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MacKenzie George & Company Presents…

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<ul><li>The Business </li></ul><ul><li>Growth Model </li></ul>A Comprehensive Business Plan Designed to Attain Financial Independence Through Business Ownership

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Mackenzie, George & Company – Certified General Accountants <ul><li>Nicholas Kilpatrick, CGA </li></ul><ul><li>Business / Professional Practice Valuations </li></ul><ul><li>Bookkeeping and Year-end Accounting (Financial Statement Compilation) </li></ul><ul><li>Assurance (Review, Audit) </li></ul><ul><li>Tax Compliance </li></ul><ul><li>Tax Planning </li></ul><ul><li>Business Component Forecasting </li></ul>

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Seminar Agenda <ul><li>Model Goals and Objectives Achieved </li></ul><ul><li>The Business Growth Model Defined </li></ul><ul><li>Financial Statement Analytics </li></ul><ul><li>Growth Model Analytics </li></ul><ul><li>The Strategic Picture </li></ul><ul><li>Final Thoughts </li></ul>

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<ul><li>Model Goals and Objectives Achieved </li></ul><ul><li>Financial Independence </li></ul><ul><li>Retirement and Estate Resources </li></ul><ul><li>Education </li></ul><ul><li>Business Growth </li></ul><ul><li>Business Succession – Leaving More Behind Than What You Arrived With. </li></ul>

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<ul><li>The Business Growth Model Defined </li></ul><ul><li>20% profit before taxes </li></ul><ul><li>5 years to satisfy loan obligation </li></ul><ul><li>500K in Revenues </li></ul><ul><li>Easy to run – can insert people to operate business. </li></ul><ul><li>Equity in first unit funds purchase of 2nd unit </li></ul><ul><li>Equity in second unit funds purchase of 3 rd unit. </li></ul>

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<ul><li>Financial Statement Analytics </li></ul><ul><li>Profitability </li></ul><ul><li>Solvency </li></ul><ul><li>Sustainability </li></ul><ul><li>Return on Investment </li></ul><ul><li>PALLR Sequence of Ratio analysis </li></ul>

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<ul><li>Ratio Analysis </li></ul><ul><li>P – Profitability </li></ul><ul><li>A – Activity </li></ul><ul><li>L -- Liquidity </li></ul><ul><li>L – Leverage </li></ul><ul><li>R – Rate of Return </li></ul>

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<ul><li>Ratio Analysis </li></ul>Average Total Assets 20% Net Income Return on Assets Shareholders' Equity 20% Net Income Return on Equity Rate of Return Current Liabilities 2:1 Current Assets Current Ratio Liquidity Total Assets 30% Total Debt Debt Ratio Leverage Average Capital Assets 5-7 times Sales Asset Turnover Avg. accounts receivable 4-5 times Revenues Receivables Turnover Activity Sales 20% (Operating margin - Discretionary expenses) Net Margin Sales 40% (Sales - Operating expenses) Operating Margin Profitability Standard Measure Ratio Measure

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<ul><li>Growth Model Analytics </li></ul><ul><li>Optimal business parameters for the model. </li></ul><ul><li>-20% net income before taxes </li></ul><ul><li>-500K revenue levels </li></ul><ul><li>-Recession-proof industry </li></ul><ul><li>-Location </li></ul><ul><li>-Demographic of customers (margin vs. volume) </li></ul><ul><li>Operational requirements. </li></ul><ul><ul><li>-Staffing levels </li></ul></ul><ul><ul><li>-Ability to replicate management efficiencies </li></ul></ul><ul><li>Personal longevity, sustainability, and success. </li></ul><ul><li>-Strategy </li></ul><ul><li>-Intent of Business </li></ul><ul><li>-Job replacement </li></ul>

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<ul><li>Growth Model Analytics </li></ul><ul><li>What Do We Have At year 15? </li></ul><ul><li>$1.49 Million in the bank. </li></ul><ul><li>Annual salary of $120,000. </li></ul><ul><li>Asst. mgmt secured at each location. </li></ul><ul><li>Assuming market value = revenues, $2,373 Million in asset value to facilitate retirement objectives. </li></ul><ul><li>All net income within the $500K Small Business Deduction Limit. </li></ul><ul><li>Ownership concentrating on: </li></ul><ul><li>Management </li></ul><ul><li>Marketing </li></ul><ul><li>Strategy </li></ul><ul><li>Financial resources to extend business network. </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Marketing requirements </li></ul><ul><li>Personnel requirements </li></ul><ul><li>Operational requirements </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Marketing requirements </li></ul><ul><li>Execution of Head Office / Franchisor marketing strategy. </li></ul><ul><li>Market demographics </li></ul><ul><li>Profile </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Personnel requirements </li></ul><ul><li>Quality staff don’t’ always come along, but they are there. </li></ul><ul><li>Good personnel needed to facilitate the plan. </li></ul><ul><li>Asset vs. Liability </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Operational requirements </li></ul><ul><li>Operational guidelines for every task in the business to cut costs and maximize efficiencies. </li></ul><ul><li>Total Quality Management (TQM) </li></ul><ul><li>Business Audit Proof Seminar – Navigator Series. </li></ul><ul><li>Your responsibility is: </li></ul><ul><li>Management </li></ul><ul><li>Marketing </li></ul><ul><li>Strategy </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Summary of Growth Model Requirements </li></ul><ul><li>Ability to pay off loan in 5 years </li></ul><ul><li>Net income at 20% after taxes </li></ul><ul><li>Active market – ability to grow business by 5%/year </li></ul><ul><li>System to continuously track expenses – keep within established model parameters. </li></ul><ul><li>Quality staff – will facilitate operational efficiencies and help you stay within your percentages. </li></ul>

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<ul><li>The Strategic Picture </li></ul><ul><li>Question marks </li></ul><ul><li>Interest rates. </li></ul><ul><li>Vendors – continuously check pricing – use multiple vendors. </li></ul><ul><li>Market demographics & other characteristics. </li></ul><ul><li>Economy </li></ul><ul><li>Location </li></ul>

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<ul><li>Final Thoughts </li></ul><ul><li>Businesses with the required parameters to make the Business Growth Model work are not available every day. </li></ul><ul><li>Finding them requires diligence by analyzing financial and business information, and speaking with mead office personnel to acquire and understanding of their vision and intent of the Business. </li></ul><ul><li>5% growth per year used in this model is conservative – execution of a well planned marketing strategy can result in more growth. </li></ul>

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<ul><li>Final Thoughts </li></ul><ul><li>Future seminars in the NAVIGATOR series to assist in finding and operating the right businesses: </li></ul><ul><li>BUSINESS AUDIT PROOF – securing your business against theft and maximizing the effectiveness and efficient operation of your business </li></ul><ul><li>BUSINESS VALUATION – Determining The Proper Price To Pay For Value. </li></ul><ul><li>FINANCIAL STATEMENT ANALYSIS – The Key To Finding Your Profitable Businesses. </li></ul><ul><li>CORPORATE TAX PLANNING – How To Legally Keep As Much Money as You Own. </li></ul><ul><li>PERSONAL AND ESTATE TAX PLANNING – Making All The Work Pay Off; How To Fully Enjoy The Fruits of Your Labour </li></ul>

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