Pink Lady Bug Designs LLC (PLBD) specializes in high-quality chocolates, gift baskets, and other fine products to raise awareness and funds for women’s health programs. We are a newly organized company seeking equity and loans for start-up capital. By Year Two, we project to double our sales, and by Year Three, we plan to triple Year Two sales. Additionally, we will donate 50% of after-tax profits to women’s health programs. Our business strategy focuses on maximizing cash flows by minimizing overhead and capital expenses. Pink Lady Bug Designs was formed by Linda Herter, who has been involved in the merchandising industry since the early 1970s. After being diagnosed with Stage III breast cancer and losing her job due to her company’s closure, Linda decided to use her talents to create a company that raises funds for breast cancer awareness and provides necessary screenings for women who can’t afford them. We aim to raise hope and inspire others facing similar challenges. Our business strategy includes delivering the Pink Lady Bug story, offering high-quality products, contributing to women’s health causes, being the first to market with little competition, partnering with a celebrity spokesperson, forming alliances with vendors and suppliers, and targeting emotionally driven customers. Our potential market consists of 20-30 million people in the United States, including breast and ovarian cancer patients, their families, friends, and caregivers. We have received overwhelming acceptance and support from prospective customers and endorsements from large organizations such as the American Cancer Society and the Breast and Cervical Cancer Program (BCCP). We have also formed two-way links with their websites to further our mission. Pink Lady Bug Designs’ strength lies in the talents and experiences of our team members, who are dedicated to preventing and curing life-threatening women’s diseases. However, we recognize that we need assistance in national marketing and distribution. Therefore, we are forming alliances with companies and individuals who can provide guidance for national product launches. Jim Herter, our vice president and Controller, brings financial planning skills, while Brian Egendoerfer will maintain our Web pages. We have also formed an Advisory Board consisting of key support players who will provide guidance and insight. Phase One of our marketing plan focuses on selling high-quality chocolates, which are already in demand by fund-raising groups. We have partnered with Bissinger’s French Confectioners to produce our chocolates, eliminating the need for capital outlay and logistics management. Funding will be used for legal and accounting fees, office supplies, marketing consultants, research and development, and Web page development. We are confident in repaying our equity members by Year 5.
Contents
1.1 Objectives
- Build a substantial cash balance by the end of year three.
- Contribute $100,000 by our third year to not-for-profit organizations assisting women’s health initiatives.
- Increase sales ten-fold by the end of Year Three.
- Pay off loans or equity investments by the end of Year Three.
1.2 Mission
Pink Lady Bug Designs aims to become the premier provider of high-quality products for raising funds for under-served women’s health programs. We will accomplish this by:
- Forming strategic alliances with organizations that share our vision.
- Operating our business fairly and ethically.
- Treating our employees with dignity and respect.
1.3 Keys to Success
- Tell the Pink Lady Bug story.
- Secure sufficient start-up capital to fund the marketing plan, administrative costs, Web page development, and operating costs for six to twelve months.
- Establish a competitive advantage by being the first to market with our products and implementing a strong national marketing strategy.
- Secure a celebrity spokesperson/major national sponsorship.
- Control finances and cash flows by keeping capital and operating costs low.
Company Summary
Pink Lady Bug Designs LLC sells high-quality products to fund women’s health initiatives. We have partnered with Bissinger French Confections, a premier confectioner in the United States, to provide a range of unique products. The company was incorporated last year.
The Company concept was formed two years ago. Upon final approval, the company will register an official trademark with the U.S. Patent and Trademark Office.
2.1 Company Ownership
Pink Lady Bug Designs LLC is a privately held corporation registered as a Limited Liability Company, with ownership divided:
51% – Linda Herter
49% – James Herter
2.2 Company Locations and Facilities
The company office is located in the owner’s residence. Initially, we will not maintain inventories or handle fulfillment, so warehousing facilities will not be necessary. Our plan includes establishing an office outside of our residence to accommodate an expanded staff in Year Three.
2.3 Start-up Summary
Almost 40% of start-up funds will go towards administrative, consulting, web page development, and product research and development costs. Expensed equipment includes a new personal computer for running necessary business and accounting software.
The remaining funds will be used to maintain a positive cash balance for the first three months of operation.
Start-up
Requirements
Start-up Expenses
Legal & Accounting – $6,000
Stationery etc. – $1,000
Brochures – $1,000
Consultants-Marketing & Merchandising – $10,000
Office Supplies – $1,000
Expensed Equipment – $4,000
Research and Development – $1,500
Web Page Development – $5,000
Total Start-up Expenses – $29,500
Start-up Assets
Cash Required – $35,500
Other Current Assets – $0
Long-term Assets – $0
Total Assets – $35,500
Total Requirements – $65,000
Start-up Funding
Start-up Expenses to Fund – $29,500
Start-up Assets to Fund – $35,500
Total Funding Required – $65,000
Assets
Non-cash Assets from Start-up – $0
Cash Requirements from Start-up – $35,500
Additional Cash Raised – $0
Cash Balance on Starting Date – $35,500
Total Assets – $35,500
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
Investor 1 – $20,000
Investor 2 – $20,000
Investor 3 – $20,000
Other – $5,000
Additional Investment Requirement – $0
Total Planned Investment – $65,000
Loss at Start-up (Start-up Expenses) – ($29,500)
Total Capital – $35,500
Total Capital and Liabilities – $35,500
Total Funding – $65,000
Products
Pink Lady Bug Designs will market uniquely designed products that incorporate a pink lady bug or pink ribbon for breast cancer awareness programs and events. We have also been contacted by other women’s health organizations to develop products to meet their specific fund-raising needs.
Our packaging will feature the attractive Pink Lady Bug Designs logo, created by graphic designer Kaleen Healey, to take advantage of the beauty and popularity of lady bugs.
Product Description
Phase One will focus on high-quality chocolates. Our cause is to help prevent needless and avoidable illnesses in women by raising funds for education, prevention, and a cure. The unique feature of the chocolates is the incorporation of both the pink lady bug and the pink ribbon, symbols of breast cancer awareness.
Pink Lady Bug Chocolates will offer three to five product offerings. We will sell chocolate lolly pops or chocolate-covered cookies with the pink ribbon and lady bug for event favors. Mid-priced items may consist of caramel or mint candies in attractive packaging, suitable as favors or gifts. For special occasions, we will offer high-quality confections.
PLBD products are also in high demand from other charitable organizations. They can be sold as premiums or stand-alone items.
In Phase Two, we will expand our product line to include gift baskets and plush collectible animals. We will also develop programs for other women’s health causes.
Competitive Comparison
Our competition is difficult to define due to our unique marketing approach. We are competing with other fund-raising organizations and directly for consumer dollars.
Chocolates
Direct Competition – No chocolates are specifically sold to raise money for breast cancer awareness.
Indirect Competition – Specialty chocolates brands such as Frango, Godiva, Ghiradelli, Sugar ‘n Spice, Brach’s, Fannie May, Russell Stover, etc.
Gift Baskets
Direct Competition – Few gift basket companies sell at a national level with the purpose of raising money for breast cancer awareness.
Indirect Competition – Local florists and basket companies specializing in occasion baskets.
Plush Toys
Direct Competition – No companies sell a collectible plush toy at a national level for breast cancer awareness.
Indirect Competition – Collectible series toys marketed by Ty, etc.
Sales Literature
Once our product selection is finalized, we will create full-color brochures to send to prospective customers. Each product will carry the Pink Lady Bug story through print on the package or inserts.
Sourcing
Our first line of products will be produced exclusively by Bissinger French Confections in St. Louis, Missouri. We have a non-binding agreement with them for large volumes. Orders will be placed through PLBD’s main office and communicated to Bissinger’s for fulfillment.
Advertising will be outsourced, while most sales promotions and public relations work will be handled in-house. Administrative and consulting tasks will also be outsourced.
Future Products
Phase Two
We will expand our "Chocolates for a Cause" products for other women’s health causes. Afterward, we will consider offering our services to causes outside of women’s health.
Panhellenic Chocolates
We will provide unique chocolates for Panhellenic functions. Test marketing will be conducted in colleges around the Great Lakes region. These chocolates will help raise awareness among young women who need to be aware of the need for health screenings.
Premium Chocolates
After generating sufficient capital and strengthening the Pink Lady Bug brand identity, we will introduce a line of upscale premium chocolates comparable to those sold in upper-tier department stores and online.
Gift Baskets/Inspirational Items/Jewelry
We will expand into gift baskets that include chocolates, inspirational items from local author, artist, and breast cancer awareness advocate Nancy Drew.
Pink Lady Bug Apparel
We will launch a line of apparel targeting teenage females to foster women’s health awareness. This program will also reach grade school, middle school, and high school levels, leveraging our experience with cheerleading, gymnastics, and girls’ athletics.
Technology
We use off-the-shelf PC-based software for accounting purposes. Our website development, including graphics and layout, is handled by Kaleen Healey. Day-to-day maintenance of the website is handled by Brian Egendoerfer. We rely heavily on our website for marketing and streamlined order fulfillment.
Market Analysis Summary
Over the past ten years, an average of 150,000 women annually have been diagnosed with breast cancer, with over 200,000 affected in 2001. Another 23,000 women will be afflicted with ovarian cancer. Each of these women touches the lives of ten family members, friends, and others who care.
This identifies a large group of emotionally tied individuals in the U.S. Approximately 1 out of 10 people in the U.S. has a mother, grandmother, aunt, sister, or loved one who has been diagnosed with cancer.
Market Segmentation
The "Fund-raiser" seeks distinctive items that tie their event with their cause. This group overlaps with "Affected Family and Friends."
"Affected Family and Friends" are the largest potential segment, with an estimated 15 million individuals touched by breast cancer alone. The number could be as high as 30 million.
The "Medical Community" segment, including healthcare professionals and pharmaceutical companies, seeks goodwill gifts that help raise funds and spirits.
The "Interested By-standers" are attracted to our unique products and interesting designs. Their recognition of the Pink Lady Bug brand leads to casual purchases.
Market Analysis:
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Fund-raisers 5% 350,000 367,500 385,875 405,169 425,427 5.00%
Affected Family and Friends 10% 15,000,000 16,500,000 18,150,000 19,965,000 21,961,500 10.00%
Interested By-standers 5% 5,000,000 5,250,000 5,512,500 5,788,125 6,077,531 5.00%
Medical Community 5% 50,000 52,500 55,125 57,881 60,775 5.00%
Total 8.74% 20,400,000 22,170,000 24,103,500 26,216,175 28,525,233 8.74%
4.2 Target Market Segment Strategy
Fund-raiser Segment:
We will focus on the fund-raiser segment for women’s health organizations. This will generate cash flow and build brand recognition. We will market the chocolates to fund-raisers nationwide. The Susan G. Komen Breast Cancer Foundation is a key organization, and we will seek a partnership with them. The American Cancer Society also presents opportunities through golf tournaments and events.
Affected Family and Friends Segment:
We will target this large group through national advertising in magazines such as Rosie and "O". We will also explore strategic alliances with national retail chains. Additionally, educational programs using the Pink Lady Bug brand will target teenage girls.
Medical Community Segment:
Medical professionals involved in breast cancer care have expressed interest in purchasing Pink Lady Bug Chocolates as gifts for their patients. We will approach pharmaceutical companies for support and offer chocolates along with inspiring stories.
Primary Markets:
– Fund Raising Event Coordinators – Reaches 300,000+
– Radiology/Oncology/Surgical Physician/Nursing/Hospice Groups
– Annual Association Meeting Coordinators – Reaches 50,000+
– Breast Cancer Victims and Their Family and Friends – 15-30 million
Sources: American Cancer Society, The Susan G. Komen Breast Cancer Foundation, The Race is Run One Step at a Time, Nancy G. Brinker
4.2.1 Market Needs
Each market segment has unique needs. We will serve these needs through a variety of products and price points. By tying our chocolates to women’s health causes using visual indications like the pink ribbon or pink lady bug, we influence buying decisions. Our distinctive products make events and occasions more memorable.
Favor – Most fund-raising events offer favors. This favor-sized item can also be used as a stand-alone fund-raiser.
Favor/Gift – Intermediate-sized products can transcend favors and gifts. These products can be used for upscale lunches and dinners, as well as gift-giving.
Gift – We are developing elegant chocolates and confections for special occasions like birthdays, anniversaries, Mother’s Day, Christmas, and Easter.
4.2.2 Market Trends
The number of women diagnosed with life-threatening diseases, including breast cancer, is increasing each year. This creates a need for further fund-raising efforts.
Regarding High-Quality Chocolates:
The retail chocolate industry in the U.S. is worth approximately $13.79 billion per year, with the high-end chocolate market growing at a rate of 10-20% per year. High-end chocolates account for $2.5 billion in annual sales in the U.S. alone. Some companies are reporting annual sales increases of well over 100%, particularly in dark chocolates.
4.2.3 Market Growth
Breast Cancer Statistics:
– An estimated 203,500 new invasive cases of breast cancer are expected in the U.S. in 2002.
– An estimated 39,600 women will die from breast cancer in 2002.
– Breast cancer is the leading cancer site among American women and the leading cause of cancer deaths among women ages 40-59.
Ovarian Cancer Statistics:
– Ovarian cancer is the fourth leading cause of cancer death among U.S. women.
– Ovarian cancer occurs in one out of 57 women.
– An estimated 13,900 American women will die from ovarian cancer in 2001.
Sources: www.breastcancerinfo.org/bhealth/QA/q_and_a.asp and www.ovariancancer.org/general/
Pink Lady Bug Designs operates in a pathos-driven retail marketing and merchandising industry. We use the awareness and sympathy of customers to build brand recognition and fuel sales. Consumer expenditures for high-quality chocolates are expected to reach $3.2 billion in 2002. High-end chocolates account for $2.5 billion in annual sales in the U.S. alone, growing at a rate of 10% to 20%.
4.3.1 Competition and Buying Patterns
Competition may come from other fund-raising organizations in the women’s health realm, but we aim to form strategic alliances with these organizations. Other companies market unique gift items, mostly jewelry. The main buying periods for breast cancer awareness products are October (breast cancer awareness month), Mother’s Day, Christmas, and Valentine’s Day.
4.3.2 Main Competitors
Direct Competition: Other fund-raising organizations like the Susan G. Komen Foundation.
Indirect Competition: Specialty chocolates like Frango, Godiva, and Ghiradelli.
4.3.3 Industry Participants
Pink Lady Bug Designs competes with a mix of fund-raising organizations and other retail products. We believe our unique product ideas and marketing strategies give us a competitive advantage. We strive to stay at the forefront of our business by researching our market segment’s needs.
4.3.4 Distribution Patterns
Bulk orders will be placed through Pink Lady Bug Designs and fulfilled by Bissinger’s French Confectioners. We will also develop national retail accounts, which will be fulfilled by Bissinger’s. Our web page allows customers to browse products and place orders directly through Bissinger’s.
Strategy and Implementation Summary
Our strategy focuses on brand recognition, personalized service, and meeting the specific needs of our market segments.
5.1 Strategy Pyramid
Our main strategy is brand recognition, achieved through exposure to community and business leaders, partnerships with national health organizations, celebrity endorsements, and national advertising. We also aim to develop a database of event planners, attend conferences, and utilize the internet for exposure.
5.2 Value Proposition
Pink Lady Bug Chocolates offer high-quality, unique products that contribute to a cause. They provide value to customers and make their events and occasions more memorable.
5.3 Competitive Edge
Our competitive advantage lies in our passion for helping others, our work ethic, and being the first to market with our products. We establish strong alliances, maintain research and development, and focus on marketing and promotions. Innovation and maintaining close relationships with suppliers and allies enhance our success.
5.4 Marketing Strategy
Our marketing strategy focuses on four segments – fund-raisers, medical community, family and friends, and interested bystanders. We will allocate marketing resources accordingly, targeting each segment through personalized services, national advertising, and attractive displays.
5.4.1 Promotion Strategy
We will use a mix of promotion strategies tailored to each segment, including direct contact, printed materials, attending conferences, and enlisting the services of a professional marketing firm.
5.4.2 Distribution Strategy
Bissinger’s French Confectioners will handle all product distribution, including web orders.
5.4.3 Marketing Programs
We will focus on re-establishing contacts with organizations and event planners for Breast Cancer Awareness events, targeting new customers and securing sales. We will also develop fund-raising programs with specific groups and establish two-way links with various organizations’ websites.
5.4.4 Positioning Statement
Pink Lady Bug Chocolates offer distinctive products that make a lasting impression. We are the first to provide such products in the market, meeting the needs of fund-raisers, family and friends, and the medical community.
5.4.5 Pricing Strategy
We will price our products slightly higher than comparable products in the market due to their unique value and contribution to a cause.
5.5 Sales Strategy
Sales will be primarily handled by Linda Herter, generating leads through direct mailing and following up with calls. Web orders will also be directed to Bissinger’s page. We will also develop fund-raising programs and establish alliances to boost sales.
5.5.1 Sales Forecast
Sales will peak during breast cancer awareness month, Mother’s Day, Christmas, and Valentine’s Day. Year two and beyond will include the development of premium offerings.
Sales Forecast
Year 1 | Year 2 | Year 3
-|-|-
Sales
Chocolate – Favor | $42,785 | $73,630 | $225,865
Chocolates – Medium Favor/Gift | $79,720 | $149,700 | $285,480
Chocolate – Premium | $77,948 | $100,433 | $952,635
Plush Collectible | $0 | $99,900 | $99,900
Gift Basket | $0 | $0 | $25,000
Other | $0 | $0 | $0
Total Sales | $200,453 | $423,663 | $1,588,880
Direct Cost of Sales
Year 1 | Year 2 | Year 3
-|-|-
Chocolate – Favor | $21,397 | $36,815 | $112,933
Chocolates – Medium Favor/Gift | $39,859 | $74,850 | $142,740
Chocolate – Premium | $38,977 | $50,217 | $476,318
Plush Collectible | $0 | $49,950 | $49,950
Gift Basket | $0 | $0 | $12,500
Other | $0 | $0 | $0
Subtotal Direct Cost of Sales | $100,233 | $211,832 | $794,441
Sales Programs
We will not offer any sales incentives in the first year to ensure positive cash flows. Extra net profit will be held as cash and distributed to investors. Once profitability is established, we will introduce sales incentives and profit sharing.
Strategic Alliances
Alliances and synergy with suppliers and women’s health organizations are essential for our success. In Phase One, we will partner with Bissinger’s French Confectioner’s to obtain product at a discounted rate and utilize their logistics and fulfillment solutions. This will allow us to maintain a healthy margin.
Endorsements from the American Cancer Society, Ovarian Cancer National Alliance, and the Susan G. Komen Foundation will provide national exposure and fundraising event contacts.
Linda Herter’s Secret Sisters Society will help create a new market for Pink Lady Bug Designs products.
We will seek alliances with pharmaceutical companies, offering recognition and inclusion of their logo on our promotional materials and packaging in exchange for sponsorship and support for fundraisers and goodwill products.
We are developing an alliance with Longaberger Baskets to supply chocolates for their annual breast cancer awareness initiative.
Milestones
The accompanying table outlines program milestones, managers in charge, and budgets. Planning for implementation is a key focus for us.
The selection of the final product is the most critical step in the start-up process. Bissinger’s French Confectioners will provide product samples by the end of June 2002. This will enable the production of brochures, color photography, and other marketing and promotion activities.
Our business plan includes provisions for plan-vs.-actual analysis and monthly follow-up meetings to address any variances and make necessary adjustments.
Milestones:
– Business Plan Completion: 5/11/2002 – 5/21/2002, $100 budget, Jim Herter (Manager), Finance (Department)
– Start-up Capital: 5/22/2002 – 6/15/2002, $200 budget, Jim Herter (Manager), Finance (Department)
– Obtain Business Insurance: 6/16/2002 – 6/16/2002, $600 budget, Linda Herter (Manager), President (Department)
– Consult w/ Attorney: 6/20/2002 – 6/27/2002, $3,000 budget, Jim/Linda (Manager), President (Department)
– Consult w/ Accountant: 6/20/2002 – 6/27/2002, $3,000 budget, Jim Herter (Manager), Finance (Department)
– Establish Telephone/Fax Lines: 6/22/2002 – 6/29/2002, $250 budget, Linda Herter (Manager), President (Department)
– Obtain Product Samples: 6/15/2002 – 6/29/2002, $1,500 budget, Linda/Jim (Manager), President (Department)
– Develop Web Page: 6/15/2002 – 7/15/2002, $5,000 budget, Linda Herter (Manager), President (Department)
– Re-print Stationery, Business Cards: 6/15/2002 – 6/30/2002, $1,000 budget, Linda Herter (Manager), President (Department)
– Brochures: 6/15/2002 – 6/30/2002, $1,000 budget, Linda Herter (Manager), President (Department)
– Develop National Database: 6/1/2002 – 6/30/2002, $0 budget, Linda Herter (Manager), President (Department)
– Mail Brochures/Product Samples: 7/1/2002 – 7/15/2002, $500 budget, Linda Herter (Manager), President (Department)
– Purchase Office/Computer Equipment: 8/1/2002 – 8/1/2002, $4,000 budget, Jim Herter (Manager), IS (Department)
– Marketing Consultation: 12/1/2002 – 12/31/2002, $10,000 budget, Linda/Jim (Manager), Company (Department)
– Secure Celebrity Spokesperson: 1/1/2003 – 2/28/2003, $3,000 budget, Linda (Manager), President (Department)
– Totals: $33,150 budget
Web Plan Summary:
The Pink Lady Bug Designs LLC website will be the virtual business card and portfolio for the company. It will provide information to customers and serve as a portal to our programs and products. Flashy or excessive use of technology may drive potential clients away.
Website Marketing Strategy:
We will maintain two-way links between our website, product suppliers, and other women’s health sites. We will also collaborate with large women’s health organizations.
Development Requirements:
The Pink Lady Bug Designs website will be developed with minimal technical resources. A user graphic and interface designer will be hired to create a simple, elegant site. The maintenance of the site will be done by Brian Egendoerfer, the Manager of Web Development Services at Bigname University.
Management Summary:
Pink Lady Bug Designs will be staffed by a team of individuals who believe in the company’s mission. Linda Herter is the President and lead public relations representative. Jim Herter is the Vice President and Controller. As the business grows, an Office Manager/Administrative Assistant and a Marketing/Sales Manager will be hired.
Organizational Structure:
Pink Lady Bug Designs is non-departmentalized. Operating requirements are matched to the skills and creativity of existing staff members. Linda Herter is the President and lead public relations representative. Jim Herter is the Vice President and Controller. As the business grows, an Office Manager/Administrative Assistant and a Marketing/Sales Manager will be added.
Management Team:
– Linda Herter, 48, President: Mrs. Herter brings a strong background in marketing, merchandising, and creative design. She has extensive experience in the retail apparel industry and is actively involved in various cancer awareness initiatives.
– Jim Herter, 42, Vice President and Controller: Mr. Herter has been employed in the food service industry for the past thirteen years. He has experience in financial analysis and planning, as well as management training.
– Brian Egendoerfer, 35, Web Engineer/Consultant: Mr. Egendoerfer has expertise in web development and has worked with various organizations in establishing their online presence.
Board of Advisors:
– Craig A. Sponseller, M.D.: Dr. Sponseller is a clinical research physician specializing in Hepatology and Transplant Hepatology. He is involved in cancer research and disease awareness initiatives.
– George Friend, M.D., F.A.C.S: Dr. Friend is a general and vascular surgeon with extensive experience in surgical education and breast care services.
– Karen Castles-Gray: Mrs. Gray is the President of Castles Sport, an upscale alumni apparel manufacturer. She brings experience in the alumni market and connections within the industry.
Management Team Gaps:
As the business strategy focuses on minimizing overhead expenses, Linda Herter will have to cover many day-to-day functions. This may limit her time for business development and public relations.
Personnel Plan:
– Linda Herter – President: $40,000 (Year 1), $60,000 (Year 2), $100,000 (Year 3)
– Jim Herter – Vice President/Controller: $0 (Year 1), $20,000 (Year 2), $42,000 (Year 3)
– Office Manager/Administrative Assistant: $0 (Year 1), $32,000 (Year 2), $33,600 (Year 3)
– Marketing/Sales Manager: $0 (Year 1), $20,000 (Year 2), $42,000 (Year 3)
– Total Payroll: $40,000 (Year 1), $132,000 (Year 2), $217,600 (Year 3)
– Growth will be moderate after Year Three, with steady cash flows.
– Sales will be conducted through credit card, check, or money order.
– Financing growth will primarily be through cash flow.
– Marketing expenses will remain below 15% of sales.
– Profits will be invested in financial markets rather than company expansion.
Important Assumptions:
– The market for assistance services for women with life-threatening diseases will continue to grow.
– Corporate involvement in health causes will remain strong.
– Upscale chocolates will continue to gain popularity.
– Pink Lady Bug Designs can establish a strong foothold within the first 8-12 months.
Key Financial Indicators:
Four indicators have been chosen to assess the health of the business. The focus is on changes rather than gross amounts: sales growth, gross margin, collection days, and inventory turnover. These indicators will be compared to a base year to track progress.
A break-even analysis table based on average costs/prices has been completed. Our cost of goods is 50%. The table below displays our average monthly fixed costs and the required monthly sales volume to achieve break-even.
Break-even Analysis:
Monthly Revenue Break-even: $13,450
Assumptions:
– Average Percent Variable Cost: 50%
– Estimated Monthly Fixed Cost: $6,724
8.4 Projected Cash Flow:
We plan to manage cash flow using the initial investment funds. No additional plans for equity investments have been made for Fiscal Year 2005.
Pro Forma Cash Flow
| Pro Forma Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $190,430 | $402,480 | $1,509,436 |
| Cash from Receivables | $8,549 | $19,543 | $70,880 |
| Subtotal Cash from Operations | $198,980 | $422,022 | $1,580,316 |
| 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 | $0 | $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 | $198,980 | $422,022 | $1,580,316 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $40,000 | $132,000 | $217,600 |
| Bill Payments | $134,382 | $277,619 | $1,026,574 |
| Subtotal Spent on Operations | $174,382 | $409,619 | $1,244,174 |
| 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 | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $18,000 |
| Dividends | $0 | $0 | $0 |
| Subtotal Cash Spent | $174,382 | $409,619 | $1,262,174 |
| Net Cash Flow | $24,598 | $12,404 | $318,142 |
| Cash Balance | $60,098 | $72,501 | $390,643 |
Projected Profit and Loss
The first year of operations will focus on sales and building relationships with key companies and organizations. The sales goal for Year One is conservative and realistic.
We aim to double sales in Year Two to support marketing and personnel objectives. Net profits may decrease in Fiscal Year 2004 due to hiring new staff members and increased marketing expenses. This strategy will enable Pink Lady Bug Designs to achieve ambitious sales goals in Fiscal Year 2005.
Pro Forma Profit and Loss
| Pro Forma Profit and Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $200,453 | $423,663 | $1,588,880 |
| Direct Cost of Sales | $100,233 | $211,832 | $794,441 |
| Other Production Expenses | $0 | $0 | $0 |
| Total Cost of Sales | $100,233 | $211,832 | $794,441 |
| Gross Margin | $100,220 | $211,831 | $794,439 |
| Gross Margin % | 50.00% | 50.00% | 50.00% |
| Expenses | |||
| Payroll | $40,000 | $132,000 | $217,600 |
| Sales and Marketing and Other Expenses | $27,300 | $44,500 | $117,500 |
| Depreciation | $792 | $1,600 | $1,600 |
| Leased Equipment | $0 | $0 | $10,000 |
| Utilities | $3,000 | $5,000 | $6,000 |
| Insurance | $3,600 | $3,600 | $3,600 |
| Rent | $0 | $5,000 | $9,600 |
| Payroll Taxes | $6,000 | $19,800 | $32,640 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $80,692 | $211,500 | $398,540 |
| Profit Before Interest and Taxes | $19,528 | $331 | $395,899 |
| EBITDA | $20,320 | $1,931 | $397,499 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $5,858 | $99 | $118,770 |
| Net Profit | $13,670 | $232 | $277,129 |
| Net Profit/Sales | 6.82% | 0.05% | 17.44% |
Projected Balance Sheet
All of our tables will be updated monthly to reflect past performance and future assumptions. Future assumptions will not be based on past performance but rather on economic cycle activity, regional industry strength, and future cash flow possibilities. We expect solid growth in net worth beyond the year 2004.
| Pro Forma Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $60,098 | $72,501 | $390,643 |
| Accounts Receivable | $1,473 | $3,114 | $11,678 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $61,571 | $75,615 | $402,321 |
| Long-term Assets | |||
| Long-term Assets | $0 | $0 | $18,000 |
| Accumulated Depreciation | $792 | $2,392 | $3,992 |
| Total Long-term Assets | ($792) | ($2,392) | $14,008 |
| Total Assets | $60,779 | $73,223 | $416,329 |
| Liabilities and Capital | |||
| Current Liabilities | |||
| Accounts Payable | $11,609 | $23,822 | $89,799 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| Subtotal Current Liabilities | $11,609 | $23,822 | $89,799 |
| Long-term Liabilities | $0 | $0 | $0 |
| Total Liabilities | $11,609 | $23,822 | $89,799 |
| Paid-in Capital | $65,000 | $65,000 | $65,000 |
| Retained Earnings | ($29,500) | ($15,830) | ($15,599) |
| Earnings | $13,670 | $232 | $277,129 |
| Total Capital | $49,170 | $49,401 | $326,531 |
| Total Liabilities and Capital | $60,779 | $73,223 | $416,329 |
| Net Worth | $49,170 | $49,401 | $326,531 |
Standard business ratios are included in the table. The ratios show a plan for balanced, healthy growth. The ratios use the Standard Industrial Classification code 5947.0103, Gift Baskets, retail, which is a close approximation of our business.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 111.35% | 275.03% | 3.34% |
| Percent of Total Assets | ||||
| Accounts Receivable | 2.42% | 4.25% | 2.81% | 15.88% |
| Other Current Assets | 0.00% | 0.00% | 0.00% | 23.99% |
| Total Current Assets | 101.30% | 103.27% | 96.64% | 80.29% |
| Long-term Assets | -1.30% | -3.27% | 3.36% | 19.71% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | ||||
| Accounts Payable | 19.10% | 32.53% | 21.57% | 36.19% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 15.42% |
| Total Liabilities | 19.10% | 32.53% | 21.57% | 51.61% |
| Net Worth | 80.90% | 67.47% | 78.43% | 48.39% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 50.00% | 50.00% | 50.00% | 37.74% |
| Selling, General & Administrative Expenses | 43.18% | 49.95% | 32.56% | 23.72% |
| Advertising Expenses | 5.99% | 4.72% | 4.72% | 2.14% |
| Profit Before Interest and Taxes | 9.74% | 0.08% | 24.92% | 1.65% |
| Main Ratios | ||||
| Current | 5.30 | 3.17 | 4.48 | 1.98 |
| Quick | 5.30 | 3.17 | 4.48 | 0.74 |
| Total Debt to Total Assets | 19.
Personnel Plan: Linda Herter – President: 100% – $3,333 per month (Months 1-12) Jim Herter – Vice President/Controller: 100% – $0 per month (Months 1-12) Office Manager/Administrative Assistant: 100% – $0 per month (Months 1-12) Marketing/Sales Manager: 100% – $0 per month (Months 1-12) Total People: 1 (Months 5-12) Total Payroll: $3,333 per month (Months 1-12) General Assumptions: Plan Month: 1-12 Current Interest Rate: 8.00% (Months 1-12) Long-term Interest Rate: 8.00% (Months 1-12) Tax Rate: 30.00% (Months 1-12) Other: 0 (Months 1-12) Pro Forma Profit and Loss: Sales: $0 (Month 1), $6,979 (Months 2-3), $13,450 (Month 4), $46,905 (Month 5), $39,410 (Month 6), $16,465 (Months 7-8), $13,450 (Months 9-11), $16,465 (Month 12) Direct Cost of Sales: $0 (Month 1), $3,489 (Months 2-3), $6,726 (Month 4), $23,453 (Month 5), $19,706 (Month 6), $8,233 (Months 7-8), $6,726 (Months 9-11), $8,233 (Month 12) Other Production Expenses: $0 (Months 1-12) Total Cost of Sales: $0 (Month 1), $3,489 (Months 2-3), $6,726 (Month 4), $23,453 (Month 5), $19,706 (Month 6), $8,233 (Months 7-8), $6,726 (Months 9-11), $8,233 (Month 12) Gross Margin: $0 (Month 1), $3,490 (Months 2-3), $6,724 (Month 4), $23,452 (Month 5), $19,704 (Month 6), $8,232 (Months 7-8), $6,724 (Months 9-11), $8,232 (Month 12) Gross Margin %: 0.00% (Month 1), 50.01% (Months 2-3), 49.99% (Month 4), 50.00% (Month 5), 49.99% (Months 6-8), 50.00% (Months 9-11), 49.99% (Month 12) Expenses: Payroll: $3,333 per month (Months 1-12) Sales and Marketing and Other Expenses: $2,275 per month (Months 1-12) Depreciation: $66 per month (Months 1-12) Leased Equipment: $0 per month (Months 1-12) Utilities: $250 per month (Months 1-12) Insurance: $300 per month (Months 1-12) Rent: $0 per month (Months 1-12) Payroll Taxes: 15% – $500 per month (Months 1-12) Other: $0 per month (Months 1-12) Total Operating Expenses: $6,724 per month (Months 1-12) Profit Before Interest and Taxes: ($6,724) (Month 1), ($3,234) (Months 2-3), $0 (Month 4), $12,980 (Month 6), $1,508 (Months 8-9), $0 (Month 10), $9,086 (Month 12) EBITDA: ($6,658) (Month 1), ($3,168) (Months 2-3), $66 (Month 4), $13,046 (Month 6), $1,574 (Months 8-9), $66 (Month 10), $1,569 (Month 12) Interest Expense: $0 (Months 1-12) Taxes Incurred: ($2,017) (Month 1), ($970) (Months 2-3), $0 (Month 4), $3,894 (Month 6), $452 (Months 8-9), $0 (Month 10), $451 (Month 12) Net Profit: ($4,707) (Month 1), ($2,264) (Months 2-3), $0 (Month 4), $9,086 (Month 6), $1,056 (Months 8-9), $0 (Month 10), $1,052 (Month 12) Net Profit/Sales: 0.00% (Month 1), -32.44% (Months 2-3), 24.96% (Month 6), 23.06% (Months 8-9), 6.41% (Month 12) Pro Forma Cash Flow: |
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| 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 Sales | $0 | $6,630 | $6,630 | $12,778 | $44,560 | $12,778 | $37,440 | $12,778 | $15,642 | $12,778 | $12,778 | $15,642 | |
| Cash from Receivables | $0 | $0 | $12 | $349 | $360 | $728 | $2,289 | $716 | $1,927 | $678 | $818 | $673 | |
| Subtotal Cash from Operations | $0 | $6,630 | $6,642 | $13,126 | $44,919 | $13,506 | $39,729 | $13,493 | $17,569 | $13,455 | $13,596 | $16,314 | |
| Additional Cash Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Subtotal Cash Received | $0 | $6,630 | $6,642 | $13,126 | $44,919 | $13,506 | $39,729 | $13,493 | $17,569 | $13,455 | $13,596 | $16,314 | |
| Expenditures from Operations | 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 Spending | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,333 | $3,337 | |
| Bill Payments | $44 | $1,459 | $5,844 | $5,984 | $10,776 | $31,072 | $10,613 | $26,362 | $10,116 | $11,945 | $10,051 | $10,116 | |
| Subtotal Spent on Operations | $3,377 | $4,792 | $9,177 | $9,317 | $14,109 | $34,405 | $13,946 | $29,695 | $13,449 | $15,278 | $13,384 | $13,453 | |
| Additional Cash Spent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Subtotal Cash Spent | $3,377 | $4,792 | $9,177 | $9,317 | $14,109 | $34,405 | $13,946 | $29,695 | $13,449 | $15,278 | $13,384 | $13,453 | |
| Net Cash Flow | ($3,377) | $1,838 | ($2,535) | $3,809 | $30,811 | ($20,899) | $25,783 | ($16,202) | $4,120 | ($1,823) | $212 | $2,861 | |
| Cash Balance | $32,123 | $33,961 | $31,426 | $35,236 | $66,047 | $45,148 | $70,930 | $54,728 | $58,848 | $57,025 | $57,237 | $60,098 | |
Pro Forma Balance Sheet:
| Pro Forma Balance Sheet | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $35,500 | $32,123 | $33,961 | $31,426 | $35,236 | $66,047 | $45,148 | $70,930 | $54,728 | $58,848 | $57,025 | $57,237 | $60,098 |
| Accounts Receivable | $0 | $0 | $349 | $686 | $1,010 | $2,995 | $2,940 | $2,621 | $2,577 | $1,473 | $1,468 | $1,323 | $1,473 |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $35,500 | $32,123 | $34,310 | $32,113 | $36,246 | $69,042 | $48,087 | $73,551 | $57,305 | $60,321 | $58,493 | $58,559 | $61,571 |
| Long-term Assets | |||||||||||||
| Long-term Assets | $0 | ($66) | ($132) | ($198) | ($264) | ($330) | ($396) | ($462) | ($528) | ($594) | ($660) | ($726) | ($792) |
| Accumulated Depreciation | $0 | $66 | $132 | $198 | $264 | $330 | $396 | $462 | $528 | $594 | $660 | $726 | $792 |
| Total Long-term Assets | $0 | ($66) | ($132) | ($198) | ($264) | ($330) | ($396) | ($462) | ($528) | ($594) | ($660) | ($726) | ($792) |
| Total Assets | $35,500 | $32,057 | $34,178 | $31,915 | $35,982 | $68,712 | $47,691 | $73,089 | $56,777 | $59,727 | $57,833 | $57,833 | $60,779 |
| Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
| Current Liabilities | |||||||||||||
| Accounts Payable | $0 | $1,264 | $5,649 | $5,649 | $9,716 | $30,736 | $9,716 | $26,027 | $9,716 | $11,610 | $9,716 | $9,716 | $11,609 |
| Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Subtotal Current Liabilities | $0 | $1,264 | $5,649 | $5,649 | $9,716 | $30,736 | $9,716 | $26,027 | $9,716 | $11,610
Business Plan Outline
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Hello!
I’m Andrew Brooks, a seasoned finance consultant from the USA and the mind behind phonenumber247.com.
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