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Table of Contents

1.0 Executive Summary....................................................................................................................................1

Chart: Highlights.......................................................................................................................................1
1.1 Keys to Success.......................................................................................................................................2
1.2 Objectives................................................................................................................................................2
1.3 Mission....................................................................................................................................................2
2.0 Company Summary.....................................................................................................................................2
2.1 Company Ownership..............................................................................................................................2
2.2 Start-up Summary...................................................................................................................................3
Table: Start-up Funding............................................................................................................................3
Table: Start-up...........................................................................................................................................4
3.0 Products.......................................................................................................................................................4
4.0 Market Analysis Summary.........................................................................................................................4
4.1 Market Segmentation..............................................................................................................................5
Table: Market Analysis.............................................................................................................................5
Chart: Market Analysis (Pie)....................................................................................................................5
4.2 Target Market Segment Strategy............................................................................................................5
4.3 Industry Analysis....................................................................................................................................6
4.3.1 Competition and Buying Patterns....................................................................................................6
5.0 Strategy and Implementation Summary.....................................................................................................6
5.1 Sales Strategy..........................................................................................................................................7
5.1.1 Sales Forecast...................................................................................................................................7
Table: Sales Forecast............................................................................................................................7
Chart: Sales Monthly............................................................................................................................8
5.2 Milestones...............................................................................................................................................8
Table: Milestones......................................................................................................................................8
5.3 Competitive Edge....................................................................................................................................8
6.0 Management Summary...............................................................................................................................9
6.1 Personnel Plan.........................................................................................................................................9
Table: Personnel........................................................................................................................................9
...........................................................................................................................................................................9
7.1 Important Assumptions.........................................................................................................................10
Table: General Assumptions...................................................................................................................10
.....................................................................................................................................................................10
7.2 Break-even Analysis.............................................................................................................................11
Chart: Break-even Analysis....................................................................................................................11
Table: Break-even Analysis....................................................................................................................11
.....................................................................................................................................................................11
7.3 Projected Profit and Loss......................................................................................................................12
Table: Profit and Loss.............................................................................................................................12
Chart: Profit Monthly..............................................................................................................................13
Page 1

Table of Contents

.....................................................................................................................................................................13
Table: Cash Flow....................................................................................................................................14
Chart: Cash..............................................................................................................................................15
7.5 Projected Balance Sheet........................................................................................................................16
Table: Balance Sheet...............................................................................................................................16
.....................................................................................................................................................................16
Table: Ratios...........................................................................................................................................17
Table: Sales Forecast.........................................................................................................................................1
...........................................................................................................................................................................1
Table: Personnel................................................................................................................................................2
...........................................................................................................................................................................2
Table: General Assumptions.............................................................................................................................3
...........................................................................................................................................................................3
Table: Profit and Loss.......................................................................................................................................4
...........................................................................................................................................................................4
Table: Cash Flow..............................................................................................................................................5
Table: Balance Sheet.........................................................................................................................................6

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Passion Soles

1.0 Executive Summary

Passion Soles is a women-only shoe store in Eugene, OR. Eugene badly needs an upscale shoe
store for women because the current stores have an inadequate selection. Currently, women
that need a special pair of shoes often must travel up to Portland to find the right shoes.
Passion Soles will have an unmatched, extensive selection of different shoes. Generally, the
size of Passion Soles' selection is cost prohibitive due to all the different sizes that must be
stocked per style. Passion Soles has a unique business model that allows them to have an
extensive selection at the cost of only stocking one size per style. This is accomplished through
a special relationship with the wholesaler so Passion Soles can receive a customer's needed size
within two days. Rush overnight shipping is available at additional cost.
Passion Soles will leverage Holly Heels' extensive knowledge of the women's retail shoe
industry to quickly gain market share. Profitability will be reached by month ten and $284,000
will be generated in revenue in year three.

Chart: Highlights

Highlights
$240,000
$210,000
$180,000
$150,000

Sales

$120,000

Gross Margin
Net Profit

$90,000
$60,000
$30,000
$0
Year 1

Year 2

Year 3

Page 1

Passion Soles

1.1 Keys to Success

The key to success is to meet the demand for an upscale women's shoe store with a wide
selection and focused customer attention.
1.2 Objectives
The objectives for the first three years of operation include:
1. To create a product-based retail store whose primary goal is to exceed customer's
expectations.
2. To increase the number of clients served by 20% per year by serving an unmet need with
outstanding selection and customer service.
3. To develop a start-up business, surviving off of its own cash flow.
1.3 Mission
Passion Soles' mission is to provide Eugene with an upscale selection of women's shoes and
outstanding customer service. We exist to attract and maintain customers. When we adhere to
this maxim, everything else will fall into place. Our services will exceed the expectations of our
customers.
2.0 Company Summary
Passion Soles is an upscale women's shoe store located in Eugene, OR., an un-serviced niche.
Customers looking for these shoes must travel up to Portland. Passion Soles will be able to offer
a wide selection because they will typically only have one size available per style. This one size
is used as a demonstrative model. All other sizes are available within two days.
2.1 Company Ownership
Passion Soles is a sole proprietorship owned by Holly Heels.

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Passion Soles

2.2 Start-up Summary

Passion Soles will incur the following start-up costs:

Computer system with CD-RW, printer, Microsoft Office, QuickBooks Pro, and POS software.
POS terminal/cash register.
Back office desk and chair.
Front of store counter.
Shelving racks.
Display racks.
Chairs, mirrors.
Assorted halogen track lighting.

Please note that the following items which are considered assets to be used for more than a
year will labeled long-term assets and will be depreciated using G.A.A.P. approved straight-line
depreciation method.
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$600
$29,400
$30,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$9,368
$20,032
$0
$20,032
$29,400

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital
Planned Investment
Holly
Other
Additional Investment Requirement
Total Planned Investment

$30,000
$0
$0
$30,000

Loss at Start-up (Start-up Expenses)

Total Capital

($600)
$29,400

Total Capital and Liabilities

$29,400

Total Funding

$30,000

Page 3

Passion Soles

Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal
Stationery etc.
Other
Total Start-up Expenses

$500
$100
$0
$600

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$20,032
$0
$9,368
$29,400

Total Requirements

$30,000

3.0 Products
Passion Soles will sell upscale women's shoes. The general categories of shoes that will be sold
are:

Sandals
Stylish work shoes
Loafers
Dress shoes
Canvas athletic/stylish shoes

Passion Soles will strive to have one of the largest selection of shoes in Oregon, barring the
larger stores in Portland. Passion Soles will accomplish this by having one size per style in
stock as a demonstration model. Passion Soles will then order the style in the needed size and
it will arrive within two days (rush one day service is available). This will be accomplished
through a special relationship with the wholesaler who is able to send out the right size in the
right style on demand. Often a wholesaler will be unwilling to ship out individual shoes,
but Passion Soles was able to secure an exclusive arrangement with a its wholesaler to meet
this need.
4.0 Market Analysis Summary
Passion Soles will be targeting two distinct groups of fashion-concious female shoppers-professional workers and housewives. While both groups are interested in dress shoes, the
professionals will also be looking for fashionable shoes they are able to wear with their business
attire. The housewives might be looking for fasionable but more casual shoes.

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Passion Soles

4.1 Market Segmentation

Passion Soles is targeting two different population segments within the broad category of the
fashion-conscious female with disposable income.

Professionals: these are full-time working professional women. They typically earn more
than $45,000. They will purchase shoes for the workplace, as well as for leisure time.
Housewives: The household income of this group is $60k-$120k, generally toward the
higher end of this range.

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Professionals
Housewives
Other
Total

9%
8%
0%
8.47%

Year 1

Year 2

Year 3

Year 4

Year 5

12,457
14,544
0
27,001

13,578
15,708
0
29,286

14,800
16,965
0
31,765

16,132
18,322
0
34,454

17,584
19,788
0
37,372

CAGR
9.00%
8.00%
0.00%
8.47%

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Professionals
Housewives
Other

4.2 Target Market Segment Strategy

These markets will be targeted through an attractive, eye-catching storefront in a popular mall.
Most women within the target market shop at malls. Malls allow them to visit many different
stores within the same vicinity. By just having a visible storefront in a well traveled mall,
Passion Soles will receive walk-through customers.

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Passion Soles

While the leased space in a mall is expensive, one of the benefits that you pay for is the mall
association which spends money on marketing the mall and the stores within the mall.
4.3 Industry Analysis
Women's shoe retail industry is made up of several different types of companies:

Shoe-only stores: As the name implies, these stores only sell shoes. Generally the shoeonly stores will either sell athletic shoes for men and women, or dress shoes for only one
sex.
Large department stores: these types of stores sell everything, including shoes.
Small women's retail stores: these types of stores cater to women by only selling
women's clothing and shoes.

4.3.1 Competition and Buying Patterns

Passion Soles has three direct competitors in Eugene:

(name omitted). This is a women's only clothing and shoe store. They have a nice selection
of clothing but a poor selection of shoes. The shoe styles are not cutting edge. The price
point for the shoes is $30-$120.
(name omitted). This is a large, complete, department store. The store however, suffers
from cluttered displays and a general sense of disorganization. Shoes here are $30-$120.
(name omitted). This is a national franchise that only sells shoes, for both men and
women. This company will sell knock-offs, shoes just like name brands, but with their name
on it. While this store has a huge selection, the quality of the shoes leaves a lot to be
desired. This is somewhat understandable as the shoes typically sell for $13-$50. While the
shoes are often good copies of famous brands, the execution is sometimes off. Many of the
shoes are made out of pleather and look like they were dipped in wax, giving them a tacky
appearance.

An indirect competitor is a shoe smith that will dye shoes. The shoes are typically dyed to
match a specific dress. Not all colors can be dyed, and dying in general is not the ideal
situation. Dying shoes creates a new shoe color that is acceptable only 20% of the time.
The two major competitors in Portland are:

Nordstroms: mid- to high-end department store known for their outstanding customer
service. The shoe price point is $60-$300.
Saks: this department store caters to the high class, older crowd. Shoes range from $75$400.

The buying habits for fashion-conscious women consist of typically buying at least one pair of
shoes per month. Women generally purchase a pair of shoes to go with a specific dress. Once
the woman purchases the dress she will then begin the sometimes long search for the perfect
pair of shoes.
5.0 Strategy and Implementation Summary
Passion Soles will leverage their competitive edge of extensive selection to drive sales. This is
indeed a competitive edge because it is typically cost prohibitive for a store to have as much of

Page 6

Passion Soles

a selection that Passion Soles will offer. Because of a unique business model, Passion Soles is
able to leverage their financial resources and offer an unmatched selection. This is done by
carrying a large selection of styles by only stocking one size per style. Once the customer has
chosen the style, Passion Soles will have the customer's shoes in one to two days.
5.1 Sales Strategy
Passion Soles' sales strategy will be based on display and visibility. A highly visible store with
attractive product displays located in the mall will get a high percentage of foot traffic. This is
especially the case for a women's shoe store. Women love to shop for shoes. Some women
even use shoe shopping as a form of therapy, similar to eating chocolate. These activities can
make them feel better.
The sales strategy will simply be, have the most complete selection of shoes. Assuming the
prices are reasonable, having an extensive selection will drive sales because we believe our
target markets of fashion-conscious females are always looking for the perfect pair of shoes to
coordinate with their fashion style.
5.1.1 Sales Forecast
The first month will be used to set up the store front. The first employee will be hired and
display inventory will be purchased. There will be no sales activity during the first month. The
second month will begin to see sales activity, and it is forecasted that around month four sales
will really begin to pick up. The reason for this is that word will get out about Passion Soles and
more and more people will be coming in to check out the extensive selection. A third employee
will be hired in December for the holiday season.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$84,402
$54,861
$139,263

$118,745
$89,184
$207,929

$135,454
$102,095
$237,549

Year 1
$33,761
$21,945
$55,705

Year 2
$47,498
$35,674
$83,172

Year 3
$54,182
$40,838
$95,020

Sales
Professionals
Housewives
Total Sales
Direct Cost of Sales
Professionals
Housewives
Subtotal Direct Cost of Sales

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Passion Soles

Chart: Sales Monthly

Sales Monthly
$20,000
$18,000
$16,000
$14,000
$12,000

Professionals

$10,000

Housewives

$8,000
$6,000
$4,000
$2,000
$0
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

5.2 Milestones
Passion Soles will have several milestones early on:

Business plan completion. This will be done as a road map for the organization. This will be
an indispensable tool for the ongoing performance and improvement of the company.
Set up the store front.
Revenues exceeding $75,000.
Profitability.

Table: Milestones

Milestones
Milestone
Business plan completion
Set up the store front
Revenues exceeding $75,000
Profitability
Totals

Start Date
1/1/2001
1/1/2001
1/1/2001
1/1/2001

End Date
2/1/2001
2/1/2001
9/31/2001
10/31/2001

Budget
$0
$0
$0
$0
$0

Manager
ABC
ABC
ABC
ABC

Department
Marketing
Department
Department
Department

5.3 Competitive Edge

Passion Soles' competitive edge is an unmatched selection in Eugene. This selection will be
achieved in two ways. The first way is a very specific effort to carry as many styles of shoes as
possible. Passion Soles recognizes that Eugene currently does not have a single store that
offers a wide selection of decent quality shoes for the fashion conscious female consumer. The
competitive edge is the recognition of this unserved niche and the serving of this demand.

Page 8

Passion Soles

Passion Soles will be able to offer a large selection through a unique inventory model that
stocks only one size per style. The advantage is that for the same amount of money that
Passion Soles invests in overhead, they can offer far more styles.
This model is effective because women are willing to order a pair of shoes sight seen but not
fitted. Passion Soles offers two day delivery with an additional expense rush overnight option.
6.0 Management Summary
Holly Heels, the founder and owner received her Bachelor of Arts in marketing from
the University of Portland. Throughout college, and full time after graduation, Holly worked at
Nordstroms. She started out as a sales person in the Nordstroms outerwear department, where
Holly was named employee of the month five times. This caught the attention of her
supervisors and after one year of full-time work at Nordstroms, she was offered a position as
the assistant manager of the women's shoe department.
Holly worked as the assistant manager for one and a half years before receiving a promotion to
manager of the department, a huge responsibility and honor. Holly learned all of the "ins and
outs" of the Nordstroms retail shoe industry in this job. After three years, Holly decided to leave
and seek another job. She had always wanted to live in a smaller town and, upon visiting a
friend in Eugene, began to do some market research about the women's shoe industry in
Eugene. She realized that there was an unmet demand for fashionable shoes and she began to
write a business plan to serve this need. She was confident that she would be able to leverage
all of her industry knowledge and create a store in Eugene serving fashion-conscious women.
6.1 Personnel Plan
Holly will be working full time at Passion Soles. She will be in charge of all administrative
details, hiring, inventory management, etc. Beginning with month two, Holly will hire a full-time
sales clerk to help her at the store. By December, she will hire an additional full-time employee
in time for the holiday season.
Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Holly
Full-time employee
Full-time employee
Total People

$36,000
$17,600
$1,600
3

$40,000
$19,200
$19,200
3

$42,000
$19,200
$19,200
3

Total Payroll

$55,200

$78,400

$80,400

Page 9

Passion Soles

7.0 Financial Plan

The following sections will outline important financial information.

7.1 Important Assumptions

The following table details important financial assumptions.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
30.00%
0

2
10.00%
10.00%
30.00%
0

3
10.00%
10.00%
30.00%
0

Page 10

Passion Soles

7.2 Break-even Analysis

The Break-even Analysis indicates that approximately $13,000 is needed in monthly revenue to
reach the break-even point.

Chart: Break-even Analysis

Break-even Analysis
$6,000
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)

$0

$4,000
$2,000

$8,000
$6,000

$12,000
$16,000
$20,000
$10,000
$14,000
$18,000
$22,000

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$12,369

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

40%
$7,421

Page 11

Passion Soles

7.3 Projected Profit and Loss

The following table will indicate projected profit and loss. We estimate purchase of new shoe
display inventory, primarily for the seasonal changes in styles. Because these are displays, we
are tracking them as expenses. It is estimated that new styles (especially around the change in
seasons) will require regular purchase of shoe displays as part of the normal course of
business.
Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

$139,263
$55,705
$0
$55,705

$207,929
$83,172
$0
$83,172

$237,549
$95,020
$0
$95,020

$83,558
60.00%

$124,757
60.00%

$142,529
60.00%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Shoe Display Inventory
Utilities
Insurance
Rent
Payroll Taxes
Other

$55,200
$1,200
$1,056
$7,000
$1,200
$1,800
$21,600
$0
$0

$78,400
$1,200
$1,056
$5,000
$1,200
$1,800
$21,600
$0
$0

$80,400
$1,200
$1,056
$5,000
$1,200
$1,800
$21,600
$0
$0

Total Operating Expenses

$89,056

$110,256

$112,256

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($5,498)
($4,442)
$255
$0

$14,501
$15,557
$224
$4,283

$30,273
$31,329
$37
$9,071

Net Profit
Net Profit/Sales

($5,753)
-4.13%

$9,994
4.81%

$21,165
8.91%

Sales
Direct Cost of Sales
Other Production Expenses
Total Cost of Sales
Gross Margin
Gross Margin %

Expenses

Page 12

Passion Soles

Chart: Profit Monthly

Profit Monthly
$4,000
$2,000
$0
($2,000)
($4,000)
($6,000)
($8,000)
($10,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10
Month 12

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Passion Soles

7.4 Projected Cash Flow

The following chart and table will indicate projected cash flow. We anticipate borrowing $5,000
in June to cover shoe display inventory purchases and other expenses.
Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$139,263
$139,263

$207,929
$207,929

$237,549
$237,549

$0
$5,000
$0
$0
$0
$0
$0
$144,263

$0
$0
$0
$0
$0
$0
$0
$207,929

$0
$0
$0
$0
$0
$0
$0
$237,549

Year 1

Year 2

Year 3

$55,200
$78,704
$133,904

$78,400
$118,797
$197,197

$80,400
$133,576
$213,976

$0
$1,260
$0
$0
$0
$0
$0
$135,164

$0
$3,000
$0
$0
$0
$0
$0
$200,197

$0
$740
$0
$0
$0
$0
$0
$214,716

$9,099
$29,131

$7,732
$36,863

$22,833
$59,697

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

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Passion Soles

Chart: Cash

Cash
$28,000
$24,000
$20,000
$16,000

Net Cash Flow

$12,000

Cash Balance
$8,000
$4,000
$0
($4,000)
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 2
Month 4
Month 6
Month 8
Month 10 Month 12

Page 15

Passion Soles

7.5 Projected Balance Sheet

The following table will indicate the projected balance sheet.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$29,131
$0
$29,131

$36,863
$0
$36,863

$59,697
$0
$59,697

$9,368
$1,056
$8,312
$37,443

$9,368
$2,112
$7,256
$44,119

$9,368
$3,168
$6,200
$65,897

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$10,056
$3,740
$0
$13,796

$9,738
$740
$0
$10,478

$11,090
$0
$0
$11,090

Long-term Liabilities
Total Liabilities

$0
$13,796

$0
$10,478

$0
$11,090

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$30,000
($600)
($5,753)
$23,647
$37,443

$30,000
($6,353)
$9,994
$33,641
$44,119

$30,000
$3,641
$21,165
$54,807
$65,897

Net Worth

$23,647

$33,641

$54,807

Assets
Current Assets
Cash
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

Page 16

Passion Soles

7.6 Business Ratios

The following table compares our ratios to Standard Industry Code #3144 (Women's footwear,
except athletic).
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

49.31%

14.25%

10.45%

Other Current Assets

Total Current Assets
Long-term Assets
Total Assets

0.00%
77.80%
22.20%
100.00%

0.00%
83.55%
16.45%
100.00%

0.00%
90.59%
9.41%
100.00%

33.22%
85.17%
14.83%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

36.85%
0.00%
36.85%
63.15%

23.75%
0.00%
23.75%
76.25%

16.83%
0.00%
16.83%
83.17%

26.82%
25.97%
52.79%
47.21%

100.00%
60.00%
74.12%
0.43%
-3.95%

100.00%
60.00%
49.27%
0.23%
6.97%

100.00%
60.00%
48.20%
0.21%
12.74%

100.00%
22.01%
10.93%
1.05%
2.49%

2.11
2.11
36.85%
-24.33%
-15.36%

3.52
3.52
23.75%
42.44%
32.36%

5.38
5.38
16.83%
55.17%
45.88%

2.58
1.37
57.34%
6.10%
14.29%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-4.13%
-24.33%

4.81%
29.71%

8.91%
38.62%

n.a
n.a

8.83
27
3.72

12.17
30
4.71

12.17
28
3.60

n.a
n.a
n.a

0.58
1.00

0.31
1.00

0.20
1.00

n.a
n.a

$15,335
-21.57

$26,385
64.74

$48,607
818.20

n.a
n.a

0.27
37%
2.11
5.89
0.00

0.21
24%
3.52
6.18
0.00

0.28
17%
5.38
4.33
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 17

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

$3,245
$2,109
$5,354

$4,114
$2,674
$6,788

$5,678
$3,691
$9,369

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$9,956
$6,471
$16,427

$11,454
$7,445
$18,899

$12,457
$8,097
$20,554

Sales
Professionals
Housewives
Total Sales
Direct Cost of Sales

0%
0%

$0
$0
$0
Month 1

$6,545
$4,254
$10,799

$6,985
$4,540
$11,525

$7,454
$4,845
$12,299

$7,945
$5,164
$13,109

$8,569
$5,570
$14,139

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Professionals

$0

$1,298

$1,646

$2,271

$2,618

$2,794

$2,982

$3,178

$3,428

$3,982

$4,582

$4,983

Housewives

$0

$844

$1,070

$1,476

$1,702

$1,816

$1,938

$2,066

$2,228

$2,589

$2,978

$3,239

Subtotal Direct Cost of Sales

$0

$2,142

$2,715

$3,747

$4,320

$4,610

$4,920

$5,244

$5,656

$6,571

$7,560

$8,222

Page 1

Appendix
Table: Personnel

Personnel Plan
Holly
Full-time employee
Full-time employee
Total People
Total Payroll

0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$3,000
$0
$0
1

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$0
2

$3,000
$1,600
$1,600
3

$3,000

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$6,200

Page 2

Appendix
Table: General Assumptions

General Assumptions
Plan Month

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
12

Current Interest Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

Long-term Interest
Rate
Tax Rate

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

10.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

Other

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 2

Month 3

Month 4

Month 10

Month 11

Month 12

Sales

Month 1
$0

$5,354

$6,788

$9,369

$10,799

$11,525

$12,299

$13,109

$14,139

$16,427

$18,899

$20,554

Direct Cost of Sales

$0

$2,142

$2,715

$3,747

$4,320

$4,610

$4,920

$5,244

$5,656

$6,571

$7,560

$8,222

Other Production
Expenses
Total Cost of Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,142

$2,715

$3,747

$4,320

$4,610

$4,920

$5,244

$5,656

$6,571

$7,560

$8,222

Gross Margin
Gross Margin %

Month 5

Month 6

Month 7

Month 8

Month 9

$0

$3,213

$4,073

$5,621

$6,480

$6,915

$7,379

$7,866

$8,483

$9,856

$11,339

$12,332

0.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

60.00%

$3,000

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$6,200

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100
$88

Expenses
Payroll
Sales and Marketing and
Other Expenses
Depreciation
Shoe Display Inventory
Utilities
Insurance

$88

$88

$88

$88

$88

$88

$88

$88

$88

$88

$88

$5,000

$0

$0

$0

$2,000

$0

$0

$0

$0

$0

$0

$0

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$100

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$1,800

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

Total Operating Expenses

$10,238

$6,838

$6,838

$6,838

$8,838

$6,838

$6,838

$6,838

$6,838

$6,838

$6,838

$8,438

Profit Before Interest and

Taxes
EBITDA

($10,238)

($3,625)

($2,765)

($1,217)

($2,358)

$77

$541

$1,028

$1,645

$3,018

$4,501

$3,894

Rent
Payroll Taxes
Other

15%

($10,150)

($3,537)

($2,677)

($1,129)

($2,270)

$165

$629

$1,116

$1,733

$3,106

$4,589

$3,982

Interest Expense

$0

$0

$0

$0

$0

$42

$40

$38

$36

$35

$33

$31

Taxes Incurred

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Net Profit
Net Profit/Sales

($10,238)

($3,625)

($2,765)

($1,217)

($2,358)

$35

$502

$989

$1,609

$2,984

$4,469

$3,863

0.00%

-67.71%

-40.74%

-12.99%

-21.84%

0.31%

4.08%

7.55%

11.38%

18.16%

23.64%

18.80%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations
Cash Sales

$0

$5,354

$6,788

$9,369

$10,799

$11,525

$12,299

$13,109

$14,139

$16,427

$18,899

$20,554

Subtotal Cash from Operations

$0

$5,354

$6,788

$9,369

$10,799

$11,525

$12,299

$13,109

$14,139

$16,427

$18,899

$20,554

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$5,000

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$5,354

$6,788

$9,369

$10,799

$16,525

$12,299

$13,109

$14,139

$16,427

$18,899

$20,554

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$3,000

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$4,600

$6,200

$238

$7,055

$4,311

$4,900

$5,983

$8,414

$6,812

$7,120

$7,446

$7,872

$8,789

$9,765

$3,238

$11,655

$8,911

$9,500

$10,583

$13,014

$11,412

$11,720

$12,046

$12,472

$13,389

$15,965

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current

Borrowing
Other Liabilities Principal
Repayment
Long-term Liabilities Principal
Repayment
Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$210

$210

$210

$210

$210

$210

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$3,238

$11,655

$8,911

$9,500

$10,583

$13,014

$11,622

$11,930

$12,256

$12,682

$13,599

$16,175

($3,238)

($6,300)

($2,123)

$216

$3,511

$677

$1,179

$1,883

$3,745

$5,301

$4,379

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Expenditures from Operations

Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Subtotal Cash Spent

Net Cash Flow

($131)

Page 5

Appendix
Cash Balance

$16,794

$10,493

$8,370

$8,240

$8,456

Month 3

Month 4

Month 5

$11,967

$12,644

$13,823

$15,706

$19,451

$24,752

$29,131

Table: Balance Sheet

Pro Forma Balance Sheet

Month 1
Assets

Month 2

Month 6

Month 7

Month 8

Month 9

Month 10

Month
11

Month 12

Starting
Balances

Current Assets
Cash
Other Current Assets
Total Current Assets

$20,032
$0
$20,032

$16,794
$0
$16,794

$10,493
$0
$10,493

$8,370
$0
$8,370

$8,240
$0
$8,240

$8,456
$0
$8,456

$11,967
$0
$11,967

$12,644
$0
$12,644

$13,823
$0
$13,823

$15,706
$0
$15,706

$19,451
$0
$19,451

$24,752
$0
$24,752

$29,131
$0
$29,131

$9,368
$0
$9,368
$29,400

$9,368
$88
$9,280
$26,074

$9,368
$176
$9,192
$19,685

$9,368
$264
$9,104
$17,474

$9,368
$352
$9,016
$17,256

$9,368
$440
$8,928
$17,384

$9,368
$528
$8,840
$20,807

$9,368
$616
$8,752
$21,396

$9,368
$704
$8,664
$22,487

$9,368
$792
$8,576
$24,282

$9,368
$880
$8,488
$27,939

$9,368
$968
$8,400
$33,152

$9,368
$1,056
$8,312
$37,443

Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month
11

Month 12

Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$0
$0
$0

$6,912
$0
$0
$6,912

$4,149
$0
$0
$4,149

$4,703
$0
$0
$4,703

$5,701
$0
$0
$5,701

$8,187
$0
$0
$8,187

$6,575
$5,000
$0
$11,575

$6,873
$4,790
$0
$11,663

$7,184
$4,580
$0
$11,764

$7,581
$4,370
$0
$11,951

$8,464
$4,160
$0
$12,624

$9,418
$3,950
$0
$13,368

$10,056
$3,740
$0
$13,796

Long-term Liabilities
Total Liabilities

$0
$0

$0
$6,912

$0
$4,149

$0
$4,703

$0
$5,701

$0
$8,187

$0
$11,575

$0
$11,663

$0
$11,764

$0
$11,951

$0
$12,624

$0
$13,368

$0
$13,796

$30,000
($600)
($20,168)
$9,232
$20,807

$30,000
($600)
($19,667)
$9,733
$21,396

$30,000
($600)
($18,677)
$10,723
$22,487

$30,000
($600)
($17,069)
$12,331
$24,282

$30,000
($600)
($14,085)
$15,315
$27,939

$30,000
($600)
($9,616)
$19,784
$33,152

$30,000
($600)
($5,753)
$23,647
$37,443

$10,723

$12,331

$15,315

$19,784

$23,647

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$30,000
($600)
$0
$29,400
$29,400

$30,000
($600)
($10,238)
$19,162
$26,074

$30,000
($600)
($13,863)
$15,537
$19,685

$30,000
($600)
($16,629)
$12,771
$17,474

$30,000
($600)
($17,845)
$11,555
$17,256

Net Worth

$29,400

$19,162

$15,537

$12,771

$11,555

$30,000
($600)
($20,204)
$9,196
$17,384
$9,196

$9,232

$9,733

Page 6