment 1 is Business establishments because
many businesses in Austin need eye-catching office
and store fronts to attract customers. Commercial real
estate and business complexes are rapidly growing as
well. These businesses could be potential clients in
need of intricate, customized wall designs in their new
spaces. (Austin Chamber) Also, a large portion of
employees of these businesses in Austin are
millennials. The millennials in Austin tend to
appreciate artwork, especially to boost morale in their
workplace. From a B2B perspective, businesses stand
to gain more in terms of yearly revenue, productivity
increase and employee satisfaction by improving the
aesthetic quality of their office space. We also chose
businesses as our target because they tend to have a
higher amount of capital, which allows them to
contract us for larger projects with more intricate and
extravagant wall art. Businesses also can increase
brand recognition with logo designs placed
strategically around their place of work, and our
company can assist with those needs as well. We will
be able to keep up with the demand of this growing
city because the projected growth rate of mural artist
is 14% so that means we will be able to grow. (U.S.
Bureau of labor)

Segment 2: 2.8% per In this segment,
Medium-High 400,861 year for the demographically, the households
income Households next 10 are making at least $85,000 a
households (U.S. years year and live in Austin Texas or
(85,000+) Census the immediate surrounding area.
Bureau) (U.S. Census Bureau) They tend
to be willing to spend their
money on higher quality
services because of their greater
income. Pictographically, this
segment tends to value and
spend more money on activities
such as entertainment, art, and
services in general (morrell
and kiers, 2017).
Geographically, this is a large
market size to provide our
service. (U.S. Census Bureau)
For example, in Austin, there
are 818,084 households. (U.S.
Census Bureau) The location of
this segment, in
Austin, values mural paintings
to accompany popular rustic and
modern interior design styles.
1 Selecting medium-high income households was
decided because of their greater amount of disposable
income. Due to art being popular in Austin, it would
be reasonable to assume they would want to spend
their money on art. From a B2C standpoint, middle-
high income household individuals would find a lot of
benefit in customization of their home's interior with
high quality art. Higher income households are also
more geographically centered around Austin, which
makes for a larger market in this segment. This
segment is also projected to grow at a rate of 2.8%
per year for the next 10 years. (Austin Chamber) It
made sense for us to pick a group with a large
projected growth rate to ensure an optimal number of
consistent sales. It is also found that 86% of all
income households with incomes $85,000+ use
Facebook. Also, over 60% of households with incomes
over 100,000 use Instagram (Khodro’s, 2021). Since
this segment utilizes Facebook and Instagram in
substantial amounts, it will be a reliable tactic to
increase our reach to this segment. Home
improvement rates are also on the rise, which will
help our company grow as well. Those with higher
incomes, like our segment, are more likely to spend
their money on home improvements and 87% are
likely to hire professional to complete them (Jaleesa
Bustamante, 2019)

Households Businesses

1. We arrived at our marketing segment size by taking the Austin Metro
total number of households 818,084 we multiplied it by the percent of
people who make over $85,000 (49%) which
equals 400,861 households (U.S. Census Bureau)
1. We arrived at our marketing segment size by taking the total number
of businesses in Austin with 20 or more people then we excluded
industries that would not want our services such as manufacturing and
wholesale trade (17.4%). This would be 8,479 businesses in our target
market. (Austin Chamber)

2. We arrived at our growth rate because according to Austin chamber
population in the Austin Metro area is going to increase by 621,008
people in the next 10 years. The average household is 2.7 people making
an increase of 230,003 households (Austin Chamber) If the distribution of
income remains the same 111,840 of the 230,003 households would have
incomes of $85,000 or more. This would be 111,840 new households in
our target market. This would be a 27.9% increase over the next 10
years or 2.8% per year. (Austin Chamber)
2. We arrived at our growth rate because from 2013 to 2018 there was
an increase of 1,586 businesses with over 20 employees. This is
an 18.7% increase over 5 years so if we keep that same projection there
should be at least an 3.74% increase per year over the next 5 years if not
more due to the increase of business moving to Austin.
 7

Exhibit #4: Market Quantification

Year Market *Total Market **Market ***Annual Annual ****Average Annual $ Total Total Total
type Potential (Businesses Share purchase Unit Sale Price Revenue Market Sales Revenue
with over 20 amount Sales Potential
employees and
Households making
$85000+ a year)
2021 Business 8,479 5.09% 0.08 35 $9,547 $329,624
Household 400,861 1.13% 0.03 136 $4,512 $613,144 409,340 170 $942,769
2022 Business 8,796 5.30% 0.08 37 $9,547 $356,056
Household 412,085 1.17% 0.03 145 $4,512 $652,624 420,881 182 $1,008,680
2023 Business 9,125 5.51% 0.08 40 $9,547 $384,009
Household 423,623 1.22% 0.03 155 $4,512 $699,568 432,748 195 $1,083,577
2024 Business 9,466 5.73% 0.08 43 $9,547 $414,265
Household 435,485 1.27% 0.03 166 $4,512 $748,630 444,951 209 $1,162,895
2025 Business 9,820 5.96% 0.08 47 $9,547 $447,007
Household 447,679 1.32% 0.03 177 $4,512 $799,891 457,499 224 $1,246,898
*Business: We calculated our business market share by finding the number of businesses with over 20 employees in the Austin-Metro area which was
8,479 ⁷. Then we took the growth rate of businesses in Austin which was 3.74% per year so we used that percentage to find the growth rate of the
market.
Household: The number of households in Austin-Metro area making $85,000 or more per year is around 400,861 households¹. The average growth rate
in this area is 2.8% per year¹. We used this growth rate to estimate the growth rate of our market.
**Business: A mural painting business in Texas, Avery O Designs, does around 4 projects a month. This is all she can do because she is the only artist,
and her design process is long⁹. Assuming she has the same target market as us she would have 7.07% of the market (48 projects/0.08 annual purchase
amount/ 8479 businesses⁷). We would expect our company to have at least the same market share as her because we have 3 artistes and 3 part time
artists that help with the design process. From this assumption we would expect to have around 5.66% market share. In our survey 27% of people said
they were extremely likely to have a mural in their business if they were an office manager and 18% of people said they were extremely interested in
buying a mural as a homeowner. We used this 18% because in our survey we didn't have a question asking if people would switch because this is addition
to the house and people don't need it. Our other option was to multiply the 27% by itself but we chose to use the 18% to be more conservative. So, if we
multiply 27% * 18% to account for survey inflation we would get a market share of 4.86%. From our two methods we get a market share of 7.07%⁹ from
the first method and 4.86% from the second method. Now if we take the average of these two, we could expect to have around 5.96% of market share.
We think this number is very reasonable because we have a smaller market share than Avery O Designs who is only one person. It would be reasonable to
assume we would have a larger share, but we wanted to stay conservative. This will be our 5th year share. We found the growth of our market share by
finding the growth rate of CertaPro Painters which was 3.85% per year over the past 10 years. ¹³ Assuming Year 5 is 5.96% we can backtrack the market
share % by subtracting 3.85% per year until we get to year one. Households: After talking to Racheal Jackson (@banyanbridges on Instagram) who
does murals for families she said she could do around 92 murals a year¹². If we take the 92 murals and divide that .03 the annual purchase amount⁸ you
get 3,067 households as her market share. The .03 annual purchase amount was decided because we expect homeowners to only buy 1 mural for their
house and the most popular mortgage is 30 years so that means a purchase amount of 1 every 30 years or 0.03⁸. Now taking Ms. Jackson's
3,067/232,335 households in Austin¹ we would expect her to have a 1.32% market share. We will use this as our 5th year market share. We found the
growth of our market share by finding the growth rate of CertaPro Painters which was 3.85% per year over the past 10 years. ¹³ Assuming Year 5 is
1.32% we can backtrack the market share % by subtracting 3.85% per year until we get to year one. We decided not to use our survey results because
the percentage it gave us was very high and we want to be conservative with our results. We are confident we can at the very least match Ms. Jacksons
market share because we have more people, and she is limited by the fact it is only her working.
***Business: We assumed business would be interested in murals every 10-15 years ¹⁴. Therefore, we took an average so every 12.5 years businesses
would purchase a mural. We arrived at this number after because of our best reasonable estimate. This means annual purchase amount would be 1/12.5
or 0.08
Households: We assumed that the annual purchase amount a homeowner would purchase from us would be once while owning their home. Therefore,
we assumed that they would have their home throughout the duration of the average mortgage for homeowners which is 30 years⁸.
****We chose to price by the square foot because of our research on businesses like ours. The business, Avery O Designs, is priced by the square foot at
$30-$40, depending on the job. We have set square foot pricing based on the total square foot. Our company decided to separate our prices by
households and businesses. For households we price 100 square feet and under jobs at $45 per square foot with a minimum price of $2750, the next 25
square feet is $44, the 25 square feet after that is $42, the next 50 square feet is $40, and the next 100 square feet is $38. For Commercial businesses
our pricing starts with 100 square feet and under priced at $45 / square foot, the next 100 square foot is $44, next is 25 is $42, 50 more square feet will
be priced at $40, and the next 100 is priced at $38. Our pricing matrix is like that of a personal income tax calculation.

Break-Even

Year 1 Year 2 Year 3 Year 4 Year 5

Variable Costs
Paint $11,702 $12,041 $13,456 $15,024 $16,511
Paint Supplies $5,851 $6,021 $6,728 $7,512 $8,255
Auto Expense $3,600 $3,744 $3,894 $4,050 $6,072
Total Variable Cost $21,153 $21,806 $24,078 $26,586 $30,838
Total Fixed Cost $880,388 $968,434 $1,062,570 $1,087,091 $1,122,494
Average Price Per Year $5,532 $5,544 $5,549 $5,556 $5,564
Breakeven Point (quantity) 163 179 196 200 207
Breakeven Point ($) $901,541 $990,240 $1,086,648 $1,113,677 $1,153,332
 8

Exhibit #5: Positioning/Competitive Analysis

Positioning Statement: Waterloo Designs provides an efficient and quality mural design process to provide customers with murals for their
space in a convenient and vertically integrated manner where we can work closely with them every step of the way. We pride ourselves on
providing new and returning clients with a streamlined design process, while maintaining a level of accuracy and professionalism far above
industry standards. Customers can conveniently visit our website to pick out an aesthetic/artwork that they wish most to then match up
with a designer who created it. The designer will work closely with the consumer to ensure their expectations are met and it is done in a
short time period.
 9

Exhibit #6: Marketing Mix

Product/Service Branding
Our business will be set in a league of its own because we provide the highest quality of wall art, and create a masterpiece, from initial consultation to
final product, in a very efficient manner through our vertically integrated design process. We also boast a faster flow time than competitors throughout
the entirety of the project thanks to our assortment of available artists to work on a variety of artistic dimensions at any given time. Professionalism is
another one of our key pillars. Our clients are the most important part of our business, and we want to make sure they feel prioritized throughout our
interactions with them. Another crucial pillar of our branding plan is accuracy. Even with the advanced level of efficiency in our process and smaller
flow time we never sacrifice accuracy along the way. We make sure that our customers vision at every step of the process. Our slogan states, “Murals
your way, in a day”. Since our process flow time is 20 hours, less than a day, and we pride ourselves in our efficiency, our company’s slogan states
just that. We want our customers to understand that we differentiate ourselves through our ability to complete projects in a timely manner compared
to our competitors.
Pricing
Year 1 Year 2 Year 3 Year 4 Year 5
Key competitor Price $30-40 $30-40 $30-40 $30-40 $30-40
Key competitor Price $40-50 $40-50 $40-50 $40-50 $40-50
Your Channel Price: N/A N/A N/A N/A N/A
Our Customer Price: $38-45 $38-45 $38-45 $38-45 $38-45
Our pricing strategy is more expensive than our competitors because we provide nothing less than the highest quality paint on the market, which will
look better and last longer than the paints that our competitors are using. We also price our service at a higher rate than our competitors because our
flow time throughout the process is much shorter than that of our competitors. Also, we are more accessible than our competitors. Since our process
is done more quickly than other competitors and we have more assistance, we can charge at a higher price due to efficiency. We also differentiate due
to our efficiency because we use a projector to help expedite the process. The artists can sketch the design created by our designers to the customers'
liking at an efficient pace and expert quality and precision.
Distribution/Location Strategy
Location Justification:
Austin, Texas is a great location for a new design firm to break ground. There are many liberal arts colleges in the surrounding area, such as UT
Austin, Texas State University, and the institute of Austin, who all give us access to some of the country’s top 25 collegiate artists right out of school
for employment ⁶. Austin is also an area of young professionals not only including artists, but business professionals, which gives our company a large
pool of potential employees to get the company started off on the right foot ⁹. We chose a well-known supplier, Sherwin Williams, that has locations
spread around Austin and the greater Travis County area, which gives us easy access to go get supplies for any job within our reach. After researching
various paint suppliers, Sherwin Williams was our best option due to the 20% discount they offer to businesses⁸. This supplier also offers larger
discounts depending on how much we buy. Therefore, they were our most cost-effective options. One of the main reasons that we chose Austin is
because it centralizes us in one of the most lucrative markets for our business ². Austin is flourishing with members of both our target markets-
businesses and homeowners. With many new businesses being constructed each year, we have access to many new clients as new businesses, which
will help increase our market share overtime⁴. Many employees for these businesses are millennials, who tend to prioritize a positive environment in
the workspace, which is easily accomplished with new art around the office¹⁰.There is also a large amount of medium-high income households in the
area who are the most likely socio-economic group to purchase household murals, as they have larger amounts of disposable income and enjoy high
quality services, such as those provided by our company⁵. We also chose our location since Austin has a high projected population growth rate over
the next 5 years, which will increase our customer base². Austin is also a very favorable location because of its very low tax rates⁷. Citizens of Austin
do not pay corporate or personal income tax, which results in the company and its employees taking in more of its profit.
compensation Method:
$50,000 +3% commission
Year 1 Year 2 Year 3 Year 4 Year 5
Total IMC Budget: $65,994 $77,532 $93,038 $103,353 $111,029
Advertising Exp: $46,197 $46,519 $55,822 $62,012 $69,393
Sales Promo Exp: $13,198 $15,506 $18,607 $23,254 $24,982
PR Exp: $6,599 $7,754 $9,305 $10,335 $8,327
Other Promo Exp: $0 $7,753 $9,304 $7,752 $8,327
Our company offers a highly customizable service which means there is a need for feedback from the consumer. Because of this, the promotional
strategy that we will execute for our business is mainly personal selling. We plan to focus most of our IMC budget on advertising expenses. We
decided to invest most of our budget into advertising on social media and mail-in ads. Our advertising would be our own artwork instead of hiring
someone to create and design ads. Therefore, it is an easy and efficient way for us to show consumers what they will be receiving if they decide to
work with us. Included in the advertising budget, we also intend to establish a social media presence on multiple sites. We plan to utilize Facebook
and Instagram since those are the platforms where our target market (millennials) seems to be most active. The other side of our target market is
older generations and businesses, we will use mail-in ads to reach them. Since our residential target market is not capped at any age, the mail-in
cards that we will send out will be aimed towards older people in our target market because they are less likely to use social media. To advertise to
other businesses, we plan to utilize LinkedIn ads and use a portion of our advertising budget to pay the costs. We plan to advertise more heavily
during our first year of business since we need our consumers to know about our new company and then heavily again by year 5 using reminder
advertising techniques. We have dedicated a generous portion each year to Sales Promotion, to be able to offer our clients good deals on our service
and continue to grow our market share. As the size of the mural increases, the price per square feet decreases. We have chosen to do this because
our company offers a high-end, customized service. We plan to have a higher budget for sales promotion after our 3 rd year to continue to push our
consumers to invest in our product. Our PR budget includes the cost of running our social media accounts and the time taken to interact with our
customers through our social media platforms which will be run daily. Our other promotion budget will go towards an annual public event in downtown
Austin where we will bring the community together and sell art to raise money for charity. We plan to do this once a year to create a known annual
event for the community to help keep our company in the consumer's mind.
# of sales people 1 2 2 2 2
Compensation Method: 50K Salary + The compensation method
3% has stayed the same all 5
Commission years. Total sales comp by
year 5 is $87,407
We plan to start out our sales team with 2 marketing associates and one sales associate. In year one, our marketing associate oversees our PR and
our personal selling actions. As the sales increase, in year two we will increase to 2 Sales Associates to help with our sales and promotion. None of our
employees will be outsourced to help with our sales promotion. We plan to keep them as full-time employees in our company since marketing is a
crucial part of exposing our artwork. Our compensation plan consists of salary and commission. Our Sales Associates are incentivized by 3%
commission and salary. Our compensation plan and pay is competitive. Therefore, it will attract the talent we need for our company and be able to
supply quality service.
 10

Exhibit #7: Process Map

For each major quality step:

Quality What is measured? How often? How will you ensure quality?
Step
Q1 Gathering information. Every time consultation Our designers will have a list of details that need to be checked when attending the consultation
is attended. with the customer. The list includes size of the mural they desire in square feet, condition of the
surface of the mural, main colors, any specific colors, color chart that customers can get the
exact colors from, and any other ideas customers have in mind. Measured by Lowe’s app, which
provides an easy and fast way to measure the wall for free.
Q2 Paint and materials Each time we begin a The quality of the paint will be checked to make sure the paint is in good condition. We will
project. measure by making sure that paint bucket is not broken or leaking, and lids are completely
closed to keep the dust from getting in. We will have a check list of materials like brushes,
rollers, ladders, sanding papers, primer, and varnish to be gathered before heading to the
customer location. This will ensure that we do not leave anything behind when we get to the
customer.
Q3 The quality of the Every time before Our artist will ensure the high quality of the design that is being displayed by adjusting the
projector displaying the painting. resolution, color clarity, brightness, and other details. Resolution will be set based on the size of
design. the design. Projector focus will be adjusted to make the design nice and sharp for color clarity.
Brightness will be set to 3500 lumens. Other small details might be adjusted to make sure the
design is displayed clearly and ready for the artist to paint.
Q4 Customer satisfaction. After the project is Our customers will receive a survey from us to fill out after the project is completed. We will
completed. measure with rating scales by rating their opinion toward our service before and after the
purchase. We will ask a list of 10 questions like, “on a scale from 0-10, how satisfied are you
with our service?” and “On a scale from 0-10, How likely are you to recommend Waterloo
designs to a friend? What can we improve on? This will provide information on what we need to
do to provide an excellent view of our company and keep our customers happy and satisfied
post project.
For each critical resource:
Critical Brief Description Unit Cost (in appropriate unit) How many?
Resource
CR1 Designers will be a critical resource for us because he/she can Part time Designers: $19,680 annual salary. 4 Part time
utilize their knowledge gained from years of experience to help our Senior Designer: $76,018 annual salary with 1 Full time
business deliver the best quality of service. benefits.
CR2 Adobe software & Microsoft office is a critical resource for us Subscriptions: $1,200 annually per designer. 5
because we will use it to make drafts for our customers to make
sure the design of mural meets the customer demands.
CR3 Projectors are critical for us since the artist will be using it to $23,400 per projector. 3 projectors by year 5
display the design of the mural on the wall to be painted.
Briefly describe your main facility - provide information about layout and dimensions.
Our main facility is 2000 square feet that includes office space for each employee. The President will have one room within the office. Marketing
Associates (2) will share a room with two different cubicles, and each will have their own set up. Sales Associates (2) will also be sharing a room with
different cubicles, and each will have their own set up. One room for the senior designer. Our part time designers (4) will be sharing a large room with
different set-ups for each designer. The Artists (2) will share a room within the office with separate cubicles with set ups. Our main office also includes
a small storage room that we will use to store paint and material. There is also a small break room with a kitchenette included within our office space.
 11

Exhibit #8: Quality Assurance

Indicate the Identify the Quality
Dimensions Step(s) on the Process
of Flowchart / Service
Quality on Why is this dimension important, given your industry & target market? Blueprint to which this
which you corresponds.
will focus.
Performance Performance is an important dimension to our target market and industry because we must execute well as a Q1, Q3, Q4
company to add value to our customers. Performance can also be measured by professionalism, accuracy, and
efficiency. Accuracy is another important aspect of performance. Accuracy involves providing a final product that
is congruent with the plan we provided during the design phase. Another aspect of performance that makes
it a very important dimension is efficiency, which is a pillar of our business. Efficiency is defined as the ability to
avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result,
which is crucial to performing well throughout our process. This is a crucial part of performance as it involves
a customer’s overall experience of our company’s processes.
Aesthetics Aesthetics is an important dimension to our target market and industry because it is the foundation of Q1, Q3
measuring artwork. It is the branch of philosophy that deals with beauty and taste. It is an opinion-based way
to measure how accurately the mural aligns with the design concept that the costumer had in mind. For
business owners, the artwork is critical in drawing customers in, making their office feel welcoming and
comfortable, enhancing the company’s branding and marketing strategy. If the desired aesthetic of the client is
not met, then we would have dissatisfied customers, resulting in a failed project. We must keep our customers
satisfied so they keep coming back, continuously put in good words to other potential clients, and leave positive
reviews online.
Perceived Perceived Quality is a very important dimension to our business because it directly determines the growth Q4
Quality or failure of our business in our target market. Perceived quality is the overall view that a company or individual
customer has of our services regarding the quality of the project in comparison to their
expectations beforehand. If a company perceives the quality of our services as far above their expectations,
they are more than likely to recommend our service to colleagues who require a similar service.
Durability The durability dimension is important for our industry and target market because we need to ensure that the Q2
paint lasts for an extended period due to households and businesses investing their money and due to it
being an eye-catching statement in their home or office.

Use the space below to describe any additional Proactive Quality Assurance Plans that are not connected to a specific activity on your
Process Flowchart / Service Blueprint.
During the painting stage of the process, our designers will go to the job site and have a check-in with the customer to make sure the experience meets
the customer’s expectations. This check-in process can ensure customer satisfaction instead of waiting until the end of the process when it is too late to
make major changes. We also have 5,000 dollars allocated for workshops and classes for our 5 designers and two part-time artists. This will ensure they
are up do date on trends, actively improving their skills, and they are learning together as a team. To ensure high quality jobs, we invested in two state-
of-the-art 4k laser projectors that will help our artists paint the most precise mural possible. Having these projectors is a prevention cost, meaning we
will have a higher appraisal cost, but our external failure costs will be lowered. There will be fewer to no mistakes and blemishes with our murals because
of the quality of our projectors. Another proactive quality assurance plan is in six months following the completion of the project, we will send an artist
back to the job site to make sure the customer’s needs are met and touch up on any blemishes. We will also maintain a valuable relationship with
suppliers. As the relationship with the supplier develops, we can accomplish reduced issues in availability, quality, and delays. The healthier the
relationship, the more we will get to know about each other's business which will reduce supply issues. When a quality relationship is developed with the
supplier, communication improves. Communication is very important in today's business world. It should build trust between us and the supplier. Having
a strong relationship with our supplier will make any issues that arise easier to solve.
Describe any reactive quality assurance plans. Include a recovery plan should a customer receive poor quality goods and/or services.
Reactive assurance plans will first consist of listening to the customers' concerns once the mural is done and agreeing to redo the art at no charge. The
artists and designers will consult with the unsatisfied customer a second time to make sure the artists understand what needs to be fixed/changed. Then,
the artists will fix or change any aspect of the art to make sure the customer is happy at no charge. While the artists are painting and making the new
adjustments, the designer checks in with the customer as the adjustment is taking place to ensure that the changes being made are accurate with
the customer’s expectations. Once the adjustments are made, we make sure the customer is happy with the service.

If you will utilize a quality/process improvement methodology, indicate which: ☐ TQM ☐ Benchmarking

Provide a specific explanation of how your chosen quality methodology relates to your business and how it will be applied:

We will use benchmarking and TQM to improve the efficiency and performance of our business overtime. Our customer satisfaction survey and our SWOT
analysis will be the most helpful tools in analyzing our performance, especially compared to our competitors. The survey will consist of 10 questions
relating to the quality of the entire process, and the customer will have the chance to rate their satisfaction of each step on a scale of 1-10. We will use
this information to measure the perceived quality of our service from our customers, and we will make changes in our processes when necessary. We
also intend on having team building exercises to encourage effective teamwork in the workplace. Having our employees be accustomed to leading and
working within teams will help us implement new processes within our company. Our SWOT analysis will come into play with the benchmarking
improvement method because it will help us see where we stand compared to our competitors. If our customer satisfaction surveys are leading us to
lower our positions on our SWOT analysis, we will begin to analyze the problem at hand. Once we see where our customers think we can improve, we will
implement specific and measurable practices into different processes within the company. Once these new practices are put into place, we will analyze
their progress and fully integrate the ones we deem successful into our processes.
 12

Exhibit #9B: Detailed Scheduling of Resources for Services

INVENTORY & SUPPLIER SELECTION FOR FACILITATING GOODS If your organization does not have facilitating goods
inventory, please check this box: ☒NA

Item(s) Supplier Name & Reason for selecting Supplier lead time Frequency of System of Mode(s) of
Location (City, this supplier (in days) replenishment (in Management Transportation
State, Country) days)
Paint and Sherwin Williams Sherwin offers corporate 0 30 Choose an item. ☐ Highway ☐
other Austin, TX sponsorship for Fixed Interval Rail
Supplies companies which allows ☐ Waterway ☐
us to get premium paint Air
at a highly discounted
rate

SUMMARY OF RESOURCES AND THEIR SHIFT PATTERNS

Types of Total hours # Of # Of full time (FT) # Of part time Shift pattern(s)
resources used required per week operating resources required (PT) resources
(for each type of days per (40 hr/wk) required
resource) week
Year 1
President 40 5 1 0 Mon-Fri 9am-5pm (1FT)
Office Manager 40 5 1 0 Mon-Fri 9am-5pm (1FT)
Marketing 80 5 2 0 Mon-Fri 9am-5pm (1FT)
Associate
Sales Associate 40 5 1 0 Mon-Fri 9am-5pm (1FT)

Senior Designer 40 5 1 0 Mon-Fri 9am-5pm (1FT)

Designer 80 Varies 0 4 Varies based on jobs that week

Artist 40 5 1 0 Mon-Fri 11am-5pm (1FT)

Associate Artist 20 4 0 1 Mon, Tues, Wed, Thurs 10pm-3pm (1PT)

Year 5
President 40 5 1 0 Mon-Fri 9am-5pm (1FT)
Office Manager 40 5 1 0 Mon-Fri 9am-5pm (1FT)

Marketing 80 5 2 0 Mon-Fri 9am-5pm (2FT)

Associate
Sales Associate 80 5 2 0 Mon-Fri 9am-5pm (2FT)

Senior Designer 40 5 1 0 Mon-Fri 9am-5pm (1FT)

Designer 80 Varies 0 4 Varies based on jobs that week

Artist 120 5 1 0 Mon-Fri 9am-5pm (3FT)

Associate Artist 20 4 0 1 Mon, Tues, Wed, Thurs 10pm-3pm (1PT)

 13

Exhibit #10: Capacity

Demand Capacity (Per Utilization Hours of Bottleneck How will you manage /adjust
(Per hour) hour) (%) Operation name and the bottleneck to ensure you
description can appropriately serve or
supply your customers?
End Year 1 0.09 0.154 58% 156 hours/ Painting At this point, we have excess
19,122 sq. 31,730 sq. 60% month phase. capacity, so no action is needed.
ft/year ft/year Jobs per week at this point = 6

End Year 2 0.097 0.154 63% 156 hours/ Painting At this point, we have excess
20,475 sq. 31,730 sq. 65% month phase. capacity, so no action is needed.
ft/year ft/year Jobs per week at this point = 6

End Year 3 0.104 0.154 68% 156 hours/ Painting At this point, we have excess
12,002 sq. 31,730 sq. 70% month phase. capacity, so no action is needed.
ft/year ft/year Jobs per week at this point = 6

End Year 4 0.112 0.154 73% 156 hours/ Painting At this point, we have excess
23,623 sq. 31,730 sq. 74% month phase. capacity, so no action is needed.
ft/year ft/year Jobs per week at this point = 6

End Year 5 0.12 0.154 78% 156 hours/ Painting At this point, we have excess
25,342 sq. 31,730 sq. 80% month phase. capacity, so no action is needed.
ft/year ft/year Jobs per week at this point = 6

Hours of Demand/month Demand/hour Capacity/month Capacity/ho Utilizatio

operation/month ur n
234 working days in a Demand/year= 170 156 hours of With 2 artists, 1 full time and 1 Capacity/mont Demand
year x 8- 170/12 months= operation per part time. We should be able to h= per
hour workdays= 1872 14 murals =demand/month month. complete 6 paintings per week. 24 murals hour/capa
hours of operation in a Sq ft demand in year 1: 19,122 14 murals = One painting takes 10 hours. Full Hours of city per
year divided by 12 demand per time artists work 40 hours/10= operation/mon hour=
months = 156 hours of month 4 projects. Part time artist work th= 156 0.09/0.15
operation/month. 12/156 24/156= 4= 58%
20 hours/10=2 projects
Demand/hour= 0.154 murals= utilization
Capacity of sq ft/ year = 6 jobs x
0.09 murals Capacity/hour
113 avg. Sq ft x 46.8 working
weeks= 31,730 sq ft

Additional resources (beyond your bottleneck) must be allocated appropriately to support operations. Identify which resources have a
significant impact on capacity at start up and describe why these are appropriate amounts of resources at start up.
The resources that have a significant impact on capacity are predominantly the number of employees employed by waterloo. These include senior
designers and artists. With a utilization of 58% in the first year, the current number of employees and hours of operation are satisfactory for the
business with an excess capacity in preparation for an increase in demand yearly. In year two, utilization increases to 63%. We can complete 6 murals
in one week with our start-up level of resources. This would require one full-time artist and one part-time artist to complete a combined six paintings
per week. Other than the number of employees. Having enough supplies based on projected sales is important so that waterloo does not need to order
more materials after the consultation, which takes time, and therefore decreases capacity.
Describe adjustments you will make as resource requirements vary with time. Be specific regarding which key resources (beyond your
bottleneck) will be adjusted, when and how. If you make multiple adjustments, explain each.
As resource requirements, such as number of employees, vary over time, we will adjust such as employing another Artist and associate artist to get
more jobs done in a week. In the winter months, when we have slightly larger demand due to seasonality, we will have some of the designers work 30
hours a week instead of 20, which will allow us to keep up with fluctuation in demand.

How will you manage seasonality?

Our organization will have small seasonal variations. This will result from employees being out of the office around the holidays, which may be a more
desirable time for businesses to get large murals painted. We will manage seasonality by implementing a classic reduction strategy in the winter
season. We will require customers to make their appointments and time slot reservations a lot further in advance to give our company time to ensure
we have the appropriate number of resources.
 14

Exhibit #11: Income Statement

Waterloo Designs’ Pro Forma Income Statement

Waterloo Designs LLC

Pro Forma Income Statement
2022 2023 2024 2025 2026

Service Revenue $942,769 $1,008,680 $1,083,577 $1,162,895 $1,246,898

Cost of Revenue $249,117 $250,779 $253,656 $255,797 $260,018
Gross profit $693,652 $757,901 $829,921 $907,098 $986,880

Operating Expenses
Rent Expense $96,000 $99,840 $103,834 $107,987 $112,306
Office expense $55,870 $25,350 $25,590 $23,110 $24,481
Wages $313,516 $399,485 $469,988 $474,747 $479,787
Advertising expense $65,994 $77,532 $93,038 $103,353 $111,029
Depreciation $20,458 $21,035 $21,311 $21,311 $21,311
Insurance $66,485 $76,862 $86,952 $90,430 $94,049
Research &
Development $27,253 $28,343 $29,476 $31,882 $34,183

Total Operating
Expenses $645,576 $728,447 $830,189 $852,820 $877,146

Operating Income $48,076 $29,454 ($268) $54,278 $109,734

Interest expense ($5,336) ($4,236) ($3,136) ($2,036) ($2,750)

Net Income $42,740 $25,218 ($3,404) $52,242 $106,984

Notes to Waterloo Designs’ Pro Forma Income Statement

• New employees are given $3,000 when they are hired to use to buy a desk, chair, and other office decorations they might want.
Therefore Year 1 office expenses are the highest because we hired 12 people. We brought on an employee in years 2 and year 3 so
that is why those years also have higher office expenses than years 4 and 5.
• Net Income drops in years 2 and year 3 due to use bringing in more employees those years and the costs associated with them
result in lower income.
 15

Exhibit #12: Waterloo Designs’ Pro Forma Balance Sheet

Waterloo Designs LLC Pro Forma Balance Sheet

2022 2023 2024 2025 2026

Current Assets
Cash $108,802 $103,948 $ 101,298 $107,959 $106,747
Accounts receivable $47,138 $50,434 $53,502 $57,410 $61,683
Inventory $3,069 $3,218 $3,383 $3,566 $3,738
Office Supplies $2,750 $6,000 $6,450 $5,785 $6,581

total current assets $161,759 $163,600 $164,633 $174,720 $178,749

Noncurrent Assets
Vehicle $56,200 $56,200 $56,200 $56,200 $56,200
Equipment $79,294 $82,057 $83,438 $83,438 $106,838
($20,458) ($41,493) ($62,804) ($84,115) ($105,426)
Less Accumulated Depreciation
Total noncurrent assets $115,036 $96,764 $ 76,834 $55,523 $ 57,612

Total Assets $276,795 $260,364 $241,467 $230,243 $236,361

Current Liabilities
Wages payable $15,447 $22,018 $24,528 $24,528 $24,528
Deferred Revenue $12,609 $13,545 $14,536 $15,596 $19,027
Accounts Payable $6,979 $7,823 $8,829 $9,303 $7,207
$20,000 $20,000 $20,000 $37,020 $16,667
Current Maturities in Long Term
Debt
total current liabilities $55,035 $63,386 $67,893 $86,447 $67,429

Noncurrent Liabilities
Note Payable $77,020 $57,020 $37,020 $0.00 $38,152

Total Liabilities $132,055 $120,406 $104,913 $86,447 $105,581

Owner's Equity
Members' Contributions $122,000 $122,000 $122,000 $122,000 $122,000
Retained Earnings $22,740 $17,958 $14,554 $21,796 $8,780

Total Owner's Equity $144,740 $139,958 $136,554 $143,796 $130,780

Total Liabilities and Owners'

Equity $276,795 $260,364 $241,467 $230,243 $236,361
 16

Exhibit #13: Waterloo Designs’ Pro Forma Statement of Cash Flows

Waterloo Designs LLC Pro Forma Statement of Cash Flows

Waterloo Designs LLC

Pro Forma Statement of Cash Flows
2022 2023 2024 2025 2026

Net Income $42,740 $25,218 ($3,404) $52,242 $106,984

Depreciation $20,458 $21,035 $21,311 $21,311 $21,311

Operating Activities
Change in A/R ($47,138) ($3,296) ($3,068) ($3,908) ($4,273)
Change in supplies ($2,750) ($3,250) ($450) $665 ($796)
Change in Inventory ($3,069) ($149) ($165) ($183) ($172)
Change in A/P $6,979 $844 $1,006 $474 ($2,096)
Change in Salary Payable $15,447 $6,571 $2,510 $0 $0
Change in Unearned
revenue $12,609 $936 $991 $1,060 $3,431

Net Cash Provided by

(Used in) Operating
Activities $2,078 $1,656 $824 ($1,892) ($3,906)

Investing Activities
Change in Vehicles ($56,200) $0 $0 $0 $0
Change in Equipment ($79,294) ($2,763) ($1,381) $0 ($23,400)

Net Cash Provided by

(Used in) Investing
Activities ($135,494) ($2,763) ($1,381) $0 ($23,400)

Financing Activities

Owners' Contributions
(Distributions) $102,000 ($30,000) $0 ($45,000) ($120,000)
Change In Note Payable $77,020 ($20,000) ($20,000) ($20,000) $38,152
$0 $0 $0 $0 ($20,353)
Net Cash Provided by
(Used in) Financing
Activities $179,020 ($50,000) ($20,000) $0 ($102,201)

Net Change In cash $108,802 ($4,854) ($2,650) $6,661 ($1,212)

Plus Beginning cash $0 $108,802 $103,948 $101,298 $107,959
Ending Cash $108,802 $103,948 $101,298 $107,959 $106,747
 17

Exhibit #14: Notes to the Financial Statements

Note 1: Accounting Methods

• Waterloo Designs uses straight line depreciation and accrual-based accounting. The company trucks are depreciated over a 7-year
life. All other office equipment is depreciated over a 5-year life.

Note 2: Investment Capital

• Waterloo Designs was funded our President (and founder) contributing $7,000. An angel investor contributing $115,000, and a 5-
year loan of $97,020 with %5.5. We also take a $50,000 loan with 5.5% interest beginning year 5 to help with expansion and buying
new office equipment to replace equipment that has completely depreciated from year 1.

Note 3: Assumptions
• There will be 2 weeks of wages outstanding at the end of the year
• The inventory is purchased a month before it is used and paid a month after it is purchased so there will be 1 month worth of
inventory outstanding at the end of the year.
• There will be 1 month of car insurance and health insurance for full-time employees outstanding at the end of the year
• All payments made to us are through ACH or a wire transfer due to our services being expensive. 50% will be collected up front and
50% will be collected upon completion terms net 30. We will have collected the initial 50% for the first week in January in December.
We will have the last 50% of December in our receivables in January.
• It is assumed that paint supplies (brushes, tape, drop cloth, and paint trays) will be 50% of Paint costs, this keeps consistent with
the conservatism principal of accounting because brushes and drop cloth can be used multiple times
• We give new employees $3000 each to purchase a desk and chair of their liking. They also use that money to purchase decorations
for their office space so they can express their creative side as they are artists. This means that when we bring on new employees
(years 1, 2, and 3) our office expenses will be higher than normal.
• We estimated that each employee will use around $1,000 of office supplies (pens, paper, printer ink, ect.) each year
• We wanted to keep enough cash to cover 2 months' worth of expenses in year 1. Beyond year 1 our goal was to have enough cash
on hand to cover between 1.5 to 2.5 months' worth of expenses.

Note 4: Risks
• Risk related to the economy: The future of the economy is uncertain, especially now with the possibility of the Delta Variant and
how that might affect the economy. Also, governmental problems with the debt ceiling and cash also cause uncertainty in the
economy. This can lead to people not wanting to spend on high-end services.
• Risk related to mural quality: While we take measures to ensure our murals do not have any defects such as painting multiple
coats, base coats, and a protective topcoat there is always a risk of human error.
• Risk related to product price, cost to produce, and unit sales: Future projections were made to determine costs, demand, and
selling price. There is a risk that these estimates will have some level of error associated with them such as the price people are
willing to pay and how many murals will be purchased. There is also uncertainty with the actual market share and market growth
rate

Note 5: Other Notes

• Our net income drops in year 3 due to us hiring another marketing employee to help grow our brand. The costs associated with
hiring our new employee resulted in a net loss.
• New employees are
 18

Exhibit #15: Waterloo Designs Pro Forma Financial Ratios

Industry
2022 2023 2024 2025 2026 Average
Liquidity Ratios
Current Ratio 2.94 2.58 2.42 2.02 2.65 3.13
Quick Ratio 2.83 2.44 2.28 1.91 2.50 2.37
Operating Cycle 32.97 34.32 35.59 36.38 33.42 46.92
Leverage Ratios
Debt Equity 0.91 0.86 0.77 0.60 0.81 0.99
Interest Coverage 12.84 11.92 6.71 37.13 47.65 22.2
Asset Management
Inventory Turnover 81.17 79.78 76.85 73.62 71.20 62.07
Receivables Turnover 20.00 20.68 20.85 20.97 20.94 12.38
Current Asset Turnover 5.83 6.17 6.58 6.66 6.98 5.29
Day's sales in inventory 4.50 4.68 4.87 5.09 5.25 10.84
Day's sales outstanding 18.25 18.25 18.02 18.02 18.06 20.04
Day's Payable outstanding 10.23 11.39 12.70 13.27 10.12 16.04
DuPont Analysis
Net Profit Margin 4.53% 2.50% -0.31% 4.49% 8.58% 7.38%
Total Asset Turnover 3.41 3.87 4.49 5.05 5.28 3.18
Equity Multiplier 1.91 1.86 1.77 1.60 1.81 1.99
Return on Equity 29.53% 18.02% -2.49% 36.33% 81.80% 46.70%
Profitability
Gross Profit Margin 73.58% 75.14% 76.59% 78.00% 79.15% 45.74%
Operating Profit Margin 5.10% 2.92% -0.02% 4.67% 8.80% 8.41%
Return on Assets 15.44% 9.69% -1.41% 22.69% 45.26% 23.45%

Valuation (based on price/ sales ratio for industry)

2022 2023 2024 2025 2026
Multiple 1.69 1.69 1.69 1.69 1.69
Projected revenue $ 942,769 $1,008,680 $1,083,577 $1,162,895 $1,246,898
Estimated Valuation $1,593,280 $1,704,669 $1,831,245 $1,965,293 $2,107,258
 19

Exhibit #16: Waterloo Designs Financial Analysis Pro Forma Financial Ratios
Liquidity
Waterloo Designs maintains a current ratio close to industry average except in year 4. This can be explained by the remaining of the 5-year
loan becoming a current liability, the current ratio returns to close to the average in year 5. The quick ratio also follows this pattern because
most of our current assets are also quick assets. If needed waterloo could become more liquid by not paying dividends and keeping that cash
on hand.
The operating cycle is consistently shorter than industry average and this is because of our efficient process using a projector to help shorten
design sketch time.

Financial leverage
Waterloo Designs has a lower debt to equity ratio than industry average. This means we are not overleveraged and are a very safe
investment for investors. Also, our debt coverage for the last 2 years is well above industry average.

Asset management
The inventory turnover is much higher than industry average because we do not carry a large inventory due to all projects being custom, we
get the paint right before we complete the job. The current asset turnover is lower than industry average. Current asset turnover is also
higher than industry average.

Profitability
Waterloo Designs’ gross profit margin is consistently higher than industry average. Our net profit margin is lower than the industry averages
the first 4 years, but in year 5 it is higher than the industry average. We anticipate it to stay at or above industry average for all years beyond
year 5.

Du Pont Analysi
Our average net profit margin is lower than the industry average. Our average total asset turnover is better than industry average and our
average equity multiplier is slightly lower than industry average. This means our average ROE is lower than industry average, however just
looking at year 5 ROE we are much higher than industry average. The main thing that affects us is our lower profit margin throughout the
first 3 years. As we become more utilized over the years, we become more profitable. To help our profit margin increase we could lower R&D
or advertising expenses, but as a new company we decided it was important to spend money on those areas to make us grow quicker. We
sacrificed our net profit margin for growth and believe it was the correct choice.

Valuation method
The valuation is based on the method of multiples using the price to sales ratio of the industry applied to the projected revenues. Our industry
P/S average ratio is 1.69. No mural painting companies are publicly traded because most are just single people painting murals for others. To
find this multiple we chose a similar industry that has publicly traded companies which was construction companies who specialize in making
wall materials such as drywall.
 20

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 26

Meet the Team - Section 5, Team 2

Hello, my name is Sarah Shiflett, and I am a junior marketing major originally from
Baltimore County, MD. I am a member of the Tri Delta sorority here at JMU and am a
part of the new member education committee. Some of my hobbies include watching
sports with my friends and family, travelling, and cooking. After graduation my goal is
to work in the marketing department for a professional sports team, preferably in the
NFL and NHL.

My name is Sophia Hudak and I am from Phoenix, Maryland. I am currently a junior

Marketing major with a minor in Honors at James Madison University. I work as a
student athlete tutor here at JMU and tutor College of Business Courses. I am a
member of the Women in Business Club and the National Society of Collegiate
Scholars at JMU.

Hi, my name is Andrew Fleetwood, and I am a Junior Accounting major from

Richmond, Virginia. I am a member of the Beta Gamma Sigma Honors Society and the
club lacrosse team here at JMU. In my free time I enjoy watching sports and going to
UREC. After college I hope to get my CPA and work at one of the big four
accounting firms.

My name is Taylor Beck and I am a junior Business Management major from Roanoke,
Virginia. Some of my interests include outdoor activities like hiking, and also meeting
new people. I recently completed a two-year internship in Roanoke in a professional
work environment with the financial management team. I hope to utilize my
knowledge obtained from JMU as well as the professional work environment to one
day work in HR at a large corporation in VA.

My name is Colin Nugent and I am a Junior Computer Information Systems major

from Ashburn, VA. At JMU I am on the executive board for my fraternity, Kappa
Sigma, and I am also a member of the business professionals club. In my free time I
enjoy playing golf, basketball, and watching sports. After college I hope to pursue a
career in cybersecurity at Telos Corporation, along with property management in the
DMV area.

My name is Christian Holcomb I am a Junior Business Management major at JMU from

Virginia Beach. This is my first semester being on campus at JMU. In my free time I
enjoy playing basketball and watching sports. After college I
plan on getting into real estate and property management.

My name is Younes Ziewki and I am from Harrisonburg, Virginia. I am a Junior

Computer Information Systems major at James Madison University. In my free time, I
enjoy playing soccer and watching sports with my friends. After college
I want to pursue a career in a consulting firm.