Business plan for Entrepreneurial Project


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Business plan for Entrepreneurial Project

  1. 1. Business PlanPhotoSynthesis 10000 Millionaire Dr. Westerville, OH 43081 T 740-803-0952 F 740-816-2620
  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 16Business Plan 2
  3. 3. PhotoSynthesis Balance Sheets 17 Cash Flow Statements 19Loan and Investment Proposal 20 Budget and Requested Funds 20 Exit Strategy and Cash Out 21Appendices 22Business 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 stillhave many old print photographs collecting dust. Time consuming to organize and tedious to display, physicalphotos usually end up stacked away somewhere. Putting these pictures into elegant and beautiful displays such asscrapbooks is costly both in time and money. To solve this problem we will use the advantages of digitalphotography software and scanning technology. By digitizing physical photographs, they can be preserved foreverand easily compiled into pleasing presentations that are easily distributed to family and friends around the world. Byproviding the technical equipment and expertise in these areas we eliminate the problem for the customer. By usingour services the customer will save valuable time, avoid great frustration, and come away with a finished productthat allows them to remember some of lifes happiest 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 commitmentwe will enable customers to take charge of their photo collections and enjoy them more thoroughly. We hope tospread this personal service as far as we can by engaging other business owners and individuals in what we do andallowing them to provide such services on their own. Our local retail presence will serve to anchor our business inthe community and allow positive personal interaction and collaboration. PhotoSynthesis is in a business thatpreserves, a business that empowers, 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-scalebasis, typically for commercial clients, and providing specialty services not normally available from one-hour photofinishing laboratories. 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 hasfive employees 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 servicefirm. We will be an approachable company for older clients and a complete solution for younger customers. Ourimage should be focused around our locations. Unlike the big online scanning firms, a customer can come into thestore and talk with us about their photos. This interaction and proximity to the customer will allow us to provide ahigher level of service and also 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 theoption of choosing standard quality (JPEG) to high quality (TIFF) formats. Scanning of photos will be automated andbulkBusiness Plan 6
  7. 7. PhotoSynthesisprocessed with an imaging system from Kodak. By default, photos will be delivered on CDs and DVDs. Photos willbe accepted 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 scanningservice. By default, photos will be delivered on CDs and DVDs. Negatives will be accepted through PhotoSynthesisstore front and through 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 acceptedthrough PhotoSynthesis 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. Forinstance, a customer buying photo scanning services can be sold VHS digitization services. In addition to thesecore 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 ofPhotoSynthesis equipment and infrastructure. Although different scanners are required for the different services, theoutput, storage, and retrieval interfaces are identical. Also, the skill set required for these services are similar. Thisstrategy enables PhotoSynthesis to spread its fixed costs over a larger base, keeping costs low. Additionally, withthis clear core definition, PhotoSynthesis will be able to focus its efforts to become the best in its class and achievea competitive advantage in photo, 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 digitalphoto album creation service. This service will be offered to all of our customers and will allow them to use theirnewly digitized photos to create professional grade albums. Working with a professional photo managementspecialist, customers will have a strong creative influence and the final word on how the album turns out. Afterspecifying what pictures they want in the album, the general theme, and any messages they may want to include,our specialist will work to create a polished digital photo album that meets those desires. Through consultations viaemail and face-to-face meetings, the customer and the photo specialist will together create a great piece that canbe shared with family and friends across the globe.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 thestandard retouching. Customers will select specific photos that they would like to be retouched beyond thestandard level. These pictures would be worked on individually by a digital photo specialist. They will be able toeliminate scratches and damages to the original photograph by "brushing" them out with advanced software likeAdobe Photoshop. Other improvements will include color enhancement, getting rid of yellow discoloration due toaging, and increasing picture clarity. With the technology available today even the oldest and most damagedphotographs can be returned to near new condition 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 allowcustomers to take very old and fragile photographs, have them retouched, and then re-printed on new paper. Thiswill extend the life of the photo and allow them to handle precious photographs without the worry of damagingthem. The costs of owning/operating a professional photo printing machine are very high so we will be outsourcingall printing activities to a photo printing business. This will allow us to offer this great feature while not incurring thecosts that such a venture would involve.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. Fora fee, we will transfer all of their scanned photos onto their personal storage device. This could include an externalhard drive 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 drivefor a 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.But working with all these photos on a computer can be overwhelming for some. Photo organization andmanagement software is extremely powerful but it can be very complicated to operate. Many of our customers donot have the time, desire, or technical knowledge to take full advantage of these tools. To allow our customers totake full advantage of their newly digitized photo collection we are going to create a new and innovative piece ofphoto organization software. The extremely intuitive visual interface based of the software will make photomanagement much easier and allow many of our 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. Byusing professional grade equipment we will ensure that our product/service is of the highest quality. After initiallyscanning the photos we will be able to enhance the images by using photo editing software. After maximizing thepotential of each photo they can be compiled into several different display and storage formats. For display thecustomer can work closely with one of our associates to create a personalized photo slideshow or digitalscrapbook. These finished products can be sent to family around the world as gifts. For storage the customer canchoose to have the photos and presentations placed on DVDs or USB drives. They may also choose to store theirphotos and creations on-line where they will be accessible from anywhere. Our physical storefront will serve as a place for customers to come in and drop off photos to be scanned.They would also be able to work with us to create digital photo slideshows and albums. As we know that not allcustomers will be able to make it into the store we will offer the option to send pictures to our facility to bescanned via FedEx or UPS certified and insured boxes. Due to the digital nature of our work we could also workwith customers from across the country over the web while creating their slideshows and albums. The photoswould be scanned and either returned to the customer or saved off-site at a secure area with heavy fire preventionsystems.Segmentation Our target segment is young families and older parents or individuals who wish to preserve all theirchildhood pictures or pictures of their young children. This segment also includes those who have numerous printphotos that need digitizing. Another segment is the individuals or families that do not have the time and or expertiseto digitize and edit photos. For the opening of the first PhotoSynthesis location, our team has created a survey to collect data thatcould help us better understand the consumers wants and needs. Below are the key findings from the surveyanswers: • 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 arecompanies that offer scanning services but non offer comprehensive and personalized album creation services aswell. In addition many of these companies target other businesses by scanning paper documents. A market that isclosely related to our purposed segment is photo editing software for consumer use. There are hundreds ofprograms out there that all claim to be the best way to organize and present your digital memories. What they allhave in common is the amount of time it takes to learn how to use them. We know our software backwards andforwards and this allows the customer to focus on helping to create the most meaningful presentation possible. Wesee older generations as a huge market niche that we can serve like no other business. Parents and Grandparentstrying to interact with their younger family members will find our personalized and sensitive service appealing. Wewill help them to bridge the digital gap that often exists between generations.Marketing Plan1. Interactive Marketing We will be using Yahoo, Google, and other online search services to promote our business. In particular,every time when people search for specific keywords such as "photo scanning", our business would show up firstplace in the results page, giving us more of the brand exposure needed to make our business a popular choiceamong customers. In addition, we will also be purchasing ad space on several websites that provide online photographyservices such as Flickr or Photobucket. In so doing, we will be able to reach those photography-enthusiasticaudience who have a 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 atleast aBusiness Plan 10
  11. 11. PhotoSynthesisyear to make PhotoSynthesis a popular local household name. In addition, we will also promote PhotoSynthesis ona number of other photography, lifestyle and home magazines every quarter for a year to reach customers fromother areas. 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 toencourage word-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 Prices to be $9.99 $14.99/flash $29.99 completely dollars/photo, determined by drive custom album Heavy firm we that is 50 photos restoration outsource to or less. Includes $25 1 hard copy and dollars/photo, DVD. Additional medium hard copies and restoration DVD editions can be purchased as $15 well dollars/photo, light restorationLocation 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 perfecttest-market for us to test our business strategies and tactics. Moreover, the rental rates for a business office inWesterville is approximately $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 studioworks/customer interactions while the other one will be used for storage and other logistics.Competitor AnalysisScan My Photos International 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 Kodakscanner that cost 26k-29k dollars and can produce high quality scans of 750 photos in 5 minutes. They offer arange of services from VHS digitization to photo restoration. They were started in 1990 and have grown very strongin the market. They have one retail location, which is also their headquarters, in Irvine, California. The majority oftheir business is done through mail-in boxes. Customers purchase a box online and it is sent to their residence.They then fill the box with photos and mail it to This process has allowed them to keepoverhead cost down and have access to customers all over the country and even the world. Their pricing forregualr photo scanning is almost unbeatalbe at about 4 cents a scan. This is of coarse not where they are makingtheir money. The value-added services and products that come into play after the photos have been scanned arewhere the profit is found.Larsen Digital Services Based in Utah, this is a smaller company than 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. Theyoffer nearly all of the features and services as larger companies and are focused on providing great customerservice. Their prices are higher than 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 areburned onto DVDs. By accessing their photos online the customer can easily manage and organize them beforethey get them back from Larsen. This is a strong feature offered by Larsen. They have no retail space at this time.Foto Bridge 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 andflash drives. In our opinion there is no clear point of differentiation for Fotobridge.Dig My Pics This company was started in 2002 by a couple who had got the idea after preserving their own family photos.In 2007 it had become a multi-million dollar company and had over 40 employees. They offer a completely uniquefeature in conjunction with their photo scanning service. It is called "Real Time Scanning" and it allows a customerto see their photos as they are being scanned as well as look at where their pictures are in the queue. This featureis unique in the industry and gives the customer greater comfort. Their pricing is wide ranging, but they offerdifferent levels of resolution to 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 createa competitive 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.This team 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 thesesame areas 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 scenariosin which our business will be underperforming, performing normally and outperforming respectively.Budget Plan Budget Plan PhotoSynthesis 4/30/091. 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 $ 15,000Business Plan 14Security Deposit ($1000 x 6 mo.) $6,000Total Renovation Cost $ 21,000
  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 CostsBusiness PlanEquipment 15 $ 16,932Software $ 2,100Facility Remodeling & Deposit $ 21,000
  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 $0Business Plan ExpenseTotal Operating 16 $ 130,778 $ 144,905 $ 160,745 Operating Income $ (49,040) $ 63,281 $ 239,242
  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 $ 100,496Business Plan 17Liabilities Current Liabilities
  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) $ 147,600Business Plan 18 Total Equity $ 75,000 $ 25,960 $ 67,093 $ 222,600Total Liabilities and Equity $ 90,000 $ 40,960 $ 82,093 $ 222,600
  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:Business Plan Net Income 19 $0 $ (53,922) $ 9,349 $ 70,069 Depreciation $0 $ 8,006 $ 10,006 $ 14,006
  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 cushionand to cover costs that were not budgeted, PhotoSynthesis will raise $90,000 for its initial cash infusion. The cashBusiness Plan 20will come from the following sources:
  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 frompersonal savings, 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 theoption for early 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 revenuebase, which significantly increases profitability. From the financial analysis, PhotoSynthesis will make a small profitin the second year of its business in the under performing scenario. Moreover, by the third year, PhotoSynthesis willhave built a substantial cash position to pay off investors in cash, or through a combination of cash and debt in theunder performing scenario. 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 atwidespread locations is beyond the capability of management. Moreover, expanding would entail significant capitalcommitments. Franchising will allow PhotoSynthesis to increase profit and reach without taking on much risk.PhotoSynthesis will license the business concept, business practices, infrastructure expertise, marketingcampaigns, training, and software to independent print shops. Since these print shops are facing increasingcompetition from "all in one" consumer office products, PhotoSynthesis concept will give these prints shops a newrevenue source. Another possibility is franchisingBusiness Plan 21
  22. 22. PhotoSynthesisor partnering with a large chain such as FedEx Kinkos to expand the business. Whichever possibilityPhotoSynthesis pursues, investors will stand to gain significantly as PhotoSynthesis value grows through thisstrategic plan.2. BuyoutAs PhotoSynthesis increases in value through an established franchise network, it will become an attractivebuyout target. Given a reasonable buyout valuation, PhotoSynthesis would sell itself to buyer. In this scenario,investors would profit handsomely from the stakes they hold in PhotoSynthesis.AppendicesOn the next page is the summary of our surveyBusiness Plan 22