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Legal Page
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Table of Contents

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

Chart: Highlights..................................................................................................................................1
1.1 Objectives..........................................................................................................................................2
1.2 Mission...............................................................................................................................................2
1.3 Keys to Success..................................................................................................................................2
2.0 Company Summary...............................................................................................................................2
2.1 Company Location & Facilities.........................................................................................................2
2.2 Company Ownership.........................................................................................................................3
2.3 Start-up Summary..............................................................................................................................3
Chart: Start-up......................................................................................................................................3
Table: Start-up.....................................................................................................................................3
Table: Start-up Funding.......................................................................................................................4
3.0 Products..................................................................................................................................................5
3.1 Product & Service Description..........................................................................................................5
3.2 Competitive Edge...............................................................................................................................6
3.3 Sales Literature..................................................................................................................................6
3.4 Sourcing.............................................................................................................................................6
3.5 Technology........................................................................................................................................7
3.6 Future Products and Services.............................................................................................................7
4.0 Market Analysis Summary....................................................................................................................7
4.1 Market Segmentation.........................................................................................................................7
Table: Market Analysis........................................................................................................................8
Chart: Market Analysis (Pie)...............................................................................................................8
4.2 Target Market Segment Strategy.......................................................................................................8
4.3 Market Growth...................................................................................................................................9
4.4 Industry Analysis.............................................................................................................................10
4.5 Industry Participants........................................................................................................................10
4.6 Distribution Patterns........................................................................................................................10
4.7 Competition & Buying Patterns.......................................................................................................10
5.0 Sales and Marketing.............................................................................................................................11
5.1 Marketing Strategy...........................................................................................................................11
5.2 Promotion Strategy..........................................................................................................................11
5.3 Distribution Strategy........................................................................................................................12
5.4 Sales Strategy...................................................................................................................................12
5.5 Sales Forecast...................................................................................................................................13
Table: Sales Forecast.........................................................................................................................13
Chart: Sales Monthly.........................................................................................................................13
Chart: Sales by Year..........................................................................................................................14
5.6 Milestones........................................................................................................................................14
Table: Milestones...............................................................................................................................14
Chart: Milestones...............................................................................................................................15
6.0 Management Summary........................................................................................................................15
6.1 Organizational Structure..................................................................................................................15
6.2 Management Team...........................................................................................................................16
6.3 Personnel Plan..................................................................................................................................16
Page 1

Table of Contents

Table: Personnel.................................................................................................................................17
....................................................................................................................................................................17
7.0 Financial Plan.......................................................................................................................................18
7.1 Important Assumptions....................................................................................................................18
Table: General Assumptions..............................................................................................................18
................................................................................................................................................................18
7.2 Break-even Analysis........................................................................................................................19
Chart: Break-even Analysis...............................................................................................................19
Table: Break-even Analysis...............................................................................................................19
................................................................................................................................................................19
7.3 Projected Profit and Loss.................................................................................................................20
Chart: Profit Monthly.........................................................................................................................20
Chart: Profit Yearly............................................................................................................................21
Chart: Gross Margin Monthly............................................................................................................21
Table: Profit and Loss........................................................................................................................21
................................................................................................................................................................22
7.4 Projected Cash Flow........................................................................................................................23
Chart: Cash.........................................................................................................................................23
Table: Cash Flow...............................................................................................................................23
................................................................................................................................................................24
7.5 Projected Balance Sheet...................................................................................................................25
Table: Balance Sheet..........................................................................................................................25
................................................................................................................................................................25
7.6 Business Ratios................................................................................................................................26
Table: Ratios......................................................................................................................................26
Table: Sales Forecast...................................................................................................................................1
......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2
......................................................................................................................................................................2
Table: General Assumptions........................................................................................................................3
......................................................................................................................................................................3
Table: Profit and Loss..................................................................................................................................4
......................................................................................................................................................................5
Table: Cash Flow.........................................................................................................................................6
......................................................................................................................................................................7
Table: Balance Sheet....................................................................................................................................8
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The Coffee Warehouse, Inc.

1.0 Executive Summary

The Coffee Warehouse is a new business providing high-quality, full service distribution of
coffee, specialty beverages and beverage-related supplies to coffee houses and espresso stands
throughout the Spokane and Northern Idaho market.
The principal owners are Steve and Jennifer Smith, whose combined experience brings office
management, high levels of customer service, and over 20 years in distribution and sales
management. At this time we are seeking additional equity capital to compliment our own
investment and are seeking to arrange a bank line for inventory and receivables financing. We
have firm commitments to distribute several high-quality new age beverage products, and have
verbal commitments from independent retailers throughout the Spokane and Northern Idaho
market to carry our product. We plan to distribute our first products within 30-60 days of
finalizing financial arrangements.
Sales projections for The Coffee Warehouse are estimated to begin at approximately
$2,229,000 the first year, increasing to approximately $2,558,000 in Year 2 and approximately
$2,936,000 in Year 3. Our net profit is projected at approximately $283,000 the first year,
increasing to $406,000 by the end of the third year of operation.
Distinguishing characteristics of our business will be the combination of management
experience, sales and distribution experience, high-quality, innovative products and exceptional
customer service. In particular, what really sets up apart is that we are the ONLY full service
distribution company servicing the coffee and specialty beverage industry in the
Spokane/Northern Idaho market. In addition, The Coffee Warehouse has an exclusive contract
to distribute a new, groundbreaking product that would enable us to gain immediate access to a
majority of the potential customer base.

Chart: Highlights

Highlights
$3,000,000
$2,700,000
$2,400,000
$2,100,000

Sales

$1,800,000
$1,500,000

Gross Margin

$1,200,000

Net Profit

$900,000
$600,000
$300,000
$0
Year 1

Year 2

Year 3

Page 1

The Coffee Warehouse, Inc.

1.1 Objectives

To open and operate a successful coffee and new age beverage distributorship in the
Spokane/Northern Idaho market, employing three to five employees the first year.
To obtain a minimum of 100 regular customers in the Spokane/North Idaho market the first
year of operation.
Achieve first year sales of $2,000,000.
Maintain an average gross margin of 25 percent.
To produce a net profit of at least $400,000 by the end of the third year of operation.

1.2 Mission
The Coffee Warehouse intends to become a recognized distributor of specialty beverages and
beverage-related supplies and services to coffee houses and espresso stands throughout
Spokane and Northern Idaho.
The Coffee Warehouse plans to develop strong relationships with key customers so we will be
viewed as indispensable partners, rather than just another supplier. We will work closely with
each customer to recommend product assortment unique for their retail base, appropriate
stocking levels, pricing and display assortments, as well as promotional ideas and material to
increase sales. The Coffee Warehouse will seek out and work with the manufacturers we
represent to deliver the most innovative and exciting products possible to the customers we
serve. We are not only selling product, we are selling service.
1.3 Keys to Success

Innovative quality products.

Individualized customer service - providing our customers with what they want, when and
how they want it.
Only full service distribution company in the Spokane/Northern Idaho market.
Fully integrated programs to help customers increase sales through menu development,
creative promotions, advertising, and custom marketing material.
Exclusive distribution rights to ground-breaking products not currently available in our
market.
The combined experience of the principal owners bring upper office management skills, high
levels of customer service, and over 20 years in distribution and sales management.

2.0 Company Summary

The Coffee Warehouse, Inc. is a new S-corporation business located in Spokane,
Washington, and will be established based on the details of the following plan.
2.1 Company Location & Facilities
The Coffee Warehouse will be located in the Spokane Valley within the Spokane Industrial
Business Park. This is a prime location to service both the Spokane and Northern Idaho
market. The facilities will include approximately 5,000 square feet of warehouse space, with an
additional 1,400 square feet built out for office/retail space. We are currently negotiating lease
terms on the several available properties, and plan to have a lease signed by July 31.

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The Coffee Warehouse, Inc.

2.2 Company Ownership

The Coffee Warehouse is a privately held S-Corporation owned in total by its co-founders, Steve
and Jennifer Smith.
UBI Number: XXX-XXX-XXX (removed to protect confidentiality)
2.3 Start-up Summary
Start-up expenses for the Coffee Warehouse total $16,450, and include expenses such as legal,
marketing, lease deposit, computer systems, etc. Start-up assets include $9,800 in initial cash
requirements, $18,750 in short term assets (office furniture, refrigeration equipment), and
$75,000 in starting inventory. These start-up costs will be financed through investments and
small-business loans. The details of the start-up summary are included in the following table.

Chart: Start-up

Start-up

$100,000

$80,000

$60,000

$40,000

$20,000

$0
Expenses

Assets

Investment

Loans

Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal Business Formation
Business Plan
Warehouse Lease Deposit
Insurance (first month)
Utilities (first month)
Research & Development

$220
$90
$2,800
$500
$350
$1,200

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The Coffee Warehouse, Inc.

Marketing
Advertising
Personnel
Business/Office Supplies
Computer Systems
Phone System
Communication Lines
Trade Show/Grand Opening
Total Start-up Expenses

$1,200
$250
$2,060
$1,550
$3,080
$650
$300
$2,200
$16,450

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

$9,800
$75,000
$18,750
$0
$103,550

Total Requirements

$120,000

Table: Start-up Funding

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

$16,450
$103,550
$120,000

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

$93,750
$9,800
$0
$9,800
$103,550

Liabilities and Capital

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

$95,000
$0
$0
$0
$95,000

Capital
Planned Investment
Investor 1
Other
Additional Investment Requirement
Total Planned Investment

$25,000
$0
$0
$25,000

Loss at Start-up (Start-up Expenses)

Total Capital

($16,450)
$8,550

Total Capital and Liabilities

$103,550

Total Funding

$120,000

Page 4

The Coffee Warehouse, Inc.

3.0 Products
The Coffee Warehouse will provide a first-class delivery service of quality hot and cold beverage
related supplies, including whole bean or ground coffee, flavor syrups, jet teas, fruit smoothies,
bubble teas, concentrated milk, fresh baked goods and assorted paper supplies. Our services
will include invaluable trade resources, effective promotional programs, custom-designed
marketing material, informative monthly newsletters, training and product demonstrations, as
well as information on the latest market trends in the coffee/specialty beverage industry.
3.1 Product & Service Description
PRODUCT DESCRIPTION
The Coffee Warehouse will carry a variety of quality products that will enable us to provide full
service delivery to espresso stands and coffee houses. Our underlying philosophy in selecting
products is to choose lines that will bring consistent quality, competitive prices, and product
satisfaction to our customers. We have personally researched and sampled each of the
following products that we offer to ensure the quality we guarantee.

Lowery's Gourmet Whole Bean and Wired Willey's White Coffee

Assorted Gourmet Syrups & Coffee Toppings
Chocolate, White Chocolate and Caramel Syrups/Sauces
Oregon Chai Concentrate
Jet Cafe and Jet Tea Fruit n' Tea Freeze
Cappuccina line of product
Big Train line of product
Red Bull Energy Drinks
Good Cow Concentrated Milk with Custom Dispensing Equipment
Fresh Baked Goods
Assortment of White, Pre-printed Paper, and Clear Beverage Cups Systems - as well as an
assortment of other paper supplies

At this time, the majority of these products are only available to customers through wholesale
vendors such as Cash and Carry retail outlets - therefore it is the customer's responsibility to
acquire these products by their own means. The Coffee Warehouse will make these same
products available through our high quality, full service delivery - bringing these products
directly to their doorstep at a competitive price.
SERVICE DESCRIPTION
An important component of our business is not just our products, but our service. In addition to
our full service delivery, the following are other important service elements that we will offer to
our customers:

Ideas to help our customers increase sales through menu development, creative
promotions, co-op advertising, and much more.

Custom designed marketing material such as printed banners, promotional posters, punch
cards, pre-purchased beverage cards, reader boards, etc.

Distribute a monthly newsletter featuring the latest coffee trends, new industry equipment,
breaking trade news, promotional ideas, new creative recipes, and upcoming events.

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The Coffee Warehouse, Inc.

Samples of the latest product releases - with eye-catching point-of-sale to advertise new
items to the end consumer.

Routine equipment maintenance and training.

3.2 Competitive Edge

KEY COMPETITIVE STRENGTHS
No other wholesaler in the market offers full service delivery with the variety of product we
feature. We are better positioned than our main competitors to take advantage of the
increasing demands of coffee and specialty beverage supplies because we focus exclusively on
high-quality distribution and customer service. In addition to the variety of products we feature,
The Coffee Warehouse has exclusive distribution rights to Good Cow's concentrated
milk/dispensing system. This product is not currently available in our market by any other
suppliers.
KEY COMPETITIVE WEAKNESSES
Our primary weakness is that we are a new business competing largely against established
suppliers. To significantly build sales, we must not just find new customers - we must take
customers away from existing suppliers. However by offering a superior selection of supplies,
new groundbreaking products to the market, and focusing on high-quality service and full
service delivery, we feel will can quickly establish accounts and build strong relationships. Cofounder Jennifer Smith has had many discussions with owners of coffee and espresso
businesses that confirm this opinion.
3.3 Sales Literature
Sales literature to be distributed to both current and potential customers will include brochures,
fliers, newsletters, as well as other print media such as print advertisements. Jennifer Smith is
highly skilled in graphic design and desktop publishing, and has quality design and printing
equipment to publish professional pieces at a low cost.
3.4 Sourcing
The Coffee Warehouse will purchase product directly from manufacturers, as well as master
distributors. Because this eliminates the broker or "middle man," this allows us to operate on a
25-30% profit margin, while providing our customers with competitive prices.
To further reduce costs, The Coffee Warehouse plans to share product shipments out of
California with distributors operating in Portland, Oregon and Tri-Cities, Washington. Other
product not being shipped directly to Spokane will be purchased and picked up in Seattle,
Washington. The Coffee Warehouse plans to send a truck to Seattle on a bi-weekly basis to pick
up product, thus cutting costs by an average of 5%.

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The Coffee Warehouse, Inc.

3.5 Technology
To streamline the efficiency of our distribution methods, The Coffee Warehouse plans to use the
latest in cutting edge technology - not only in the warehouse - but also in the trade.
All of our drivers/sales representatives will be equiped with Thinque MSP handhelds and
software. Thinque MSP applications will reduce field expenses, decrease day's sales
outstanding, and increase worker efficiency. Features can be used in or out of the warehouse
and include managing returns and collections; adjusting item price, profit or margin; applying
promotional items to an account; streamlining orders; tracking inventory; reducing out-ofstocks; and providing sales history reports. All information recorded in the handheld is available
in real time to be viewed by management in the office.
3.6 Future Products and Services
Within the first year of business, The Coffee Warehouse intends to open a retail/wholesale store
and high-quality showroom. Products will be available for purchase by both our wholesale
customers who may need product between delivery days, as well as retail consumers interested
in purchasing product for their home use. We will also offer a showroom that will feature
equipment, supplies, trade resources, and information on marketing services with examples of
marketing and promotional material available to customers.
With the addition of the product showroom, The Coffee Warehouse will offer customers
quarterly product and training demonstrations that will be presented by trained beverage
experts from the industry.
The Coffee Warehouse also plans to hold semi-annual trade shows for current or potential
customers. These trade shows will allow customers the opportunity to sample products, talk to
manufacturers, learn about new industry trends, review marketing material, and network with
other business owners in their market.
4.0 Market Analysis Summary
Coffee is the second largest commodity market next to oil, and growth is expected to continue
at a strong pace for the foreseeable future. The specialty beverage industry is growing at an
equally strong pace, with sales growth in some categories projected to grow at rates of 40%
per year.
This growth offers excellent opportunities for new companies to enter this market, and we are
excited about the possibilities of what The Coffee Warehouse can accomplish in the Spokane
and Northern Idaho market.
4.1 Market Segmentation
The gourmet coffee and specialty beverage industry is divided into several segments.
Consumers who enjoy these products purchase drinks at restaurants, coffee houses, sports
venues, drive-thru espresso stands, and even inside other retail establishments that might
feature an independent beverage stand.
As illustrated in the chart below, within the market surrounding Spokane, Rathdrum, Post Falls
and Coeur d'Alene, there are currently 250 drive-thru espresso stands, 18 coffee/tea houses,

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The Coffee Warehouse, Inc.

52 independent inner-retail espresso stands, and approximately 10 stands in locations such as

sports venues, university campuses, and etc. These figures are not including the number of
restaurants, bars and cafes that also feature these beverages.
Table: Market Analysis

Market Analysis
Potential Customers

Year 1

Year 2

Year 3

Year 4

Year 5

4%
4%
5%
5%

250
52
18
10

259
54
19
11

268
56
20
12

277
58
21
13

287
60
22
14

3.51%
3.64%
5.14%
8.78%

3.79%

330

343

356

369

383

3.79%

Growth

Drive-thru Espresso
Inner-Retail Espresso
Coffee/Tea Houses
Other (sports venues,
universities, etc)
Total

CAGR

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Drive-thru Espresso
Inner-Retail Espresso
Coffee/Tea Houses
Other (sports venues, universities, etc)

4.2 Target Market Segment Strategy

While the market is already sizeable, this industry continues to grow. New espresso stands
open their doors to the public on a monthly basis in our market, and it isn't uncommon to see
numerous espresso stands within a one or two mile radius. The article below, published by a
national coffee retail magazine, discusses our market's unique drive-thru espresso industry. The
sales potential in this market is unlimited.
The Coffee Warehouse initially plans to target these drive-thru espresso stands, as well as all
inner-retail espresso stands within our designated market. It is this segment that is most in
need of the services we are planning to offer. Essential needs include: quality products at
competitive prices, first class service, and strong sales support. It is most often these small

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The Coffee Warehouse, Inc.

owner-operated businesses that are neglected by larger suppliers and are forced to service
themselves. It is also these smaller businesses who could most greatly benefit from marketing
services, sales support, and full service product delivery. Providing the same high-quality
service, within the first six months of operation, The Coffee Warehouse plans to expand our
target into formal coffee houses and cafes, and as business grows and stabilizes, eventually
evaluate the needs of potential customers in the restaurants and bar industry.

4.3 Market Growth

Coffee has been a growing industry for the past several years. In the gourmet/specialty coffee
industry alone, the figures show an impressive rate of growth in the United States.
The new age beverage industry is growing at an equally strong pace. Sales growth in the chai
tea category alone is estimated to be 50% historically, with projected growth rates of 40% per
year. Energy drinks, including brands such as Red Bull - and trends such as Jet Tea - are
driving the new age beverage growth, and have increased 50-fold in the past three years.
Bubble Tea has been a rapidly growing market in Asia, though it is relatively new to the United
States. Introduced to trend setting marketings such as San Francisco and Seattle, sales have
been exploding - and the craze of the "Tapioca Pearl" is expected to spread throughout
America.

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The Coffee Warehouse, Inc.

4.4 Industry Analysis

The coffee and specialty beverage industry is pulverized, with hundreds of manufacturers,
brokers, suppliers and retailers. Unlike the beer/soda industry, with large companies such as
Anheuser Busch, Pepsi and Coca Cola controlling most of the market, the coffee and specialty
beverage industry does not have large national chains with market control.
In an open industry growing at such a strong rate, The Coffee Warehouse is in position to
capitalize on the customer's need for quality product, exceptional service, and an effective
partner to success.
4.5 Industry Participants
With the rate of growth in the gourmet coffee market, in addition to the recent trends in Jet
Teas and other specialty beverages, the industry is comprised of many small participants, each
focusing on only a few specific items or brands at a time. As the markets evolve, we expect the
industry to consolidate with larger distributors representing more of a vast selection of products
in each market.
Currently in our segment of the industry, there are no large national chains with market
control. There are also few products that are offered with exclusive rights to one market.
While this is the case with many products, The Coffee Warehouse is working with
manufacturers to change that practice, and not only represent a larger variety of product than
others in our industry, but also acquire exclusive rights to many of the products in our portfolio.
4.6 Distribution Patterns
The following flow chart illustrates the overall industry surrounding the distribution patterns of
coffee and specialty beverages. (The Coffee Warehouse falls into the level highlighted in
yellow).
Several manufacturers are represented by master distributors and/or brokers who in turn
provide the product to direct distributors and other wholesale suppliers. Other manufacturers
allow distributors and suppliers to purchase product direct - depending on the quantity of
product being purchased. Product is then distributed or sold through cash and carry wholesale
stores to retail businesses as illustrated below.

4.7 Competition & Buying Patterns

While there are a handful of coffee and specialty beverage suppliers providing product in our
market, there is still a great deal of room for new business. Most importantly, there is room for
new business that understands the need for high-quality service and sales support - in addition
to product at competitive prices.
In this industry, customers choose their suppliers based on available product, price, and service
- though most often, it is the service that suffers most. While one supplier may offer the
product at the right price, they do not provide the level of service that the customer demands.
The next supplier may offer the right level of service, though their prices are too high. This

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The Coffee Warehouse, Inc.

results with the customer purchasing most of their supplies through a cash and carry style
wholesale store - leaving the customer with no service or support.
By positioning ourselves in the market with in-demand, quality product at competitive prices,
with a consistent high level of customer service - we are confident that we will see customers
and their business continue to increase.
5.0 Sales and Marketing
The unique aspects of our business include individual product selection, quality assurance, and
high-quality full service distribution. Our strategy is to focus 100% of our efforts on the market
for espresso supplies in the Spokane and Northern Idaho area. By focusing all of our effort and
energy on this particular area, we expect to quickly develop and maintain a leadership position.
The Coffee Warehouse's key personnel will stay in contact with our customers, and will be able
to respond to changes in this market much faster than our competitors.
The Coffee Warehouse will offer the best, most highly personalized service in the marketplace.
Being a small, owner-operated company, we intend to use this to our advantage to be
absolutely certain that every one of our customers receive excellent service. We will go out of
our way to make sure that our customers know that they truly matter to us. Sales reps and inhouse personnel who deal with customers will be carefully trained and given wide latitude for
insuring that customers are always satisfied.
5.1 Marketing Strategy
Our basic marketing strategy is to work with customers on a one-to-one basis to ensure their
supply needs are being met and help develop unique marketing programs for each of them. We
intend to prioritize customer service and make it a key component of our marketing programs.
We believe that providing our customers with what they want, when and how they want it, is
the key to repeat business and positive word-of-mouth advertising. Because we want to
develop close working relationships with our customers, we want to establish accounts in as
personable a way as possible. It is for this reason that we will overwhelmingly emphasize inperson sales calls to build accounts.
We will closely integrate all of our marketing and sales efforts to project a consistent image of
our company and a consistent positioning of our products and services. We will build this image
around our name "The Coffee Warehouse, Inc." and emphasize to customers the high-quality
service that is behind this name.
To support our marketing initiatives and product knowledge, we will attend as many area
conventions and trade shows as possible to ensure we are offering the most up-to-date market
trend information.
5.2 Promotion Strategy
Relationships are the key to success in the distribution business. Personal selling will remain our
most important means of promotion. Both Steve and Jennifer Smith will lead this effort - Steve,
with his skill and experience in sales and distribution, and Jennifer in customer service and
relations. In addition to personal selling, The Coffee Warehouse has identified several other
means of advertising and publicity.

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The Coffee Warehouse, Inc.

The Coffee Warehouse will send news releases to local media and press, as well as trade
magazines to try to get product and company feature coverage in front of the eyes of our
customers - as well as the end consumer. We will also produce a few generic press releases
about the products we are distributing for our customers to use toward publicity coverage for
their businesses in local publications such as the Spokesman, The Inlander and Local Planet.
Third, we shall have a monthly newsletter for current of potential customers. This newsletter
will highlight new and current trends in the industry, upcoming conventions and trade shows,
offer promotions and special deals, as well as provide new recipes, fun tips and other
information that can be used in their business. We will also highlight not just our products, but
also display ideas and success stories of other business in the industry. As a more straight
forward advertising effort, The Coffee Warehouse will feature an advertisement in the Yellow
Pages, frequent ads in the Spokesman Review, the Inlander, and the Local Planet, as well as
participation in networking, local trade shows, and personal word-of-mouth advertising.
5.3 Distribution Strategy
To begin, The Coffee Warehouse will operate two delivery trucks with a third vehicle for special
deliveries between scheduled delivery days. Deliveries will be made Monday through Friday,
and will be strategically routed to minimize travel time and fuel costs - while maximizing
production. On average, we will service 20-30 accounts per day, with deliveries to each
account twice a week. As the number of accounts increase, the need for additional delivery
trucks will continue to be evaluated. With each additional delivery truck, routes will be
restructured to maintain maximum efficiency.
5.4 Sales Strategy
Distribution sales are dependent on repeat business, therefore the sales strategy for The Coffee
Warehouse is based on personal, consistent sales contact, with a high emphasis on customer
service and relations. Because we are a new distributor, we understand that we will have to
prove our worth to our customers in order to earn their respect and business. Both of the
owners, Steve and Jennifer, will make personal calls on potential customers to review our
product line and services, give general information on our company, and discuss how we feel
we can help them succeed in their business.
The Coffee Warehouse will begin operations with two full-time delivery/sales representatives,
who will be responsible for providing full service and delivery to current customers, but also
make sales calls for potential new business. This delivery/sales representatives will receive a
base salary, with commission on qualified sales, as well as bonuses for new acquired business.
Customers will be scheduled for a pre-arranged delivery day once or twice a week, depending
on the quantity and timeline of product needed. Product orders can be placed in a number of
ways to help facilitate the process:

Phoned Orders: Customers can easily phone orders into our office, up until 2:30 p.m. of the
afternoon prior to their scheduled delivery day.

Faxed Orders: Customers can fax in a completed product order sheet, with the same
deadline as phoned orders.

Tel-Sell: Customers may choose to have a representative from the office call them the day
prior to their scheduled delivery to check product quantities and assist them in placing their
order.

Page 12

The Coffee Warehouse, Inc.

We understand the hectic schedule of a small business, so if a customer fails to call or fax their
weekly order, they will receive a courtesy call from our office to verify that an order is not
needed.
5.5 Sales Forecast
As indicated in the table, our sales are forecasted to increase rapidly, with an annual growth
rate of approximately 30%.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Espresso Syrups
Chocolate & Caramel Sauces
Specialty Beverage Mixes
Energy Drinks
Concentrated Milk
Paper Supplies
Marketing
Total Sales

$415,362
$275,852
$176,660
$44,372
$113,816
$1,185,285
$18,305
$2,229,652

$477,666
$311,713
$203,158
$51,028
$130,889
$1,363,078
$21,051
$2,558,584

$549,316
$352,235
$233,632
$58,683
$150,523
$1,567,540
$24,208
$2,936,137

Direct Cost of Sales

Espresso Syrups
Chocolate & Caramel Sauces
Specialty Beverage Mixes
Energy Drinks
Concentrated Milk
Paper Supplies
Marketing
Subtotal Direct Cost of Sales

Year 1
$345,347
$244,798
$134,440
$36,542
$97,919
$888,964
$6,540
$1,754,550

Year 2
$397,149
$276,622
$154,606
$42,023
$112,607
$1,022,308
$7,521
$2,012,837

Year 3
$456,722
$312,583
$177,797
$48,327
$129,498
$1,175,655
$8,649
$2,309,230

Sales

Chart: Sales Monthly

Sales Monthly
$400,000

Espresso Syrups

$350,000

Chocolate & Caramel Sauces

$300,000

Specialty Beverage Mixes

$250,000

Energy Drinks

$200,000

Concentrated Milk

$150,000

Paper Supplies

$100,000

Marketing

$50,000

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

Page 13

The Coffee Warehouse, Inc.

Chart: Sales by Year

Sales by Year
$3,000,000
$2,700,000

Espresso Syrups

$2,400,000

Chocolate & Caramel Sauces

$2,100,000

Specialty Beverage Mixes

$1,800,000

Energy Drinks

$1,500,000

Concentrated Milk

$1,200,000
$900,000

Paper Supplies

$600,000

Marketing

$300,000
$0
Year 1

Year 2

Year 3

5.6 Milestones
The following table and chart are the important milestones for The Coffee Warehouse.
Table: Milestones

Milestones
Milestone
Market/Trade Research
Logo Design/Marketing
Complete Business Plan
Product/Pricing Comparison
Finalize Potential Client List
Licensing/Incorporation
Secure Product Line
Research/Secure Financing
Warehouse Selection/Buildout
Leasehold Improvements
Delivery Vehicle Selection
Develop Routing
Hire Delivery/Sales Personnel
Office Equipment/Computer/Supplies
Order Beginning Inventory
Press Releases/Advertising
Organize Grand Opening Trade Show
Totals

Start Date
3/15/2003
4/15/2003
4/15/2003
4/15/2003
5/1/2003
5/15/2003
5/15/2003
5/15/2003
5/15/2003
7/1/2003
6/1/2003
6/15/2003
7/1/2003
7/1/2003
7/10/2003
7/1/2003
8/1/2003

End Date
5/15/2003
5/15/2003
5/30/2003
5/15/2003
5/15/2003
6/15/2003
6/15/2003
7/15/2003
6/15/2003
8/1/2003
6/15/2003
7/15/2003
7/15/2003
8/1/2003
7/20/2003
8/1/2003
8/10/2003

Budget
$150
$1,300
$90
$150
$0
$200
$0
$0
$0
$5,000
$0
$100
$100
$5,000
$20,000
$250
$3,000
$35,340

Manager
SDS / JLS
JLS
JLS
SDS / JLS
JLS
JLS
JLS
SDS / JLS
SDS / JLS
SDS / JLS
SDS
SDS
SDS
JLS
SDS / JLS
JLS
JLS

Department
Marketing
Marketing
Marketing
Marketing
Marketing
Marketing
Marketing
Marketing
Marketing
Web
Web
Department
Department
Department
Department
Department
Department

Page 14

The Coffee Warehouse, Inc.

Chart: Milestones

Milestones
Logo Design/Marketing
Product/Pricing Comparison
Licensing/Incorporation
Research/Secure Financing
Leasehold Improvements
Develop Routing
Office Equipment/Computer/Supplies
Press Releases/Advertising
Apr

May

Jun

Jul

6.0 Management Summary

The Coffee Warehouse will be owned and operated by its founders, initially working with a small
employee base that will cover sales and delivery. Management and personnel plans are covered
in more detail in the topics to follow.
6.1 Organizational Structure
The Coffee Warehouse will be managed by the two founding partners, whose individual areas of
expertise cover many of the functional aspects of the business.
The organizational structure is very simple. Steve Smith will be responsible for the routing,
distribution management and delivery systems. Jennifer Smith will be responsible for customer
service, accounting, shipping and the general administration of the business. Together they will
be responsible for product selection and sales and marketing.
The support staff at the office and warehouse, as well as the delivery personnel will report to
Jennifer. Because Steve will be spending a majority of his time in the trade, Jennifer will be
able to support any day-to-day needs that the personnel may have. However even when Steve
is out of the office, he will be in constant contact via computer or phone.
The goal of The Coffee Warehouse is to have a team of committed associates who empower
each other so that the customer's expectations can be exceeded. Our goal is to offer career
opportunities, advancement opportunities and a level of income and benefits that is competitive
within the region and job classification. It is our long-term goal to be the preferred employer
within our niche of the beverage distribution industry.

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The Coffee Warehouse, Inc.

6.2 Management Team

Steven D. Smith
Steve has a long history of experience in sales and distribution management, specifically in the
beverage industry. As the sales and distribution manager for the largest beverage
distributorship in the state, he currently manages ten sales representatives and twenty four
merchandisers. During this time as sales manager, he has helped increase market share from
25 to 40%.
Over the last twenty years, Steve has successfully built and maintained rapport with buyers in
the city's largest key accounts, and has strategically routed sales, merchandising and truck
routes throughout the city.
Steve has many industry contacts and an in-depth knowledge of the market.
Jennifer L. Smith
Jennifer recently operated as general manager for a local business and directed a staff of
thirteen, overseeing the accounting practices, human resource issues, and day-to-day
operations of the company. Prior to this position, Jennifer has held a variety of other inside
business management and operations positions.
Jennifer's strengths and skills include strong management, excellent public relations, high levels
of organization, extensive computer knowledge - including desktop publishing and graphic
layout - and extensive presentation and reporting skills.
6.3 Personnel Plan
PERSONNEL GENERAL
Initially we expect to be able to handle business needs with Steve and Jennifer, one
administrative assistant, and two product delivery/sales personnel. As business continues to
grow, we intend to hire additional employees one at a time and pay premium, over market
labor rates to attract and retain quality help.
Not only will we train our employees to deliver excellent service, we will give them the flexibility
to respond creatively to client requests. In addition, we will continually monitor our clients' level
of satisfaction with our service through surveys and other convenient feedback opportunities.
To ensure our personnel are meeting our expectations, we will hold a minimum of quarterly
meetings with all employees so that results can be reviewed and future plans can be discussed.
At least twice a year, a refresher course will be required on product knowledge and how to
exceed our customer's expectations.
SALES AND DELIVERY
In order to deliver high quality, personalized service we will carefully select all employees - with
extra attention given to sales reps and delivery personnel who will deal directly with customers.
We will carefully review references not just from past employers or manufacturers, but also
from retailers whom these sales reps have served. We will also make sure that each employee
understands our way of delivering quality service to each customer. We will have immediate
back-up support available by phone from our office for more difficult service issues. We will also
give employees enough latitude so that they can respond immediately to almost any customer
request or complaint - which in this industry usually means granting immediate credit for
damaged merchandise, and adding additional merchandise to an order.

Page 16

The Coffee Warehouse, Inc.

Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Jennifer Smith
Sales/Delivery (Salary)
Sales/Delivery (Commission)
Delivery/Warehouse Personnel
Administration
Total People

$30,000
$20,400
$4,237
$20,400
$18,720
4

$35,000
$21,500
$4,500
$21,500
$19,500
4

$40,000
$22,500
$4,500
$22,500
$21,000
4

Total Payroll

$93,757

$102,000

$110,500

Page 17

The Coffee Warehouse, Inc.

7.0 Financial Plan

The Coffee Warehouse projects the gross margin to be at approximately 20-25 percent. Sales
projections for FY2004 are at $2,229,652 increasing to $2,558,584 in FY2005 and $2,936,137
in FY2006. Cash-flow analysis, balance sheet, business ratio, break-even analysis, and other
financial details are shown in the appendix.
7.1 Important Assumptions
General assumptions for this plan are on the following table.
Table: General Assumptions

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

Year 1

Year 2

Year 3

1
8.00%
8.00%
25.42%
0

2
8.00%
8.00%
25.00%
0

3
8.00%
8.00%
25.42%
0

Page 18

The Coffee Warehouse, Inc.

7.2 Break-even Analysis

The following table and chart illustrate our break-even analysis. With our fixed costs estimate of
approximately $15,000 per month, operating on average at a 25% profit margin, we will need
to sell 67,666 units to break-even in a month. Fixed costs include our warehouse lease, vehicle
leases, utilities, insurance, payroll, and an estimation of other running costs.

Chart: Break-even Analysis

Break-even Analysis
$6,000
$3,000
$0
($3,000)
($6,000)
($9,000)
($12,000)
($15,000)
$0

$20,000
$40,000
$60,000
$80,000
$100,000
$10,000
$30,000
$50,000
$70,000
$90,000
$110,000

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$75,055

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

79%
$15,993

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The Coffee Warehouse, Inc.

7.3 Projected Profit and Loss

The following table and charts show the projected profit and loss. Monthly projections are
included in the appendix.

Chart: Profit Monthly

Profit Monthly
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$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

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The Coffee Warehouse, Inc.

Chart: Profit Yearly

Profit Yearly

$280,000
$240,000
$200,000
$160,000
$120,000
$80,000
$40,000
$0
Year 1

Year 2

Year 3

Chart: Gross Margin Monthly

Gross Margin Monthly

$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$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

Table: Profit and Loss

Pro Forma Profit and Loss

Sales

Year 1

Year 2

Year 3

$2,229,652

$2,558,584

$2,936,137

Page 21

The Coffee Warehouse, Inc.

Direct Cost of Sales

Hidden Row
Total Cost of Sales

$1,754,550
$0
$1,754,550

$2,012,837
$0
$2,012,837

$2,309,230
$0
$2,309,230

$475,102
21.31%

$545,747
21.33%

$626,907
21.35%

$93,757
$0
$0
$33,096
$7,200
$6,000
$14,064
$12,000
$3,000
$2,400
$12,000
$3,600
$2,400
$2,400

$102,000
$0
$0
$34,260
$7,500
$6,300
$15,300
$12,600
$3,000
$2,400
$12,500
$3,600
$2,200
$2,700

$110,500
$0
$0
$35,460
$7,800
$6,500
$16,575
$13,200
$3,000
$2,400
$13,000
$3,600
$2,600
$3,000

Total Operating Expenses

$191,917

$204,360

$217,635

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$283,186
$283,186
$6,560
$69,354

$341,387
$341,387
$4,720
$84,167

$409,272
$409,272
$2,800
$103,312

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$207,271
9.30%

$0
$252,500
9.87%

$0
$303,160
10.33%

Gross Margin
Gross Margin %

Expenses
Payroll
Other
Depreciation
Rent
Utilities and Phone
Insurance
Payroll Burden
Leased Equipment (Delivery Vehicles)
Leased Equipment (Warehouse)
Leased Equipment (Other)
Fuel (delivery)
Advertising / Promotion
Professional Services
Miscellaneous (office supplies, etc)

Other Income
Interest Income
Other Income Account Name
Total Other Income
Other Expense
Account Name
Other Expense Account Name
Total Other Expense
Net Other Income
Net Profit
Net Profit/Sales

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The Coffee Warehouse, Inc.

7.4 Projected Cash Flow

The following table shows cash flow for the three years, and the chart illustrates monthly cash
flow in the first year. Monthly cash flow projections are included in the appendix.

Chart: Cash

Cash
$280,000
$240,000
$200,000

Net Cash Flow

$160,000

Cash Balance

$120,000
$80,000
$40,000

Month 12

Month 11

Month 10

Month 9

Month 8

Month 7

Month 6

Month 5

Month 4

Month 3

Month 2

Month 1

$0

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$2,229,652
$2,229,652

$2,558,584
$2,558,584

$2,936,137
$2,936,137

$0
$0
$0
$0
$0
$0
$0
$0
$2,229,652

$0
$0
$0
$0
$0
$0
$0
$0
$2,558,584

$0
$0
$0
$0
$0
$0
$0
$0
$2,936,137

Year 1

Year 2

Year 3

$93,757

$102,000

$110,500

Cash Received
Cash from Operations
Cash Sales
Subtotal Cash from Operations
Additional Cash Received
Non Operating (Other) Income
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

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The Coffee Warehouse, Inc.

Bill Payments
Subtotal Spent on Operations

$1,826,094
$1,919,851

$2,274,170
$2,376,170

$2,512,879
$2,623,379

$0
$0
$24,000
$0
$0
$0
$0
$0
$1,943,851

$0
$0
$24,000
$0
$0
$0
$0
$0
$2,400,170

$0
$0
$24,000
$0
$0
$0
$0
$0
$2,647,379

$285,801
$295,601

$158,413
$454,014

$288,758
$742,772

Additional Cash Spent

Non Operating (Other) Expense
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

Page 24

The Coffee Warehouse, Inc.

7.5 Projected Balance Sheet

The projected balance sheet is shown in the following table, with monthly projections in the
appendix.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$295,601
$358,198
$18,750
$672,549

$454,014
$211,672
$18,750
$684,436

$742,772
$242,850
$18,750
$1,004,371

$0
$0
$0
$672,549

$0
$0
$0
$684,436

$0
$0
$0
$1,004,371

Year 1

Year 2

Year 3

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$385,728
$71,000
$0
$456,728

$169,114
$47,000
$0
$216,114

$209,889
$23,000
$0
$232,889

Long-term Liabilities
Total Liabilities

$0
$456,728

$0
$216,114

$0
$232,889

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

$25,000
($16,450)
$207,271
$215,821
$672,549

$25,000
$190,821
$252,500
$468,321
$684,436

$25,000
$443,321
$303,160
$771,482
$1,004,371

Net Worth

$215,821

$468,321

$771,482

Assets
Current Assets
Cash
Inventory
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 25

The Coffee Warehouse, Inc.

7.6 Business Ratios

The table shows projected business ratios.
Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

14.75%

14.76%

0.00%

Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

53.26%
2.79%
100.00%
0.00%
100.00%

30.93%
2.74%
100.00%
0.00%
100.00%

24.18%
1.87%
100.00%
0.00%
100.00%

0.00%
100.00%
100.00%
0.00%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

67.91%
0.00%
67.91%
32.09%

31.58%
0.00%
31.58%
68.42%

23.19%
0.00%
23.19%
76.81%

0.00%
0.00%
0.00%
100.00%

100.00%
21.31%
8.61%
0.00%
12.70%

100.00%
21.33%
8.17%
0.00%
13.34%

100.00%
21.35%
7.51%
0.00%
13.94%

100.00%
0.00%
0.00%
0.00%
0.00%

1.47
0.69
67.91%
128.17%
41.13%

3.17
2.19
31.58%
71.89%
49.19%

4.31
3.27
23.19%
52.69%
40.47%

0.00
0.00
0.00%
0.00%
0.00%

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

9.30%
96.04%

9.87%
53.92%

10.33%
39.30%

n.a
n.a

10.91
5.73
27
3.32

7.06
12.17
49
3.74

10.16
12.17
27
2.92

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

2.12
1.00

0.46
1.00

0.30
1.00

n.a
n.a

$215,821
43.17

$468,321
72.33

$771,482
146.17

n.a
n.a

0.30
68%
0.69
10.33
0.00

0.27
32%
2.19
5.46
0.00

0.34
23%
3.27
3.81
0.00

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

Activity Ratios
Inventory Turnover
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 26

The Coffee Warehouse, Inc.

Page 27

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales
Espresso Syrups
Chocolate & Caramel Sauces
Specialty Beverage Mixes
Energy Drinks
Concentrated Milk
Paper Supplies
Marketing
Total Sales
Direct Cost of Sales

0%
0%
0%
0%
0%
0%
0%

$14,322
$10,465
$8,626
$1,530
$1,530
$51,400
$700
$88,573

Month 5

$28,807
$21,048
$4,732
$3,077
$6,360
$58,075
$1,295
$123,394
Month 6

$33,128
$21,048
$7,887
$3,539
$7,914
$68,506
$1,470
$143,492
Month 7

$38,097
$24,205
$10,498
$4,070
$9,882
$85,766
$1,680
$174,198
Month 8

$43,811
$27,836
$21,167
$4,680
$12,379
$123,777
$1,890
$235,540
Month 9

$50,383
$32,011
$30,347
$5,382
$15,556
$177,815
$2,170
$313,664

$57,940
$36,813
$34,899
$6,190
$19,604
$202,120
$2,450
$360,016

$66,632
$42,335
$40,134
$7,118
$24,774
$230,071
$2,765
$413,829

Month 10

Month 11

Month 12

$18,110

$20,827

$23,951

$27,544

$31,675

$36,426

$41,890

$48,174

$55,400

Chocolate & Caramel Sauces

$8,441

$9,707

$11,163

$12,837

$14,763

$16,977

$19,524

$22,453

$25,821

$29,694

$34,148

$39,270

Specialty Beverage Mixes

$6,496

$4,866

$2,981

$3,192

$3,401

$3,802

$6,168

$8,145

$16,035

$22,852

$26,280

$30,222

Energy Drinks

$1,260

$1,449

$1,666

$1,916

$2,204

$2,534

$2,914

$3,352

$3,854

$4,433

$5,097

$5,862

Concentrated Milk

$1,308

$2,509

$3,022

$3,646

$4,405

$5,465

$6,804

$8,499

$10,651

$13,389

$16,880

$21,339

$38,550

$35,560

$32,335

$34,387

$38,534

$43,556

$51,379

$64,325

$92,833

$133,361

$151,590

$172,554

$250

$288

$325

$363

$413

$463

$525

$600

$675

$775

$875

$988

$68,213

$68,073

$67,240

$74,451

$84,546

$96,749

$114,858

$139,049

$186,297

$246,395

$283,045

$325,635

Subtotal Direct Cost of Sales

Month 4

$25,049
$18,303
$4,242
$2,676
$5,128
$51,378
$1,155
$107,931

$15,748

Marketing

Month 3

$21,782
$15,915
$4,006
$2,327
$4,245
$45,849
$1,015
$95,139

$13,694

Paper Supplies

Month 2

$18,941
$13,839
$3,759
$2,023
$3,520
$43,114
$910
$86,106

$11,908

Espresso Syrups

Month 1

$16,470
$12,034
$6,363
$1,760
$2,924
$47,414
$805
$87,770

Page 1

Appendix
Table: Personnel

Personnel Plan

Jennifer Smith
Sales/Delivery (Salary)
Sales/Delivery (Commission)
Delivery/Warehouse Personnel
Administration
Total People
Total Payroll

0%
0%
0%
0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9
$2,500
$1,700
$429
$1,700
$1,560
4

Month
10
$2,500
$1,700
$493
$1,700
$1,560
4

Month
11
$2,500
$1,700
$565
$1,700
$1,560
4

Month
12
$2,500
$1,700
$649
$1,700
$1,560
4

$2,500
$1,700
$170
$1,700
$1,560
4

$2,500
$1,700
$192
$1,700
$1,560
4

$2,500
$1,700
$216
$1,700
$1,560
4

$2,500
$1,700
$240
$1,700
$1,560
4

$2,500
$1,700
$268
$1,700
$1,560
4

$2,500
$1,700
$300
$1,700
$1,560
4

$2,500
$1,700
$336
$1,700
$1,560
4

$2,500
$1,700
$379
$1,700
$1,560
4

$7,630

$7,652

$7,676

$7,700

$7,728

$7,760

$7,796

$7,839

$7,889

$7,953

$8,025

$8,109

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

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

Long-term Interest
Rate
Tax Rate

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

30.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

25.00%

Other

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and

Loss
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$88,573

$87,770

$86,106

$95,139

$107,931

$123,394

$143,492

$174,198

$235,540

$313,664

$360,016

$413,829

Direct Cost of Sales

$68,213

$68,073

$67,240

$74,451

$84,546

$96,749

$114,858

$139,049

$186,297

$246,395

$283,045

$325,635

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$68,213

$68,073

$67,240

$74,451

$84,546

$96,749

$114,858

$139,049

$186,297

$246,395

$283,045

$325,635

Gross Margin

$20,360

$19,697

$18,866

$20,688

$23,385

$26,645

$28,634

$35,149

$49,243

$67,269

$76,971

$88,194

22.99%

22.44%

21.91%

21.74%

21.67%

21.59%

19.96%

20.18%

20.91%

21.45%

21.38%

21.31%

$7,630

$7,652

$7,676

$7,700

$7,728

$7,760

$7,796

$7,839

$7,889

$7,953

$8,025

$8,109

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

$2,758

Utilities and Phone

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

$600

Insurance

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$1,145
$1,000

$1,148
$1,000

$1,151
$1,000

$1,155
$1,000

$1,159
$1,000

$1,164
$1,000

$1,169
$1,000

$1,176
$1,000

$1,183
$1,000

$1,193
$1,000

$1,204
$1,000

$1,216
$1,000

$250

$250

$250

$250

$250

$250

$250

$250

$250

$250

$250

$250

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$300

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$200
$200

$15,783

$15,808

$15,835

$15,863

$15,895

$15,932

$15,973

$16,023

$16,080

$16,154

$16,237

$16,333

$4,578

$3,889

$3,030

$4,825

$7,490

$10,713

$12,661

$19,126

$33,163

$51,116

$60,735

$71,861

$4,578

$3,889

$3,030

$4,825

$7,490

$10,713

$12,661

$19,126

$33,163

$51,116

$60,735

$71,861

$620

$607

$593

$580

$567

$553

$540

$527

$513

$500

$487

$473

$1,187

$821

$609

$1,061

$1,731

$2,540

$3,030

$4,650

$8,162

$12,654

$15,062

$17,847

Hidden Row

Gross Margin %

Expenses
Payroll

Rent

Payroll Burden
Leased Equipment
(Delivery Vehicles)
Leased Equipment
(Warehouse)
Leased Equipment
(Other)
Fuel (delivery)

15%

Advertising / Promotion
Professional Services
Miscellaneous (office
supplies, etc)
Total Operating
Expenses
Profit Before Interest and
Taxes
EBITDA
Interest Expense
Taxes Incurred

15%

Other Income

Page 4

Appendix
Interest Income

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Income Account

Name
Total Other Income

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Account Name

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Expense Account

Name
Total Other Expense

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Expense

Net Other Income

Net Profit
Net Profit/Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,770

$2,462

$1,828

$3,184

$5,192

$7,620

$9,090

$13,950

$24,487

$37,962

$45,186

$53,541

3.13%

2.80%

2.12%

3.35%

4.81%

6.18%

6.34%

8.01%

10.40%

12.10%

12.55%

12.94%

Page 5

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

$88,573

$87,770

$86,106

$95,139

$107,931

$123,394

$143,492

$174,198

$235,540

$313,664

$360,016

$413,829

Subtotal Cash from Operations

$88,573

$87,770

$86,106

$95,139

$107,931

$123,394

$143,492

$174,198

$235,540

$313,664

$360,016

$413,829

$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

New Other Liabilities (interestfree)

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$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

$88,573

$87,770

$86,106

$95,139

Additional Cash Received

Non Operating (Other) Income
Sales Tax, VAT, HST/GST Received
New Current Borrowing

Subtotal Cash Received

Expenditures

0.00%

Month 1

Month 2

Month 3

Month 4

$0

$107,931

$123,394

$143,492

$174,198

$235,540

$313,664

$360,016

$413,829

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Expenditures from Operations

Cash Spending

$7,630

$7,652

$7,676

$7,700

$7,728

Bill Payments

$2,607

$78,184

$77,442

$76,236

$92,651

$106,626

$122,274

$147,608

$181,556

$257,760

$334,299

$348,850

$10,237

$85,836

$85,118

$83,936

$100,379

$114,386

$130,070

$155,447

$189,445

$265,713

$342,324

$356,959

Non Operating (Other) Expense

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Spent on Operations

$7,760

$7,796

$7,839

$7,889

$7,953

$8,025

$8,109

Additional Cash Spent

Principal Repayment of Current

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

$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

Page 6

Appendix
Subtotal Cash Spent

$12,237

Net Cash Flow

$76,336

Cash Balance

$86,136

$87,836
($66)
$86,071

$87,118
($1,012)
$85,059

$85,936

$102,379

$9,203

$5,552

$94,262

$99,813

$116,386
$7,008
$106,821

$132,070

$157,447

$191,445

$267,713

$344,324

$358,959

$11,422

$16,751

$44,095

$45,951

$15,692

$54,870

$118,243

$134,994

$179,089

$225,039

$240,731

$295,601

Page 7

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month
10

Month
11

Month
12

$9,800
$75,000
$18,750
$103,550

$86,136
$75,034
$18,750
$179,920

$86,071
$74,880
$18,750
$179,701

$85,059
$73,964
$18,750
$177,773

$94,262
$81,896
$18,750
$194,908

$99,813
$93,001
$18,750
$211,564

$106,821
$106,424
$18,750
$231,995

$118,243
$126,344
$18,750
$263,337

$134,994
$152,954
$18,750
$306,698

$179,089
$204,926
$18,750
$402,765

$225,039
$271,034
$18,750
$514,823

$240,731
$311,349
$18,750
$570,830

$295,601
$358,198
$18,750
$672,549

$0
$0
$0
$103,550

$0
$0
$0
$179,920

$0
$0
$0
$179,701

$0
$0
$0
$177,773

$0
$0
$0
$194,908

$0
$0
$0
$211,564

$0
$0
$0
$231,995

$0
$0
$0
$263,337

$0
$0
$0
$306,698

$0
$0
$0
$402,765

$0
$0
$0
$514,823

$0
$0
$0
$570,830

$0
$0
$0
$672,549

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month
10

Month
11

Month
12

Starting
Balances

Current Assets
Cash
Inventory
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
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$0
$95,000
$0
$95,000

$75,600
$93,000
$0
$168,600

$74,919
$91,000
$0
$165,919

$73,163
$89,000
$0
$162,163

$89,114
$87,000
$0
$176,114

$102,578
$85,000
$0
$187,578

$117,390
$83,000
$0
$200,390

$141,641
$81,000
$0
$222,641

$173,052
$79,000
$0
$252,052

$246,632
$77,000
$0
$323,632

$322,728
$75,000
$0
$397,728

$335,549
$73,000
$0
$408,549

$385,728
$71,000
$0
$456,728

Long-term Liabilities
Total Liabilities

$0
$95,000

$0
$168,600

$0
$165,919

$0
$162,163

$0
$176,114

$0
$187,578

$0
$200,390

$0
$222,641

$0
$252,052

$0
$323,632

$0
$397,728

$0
$408,549

$0
$456,728

$25,000
($16,450)
$0
$8,550
$103,550

$25,000
($16,450)
$2,770
$11,320
$179,920

$25,000
($16,450)
$5,232
$13,782
$179,701

$25,000
($16,450)
$7,060
$15,610
$177,773

$25,000
($16,450)
$10,244
$18,794
$194,908

$25,000
($16,450)
$15,436
$23,986
$211,564

$25,000
($16,450)
$23,056
$31,606
$231,995

$25,000
($16,450)
$32,146
$40,696
$263,337

$25,000
($16,450)
$46,096
$54,646
$306,698

$25,000
($16,450)
$70,583
$79,133
$402,765

$25,000
($16,450)
$108,545
$117,095
$514,823

$25,000
($16,450)
$153,731
$162,281
$570,830

$25,000
($16,450)
$207,271
$215,821
$672,549

$11,320

$13,782

$15,610

$18,794

$23,986

$31,606

$40,696

$54,646

$79,133

$117,095

$162,281

$215,821

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

$8,550

Page 8