Академический Документы
Профессиональный Документы
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1.5 MANAGEMENT Our leadership team currently consists of Chief Executive Officer John Baker, President Michael Smith, and Vice President Susan Jones. Additional key leaders will include directors of finance, marketing and sales, human resources, information technology and operations. While these positions remain unfilled at this time, we do have several extremely qualified candidates interested in joining with us in this new venture. 1.6 FINANCIAL PLAN Our Company will earn revenue from the sale of design services and manufactured molds. The attached Income Statement demonstrates that our gross profit margin will exceed 72%, and we will achieve break-even with sales of $XXX,XXX. We expect to reach profitability by the middle of Year 2. 1.7 SOURCES & USE OF FUNDS Titus Mold Manufacturing, Inc. requires $4,450,000 to launch. At present, we have raised $150,000 in venture capital funds. In addition, co-owners John Baker, Michael Smith and Susan Jones have each invested $100,000 into the company. We are currently seeking funds from outside investors and business loans. The start-up funds will be used to cover the facility, build-out costs, equipment, software and initial operating costs including payroll, taxes, and utilities.
2.0 COMPANY
2.1 COMPANY & INDUSTRY Titus Mold Manufacturing, Inc. is located in Molder, Missouri. Our company designs and manufactures prototypes and molds for use in casting metals or forming other materials, such as plastics, glass or rubber. Our business operates within the manufacturing industry and is classified under NAICS code 333511 industrial mold manufacturing.
2.2 LEGAL ENTITY & OWNERSHIP Titus Mold Manufacturing is an S-Corporation that was formally organized in Missouri. The company's principal owners are John Baker, Michael Smith and Susan Jones, who hold equal shares of ownership in the company. 2.3 COMPANY HISTORY TO DATE Our company is a new business that will create prototypes and quality molds, utilizing the latest design software, e-commerce technology, high tech machinery and innovative
operations processes. As the company's founders and owners, we have a combined 40 years of experience in software development and the manufacturing industry. Our experience includes product research and development, engineering and production management. After recognizing the need for and value of creating a more efficient customer experience to secure and retain business, we decided to create Titus Mold Manufacturing, Inc. 2.4 FACILITIES Our company is preparing to lease a manufacturing facility in Molder, Missouri. We are presently operating out of temporary administrative offices at the Barton Business Incubation Center. We are working with a local realtor and BBIC to identify potential industrial space available for lease. We require a 10-12,000 sq. ft. facility to accommodate product development and engineering, a mold shop, a tool shop, quality assurance area, inventory storage and administrative offices. As the business grows, we intend to add injectionmolding capabilities. 2.5 KEY ASSETS Titus Mold Manufacturing holds a patent for its revolutionary Virtual Design Center (VDC). The VDC combines the best of virtual and in-person presentations and meetings, allowing customers to work in real-time with our design engineers. This allows us to serve clients nationwide.
3.0 PRODUCTS/SERVICES
3.1 DESCRIPTION Titus Mold Manufacturing, Inc. will make prototypes and molds for the manufacturing of consumer products. A mold, which is usually made from aluminum or steel, is a hollow form that gives a particular shape to a product while it is in a liquid state. The molds are used for products made from plastic, glass, metal or other raw materials. There are three main phases to manufacturing a prototype or mold. First, engineers and product developers create a design. Titus Mold Manufacturing is able to complete a design from start to finish for a customer. If need be, Titus will work with the customer through the design process via our one of a kind Virtual Design Center. Secondly, we make test molds. We then inspect and test the molds for quality assurance. Finally, we manufacture prototypes and molds based on specific design specifications, using precision machinery to form the desired prototype or mold. 3.2 FEATURES & BENEFITS
Virtual Design Center will be the key to distinguishing and drawing attention to our company. Once we have a particular industry or customer's attention, we will sell them on our fast turnaround, exceptional quality, unparalleled customer service and competitive pricing.
Obviously, speed, quality, service and price are qualities most of our competitors will list in their mission statement. However, Titus Mold Manufacturing will from the beginning invest in top quality, highly sophisticated machinery as well as implement innovative operations policies. These steps will ensure our ability to deliver beyond normal industry standard and surpass our customers expectations saving them time and money. 3.3 COMPETITION Our competitors are companies that provide similar types of design and mold-making services. There are far too many competitors to list specifically. To their advantage, they have an established customer base. Further, many mold-making companies also have injection-molding machinery, which enables them to manufacture actual products. However, the vast majority of our competitors are not taking full advantage of current technology, nor are they implementing modern operational systems. Their waste is ultimately passed along to the customer via longer turnaround times and higher overhead costs. 3.4 COMPETITIVE ADVANTAGE/BARRIERS TO ENTRY By relying on our technology and an activity-based costing system, rather than a timebased system, we will be able to maintain competitive prices and sustain high profitability. Our technology and systematic efficiencies will allow us to have advantages in cost, speed and design capability. Ultimately, these advantages will quickly come to define Titus Mold Manufacturing as an industry leader. Our Virtual Design Center technology gives us a significant advantage over our competitors, and our patent prevents others from being able to replicate the services we offer. 3.5 DEVELOPMENT As our company grows, we plan to expand our facility and create an injection-mold manufacturing plant. At that point, we will be able to control all operations in-house from initial design to mold creation and even mass production of the finished products. In addition, we will stay atop technology trends and upgrade equipment and processes as needed and can be afforded. We will also continue to research and pursue shares of existing markets such as packing, defense, electronics and telecommunications.
Propriety software (Virtual Design Center) Potential for global customer base Manufacturing & production expertise Software development expertise Understanding of emerging technologies Understanding of target markets Competitive product pricing
Weaknesses
No company history Small initial customer base New staff Lack of leverage with new relationships
Opportunities
New products & processes Bringing new technology into the industry Developing a new reputation Hiring new talent New innovations and applications of our technology
Threats
Impact of new legislation Technologies developed by competitors Challenges in building a talented staff Retaining key staff members Market demand fluctuations
this, we are putting forth a great amount of time and resources into developing a premiere Web site. We are working with a design firm and have secured a domain name TitusMolds.com. We have already initiated the process of integrating our Virtual Design Center into the site. In addition to describing our manufacturing processes and design capabilities, we will feature numerous success stories and images of prototypes and molds we have produced. Our site will also include a simple online form to complete for custom quotes as well as a generic form to submit questions and comments. Our vision is to create a Web site that will become an integral part of our marketing, sales and daily operations. 5.3 MARKETING STRATEGY Titus Mold Manufacturing recognizes the critical importance of marketing. We will require a properly designed and executed marketing plan to ensure market penetration and business success. Until we hire an in-house sales and marketing team, we will work with a marketing and public relations firm. Once a sales and marketing staff is in place, we will reassess the need for an outside firm. In addition to conveying to our potential customers the fast turnaround, exceptional quality, unparalleled customer service and competitive pricing offered by Titus Mold Manufacturing, we will also position our company as future-minded and a leader in the integration of innovative technology into the mold manufacturing process. Our marketing plan will include an initial publicity campaign that introduces our company and patented Virtual Design Center. Further, we will launch a comprehensive advertising campaign in automotive manufacturing and medical devise trade publications and related Web sites. The publicity campaign will be closely followed by a direct-mail campaign to targeted customers. The other main component of our marketing plan will be to attend trade shows which will require booth construction and maintenance, marketing materials such as brochures, and promotional items such as pens with our logo. To increase local awareness of our company and to foster a positive public perception, we will participate in and sponsor local charity events such as Walk for the Cure and March of Dimes and youth sports teams. We will also reach out to local high schools and colleges to offer internships and promote careers in manufacturing. 5.4 SALES STRATEGY Titus Mold Manufacturing will build a sales team focused on securing new business in the short and long term. The sales team will be motivated by commissions and performance-based bonuses.
Under the direction of executive management, we will employ an outside sales staff as well as an inside sales staff, which will be cross-trained to handle general customer service calls. The outside sales staff will focus primarily on trade show attendance, comprehensive follow up, relationship building, closing deals, and securing referrals. 5.5 STRATEGIC ALLIANCES We plan to develop strategic alliances with local and regional injection-molding manufacturing facilities that do not have mold-making capabilities within their facilities. One such alliance has been developed with Hilden Manufacturing Company located within our region. More are developing. 5.6 OPERATIONS Our facility's space will be divided in proportion to our needs and will include product development and engineering labs, mold shop, tool shop, quality control and testing area, inventory storage and administrative offices. Each area will be staffed with trained employees and wherever possible factory-floor technicians will be cross-trained. Our administrative offices will include space for executive, marketing and sales, accounting, information technology, security, maintenance, and human resource departments. To become a fully operational mold-manufacturing facility, we will require the following machinery and software. Machines
Viper, SLA 7000 & SLA 5000 Eden260, Eden333 & Eden500V Vantage, Titan & Maxum RTV Tooling
Software
By utilizing the latest precision machinery and software and superior operational and quality control processes such as LEAN Manufacturing, Rapid Prototyping and Manufacturing, and Sigma Six, Titus Mold Manufacturing will control costs while ensuring quality. Additionally, once we are operational, our company will become ISO 9001-2000 certified. Titus will also follow FDA requirements and comply with Medical Directive standards to further ensure quality control. Operationally, our strengths lie in our knowledge and expertise within the manufacturing industry. We know what fixed assets we require and what regulations we must adhere to.
However, while we cannot know for certain the quality of our managerial team at this point, we expect to hire and implement a top notch team. As previously mentioned, we have several promising prospects and will, of course, strive to recruit top talent. 5.7 GOALS The following is a list of business goals and milestones we wish to accomplish within the next three years.
Secure necessary funds. Locate and lease suitable manufacturing facility. Purchase machinery, equipment and supplies. Hire skilled employees to complete our team. Set up shop and open for business. Successfully penetrate targeted markets. Secure contracts to achieve projected sales goals. Become a profitable company. Establish a solid reputation as an industry leader.
Our first major milestones will be securing funds and setting up our business. This is our primary focus right now. In three years, we hope to have established our company in the community and within our industry. 5.8 EXIT STRATEGY Should management or our investors seek a business exit, there are several options we would be willing to pursue. Our company could most likely be sold to a manufacturing company that does not already have mold manufacturing capabilities. A management buyout could also be pursued once our business credit is firmly established.
President and VP will be responsible for the majority of purchasing, hiring, training, quality control, and additional day-to-day duties. Additional key leaders will include directors of finance, marketing and sales, human resources, information technology and operations. While these positions remain unfilled at this time, we do have several extremely qualified candidates interested in joining with us in this new venture. As we start our mold manufacturing business, we will implement a plan to hire management and production staff first and fill in with mid-level management and administrative staff as our budget and needs change. 6.3 BOARD MEMBERS & ADVISORS Our Board of Directors is not yet fully formed. CEO John Baker will serve as Chairman. The board will consist of company owners (shareholders), officers and directors. Duties of the Board of Directors may include:
Establishing broad company policies and objectives. Selecting, appointing, and reviewing the performance of executive staff. Insuring the availability of adequate financial resources and approving annual budgets. Accounting to the stakeholders for the organization's performance
We will actively seek individuals to sit on our Board of Directors who will have the ability to add to and advise our organization such as lawyers, accountants, and professionals in the automotive or medical fields.
The start-up funds will be used to cover operating costs including payroll, taxes, and utilities. Start-up funds will also be used to purchase capital expenditures such as leasehold improvements, software and machinery, which will produce future benefits for the company. Approximately forty percent will be spent on assets, while the other sixty percent will be spent on operations until we realize profitability. 7.3 INCOME STATEMENT PROJECTIONS The accompanying income statement demonstrates our company's profitability. Our income shows a gross profit margin of seventy-two percent. Our monthly operating expenses average $116,325. Projected net income will average $54,075 per month in our third year. After completing a comprehensive break-even analysis, we will achieve our break-even point by the middle of year two. 7.4 CASH FLOW PROJECTIONS The nature of our business requires that our company collect payment after the product is complete. So we have included the accompanying cash flow statement, which projects our monthly flow of cash. While we expect to reach break-even by our eighteenth month, it will take nearly two years to become cash flow positive. 7.5 BALANCE SHEET Our balance sheet will depend greatly on our sources of capital. We expect to raise approximately $1.5 million through loans and $2.95 million through equity capital. Our assets will be comprised of cash, leasehold improvements, equipment, software and other tangible assets. 7.6 ASSUMPTIONS Our projections are based on the assumption that the manufacturing industry, particularly the medical and automotive industries, will continue to follow present trends. Industry regulation and government legislation is always poised to interfere with business projections, but there are no indications at this time to expect any negative influence to our projections. Additionally, we are not relying on new regulations or the passage of new legislation to enable our company to reach our projected numbers.
Projections for Ride On Bikes show the company generating nearly $500,000 in sales in Year 1 and becoming cash flow positive early in Year 2. The company will maintain low overhead and minimal liabilities. The business will be debt free within five years. 1.7 FUNDS REQUIRED & USE Ride On Bikes is pursuing a $175,000 SBA loan which will be used for building renovations, inventory purchases, initial marketing and working capital. The owner has invested $25,000 in cash plus $20,000 in tools and supplies to begin the venture.
2.0 COMPANY
2.1 COMPANY & INDUSTRY Ride On Bikes is a full service bicycle repair and retail shop located in Pullman, Washington. It is the only authorized GT, Kona, Specialized and Diamondback dealer in a 50 mile radius. The shop, which serves the large university population, caters to many different segments including: cross-country, downhill, commuter and road enthusiasts. In addition to bike sales, the store has a full line of accessories, apparel and parts. The shop also has certified mechanics to provide repairs and installations for customers. 2.2 LEGAL ENTITY & OWNERSHIP Ride On Bikes is a limited liability company registered with the Washington Secretary of State under the name of Ricks Cycling, LLC. The company is solely owned by Rick Austin, a lifelong bicycle mechanic. 2.3 HISTORY Ride On Bikes is a new company being launched by Rick Austin. Rick began riding and working on bikes at a young age, which began his love for the cycling community. As a teenager he worked for a bike shop after school and during the summer, where he eventually became a certified bike mechanic. Along with learning how to work on bikes, Rick made several key contacts with sales reps of various companies in the biking industry. After relocating to the Pullman area to attend college for a business degree, Rick realized the need for a bike shop in the area. Following the completion of a Bachelors Degree in Business Administration, Rick decided to open Ride On Bikes. 2.4 FACILITIES & LOCATION Ride On Bikes is very conveniently located in the heart of the University District in Pullman, Washington, a prime location to supply the university students with their cycling needs. The 3,000 square foot shop has over 1,600 square feet of retail space and 800 square feet of service area. The remaining portion of the building is used for office space and inventory storage. A low lease rate of $1 per square foot has been negotiated for a five year lease.
2.5 KEY ASSETS The company will maintain top-of-the-line inventory of bikes, parts and apparel. Other assets include tools, cash register, computer, retail displays and signage. Intangibles, such as experience, relationships and location will prove to be the most valuable components of Ride On Bikes.
3.4 COMPETITIVE ADVANTAGES Ride On Bikes has several competitive advantages, including location, certified mechanics and exclusive distribution agreements with popular brands. Competing companies are not able to match these capabilities. 3.5 DEVELOPMENT In the long term, Ride On Bikes expects to open new locations in the Pacific Northwest. Locations will be selected where customer demand is high and exclusive distribution rights are available.
Strengths: location near campus center; GT, Kona, Specialized and Diamondback exclusive distribution rights; certified mechanics; low lease rates Weaknesses: most of the target market returns home during the summer, making summer months less busy; new in the marketplace Opportunities: lack of competition with certain brands will allow higher margins; group rides, events and races will attract new customers; 4 colleges in area provide large and ever-changing market Threats: competing bike shops already have established customer bases; trends my shift away from bicycling if gas prices drop; weather (too hot, rainy or snowy) causes fewer people to ride
place during the school year, especially in the fall when school is beginning session and in the spring when students prefer to be outside. More than 85% of sales will be made inperson at our retail shop. The staff will be motivated by sales bonuses for each bicycle sold. Ride On Bikes has secured an ongoing contract with the universitys security department to provide all new bikes and service to its officers. The staff will pursue other bulk sales opportunities as well. 5.5 STRATEGIC ALLIANCES
Bicycle Manufacturers: GT, Diamondback, Kona and Specialized have granted exclusive distribution rights Suppliers such as QBP will supply accessories and parts Washington State University: Student Activities Board and University Security Department The city of Pullman and the Quad Cities provide places to ride and trail maintenance
5.6 OPERATIONS Operations of Ride On Bikes will be led by Rick Austin. He will oversee daily transactions, as well as inventory levels, marketing, bulk sales and other miscellaneous duties. The remainder of the staff, which will be adequately trained in product knowledge and sales, will be responsible for ensuring customer satisfaction and achieving sales goals. The store will be open daily from 10am until 7pm, with a reduction in hours during non-school sessions. 5.7 GOALS
Provide high quality service and products to the university and surrounding population Achieve $500,000 in first year sales Interact with the universities to provide training and programs for students Organize regular group rides to meet new people and build customer relationships
6.0 MANAGEMENT
6.1 MANAGEMENT TEAM Ride On Bikes is managed by its owner, Rick Austin. Rick is a lifelong bicycle enthusiast with many years of experience riding and working on bikes. He spent much of his teenage years working in a bike shop in his hometown of Enumclaw, Washington, where he gained many contacts and inside knowledge of the bike industry. He attended Washington State University and received a Bachelor of Business Administration focusing on Entrepreneurship.
6.2 PERSONNEL NEEDS Along with Rick, Ride On Bikes will employ two full-time certified mechanics. These mechanics will provide all repair and service work that comes through the shop. Three to five part-time sales people will be hired to assist customers and ring up purchases. The staff will adjust in size and hours to meet the seasonal demand. The part-time staff will likely be university students who are looking to supplement their income by working at a fun store. 6.3 ADVISORS The company receives advice from various friends and business professionals. These include a CPA for financial and accounting matters, as well as an attorney for any legal requirements, such as liability waiver forms for events. In addition, Rick consults with some of his former business professors who taught him at Washington University.
With fixed monthly expenses equaling $25,000, and a combined average margin of 62%, the business will break even at approximately $40,000 per month in revenues. This will be achieved on a monthly basis before the end of Year 1. 7.5 PROJECTED CASH FLOW Ride On Bikes strongest months will be August through December and March through May. These months will be cash flow positive and will carry the company through the slower months. Ride On Bikes will end Year 1 with approximately $60,000 in the bank. 7.6 BALANCE SHEET Ride On Bikes balance sheet will show total assets of approximately $220,000, including cash, inventory, equipment and leasehold improvements. Liabilities will be $175,000, plus any bank lines of credit. In the event that suppliers extend credit to the business, the balance sheet will reflect an increase in inventory and an equal adjustment to liabilities. 7.7 IMPORTANT ASSUMPTIONS
University enrollment remains the same The surrounding universities continue to cooperate with marketing initiatives and events Accounts payable terms with suppliers are net 30 Fuel prices remain high The biking industry continues to grow or remains steady
1.6 FINANCIAL PLAN Olympic Pizzeria has a strong financial plan with first year earnings exceeding $30,000 and cash flow positive by month 5. It is expected that the company will have losses during the five months that tourism is slow, however during the busy months monthly profits will exceed $10,000. Yearend cash balances will exceed $30,000, and the bank loan will be paid off within two years. 1.7 FUNDS REQUIRED & USE Olympic Pizzeria requires $85,000 in capital to begin operations. The three owners have personally invested $60,000 into the company. The remaining $25,000 will come from a bank loan that has already been secured. Funds will be used for building renovations, marketing and advertising, and daily operations for the first five months until the company becomes cash flow positive.
At this location, an existing vacant restaurant has been secured. The building is fully built out to accommodate the needs of the pizzeria, including complete kitchen, dining, and office areas. The owner has agreed to $1.80 per square foot in rent ($900/mo.) and will include garbage pickup and water. Utilities will be based on use. 2.5 KEY ASSETS The most significant assets will be the kitchen equipment, including the oven, mixer and prep tables. As the reputation for our pizza grows, our most important assets will become our recipes and the Olympic Pizzeria brand.
3.4 COMPETITIVE EDGE/BARRIERS TO ENTRY As there is limited competition, Olympic Pizzeria will have a first mover advantage in offering quality pizzas for fast, free delivery. Once established, it will be difficult for another pizzeria to enter the market, as Seaside is not large enough to support three pizza restaurants year-round. Additionally, Olympic Pizzeria has lower fixed costs through negotiations on a long term building lease. The pizzeria also offers a wider variety of menu items, including whole wheat crust options, which the competition does not offer. 3.5 DEVELOPMENT Olympic Pizzeria plans to open another location near the waterfront, which will serve as a convenient place to eat while tourists are enjoying the beach. This location will act as a hub for several mobile carts strategically located along the beach, which will offer pizza by the slice and drinks to customers. As customers preferences are further defined, menu items will be added to expand the target market. For example, a healthier alternative, such as wraps, will be added to the menu. Additional locations in other towns along the coastline may also be considered.
Strengths: fast, free delivery; unique recipes and secret sauce; first mover advantage; healthy menu options; low overhead and fixed expenses; prime location; management team Weaknesses: higher variable costs for ingredients due to better quality; competing pizzeria already operating; three person management team Opportunities: tourists allow higher margins; mobile beach carts for additional delivery method; capture local delivery market with faster and cheaper delivery Threats: new pizzeria entering market; existing competition offering fast, free delivery
Given the target market of tourists, Olympic Pizzeria can charge a premium for its menu items. As dining is often an impulse purchase, it is difficult to estimate sales forecasts, however it is expected that during the tourist season, sales will increase significantly. We have estimated that of the 3,000 full time households, 25% will make at least one order per month, which equals 25 pizzas per day. During the tourist season we expect at least 50 orders per day. This equates to 14,250 pizzas per year, and gross revenues of $285,000. 5.6 STRATEGIC ALLIANCES Olympic Pizzeria has formed alliances with area resorts and hotels to allow marketing and advertising of our menu to guests and tourists. Additionally, the restaurant has been given permission to place mobile vending carts on the beach, in exchange for sponsorships of local community events. Partnerships with fresh ingredient suppliers are also being negotiated. 5.7 OPERATIONS Operations will be managed by the three managing partners. This will include all marketing activities, financial and accounting activities, and operational activities. The restaurant will employ a small staff of waiters, cooks, and delivery drivers. Staff will be trained by the management team to ensure quality and consistency of food preparation. 5.8 GOALS
Be the premier pizza delivery restaurant with quality menu items First year revenues of $250,000 Expansion to second location and beach mobile vending carts within 12 months Have a strong community involvement Open additional locations in other neighboring coastal towns
5.9 EXIT STRATEGY It is anticipated that within 10 years, there will be 10 Olympic Pizzeria locations in operation. At this time, company valuation is expected to be around $5 million, which will allow an adequate-sized venture to become interested in acquiring the company.
6.2 MANAGEMENT TEAM The initial management team will consist of the following three owners: Sean Smith is currently the Resident Manager at Oceanside Resort. He has extensive experience resorts operations and management, as well as computer database administration. He also is experienced with resort marketing. His background will aid in resort relations, as well as handling public relations and special events. He has a degree in business from Oregon State University. Aaron Lambert is currently the front desk manager of Pacificview Resort. He has experience in starting and operating an upscale deli at the Hilton in Portland. He has a broad based management background that includes very large, fourstar resorts to a smaller, handson resort. Aaron has a degree in business with emphasis in resort management from Azusa State University. David Crawford is the assistant front desk manager at the Pacificview Resort. He has worked with Aaron for the last three years, beginning with the deli project at the Hilton. David comes from the East Coast, where he has experience in the pizza business. He has background with backline operations such as dough and sauce prep, consistency control, and recipe creation. He has experience as revenue auditor for restaurant, casino and hotel operations. David has a degree in business administration from the University of Ohio. 6.3 PERSONNEL NEEDS It is estimated that a staff of 10 will be needed to maintain operations. As this industry does not require special training and turnover is typically high, staff wages can be relatively low. Most of the staff will maintain part time hours, as many will be high school students and retirees. This will eliminate the need for expensive benefits and other requirements. 6.4 BOARD MEMBERS & ADVISORS Olympic Pizzerias advisory team consists of a certified public accountant, who takes care of all tax accounting requirements, as well as a corporate attorney that is held on retainer in case any legal needs arise.
7.2 USE OF FUNDS Funds will be used primarily for renovation and upgrades to the kitchen ($55,000), including new pizza ovens, kitchen equipment, and dining room dcor. Additionally, advertising expenses and marketing collateral, as well as initial inventory, insurance, rent, and utilities, will all need to be purchased in the first month of operations. Remaining funds will be used as operating capital. 7.3 INCOME STATEMENT PROJECTIONS It is projected that first year revenue will exceed $285,000, with the sale of nearly 15,000 pizzas. Monthly revenues are expected to vary between $15,000-$30,000, depending upon tourist seasons. Fixed expenses are projected to be around $15,000 monthly, which includes wages, marketing and advertising, insurance, rent, and utilities. Variable costs are estimated to be $3 per pizza. Net losses are anticipated during the non-tourist months, however during tourist seasons the monthly profits are expected to exceed $10,000. First year earnings are estimated to be $37,000, with second and third year earnings projections of $45,000 and $52,000. 7.4 BREAK-EVEN ANALYSIS The break even analysis works out to 901 pizzas per month or $18,020 in sales. 7.5 PROJECTED CASH FLOW The company is expected to be cash flow positive by the fifth month of operations. The initial owners investment of $10,000, along with the bank financing of $25,000 ensures that free cash never drops below $2,000, with most months exceeding $5,000. By the end of Year 1, the bank account balance is expected to exceed $35,000, which will allow expansion of the company operations. 7.6 BALANCE SHEET Olympic Pizzerias balance sheet will show $85,000 in assets, attributed mainly to equipment, leasehold improvements and cash. Liabilities will be only $25,000 upon launch and zero within two years. Equity will continue to increase as retained earnings stay positive and debt is paid down. 7.7 IMPORTANT ASSUMPTIONS
Variable costs (including ingredients, packaging, and delivery) remain at $3 Tourist months stay strong April-October The tourist economy continues to grow over the next 5 years