food fun- start up business plan

7/29/2019 Food Fun- Start up Business Plan

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January 2003

This sample business plan has been made available to users ofBusiness Plan Pro, businessplanning software published by Palo Alto Software. Names, locations and numbers may havebeen changed, and substantial portions of the original plan text may have been omitted topreserve confidentiality and proprietary information.

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

1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.3 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.2 Target Market Segment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.3 Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.3.1 Competition and Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.2 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.3 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.3.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.4 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6.0 Web Plan Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

6.1 Website Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126.2 Development Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

7.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

8.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

8.1 Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148.2 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158.3 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168.4 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198.5 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218.6 Business Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table of Contents


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1.0 Executive Summary

FoodFun Lifeskills Instructional Software (FoodFun LIS) is a start-up organization whosevision is to create the finest education/entertainment software for non-reading individualswith developmental disabilities. The software product has been designed and created by aPh.D. veteran of the special education industry, to meet the needs of this special customersegment. The software will be constructive by teaching certain lifeskills and will be fun to use,encouraging the student to use it as often as possible. FoodFun LIS was formed in January2003 as an Illinois L.L.C. by founder and owner is Sue Altamirankow, Ph.D. and will be basedin Chicago.

The Market

FoodFun has identified four distinct market segments that will be interested in the softwareproduct. These segments are the most likely consumers of the software. The segments are asfollows:

Centers for Independent Living- These centers exist to help train individuals withdevelopmental disabilities to live on their own. The curriculum is often based aroundfour primary lifeskills that are necessary for the individuals to have in order to

successfully live independently. School Districts- All states are required to provide education for students of specialneeds until they reach the age of 21. The school districts are often the educationalproviders until the students are 18 and will be interested in FoodFun's software asthey help the students obtain fundamental lifeskills.

Proactive Parents- Parents who are taking an active role in the education of theirchildren will be looking for aids that they can use at home to help with their child'slearning progress.

Agencies- Many states have formed agencies that act as brokers to connect serviceproviders with individuals. The agencies have generally been formed as a result of asettlement or payout from a lawsuit (including class action).

Parents are expected to purchase only one copy of the program, while the other segmentswill generally purchase multiple copies/site licenses and are likely to purchase upgrades tosubsequent versions.

The Product

Grocery shopping and socialization/leisure are two of the main lifeskills which individuals withdevelopmental disabilities are taught. FoodFun has developed a unique software product thatis an effective teaching aid for these important skills. The first component of the software isgrocery shopping. This takes the form of a digital cookbook of recipes. Each recipe isrepresented by a picture. When the student chooses the picture they desire, they then see alist of pictures which are the ingredients and utensils needed to make the dish. The student isthen able to print out the pictures and take the pictures to the grocery store, allowing themto shop independently.

FoodFun Lifeskills Instructional Software


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This interest and joy will increase the amount of time that the students use the software,thereby increasing the effectiveness of the program. FoodFun is convinced that whenstudents enjoy what they are doing they are likely to use the product instead of having to beforced to use it.

Management

FoodFun has been founded and will be led by Dr. Sue Altamirankow. Sue has a Masters andPh.D. in special education and has been teaching in the university setting for eight years. Herpublished thesis "Implications in Lifeskill Training for Individuals with Autism" was a ground-breaking paper that carefully studied all aspects of lifeskills. This was the foundation of heridea to start a software company. She realized that she could develop a study aid that wouldbe fun and effective. It would be fun because the students would enjoy using it, it would beeffective because it taught important necessary lifeskills to individuals with developmentaldisabilities who begin to live more independently. FoodFun has forecasted revenues of$400,397 and $490,000 for years two and three. Net profit/Sales has been forecasted to be12.57% and 21.45% for those respective years.

($200,000)

($100,000)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

2003 2004 2005

Sales

Gross Margin

Net Profit

Highlights

1.1 Objectives

Increase sales by triple for the first two years. Achieve 20% market penetration by year four



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1.2 Mission

To develop fun-to-use educational software for non-readers with developmental disabilities.Our software will provide lifeskills training that empowers the individuals and make themmore independent. We exist to make products that the market demands and have a positiveimpact on society.

1.3 Keys to Success

Develop educational software that is constructive and fun. If it is not fun, it likely will

not be used. Implement a strong marketing campaign to develop awareness of the software and its

benefits within all of the training centers, school districts, brokerages, and amongparents.

Design strict financial controls for the organization.

2.0 Company Summary

FoodFun Lifeskills Instructional Software is an Illinois based L.L.C. The company is owned byits founder Sue Altamirankow. The company is a start-up organization founded in January of2003.

2.1 Company Ownership

The company was founded and is owned by Sue Altamirankow. Sue is a respected, published,former educator of special education with an emphasis on autism. Sue will leverage herextensive knowledge and industry contacts to make FoodFun LIS a success.

2.2 Start-up Summary

FoodFun LIS is a start-up organization. The following assets and professional services will beneeded for the formation and start of operations.

Legal services for company formation. Accounting services to set up the accounting shell of the company QuickBooks Pro

software. Computer programmers (3) to rapidly develop the software. An individualprogrammer could complete the coding of this product however, FoodFun is interestedin launching the product fast therefore they will employ multiple programmers tospeed the process up.

Eight computer workstations, including one server. Seven of the stations will haveMicrosoft Office, one of them will have QuickBooks Pro. Three networked laser



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Table: Start-up

Start-up

Requirements

Start-up ExpensesLegal $3,000Accounting $2,000Brochures $2,500Consultants $0Insurance $0Rent $0Research and Development $0Expensed Equipment $15,000Other $0Total Start-up Expenses $22,500

Start-up Assets NeededCash Balance on Starting Date $213,500Start-up Inventory $0Other Current Assets $0Total Current Assets $213,500

Long-term Assets $9,000

Total Assets $222,500Total Requirements $245,000

Funding

InvestmentInvestor 1 $60,000Investor 2 $50,000Other $35,000Total Investment $145,000

Current LiabilitiesAccounts Payable $0Current Borrowing $0Other Current Liabilities $0Current Liabilities $0

Long-term Liabilities $100,000Total Liabilities $100,000

Loss at Start-up ($22,500)Total Capital $122,500

Total Capital and Liabilities $222,500



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$0

$50,000

$100,000

$150,000

$200,000

$250,000

Expenses Assets Investment Loans

Start-up

3.0 Products

FoodFun LIS' flagship product is a software package designed for non-readers, generallyindividuals with autism and developmental disabilities, and other people with developmental

disabilities. Most transition/lifeskills training programs focus on four key areas of life:food/cooking/nutrition, money management, health/safety, and social interaction/leisure.FoodFun's product focuses on food/cooking as well as social interaction, two of the primarylifeskills needed for independent living.

Non-readers rely on visual images as a form of communication, a replacement for the moretypical text that readers are able to understand. The first component of the software is adigital cookbook of recipes. The software displays pictures of the different ingredients neededfor the recipe. The pictures are then printed allowing the individual to take the picture to the

grocery store facilitating the purchasing of the groceries. On each picture is also textexplaining what the item is. Within each recipe is the ability to print the different utensils andpots needed to complete the item. While the recipes are meant to be cooked with support,the main goal is to allow the individual to have independent shopping.

The user first sees a bunch of different pictures of food dishes with names below the pictures.The user then chooses a dish and is brought to a screen where the ingredients are listed by



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the different steps of food preparation for the event. These food preparation steps are thepreviously explained food component that is now organized not by dish but by event. If apicnic in a park is chosen there will be several dishes to be made, all of them cold as there isno way of heating the dishes while you are in the park. All users of this module will beentertained by the background sounds as well as the excitement of planning for a party.

This component is especially important in the individual's development. Planning activities areespecially important for a population that is so isolated. Without socialization skills such asparties, the clients end up learning the skills and then sit in their apartment alone.

Ultimately, FoodFun's software product combines two of the most importantlifeskills/transition training areas, food preparation and social leisure. The food component

allows the non-reading individuals with developmental disabilities to become moreindependent in their daily activities. The social planning module leverages the existing foodmodule and assists the users in panning for social occassions centered around food. Thismodule is designed to be entertaining to capture the interest and imagination of the user,drawing them into the software, creating the desire to use the product.

The software product will be developed by three contract programmers. The software will beupgraded yearly.

4.0 Market Analysis Summary

The market for lifeskills training software can be segmented into four groups. The first iscenters for independent living, the second is school districts, the third is proactive parents,and the last is agencies charged with special education administration. Each of the foursegments is distinct and will be communicated with in different ways. These four segmentshave been chosen because they are the main purchasers of products for individuals withdevelopmental disabilities.

The software industry for individuals with developmental disabilities has just begun to grow.Only within the last few years has there been a significant increase in the number ofcomputers found in classrooms using specialized software. Competing with the softwarecompanies are products that have printed pictures on them, typically laminated cards. Whilethese cards are helpful, they are less interactive.

4.1 Market Segmentation

FoodFun LIS has identified four distinct market segments for their products: Centers for Independent Living- These are typically not-for-profit entities that

assist individuals with developmental disabilities. The centers help clients with



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state to the service providers assisting the individuals in need.

Table: Market Analysis

Market AnalysisPotential Customers Growth 2003 2004 2005 2006 2007 CAGRCenters for IndependentLiving

6% 3,245 3,440 3,646 3,865 4,097 6.00%

School Districts 5% 14,856 15,599 16,379 17,198 18,058 5.00%Proactive Parents 8% 824,555 890,519 961,761 1,038,702 1,121,798 8.00%Agencies 6% 5,354 5,675 6,016 6,377 6,760 6.00%Total 7.93% 848,010 915,233 987,802 1,066,142 1,150,713 7.93%

Centers for Independent Living

School Districts

Proactive Parents

Agencies

Market Analysis (Pie)

4.2 Target Market Segment Strategy

These four target segments were chosen because they have the greatest likelihood of

purchasing FoodFun's products.

Centers for Independent Living- The centers typically buy aids to assist in theteaching of lifeskills and other transition skills to their clientss.

School Districts- In order to assist the school districts in teaching the students (afederal requirement) the districts will use instructuional tools and aids. Instructionaltools are particularly useful as the ratio of students to teachers is often high and these



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4.3 Industry Analysis

There are several companies making products that specifically address learning needs forindividuals with developmental disabilities. While some of the companies' products are alsosuitable for traditional students, most companies in this industry specialize on products fordevelopmental disabilities.

Within the industry there are a wide range of products. There are many different productgroups that target specific types of disabilities. There are also different products targeted ona specific disability. Some might concentrate on spelling, reading comprehension, counting,sentence construction, etc. Lastly, within each specific category products take different forms,some may be CDs, software, cards, audio tapes, etc.

4.3.1 Competition and Buying Patterns

There are three main companies that are direct competitors to FoodFun Lifeskills InstructionalSoftare, focusing on individuals with developmental disabilities or individuals with autism

(75% of individuals with autism are developmentally disabled and non-readers).

WordWise- This company makes several products including picture-based languageprograms, laminated picture cards, and community success CDs. While their softwarehas a grocery shopping module, it is very simple and limited in the choices of groceryitems.

Edbydesign.com- This company has several products including: sentence maker,match maker, counting programs, and sorting programs. These are all non-interactiveCD-based programs.

Autismcoach.com- This company makes software that is designed to strengthencore cognitive skills such as short-term memory, mental processing speed, multi-tasking and auditory processing. This is primarily for a younger customer age of 10-17.

5.0 Strategy and Implementation Summary

FoodFun LIS will leverage their competitive edge of combining education and entertainment

within their software product to help them quickly gain market share. All of the competitors'software concentrate on skill development. While this is useful, it does not always motivatestudents. FoodFun has added entertaining elements into their software, encouraging thestudents to use the software and have fun while they learn.

FoodFun's marketing strategy will be to raise visibility of the software product among thedecision makers who are in charge of purchasing aids and instructional tools. The campaign



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5.1 Competitive Edge

FoodFun LIS' competitive edge is their clever incorporation of entertaining fun within theeducation software. Currently, there are several different vendors that are marketingsoftware for this niche, however, the software is strictly educational. While this is well andgood for developing skills, the students are not always that eager to use the software.FoodFun has adopted the philosophy that if they can make the education/training fun, thestudents will use it far more often, having fun while they are learning valuable skills.

Two different studies (not developmental disability specific studies, but the results are stillapplicable) have shown that if students are enjoying themselves, they will spend 2.4 times aslong using the software that they perceive as fun. What this means is that the student isspending 2.4 times as long developing necessary skills when they are enjoying the software.FoodFun has incorporated entertainment aspects to their software to utilize this phenomenon.

5.2 Marketing Strategy

FoodFun's marketing strategy reflects their perception of the industry: that most of thecompanies operating today are operated by educators; that they make nice products; but notmany people know about the products, and overall awareness is poor. The reality is that somany prospective customers in the United States are unaware of the different availableproducts. FoodFun will employ an aggressive marketing strategy to raise awareness of theirproducts among customers who are in need of these products, and thereby increasingsoftware purchases. FoodFun will be advertising heavily in various industry journals andmagazines as a proven method of reaching the target audience. The ads will generateawareness of FoodFun LIS and will lead the customers to FoodFun's website where they can

demo the software. This strategy is based on the philosophy that you can have a greatproduct, but if no one knows about it you are not going to be successful.

5.3 Sales Strategy

FoodFun will use an aggressive sales campaign that will rely on conference participation aswell as target cold calling. There are numerous industry conferences throughout the countrythat are specifically for educators. The conferences are the places where people get togetherand share strategies that work with their colleagues in different departments and different

states. While the conferences are not typically packed with vendors, FoodFun LIS will bepresent since the conferences are a captive assortment of the right people the educatorsthat are in the trenches working with the special students. The conferences will be anexcellent networking opportunity and should develop significant sales.

The second prong of the sales strategy will be a campaign aimed at contacting key decisionmakers and introducing them to FoodFun LIS and their products. Autism consultants for



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5.3.1 Sales Forecast

The following table and charts present sales forecasts in a monthly format as well as yearlyprojections. Forecasts have been conservatively estimated to increase the likelihood ofattainment. Sales has been broken down by customer group.

A fulfillment house will be contracted to produce, package, and ship the hard copy softwareproduct to purchasers. Download of the software from the FoodFun FIS website will beavailable. This will drastically reduce cost of goods if purchasers use the download onlypurchase option.

Table: Sales Forecast

Sales ForecastSales 2003 2004 2005Centers for Independent Living $23,439 $96,957 $118,616School Districts $43,405 $179,550 $219,660Proactive Parents $9,983 $41,297 $50,522Agencies $19,966 $82,593 $101,044Total Sales $96,793 $400,397 $489,842

Direct Cost of Sales 2003 2004 2005Centers for Independent Living $1,641 $6,787 $8,303School Districts $3,038 $12,569 $15,376Proactive Parents $699 $2,891 $3,537Agencies $1,398 $5,782 $7,073Subtotal Direct Cost of Sales $6,776 $28,028 $34,289

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000


School Districts

Proactive Parents

Agencies

Sales Monthly



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$0

$100,000

$200,000

$300,000

$400,000

$500,000

2003 2004 2005


School Districts

Proactive Parents

Agencies

Sales by Year

5.4 Milestones

FoodFun LIS has several milestones, presented in the following table and chart, which will beinstrumental in the success of the organization.

Table: Milestones

MilestonesMilestone Start Date End Date Budget Manager DepartmentBusiness plan completion

1/1/2004 2/15/2004 SueBusines

DevelopmentBeta version completed 2/1/2004 4/15/2004 ProgrammingOrganizational hiring complete 3/15/2004 5/1/2004 Sue HRPublic release of software 4/15/2004 5/15/2004 Programming

Profitability 5/15/2004 5/30/2005 Sue AccountingTotals $0



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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Business plan completion

Beta version completed

Organizational hiring complete

Public release of software

Profitability

Milestones

6.0 Web Plan Summary

FoodFun will develop a website that will be used as both a marketing and sales tool. On thesite interested parties can receive more information regarding the company and the current

product list. Once the beta version of the software is ready interested customers candownload a trial version of the software for their evaluation. The website will also providepeople with company contact information to allow them to ask any questions that they mayhave.

Online sales will be contracted to one of the third party Internet sales businesses, such asYahoo! Shopping. The site will provide customers with a download only purchase option.

6.1 Website Marketing Strategy

The website will be marketed using simple yet effective means. The first method is inclusionof the URL address in all promotional activities. This will be especially important because itwill allow all interested parties to view screen shots of the software and download a trialversion of the product FoodFun LIS recognizes that no ad will be able to communicate



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6.2 Development Requirements

FoodFun will employ one computer science student for the design and development of thewebsite. Development will occur concurrently with the development of the software.

7.0 Management Summary

FoodFun LIS has been founded and will be led by Sue Altamirankow. Sue received herBachelors in Education from Northwestern University. After graduation she enteredNorthwestern's Masters Program in Special Education with her emphasis on Autism.

Recognizing that she wanted to teach at some point, Sue finished her Masters and enteredthe rigorous Ph.D. program. Her thesis, entitled "Implications in Lifeskills Training forIndividuals with Autism" won widespread accolade and was published in the prestigiousHarvard Special Education Journal. Having gotten to know most of the special educationdepartment at Northwestern, she was asked to become a faculty member on completion ofher Ph.D.

Sue spent eight years teaching at Northwestern. While she taught a number of generalspecial education classes, her passion was lifeskills for individuals with developmental

disabilities, focusing on life transitions. In addition to teaching, Sue served as a member ofthe board of several different nonprofit agencies. Her time spent on the different boards wasquite pleasing since it provided her with a bit more direct experience with the individuals inneed. In the school setting most of her interactions was specifically with graduate andundergraduate students.

Sue began to realize as much as she enjoyed teaching, she felt isolated from the studentsthat she was trying to help. She recognized that her work as an educator would in effectbenefit the students, but she was looking for a different connection. Because she had anamazing amount of knowledge about the subject of special education, Sue began tobrainstorm some ideas of starting a business that would serve individuals with developmentaldisabilities. While this intrigued Sue, she did not feel she had the requisite businessexperience, so she took several business courses to help develop this new skill set. Whiletaking these course (and teaching at the same time) Sue began to realize that while therewere many different study aids on the market, they were all strictly educational. Sue believed(and studies would indicate) that if a fun component was added to the aid, students woulduse it more often and learn more. With this information in hand, Sue began to create an ideafor some software that was both educational and entertaining at the same time. This was thebeginning of FoodFun Lifeskills Instructional Software.

7.1 Personnel Plan

FoodFun LIS will require the following employees:



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Table: Personnel

Personnel Plan2003 2004 2005

Sue $22,000 $26,000 $30,000Accounting $16,200 $21,600 $21,600Software Documentation $19,800 $26,400 $26,400Product Development $15,400 $26,400 $26,400Customer Service/ Tech Support $19,800 $26,400 $26,400Customer Service/ Tech Support $19,800 $26,400 $26,400Marketing/ Sales $27,000 $36,000 $36,000Marketing/ Sales $27,000 $36,000 $36,000Total People 8 8 8Total Payroll $167,000 $225,200 $229,200

8.0 Financial Plan

The following sections outline important financial information.

8.1 Important Assumptions

The following table details important financial assumptions.

Table: General Assumptions

General Assumptions2003 2004 2005

Plan Month 1 2 3Current Interest Rate 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00%Tax Rate 30.00% 30.00% 30.00%

Sales on Credit % 75.00% 75.00% 75.00%Other 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $167,000 $225,200 $229,200Sales on Credit $72,595 $300,297 $367,381New Accounts Payable $84,234 $133,165 $156,731Inventory Purchase $10,000 $38,142 $37,269



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8.2 Break-even Analysis

The Break-even Analysis indicates that $26,767 is needed in monthly revenue to reach thebreak-even point.

Table: Break-even Analysis

Break-even Analysis:Monthly Units Break-even 268Monthly Revenue Break-even $26,767

Assumptions:Average Per-Unit Revenue $100.00Average Per-Unit Variable Cost $10.00Estimated Monthly Fixed Cost $24,090

($30,000)

($20,000)

($10,000)

$0

$10,000

$20,000

$0 $8,000 $16,000 $24,000 $32,000 $40,000

Monthly break-even point

Break-even point = where line intersects with 0

Break-even Analysis



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8.3 Projected Profit and Loss

The table and charts illustrate the projected profit and loss.

Table: Profit and Loss

Pro Forma Profit and Loss2003 2004 2005

Sales $96,793 $400,397 $489,842Direct Costs of Goods $6,776 $28,028 $34,289Other Costs of Goods $0 $0 $0

------------ ------------ ------------Cost of Goods Sold $6,776 $28,028 $34,289Gross Margin $90,018 $372,369 $455,553Gross Margin % 93.00% 93.00% 93.00%Expenses:Payroll $167,000 $225,200 $229,200Sales and Marketing and OtherExpenses

$6,600 $7,200 $7,200

Depreciation $1,800 $1,800 $1,800Rent $10,450 $11,400 $11,400Utilities $5,500 $6,000 $6,000

Insurance $5,500 $5,500 $5,500Payroll Taxes $25,050 $33,780 $34,380Programming $12,000 $0 $0

------------ ------------ ------------Total Operating Expenses $233,900 $290,880 $295,480Profit Before Interest and Taxes ($143,882) $81,489 $160,073Interest Expense $9,134 $9,566 $9,943Taxes Incurred $0 $21,577 $45,039Net Profit ($153,017) $50,346 $105,091Net Profit/Sales -158.09% 12.57% 21.45%Include Negative Taxes FALSE TRUE TRUE

($20,000)

($15,000)

($10,000)

($5,000)

$0

Profit Monthly



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($200,000)

($150,000)

($100,000)

($50,000)

$0

$50,000

$100,000

$150,000

2003 2004 2005

Profit Yearly

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Gross Margin Monthly



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$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2003 2004 2005

Gross Margin Yearly



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8.4 Projected Cash Flow

The following chart and table show projected cash flow.

($50,000)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Net Cash Flow

Cash Balance

Cash



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Table: Cash Flow

Pro Forma Cash Flow 2003 2004 2005

Cash ReceivedCash from Operations:Cash Sales $24,198 $100,099 $122,460Cash from Receivables $45,668 $215,837 $342,498

Subtotal Cash from Operations $69,866 $315,936 $464,959

Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0Sales Tax, VAT, HST/GST Received $0 $0 $0New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0New Long-term Liabilities $0 $40,000 $0Sales of Other Current Assets $0 $0 $0Sales of Long-term Assets $0 $0 $0New Investment Received $0 $0 $0

Subtotal Cash Received $69,866 $355,936 $464,959

Expenditures 2003 2004 2005Expenditures from Operations:Cash Spending $167,000 $225,200 $229,200Payment of Accounts Payable $78,196 $114,225 $151,151

Subtotal Spent on Operations $245,196 $339,425 $380,351

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0Principal Repayment of CurrentBorrowing

$0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0Long-term Liabilities PrincipalRepayment

$16,227 $16,227 $16,227

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0Dividends $0 $0 $0Subtotal Cash Spent $261,423 $355,652 $396,578

Net Cash Flow ($191,557) $284 $68,381Cash Balance $21,943 $22,226 $90,607



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8.5 Projected Balance Sheet

The following table presents the projected balance sheet.

Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets 2003 2004 2005Cash $21,943 $22,226 $90,607

Accounts Receivable $26,927 $111,388 $136,271Inventory $3,224 $13,338 $16,318Other Current Assets $0 $0 $0Total Current Assets $52,095 $146,953 $243,196Long-term AssetsLong-term Assets $9,000 $9,000 $9,000Accumulated Depreciation $1,800 $3,600 $5,400Total Long-term Assets $7,200 $5,400 $3,600Total Assets $59,295 $152,353 $246,796

Liabilities and Capital2003 2004 2005

Accounts Payable $6,038 $24,977 $30,557Current Borrowing $0 $0 $0Other Current Liabilities $0 $0 $0Subtotal Current Liabilities $6,038 $24,977 $30,557

Long-term Liabilities $83,773 $107,546 $91,319Total Liabilities $89,811 $132,524 $121,876

Paid-in Capital $145,000 $145,000 $145,000Retained Earnings ($22,500) ($175,517) ($125,171)Earnings ($153,017) $50,346 $105,091

Total Capital ($30,517) $19,829 $124,920Total Liabilities and Capital $59,295 $152,353 $246,796Net Worth ($30,517) $19,829 $124,920

8.6 Business Ratios

The following table outlines some of the more important ratios from the Computer Softwareindustry. The final column, Industry Profile, details specific ratios based on the industry as it

is classified by the Standard Industry Classification (SIC) code, 5045.9903.



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Table: Ratios

Ratio Analysis

2003 2004 2005 Industry ProfileSales Growth 0.00% 313.66% 22.34% 1.51%

Percent of Total AssetsAccounts Receivable 45.41% 73.11% 55.22% 29.71%Inventory 5.44% 8.75% 6.61% 39.18%Other Current Assets 0.00% 0.00% 0.00% 19.28%Total Current Assets 87.86% 96.46% 98.54% 88.17%Long-term Assets 12.14% 3.54% 1.46% 11.83%Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.18% 16.39% 12.38% 43.83%Long-term Liabilities 141.28% 70.59% 37.00% 9.87%Total Liabilities 151.47% 86.98% 49.38% 53.70%Net Worth -51.47% 13.02% 50.62% 46.30%

Percent of SalesSales 100.00% 100.00% 100.00% 100.00%Gross Margin 93.00% 93.00% 93.00% 24.10%Selling, General & Administrative Expenses 251.09% 80.43% 71.55% 15.49%Advertising Expenses 0.00% 0.00% 0.00% 0.58%Profit Before Interest and Taxes -148.65% 20.35% 32.68% 2.35%

Main RatiosCurrent 8.63 5.88 7.96 1.86Quick 8.09 5.35 7.42 0.86Total Debt to Total Assets 151.47% 86.98% 49.38% 5.06%Pre-tax Return on Net Worth 501.42% 362.71% 120.18% 56.70%Pre-tax Return on Assets -258.06% 47.21% 60.83% 11.68%

Business Vitality Profile 2003 2004 2005 IndustrySales per Employee $12,099 $50,050 $61,230 $518,155Survival Rate 53.30%

Additional Ratios 2003 2004 2005Net Profit Margin -158.09% 12.57% 21.45% n.aReturn on Equity 0.00% 253.90% 84.13% n.a

Activity RatiosAccounts Receivable Turnover 2.70 2.70 2.70 n.aCollection Days 55 84 123 n.aInventory Turnover 1.22 3.38 2.31 n.aAccounts Payable Turnover 13.95 5.33 5.13 n.aPayment Days 28 43 65 n.aTotal Asset Turnover 1.63 2.63 1.98 n.a

Debt RatiosDebt to Net Worth 0.00 6.68 0.98 n.aCurrent Liab. to Liab. 0.07 0.19 0.25 n.a

Liquidity RatiosNet Working Capital $46,056 $121,975 $212,639 n.aI t t C 15 75 8 52 16 10



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Appendix Table: Sales Forecast

Sales Forecast

Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCenters for Independent Living $0 $0 $0 $0 $540 $1,350 $1,944 $2,970 $3,918 $4,023 $4,266 $4,428School Districts $0 $0 $0 $0 $1,000 $2,500 $3,600 $5,500 $7,255 $7,450 $7,900 $8,200Proactive Parents $0 $0 $0 $0 $230 $575 $828 $1,265 $1,669 $1,714 $1,817 $1,886

Agencies $0 $0 $0 $0 $460 $1,150 $1,656 $2,530 $3,337 $3,427 $3,634 $3,772Total Sales $0 $0 $0 $0 $2,230 $5,575 $8,028 $12,265 $16,179 $16,614 $17,617 $18,286

Direct Cost of Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCenters for Independent Living $0 $0 $0 $0 $38 $95 $136 $208 $274 $282 $299 $310School Districts $0 $0 $0 $0 $70 $175 $252 $385 $508 $522 $553 $574Proactive Parents $0 $0 $0 $0 $16 $40 $58 $89 $117 $120 $127 $132

Agencies $0 $0 $0 $0 $32 $81 $116 $177 $234 $240 $254 $264Subtotal Direct Cost of Sales $0 $0 $0 $0 $156 $390 $562 $859 $1,133 $1,163 $1,233 $1,280

Appendix

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Appendix Table: Personnel

Personnel Plan

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSue $0 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000Accounting $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800Software Documentation $0 $0 $0 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200Product Development $0 $0 $0 $0 $0 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200Customer Service/ Tech Support $0 $0 $0 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200Customer Service/ Tech Support $0 $0 $0 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200 $2,200Marketing/ Sales $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000Marketing/ Sales $0 $0 $0 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000Total People 0 1 1 7 7 8 8 8 8 8 8 8Total Payroll $0 $2,000 $2,000 $16,400 $16,400 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600

Appendix

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Appendix Table: General Assumptions

General Assumptions

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPlan Month 1 2 3 4 5 6 7 8 9 10 11 12Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%Sales on Credit % 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00% 75.00%Other 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Calculated TotalsPayroll Expense $0 $2,000 $2,000 $16,400 $16,400 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600Sales on Credit $0 $0 $0 $0 $1,673 $4,181 $6,021 $9,199 $12,134 $12,460 $13,213 $13,715New Accounts Payable $3,823 $6,662 $6,651 $18,800 $5,789 $6,107 $6,096 $6,085 $6,073 $6,062 $6,050 $6,038Inventory Purchase $0 $0 $0 $10,000 $0 $0 ($0) $0 $0 $0 $0 $0

Appendix

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Appendix Table: Profit and Loss

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecSales $0 $0 $0 $0 $2,230 $5,575 $8,028 $12,265 $16,179 $16,614 $17,617 $18,286Direct Costs of Goods $0 $0 $0 $0 $156 $390 $562 $859 $1,133 $1,163 $1,233 $1,280Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

---- -- --- --- - --- -- -- -- -- - -- --- -- -- -- - -- --- -- --- - -- -- -- -- --- - - -- -- -- --- -- - -- -- -- --- -- - -- --- -- --- - - --- -- --- --- - --- -- --- --- - -- -- -- -- -- - - --- --- -- ---Cost of Goods Sold $0 $0 $0 $0 $156 $390 $562 $859 $1,133 $1,163 $1,233 $1,280Gross Margin $0 $0 $0 $0 $2,074 $5,185 $7,466 $11,406 $15,046 $15,451 $16,384 $17,006Gross Margin % 0.00% 0.00% 0.00% 0.00% 93.00% 93.00% 93.00% 93.00% 93.00% 93.00% 93.00% 93.00%Expenses:Payroll $0 $2,000 $2,000 $16,400 $16,400 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600Sales and Marketing and OtherExpenses

$0 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Depreciation $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150Rent $0 $950 $950 $950 $950 $950 $950 $950 $950 $950 $950 $950

Utilities $0 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500Insurance $0 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500Payroll Taxes 15% $0 $300 $300 $2,460 $2,460 $2,790 $2,790 $2,790 $2,790 $2,790 $2,790 $2,790Programming $3,000 $3,000 $3,000 $3,000 $0 $0 $0 $0 $0 $0 $0 $0

---- -- --- --- - --- -- -- -- -- - -- --- -- -- -- - -- --- -- --- - -- -- -- -- --- - - -- -- -- --- -- - -- -- -- --- -- - -- --- -- --- - - --- -- --- --- - --- -- --- --- - -- -- -- -- -- - - --- --- -- ---Total Operating Expenses $3,150 $8,000 $8,000 $24,560 $21,560 $24,090 $24,090 $24,090 $24,090 $24,090 $24,090 $24,090Profit Before Interest and Taxes ($3,150) ($8,000) ($8,000) ($24,560) ($19,486) ($18,905) ($16,624) ($12,684) ($9,044) ($8,639) ($7,706) ($7,084)Interest Expense $823 $812 $801 $790 $779 $767 $756 $745 $733 $722 $710 $698Taxes Incurred $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Profit ($3,973) ($8,812) ($8,801) ($25,350) ($20,265) ($19,673) ($17,380) ($13,428) ($9,777) ($9,361) ($8,416) ($7,782)Net Profit/Sales 0.00% 0.00% 0.00% 0.00% -908.73% -352.87% -216.49% -109.48% -60.43% -56.35% -47.77% -42.56%Include Negative Taxes

Appendix

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Appendix Table: Cash Flow

Pro Forma Cash Flow Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cash ReceivedCash from Operations:Cash Sales $0 $0 $0 $0 $558 $1,394 $2,007 $3,066 $4,045 $4,153 $4,404 $4,572Cash from Receivables $0 $0 $0 $0 $0 $0 $1,673 $4,181 $6,021 $9,199 $12,134 $12,460

Subtotal Cash from Operations $0 $0 $0 $0 $558 $1,394 $3,680 $7,248 $10,066 $13,352 $16,538 $17,032

Additional Cash ReceivedNon Operating (Other) Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Cash Received $0 $0 $0 $0 $558 $1,394 $3,680 $7,248 $10,066 $13,352 $16,538 $17,032

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecExpenditures from Operations:Cash Spending $0 $2,000 $2,000 $16,400 $16,400 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600 $18,600Payment of Accounts Payable $0 $3,823 $6,662 $6,651 $18,800 $5,789 $6,107 $6,096 $6,085 $6,073 $6,062 $6,050

Subtotal Spent on Operations $0 $5,823 $8,662 $23,051 $35,200 $24,389 $24,707 $24,696 $24,685 $24,673 $24,662 $24,650

Additional Cash SpentNon Operating (Other) Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Principal Repayment of Current

Borrowing$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Long-term Liabilities PrincipalRepayment

$1,291 $1,302 $1,313 $1,324 $1,335 $1,346 $1,357 $1,369 $1,380 $1,392 $1,403 $1,415

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $1,291 $7,125 $9,975 $24,375 $36,535 $25,735 $26,065 $26,065 $26,065 $26,065 $26,065 $26,065

Net Cash Flow ($1,291) ($7,125) ($9,975) ($24,375) ($35,977) ($24,341) ($22,385) ($18,817) ($15,999) ($12,713) ($9,526) ($9,033)Cash Balance $212,209 $205,084 $195,109 $170,735 $134,757 $110,416 $88,031 $69,214 $53,215 $40,502 $30,976 $21,943

Appendix

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Appendix Table: Balance Sheet

Pro Forma Balance Sheet

AssetsCurrent Assets Starting Balances Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecCash $213,500 $212,209 $205,084 $195,109 $170,735 $134,757 $110,416 $88,031 $69,214 $53,215 $40,502 $30,976 $21,943

Accounts Receivable $0 $0 $0 $0 $0 $1,673 $5,854 $10,202 $15,220 $21,333 $24,594 $25,673 $26,927Inventory $0 $0 $0 $0 $10,000 $9,844 $9,454 $8,892 $8,033 $6,901 $5,738 $4,504 $3,224Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Current Assets $213,500 $212,209 $205,084 $195,109 $180,735 $146,274 $125,724 $107,125 $92,467 $81,448 $70,834 $61,153 $52,095Long-term AssetsLong-term Assets $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $9,000

Accumulated Depreciation $0 $150 $300 $450 $600 $750 $900 $1,050 $1,200 $1,350 $1,500 $1,650 $1,800Total Long-term Assets $9,000 $8,850 $8,700 $8,550 $8,400 $8,250 $8,100 $7,950 $7,800 $7,650 $7,500 $7,350 $7,200Total Assets $222,500 $221,059 $213,784 $203,659 $189,135 $154,524 $133,824 $115,075 $100,267 $89,098 $78,334 $68,503 $59,295

Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAccounts Payable $0 $3,823 $6,662 $6,651 $18,800 $5,789 $6,107 $6,096 $6,085 $6,073 $6,062 $6,050 $6,038Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Subtotal Current Liabilities $0 $3,823 $6,662 $6,651 $18,800 $5,789 $6,107 $6,096 $6,085 $6,073 $6,062 $6,050 $6,038

Long-term Liabilities $100,000 $98,709 $97,406 $96,094 $94,770 $93,435 $92,089 $90,731 $89,363 $87,983 $86,591 $85,188 $83,773Total Liabilities $100,000 $102,531 $104,068 $102,744 $113,569 $99,223 $98,196 $96,827 $95,447 $94,056 $92,653 $91,238 $89,811

Paid-in Capital $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000 $145,000Retained Earnings ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500) ($22,500)Earnings $0 ($3,973) ($12,784) ($21,585) ($46,935) ($67,200) ($86,872) ($104,252) ($117,680) ($127,458) ($136,819) ($145,235) ($153,017)Total Capital $122,500 $118,527 $109,716 $100,915 $75,565 $55,300 $35,628 $18,248 $4,820 ($4,958) ($14,319) ($22,735) ($30,517)

Total Liabilities and Capital $222,500 $221,059 $213,784 $203,659 $189,135 $154,524 $133,824 $115,075 $100,267 $89,098 $78,334 $68,503 $59,295Net Worth $122,500 $118,527 $109,716 $100,915 $75,565 $55,300 $35,628 $18,248 $4,820 ($4,958) ($14,319) ($22,735) ($30,517)

Appendix

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food fun- start up business plan

Documents