Sample business plan ppsx

January 2002 This sample business plan has been made available to users of Business Plan Pro®, business planning software published by Palo Alto Software. Names, locations and numbers may have been changed, and substantial portions of text may have been omitted from the original plan to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright Palo Alto Software, Inc., 1995-2002 Confidentiality Agreement The undersigned reader acknowledges that the information provided by _________________________ in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _________________________. Upon request, this document is to be immediately returned to _________________________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a business plan. It does not imply an offering of securities. 1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.3 Service Business Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 6.0 Web Plan Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6.1 Website Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6.2 Development Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 7.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 8.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 8.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 8.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 8.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 8.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table of Contents 1.0 Executive Summary WorkChairs is an ergonomic product business located in Studio City, California that focuses on selling hard-to-find ergonomic products to both the local community and through their website online. WorkChairs is owned by Jake and Lisa Wilson, and is a corporation with one other employee, Peter Wilson. WorkChairs will use two sales channels and focus on selling niche products that solve ergonomic health problems that have become more common as people use computers more and more in their daily work days. By using traditional local marketing and sales techniques, WorkChairs will establish a solid local customer base in the home office, small business, and large business communities. To supplement the business and take advantage of manufacturer relationships that include drop-shipping, WorkChairs will have a website that has both an online store and an educational section to teach people about ergonomic problems. WorkChairs has a conservative financial plan with low expenses, low payroll, and a conservative sales forecast. WorkChairs will always maintain a positive cash balance while slowly growing the total cash and company net worth. ($50,000) $0 $50,000 $100,000 $150,000 $200,000 $250,000 2002 2003 2004 Sales Gross Margin Net Profit Highlights WorkChairs Business Plan Page 1 1.1 Objectives • Becoming profitable after six months of operation. • Be the market share leader of specialty ergonomic products in the local market. There is no official measurement, but it should be relatively easy to guess how our few competitors are doing. • Have our website be one of the top five websites for specialty ergonomic products measured by both traffic and sales. Unfortunately, we can't get sales statistics for other competing sites, but we can judge by their traffic levels based on their search engine placement, pay per click advertising, links in to their site, and Google Pagerank. From there we can guess at how well their site converts visitors into sales. • Have fun helping our customers work in a safer and more comfortable work environment. 1.2 Mission WorkChairs is a specialty ergonomic product retailer in both the local market and in the online space. We aim to provide quality products to satisfy our customers desire to work in a healthy work environment that keeps them injury and pain-free. Keeping our customers happy and solving their problems by providing great products at an affordable price is our goal. We also take pride in educating our customers on ergonomic issues that they might not be aware of, to prevent them from experiencing pain and discomfort in the future as well. We find doing this is rewarding in a personal and business sense. 1.3 Keys to Success • Provide specialty products that can't be found at "large box" retailers such as Office Max, Office Depot, Staples, Costco, Ikea, and others. We want niche products that can't be found at these stores, because we can't compete with them on price. • Provide excellent customer service. It's difficult to find customers who are aware enough of the health issues of standard office work to actually realize they need ergonomic products. So once we find these customers, we need to keep them happy and keep them coming back to us for future products they need. • Keep our growth slow and organic so we can make sure we keep expenses low and operate efficiently. • Build an easy to use website that educates our customers and potential customers while also selling our products effectively. WorkChairs Business Plan Page 2 2.0 Company Summary WorkChairs is a small business based in Studio City, CA that sells specialty ergonomic products to local businesses and home office workers while also selling those products on their website online. The company is operated out of the home of owners Jake and Lisa Wilson. Their son Peter also is part of the company. 2.1 Company Ownership Workchairs is a private C corporation owned by Jake and Lisa Wilson. They each own 50% of the company. 2.2 Start-up Summary WorkChairs will require $3,825 in total start-up expenses. These expenses include $1,000 for legal fees in setting up the business, $250 in stationery, $1,000 for sales brochures and collateral, $500 in insurance, $1,000 in expensed computer equipment, and $75 for a domain name. Jake and Lisa Wilson will be investing $10,000 which will cover the start-up expenses while also leaving a cash reserve of $6,175. We have no start-up liabilities or other assets to be considered in our start-up phase. $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Expenses Assets Investment Loans Start-up WorkChairs Business Plan Page 3 Table: Start-up Start-up Requirements Start-up Expenses Legal $1,000 Stationery etc. $250 Brochures $1,000 Insurance $500 Expensed Equipment $1,000 Domain Name $75 Total Start-up Expenses $3,825 Start-up Assets Needed Cash Balance on Starting Date $6,175 Other Current Assets $0 Total Current Assets $6,175 Long-term Assets $0 Total Assets $6,175 Total Requirements $10,000 Funding Investment Jake and Lisa Wilson $10,000 Other $0 Total Investment $10,000 Current Liabilities Accounts Payable $0 Current Borrowing $0 Other Current Liabilities $0 Current Liabilities $0 Long-term Liabilities $0 Total Liabilities $0 Loss at Start-up ($3,825) Total Capital $6,175 Total Capital and Liabilities $6,175 3.0 Products WorkChairs sells niche ergonomic products that are hard to find at standard office furniture or office supply stores. Our primary products include: • Chairs—There is a large number of specialty chairs that are built to solve various physical problems caused by sitting in an office chair all day. These chairs aim to solve back, hip, leg, neck, shoulder, arm, and wrist problems. • Workstations—Computer and regular workstations that are specially designed to be ergonomically correct. • Computer Accessories—Special mice, keyboards, glare screens, keyboard trays, wrist rests, monitor supports, and other computer accessories. • Document Holders—Copy holders to allow the head to stay looking up at eye level. • Foot Rests—A proper foot rest complements an ergonomic chair for better posture alignment. • Lighting—Various types of lighting to make things easier on the eyes while working. • Back/Arm/Wrist Supports—Various supports for various reasons. • Headsets/Microphones—For phone-related problems. WorkChairs Business Plan Page 4 4.0 Market Analysis Summary As computer and office jobs get more and more common, the general working population will experience more health problems caused by improper office working environments. It may be it's their wrists aching from typing, their back hurting from their chair being bad, or their eyes damaged from staring at a computer screen. Ergonomic products focus on solving these problems. Unfortunately, these products are often hard to find at general furniture stores or office supply stores. WorkChairs aims to supply these products to both our local market and in the online space. Specifically, we'll target a few different types of worker: • The home office user. • The small business office manager. • The large organization purchasing manager. 4.1 Market Segmentation We have broken down our target market into the following categories: • Home Office—This segment is the huge market of people running businesses from their home. We estimate there to be about 20,000,000 home office businesses in the United States, with about a 5% growth rate. Since we can reach the whole United States with our website, we can, potentially, reach the entire market. • Small Office Managers—The small office market is also quite large, with a 5% growth rate. Most of these businesses have office workers who would be in need of ergonomic products. • Large Office Purchase Managers—This market segment is much smaller in size, but has huge potential for sales as purchase managers usually make bulk buying decisions for multiple workers. It has a slower 2% growth rate due to fewer large businesses being created. Table: Market Analysis Market Analysis Potential Customers Growth 2002 2003 2004 2005 2006 CAGR Home Office 5% 20,000,000 21,000,000 22,050,000 23,152,500 24,310,125 5.00% Small Office Managers 5% 2,000,000 2,100,000 2,205,000 2,315,250 2,431,013 5.00% Large Business Purchase Managers 2% 500,000 510,000 520,200 530,604 541,216 2.00% Total 4.94% 22,500,000 23,610,000 24,775,200 25,998,354 27,282,354 4.94% WorkChairs Business Plan Page 5 Home Office Small Office Managers Large Business Purchase Managers Market Analysis (Pie) 4.2 Target Market Segment Strategy The following are our market segments along with our reasoning for targeting each segment: • Home Office—This segment is very large, and because most home offices now involve people spending long hours on a computer, these people are prime targets for needing ergonomic equipment. Since these offices are also in their home, they're more likely to spend some money on nicer furniture and equipment they can use for both home and work purposes. • Small Business Managers—Most small businesses have a manager in charge of equipment purchasing decisions. At some point, most of these managers usually have an employee who suffers from a problem that can be solved with ergonomic equipment. Even if they haven't, these people can usually be educated on the benefits of an ergonomically-sound workplace. They are usually pretty careful with their money though, as most small businesses try to keep their costs low. It's a good market, especially locally, because these business often support other local small businesses. • Large Business Purchase Managers—Large businesses usually have a purchase manager who's sole job is making equipment and supply purchasers. It's usually harder to reach these managers, and there are fewer large businesses, but they make for very lucrative accounts. Once you can build a good relationship with a purchase manager, they can be responsible for a lot of sales. Most purchasers buy equipment in bulk, and they usually have budgets that allow them to buy good equipment. WorkChairs Business Plan Page 6 4.3 Service Business Analysis The ergonomic industry is growing by leaps and bounds. As the use of computers increases in offices, people are experiencing lots of health problems from repetitious use of computers all day long. The ailments can really vary, but knowledge of ergonomic products is growing as people realize these problems exist. The ergonomic product manufacturing industry is also growing as more companies are putting out new products for cheaper prices. WorkChairs aims to sell locally to small and large businesses, while also serving those two markets and the home office market on the Web. We believe this combination of local and nationwide sales will provide a solid base for a business. 4.3.1 Competition and Buying Patterns People shopping for ergonomic products choose their retailer based on the following criteria: Product selection: They want to work with a company that provides a number of ergonomic products to choose from, including competing brands. Price: Nobody wants to pay more than they have to, and generally ergonomic products are more expensive than people anticipate, so price is usually a big issue. Customer Service: People usually have questions before purchasing an ergonomic product because, for the most part, they have never seen or worked with the product before. This means that our website must explain things well and make it easy to contact us. We also must provide great customer service locally to keep our clients educated and happy. 5.0 Strategy and Implementation Summary The primary strategies of WorkChairs are: • Sell niche ergonomic products that are hard to find in normal sales channels and usually take some education to understand and use. • Educate our customers and nurture relationships with them by providing superior customer service. • Sell locally and online to maximize two different sales channels. WorkChairs Business Plan Page 7 [...]... WorkChairs Business Plan 5.3 Sales Strategy Our sales strategy is broken down into two different areas: • Local Sales—We will sell to local customers and employ a traditional local business sales strategy Jake Wilson will be our primary salesman, and he'll work in a normal fashion of calling on local businesses and informing them about our company and our products Mr Wilson will also join local business. .. department We are not rushed to get this business going, but we still feel it's crucial to hit our milestones on time to get the business going before the slow summer season hits We'd like to use the summer season to fine tune our website and make sure our relationships with our manufacturers are all solid and working well We will use the Plan vs Actual feature of Business Plan Pro® PREMIER to track our progress... Corporation Formed Product Selection Finalized Website Seach Engine Submissions Link Campaign Affiliate Program Launch Business Groups Joined Cold Calls Launch Jan Feb Mar Apr Page 11 WorkChairs Business Plan 6.0 Web Plan Summary The WorkChairs' website will be more than just a brochure for our local business, it will be a huge sales channel to the online world The focus of our site will be a combination of... WorkChairs Business Plan Profit Yearly $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) 2002 2003 2004 Gross Margin Monthly $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Page 17 WorkChairs Business Plan Gross Margin Yearly $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2002 2003 2004 Page 18 WorkChairs Business. .. online marketing Peter will be in charge of the website and it's marketing for WorkChairs Page 13 WorkChairs Business Plan 7.1 Personnel Plan The accompanying Personnel Table explains the salaries of the three employees of WorkChairs Jake and Lisa Wilson will not be taking salaries until the business has sales up and running in the middle of the year Peter will be paid a modest salary for his part-time... Wilson will also see a raise in 2003 when the business has reached a high enough level of sales to make that possible Table: Personnel Personnel Plan 2002 $21,000 $21,000 $12,000 3 $54,000 Jake Wilson Lisa Wilson Peter Wilson Total People Total Payroll 2003 $36,000 $36,000 $12,000 3 $84,000 2004 $36,000 $36,000 $20,000 3 $92,000 8.0 Financial Plan The financial plan of WorkChairs is very simple and conservative... $15,987 $10,910 $76,929 Page 9 WorkChairs Business Plan Sales Monthly $30,000 $25,000 $20,000 Chairs Computer Accessories $15,000 Workstations $10,000 Other $5,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sales by Year $250,000 $200,000 Chairs $150,000 Computer Accessories Workstations $100,000 Other $50,000 $0 2002 2003 2004 Page 10 WorkChairs Business Plan 5.4 Milestones The accompanying table... attainable Table: General Assumptions General Assumptions Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Calculated Totals Payroll Expense New Accounts Payable 2002 1 10.00% 10.00% 30.00% 0.00% 2003 2 10.00% 10.00% 30.00% 0.00% 2004 3 10.00% 10.00% 30.00% 0.00% $54,000 $82,700 $84,000 $89,466 $92,000 $98,717 Page 14 WorkChairs Business Plan 8.2 Break-even Analysis Our Break-even Analysis... old fashioned way." • Cold Calls—Jake Wilson will call on local businesses both small and large to educate them on our company and our ergonomic products • Yellow Pages—We will be listed in the local yellow pages under office products, office furniture, etc • Business Groups—Jake and Lisa Wilson will each be joining a number of local business groups in order to network and make contacts at local companies... that's it's easy for visitors to send pages of our site to their friends and co-workers We also hope their satisfaction with our products will lead them to tell others about us Page 12 WorkChairs Business Plan 6.2 Development Requirements The development of the WorkChairs website will start on January 1st of 2002 The estimated finish date of the website will be February 15, 2002 Peter Wilson will be . January 2002 This sample business plan has been made available to users of Business Plan Pro®, business planning software published by Palo Alto Software. Names,. Launch Business Groups Joined Cold Calls Launch Milestones WorkChairs Business Plan Page 11 6.0 Web Plan Summary The WorkChairs' website will be more than just a brochure for our local business, . though, as most small businesses try to keep their costs low. It's a good market, especially locally, because these business often support other local small businesses. • Large Business Purchase