PhotoSynthesis                            Business PlanPhotoSynthesis   10000 Millionaire Dr. Westerville, OH 43081   T 74...
PhotoSynthesisTable of ContentsExecutive Summary                             4Vision and Mission Statement                ...
PhotoSynthesis    	        Exit Strategy and Cash Out                   21    Appendices                                  ...
PhotoSynthesisExecutive Summary	        Digital photography has significantly changed the way people interact with their pe...
PhotoSynthesis    	    Industry demand depends on consumer income. Profitability of individual companies is linked to marke...
PhotoSynthesis        •        Local physical presence and ownership        •        Personal contact between customer and...
PhotoSynthesisprocessed with an imaging system from Kodak. By default, photos will be delivered on CDs and DVDs. Photos wi...
PhotoSynthesispictures may need special attention. To address this need we will offer a special retouching service on top ...
PhotoSynthesis         •       Ability to attach notes to each picture         •       Easy uploading to photo sharing sit...
PhotoSynthesis        •        55% say their photographs are not safely stored.        •        78% say they have some but...
PhotoSynthesisyear to make PhotoSynthesis a popular local household name. In addition, we will also promote PhotoSynthesis...
PhotoSynthesis	        The first location of PhotoSynthesis will be opened in Westerville, Ohio. There are a number of reas...
PhotoSynthesisadded and on-line organization tool that will allow customers to sort and name all the photos before they ar...
PhotoSynthesisFinancial Forecasts	        Below are our financial forecasts for PhotoSynthesis in the first three years of o...
PhotoSynthesis4. Overhead Expenses   RentStore Rental                                                $	     1,000   Utilit...
PhotoSynthesis  Total                                   $	          40,032Monthly OverheadsRent                           ...
PhotoSynthesisTax                                  $	          (17,164) $ 	                22,148 $ 	             83,735 N...
PhotoSynthesis  Accounts Payable                    $	            0 $	             0 $	              0 $	              0  ...
PhotoSynthesis                                   PhotoSynthesis Balance Sheet [Outperform]                                ...
PhotoSynthesis    Changes in Working Capital                       $	             0 $	              0 $	              0 $	...
PhotoSynthesis1. Personal Investments	           As founding members of the business, Nathaniel Cook, David Khoo, and Than...
PhotoSynthesisor partnering with a large chain such as FedEx Kinkos to expand the business. Whichever possibility PhotoSyn...
Upcoming SlideShare
Loading in...5
×

Business Plan for Entrepreneurial Project

401

Published on

Written Business Plan for PhotoSynthesis - Duke Nguyen

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
401
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
24
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Business Plan for Entrepreneurial Project

  1. 1. PhotoSynthesis Business PlanPhotoSynthesis 10000 Millionaire Dr. Westerville, OH 43081 T 740-803-0952 F 740-816-2620 info@photosynthesis.com
  2. 2. PhotoSynthesisTable of ContentsExecutive Summary 4Vision and Mission Statement 4Industry Profile and Overview 4Business Strategy 5 Company Goals and Objectives 5 SWOT Analysis 5Company Products and Services 6 Core Products/Services Description 6 Value Added Products/Services 7Marketing Strategy 9 Problem to be solved 9 Segmentation 9 Market Description 10 Marketing Plan 10 Pricing 11Location and Layout 11 Location 12 Layout 12Competitor Analysis 12Description of Management Team 13Financial Forecasts 14 Budget Plan 14 Summary of Cost 15 Income Statements 16 Balance Sheets 17 Cash Flow Statements 19Loan and Investment Proposal 20 Budget and Requested Funds 20Business Plan 2
  3. 3. PhotoSynthesis Exit Strategy and Cash Out 21 Appendices 22 Business Plan 3
  4. 4. PhotoSynthesisExecutive Summary Digital photography has significantly changed the way people interact with their personal photos. The waypeople manage their photographic memories now is a more streamlined and empowering experience to the averageconsumer. This change has eliminated the need for boxes and folders of physical pictures, but many people still havemany old print photographs collecting dust. Time consuming to organize and tedious to display, physical photos usuallyend up stacked away somewhere. Putting these pictures into elegant and beautiful displays such as scrapbooks is costlyboth in time and money. To solve this problem we will use the advantages of digital photography software and scanningtechnology. By digitizing physical photographs, they can be preserved forever and easily compiled into pleasingpresentations that are easily distributed to family and friends around the world. By providing the technical equipment andexpertise in these areas we eliminate the problem for the customer. By using our services the customer will save valuabletime, avoid great frustration, and come away with a finished product that allows them to remember some of lifeshappiest moments forever.Vision and Mission Statement PhotoSynthesis LLC. is in the business of helping people protect and enhance their photographic memories ina personal and respectful way. We understand the importance of each and every photograph. We support eachcustomers efforts to preserve and organize these memories. Through our technology, experience, and commitment wewill enable customers to take charge of their photo collections and enjoy them more thoroughly. We hope to spread thispersonal service as far as we can by engaging other business owners and individuals in what we do and allowing themto provide such services on their own. Our local retail presence will serve to anchor our business in the community andallow positive personal interaction and collaboration. PhotoSynthesis is in a business that preserves, a business thatempowers, and a business that enriches our future.Industry Profile and OverviewIndustry - Photo Finishing Laboratories (except One-Hour) - USNAICS Code - 812921 This industry comprises establishments, known as commercial and professional photo finishing laboratories,primarily engaged in developing film and making photographic slides, prints, and enlargements, on a large-scale basis,typically for commercial clients, and providing specialty services not normally available from one-hour photo finishinglaboratories. The photofinishing industry includes about 8,000 locations with combined annual revenue of $7 billion. Theindustry is concentrated: the 50 largest companies hold more than 60 percent of the market. A typical store has fiveemployees and about $500,000 in annual revenue.Business Plan 4
  5. 5. PhotoSynthesis Industry demand depends on consumer income. Profitability of individual companies is linked to marketing,and, for photofinishers, efficiency of operations. Large companies can have economies of scale in purchasing andoperations. Small companies can compete successfully by offering superior service. The industry is fairly labor-intensive:annual revenue per employee is about $100,000.Business Strategy PhotoSynthesis will position itself within the market as a reasonably priced, high quality, excellent service firm.We will be an approachable company for older clients and a complete solution for younger customers. Our image shouldbe focused around our locations. Unlike the big online scanning firms, a customer can come into the store and talk withus about their photos. This interaction and proximity to the customer will allow us to provide a higher level of service andalso gain more of the trust of the customers.Company Goals and Objectives1. Operational • All orders should be completed within 5 business days of receiving the pictures. • All customer inquiries will be answered within 24 hours of receipt. • Make four new very personal customer contacts a day and add them to data base • Call one former customer a day to make sure they are satisfied with our work and remind them of upcoming promotions and new product releases. • Post an operate a functional and stylish website2. Financial Goals • Generate positive cash flow in the 2nd year • Be free of original debt by end of third year • Make payroll • Reach break even after the first year3. Other Goals • Sponsor and run one charity fundraiser a year held in and around our store.SWOT Analysis1. StrengthsBusiness Plan 5
  6. 6. PhotoSynthesis • Local physical presence and ownership • Personal contact between customer and company • Ease of use for our service • Complete solution to problem2. Weaknesses • Initial production capacity might be low • Unknown brand in the local market • Need to educate many customers about the service we provide • Efficiencies lower than online competitors3. Opportunities • High growth through networking with local organizations (sports teams, churches) • Contractual arrangements with organizations to scan their photos and maybe documents in future • Being the first mover in the Columbus Market.4. Threats • Customers failing to take action on intentions to bring in pictures due to lack of motivation or competitors actions. • Improvement of consumer scanning technology • Decreasing usage of film • Passing on of the older generation • Competitors value propositionsCompany Products and ServicesCore Products/Services DescriptionPhotoSynthesis core business revolves around three major product offerings:1. Photo Scanning PhotoSynthesis will scan print photos into digital format. Print photos of various sizes and print media will beaccepted. The digitized photos will be saved in industrial and consumer image formats. Customers will have the option ofchoosing standard quality (JPEG) to high quality (TIFF) formats. Scanning of photos will be automated and bulkBusiness Plan 6
  7. 7. PhotoSynthesisprocessed with an imaging system from Kodak. By default, photos will be delivered on CDs and DVDs. Photos will beaccepted through PhotoSynthesis store front and through mail.2. Negative Scanning Alongside print photo scanning, PhotoSynthesis will also digitize negatives. A separate automated negativescanner will be used, but the customer provided with the same digital output options as the photo scanning service. Bydefault, photos will be delivered on CDs and DVDs. Negatives will be accepted through PhotoSynthesis store front andthrough mail.3. VHS Digitization PhotoSynthesis will also convert analog VHS videos into digital format. Various output options will be madeavailable, from compressed (AVI) to lossless (DVD) and high definition video formats. VHS tapes will be accepted throughPhotoSynthesis store front and through mail. At its core, PhotoSynthesis offers photo and video digitization services. By offering photo, negative, and VHSdigitization, PhotoSynthesis can offer a complete suite of products to customers. Since customers prefer to have allrelated tasks completed conveniently at one location with the least hassle, PhotoSynthesis is positioned to takeadvantage of this need. Moreover, this suite of services allows PhotoSynthesis to cross sell to customers. For instance, acustomer buying photo scanning services can be sold VHS digitization services. In addition to these core services,customers will also be offered a host of value added services that are built atop these core offerings. From a business perspective, these three related services will leverage and maximize the use of PhotoSynthesisequipment and infrastructure. Although different scanners are required for the different services, the output, storage, andretrieval interfaces are identical. Also, the skill set required for these services are similar. This strategy enablesPhotoSynthesis to spread its fixed costs over a larger base, keeping costs low. Additionally, with this clear core definition,PhotoSynthesis will be able to focus its efforts to become the best in its class and achieve a competitive advantage inphoto, negative and VHS digitization.Value Added Products/Services1. Digital photo album creation As a way to increase the overall total value of each customer interaction we will offer a custom digital photoalbum creation service. This service will be offered to all of our customers and will allow them to use their newly digitizedphotos to create professional grade albums. Working with a professional photo management specialist, customers willhave a strong creative influence and the final word on how the album turns out. After specifying what pictures they wantin the album, the general theme, and any messages they may want to include, our specialist will work to create apolished digital photo album that meets those desires. Through consultations via email and face-to-face meetings, thecustomer and the photo specialist will together create a great piece that can be shared with family and friends across theglobe.2. Retouching To save on labor costs we will be using automated retouching software to quickly improve the overallappearance and quality of the photos we scan en mass. But there are limits to our automated software and someBusiness Plan 7
  8. 8. PhotoSynthesispictures may need special attention. To address this need we will offer a special retouching service on top of the standardretouching. Customers will select specific photos that they would like to be retouched beyond the standard level. Thesepictures would be worked on individually by a digital photo specialist. They will be able to eliminate scratches anddamages to the original photograph by "brushing" them out with advanced software like Adobe Photoshop. Otherimprovements will include color enhancement, getting rid of yellow discoloration due to aging, and increasing pictureclarity. With the technology available today even the oldest and most damaged photographs can be returned to near newcondition in a digital format that can be reprinted.3. Photo Printing For any photos that we scan we will also offer to professionally reprint them. This feature will allow customers totake very old and fragile photographs, have them retouched, and then re-printed on new paper. This will extend the life ofthe photo and allow them to handle precious photographs without the worry of damaging them. The costs of owning/operating a professional photo printing machine are very high so we will be outsourcing all printing activities to a photoprinting business. This will allow us to offer this great feature while not incurring the costs that such a venture wouldinvolve.4. Transfer of scanned images onto user storage device The management and distribution of the images after scanning is an important issue for our customers. For afee, we will transfer all of their scanned photos onto their personal storage device. This could include an external harddrive or a flash drive. This will allow customers to choose how they want to receive their data.5. Flash Drives In addition to our standard DVD transfer service we will also offer to put the scanned images on a flash drive fora fee. This will give the customer good portability and ease of use.6. Proprietary Software Having an entire photo collection digitized can be a great way to organize and manage personal memories. Butworking with all these photos on a computer can be overwhelming for some. Photo organization and managementsoftware is extremely powerful but it can be very complicated to operate. Many of our customers do not have the time,desire, or technical knowledge to take full advantage of these tools. To allow our customers to take full advantage of theirnewly digitized photo collection we are going to create a new and innovative piece of photo organization software. Theextremely intuitive visual interface based of the software will make photo management much easier and allow many ofour target customers to enjoy their photos fully. Features will include : • Name tagging • Date tagging • Location tagging • Sorting options (Example: "show me all pictures of me and my brother") • Chronological ordering • Family tree via pictures • Grouping by event or tripBusiness Plan 8
  9. 9. PhotoSynthesis • Ability to attach notes to each picture • Easy uploading to photo sharing sitesMarketing StrategyProblem to be solved The focus of our business is to take print photographs and scan them into digital format so they can beenhanced and compiled into professional slideshows, digital binders, and other storage and display options. By usingprofessional grade equipment we will ensure that our product/service is of the highest quality. After initially scanning thephotos we will be able to enhance the images by using photo editing software. After maximizing the potential of eachphoto they can be compiled into several different display and storage formats. For display the customer can work closelywith one of our associates to create a personalized photo slideshow or digital scrapbook. These finished products canbe sent to family around the world as gifts. For storage the customer can choose to have the photos and presentationsplaced on DVDs or USB drives. They may also choose to store their photos and creations on-line where they will beaccessible from anywhere. Our physical storefront will serve as a place for customers to come in and drop off photos to be scanned. Theywould also be able to work with us to create digital photo slideshows and albums. As we know that not all customers willbe able to make it into the store we will offer the option to send pictures to our facility to be scanned via FedEx or UPScertified and insured boxes. Due to the digital nature of our work we could also work with customers from across thecountry over the web while creating their slideshows and albums. The photos would be scanned and either returned tothe customer or saved off-site at a secure area with heavy fire prevention systems.Segmentation Our target segment is young families and older parents or individuals who wish to preserve all their childhoodpictures or pictures of their young children. This segment also includes those who have numerous print photos that needdigitizing. Another segment is the individuals or families that do not have the time and or expertise to digitize and editphotos. For the opening of the first PhotoSynthesis location, our team has created a survey to collect data that couldhelp us better understand the consumers wants and needs. Below are the key findings from the survey answers: • Those that are most interested in purchasing our services are parents in their 50s with household annual income of $80,000 and above. • 44% of the selected group has paid for digital photo scanning services before. • 53% answered yes when asked if they use any online photo sharing services. • 92% say their printed photos are important to them and that they could not bear to lose them.Business Plan 9
  10. 10. PhotoSynthesis • 55% say their photographs are not safely stored. • 78% say they have some but not all of their printed photos duplicated. • 88% of the selected group they would consider using a service that digitally preserves photos. • 69% of the group are willing to pay up to $100 for our service, 25% are comfortable within the $100-200 range and the rest is willing to pay even more than $200. • 85% of the group have thought of organizing their photos or scanning them. • 95% people have not scanned all their printed photos. • 74% say they do not have time to digitize their photos • 87% agree that having all their photos digitally scanned would bring them great value.Market Description Right now the market for full service photo scanning and digital album creation is limited. There are companiesthat offer scanning services but non offer comprehensive and personalized album creation services as well. In additionmany of these companies target other businesses by scanning paper documents. A market that is closely related to ourpurposed segment is photo editing software for consumer use. There are hundreds of programs out there that all claimto be the best way to organize and present your digital memories. What they all have in common is the amount of time ittakes to learn how to use them. We know our software backwards and forwards and this allows the customer to focuson helping to create the most meaningful presentation possible. We see older generations as a huge market niche thatwe can serve like no other business. Parents and Grandparents trying to interact with their younger family members willfind our personalized and sensitive service appealing. We will help them to bridge the digital gap that often existsbetween generations.Marketing Plan1. Interactive Marketing We will be using Yahoo, Google, and other online search services to promote our business. In particular, everytime when people search for specific keywords such as "photo scanning", our business would show up first place in theresults page, giving us more of the brand exposure needed to make our business a popular choice among customers. In addition, we will also be purchasing ad space on several websites that provide online photography servicessuch as Flickr or Photobucket. In so doing, we will be able to reach those photography-enthusiastic audience who havea lot of potential to become our customers.2. Traditional Marketing Since the first PhotoSynthesis store will be located in central Ohio, we will be advertising our business onseveral local newspapers and community newsletters such as The Columbus Dispatch or Delaware Gazette for at least aBusiness Plan 10
  11. 11. PhotoSynthesisyear to make PhotoSynthesis a popular local household name. In addition, we will also promote PhotoSynthesis on anumber of other photography, lifestyle and home magazines every quarter for a year to reach customers from otherareas. Furthermore, we will be offering free trials for orders of 25 photos and fewer in the first three months ofoperation to create more incentives for people to try our services. We will also be visiting places such as school,retirement homes and churches to deliver presentation and demonstration on our products and services to encourageword-of-mouth communication. Last but not least, during the first month of operation our company will send out 1000 postcards to potentialbusiness partners and customers in Ohio to introduce our business and services, and also to generate publicity.PricingGeneral Pricing 0-500 Pictures 501-1000 Pictures 1001-2000 Pictures 2001 Pictures and Above 12.5 cents/picture 11 cents/picture 10 cents/picture Ask about pricingPricing of Add-On Features Digital Photo Retouching Photo Printing Data Transfer Flash Drive Software Album Creation to Customer’s Device $150 for a single $50 dollars/ Prices to be $9.99 $14.99/flash $29.99 completely photo, Heavy determined by drive custom album restoration firm we that is 50 photos outsource to $25 dollars/ or less. Includes photo, medium 1 hard copy and restoration DVD. Additional hard copies and $15 dollars/ DVD editions can photo, light be purchased as restoration wellLocation and LayoutLocationBusiness Plan 11
  12. 12. PhotoSynthesis The first location of PhotoSynthesis will be opened in Westerville, Ohio. There are a number of reasons as towhy we chose this area to open our business. In particular, while Westerville is a well-established community ofprofessionals with steady income that could support our business, the city is also populated by elder residents whousually have a lot of photos and potential to become our customers. Therefore, this town would provide a perfect test-market for us to test our business strategies and tactics. Moreover, the rental rates for a business office in Westerville isapproximately $500/month. which is affordable for a start-up business like PhotoSynthesis.Layout Our office will be a 800 square feet room on the ground floor of a townhouse, which complies with theAmericans with Disabilities Act. The office space will be divided into two sections: one section is for studio works/customer interactions while the other one will be used for storage and other logistics.Competitor AnalysisScan My Photos Internationalhttp://www.scanmyphotos.com/ This is one of the largest companies in the market. They have been featured in such publications as The NewYork Times, The Wall Street Journal, The Chicago Sun-Times, USA Today, and CBS. They use the finest and mostadvanced scanning technology in the industry to achieve extremely high levels of efficiency. They use a Kodak scannerthat cost 26k-29k dollars and can produce high quality scans of 750 photos in 5 minutes. They offer a range of servicesfrom VHS digitization to photo restoration. They were started in 1990 and have grown very strong in the market. Theyhave one retail location, which is also their headquarters, in Irvine, California. The majority of their business is donethrough mail-in boxes. Customers purchase a box online and it is sent to their residence. They then fill the box withphotos and mail it to scanmyphotos.com. This process has allowed them to keep overhead cost down and have accessto customers all over the country and even the world. Their pricing for regualr photo scanning is almost unbeatalbe atabout 4 cents a scan. This is of coarse not where they are making their money. The value-added services and productsthat come into play after the photos have been scanned are where the profit is found.Larsen Digital Serviceshttp://www.slidescanning.com/ Based in Utah, this is a smaller company than scanmyphotos.com that was started in 1995. They pridethemselves for not outsourcing any work over seas. Everything they do is done in house and in the States. They offernearly all of the features and services as larger companies and are focused on providing great customer service. Theirprices are higher than scanmyphotos.com but they also are able to give a more personal experience. They have recentlyBusiness Plan 12
  13. 13. PhotoSynthesisadded and on-line organization tool that will allow customers to sort and name all the photos before they are burned ontoDVDs. By accessing their photos online the customer can easily manage and organize them before they get them backfrom Larsen. This is a strong feature offered by Larsen. They have no retail space at this time.Foto Bridgehttp://www.fotobridge.com/ Smaller private company that focuses on offering "all inclusive" pricing. They believe that customers valueknowing exactly how much they are going to be paying at the end so they price their products and services in areasonable way. They do many of the same things as bigger companies in terms of offering photos on DVDs and flashdrives. In our opinion there is no clear point of differentiation for Fotobridge.Dig My Picshttp://www.digmypics.com/ This company was started in 2002 by a couple who had got the idea after preserving their own family photos. In2007 it had become a multi-million dollar company and had over 40 employees. They offer a completely unique feature inconjunction with their photo scanning service. It is called "Real Time Scanning" and it allows a customer to see theirphotos as they are being scanned as well as look at where their pictures are in the queue. This feature is unique in theindustry and gives the customer greater comfort. Their pricing is wide ranging, but they offer different levels of resolutionto scan at and this causes a lot of the variation.Description of Management TeamKey managers and employees Duke, Nathaniel and David are three juniors from Ohio Wesleyan University. We would be the majorstakeholders and operators of the business. We would leverage our complementary skills and experience to create acompetitive advantage for the business. Duke and Nathaniel would undertake sales, marketing, and operationalresponsibilities while David will be responsible for the technical and IT aspects of the business. Since digitalphotography, editing, and composition are beyond our core competencies, we would need to hire an artistic team. Thisteam would include Ohio Wesleyan Junior and Photography major Taylor McCleneghan. Her knowledge ofphotography and training in photo editing software such as Adobe Photoshop will allow us to train others in these sameareas and avoid having to pay for experience up-front.AdviserRusty McClure - an Angel investor who has had a lot of experience in helping a start-up businessBusiness Plan 13
  14. 14. PhotoSynthesisFinancial Forecasts Below are our financial forecasts for PhotoSynthesis in the first three years of operation, which includes abudget plan, income statements, balance sheets and cash flow statements. We have also created three scenarios inwhich our business will be underperforming, performing normally and outperforming respectively.Budget Plan Budget Plan PhotoSynthesis 6/12/121. Equipment ComputersiMac (x2) $ 3,598PC (x1) 700 Storage & BackupPowerVault DP500 2TB 3,000 NetworkingDell Powerconnect 5424 Gigabit Switch 834Wiring facility, conduits, labor 500 Uninterrupted Power SupplyUPS/Generator 2,000 Scanning DeviceKodak s1220 Photo Scanning System x 2 3,600Nikon Super CoolScan 5000 ED 1,200 Printing DeviceHP Designjet 130nr Printer 1,500Total Equipment Cost $ 16,9322. Software AdobeCreative Suite 4 Design Premium $ 1,800Photoshop Lightroom 2 300Total Software Cost $ 2,1003. Facility Remodelling & Security DepositLabor & Materials $ 15,000Security Deposit ($1000 x 6 mo.) $6,000Total Renovation Cost $ 21,000Business Plan 14
  15. 15. PhotoSynthesis4. Overhead Expenses RentStore Rental $ 1,000 UtilitiesElectricity 500Water 50 Office SuppliesPaper, Ink, Staples, etc… (first month only) 200 LaborComputer Imaging Contractor (x1) 2,000Total Overhead Expense $ 3,7505. Marketing Expense (per quarter) Interactive MarketingOnline Ads (Google, Yahoo, Social Webs) $ 500 Traditional MarketingColumbus Dispatch ($246/column inch) 2,952Delaware Gazette ($12/column inch) 48Photography Mag. ($990 every 1/6 page ad) 1,980Lifestyle Mag. (~$1000 every 1/6 page ad) 2,000Home Mag. (~$1000 every 1/6 page ad) 2,000Newsletter & Community Postings 1,000 Direct MailingStamps (27cents x1000) 270Printing Cost (x1000 bundle) 120Total Marketing Expense $ 10,8706. Miscellaneous ExpenseExternalities Cost (5% of all operations) $ 2,732.60Total Miscellaneous Expense $ 2,732.60PROPOSED START-UP BUDGET $ 57,385Summary of CostOne Time CostsEquipment $ 16,932Software $ 2,100Facility Remodeling & Deposit $ 21,000Business Plan 15
  16. 16. PhotoSynthesis Total $ 40,032Monthly OverheadsRent $ 1,000Utilities $ 550Supplies $ 200Labor $ 2,000Marketing $ 3,623Miscellaneous $ 2,733 Total $ 10,106Income Statements PhotoSynthesis Income Statement [Underperform] Year 1 Year 2 Year 3Core Revenue $ 69,343 $ 143,314.26 $ 236,242.40Value Added Revenue $ 7,513 $ 15,973.51 $ 32,300.91 Total Revenue $ 76,856 $ 159,288 $ 268,543COGS & SGA $ 121,271 $ 133,398 $ 146,738Depreciation $ 8,006 $ 10,006 $ 14,006Interest Expense $ 1,500 $ 1,500 $ 0Total Operating Expense $ 130,778 $ 144,905 $ 160,745 Operating Income $ (53,922) $ 14,383 $ 107,799EBT $ (53,922) $ 14,383 $ 107,799Tax $ (18,873) $ 5,034 $ 37,730 Net Income $ (53,922) $ 9,349 $ 70,069* Marginal Tax Rate 35%* Depreciation 5 year straight line PhotoSynthesis Income Statement [Normal] Year 1 Year 2 Year 3Core Revenue $ 73,303 $ 184,715.34 $ 344,049.10Value Added Revenue $ 8,435 $ 23,470.51 $ 55,937.39 Total Revenue $ 81,738 $ 208,186 $ 399,986COGS & SGA $ 121,271 $ 133,398 $ 146,738Depreciation $ 8,006 $ 10,006 $ 14,006Interest Expense $ 1,500 $ 1,500 $ 0Total Operating Expense $ 130,778 $ 144,905 $ 160,745 Operating Income $ (49,040) $ 63,281 $ 239,242EBT $ (49,040) $ 63,281 $ 239,242Business Plan 16
  17. 17. PhotoSynthesisTax $ (17,164) $ 22,148 $ 83,735 Net Income $ (49,040) $ 41,133 $ 155,507* Marginal Tax Rate 35%* Depreciation 5 year straight line PhotoSynthesis Income Statement [Outperform] Year 1 Year 2 Year 3Core Revenue $ 78,442 $ 254,094.50 $ 546,753.18Value Added Revenue $ 9,050 $ 33,347.19 $ 96,401.69 Total Revenue $ 87,492 $ 287,442 $ 643,155COGS & SGA $ 121,271 $ 133,398 $ 146,738Depreciation $ 8,006 $ 10,006 $ 14,006Interest Expense $ 1,500 $ 1,500 $ 0Total Operating Expense $ 130,778 $ 144,905 $ 160,745 Operating Income $ (43,285) $ 142,537 $ 482,410EBT $ (43,285) $ 142,537 $ 482,410Tax $ (15,150) $ 49,888 $ 168,844 Net Income $ (43,285) $ 92,649 $ 313,567* Marginal Tax Rate 35%* Depreciation 5 year straight lineBalance Sheets PhotoSynthesis Balance Sheet [Underperform] Year 0 Year 1 Year 2 Year 3Assets Current Assets Cash $ 49,968 $ 4,053 $ 13,408 $ 62,484 Accounts Receivable $ 0 $ 0 $ 0 $ 0 Inventory $ 0 $ 0 $ 0 $ 0 Total Current Assets $ 49,968 $ 4,053 $ 13,408 $ 62,484 Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032 Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019 Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013Total Assets $ 90,000 $ 36,078 $ 45,427 $ 100,496Liabilities Current LiabilitiesBusiness Plan 17
  18. 18. PhotoSynthesis Accounts Payable $ 0 $ 0 $ 0 $ 0 Accruals $ 0 $ 0 $ 0 $ 0 Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0 Long Term Liabilities Long Term Debt $ 0 $ 0 $ 0 $ 0 Total Liabilities $ 15,000 $ 15,000 $ 15,000 $ 0 Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000 Retained Earnings $ 0 $ (53,922) $ (44,573) $ 25,496 Total Equity $ 75,000 $ 21,078 $ 30,427 $ 100,496Total Liabilities and Equity $ 90,000 $ 36,078 $ 45,427 $ 100,496 PhotoSynthesis Balance Sheet [Normal] Year 0 Year 1 Year 2 Year 3Assets Current Assets Cash $ 49,968 $ 8,935 $ 50,074 $ 184,587 Accounts Receivable $ 0 $ 0 $ 0 $ 0 Inventory $ 0 $ 0 $ 0 $ 0 Total Current Assets $ 49,968 $ 8,935 $ 50,074 $ 184,587 Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032 Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019 Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013Total Assets $ 90,000 $ 40,960 $ 82,093 $ 222,600Liabilities Current Liabilities Accounts Payable $ 0 $ 0 $ 0 $ 0 Accruals $ 0 $ 0 $ 0 $ 0 Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0 Long Term Liabilities Long Term Debt $ 0 $ 0 $ 0 $ 0 Total Liabilities $ 15,000 $ 15,000 $ 15,000 $ 0 Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000 Retained Earnings $ 0 $ (49,040) $ (7,907) $ 147,600 Total Equity $ 75,000 $ 25,960 $ 67,093 $ 222,600Total Liabilities and Equity $ 90,000 $ 40,960 $ 82,093 $ 222,600Business Plan 18
  19. 19. PhotoSynthesis PhotoSynthesis Balance Sheet [Outperform] Year 0 Year 1 Year 2 Year 3Assets Current Assets Cash $ 49,968 $ 14,689 $ 107,344 $ 399,918 Accounts Receivable $ 0 $ 0 $ 0 $ 0 Inventory $ 0 $ 0 $ 0 $ 0 Total Current Assets $ 49,968 $ 14,689 $ 107,344 $ 399,918 Fixed Assets Property, Plant & Equipment $ 40,032 $ 40,032 $ 50,032 $ 70,032 Accumulated Depreciation $ 0 $ 8,006 $ 18,013 $ 32,019 Total Fixed Assets $ 40,032 $ 32,026 $ 32,019 $ 38,013Total Assets $ 90,000 $ 46,715 $ 139,364 $ 437,930Liabilities Current Liabilities Accounts Payable $ 0 $ 0 $ 0 $ 0 Accruals $ 0 $ 0 $ 0 $ 0 Short Term Debt $ 15,000 $ 15,000 $ 15,000 $ 0 Long Term Liabilities Long Term Debt $ 0 $ 0 $ 0 $ 0 Total Liabilities $ 15,000 $ 15,000 $ 15,000 $ 0 Stock $ 75,000 $ 75,000 $ 75,000 $ 75,000 Retained Earnings $ 0 $ (43,285) $ 49,364 $ 362,930 Total Equity $ 75,000 $ 31,715 $ 124,364 $ 437,930Total Liabilities and Equity $ 90,000 $ 46,715 $ 139,364 $ 437,930Cash Flow Statements PhotoSynthesis Cash Flow Statement [Underperform] Year 0 Year 1 Year 2 Year 3Cash from Operating Activities: Net Income $ 0 $ (53,922) $ 9,349 $ 70,069 Depreciation $ 0 $ 8,006 $ 10,006 $ 14,006Business Plan 19
  20. 20. PhotoSynthesis Changes in Working Capital $ 0 $ 0 $ 0 $ 0 Total Cash from Operating Activities $ 0 $ (45,915) $ 19,355 $ 84,076Cash from Investing Activities:Capital Expenditures $ 0 $ 0 $ (10,000) $ (20,000) Total Cash from Investing Activities $ 0 $ 0 $ (10,000) $ (20,000)Cash from Financing Activities:Debt $ 15,000 $ 0 $ 0 $ (15,000)Sale of Stock $ 75,000 $ 0 $ 0 $ 0Dividends $ 0 $ 0 $ 0 $ 0 Total Cash from Financing Activities $ 90,000 $ 0 $ 0 $ (15,000) Net Cash Flow $ 90,000 $ (45,915) $ 9,355 $ 49,076 PhotoSynthesis Cash Flow Statement [Normal] Year 0 Year 1 Year 2 Year 3Cash from Operating Activities: Net Income $ 0 $ (49,040) $ 41,133 $ 155,507 Depreciation $ 0 $ 8,006 $ 10,006 $ 14,006 Changes in Working Capital $ 0 $ 0 $ 0 $ 0 Total Cash from Operating Activities $ 0 $ (41,033) $ 51,139 $ 169,514Cash from Investing Activities:Capital Expenditures $ 0 $ 0 $ (10,000) $ (20,000) Total Cash from Investing Activities $ 0 $ 0 $ (10,000) $ (20,000)Cash from Financing Activities:Debt $ 15,000 $ 0 $ 0 $ (15,000)Sale of Stock $ 75,000 $ 0 $ 0 $ 0Dividends $ 0 $ 0 $ 0 $ 0 Total Cash from Financing Activities $ 90,000 $ 0 $ 0 $ (15,000) Net Cash Flow $ 90,000 $ (41,033) $ 41,139 $ 134,514Loan and Investment ProposalBudget and Requested Funds Detailed budget analysis (Appendix) puts PhotoSynthesis startup costs at $57,385. To give a cash cushion andto cover costs that were not budgeted, PhotoSynthesis will raise $90,000 for its initial cash infusion. The cash will comefrom the following sources:Business Plan 20
  21. 21. PhotoSynthesis1. Personal Investments As founding members of the business, Nathaniel Cook, David Khoo, and Thang Nguyen will each invest$10,000 in personal funds into the business for a total of $30,000. Each member will source the money from personalsavings, families, friends, and credit cards.2. Secured Bank Loans PhotoSynthesis will borrow $15,000 from banks, secured by the equipment bought with the borrowed funds.Given that PhotoSynthesis is a startup with no business history, rates would be high (around 10%). Hence,PhotoSynthesis will seek to structure this $15,000 in borrowing as a short term loan (around 3 years) with the option forearly repayment.3. Outside Investors PhotoSynthesis will seek the remaining $45,000 in startup capital from outside investors. For their investment,outside investors will be given an equity stake in the company. Each $3,000 investment will purchase a 1% stake inPhotoSynthesis LLC, for a total of 15% offered for sale to investors. For use of these funds, investors will be repaidaccording to the following schedule: Funds used for 2 years: Payback 2 x initial investment Funds used for 3 years: Payback 3 x initial investment Funds used for 4 years: Payback 4 x initial investment Funds used for 5 years: Payback 5 x initial investmentExit Strategy and Cash Out PhotoSynthesis scales easily and quickly. As revenue grows, costs will be spread over a growing revenue base,which significantly increases profitability. From the financial analysis, PhotoSynthesis will make a small profit in the secondyear of its business in the under performing scenario. Moreover, by the third year, PhotoSynthesis will have built asubstantial cash position to pay off investors in cash, or through a combination of cash and debt in the under performingscenario. Although PhotoSynthesis is confident in its ability to pay investors back, investors can obtain a lucrative cashout through the following scenarios:1. Growth through FranchisingTo further expand the business, PhotoSynthesis will franchise the business model. Managing many stores at widespreadlocations is beyond the capability of management. Moreover, expanding would entail significant capital commitments.Franchising will allow PhotoSynthesis to increase profit and reach without taking on much risk. PhotoSynthesis willlicense the business concept, business practices, infrastructure expertise, marketing campaigns, training, and softwareto independent print shops. Since these print shops are facing increasing competition from "all in one" consumer officeproducts, PhotoSynthesis concept will give these prints shops a new revenue source. Another possibility is franchisingBusiness Plan 21
  22. 22. PhotoSynthesisor partnering with a large chain such as FedEx Kinkos to expand the business. Whichever possibility PhotoSynthesispursues, investors will stand to gain significantly as PhotoSynthesis value grows through this strategic plan.2. BuyoutAs PhotoSynthesis increases in value through an established franchise network, it will become an attractive buyouttarget. Given a reasonable buyout valuation, PhotoSynthesis would sell itself to buyer. In this scenario, investors wouldprofit handsomely from the stakes they hold in PhotoSynthesis.AppendicesOn the next page is the summary of our surveyBusiness Plan 22

×