Executive
Summary
Computer GENERAL is a one-stop shop
for computer users. We are located in the center of Kuala Lumpur, on the
capital city of Malaysia. Our location is a major asset, as it is accessible to
both the largest concentration of the local community as well as tourism to the
state. We will offer a wide selection of latest-technology computer hardware,
custom-built computer systems, computer service, computer rentals by the hour,
and networking services. We are dedicated to providing consistently high client
satisfaction by rendering excellent service, carrying items that are not
locally available, and furnishing a warm, pleasant atmosphere at a competitive
price. Our work environment will be one of respect for our clients and our
community.
The timing is right for starting
this new venture. Our target area is the Kuala Lumpur and Selangor state.
Presently, there is only one other computer store in these districts that
handles IBM-compatible computers, and that store focuses primarily on computer
service, not hardware sales. We have polled the Kuala Lumpur community and have
received an overwhelming response that there is a definite need for a more
comprehensive resource for computer sales and service in our target area. We
will offer solutions to the community not provided by any of our competitors.
To achieve our objectives, Computer
GENERAL is seeking a start-up loan. This loan will be paid back from the
cash flow of the business within ten years, collateralized by the assets of the
company, backed by personal integrity, experience, and a contractual guarantee
from the owners. This loan will be used to purchase inventory, increase working
capital, and assist in start-up costs.
1.1
Objectives
The objectives for Computer
GENERAL are outlined below:
- To create a service-based company whose goal is to
exceed customer's expectations.
- Sales increase to over a quarter-million dollars
by end of second year and increase modestly in the third year.
- To increase the number of customers serviced by at least
20% per year through superior performance and word-of mouth referrals.
- Have a customer return rate of 90% by end of first
year.
- Become an established community destination by end of
first year.
1.2
Mission
To provide the Malaysian community
with quality brand-name products, computer and networking solutions,
reliable and professional technical support, and unparalleled customer service
through the application of the principles of kina`ole and heartfelt aloha, and
to earn a fair profit for our employee-owners and stakeholders by embracing
sound, ethical business practices.
1.3
Keys to Success
The keys to success in our business
are:
- Superior Customer Service: provide reliable, high-quality service and products,
and an expedient turn-around time on repairs.
- Environment:
provide a clean, friendly, and comfortable environment conducive to giving
professional trusting service.
- Convenience:
offering clients a wide selection of computer products and services in one
environment; including custom-built computers, computer diagnosis and
repair, networking, and in-store computer stations where clients can buy
time to browse the Internet, check e-mail, and download their digital
photos from their camera memory cards onto discs.
- Location:
provide an easily accessible location for customer convenience.
- Reputation:
credibility, integrity, and 100% dedication from 13+ years of
experience in the computer industry.
Company
Summary
Computer GENERAL will sell and
service IBM-compatible computers to the Kuala Lumpur and Selangor
community. It will also offer custom-built computers,
networking solutions, and in-store computer stations
where customers can buy time to browse the Internet, check e-mail, and
download their digital photos from their camera memory cards onto discs.
What will set Computer GENERAL apart from the competition is providing our
customers all this in one convenient location, our dedication to excellent
customer service, and an expedient turn-around time on repairs.
2.1
Company Ownership
Computer GENERAL will be created as
an Computer General Sdn Bhd , and privately co-owned by Omarali Abdul
Rahim and his wife, Siti Haslin Mohd Ali. Omarali has 12 years
experience in the computer industry. Omarali is a computer technician and
also has many years of management and retail experience.
Siti Haslin has 5 years of
experience in the information technology industry. She was most
recently employed by Unifi TM, which is a nationwide provider of
network service (high speed Internet access). Siti Haslin also
has management experience and extensive retail experience.
2.2
Start-up Summary
The start-up costs are to be
financed by the direct owner investment. The cost, expense, and investment
details are included in the following tables and chart.
Start-up Funding
|
Start-up Expenses to Fund
|
$7,975
|
Start-up Assets to Fund
|
$12,025
|
Total Funding Required
|
$20,000
|
Assets
|
|
Non-cash Assets from Start-up
|
$10,000
|
Cash Requirements from Start-up
|
$2,025
|
Additional Cash Raised
|
$0
|
Cash Balance on Starting Date
|
$2,025
|
Total Assets
|
$12,025
|
Liabilities and Capital
|
|
Liabilities
|
|
Current Borrowing
|
$0
|
Long-term Liabilities
|
$0
|
Accounts Payable (Outstanding Bills)
|
$0
|
Other Current Liabilities (interest-free)
|
$0
|
Total Liabilities
|
$0
|
Capital
|
|
Planned Investment
|
|
Omarali and Siti Haslin
|
$20,000
|
Investor 2
|
$0
|
Other
|
$0
|
Additional Investment Requirement
|
$0
|
Total Planned Investment
|
$20,000
|
Loss at Start-up (Start-up Expenses)
|
($7,975)
|
Total Capital
|
$12,025
|
Total Capital and Liabilities
|
$12,025
|
Total Funding
|
$20,000
|
Start-up
|
Requirements
|
|
Start-up Expenses
|
|
Business License & Legal
|
$1,200
|
Stationery etc.
|
$100
|
Brochures
|
$25
|
Consultants
|
$0
|
Insurance
|
$150
|
Rent
|
$0
|
Rental Deposit
|
$1,300
|
Research and Development
|
$0
|
Expensed Equipment
|
$0
|
Display Shelving *
|
$500
|
Display for Custom-built Systems
|
$400
|
Display Cabinet *
|
$450
|
Main Store Sign
|
$75
|
Store Signs for Windows
|
$125
|
Installed Security System
|
$1,200
|
Storage Shelving for Inventory
|
$50
|
Workstations (4)
|
$200
|
Workstation Monitors (4)
|
$400
|
2 Additional Circuits for 4 Total Outlets
|
$600
|
Carpet
|
$1,100
|
Painting
|
$100
|
Other
|
$0
|
Total Start-up Expenses
|
$7,975
|
Start-up Assets
|
|
Cash Required
|
$2,025
|
Start-up Inventory
|
$10,000
|
Other Current Assets
|
$0
|
Long-term Assets
|
$0
|
Total Assets
|
$12,025
|
Total Requirements
|
$20,000
|
Products and Services
Most people today use computers
either at work or at home. It is important that people have a quality resource
for buying and servicing those computers. Computer GENERAL will
provide the Malaysian community with just such a quality resource - a one-stop
shop for IBM-compatible computers. Computer GENERAL will offer the following
products and services with excellent customer service in a friendly,
professional, and pleasant environment:
- Ready-to-Sell Computers - We will sell new and used computer systems in
various price ranges that are already built and ready to be used.
- Custom-Built Computers - We will build and sell computer systems that are
custom-designed according to the customer's preferences.
- Service and Repairs
-We will do full-service computer diagnosis and repairs with an emphasis
on quality work within an expedient turn-around time.
- Upgrades
- We will offer customers the latest technology available to upgrade the
computers they already own.
- Networking
- We will offer full networking solutions for both home and office,
including wireless networking.
- Computer Rental Stations - We will have work-stations set up where
customers can browse the Internet, check e-mail, and download their
digital photos from their camera memory cards onto discs. These stations
will be rented by the hour, but with no minimum time requirement. This
will be useful to both tourists and the local community.
Market
Analysis Summary
Computer GENERAL will focus on
markets on the Kuala Lumpur and Selangor, including consumers, small
businesses and home offices (less than 10 employees), and tourists
(mainly with the Computer Rental Stations).
Market research shows that customers
from the rural area of Selangor going to Kuala Lumpur for their technological
needs. Because of this, if a computer store is located in Kuala Lumpur, the
prime market is a 20-mile to 50-mile radius, within the Kuala Lumpur and
Selangor state. Also, Kuala Lumpur is the main center for tourism of Malaysia.
4.1
Market Segmentation
Our market segmentation focuses on
residents, small businesses, and tourists to the Kuala Lumpur and Selangor.
However, the tourist market segment has very different needs, so
the income potential is vastly different than the other two market
segments. The income potential analysis is as follows:
Though the numbers in our
market segmentation scheme show that the tourist segment makes up the
largest portion of potential customers, they do not actually represent
the largest income potential. The average tourist is in Kuala Lumpur
for about a week and will not be in the market to purchase a computer or
have one repaired. However, many tourists want to be able to
access the Internet and check their e-mail. We will satisfy this
need with our Computer Rental Stations. Tourists will be able to rent time
at a Computer Rental Station to browse the Internet, check e-mail, and
download their digital photos from their camera memory cards onto discs.
The fees we will charge to rent the Stations will be modest, but
since there will be no actual product leaving the store for this service, the
rental fees are straight profit. We expect these Rental Stations to generate
approximately 10% of the business' profit, so the income from the tourist
market segment is actually 10%.
In terms of income potential, the
largest market segment is actually the local consumers. This segment is
represented in the market segmentation scheme under the heading "Resident
Households". According to the official website for the state of Kuala
Lumpur, in 2012, 89.4% of Kuala Lumpur households had computers. In fact, many
households have more than one computer. Consumers need a place to repair and
upgrade the computers they already have as well as purchase
new computers and parts with the latest technology. Currently, the
local residents have very limited resources for purchasing computers or parts.
Their options are: a) order computers and computer parts over the Internet,
which incurs shipping costs and prevents hands-on inspection by the purchaser;
or b) buy a computer from Low Yat Plaza, which only offers a handful of
different models and there is no option to customize the computer to match the
purchaser's specific needs. Computer GENERAL will resolve these issues
for local consumers by selling computers and computer parts that are
of the latest technology. We will have computers on display so that a customer
can do a hands-on inspection before purchasing. We will also sell custom-built
computers and do in-store upgrades so that customers can purchase computers
that match their specific needs. In addition, we will offer in-store repair
service and guarantee our products. Computers sales, upgrades, and repairs
generate a much greater income than the Computer Rental Stations will. We
expect the local consumer market segment to provide 50% of the business income.
The remaining 40% of our business
income will be generated by the small business market segment. 77% of the
businesses in Kuala Lumpur are small businesses with less than 10 employees.
These small businesses are large enough to need the high-quality computer
technology we offer, but too small to have a separate computer management
staff. This segment is largely overlooked by most business-focused computer
resources because of its "low end" buying habits, and a reluctance to
compete with the major retail chain box movers. This currently leaves the small
businesses with the same limited resources as are available to the local
consumers. As with the local consumers, we will resolve these issues for the
small business market segment by providing affordably-priced, high-quality
products of the latest technology, customized according to each business'
unique needs. Our full-service computer diagnosis and repair service will
provide quality work within an expedient turn-around time. Small businesses
cannot afford to wait very long for computer repairs or servicing. We will also
offer full networking solutions, including wireless networking.
Market Analysis
|
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
|
Potential Customers
|
Growth
|
|
|
|
|
|
CAGR
|
Resident Households
|
2%
|
56,243
|
57,396
|
58,573
|
59,774
|
60,999
|
2.05%
|
Small Businesses
|
2%
|
2,956
|
3,017
|
3,079
|
3,142
|
3,206
|
2.05%
|
Tourists
|
2%
|
1,035,682
|
1,056,913
|
1,078,580
|
1,100,691
|
1,123,255
|
2.05%
|
Total
|
2.05%
|
1,094,881
|
1,117,326
|
1,140,232
|
1,163,607
|
1,187,460
|
2.05%
|
4.2
Target Market Segment Strategy
Analysis of our market segmentation
shows that 90% of our income will be generated by local consumers and small
businesses, with the remaining 10% being generated by tourists. Advertising
strategy to the local market segments will differ from advertising strategy to
the tourism segment in the following ways:
Advertising to Local Consumers and
Small Businesses:
- Yellow Pages
- Local newspapers
- Radio
- Hand out flyers to local businesses
- Internet website
Advertising to Tourists:
- Post a sandwich-board sign at the busiest
intersection near the store to direct walk-by traffic
- Hand out flyers to local hotels, car rental
agencies, and tour companies
4.3
Service Business Analysis
Computer GENERAL is part of
the retail computer industry, which includes several types of
businesses:
- Low Yat Plaza Computer Superstores: these include major chains such as Sri Comp, Technip, etc.
They are almost always more than 10,000 square feet of space, and are
often warehouse-like locations where people go to find products in boxes.
They usually offer a wide selection of software as well as the
hardware. When purchasing computer systems, customers chose from various
as-is computer systems, often without the option to alter the system
components. Their products are usually aggressively priced, but little or
no support is provided. If they do offer computer repair service, the
turn-around time is often lengthy.
- Small Computer Dealers: storefront computer retailers, usually less than 5,000
square feet. These computer stores are usually privately owned and
often owner-operated. Because they are privately owned, the quality of
products and service varies greatly from one store to another. They
usually focus on a few main brands of hardware, offer a minimum of
software, and usually offer some level of service and support. A well run
store will offer top-quality products and competent, timely support and
repair service; whereas, a poorly run store will provide little or no
support and carry products chosen mainly for their low price point, not
quality or reliability. As with quality and service, the prices at these
small stores vary between one store and another. Some small
stores make a point to compete with the prices of the large chain stores
and superstores, and some do not. Small stores have the
advantage of a one-on-one relationship between the customer and
the sales person, which often results in more personalized service and
products that are better matched to the individual customer's needs.
- Internet/Mail order:
mail order businesses from which customers purchase hardware over the
phone or Internet, including components and whole computer systems. They
typically offer boxed products that are aggressively priced,
but usually offer no service or support. This is a viable option for
the purely price-driven buyer, who buys boxes and expects no service.
There is, of course, always a time delay between purchasing the products
and receiving them due to shipping time, and often, the customer has to
pay the shipping charges. Also, there is no opportunity for the customer
to do a hands-on inspection before a product is purchased.
The computer industry has a greater
influence on our society all the time. Most people use computers either at work
or at home. As the general public becomes more computer savvy, it places a
greater value on quality resources to meet their computer needs.
4.3.1
Competition and Buying Patterns
Consumers and small business buyers
understand the concept of service and support, and are much more likely to pay
for it when the offering is clearly stated.
There is no doubt that we compete
much more against all the box pushers than against other service providers. We
need to effectively compete against the idea that businesses should buy
computers as plug-in appliances that don't need ongoing service, support, and
training.
Research indicates that our
target consumers and small businesses think about price but would buy
based on quality service if the offering were properly presented. They think
about price because that's all they ever see. We have very good indications
that many would rather pay 10-20% more for a relationship with a long-term
vendor providing back-up and quality service and support; they end up in the
box-pusher channels because they aren't aware of the alternatives.
Availability is also very important.
Consumers and small business buyers tend to want immediate, local
solutions to problems.
Strategy
and Implementation Summary
Our target market consists of consumers,
small businesses and home offices (less than 10 employees), and tourists.
Our sales and marketing strategy will consist of offering a wide selection of
quality products and services, a friendly pleasant atmosphere, and a
convenient location in the center of Kuala Lumpur with accessibility to locals
and tourists alike. We will establish ourselves in the community
through word-of-mouth referrals from our satisfied clients, and various
forms of advertising.
5.1
Competitive Edge
Our competitive edge is a
combination of our wide range of products and services, outstanding
location, and our interaction with our clients. By building a business based on
long-standing relationships with satisfied clients, we simultaneously build defenses
against competition. The longer the relationship stands, the more we help our
clients understand what we offer them and why they should both stay with
Computer General, and refer us to others in the community. In close-knit
communities like the Kuala Lumpur, reputation is extremely important, and
word-of-mouth advertising is invaluable.
5.2
Marketing Strategy
Our marketing strategy is a simple
one: satisfied customers are our best marketing tool. The first time a customer
comes to Computer General, they will know that they have found a one-stop shop
for all of their computer needs, including a friendly personal atmosphere
with exceptional customer service. We have talked with many friends and
associates who are excited about our plans and are anxious to shop with us and
use our services. Word of mouth and a good reputation are the best marketing
tools in a close-knit community such as ours.
In addition, we will have a website,
do radio and newspaper advertising, distribute flyers to local businesses, and
advertise in the Yellow Pages. These venues will help us become known as
we establish our business.
5.3
Sales Strategy
Our umbrella sales strategy is to
sell Computer GENERAL to the Kuala Lumpur community as the best resource for
their computer needs, enhancing their lives with our quality,
latest-technology products, the convenience of our one-stop shop,
affordable pricing and the reliable professional service we offer.
We will sell Computer GENERAL
through each employee's expertise, courtesy, and warmth, creating a trusting
impression on all customers, and establishing loyalty and return visits.
We will ensure each visit to Computer GENERALis a professional and pleasant
experience, so that customers can always depend on our brand of service when
they arrive.
We expect to have a customer return
rate of 90% at the end of the first year and for sales to increase to over
a quarter-million dollars by end of second year.
5.3.1
Sales Forecast
The important elements of the Sales
Forecasts are shown in the chart and table below. Initial sales forecast
indicate a healthy first year revenue increasing modestly but steadily in the
second and third year. These figures are based on revenue from three main
areas:
- Computer Sales
- this includes sales of all hardware components. We estimate a
5% annual increase in this revenue area from new customer
acquisition. The sales costs for computer hardware averages 70% of the
final sales prices when the hardware is sold. Costs for wholesale computer
hardware is expected to have a 2% annual increase.
- Computer Service
- revenue generated strictly from labor fees, so except for
payroll, there is no sales cost. We estimate a 10% annual increase in
this revenue area from repeat business as a result of customer
loyalty.
- Computer Rental Stations - revenue generated from customers renting the
computer stations by the hour. We estimate a 3% annual increase to reflect
the projected increase in tourism to Kuala Lumpur. This revenue is all
profit since it requires no cost for inventory and it is
basically self-service, so requires no labor hours
Sales Forecast
|
|
Year
1
|
Year
2
|
Year
3
|
Sales
|
|
|
|
Computer Sales
|
$156,500
|
$164,325
|
$172,541
|
Computer Repairs
|
$53,000
|
$58,300
|
$64,130
|
Computer Rental
Stations
|
$10,050
|
$10,352
|
$10,662
|
Total Sales
|
$219,550
|
$232,977
|
$247,333
|
Direct Cost of Sales
|
Year
1
|
Year
2
|
Year
3
|
Computer Parts
|
$109,550
|
$111,741
|
$113,976
|
Subtotal Direct Cost
of Sales
|
$109,550
|
$111,741
|
$113,976
|
5.4
Milestones
The following table lists important
program milestones, with dates and managers in charge, and budgets for each. The
milestone schedule indicates our emphasis on planning for implementation.
Milestones
|
Milestone
|
Start
Date
|
End
Date
|
Budget
|
Manager
|
Department
|
Business Plan
|
9/25/2013
|
10/23/2013
|
$100
|
Siti
Haslin
|
Management
|
Negotiate/Sign Store
Front Lease
|
10/22/2013
|
11/1/2013
|
$0
|
Omar
|
Management
|
Build Displays &
Set Up Store Interior
|
11/1/2013
|
12/1/2013
|
$6,050
|
Omar
|
Management
|
Secure Business Name
and Legal
|
11/1/2013
|
11/15/2013
|
$1,200
|
Siti
Haslin
|
Management
|
Obtain Financial
Backing
|
11/1/2013
|
12/1/2013
|
$0
|
Siti
Haslin
|
Management
|
Print Business
Stationary & Flyers
|
11/15/2013
|
12/1/2013
|
$125
|
Omar
|
Management
|
Grand Opening for
Store
|
12/1/2013
|
12/7/2013
|
$50
|
Omar
|
Management
|
Distribute Flyers
|
12/1/2013
|
12/7/2013
|
$20
|
Siti
Haslin
|
Management
|
Research Media
Advertising
|
1/1/2014
|
1/15/2014
|
$0
|
Siti
Haslin
|
Management
|
Print & Distribute
2nd Group of Flyers
|
2/1/2014
|
2/15/2014
|
$50
|
Omar
|
Management
|
Totals
|
|
|
$7,595
|
|
|
Management
Summary
The management philosophy of
Computer GENERAL is based on respect for each of our fellow employees, respect
for every client, and individual responsibility. We believe in listening to our
clients and doing our best to embody their vision of a community-minded
business dedicated to meeting all their computer needs. Our management
team consists of the owners, who are experienced
entrepreneurs possessing a breadth of functional experience in computer
technology, information technology, management and retail. Both Omarali
and Siti Haslin will share the senior management responsibilities
with Omarali directing the sales, development, operations and production,
and Siti Haslin directing the finances and marketing.
We still need to find a networking
specialist for our clients who require that service, but as the need for that
will be on a job-by-job basis, we will use an independent contractor. We
already know of a couple of qualified candidates.
When the need arises to hire
employees, we will hire only employees who demonstrate technical aptitude
and a dedication to excellent customer service. The organizational
structure and personnel plan reflect our intentions to maintain an organization
that is customer oriented and technologically proficient, while efficiently
managing cost controls and productivity.
6.1 Personnel Plan
The
Personnel Plan below reflects our projected need at opening, and carries
through the second year. The need for any additional personnel is not
anticipated before the third year.
Personnel Plan
|
|
Year 1
|
Year 2
|
Year 3
|
Omarali
|
$33,000
|
$36,000
|
$40,000
|
Siti Haslin
|
$16,500
|
$21,000
|
$25,000
|
Total People
|
2
|
2
|
2
|
Total Payroll
|
$49,500
|
$57,000
|
$65,000
|
Financial
Plan
The following subtopics help present
the financial plan for Computer General.
7.1
Important Assumptions
The key underlying assumptions of
our financial plan shown in the following general assumption table are:
- We assume access to the start-up funding necessary to
provide adequate initial capitalization and establish our company.
- We assume continued steady economic growth in
Kuala Lumpur as predicted by Bank Negara, and other Malaysian
economists.
- We assume continued steady population growth of the
Kuala Lumpur and Selangor community.
- We assume continued steady increase in tourism to the
Kuala Lumpur area as predicted by the Malaysian Tourism for the Kuala
Lumpur.
- We assume continued usage ofcomputers in the home
and at work.
General Assumptions
|
|
Year
1
|
Year
2
|
Year
3
|
Plan Month
|
1
|
2
|
3
|
Current Interest
Rate
|
10.00%
|
10.00%
|
10.00%
|
Long-term Interest
Rate
|
10.00%
|
10.00%
|
10.00%
|
Tax Rate
|
30.00%
|
30.00%
|
30.00%
|
Other
|
0
|
0
|
0
|
For our break-even analysis, we assume
running costs which include our full payroll, rent and utilities, and an
estimation of other running costs.
We will monitor gross margins very
closely, and maintain them at or above 50% by taking advantage of all
promotions and discounts offered by our manufacturers and by our higher-profit
revenue generators of computer service and Computer Rental Stations.
The chart shows what we need to
sell per month to break even, according to these assumptions. This is
about 6% of our projected sales for our first year.
Break-even Analysis
|
Monthly Revenue
Break-even
|
$12,868
|
Assumptions:
|
|
Average Percent
Variable Cost
|
50%
|
Estimated Monthly
Fixed Cost
|
$6,447
|
|
|
|
|
7.3
Projected Profit and Loss
There are two important assumptions
with our Projected Profit and Loss statement:
- Our revenue is based on minimum estimated averages
against highest expense expectations.
- Our major expense of rent is fixed for the
next three years.
Pro Forma Profit and
Loss
|
|
Year
1
|
Year
2
|
Year
3
|
Sales
|
$219,550
|
$232,977
|
$247,333
|
Direct Cost of Sales
|
$109,550
|
$111,741
|
$113,976
|
Other Costs of Goods
|
$0
|
$0
|
$0
|
Total Cost of Sales
|
$109,550
|
$111,741
|
$113,976
|
Gross Margin
|
$110,000
|
$121,236
|
$133,357
|
Gross Margin %
|
50.10%
|
52.04%
|
53.92%
|
Expenses
|
|
|
|
Payroll
|
$49,500
|
$57,000
|
$65,000
|
Sales and Marketing
and Other Expenses
|
$280
|
$280
|
$280
|
Depreciation
|
$0
|
$0
|
$0
|
Rent
|
$15,600
|
$15,600
|
$15,600
|
Utilities
|
$3,600
|
$3,600
|
$3,600
|
Security Alarm
System
|
$360
|
$360
|
$360
|
Insurance
|
$600
|
$600
|
$600
|
Payroll Taxes
|
$7,425
|
$8,550
|
$9,750
|
Other
|
$0
|
$0
|
$0
|
Total Operating
Expenses
|
$77,365
|
$85,990
|
$95,190
|
Profit Before
Interest and Taxes
|
$32,635
|
$35,246
|
$38,167
|
Interest Expense
|
$3,310
|
$2,974
|
$2,624
|
Taxes Incurred
|
$8,797
|
$9,681
|
$10,663
|
Net Profit
|
$20,527
|
$22,590
|
$24,880
|
Net Profit/Sales
|
9.35%
|
9.70%
|
10.06%
|
7.4
Projected Cash Flow
Our projected cash flow includes planned
borrowing to increase our capital and thereby ensure a positive cash balance while
our business is becoming established. Though the cash flow is negative on and
off throughout the year, we will maintain a healthy cash balance, which
steadily increases in both the second and third years.
Pro Forma Cash Flow
|
|
Year
1
|
Year
2
|
Year
3
|
Cash Received
|
|
|
|
Cash from Operations
|
|
|
|
Cash Sales
|
$219,550
|
$232,977
|
$247,333
|
Subtotal Cash from
Operations
|
$219,550
|
$232,977
|
$247,333
|
Additional Cash
Received
|
|
|
|
Sales Tax, VAT,
HST/GST Received
|
$0
|
$0
|
$0
|
New Current
Borrowing
|
$0
|
$0
|
$0
|
New Other
Liabilities (interest-free)
|
$0
|
$0
|
$0
|
New Long-term
Liabilities
|
$35,000
|
$0
|
$0
|
Sales of Other
Current Assets
|
$0
|
$0
|
$0
|
Sales of Long-term
Assets
|
$0
|
$0
|
$0
|
New Investment
Received
|
$0
|
$0
|
$0
|
Subtotal Cash
Received
|
|
$232,977
|
$247,333
|
Expenditures
|
Year
1
|
Year
2
|
Year
3
|
Expenditures from
Operations
|
|
|
|
Cash Spending
|
$49,500
|
$57,000
|
$65,000
|
Bill Payments
|
$136,766
|
$156,082
|
$157,370
|
Subtotal Spent on
Operations
|
$186,266
|
$213,082
|
$222,370
|
Additional Cash
Spent
|
|
|
|
Sales Tax, VAT,
HST/GST Paid Out
|
$0
|
$0
|
$0
|
Principal Repayment
of Current Borrowing
|
$0
|
$0
|
$0
|
Other Liabilities
Principal Repayment
|
$0
|
$0
|
$0
|
Long-term
Liabilities Principal Repayment
|
$3,504
|
$3,504
|
$3,504
|
Purchase Other
Current Assets
|
$0
|
$0
|
$0
|
Purchase Long-term
Assets
|
$0
|
$0
|
$0
|
Dividends
|
$0
|
$0
|
$0
|
Subtotal Cash Spent
|
$189,770
|
$216,586
|
$225,874
|
Net Cash Flow
|
$64,780
|
$16,390
|
$21,460
|
Cash Balance
|
$66,805
|
$83,195
|
$104,655
|
