Hardware Store Sample Business Plan

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TRIPLEWEAVE PAINT & HARDWARE

.
Confidentiality Agreement

The undersigned reader acknowledges that the information provided by _______________ in


this business plan is confidential; therefore, reader agrees not to disclose it without the
express written permission of _______________.

It is acknowledged by reader that information to be furnished in this business plan is in all


respects confidential in nature, other than information which is in the public domain through
other means and that any disclosure or use of same by reader, may cause serious harm or
damage to _______________.

Upon request, this document is to be immediately returned to _______________.

___________________
Signature

___________________
Name (typed or printed)

___________________
Date

This is a business plan. It does not imply an offering of securities.


Table of Contents

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


1.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2


2.1 Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Start-up Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.0 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4.0 Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4


4.1 Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

5.0 Strategy and Implementation Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


5.1 Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2.1 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

6.0 Management Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


6.1 Personnel Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

7.0 Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


7.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Projected Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Projected Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Clara's Hardware Store

1.0 Executive Summary

This business plan outlines the strategy and financial forecast for a hardware store, requiring
a capital investment of R500,000. The objective of this hardware store is to provide a wide
range of quality hardware products to cater to the needs of contractors, construction
companies, and DIY enthusiasts. The store will aim to establish a strong customer base and
achieve a sustainable return on investment.

1.1 Mission

The mission of Tripleweave Hardware is to offer quality hardware products in a customer-


friendly shopping environment. Our customers will get assistance quickly and will leave the store
prepared to get the job done right the first time. Clara's Hardware will also focus on
anticipating the seasonal needs of its customers and providing the best products at
competitive prices. Most importantly, Clara's Hardware will make the additional 15 minute
drive to a mega-hardware store, too far to go and too expensive to entertain.

1.2 Keys to Success

• Location: Tripleweave Hardware is located in Terenure Kempton Park. The foot traffic in
the area is very strong. The area area is full of estates and mostly working class people.
Terenure has easy access points on both of the area's major cross streets. The
closest hardware store to the Terenure area is a fifteen to twenty minute drive.

• Seasonal Products: Each season has it own unique demand on a homeowner.


Tripleweave Hardware will focus on this pattern and bring in local customers by
marketing these items at competitive prices.

• Repair/Project Resource Area: The first section customers will find when they enter
is a repair/project resource area that they can use to plan repairs or projects. There
will be a repair/project resource person to answer questions and direct them to the
section of store where the needed products are.

• In-Store Expertise: Store employees will be knowledgeable in home repairs/projects.


In addition, the repair/project resource area will be used to conduct short trainings and
demonstrations in home repair and home projects.

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Clara's Hardware Store

Highlights (Planned)

$1,400,000

$1,200,000

$1,000,000

$800,000 Sales
Gross Margin
$600,000
Net Profit
$400,000

$200,000

$0
2023 2024 2025

The business will make a profit in month six, and will grow steadily each consecutive month.

2.1 Company Ownership

Clara's Hardware is owned by Clara Johnson.

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Clara's Hardware Store

2.2 Start-up Summary

The start-up cost of Tripleweave Hardware will consist primarily of inventory and display
equipment.
Investors can invest R330 000

Table: Start-up

Start-up
Requirements

Start-up Expenses
Legal R1,000
Stationery etc. R1,000
Brochures R1,000
Consultants R0
Insurance R0
Rent R6,000
Start-Up Inventory R100,000
Display Set-Up R50,000
Cash Reserve for Hiring R20,000
Advertising R0
Other R0
Total Start-up Expense R179,000

Start-up Assets Needed


Cash Balance on Starting Date R121,000
Other Short-term Assets R0
Total Short-term Assets R121,000

Long-term Assets R30,000


Total Assets R151,000
Total Requirements R330,000

Funding

Investment
Tripleweave R0
Silent Partner
Other R0
Total Investment R0

Short-term Liabilities
Accounts Payable R0
Current Borrowing R0
Other Short-term Liabilities R0
Subtotal Short-term Liabilities R0

Long-term Liabilities R150,000


Total Liabilities R150,000

Loss at Start-up (R179,000)


Total Capital R1,000
Total Capital and Liabilities R151,000

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Clara's Hardware Store

Start-up

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0
Expenses Assets Investment Loans

3.0 Products

Tripleweave Hardware offers the parts, material, and advice to tackle any home repair and all
things needed by DIY enthusiasts. The primary focus will be to satisfy the seasonal needs of
the area's customers.

• Fall/Winter: Weatherization projects, Winter gadgets.


• Spring: Garden/lawn projects/home improvement projects.
• Summer: Outdoor building projects, Summer gadgets.

4.0 Market Analysis Summary

In the past ten years, most local hardware stores have closed due to the success of large
hardware mega-stores drawing away local customers. The attraction of the larger stores has
always been price and a large inventory. Customers would rather drive 20 minutes and make
sure they will find what they want rather than drive five minutes and hope the local store will
have it at a low price. Yet these same hardware mega-stores are sterile and not customer-
friendly. Customers can wander the aisles, aimlessly lost, looking for a 20 rand item. And
when they do find the right section, they will most likely select the most popular brand no
matter how large the selection is. What these store offer in price and selection, they
lose in creating a confusing, frustrating maze for their customers.

We believe that a local hardware store can provide a reasonable selection in the most
important product areas, be competitive in pricing, and offer the customer a shopping
environment that will assure repeat business.

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Clara's Hardware Store

4.1 Market Segmentation

In South Africa, the market share of hardware stores caters to three main customer segments -
low-income homeowners, professional technicians, and DIY enthusiasts. Each segment has
distinct characteristics and requirements, which influence their preferences and buying behavior.

Low-Income Homeowners:

Market Share:

Low-income homeowners represent a significant customer base for hardware stores, as they
require affordable and basic supplies for their home maintenance and improvement projects.
Characteristics: This segment primarily consists of individuals or families with limited financial
resources. They are often more focused on cost-effectiveness and seek budget-friendly options for
their projects.
Preferences: Low-income homeowners tend to prioritize basic construction materials, plumbing
fixtures, electrical supplies, and paint. They may also look for financing options, discounts, or
sales to make their purchases more affordable.

Professional Technicians:

Market Share:

Professional technicians, such as contractors, builders, electricians, and plumbers, contribute to a


considerable portion of the hardware store market share. They require a wide range of specialized
tools, equipment, and supplies for their professional services.
Characteristics: This segment is composed of skilled professionals who are experienced in various
trades. They rely on high-quality products and prefer efficient service to meet their project
deadlines.
Preferences: Professional technicians require a diverse range of supplies, including power tools,
safety equipment, specialty hardware, specialized materials, and workwear. They often establish
long-term relationships with hardware stores that provide reliable products, competitive pricing,
and prompt delivery.

DIY Enthusiasts:

Market Share:

DIY enthusiasts consist of hobbyists, homeowners undertaking smaller projects, or individuals


interested in hands-on home improvement or craft activities. While their market share may not be
as substantial as the previous segments, they actively contribute to the hardware store industry.
Characteristics: DIY enthusiasts are generally driven by creativity, personal satisfaction, and the
desire to enhance their skills. They rely on hardware stores for guidance, a wide selection of tools
and materials, and project ideas.
Preferences: DIY enthusiasts often prioritize do-it-yourself kits, home décor supplies, gardening
tools, paints, adhesives, and instructional materials. They also value knowledgeable staff who can
provide guidance, demonstrations, and advice on project execution.
In summary, the market share of hardware stores in South Africa is divided among low-income
homeowners, professional technicians, and DIY enthusiasts. Each segment has unique
characteristics, preferences, and budget considerations, which hardware stores should cater to in
order to effectively capture and retain their market share.

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Clara's Hardare Store

The DIY & Hardware Store market in South Africa is projected to grow by -1.60% (2023-2028)
resulting in a market volume of US$5.24bn in 20281.
The home improvement and gardening stores witnessed increased demand from mid- and high-income
groups making permanent changes to their homes during the pandemic.
A hardware store is a very lucrative business to start in South Africa, with huge profits. Hardware
stores cater for both large and small projects3.
Based on these insights, one possible estimate of the market share of Hardware stores for low income
home owners, Professional Technicians and DIY enthusiasts in South Africa is:

Low income home owners: 10%


Professional Technicians: 40%
DIY enthusiasts: 50%

5.0 Strategy and Implementation Summary


Clara's Hardware will be heavily promoting the store. We will use the local paper, The Gilmore Sun, to
advertise. In addition, we will have a drawing for five $1,000 home improvement gift certificates that can be
redeemed at selected home improvement professionals. We will have new drawings each week for the first
eight weeks of the store's operation. Clara's Hardware will use the drawings to make connections with the
local home improvement professionals. Itis our plan to recoup some of the gift certificate money in material
purchases that will be made by the home improvement professionals the winners select.

Page 6
5.1 Competitive Edge
Tripleweave Hardware's competitive edge is:
Location:The traffic in the area is very strong. The closest hardware store to the area is a twenty
minute drive.
Seasonal Products: Each season has it own unique demand on a homeowner. TWP & Hardware will
focus on this pattern and bring in local customers by marketing these items at competitive prices.
Repair/Project Resource Area: The first section customers will find when they enter the store is a
repair/project resource area that they can use to plan repairs or projects.There will be a
repair/project resource person there to answer their questions and direct them to the section of
store where the needed products are.
In-Store Expertise: Store employees will be knowledgeable in home repairs/projects.In addition,
the repair/project resource area will be used to conduct short trainings and demonstrations in
home repair and home projects.
5.2 Sales Strategy
The sales strategy of the Hardware is simple. First, create a shopping environment that will create
confidence in the customer that he or she will get the needed material, part, or instructions to get
the job done right the first time. Second, make the store easy to navigate,so customer can get in
and out as quickly as possible. Third, know your customer's seasonal hardware needs and offer it
at competitive prices.

5.2.1 Sales Forecast

The Hardware will hit the ground running once allthe investment is funneled in.
Table: Sales Forecast (Planned)

Sales Forecast
Sales 2024 2025 2026
Hardware R964,000 R1,090,000 R1,240,000
Other R0 R0 R0
Total Sales R964,000 R1,090,000 R1,240,000

Direct Cost of Sales 2024 2025 2026


Hardware R474,000 R500,000 R612,000
Other R0 R0 R0
Subtotal Direct Cost of Sales R474,000 R500,000 R612,000

Sales Monthly (Planned)

R100,000

R90,000

R80,000
R70,000
R60,000

R50,000 Hardware

R40,000 Other

R30,000

R20,000
R10,000

R0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

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Clara's Hardware Store

6.0 Management Summary

Clara Johnson is a excellent staff supervisor and will do very well in managing the staff of
Clara's Hardware.

6.1 Personnel Plan

Clara's Hardware will have the following staff members:

• Manager.
• Assistant Manager.
• Office Manager/Accountant.
• Checkers (full time and part time).
• Two Customer Assistants.
• Stockers (full time and part time).

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Clara's Hardware Store

7.0 Financial Plan

The following is the financial plan for Tripleweave Hardware.

7.1 Break-even Analysis

The monthly sales break-even point is R50,526.

Table: Break-even Analysis

Break-even Analysis:
Monthly Units Break-even 842
Monthly Sales Break-even R50,526

Assumptions:
Average Per-Unit Revenue R60.00
Average Per-Unit Variable Cost R3.00
Estimated Monthly Fixed Cost R48,000

Break-even Analysis

R20,000

R10,000

R0

(R10,000)

(R20,000)

(R30,000)

(R40,000)

(R50,000)
R0 R12,000 R24,000 R36,000 R48,000 R60,000

Monthly break-even point

Break-even point = where line intersects with 0

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Clara's Hardware Store

7.2 Projected Profit and Loss

The following table and chart highlight the projected profit and loss for three years.

Table: Profit and Loss (Planned)

Pro Forma Profit and Loss


2024 2025 2026
Sales R964,000 R1,090,000 R1,240,000
Direct Cost of Sales R474,000 R500,000 R612,000
Other Production Expenses R0 R0 R0
------------ ------------ ------------
Total Cost of Sales R474,000 R500,000 R612,000
Gross Margin R490,000 R590,00 R628,00
Gross Margin % 50.83% 54.13% 50.65%
Operating Expenses:
Advertising/Promotion R75,000 R100,000 R100,000
Travel
Miscellaneous R0 R0 R0
Payroll Expense R0 R0 R0
Payroll Burden R240,000 R265,500 R292,000
Depreciation R36,000 R39,825 R43,800
Leased Equipment R4,284 R4,285 R4,285
Utilities R0 R0 R0
Insurance R6,000 R6,000 R6,000
Rent R0 R0 R0
Inventory R36,000 R36,000 R36,000
Contract/Consultants R0 R0 R0
------------ ------------ ------------
Total Operating Expenses R397,284 R451,610 R482,085
Profit Before Interest and Taxes R92,716 R138,390 R145,915
Interest Expense Short-term $0 R0 R0
Interest Expense Long-term R13,375 R7,500
R10,500
Taxes Incurred R23,802 R41,525
R38,367
Extraordinary Items R0 R0
R0
Net Profit R55,539 R89,523 R96,891
Net Profit/Sales 5.76% 8.21% 7.81%

Profit Monthly (Planned)

R20,000

R15,000

R10,000

R5,000

R0

(R5,000)

(R10,000)

(R15,000)

(R20,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

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Clara's Hardware Store

7.3 Projected Cash Flow

The following table and chart highlight the projected cash flow for three years.

Table: Cash Flow (Planned)

Pro Forma Cash Flow 2024 2025 2026

Cash Received
Cash from Operations:
Cash Sales R964,000 R1,090,000 R1,240,000
From Receivables R0 R0 R0
Subtotal Cash from Operations R964,000 R1,090,000 R1,240,000

Additional Cash Received


Extraordinary Items
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of other Short-term Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received R964,000 R1,090,000 R1,240,000

Expenditures 2024 2025 2026


Expenditures from Operations:
Cash Spent on Costs and Expenses R62,818 R69,087 R80,302
Wages, Salaries, Payroll Taxes, etc. R276,000 R305,325 R335,800
Payment of Accounts Payable R515,297 R616,784 R713,784
Subtotal Spent on Operations R854,115 R991,196 R1,129,886

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment R30,000 R30,000 R30,000
Purchase Other Short-term Assets
Purchase Long-term Assets
Dividends
Adjustment for Assets Purchased on Credit
Subtotal Cash Spent R884,115 R1,021,196 R1,159,886

Net Cash Flow R79,885 R68,804 R80,114


Cash Balance R200,885 R269,689 R349,803

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Clara's Hardware Store

Cash (Planned)

R250,000

R200,000

R150,000

R100,000 Net Cash Flow


Cash Balance
R50,000

R0

(R50,000)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

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Clara's Hardware Store

7.4 Projected Balance Sheet

The following table highlights the projected balance sheet for three years.

Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

Assets
Short-term Assets 2024 2025 2026
Cash R200,885 R269,689 R349,803
Other Short-term Assets R0 R0 R0
Total Short-term Assets R200,885 R269,689 R349,803
Long-term Assets
Long-term Assets R30,000 R30,000 R30,000
Accumulated Depreciation R4,284 R8,569 R12,854
Total Long-term Assets R25,716 R21,431 R17,146
Total Assets R226,601 R291,120 R366,949

Liabilities and Capital


2024 2025 2026
Accounts Payable R50,062 R55,058 R63,997
Current Borrowing
Other Short-term Liabilities
Subtotal Short-term Liabilities R50,062 R55,058 R63,997

Long-term Liabilities R120,000 R90,000 R60,000


Total Liabilities R170,062 R145,058 R123,997

Paid-in Capital R80,000 R80,000 R80,000


Retained Earnings (R79,000) (R23,461) R66,062
Earnings R55,539 R89,523 R96,891
Total Capital R56,539 R146,062 R242,952
Total Liabilities and Capital R226,601 R291,120 R366,949
Net Worth R56,539 R146,062 R242,952

7.5 Ratios

Business ratios for the years of this plan are shown below.

Page 13
Table: Ratios (Planned)

Ratio Analysis
2002 2003 2004 Industry Profile
Sales Growth 0.00% 13.07% 13.76% 6.00%

Percent of Total Assets


Accounts Receivable 0.00% 0.00% 0.00% 11.00%
Inventory 0.00% 0.00% 0.00% 48.50%
Other Short-term Assets 0.00% 0.00% 0.00% 20.20%
Total Short-term Assets 88.65% 92.64% 95.33% 79.70%
Long-term Assets 11.35% 7.36% 4.67% 20.30%
Total Assets 100.00% 100.00% 100.00% 100.00%

Other Short-term Liabilities 0.00% 0.00% 0.00% 37.60%


Subtotal Short-term Liabilities 22.09% 18.91% 17.44% 30.00%
Long-term Liabilities 52.96% 30.92% 16.35% 19.70%
Total Liabilities 75.05% 49.83% 33.79% 49.70%
Net Worth 24.95% 50.17% 66.21% 50.30%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 50.83% 54.13% 50.65% 33.80%
Selling, General & Administrative Expenses 45.07% 45.92% 42.83% 21.10%
Advertising Expenses 7.78% 9.17% 8.06% 1.90%
Profit Before Interest and Taxes 9.62% 12.70% 11.77% 1.10%

Main Ratios
Current 4.01 4.90 5.47 2.24
Quick 4.01 4.90 5.47 0.58
Total Debt to Total Assets 75.05% 49.83% 33.79% 57.30%
Pre-tax Return on Net Worth 187.64% 101.94% 63.15% 2.20%
Pre-tax Return on Assets 46.82% 51.14% 41.81% 5.30%

Business Vitality Profile 2002 2003 2004 Industry


Sales per Employee $107,111 $121,111 $137,778 $0
Survival Rate 0.00%

Additional Ratios 2002 2003 2004


Net Profit Margin 5.76% 8.21% 7.81% n.a
Return on Equity 98.23% 61.29% 39.88% n.a

Activity Ratios
Accounts Receivable Turnover 0.00 0.00 0.00 n.a
Collection Days 0 0 0 n.a
Inventory Turnover 0.00 0.00 0.00 n.a
Accounts Payable Turnover 11.29 11.29 11.29 n.a
Total Asset Turnover 4.25 3.74 3.38 n.a

Debt Ratios
Debt to Net Worth 3.01 0.99 0.51 n.a
Short-term Liab. to Liab. 0.29 0.38 0.52 n.a

Liquidity Ratios
Net Working Capital $150,823 $214,631 $285,806 n.a
Interest Coverage 6.93 13.18 19.46 n.a

Additional Ratios
Assets to Sales 0.24 0.27 0.30 n.a
Current Debt/Total Assets 22% 19% 17% n.a
Acid Test 4.01 4.90 5.47 n.a
Sales/Net Worth 17.05 7.46 5.10 n.a
Dividend Payout R0 0.00 0.00 n.a

Page 14
Appendix

Appendix Table: Sales Forecast (Planned)

Sales Forecast
Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2024 2025 2026
Hardware R50,000 R60,000 R70,000 R75,000 R85,000 R90,000 R100,000 R85,000 R90,000 R85,000 R79,000 R95,000 R964,000 R1,090,000 R1,240,000
Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Total Sales R50,000 R60,000 R70,000 R75,000 R85,000 R90,000 R100,000 R85,000 R90,000 R85,000 R79,000 R95,000 R964,000 R1,090,000 R1,240,000

Direct Cost of Sales Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2024 2025 2026
Hardware R25,000 R30,000 R35,000 R37,000 R42,000 R45,000 R50,000 R42,000 R45,000 R42,000 R39,000 R42,000 R474,000 R500,000 R612,000
Other R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Subtotal Direct Cost of Sales R25,000 R30,000 R35,000 R37,000 R42,000 R45,000 R50,000 R42,000 R45,000 R42,000 R39,000 R42,000 R474,000 R500,000 R612,000

Page 1
Appendix

Appendix Table: Personnel (Planned)

Personnel Plan
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Manager R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R6,000 R72,00 R80,000 R90,000
Assistant Manager 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Office Manager/Bookkeeper R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R3,000 R36,000 R39,000 R42,000
Checkers R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R2,700 R32,400 R35,500 R40,000
R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R5,000 R60,000
Customer Assistants R8,000 R74,000
R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R3,300 R39,600
Stockers R3,300 R44,000 R48,000
R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0 R0
Other R0 R0 R0
Total Payroll R20,000 R240,000 R265,500 R292,000

Total People 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9
Payroll Burden R3,000 R36,000 R39,825 R43,800
Total Payroll Expenditures R23,000 R276,000 R305,325 R335,800

Page 2
Appendix

Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss


Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
Direct Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $25,000 $30,000 $35,000 $37,000 $42,000 $45,000 $50,000 $42,000 $45,000 $42,000 $39,000 $42,000 $474,000 $500,000 $612,000
Gross Margin $25,000 $30,000 $35,000 $38,000 $43,000 $45,000 $50,000 $43,000 $45,000 $43,000 $40,000 $53,000 $490,000 $590,000 $628,000
Gross Margin % 50.00% 50.00% 50.00% 50.67% 50.59% 50.00% 50.00% 50.59% 50.00% 50.59% 50.63% 55.79% 50.83% 54.13% 50.65%
Operating Expenses:
Advertising/Promotion $20,000 $25,000 $5,000 $0 $5,000 $5,000 $0 $5,000 $0 $0 $5,000 $5,000 $75,000 $100,000 $100,000
Travel $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Miscellaneous $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Payroll Expense $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $240,000 $265,500 $292,000
Payroll Burden $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $39,825 $43,800
Depreciation $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $357 $4,284 $4,285 $4,285
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Utilities $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 $6,000 $6,000
Insurance $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $36,000 $36,000 $36,000
Inventory $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses $46,857 $51,857 $31,857 $26,857 $31,857 $31,857 $26,857 $31,857 $26,857 $26,857 $31,857 $31,857 $397,284 $451,610 $482,085
Profit Before Interest and Taxes ($21,857) ($21,857) $3,143 $11,143 $11,143 $13,143 $23,143 $11,143 $18,143 $16,143 $8,143 $21,143 $92,716 $138,390 $145,915
Interest Expense Short-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest Expense Long-term $1,229 $1,208 $1,188 $1,167 $1,146 $1,125 $1,104 $1,083 $1,063 $1,042 $1,021 $1,000 $13,375 $10,500 $7,500
Taxes Incurred ($6,926) ($6,920) $587 $2,993 $2,999 $3,605 $6,612 $3,018 $5,124 $4,530 $2,137 $6,043 $23,802 $38,367 $41,525
Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Profit ($16,160) ($16,146) $1,369 $6,983 $6,998 $8,413 $15,427 $7,042 $11,956 $10,571 $4,986 $14,100 $55,539 $89,523 $96,891
Net Profit/Sales -32.32% -26.91% 1.96% 9.31% 8.23% 9.35% 15.43% 8.28% 13.28% 12.44% 6.31% 14.84% 5.76% 8.21% 7.81%

Page 3
Appendix

Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005

Cash Received
Cash from Operations:
Cash Sales $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000
From Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash from Operations $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000

Additional Cash Received


Extraordinary Items $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $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 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of other Short-term Assets $0 $0 $0 $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 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $50,000 $60,000 $70,000 $75,000 $85,000 $90,000 $100,000 $85,000 $90,000 $85,000 $79,000 $95,000 $964,000 $1,090,000 $1,240,000

Expenditures Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Expenditures from Operations:
Cash Spent on Costs and Expenses $4,280 $5,279 $4,527 $4,466 $5,464 $5,823 $6,122 $5,460 $5,469 $5,107 $5,066 $5,754 $62,818 $69,087 $80,302
Wages, Salaries, Payroll Taxes, etc. $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $23,000 $276,000 $305,325 $335,800
Payment of Accounts Payable $1,284 $38,823 $47,284 $40,728 $40,493 $49,288 $52,497 $54,896 $49,144 $49,110 $45,952 $45,798 $515,297 $616,784 $713,784
Subtotal Spent on Operations $28,564 $67,101 $74,812 $68,194 $68,958 $78,111 $81,619 $83,356 $77,612 $77,217 $74,018 $74,553 $854,115 $991,196 $1,129,886

Additional Cash Spent


Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $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 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $30,000 $30,000 $30,000
Purchase Other Short-term Assets $0 $0 $0 $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 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Adjustment for Assets Purchased on Credit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $31,064 $69,601 $77,312 $70,694 $71,458 $80,611 $84,119 $85,856 $80,112 $79,717 $76,518 $77,053 $884,115 $1,021,196 $1,159,886

Net Cash Flow $18,936 ($9,601) ($7,312) $4,306 $13,542 $9,389 $15,881 ($856) $9,888 $5,283 $2,482 $17,947 $79,885 $68,804 $80,114
Cash Balance $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803

Page 4
Appendix

Appendix Table: Balance Sheet (Planned)

Pro Forma Balance Sheet

Assets
Short-term Assets Starting Balances Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Cash $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
Other Short-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Short-term Assets $121,000 $139,936 $130,334 $123,022 $127,328 $140,870 $150,259 $166,141 $165,285 $175,173 $180,456 $182,938 $200,885 $200,885 $269,689 $349,803
Long-term Assets
Long-term Assets $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000
Accumulated Depreciation $0 $357 $714 $1,071 $1,428 $1,785 $2,142 $2,499 $2,856 $3,213 $3,570 $3,927 $4,284 $4,284 $8,569 $12,854
Total Long-term Assets $30,000 $29,643 $29,286 $28,929 $28,572 $28,215 $27,858 $27,501 $27,144 $26,787 $26,430 $26,073 $25,716 $25,716 $21,431 $17,146
Total Assets $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949

Liabilities and Capital


Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2003 2004 2005
Accounts Payable $0 $37,239 $45,926 $39,389 $38,854 $47,541 $50,660 $53,258 $47,503 $47,577 $44,433 $44,072 $50,062 $50,062 $55,058 $63,997
Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Short-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Short-term Liabilities $0 $37,239 $45,926 $39,389 $38,854 $47,541 $50,660 $53,258 $47,503 $47,577 $44,433 $44,072 $50,062 $50,062 $55,058 $63,997

Long-term Liabilities $150,000 $147,500 $145,000 $142,500 $140,000 $137,500 $135,000 $132,500 $130,000 $127,500 $125,000 $122,500 $120,000 $120,000 $90,000 $60,000
Total Liabilities $150,000 $184,739 $190,926 $181,889 $178,854 $185,041 $185,660 $185,758 $177,503 $175,077 $169,433 $166,572 $170,062 $170,062 $145,058 $123,997

Paid-in Capital $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000
Retained Earnings ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($79,000) ($23,461) $66,062
Earnings $0 ($16,160) ($32,306) ($30,937) ($23,954) ($16,956) ($8,543) $6,884 $13,926 $25,882 $36,453 $41,439 $55,539 $55,539 $89,523 $96,891
Total Capital $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952
Total Liabilities and Capital $151,000 $169,579 $159,620 $151,951 $155,900 $169,085 $178,117 $193,642 $192,429 $201,960 $206,886 $209,011 $226,601 $226,601 $291,120 $366,949
Net Worth $1,000 ($15,160) ($31,306) ($29,937) ($22,954) ($15,956) ($7,543) $7,884 $14,926 $26,882 $37,453 $42,439 $56,539 $56,539 $146,062 $242,952

Page 5

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