This plan provides investor information and includes the strategic business plan necessary for establishing and operating JTB Integrated Technologies, a sub-corporation of JTB Technologies, Inc. The plan outlines the Integrated Technologies Division.
JTB Integrated Technologies, Inc. will be formed in February in Richfield, Louisiana as a corporation under the laws of Louisiana.
The Integrated Technologies Division will develop and support P.C.-based business software applications. JTB will also develop and support Internet marketplaces, online magazines, custom-developed commercial websites, and other hosted business products tailored to the Industrial marketplace. The Division will use JTB’s Industrial Sales and Industrial Products Divisions as a test bed and marketing referral for live product demonstration.
The managers have worked as vendors for twenty years and have identified a niche in helping businesses with product presentations, customer management, and job costing. Businesses in this industry currently use different software and databases for internal vendor information resources and external customer RFQ management. Our products will allow businesses to extend their services and products into new markets, through our distributor partners. JTB’s Integrated Technologies Division will support the business applications.
The management team, Mitchell R. Jeremy and Rachel Jeremy, will oversee product design, development, integration, and daily operations. A team-oriented staff of 3 will support the management team, and in-house developers will create and maintain software applications and websites. A CPA firm will perform company audits, prepare taxes and payroll, and serve as a business consultant.
Based on current prices in the Industrial Marketing Products and Services market, JTB Integrated Technologies, Inc. has the potential to make sales of $220,000 within the first eighteen months. A revenue growth of nearly 30% annually is expected. The projected ratios at the end of Fiscal Year 3 are solid.
Equity for each investor will be based on their investment. More detailed ratios can be found in the Financial Plan section. The business anticipates attracting further investment within 48 months and being able to pay out initial investors.
JTB Integrated Technologies aims to develop and support vendor relations software, inventory sharing technology systems, purchasing and order management technology systems, job costing and quotation management technology systems, web-based e-marketing sites and systems, and LAN and WAN based sales, marketing, engineering intranet systems.
After developing these products, we will bring them to market and resell the technology and its required support services.
The keys to our success lie in our seasoned management team with over twenty-five years of business experience in servicing the Industrial Distribution and Tool industries.
Our mission is to develop and support high-quality marketing services and products for the metalworking and manufacturing marketplace. Our software products will be a valuable resource for procurement and sales. Along with our internet-based marketing websites and customer management tools, our clients can expect positive results and long-term growth.
Using our Products and Services Division as a model and test bed, we will provide cost-effective solutions for managing external vendor and customer transactions, online marketing, job costing, purchasing, and project management to the mid-sized corporate market.
JTB’s Integrated Technologies, Inc. will be located in Richfield, Louisiana, which provides access to the Mississippi, Arkansas, and Texas Industrial Markets. Our management team has extensive experience in the industrial marketplace, acquired while managing RL&I Tool and Machine, Inc. in Missouri.
The primary partners in this plan are responsible for all phases of business and product development. With our roots firmly planted in the Industrial marketplace, JTB will provide integrated business development technology to Industrial and Commercial manufacturing accounts gained over the last twenty-five years.
JTB will be a privately held corporation co-owned by Rachel L. Jeremy and her husband, Mitchell R. Jeremy. Rachel Jeremy has 10 years of experience in production management and customer services. Mitchell R. Jeremy owns and operates Technical Marketing Technologies LLC, with over 25 years of technical experience in the Industrial tool market.
To achieve our objectives, Jeremy is seeking $27,150 in loan financing and $225,000 in investment for JTB’s Integrated Technologies Division. Initial investors have the option to opt-out in year three with a repayment of $300,000 or maintain their equity investment and receive yearly dividends over the next five years.
The Integrated Technologies Division will start by hiring two Application developers and one Web Developer to develop the internet-based software. We will also hire database experts and web-based application specialists.
Our start-up expenses include office and computer equipment for our development center, licensing of version-control software, high-speed color printing equipment, and specialty CD duplicator equipment for the business development office.
Start-up
Requirements
Start-up Expenses
Legal $3,000
Stationery etc. $450
Brochures $2,500
Headhunter fees $2,000
Insurance $750
Rent $750
Computer Equipment and Software Licenses $10,200
Total Start-up Expenses $19,650
Start-up Assets
Cash Required $210,000
Start-up Inventory $1,000
Other Current Assets $6,500
Long-term Assets $15,000
Total Assets $232,500
Total Requirements $252,150
Start-up Funding
Start-up Expenses to Fund $19,650
Start-up Assets to Fund $232,500
Total Funding Required $252,150
Assets
Non-cash Assets from Start-up $22,500
Cash Requirements from Start-up $210,000
Additional Cash Raised $0
Cash Balance on Starting Date $210,000
Total Assets $232,500
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $27,150
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $27,150
Capital
Planned Investment
Investor 1 $225,000
Other $0
Additional Investment Requirement $0
Total Planned Investment $225,000
Loss at Start-up (Start-up Expenses) ($19,650)
Total Capital $205,350
Total Capital and Liabilities $232,500
Total Funding $252,150
2.3 Company Locations and Facilities
JTB will initially work from its location in Richfield, Louisiana, alongside the Industrial Sales Division. This proximity will allow us to test the inventory-sharing and customer-support functions of the software with real-time feedback from employees of the other JTB divisions. In addition, warehousing space in the Industrial Sales Division can support the storage of completed CD-packages of the standard software.
The Richfield location provides sufficient space for offices for each of the developers, a server room, and backup storage. Additional backup plans include off-site storage in the Northeast in the event of physical damage to the Richfield area (floods, hurricanes, etc.).
Products and Services
JTB Integrated Technologies will develop and support PC-based sales and customer support applications. Our primary product will be a set of data management applications for businesses in the industries served by our other divisions. These applications will provide our staff and our clients’ inside sales staff with database-driven, market-specific product information, quotation, and RFQ processing. Our custom solutions will provide sales and engineering information to aid in completing orders and pre-sales marketing.
After development of the standard software packages for inventory-sharing, marketing, and customer-support tracking and management, we will train our own sales and support personnel in the software so they can demonstrate and support its features. In the second year, we will begin working with medium-sized industrial clients contacted through the other JTB divisions to develop customized versions of the software to suit their needs.
Our website development is the secondary project of JTB’s Integrated Technologies Division. In addition to providing support for sales and marketing efforts in all three JTB divisions, the website will implement the JTB software in real-time to provide additional testing for software during development. Starting in year two, the website will begin hosting other clients’ websites and client-version software for non-networked clients.
When completed, our products will also generate support income when installed at the various distributors. Further niche applications include industry-specific portal systems which will target specific markets and provide direct access to our paid advertisers.
JTB Integrated Technologies will develop customized business growth and customer services solutions. As our clients will be throughout the U.S., most if not all of our work will be done online via the Internet. JTB will offer distributed software products from well-known names in the engineering software field, and our own software titles as well. Our support services will help our clients implement their installations, and training support via contracted trainers will be offered when needed. As our niche market is small to mid-sized corporations, we differ from larger firms like Peoplesoftware, Profit2100, Dimasystems, and Net2soft, which have developed expensive software and netware packages starting at $10,000 – $50,000 and up.
Our cost analysis has shown that there are many more cost-competitive options available for businesses to choose from, which in many cases they are simply unaware they are available. As a service business that will utilize our own products, we can market and demo our products simultaneously, further reducing our costs per solicitation.
3.1 Product and Service Description
PRODUCTS
Custom-developed PC- and network-based applications allowing up to 100 users simultaneous access to order processing, quotation processing, pre-sales product request fulfillment, after-sales product support, and custom networked business solution products. These products can be thought of as support applications or tools for a business’ sales and marketing staff to streamline repetitive tasks. The products will be designed to work with Windows-based software applications.
Basically, these software tools will fill in the gaps where businesses may have older accounting and marketing systems. Our products can run on older networks and do not require a company to upgrade their computer systems past Windows 98. Additionally, management is professionally schooled in network management, allowing JTB to also offer complete turn-key applications with hardware.
Custom Developed Applications – PC-based products will be developed to interact with our Intranet products, allowing a customizable work environment for our clients’ business support needs.
Distributors of prototype engineering software and hardware – CAD software products, business applications software, Accounting and Database applications software.
SERVICES
A mix of product support and development services, supporting our applications and PC-based products. Distribution and after-sales support of our resold products.
Custom support services – JTB will offer custom support services for all of our PC-based products and turn-key business networks and software.
Internet-based marketing and subscription services – Industrial marketing sites, search engines, and portal systems, Industrial website development, Industrial and commercial hosting.
3.2 Competitive Comparison
JTB will compete in the industrial media and business applications marketplace. This market is comprised of printed trade magazines, industrial content websites, and custom Web developers. Our emphasis is on businesses that are looking for smart, cost-effective ways to develop new customers. This division will provide sales and support of our engineering software and services, and our developed applications and Web-based services. Our services offering is similar to what is offered by some large firms, with the major difference being the cost to the end users.
Our integrated products will give smaller businesses better media opportunities to grow and market themselves with the much-needed customer support features that many firms lack. It is no secret that most businesses do not implement a quality business plan or marketing plan. JTB will offer a mix of products geared toward our industry. These products present all the features and capabilities that a very large corporation’s staff would utilize, while keeping our products simplified to expedite the required tasks. Our other divisions will utilize, test, and help develop this technology.
In terms of competition, no other firm in our industry will have a similar product offering. By distributing high-quality business software, we can introduce JTB to all types of businesses, possibly opening up doors to clients on whom we otherwise could not call. Distributing the latest prototype development products also introduces the company to the engineering departments rather than the purchasing departments, allowing further opportunity to introduce all of the JTB divisions. In general, this division could be considered an engineered sales and marketing firm that utilizes our own technology to grow our business.
3.3 Sales Literature
JTB’s Integrated Technologies division will utilize the same methods of providing our clients with sales literature as our other divisions. We will purchase and manage our own color print systems, allowing us to update and manage our printed goods as needed. These printed items will be mailed to our clients when written proposals on our products and services are dispatched to the customer. Other media will include product information via our websites and fax services.
3.4 Fulfillment
JTB’s Integrated Technologies division will fulfill its clients’ needs by developing its own media to support our Web-based products. This media will handle customer support and download capabilities for clients to access our products. Boxed CD versions of our products will be available in our inventory and shipped as needed. Further fulfillment comes when our staff or an outsourced engineer travels to a client to make a hardware or software installation.
3.5 Technology
JTB’s technology consists of the latest in high-speed Unix-based servers to support our PHP-driven business applications. In addition to server technology, JTB will also develop local PC-based applications with MYSQL Databases.
Additionally, management will personally build and implement a custom computer network throughout the entire corporation. Our in-house servers will support our corporate applications and our Accounting and Marketing systems.
Market Analysis Summary
JTB Integrated Technologies is targeting the following markets:
1. Aerospace Industry – High Tech Manufacturers and supporting sub-industries.
2. Automotive – Auto Makers and their support industries.
3. Primary Metals and Machining Industry – Turbine, Valve, Specialty Manufacturers, and Machining industries.
4. Sporting Industry – Sporting Goods manufacturers and Services industries.
5. Mining and Contractor Industry – Hole drilling and Utility service providers.
6. Industrial distributors throughout the U.S.
7. Service providers for the above industries throughout the U.S.
8. Distributor Partners
Our business development goals are to integrate our marketing and business development services into the above markets. Our PC-based applications will make it possible for these businesses to partner with our distributor partners and service providers. These distributor partnerships with smaller businesses can then take on larger clients they previously did not have the capacity to handle.
The approximate number of clients for JTB in the Louisiana region, in target markets 1-5, is 4,553. The totals for the U.S market are 314,555. Categories 7 and 8 represent approximately 1,500 – 6,000 distributor partners who could participate in servicing categories 1-6. JTB anticipates additional marketing revenues from providing the channel partners access to the customer databases.
4.1 Market Segmentation
Key market segmentation highlights:
1. All of the above businesses require internet support services to conduct daily business.
2. Over 70% of these businesses pay substantial monthly fees for online services.
3. Over 80% of these businesses pay monthly software support fees.
4. Each business spends a minimum of $3,000 or more annually on monthly access fees and advertising, creating a potential market of $961,665,000 annually.
Our conclusion is that all markets represent what we would call approachable potential customers, and sales could occur directly or indirectly through a channel partner. JTB anticipates the low entry costs involved with accessing our server-based systems will stimulate a strong market response. We expect that these users will continue to subscribe to our services annually.
The following table and chart show the relative size and growth rates of the different national markets. Primary Metals and Machinery is the largest group.
Market Analysis:
Potential Customers: Aerospace, High Tech manufacturing (3% growth)
Year 1: 25,587
Year 2: 26,355
Year 3: 27,146
Year 4: 27,960
Year 5: 28,799
Automotive, Auto makers, support sub-industry (2% growth)
Year 1: 4,000
Year 2: 4,080
Year 3: 4,162
Year 4: 4,245
Year 5: 4,330
Primary Metals, and Machining industry (7% growth)
Year 1: 210,000
Year 2: 224,700
Year 3: 240,429
Year 4: 257,259
Year 5: 275,267
Sporting Goods and related services (7% growth)
Year 1: 6,058
Year 2: 6,482
Year 3: 6,936
Year 4: 7,422
Year 5: 7,942
Mining, and Contractor industry (9% growth)
Year 1: 3,149
Year 2: 3,432
Year 3: 3,741
Year 4: 4,078
Year 5: 4,445
Independent Distributors (4% growth)
Year 1: 1,500
Year 2: 1,560
Year 3: 1,622
Year 4: 1,687
Year 5: 1,754
Service Providers (4% growth)
Year 1: 4,500
Year 2: 4,680
Year 3: 4,867
Year 4: 5,062
Year 5: 5,264
Total (6.50% growth)
Year 1: 254,794
Year 2: 271,289
Year 3: 288,903
Year 4: 307,713
Year 5: 327,801
Target Market Segment Strategy:
Our marketing strategy will vary for each target market segment. We will directly market to the Aerospace, Automotive, Primary Metals and Machining, and Sporting Industries, introducing these clients to JTB’s Industrial Purchasing, Marketing, and Vendor management solutions.
Additionally, the Integrated Technologies Division will draw its clients from the other divisions’ business contacts. Our interactive order management and inventory systems will allow our integration into the market as it is developed, forming a closer relationship with the client.
We will target the Mining and Contractor Industry, Industrial distributors, and Service providers for our Internet-based products for Web management and to develop their own individual marketplaces.
Market Trends:
The media market has changed over the last five years. Business sites are gradually becoming more informational, driven by search engines that analyze site content for ranking. Trade magazine ads now include business’ web addresses. Buyers visiting larger manufacturers’ sites expect high-end features, which smaller businesses often lack.
Our niche market consists of small- to mid-sized corporations overlooked by larger firms. We offer cost-effective software packages and netware starting at $10,000.
Market Needs:
JTB’s market is serviced by many media, marketing, and business applications development companies. Traditionally, these developers dictate what they can offer or clients choose from existing products. JTB offers customizable applications using web technologies to match the business’ marketing strategy.
The market consists of businesses seeking work, businesses wanting to sell or distribute products, and web-based sites backed by large trade magazines. Ad rates are high, so many companies rely on other avenues for client development. Small- to mid-sized manufacturers often use low-end marketing to avoid high-cost marketing.
JTB offers interactive, web-based products to replace older technology sites and work with existing sites. We provide real-time inventory and other customer-demanded interactivity.
Service Business Analysis:
JTB’s Integrated Technologies Division competes in the Business-Oriented Computer Software industry. We offer an integrated software package for small- to mid-sized companies in the industries.
Distributing a Service:
JTB will distribute its services as a business development firm providing alternatives to customer support and marketing, and as a business partner integrated with other divisions and marketing sites. All services will be accessible online.
Competition and Buying Patterns:
Some things to consider about our competitors:
1. They offer generic Internet-based applications not well-matched to customer needs.
2. Many require the latest computer hardware and fast internet access.
3. They lack internet support and a well-combined offering of products and services.
4. They don’t provide marketing and customer support for long-term growth.
Client buying patterns vary and are driven by the need for better customer support and new sales territory development. Small- to mid-sized corporations lack a well-balanced interactive sales and marketing environment. JTB’s Integrated Technologies Division will develop interactive, web-based products to address these needs.
Strategy and Implementation Summary:
JTB’s strategy is to utilize our own products while working with new clients, as demonstrations are better than literature. Our sales staff will interact with potential clients and vendors simultaneously, providing a demonstration environment. Our low-cost marketing and marketing sites featuring our "powered by" logos will draw attention. We offer flexible core features, PC-based applications that don’t require the latest technology, and complete customization. We also offer interactive media marketplaces for quality customer access and support.
Sales Strategy:
JTB’s Integrated Technologies Division will create interest among existing clients of other divisions by demonstrating the effectiveness of our software. Sales agents will customize applications, hosting services, and support to meet individual client needs. These clients will then be used to demonstrate our products and services to new potential clients.
With nearly 330,000 potential clients and distributor partners, the sales forecast for JTB’s Integrated Technologies Division is strong. We offer renewable subscribed services at an annual cost of approximately $3,000 per business, resulting in a $990 million dollar marketplace.
The forecast assumes growth rates for various market segments and highlights our targeted clientele. JTB anticipates additional marketing revenues from distributor partners accessing customer databases.
| Sales Forecast | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales | |||||
| Interactive media site revenues | $5,500 | $71,360 | $87,059 | $97,506 | $117,772 |
| Custom Applications Revenue | $0 | $26,346 | $30,297 | $34,841 | $40,067 |
| Existing Applications Revenue | $3,724 | $35,282 | $40,574 | $46,660 | $53,659 |
| Support Services Revenue | $2,880 | $29,000 | $40,600 | $56,840 | $79,576 |
| Distributed Resale Products | $10,900 | $24,000 | $48,000 | $60,000 | $90,000 |
| Distributor Partner Revenues | $0 | $8,160 | $10,200 | $12,750 | $15,937 |
| Affitiate Revenue | $200 | $5,800 | $11,600 | $23,200 | $46,400 |
| Total Sales | $23,204 | $199,948 | $268,330 | $331,797 | $443,411 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Interactive media site | $1,100 | $14,272 | $17,412 | $19,501 | $23,554 |
| Custom Applications | $0 | $2,635 | $3,030 | $3,484 | $4,007 |
| Existing Applications | $372 | $3,528 | $4,057 | $4,666 | $5,366 |
| Support Services | $0 | $0 | $0 | $0 | $0 |
| Distributed Resale Products | $6,976 | $15,360 | $30,720 | $38,400 | $57,600 |
| Subtotal Direct Cost of Sales | $8,448 | $35,795 | $55,219 | $66,051 | $90,527 |
Contents
5.2 Strategic Alliances
JTB’s Integrated Technologies division will develop long-term relationships with quality media developers to provide clients with a broad range of products and services. Our developer partners and technology suppliers will be selected for their capabilities. The goal of our strategic alliances is to choose the best possible providers. JTB will collaborate with our clients and distributor partners to fulfill and complete our media projects.
5.3 Marketing Strategy
- Develop a high profile sales environment to reach new and existing clients.
- Market our products to potential clients using our branded applications and software.
- Establish distributor partnerships using our PC-based applications.
- Maintain high-quality customer service and follow-up programs for all JTB divisions.
- Utilize an ongoing automated marketing system to contact potential clients.
- Target marketing expenditures to maximize returns.
5.3.1 Promotion Strategy
Offer trial and demonstration arrangements for our media marketing products, custom-developed applications, and PC-based sales and customer support products. Our promotion strategy includes a 100% performance guarantee with a limited-time money-back offer. We develop products that can easily add modules for additional features. All our products include 24/7 access to a help and support area, as well as a no-cost web-based demonstration and product marketing environment.
5.3.2 Distribution Strategy
Implement a web-based distribution of our business applications, allowing instant setup or installation on PCs by JTB or other web developers. Internet-based accessibility minimizes distribution costs. Some custom applications may be distributed using CD-ROMs.
5.3.3 Positioning Statement
JTB Integrated Technologies will initially focus on developing online media and business applications. Once these software products are completed, JTB will position its industrial website technology in the industrial marketplace. Marketing will be targeted towards generating subscription revenues in a timely manner. Our mix of media products and services is designed to improve the marketing process in the industrial marketplace. Visitors and clients will gain a full appreciation of JTB’s goals through our developed media environment. Additionally, our quality software products can be marketed within this environment.
5.3.4 Pricing Strategy
JTB’s product offering targets small- to mid-sized corporations seeking improvements in the sales and marketing process. Pricing is based on time spent to customize applications, support services, subscription, licensing, and advertisement fees. By reusing our overall platform, JTB offers a cost-competitive solution.
5.4 Milestones
Hire Application Developers – Seek multi-talented individuals to create P.C.-based business applications.
Hire Web Developer – Seek experienced web developer to create Internet applications.
Applications Development Begins – Developers will begin creating sales, marketing, and engineering applications.
Sales and Marketing Program Development – Develop a database-driven marketing program to directly contact new clients.
Customer Service Associate Manager and Support Associate Selection – Screen applicants for skilled individuals to develop a career in customer services.
Marketing Sites are Established – Develop and manage marketing sites dedicated to JTB’s line of industrial products and services.
Revenue Sites are Established – Develop and manage industry-specific sites that generate revenue through advertisements.
Partnership Development Begins – Implement distributor partnership program to expand the client base.
Milestones:
– Milestone: Start Date, End Date, Budget, Manager, Department
– Hire Application Developers: 12/31/2004, 1/31/2005, $1,500, M. Jeremy, App Development
– Hire Web Developer: 12/31/2004, 1/31/2005, $500, M. Jeremy, Web Development
– Application development: 2/15/2005, 9/15/2005, $70,200, M. Jeremy, App Development
– Revenue Sites are established: 4/15/2005, 6/15/2005, $9,000, M. Jeremy, Sales/Marketing
– Partnership Development Begins: 7/1/2005, 3/1/2006, $5,000, M. Jeremy, Sales/Marketing
– Finish Beta Version of Software: 8/15/2005, 9/1/2005, $0, M. Jeremy, Sales/Marketing
– Marketing Sites are established: 9/15/2005, 11/15/2005, $7,500, M. Jeremy, Sales/Marketing
– Hire Customer Service Manager: 10/1/2005, 10/31/2005, $0, M. Jeremy, Sales/Marketing
– Hire Customer Support Associate: 10/1/2005, 10/31/2005, $0, M. Jeremy, Sales/Marketing
– Sales and Marketing program development: 11/1/2005, 4/15/2006, $18,950, M. Jeremy, Sales/Marketing
– Launch Initial Software: 11/9/2005, 11/10/2005, $0, M. Jeremy, Sales/Marketing
Web Plan Summary:
JTB’s Integrated Technologies Division will build, test, update, and maintain websites for all three subdivisions and the holding company. The marketing plan will be the same for all divisions, with customization for each target audience. JTB will gather information and feedback through paid ads in trade magazines and other websites, and will also link its products and services with affiliate sites.
Website Marketing Strategy:
JTB will develop and manage industrial marketplaces, utilize search engine technology, affiliate marketing programs, and paid banner ads to drive customers to its sites. JTB will develop its own sites and applications at a lower cost than competitors.
Management Summary:
Mitchell R. Jeremy, the President and Sales Manager, will work closely with software and application developers to create products. A team of support associates will be trained in marketing, customer support, and product support.
Personnel Plan:
– Customer Support Associate/Manager: Works in sales, marketing, and customer support
– Customer Support Associate (Part-time): Covers office operating hours and focuses on developing new clients and providing support
– Sales and Marketing Associate (Shared): Works in sales and new customer development
– Application Developer (Full-time): Develops products and provides custom work
– Assistant Application Developer/Quality Assurance Tester (Part-time): Assists in development and performs QA testing
– Web Developer: Oversees website creation and integration of software package
Financial Plan:
JTB’s financial plan relies on raising $225,000 in private equity to develop the Integrated Technologies Division. The division will develop, market, and support P.C.-based industrial sales applications and marketing portals. The plan expects a net loss in the first two years, offsetting taxes on profits from other divisions. The division will implement a large-scale marketing program and aims to generate $443,000 in sales by year 5.
Important Assumptions:
– Current business, banking, and economic trends remain stable
– Customer buying trends and orders stay strong
– Overhead and external operating costs grow as projected
– Internet buying trends continue to grow in the industrial sector
JTB Integrated Technologies will not reach break-even until year 3. The goal is to bring subscription-based products and services to market within 10 months and develop linked websites for affiliate development in the first year. JTB aims to build a solid base with primary products and services while continuing the development of distribution software.
Break-even Analysis:
Monthly Revenue Break-even: $5,518
Assumptions:
– Average Percent Variable Cost: 36%
– Estimated Monthly Fixed Cost: $3,509
8.3 Projected Profit and Loss:
Please read note 8.1.1 in the Important Assumptions section regarding our Accounting system and methodology.
The Projected Profit and Loss table considers all basic operating expenses for the Integrated Technologies Division only. In software and Web development, up-front research and development expenses are significant. The plan includes a full depreciation schedule of relevant long-term assets.
One consideration not included in the Profit and Loss statement is the burden of management and their output. The 3 JTB divisions will operate under one roof, and management will fill in all areas of production as needed. Jeremy Mitchell will have primary management oversight in the Integrated Technologies Division.
The Profit and Loss statement includes an additional direct cost of sales in the fees paid to a contracted Graphic Designer. The graphic artist will work with our developers to create the "look" of the software application UI and the JTB websites. We will retain this graphic artist for updates and customization of the software and website over the next five years.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $23,204 $199,948 $268,330 $331,797 $443,411
Direct Cost of Sales $8,448 $35,795 $55,219 $66,051 $90,527
Developers Payroll $94,800 $74,800 $74,800 $74,800 $74,800
Contracted Graphics Dvlpmnt for Software $4,500 $4,500 $4,500 $4,500 $4,500
Total Cost of Sales $107,748 $115,095 $134,519 $145,351 $169,827
Gross Margin ($84,544) $84,853 $133,811 $186,446 $273,584
Gross Margin % -364.35% 42.44% 49.87% 56.19% 61.70%
Operating Expenses
Sales and Marketing Payroll $13,100 $50,000 $53,000 $55,000 $57,000
Advertising/Promotion $5,850 $7,200 $12,000 $12,000 $12,000
Other Sales and Marketing Expenses $0 $0 $0 $0 $0
Total Sales and Marketing Expenses $18,950 $57,200 $65,000 $67,000 $69,000
Sales and Marketing % 81.67% 28.61% 24.22% 20.19% 15.56%
General and Administrative Payroll $0 $0 $0 $0 $0
Sales and Marketing and Other Expenses $3,000 $5,000 $12,000 $12,000 $16,000
Depreciation $996 $1,000 $1,000 $1,000 $1,000
Rent $9,000 $9,000 $9,000 $9,000 $9,000
Utilities $3,000 $3,000 $3,000 $3,000 $3,000
Insurance $4,200 $6,000 $6,000 $6,000 $6,000
Payroll Taxes $0 $0 $0 $0 $0
CPA: Accounting and Payroll $600 $600 $600 $600 $600
Off-site secure backup storage $360 $400 $400 $400 $400
Computer maintenance and software upgrades $2,000 $3,000 $4,000 $5,000 $6,000
Total General and Administrative Expenses $23,156 $28,000 $36,000 $37,000 $42,000
General and Administrative % 99.79% 14.00% 13.42% 11.15% 9.47%
Other Expenses:
Other Payroll $0 $0 $0 $0 $0
Consultants $0 $0 $0 $0 $0
Other Expenses $0 $0 $0 $0 $0
Total Other Expenses $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00%
Total Operating Expenses $42,106 $85,200 $101,000 $104,000 $111,000
Profit Before Interest and Taxes ($126,650) ($347) $32,811 $82,446 $162,584
EBITDA ($125,654) $653 $33,811 $83,446 $163,584
Interest Expense $2,592 $2,374 $2,144 $1,914 $1,684
Taxes Incurred $0 $0 $9,200 $24,160 $48,270
Net Profit ($129,243) ($2,721) $21,467 $56,372 $112,630
Net Profit/Sales -556.99% -1.36% 8.00% 16.99% 25.40%
8.4 Projected Cash Flow
JTB’s projected cash flow reflects the business’ position to repay the initial investors and the long-term loan. Please remember when you review this table, it is for the Integrated Technologies Division only. This division will operate at a loss for the first two years in order to build a solid, integrated software package to support the other divisions and to serve as the basis for future customized software and hosting for outside clients.
The cash flow projects only the base products described in the business plan. It’s highly probable that JTB will be involved with more outsourced products in years 2 thru 5, furthering our potential profitability. After initial decreases due to development lead-time, the cash position shows strong positive growth.
The Cash Flow table reflects one possible exit strategy for initial investors. Early in year three, as the business is becoming profitable with a stabilized software offering, we may seek a second round of outside investment and pay out our initial investors, with a $70,000 increase over the initial investment. We are confident that we can achieve this buy-out rate given the desperate need for software such as ours, the benefit of which will be proven after the first two years.
Please review section 8.1 regarding the Important Assumptions to get a better feel for the explained projected cash flow.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Cash Received | |||||
| Cash from Operations | |||||
| Cash Sales | $11,602 | $99,974 | $134,165 | $165,899 | $221,706 |
| Cash from Receivables | $5,871 | $56,324 | $117,277 | $150,224 | $194,140 |
| Subtotal Cash from Operations | $17,473 | $156,298 | $251,442 | $316,123 | $415,846 |
| Additional Cash Received | |||||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $350,000 | $0 | $0 |
| Subtotal Cash Received | $17,473 | $156,298 | $601,442 | $316,123 | $415,846 |
8.5 Projected Balance Sheet
JTB Integrated Technologies’s projected Balance Sheet shows the expected decrease in asset values (including cash reserves) over the two years, as we build, test, and establish our products and services. Once sales begin to pick up, we will make up this loss, reaching a strong net worth in year five.
| Pro Forma Balance Sheet | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Assets | |||||
| Current Assets | |||||
| Cash | $79,047 | $25,253 | $76,880 | $95,030 | $97,800 |
| Accounts Receivable | $5,731 | $49,381 | $66,269 | $81,944 | $109,509 |
| Inventory | $2,345 | $9,935 | $15,327 | $18,952 | $25,328 |
| Other Current Assets | $6,500 | $6,500 | $6,500 | $6,500 | $6,500 |
| Total Current Assets | $93,622 | $91,069 | $164,976 | $202,426 | $239,136 |
| Long-term Assets | |||||
| Long-term Assets | $15,000 | $15,000 | $15,000 | $15,000 | $15,000 |
| Accumulated Depreciation | $996 | $1,996 | $2,996 | $3,996 | $4,996 |
| Total Long-term Assets | $14,004 | $13,004 | $12,004 | $11,004 | $10,004 |
| Total Assets | $107,626 | $104,073 | $176,980 | $213,430 | $249,140 |
8.6 Business Ratios
JTB’s business ratios are compared to standard industry ratios for the Business-Oriented Computer Software industry. Our ratios differ in some areas, as the industry profiles most likely reflect a complete business with a full overhead. Our ratios are lighter in overhead and assets, as most of the heavy assets are in our Industrial Products and Services Division, and are not shown in this division’s balance sheet.
Our sales growth is substantially greater as we are adding new products and services each year to the plan, and our average Gross Margins reflect the time and expense invested up-front in the development of many of our products. Overall, we feel our ratios are better than the industry as we have maximized our marketing budgets and marketing avenues while keeping costs in check. Further maximization comes in the form of training the sales staff on maintaining profit-per-order levels when processing orders. Our unique order processing makes for streamlined repeat ordering by customers, further allowing our staff to process orders more efficiently, while reducing the internal costs.
Ratio Analysis:
| Ratio Analysis | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Industry Profile | |
| 0.00% | 761.70% | 34.20% | 23.65% | 33.64% | 3.84% | |
| 5.32% | 47.45% | 37.44% | 38.39% | 43.95% | 18.43% | |
| 2.18% | 9.55% | 8.66% | 8.88% | 10.17% | 2.30% | |
| 6.04% | 6.25% | 3.67% | 3.05% | 2.61% | 46.80% | |
| 86.99% | 87.50% | 93.22% | 94.84% | 95.98% | 67.53% | |
| 13.01% | 12.50% | 6.78% | 5.16% | 4.02% | 32.47% | |
| 6.16% | 7.78% | 6.69% | 6.66% | 7.87% | 33.10% | |
| 23.12% | 21.70% | 11.46% | 8.43% | 6.30% | 15.52% | |
| 29.29% | 29.49% | 18.15% | 15.09% | 14.16% | 48.62% | |
| 70.71% | 70.51% | 81.85% | 84.91% | 85.84% | 51.38% | |
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| -364.35% | 42.44% | 49.87% | 56.19% | 61.70% | 100.00% | |
| 26.60% | 25.88% | 19.21% | 15.86% | 12.27% | 79.13% | |
| 19.89% | 18.89% | 16.37% | 14.26% | 11.45% | 1.27% | |
| -545.81% | -0.17% | 12.23% | 24.85% | 36.67% | 1.63% | |
| 14.12 | 11.24 | 13.94 | 14.24 | 12.20 | 1.34 | |
| 13.77 | 10.02 | 12.64 | 12.91 | 10.91 | 1.07 | |
| 29.29% | 29.49% | 18.15% | 15.09% | 14.16% | 57.52% | |
| -169.82% | -3.71% | 21.17% | 44.44% | 75.24% | 3.03% | |
| -120.08% | -2.61% | 17.33% | 37.73% | 64.58% | 7.13% | |
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| -556.99% | -1.36% | 8.00% | 16.99% | 25.40% | n.a | |
| -169.82% | -3.71% | 14.82% | 31.11% | 52.67% | n.a | |
| 2.02 | 2.02 | 2.02 | 2.02 | 2.02 | n.a | |
| 39 | 101 | 157 | 163 | 158 | n.a | |
| 7.36 | 5.83 | 4.37 | 3.85 | 4.09 | n.a | |
| 6.77 | 10.43 | 10.43 | 10.43 | 10.43 | n.a | |
| 31 | 32 | 29 | 32 | 30 | n.a | |
| 0.22 | 1.92 | 1.52 | 1.55 | 1.78 | n.a | |
| 0.41 | 0.42 | 0.22 | 0.18 | 0.16 | n.a | |
| 0.21 | 0.26 | 0.37 | 0.44 | 0.56 | n.a | |
| 12.90 | 3.92 | 7.04 | 7.14 | 5.32 | n.a | |
| 0.30 | 2.72 | 1.85 | 1.83 | 2.07 | n.a | |
| 0.00 | 0.00 | 13.97 | 0.35 | 0.71 | n.a | |
8.7 Long-term Plan
JTB’s Integrated Technologies Division has projected a 10-year plan to showcase long-term results and the potential of channel partnerships. Additionally, the plan includes the fourth and fifth year cash position for payout analysis of initial investors and provides a clearer equity picture.
- Targeting gross sales of over $600,000 by year 8.
- Aiming for gross margins of over $270,000 by year 5.
- Expecting net income to exceed $100,000 by year 5.
- Recovering current assets to over $200,000 by year 5.
- Striving for equity of over $260,000 by year 8.
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