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Cover Page

This sample business plan has been made available to users of Business Plan Pro, business
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Legal Page
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Table of Contents

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

Chart: Highlights .........................................................................Error! Bookmark not defined.
1.1 Mission .......................................................................................................................................... 1
1.2 Objectives.................................................................................................................................... 1
1.3 Keys to Success ........................................................................................................................ 2
2.0 Company Summary ..................................................................................................................... 2
2.1 Start-up Summary ................................................................................................................... 2
Table: Start-up Funding ............................................................................................................ 3
Chart: Start-up ............................................................................................................................. 4
Table: Start-up.............................................................................................................................. 4
2.2 Company Ownership ............................................................................................................... 5
3.0 Products ........................................................................................................................................... 5
3.1 Business Model .......................................................................................................................... 6
4.0 Market Analysis Summary ........................................................................................................ 6
4.1 Market Segmentation ............................................................................................................. 7
Chart: Market Analysis (Pie) .................................................................................................... 8
Table: Market Analysis ............................................................................................................... 8
4.2 Target Market Segment Strategy ...................................................................................... 8
4.3 Industry Analysis ...................................................................................................................... 9
4.3.1 Competition and Buying Patterns .............................................................................. 9
5.0 Strategy and Implementation Summary ............................................................................ 9
5.1 Competitive Edge ................................................................................................................... 10
5.2 Marketing Strategy ................................................................................................................ 10
5.3 Sales Strategy ......................................................................................................................... 11
5.3.1 Sales Forecast.................................................................................................................. 11
Table: Sales Forecast ........................................................................................................... 11
Chart: Sales Monthly ............................................................................................................ 12
Chart: Sales by Year ............................................................................................................. 12
5.4 Milestones.................................................................................................................................. 13
Table: Milestones ....................................................................................................................... 13
Chart: Milestones ....................................................................................................................... 13
6.0 Web Plan Summary ................................................................................................................... 14
6.1 Website Marketing Strategy ............................................................................................... 14
6.2 Development Requirements ............................................................................................... 14
7.0 Management Summary ............................................................................................................ 14
7.1 Personnel Plan ......................................................................................................................... 14
Table: Personnel ......................................................................................................................... 15
8.0 Financial Plan ............................................................................................................................... 15
8.1 Important Assumptions ....................................................................................................... 15
Table: General Assumptions .................................................................................................. 15
8.2 Break-even Analysis .............................................................................................................. 15
Chart: Break-even Analysis ................................................................................................... 16
Table: Break-even Analysis.................................................................................................... 16
8.3 Projected Profit and Loss ..................................................................................................... 17
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Table of Contents

8.3 Projected Profit and Loss ..................................................................................................... 17

Chart: Profit Monthly ................................................................................................................ 17
Chart: Profit Yearly .................................................................................................................... 17
Chart: Gross Margin Monthly................................................................................................. 18
Chart: Gross Margin Yearly .................................................................................................... 18
Table: Profit and Loss ............................................................................................................... 19
8.4 Projected Cash Flow .............................................................................................................. 19
Table: Cash Flow ........................................................................................................................ 20
Chart: Cash .................................................................................................................................. 21
8.5 Projected Balance Sheet ...................................................................................................... 22
Table: Balance Sheet ................................................................................................................ 22
8.6 Business Ratios ....................................................................................................................... 22
Table: Ratios ................................................................................................................................ 23
Table: Sales Forecast ......................................................................................................................... 1
Table: Personnel ................................................................................................................................... 2
Table: Personnel ................................................................................................................................... 2
Table: General Assumptions ............................................................................................................ 3
Table: General Assumptions ............................................................................................................ 3
Table: Profit and Loss ......................................................................................................................... 4
Table: Profit and Loss ......................................................................................................................... 4
Table: Cash Flow .................................................................................................................................. 5
Table: Cash Flow .................................................................................................................................. 5
Table: Balance Sheet .......................................................................................................................... 7
Table: Balance Sheet .......................................................................................................................... 7

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Jay Limited

1.0 Executive Summary

Jay Limited is a start-up organization using the multi-level marketing (MLM) business model to
sell environmentally friendly scent products. Jay Limited has been founded by john hammond.
The company has been registered as an Illinois LLC.
The Products
Jay Limited sells a complete line of non-toxic, environmentally friendly scent supplies for all
possible household, office, car uses. Jay Limited is finalizing a contactual agreement with a
california scent supply manufacturer for the supply of a complete line of California scent
products. Product prices will be quite competitive since Jay Limited is buying direct from the
manufacturer. Another feature of this relationship which is of significant value to Jay Limited is
the willingness of the manufacturer to allow Jay Limited to sell and distribute in Ghana.
Products that will be part of the initial product line include: all purpose soap, bathroom
Limiteder, basin/tub and tile Limiteder, detergent, window Limiteder, bleach, laundry liquid and
a variety of different air fresheners. Jay Limited is able to offer competitively priced products
that are of the highest quality.
The Market
Jay Limited will sell products to two customer segments. The first segment are individual
consumers who are purchasing the products for personal (household, car, office) use. These
individuals are environmentally conscious consumers who are looking for non-toxic scents for
their home, car or office. Demographics for this group are younger, politically liberal people
who are interested in making an individual contribution to the betterment of our environment.
The second target segment is a select group from within the first segment of individual
customers. Some of these individuals will be recruited to become distributors of Jay Limited
products. A distributor is a person who sells the Jay Limited products on their own to their own
set of customers. This segment is taken from the actual consumers that purchase and use
products. This creates a sales force that passionately believes in the products that they sell.
The distributors that make up this segment receive a sales commission if they are able to
recruit new distributors who then make sales. This is how the MLM business model works. Jay
Limited sells to consumers, some of those consumers then become distributors earning revenue
for Jay Limited as well as themselves. If these new distributors attract more people to sell, they
then make money on their specific sales as well as money on everything that their recruited
sales people sell.

1.1 Mission
Jay Limited's mission is the development of a environmentally friendly distribution company
that uses grassroots and network marketing techniques to sell the product and make a
meaningful contribution to the environment. Jay Limited exists to support its members and to
support the environment.
1.2 Objectives

To create a profitable company that sells environmentally friendly scent products.

Design an organization that compensates individuals for sales made by other people that
they recruit.

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Jay Limited

Design a more efficient marketing machine that does away with the inefficient traditional
distribution systems.

1.3 Keys to Success

Distribute only quality, environmentally friendly products.

Recruit new people to assist in the sales of the products.
Build the company on a solid basis of integrity.

2.0 Company Summary

Jay Limited has been formed as an Ghana registered LLC. The company has been founded by
john hammond. The company exists to distribute environmentally friendly scent supplies
through an efficient, networking distribution system.
2.1 Start-up Summary
Jay Limited has incurred the following expenses for the start-up phases of the organization:

Storage space: This will be used for the storage of product inventory. While Jay Limited
could get away with a smaller space such as a closet in Devon's home, he is able to achieve
costs breaks by purchasing larger quantities and will take these discounts and place the
inventory in storage.

Service provider fees: Jay Limited has incurred both accountant and attorney fees in the
set up of the business. The accountant will set up the quickbooks accounting system and
the attorney will develop and register the business formation as well as draft some sale
agreements for distributors.

Computer system: The computer system will be used for correspondence, accounting
purposes as well as to develop marketing and sales information. The system will include a
laptop computer, printer, fax/scanner, and a broadband Internet connection. Jay Limited
will use Microsoft Office and quickbooks Accounting as their preferred software.

Assorted types of paper and stationery: Personalized with a logo, return addresses, etc.
for catalogs, and brochures.

Assorted office furniture and accessories: The office will be located in Devon's house.

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Jay Limited

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$9,140
$40,860
$50,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$5,000
$35,860
$0
$35,860
$40,860

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$20,000
$0
$0
$20,000

Capital
Planned Investment
Family & Friends
D. McGregor
Additional Investment Requirement
Total Planned Investment

$20,000
$10,000
$0
$30,000

Loss at Start-up (Start-up Expenses)

Total Capital

($9,140)
$20,860

Total Capital and Liabilities

$40,860

Total Funding

$50,000

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Jay Limited

Chart: Start-up

Table: Start-up

Start-up
Requirements
Start-up Expenses
Professional service providers
Paper products
Website development
Storage rental
Expensed Equipment - Computer system
Insurance
Rent
Total Start-up Expenses

$4,000
$250
$2,000
$165
$2,500
$75
$150
$9,140

Start-up Assets
Cash Required
Other Current Assets
Long-term Assets
Total Assets

$35,860
$0
$5,000
$40,860

Total Requirements

$50,000

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Jay Limited

2.2 Company Ownership

Jay Limited is solely owned by john hammond. In addition to his own investment john has
received an investment from friends and family.
3.0 Products
Jay Limited sells a wide range of environmentally friendly scent products. All products are
designed to be effective at fragrances, yet easy and non-toxic on the environment. Jay Limited
has contracted with a large national producer of environmentally friendly products to supply
products in Ghana. This vendor was chosen because of their quality products as well as their
flexibility in offering low minimum orders ($150). The following are the initial products that Jay
Limited will offer. As the company grows they will consider adding new items to the product list
as demanded by the market:

All purpose soap: A concentrated formula for washing walls, floors, cabinets, and all other
washable surfaces. Orange oil and sodium citrate based.

Bathroom Limiteder: Quickly and easily removes dirt and grime, Limiteding and
deodorizing the entire house. An all vegetable-based Limiteding agent.

Basin, tub & tile Limiteder: Effective at removing soap scum from all surfaces. Citric acid,
glycolic acid and orange oil.

Dishwashing detergent: Easy on hands, tough on Limiteding. A mild coconut oil based
detergent.

Window Limiteder: A streak free Limiteder. Citrus based, either orange of lemon.

Oxygen bleach Limiteder: A wonderful Limiteder that works on sinks and bathtubs. Made
from sodium percarbonate, calcium carbonate, soda ash, and sodium sulfate.

Laundry liquid: Concentrated, biodegradable, natural Limiteder for laundry. This is a

vegetable-based surfactant detergent.

Air fresheners: Natural, healthful, eco-mists containing essential oils, emulsifiers, and
water. Available scents include, wild cherry, vanilla and hazelnut, citrus, lavender, and
natural fruit.

Environmental Limiteding products were chosen for a several reasons:

1. It allows the participating individuals to make a positive contribution to the protection of the
environment.
2. The environmentally friendly Limiteding industry is in its infancy in terms of growth. It is on
the verge of market wide acceptance as more and more people are participating in activities
that take into account environmental impacts.

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Jay Limited

3. The MLM and environmental Limiteding products is a perfect combination as it combines

emotional, and economic factors in a selling opportunity to friends and other network
contacts. The seller has an emotional reason for selling the products. They also have an
economic incentive because if they find additional people to help sell the product then they
get additional commissions on product the new people sell.
Because Jay Limited buys private label goods direct from the manufacturer, even after paying
out the sales commissions, their products are competitively priced. This is achieved through the
private label procurement as well as the more efficient, grassroots system of distribution.
3.1 Business Model
Jay Limited will use a multi-level marketing approach (MLM) to the sale of these products. An
MLM approach is a grassroots networking based approach where products are sold direct from
an individual (distributor) to the end consumer. The distributor receives the products from Jay
Limited who buys direct from the manufacturer. When a distributor is able to recruit a new
person to sell these products (new distributor) then the "recruiter" receives a sales commission
for all of the sales made by person #2. If person #2 is able to recruit another distributor
(person #3) then both the original distributor and distributor #2 receive commissions from
sales generated by person #3.
The MLM system in essence leverages peoples relationships and networking skills. It creates the
ability to be your own boss, making sales pitches to friends and associates on your time
schedule. It creates a common man, grassroots implementation of a real world distribution
channel.
This arrangement differs significantly from pyramid schemes which are illegal in the United
States. A pyramid scheme is a system where individuals sell products and get commissions
from the recruitment of new people to also sell the products. The more people they recruit, the
more money they make. Pyramid schemes are illegal and are broken up when they are found to
exist. The regulatory analysis that is applied to determine if the business is a MLM or a pyramid
scheme is as follows:
1. Is the compensation merely for introduction of additional participants into the program;
2. Or is the compensation related to the sale of goods.
If regulators believe the business is more like #1 it will be found illegal, against public policy,
and shut down.
As it stands, Jay Limited is clearly a MLM venture as participants get compensated for the
products others sell, not for the specific recruitment of individuals.
4.0 Market Analysis Summary
Jay Limited has identified two distinct type of customers. The first customer type is the end
user of the Limiteding products. These are people with an environmental consciousness in need
of appropriate Limiteding supplies.
The second customer group is comprised of a select number of people from the first group with
an interest in becoming distributors of the Limiteding products. The following sections will
provide more detailed information regarding these two groups.

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Jay Limited

4.1 Market Segmentation

Jay Limited has identified two groups of customers who are the most attractive marketing
prospects.
1. Consumers of environmentally friendly Limiteding products.
2. Members of the consumer group who are interested in being product distributors.
Individual consumers
These are people who are looking for products that will reduce their individual impact on the
environment. Limiteding products are an excellent product category to concentrate on since
they can be particularly abrasive to the environment. Some demographic information for
this group is as follows:

Ages 23-48
Median household income of $41,000
22% of the people commute by bicycle or use mass transportation
97% of the people are active recyclers
The majority routinely consider what consequences their choices or actions will have on the
environment.
41% are vegetarian
93% are registered Democrats

Distributors
A distributor is an individual consumer who is interested in also selling the products. In the
world of MLM, the sellers are called distributors because they are essentially doing the activities
that a distributor would do in a more traditional distribution channel. These individuals have a
passion for the product and the time to sell the product to their friends.

89% of the people will take on the role of distributor in addition to their already existing
part or full time employment.
They see the chance of selling Jay Limited as an opportunity to do something that they are
passionate about (positive environmental actions) as well as a means of making
supplemental income.
87% of the distributors will have the goal of signing up more distributors and establish an
additional source of revenue.

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Jay Limited

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
Potential Customers
Individuals
Distributors
Total

Year 1

Year 2

Year 3

Year 4

Year 5

2,455
2,455
4,910

2,602
2,578
5,180

2,758
2,707
5,465

2,923
2,842
5,765

3,098
2,984
6,082

Growth
6%
5%
5.50%

CAGR
5.99%
5.00%
5.50%

4.2 Target Market Segment Strategy

The two enumerated customer segments are particularly attractive because they represent
people who are most likely to be consumers of environmentally friendly Limiteding supplies.
The individual consumers have a sensitive perspective toward the environment and are looking
for a way that they can have a positive impact on the environment. Recognizing that so many
traditional Limiteding agents are toxic for the environment, it then becomes relatively easy for
the individuals to make a positive contribution. This attitude follows the slogan "think globally,
act locally." Buying these products allows them to do their part.
The distributors are individual consumers who have an even stronger conviction and belief in
the products as well as the time to sell the products and find potential people to recruit into the
distribution effort. To be a distributor does not require a huge sacrifice of time, the majority of
distributors will have full-time jobs in addition to marketing Jay Limited. This makes the job of
distributor all that more attractive, the person is able to balance their already existing job with
another source of revenue and personal satisfaction.

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Jay Limited

4.3 Industry Analysis

Jay Limited arguably participates in two industries, the product industry of environmentally
friendly Limiteding supplies and the business model industry of MLM. The environmentally
friendly Limiteding supply industry is small but just now beginning to develop momentum.
These supplies are typically sold in health food type stores. These stores generally sell a smaller
variety than what Jay Limited sells, they have just the basics. Some larger retailers such as
Safeway and Alberston's are beginning to carry one or two products, typically an all purpose
Limiteder and a washing machine liquid. As the market demands more outlets for these
products it is likely that more retailers will begin to sell environmentally friendly Limiteding
products.
Jay Limited also participates within the multi-level marketing industry. However Jay Limited
does not, per se, compete within this industry. Currently, market research has yet to find an
MLM company that sells environmentally friendly Limiteding products. The largest and most
well known MLM company is Amway which sells a wide range of products. Amway is
different from Jay Limited in the sense that the majority of products that they sell are
branded rather than private label products. While that is beneficial for Amway in that they are
able to use the manufacturer's marketing efforts to assist in sales, Amway is often not that cost
competitive.
4.3.1 Competition and Buying Patterns
Jay Limited faces competition from several sources:
1. Local and national health food stores: These stores typically have a small selection of
Limiteding products. National competitors include:
o Whole Foods
o Wild Oats
2. Large supermarkets: These competitors have a very limited selection
3. Mail order/Internet sales: These are remote retail companies that sell a range of
products. More often than not these companies sell national brands as opposed to private
label goods. Competitors include:
o mothernature.com
o thegoodearth.com
5.0 Strategy and Implementation Summary
Jay Limited will leverage their multi-pronged competitive edge of a quality product, competitive
pricing, and a grassroots, non-corporate business model. These three advantages will resonate
with the target market.
Jay Limited will have a marketing strategy that will focus on the green or environmentally
friendly aspect of their products, the fact that profits go to support a green, grassroots
organization instead of a large corporation, and lastly, the opportunity for the consumer to take
a more active role with the company with the possibility for an additional source of income.
Jay Limited's sales strategy will focus on the high quality products offered and the ability to
offer 100% customer satisfaction, ensuring a happy customer constituency.

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Jay Limited

5.1 Competitive Edge

Jay Limited's has identified a multi faceted competitive edge that will assist them in their fast
market penetration.

Quality products: All of the products sold by Jay Limited are manufactured by a leading
company, made for Jay Limited to their specifications. This allows Jay Limited to offer a very
competitive product that meets the needs of the market.

Competitive pricing: Jay Limited is able to offer great pricing because they are purchasing
the products directly from the manufacturer. While Jay Limited pays out sale commissions
to the various layers of distributors, this grassroots distribution model is still more efficient
than the traditional distribution channel, keeping prices competitive.

Grassroots, non-corporate business model: Instead of profits going to a large

corporation, the profits are dispersed among the user distributors that assist Jay Limited.
This arrangement is quite rare, and attractive for the targeted customer segment.

5.2 Marketing Strategy

The marketing strategy is based on the need to generate visibility for Jay Limited as a company
that offers the following advantages:

A wide selection of green products.

Profits that go to environmentally friendly people, not a large corporation.
The opportunity for users to become distributors, realizing an additional source of revenue.

The marketing strategy is one based on grassroots networking. This strategy is most effective
when the person selling the products is passionate about what they are selling. This is
specifically why environmentally friendly Limiteding products were chosen, it is easy for people
who care about the environment to be passionate about the products.
Networking is the key to increased visibility and distribution. Networking will take place in a
number of venues including: the traditional work environment, social organizations (such as
the Lions Club), religious organizations, and other gatherings/situations that bring people
together. The distributor sets up a meeting with the prospective person (someone they
generally already know and have some sort of relationship with), shows them the product
catalog and provides them with samples. Once the consumer has had a chance to use the
products and been impressed by them, another meeting can be scheduled to determine if the
person is interested in making a purchase, and/or is interested in an additional source of
income selling these environmentally friendly products.

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Jay Limited

5.3 Sales Strategy

Jay Limited's sales strategy will emphasize their high quality products and 100% customer
satisfaction. By combining these two benefits, consumers are able to try the available products
risk free. This provides them with the opportunity to test them out and determine if they are as
good as they claim to be. Once the consumer has recognized the outstanding quality that Jay
Limited offers, the option of becoming a distributor becomes all the more attractive. If the
consumer truly believes in the product, then it becomes that much easier to convince them that
there is an excellent opportunity available that allows them to sell a product that they believe
in, obtain an additional source of revenue, and make a positive impact on the environment. All
of this will be done on a grassroots, one-to-one level.
5.3.1 Sales Forecast
Jay Limited will be tracking both the sales to the individual consumers and the revenue received
through commissions from sales from the various distributors. The forecast indicates that
initially the bulk of revenue will be from sales to the individual customers. As time progresses
and more distributors are secured, the amount of revenue from the distributors will increase.
Jay Limited has adopted a reasonably conservative sales forecast. Please review the following
table and charts for a graphical representation of sales.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

$15,205
$4,706
$19,911

$29,650
$9,176
$38,826

$54,852
$16,975
$71,827

Year 1
$4,562
$1,412
$5,973

Year 2
$8,895
$2,753
$11,648

Year 3
$16,456
$5,093
$21,548

Sales
Individuals
Distributors
Total Sales
Direct Cost of Sales
Individuals
Distributors
Subtotal Direct Cost of Sales

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Jay Limited

Chart: Sales Monthly

Chart: Sales by Year

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Jay Limited

5.4 Milestones
Jay Limiteding has identified several milestones which will be used as goals for the
organization. Milestones were chosen to be as quantifiable as possible to aid in achievement.
The following table details the specific milestones and provides a time frame for the
accomplishment of each one.
Table: Milestones

Milestones
Milestone
Business plan completion
Contract finalization with
manufacturer
First sales customer
Establishment of first distributor
Significant recurring distributor
revenue
Profitability
Totals

Start Date
1/1/2003

End Date
10/1/2003

Budget
$0

Manager
Devon

2/1/2004

2/15/2004

$0

Devon

2/15/2004
3/1/2004
5/1/2004

3/1/2004
5/1/2004
5/30/2005

$0
$0
$0

Devon
Devon
Devon

Department
Business
Development
Business
Development
Sales
Sales
Accounting

5/30/2005

9/1/2005

$0
$0

Devon

Sales

Chart: Milestones

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Jay Limited

6.0 Web Plan Summary

A website site will be created to offer viewers an extensive product catalog as well as
information regarding the company and the availability of distributor options. The site will
contain extensive information, however it will encourage viewers to contact Jay Limited for
more information as Devon recognizes that he can be far more effective in sales if he as an
opportunity to chat with the interested party. The website will be periodically updated with new
information.
6.1 Website Marketing Strategy
The website will be marketed in two ways:

Submission of the site to various search engines to ensure that people looking for the site
using a search engine such as Yahoo! will easily find www.JayLimited.com.

All printed material such as brochures, advertising, catalogs, price sheets, packaging, and
all product labels will have the URL prominently displayed. This will be especially useful
because it allows customers who may have only one product the opportunity to view the
entire product selection through the convenience of the Internet.

6.2 Development Requirements

The website will be developed and periodically updated by a University of Chicago Computer
Science student.
7.0 Management Summary
Jay Limited has been founded and will be run by Devon McGregor.
He has an undergraduate degree in business from Loyola University, and one year of post
graduate course work in biology and pharmaceuticals.
Work experience includes eight years with Eli Lilly as a pharmaceutical sales representative,
earning many sales leader awards.
Seeking a position in sales that offered the satisfaction of interpersonal interaction, a positive
impact on society, and a minimal amount of travel, Devon began researching the multi-level
marketing business model. After rejecting participation in other existing MLM businesses, he
decided to establish his own organization and chose environmentally safe Limiteding supplies as
his product line.
7.1 Personnel Plan
Devon McGregor will be the only employee of Jay Limited. Other individuals involved will be
distributors and compensated in the form of sales commissions. The payment of the sales
commission is recognized as a cost of sales under the sales forecast.

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Jay Limited

Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Devon
Other
Total People

$20,000
$0
1

$24,000
$0
1

$24,000
$0
1

Total Payroll

$20,000

$24,000

$24,000

8.0 Financial Plan

The following section will outline important financial information.
8.1 Important Assumptions
The following table details important Financial Assumptions.
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

1
10.00%
10.00%
30.00%
0

2
10.00%
10.00%
30.00%
0

3
10.00%
10.00%
30.00%
0

8.2 Break-even Analysis

The Break-even Analysis indicates that approximately $3,500 is needed in monthly revenue to
reach the break-even point.

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Jay Limited

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$3,542

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

30%
$2,480

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Jay Limited

8.3 Projected Profit and Loss

The following table and charts illustrate the Projected Profit and Loss.

Chart: Profit Monthly

Chart: Profit Yearly

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Jay Limited

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

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Jay Limited

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Sales
Direct Cost of Sales
Other Costs of Goods
Total Cost of Sales

$19,911
$5,973
$0
$5,973

$38,826
$11,648
$0
$11,648

$71,827
$21,548
$0
$21,548

Gross Margin
Gross Margin %

$13,937
70.00%

$27,178
70.00%

$50,279
70.00%

Payroll
Sales and Marketing and Other Expenses
Depreciation
Rent
Utilities
Insurance
Payroll Taxes

$20,000
$2,400
$996
$1,800
$660
$900
$3,000

$24,000
$0
$996
$1,800
$660
$900
$3,600

$24,000
$0
$996
$1,800
$660
$900
$3,600

Total Operating Expenses

$29,756

$31,956

$31,956

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

($15,819)
($14,823)
$1,903
$0

($4,778)
($3,782)
$1,730
$0

$18,323
$19,319
$1,550
$5,032

Net Profit
Net Profit/Sales

($17,721)
-89.00%

($6,508)
-16.76%

$11,741
16.35%

Expenses

8.4 Projected Cash Flow

The following table and chart presents the Projected Cash Flow.

Page 19

Jay Limited

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

$4,978
$9,199
$14,177

$9,706
$23,672
$33,379

$17,957
$44,367
$62,324

$0
$0
$0
$0
$0
$0
$0
$14,177

$0
$0
$0
$0
$0
$0
$0
$33,379

$0
$0
$0
$0
$0
$0
$0
$62,324

Year 1

Year 2

Year 3

$20,000
$14,499
$34,499

$24,000
$20,803
$44,803

$24,000
$33,878
$57,878

$0
$0
$0
$1,800
$0
$0
$0
$36,299

$0
$0
$0
$1,800
$0
$0
$0
$46,603

$0
$0
$0
$1,800
$0
$0
$0
$59,678

($22,122)
$13,738

($13,225)
$514

$2,646
$3,160

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 20

Jay Limited

Chart: Cash

Page 21

Jay Limited

8.5 Projected Balance Sheet

The following table shows the Projected Balance Sheet.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

$13,738
$5,734
$0
$19,472

$514
$11,181
$0
$11,694

$3,160
$20,685
$0
$23,844

$5,000
$996
$4,004
$23,476

$5,000
$1,992
$3,008
$14,702

$5,000
$2,988
$2,012
$25,856

Year 1

Year 2

Year 3

$2,137
$0
$0
$2,137

$1,672
$0
$0
$1,672

$2,884
$0
$0
$2,884

$18,200
$20,337

$16,400
$18,072

$14,600
$17,484

$30,000
($9,140)
($17,721)
$3,139
$23,476

$30,000
($26,861)
($6,508)
($3,369)
$14,702

$30,000
($33,369)
$11,741
$8,372
$25,856

$3,139

($3,369)

$8,372

Assets
Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities
Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

8.6 Business Ratios

The following table details specific Business Ratios for Jay Limited. While Jay Limited sells
Limiteding products, the organizational structure of multi-level merchandising falls within the
Standard Industrial Classification code system under Nonstore Retailers - Direct Selling
Establishments. We most closely match SIC industry class: Party-plan merchandising 5963.9907

Page 22

Jay Limited

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Industry Profile

n.a.

95.00%

85.00%

2.88%

Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

24.42%
0.00%
82.94%
17.06%
100.00%

76.05%
0.00%
79.54%
20.46%
100.00%

80.00%
0.00%
92.22%
7.78%
100.00%

18.38%
22.11%
78.80%
21.20%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

9.10%
77.53%
86.63%
13.37%

11.37%
111.55%
122.92%
-22.92%

11.15%
56.47%
67.62%
32.38%

34.69%
13.42%
48.11%
51.89%

100.00%
70.00%
158.62%
0.00%
-79.45%

100.00%
70.00%
38.79%
0.00%
-12.31%

100.00%
70.00%
30.20%
0.00%
25.51%

100.00%
38.83%
25.49%
1.97%
2.02%

9.11
9.11
86.63%
-564.56%
-75.49%

7.00
7.00
122.92%
193.17%
-44.26%

8.27
8.27
67.62%
200.35%
64.87%

2.01
0.79
55.49%
3.89%
8.75%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

Return on Equity

-89.00%
-564.56%

-16.76%
0.00%

16.35%
140.24%

n.a
n.a

2.60
54
7.78
27
0.85

2.60
106
12.17
34
2.64

2.60
108
12.17
24
2.78

n.a
n.a
n.a
n.a
n.a

6.48
0.11

0.00
0.09

2.09
0.16

n.a
n.a

$17,335
-8.31

$10,023
-2.76

$20,960
11.82

n.a
n.a

1.18
9%
6.43
6.34
0.00

0.38
11%
0.31
0.00
0.00

0.36
11%
1.10
8.58
0.00

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 23

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0
$0
$0

$0
$0
$0

$0
$0
$0

$500
$0
$500

$625
$200
$825

$850
$272
$1,122

$1,200
$384
$1,584

$1,650
$528
$2,178

$2,100
$672
$2,772

$2,400
$768
$3,168

$2,650
$848
$3,498

$3,230
$1,034
$4,264

Sales
Individuals
Distributors
Total Sales
Direct Cost of Sales

0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Individuals

$0

$0

$0

$150

$188

$255

$360

$495

$630

$720

$795

$969

Distributors

$0

$0

$0

$0

$60

$82

$115

$158

$202

$230

$254

$310

Subtotal Direct Cost of Sales

$0

$0

$0

$150

$248

$337

$475

$653

$832

$950

$1,049

$1,279

Page 1

Appendix
Table: Personnel

Personnel Plan
Devon
Other
Total People
Total Payroll

0%
0%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0
$0
0

$0
$0
0

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$2,000
$0
1

$0

$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

Page 2

Appendix
Table: General Assumptions

General Assumptions
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

12

Current 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%

Plan Month

Other

Month 12

Page 3

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$0

$0

$0

$500

$825

$1,122

$1,584

$2,178

$2,772

$3,168

$3,498

$4,264

Direct Cost of Sales

$0

$0

$0

$150

$248

$337

$475

$653

$832

$950

$1,049

$1,279

Other Costs of Goods

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$0

$0

$0

$150

$248

$337

$475

$653

$832

$950

$1,049

$1,279

Gross Margin
Gross Margin %

$0

$0

$0

$350

$578

$785

$1,109

$1,525

$1,940

$2,218

$2,449

$2,985

0.00%

0.00%

0.00%

70.00%

70.00%

70.00%

70.00%

70.00%

70.00%

70.00%

70.00%

70.00%

Expenses
Payroll

$0

$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

Sales and Marketing and Other

Expenses
Depreciation

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$200

$83

$83

$83

$83

$83

$83

$83

$83

$83

$83

$83

$83

Rent

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

$55

$75
$0

$75
$0

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$75
$300

$563

$563

$2,863

$2,863

$2,863

$2,863

$2,863

$2,863

$2,863

$2,863

$2,863

$2,863

Profit Before Interest and Taxes

($563)

($563)

($2,863)

($2,513)

($2,286)

($2,078)

($1,754)

($1,338)

($923)

($645)

($414)

$122

EBITDA

($480)

($480)

($2,780)

($2,430)

($2,203)

($1,995)

($1,671)

($1,255)

($840)

($562)

($331)

$205

$165

$164

$163

$162

$160

$159

$158

$157

$155

$154

$153

$152

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Net Profit

($728)

($727)

($3,026)

($2,675)

($2,446)

($2,237)

($1,912)

($1,495)

($1,078)

($800)

($567)

($30)

Net Profit/Sales

0.00%

0.00%

0.00%

-534.93%

-296.47%

-199.36%

-120.71%

-68.64%

-38.89%

-25.24%

-16.22%

-0.71%

Utilities
Insurance
Payroll Taxes
Total Operating Expenses

Interest Expense
Taxes Incurred

15%
15%

Page 4

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Cash Sales

$0

$0

$0

$125

$206

$281

$396

$545

$693

Cash from Receivables

$0

$0

$0

$0

$13

$383

$626

$853

$1,203

Subtotal Cash from Operations

$0

$0

$0

$125

$219

$664

$1,022

$1,398

$1,896

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

Subtotal Cash Received

$0

$0

$0

Month 1

Month 2

Month 10

Month 11

Month 12

$792

$875

$1,066

$1,648

$2,089

$2,384

$2,440

$2,963

$3,450

$0
$0

$0
$0

$0
$0

$0
$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$125

$219

$664

$1,022

$1,398

$1,896

$2,440

$2,963

$3,450

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Expenditures from Operations

Cash Spending

$0

$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

Bill Payments

$22

$645

$654

$948

$1,095

$1,191

$1,280

$1,419

$1,596

$1,771

$1,888

$1,990

Subtotal Spent on Operations

$22

$645

$2,654

$2,948

$3,095

$3,191

$3,280

$3,419

$3,596

$3,771

$3,888

$3,990

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal 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

$0

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

$150

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$172

$795

$2,804

$3,098

$3,245

$3,341

$3,430

$3,569

$3,746

$3,921

$4,038

$4,140

Additional Cash Spent

Long-term Liabilities Principal Repayment

Subtotal Cash Spent

Net Cash Flow

($172)

($795)

($2,804)

($2,973)

($3,026)

($2,677)

($2,408)

($2,171)

($1,850)

($1,481)

($1,074)

($690)

Cash Balance

$35,688

$34,893

$32,089

$29,116

$26,090

$23,413

$21,005

$18,833

$16,983

$15,502

$14,428

$13,738

Page 5

Appendix

Page 6

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$35,860
$0
$0
$35,860

$35,688
$0
$0
$35,688

$34,893
$0
$0
$34,893

$32,089
$0
$0
$32,089

$29,116
$375
$0
$29,491

$26,090
$981
$0
$27,071

$23,413
$1,440
$0
$24,852

$21,005
$2,001
$0
$23,006

$18,833
$2,782
$0
$21,615

$16,983
$3,658
$0
$20,641

$15,502
$4,386
$0
$19,888

$14,428
$4,920
$0
$19,348

$13,738
$5,734
$0
$19,472

$5,000
$0
$5,000
$40,860

$5,000
$83
$4,917
$40,605

$5,000
$166
$4,834
$39,727

$5,000
$249
$4,751
$36,840

$5,000
$332
$4,668
$34,159

$5,000
$415
$4,585
$31,656

$5,000
$498
$4,502
$29,354

$5,000
$581
$4,419
$27,425

$5,000
$664
$4,336
$25,951

$5,000
$747
$4,253
$24,894

$5,000
$830
$4,170
$24,058

$5,000
$913
$4,087
$23,435

$5,000
$996
$4,004
$23,476

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0
$0
$0
$0

$624
$0
$0
$624

$623
$0
$0
$623

$911
$0
$0
$911

$1,055
$0
$0
$1,055

$1,148
$0
$0
$1,148

$1,233
$0
$0
$1,233

$1,366
$0
$0
$1,366

$1,537
$0
$0
$1,537

$1,708
$0
$0
$1,708

$1,822
$0
$0
$1,822

$1,916
$0
$0
$1,916

$2,137
$0
$0
$2,137

Long-term Liabilities
Total Liabilities

$20,000
$20,000

$19,850
$20,474

$19,700
$20,323

$19,550
$20,461

$19,400
$20,455

$19,250
$20,398

$19,100
$20,333

$18,950
$20,316

$18,800
$20,337

$18,650
$20,358

$18,500
$20,322

$18,350
$20,266

$18,200
$20,337

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$30,000
($9,140)
$0
$20,860
$40,860

$30,000
($9,140)
($728)
$20,132
$40,605

$30,000
($9,140)
($1,456)
$19,404
$39,727

$30,000
($9,140)
($4,482)
$16,379
$36,840

$30,000
($9,140)
($7,156)
$13,704
$34,159

$30,000
($9,140)
($9,602)
$11,258
$31,656

$30,000
($9,140)
($11,839)
$9,021
$29,354

$30,000
($9,140)
($13,751)
$7,109
$27,425

$30,000
($9,140)
($15,246)
$5,614
$25,951

$30,000
($9,140)
($16,324)
$4,536
$24,894

$30,000
($9,140)
($17,124)
$3,736
$24,058

$30,000
($9,140)
($17,691)
$3,169
$23,435

$30,000
($9,140)
($17,721)
$3,139
$23,476

Net Worth

$20,860

$20,132

$19,404

$16,379

$13,704

$11,258

$9,021

$7,109

$5,614

$4,536

$3,736

$3,169

$3,139

Assets

Starting Balances

Current Assets
Cash
Accounts Receivable
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

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