Box Werkz Business Plan

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This is a Business Plan I developed and put into operation in Lewisville, TX. This is a company that makes custom and standard corrugated boxes. In this economy I want to do my part to help anyone who wants to start a business.

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Box Werkz Business Plan

  1. 1. BoxWerkz, Inc. Business Plan By: Stephen Shepherd
  2. 2. Table of Contents 1.0 Executive Summary....................................................................................................................................1 1.1 Objectives................................................................................................................................................1 1.2 Mission....................................................................................................................................................1 1.3 Keys to Success.......................................................................................................................................2 2.0 Company Summary.....................................................................................................................................2 2.1 Company Ownership..............................................................................................................................2 2.2 Start-up Summary...................................................................................................................................2 Table: Start-up...........................................................................................................................................3 3.0 Products and Services.................................................................................................................................4 4.0 Market Analysis Summary.........................................................................................................................4 4.1 Market Segmentation..............................................................................................................................5 Table: Market Analysis.............................................................................................................................5 4.2 Target Market Segment Strategy............................................................................................................5 4.3 Service Business Analysis......................................................................................................................5 4.3.1 Competition and Buying Patterns....................................................................................................6 5.0 Strategy and Implementation Summary.....................................................................................................6 5.1 Strengths..................................................................................................................................................6 5.2 Weaknesses.............................................................................................................................................6 5.3 Opportunities...........................................................................................................................................7 5.4 Threats.....................................................................................................................................................7 5.5 Competitive Edge....................................................................................................................................7 5.6 Marketing Strategy..................................................................................................................................7 5.7 Sales Strategy..........................................................................................................................................7 5.7.1 Sales Forecast...................................................................................................................................8 Table: Sales Forecast............................................................................................................................9 5.8 Milestones.............................................................................................................................................11 Table: Milestones....................................................................................................................................11 6.0 Management Summary.............................................................................................................................12 6.1 Personnel Plan.......................................................................................................................................12 Table: Personnel......................................................................................................................................12 .........................................................................................................................................................................13 7.0 Financial Plan............................................................................................................................................13 7.1 Start-up Funding...................................................................................................................................13 Table: Start-up Funding..........................................................................................................................13 7.2 Important Assumptions.........................................................................................................................13 7.3 Break-even Analysis.............................................................................................................................13 Table: Break-even Analysis....................................................................................................................14 7.4 Projected Profit and Loss......................................................................................................................14 Table: Profit and Loss.............................................................................................................................15 7.5 Projected Cash Flow.............................................................................................................................17 Table: Cash Flow....................................................................................................................................17 7.6 Projected Balance Sheet........................................................................................................................18 Table: Balance Sheet...............................................................................................................................19 7.7 Business Ratios.....................................................................................................................................19 Page 1
  3. 3. Table of Contents Table: Ratios...........................................................................................................................................19 Page 2
  4. 4. BoxWerkz Business Plan 1.0 Executive Summary Highlights $1,400,000 $1,200,000 $1,000,000 Sales $800,000 Gross Margin Net Profit $600,000 $400,000 $200,000 $0 FY 2009 FY 2010 FY 2011 1.1 Objectives • To provide short to medium run boxes commercially in the Dallas/Fort Worth area. With costs on everything sky rocketing upward for all businesses, we expect demand for small volume orders of boxes to increase dramatically. • To maintain a minimum of 55% profit margin on all sales. Short run and quick turn around orders would have a much higher margin. • In the period of October 2008 to October 2009 to do $264,000 in gross sales. • To have the company at sales of over 1,000,000 by the third year of operation. 1.2 Mission BoxWerkz will provide the Dallas/Fort Worth area with a resource to obtain short to medium run boxes in special sizes with affordable prices, quick turn around and the highest customer service. It is our goal to match our capabilities with our customer's needs to form long term business relationships. We want our customers to be so happy with the quality of product and the service they receive that they will order from us again and again. BoxWerkz will strive to make itself a place that our employees are proud to work for by treating all with respect and listening to what they have to say. Page 1
  5. 5. BoxWerkz Business Plan 1.3 Keys to Success 1. Nothing will happen unless someone sells full time. There are thousands of potential customers in this market that we must go and see. They will not order from us unless they know we are here. 2. We must provide a quality product. They must at least get as good a box as they are use to but we will strive to give better products. 3. We must have a quick turn around. More profits come from moving as fast as our customers need us to. 2.0 Company Summary With cost exploding upward for virtually all businesses the demand for smaller volume orders of boxes will increase dramatically. Businesses simply can't afford to inventory excess boxes for long periods of time. There are market niches that are under served that present great opportunity. Boxes are an established need that will never go away. The equipment to manufacture boxes is relatively inexpensive and the learning curve of operate is very short. BoxWerkz will be located in Lewisville, Texas and service the Dallas/Fort Worth area. 2.1 Company Ownership We formed BoxWerkz as an S Corporation to keep our ownership private for now. We have issued 100,000 authorized shares. The primary ownership will be Stephen Shepherd and Keith Steele with 48% each. James Nix and Bradley Nix combine for 4%. Keith Steele is our Chairman of the Board, Stephen Shepherd is President, James Nix is the CFO and Bradley is the Secretary. 2.2 Start-up Summary In summary, BoxWerkz is a start up company in the business of making boxes. We have located a space that would be needed for this type operation that is a Warehouse/office combination. It is located in an industrial area in Lewisville, Texas at 821 E. Main. We have around 2,000+ square feet and our cost is $1,800 a month. We have the option to double our space for an additional $700 a month in the same facility. We have paid the security deposit of $1,800 and rent starts September 2, 2008. The box making equipment we would start with would be a Box maker, Slitter and Dye Cutter. We found all these items used and in very good condition. We ordered this equipment and have it on the way. Our cost was $56,500. We would also need a glue gun, air compressor, fork truck (used) and delivery vehicle (like a used van). We will wait for the truck until needed. I will put a camper shell on my personal pickup truck to do deliveries for now. We would need a supply of corrugated sheets of cardboard stock to make boxes with (1,000 sheets). We may want to put in a small supply of tape and packing materials to sell our customers to compliment our core business. Page 2
  6. 6. BoxWerkz Business Plan To set the office up I would get two desks, chairs and file cabinet. We would need two phone lines and a fax line. I would put in a used multi-functional copier that would also serve as my fax and printer. I have some computers we will use but we will need to buy a laptop for presentations. I would build a counter for the office area and build a large staging table, as well as some smaller tables, in the warehouse. We would need to put together some marketing handouts, letterhead, business cards and develop a web site. Table: Start-up Start-up Requirements Start-up Expenses Stationery etc. $750 Insurance $1,276 Rent $1,800 consulting $200 Business trip for company research $1,000 Build out expenses $3,000 Shipping expenses $2,000 Total Start-up Expenses $10,026 Start-up Assets Cash Required $42,500 Start-up Inventory $5,000 Other Current Assets $3,000 Long-term Assets $69,500 Total Assets $120,000 Total Requirements $130,026 Start-up $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Expenses Assets Investment Loans Page 3
  7. 7. BoxWerkz Business Plan 3.0 Products and Services When a manufacturer designs a product for market they don't design it with a standard size box in mind. They make the product and then get a box or boxes to ship, custom made, to fit the application they developed. Typically they order a large amount of the boxes needed to get price breaks. The problem with that is they have to store them for long periods of time while they use them up. The product design could change and all the boxes bought could become useless. The space for storage is also not free. What BoxWerkz is offering is an alternative. Why buy more now that you need? Why store boxes for a year when you could have what you need delivered to you every month as you need it. Why pay for all those boxes in advance and risk losing the investment? What if your sales go up or down and you need less or more? Can you buy more boxes at the same volume price? Will your large volume box supplier take boxes back if you don't need as many as you thought when you placed that big order? BoxWerkz will make your boxes to the sizes you need and the amount you need this month (or what ever time frame you are under). We will make them and deliver them to you on time every time. We can make any box in any size (within reason) other than die cut boxes. 4.0 Market Analysis Summary According to Jerry Jenkins, owner of Lake View Sales LLC, any operation that ships products is worth looking into. Jerry's company sells the equipment that makes the boxes. He has been in this industry for many years and has sold to others with a similar concept as BoxWerkz. He does point out that mass production, volume box users such, as food processors, would be better supplied by large multi million dollar box production plants. Jerry has identified the following as good prospects: • Packaging Distributors • Independent Pack & Mail • Furniture Manufacturers • Architectural Features e.g.,lighting fixtures, display cases, etc. • Specialty Manufacturing ego., roll up security doors • Art Dealers (arts and crafts manufacturers) • Parts Distribution Centers • Freight Consolidators • Contract Packaging • Folding Carton and Display Manufacturers • Aerospace & Defense Industry • Logistics • Technology • Automotive and Aircraft Components • Chemicals/Pharmaceuticals/Cosmetics Makers The U.S. Census Bureau has a Web site where they post number from every major metropolitan area in the United States. Dallas is the 4th largest metropolitan area in the U.S. with 6.1 million people living here. As of the last census, Dallas/Fort Worth had 6,365 companies in the manufacturing business sub sector. In the wholesale trade business, Dallas/Fort Worth had 9,596 companies in this sub sector. In transportation and warehousing, DFW had 3,121 companies in this sub sector. In these three areas alone BoxWerkz would have 19,082 companies to call on. Page 4
  8. 8. BoxWerkz Business Plan To reach our targets of 500K in the second year and 1 million in the third we would have to have 150 customers that would average 7 jobs a day, 22 days a month(500K mark) and double that for the 1 million mark. We have plenty of target accounts to go for. 4.1 Market Segmentation Table: Market Analysis Market Analysis 2008 2009 2010 2011 2012 Potential Customers Growth CAGR Manufacturing 7% 6,365 6,811 7,288 7,798 8,344 7.00% Transportation and Warehousing 12% 3,121 3,496 3,916 4,386 4,912 12.01% Wholesale Trade 9% 9,596 10,460 11,401 12,427 13,545 9.00% Total 8.86% 19,082 20,767 22,605 24,611 26,801 8.86% Market Analysis (Pie) Manufacturing Transportation and Warehousing Wholesale Trade 4.2 Target Market Segment Strategy 4.3 Service Business Analysis In the Dallas/Fort Worth market there are some box makers like International Paper, PCA, Liberty Carton and Bates Container company. These are very large box makers that specialize in large quantity orders. They print on the boxes for there customers. BoxWerkz is not in this same arena. We are looking for customers that do not want to keep large quantities of boxes laying around and taking up space. We will make shorter run boxes as our customers need them. We can make them as large or small as they need. We have very little competition in this market doing what we do. A good order to us would be 200 boxes a month from each of Page 5
  9. 9. BoxWerkz Business Plan our customers. We will make one if that is all they need. Copier companies have to ship back lease returns and need boxes in non-standard sizes. Display makers have all kinds of odd sizes of fixtures they need to ship. A furniture store may not have the original box to ship back a broken sofa. We can make them and deliver the boxes when and where our customers want and need them. I talked to a company today that will be manufacturing wine racks for a wine store that is nation wide. They said they would need boxes made to fit the wine racks. They don't know if this product will be a big hit so why would they order a large quantity of boxes that may never be used and take up space in the warehouse. Because of our short run and fast delivery we will be able to make more margin on the quicker turn around and shipping charges and still save our customers money. 4.3.1 Competition and Buying Patterns BoxWerkz has little competition doing what we will do. We will be selling business-to-business with outside sales call on target accounts and telephone solicitation. Our target accounts will order boxes monthly or at least quarterly as they need them. Some may order twice or three time a month. Everyone who ships products needs a box. Our market (Dallas/Fort Worth) is full of companies that need boxes. We just need to show them there is a better way than ordering large quantities of boxes they may never use. 5.0 Strategy and Implementation Summary 5.1 Strengths Our first strength is that we are not going to just put an advertisement in the Yellow Pages and wait for customers to come to us. We have a strong sales background in business to business sales with Stephen Shepherd and Keith Steele. We have both been top sales people as well as sales management. We have both been in this market for years and know hundreds of contacts we have called on in the past that can use our services. We will be aggressive in getting our name as well as products and services offered out to prospective customers. Our second strength is that we offer services no one else can unless they are one of the big box makers. We will have a Auto Box box make for corrugated boxes which is one of the best in the world. We will have a large Slitter that is 120quot; across with 4 rolls to score and cut cardboard. We will also have a Dye Cutter that will separate us into the area of specialty boxes. We will be able to make a box in any size and shape. We will sell standard size boxes like some box stores but that will only be a small part of what we do. The same goes for supplies, they will ask for them so we will supply them. Our third strength is that we will deliver our customers orders to them. We will always give them quick turn around and speedy service. 5.2 Weaknesses We are bringing a new concept to the box world. In America most businesses buy on the volume discount when it comes to boxes. Large box makers have minimum sized orders so Page 6
  10. 10. BoxWerkz Business Plan many will order just once a year and store them until they use them. We are offering to supply them monthly/quarterly and they will have no storage problems or cost related to storage. This concept is wide spread in England, where the Auto Box is made. They have had bad roads between towns with high gas prices for years. Having a small box maker or two in every town is common. We feel that this concept will work in the U.S.A. but we could be wrong. We are not going to set up to be able to print on boxes. We feel that we can out source this to printers for far less cost than buying the printing equipment. We could be wrong. 5.3 Opportunities We have to get to the people, in business, that want to control costs and have them change the way they think. We have to get them to start thinking about how many do I need the month not how many do I need per year. 5.4 Threats We see no threats as long as the economy doesn't totally bottom out. The fact that gas prices are high and cost are rising we think helps us to get our concept excepted. 5.5 Competitive Edge Our edge is that we have something new to offer manufacturers who want to get their products to market. They have to buy a box and we offer a different way to do that. We offer buy as need, quick turn around, we will deliver and no storage fees. All this with competitive prices too! 5.6 Marketing Strategy In our market analysis we targeted 19,082 business prospects in the Dallas/ Fort Worth market. That number is increasing. If we can get 300 accounts to order from us once a month we will be over a million in sales. We only looked at manufacturing, wholesale and transportation/warehousing markets. We are finding even more prospects as we talk to companies. We have to get our equipment set up and get out and let our prospects know we are here. We also want to get with the box giants in the area. They typically turn down small orders below the set minimum established. We would like to get these orders they do not want and in turn, if we get a order to large we will out source to them. 5.7 Sales Strategy We have about 20,000 target accounts in the Dallas/Fort Worth Market with no other company doing exactly what we do. Everyone who ships needs a box, so why not BoxWerkz? Our sales strategy is very simple. They won't buy from us unless they know we exist. We will be cold calling and telemarketing to every plant manager, warehouse manager and owner of small manufacturing companies in the area. Page 7
  11. 11. BoxWerkz Business Plan In the beginning Stephen Shepherd and Keith Steele will be doing all sales and running the machines to fill orders. We will hire an office person right away that will spend most of their time on the telephone, telemarketing and setting appointments for me. We will give that person a 5% lead fee on each lead that turns into a sale out of profit. That person will answer the phone and do general office duties while we are out in the field. When it gets to the point we can no longer sell and run equipment we will hire a warehouse/production person. That person will probably have to serve a delivery driver as well. When we take it to the next step in a year or two, we will hire a second sales rep and pay them an hourly rate plus commissions. We am thinking the commission percentage to be around 20% of profit on accounts they bring in. Unlike some industries, these accounts will most likely order more boxes every month. No commissions will be paid until the company is paid. We will need to set up an accounting computer system. We are looking at Quick Books. Accounts receivable is the lifeblood of a company and we need to keep a close eye on this. BoxWerkz is filling a niche that no one is in. We can make any size box as fast as our customer may need it and then deliver it to him. We will charge for this. The fast and larger, the more margin we will make. If our customer wants it fast but he will come and pick it up, he can save delivery charges. With gas as high as it is, we will have a minimum delivery charge of $25. We will deliver on normal business hours of 8:00 AM to 5:00 PM unless the customer is willing to pay extra for special delivery. 5.7.1 Sales Forecast Our Daily Sales/Production Objective With one full time sales person our daily goal in the beginning is as follows: Qty Production time Gross Profit/ea Gross Profit/order 800 3 hours $.25 each $200.00 400 1.5 hours $.50 each $200.00 200 1 hour $.75 each $150.00 100 Half hour $1.00 each $100.00 75 Half hour $1.25 each $93.75 50 Half hour $1.50 each $75.00 25 Half hour $2.00 each $50.00 This brings a total of 1650 boxes per day with a profit of $868.75 on seven orders for 7 1/4 hours work. This would be gross sales of $1975 per day with a 44% margin. $1,975 x 22 working days is $43,450 with a profit of $19,112.50 with one sale rep. We will expand to two sales reps in the second year to double or sales by the end of the third year. Page 8
  12. 12. BoxWerkz Business Plan If we reach the goal of 150+ repeat accounts we should be able to keep an average of 7 jobs per day, every day of the week. Seven jobs times 22 working days is 154 accounts. Table: Sales Forecast Sales Forecast FY 2009 FY 2010 FY 2011 Unit Sales Corrugated Boxes 88,283 161,000 320,200 Dye Cut Boxes 35,250 65,250 120,250 Standard Boxes 6,973 7,973 8,973 Supplies (Tape, peanuts, bubble wrap, etc.) 3,510 7,020 14,040 Total Unit Sales 134,016 241,243 463,463 Unit Prices FY 2009 FY 2010 FY 2011 Corrugated Boxes $1.19 $1.19 $1.19 Dye Cut Boxes $8.00 $8.00 $8.00 Standard Boxes $1.00 $1.00 $1.00 Supplies (Tape, peanuts, bubble wrap, etc.) $5.00 $5.00 $5.00 Sales Corrugated Boxes $105,057 $191,590 $381,038 Dye Cut Boxes $282,000 $522,000 $962,000 Standard Boxes $6,973 $7,973 $8,973 Supplies (Tape, peanuts, bubble wrap, etc.) $17,550 $35,100 $70,200 Total Sales $411,580 $756,663 $1,422,211 Direct Unit Costs FY 2009 FY 2010 FY 2011 Corrugated Boxes $0.54 $0.54 $0.54 Dye Cut Boxes $3.20 $3.20 $3.20 Standard Boxes $0.10 $0.10 $0.10 Supplies (Tape, peanuts, bubble wrap, etc.) $0.25 $0.25 $0.25 Direct Cost of Sales Corrugated Boxes $47,276 $86,216 $171,467 Dye Cut Boxes $112,800 $208,800 $384,800 Standard Boxes $697 $797 $897 Supplies (Tape, peanuts, bubble wrap, etc.) $878 $1,755 $3,510 Subtotal Direct Cost of Sales $161,650 $297,568 $560,674 Page 9
  13. 13. BoxWerkz Business Plan Sales Monthly $160,000 $140,000 $120,000 Corrugated Boxes $100,000 Dye Cut Boxes $80,000 Standard Boxes $60,000 Supplies (Tape, peanuts, bubble wrap, etc.) $40,000 $20,000 $0 Nov Mar Apr Jan Feb Jun Aug Sep Jul Oct Dec May Sales by Year $1,400,000 $1,200,000 Corrugated Boxes $1,000,000 Dye Cut Boxes $800,000 Standard Boxes $600,000 Supplies (Tape, peanuts, bubble wrap, etc.) $400,000 $200,000 $0 FY 2009 FY 2010 FY 2011 Page 10
  14. 14. BoxWerkz Business Plan 5.8 Milestones Table: Milestones Milestones Milestone Start Date End Date Budget Manager Department Order equipment 8/15/2008 8/30/2008 $60,000 Steve/Keith Get incorporated 8/21/2008 done $0 James/Brad Deposit on building 8/22/2008 done $1,800 Steve/Keith Get insurance 8/22/2008 done $1,250 Steve/Keith Get space ready for equipment 8/25/2008 8/30/2008 $5,000 Steve/Keith Set up and build out 8/25/2008 9/9/2008 $8,000 Steve/Keith Hire employees 8/25/2008 9/4/2008 $0 Steve/Keith Train employees 8/25/2008 9/5/2008 $0 Steve/Keith Open for business 8/25/2008 9/15/2008 $0 Steve/Keith Get Web site up and running 8/25/2008 9/15/2008 $1,200 Steve/Keith Totals $77,250 Milestones Get Web site up and running Open for business Train employees Hire employees Set up and build out Get space ready for equipment Get insurance Deposit on building Get incorporated Order equipment Aug `08 Sep Page 11
  15. 15. BoxWerkz Business Plan 6.0 Management Summary Management Staff is as follows: Keith Steele - Chairman Stephen Shepherd - President James Nix - CFO Brad Nix - Secretary James and Brad fill our accounting and financial monitoring needs and act as a counter weight to Stephen and Keith who have more of a sales mentality. For now, Stephen and Keith will focus on establishing accounts. Soon Keith will switch focus to our plan to do Site Licence agreements to expand the BoxWerkz concept. Stephen and Keith will run the equipment as needed but we will hire a operator before we open. We will also hire an administrative person who can also fill in for production if needed. 6.1 Personnel Plan James and Brad Nix are really silent partners as far as operations go. As of now James and Brad are working for the value of their percent in the company. Keith will forgo any money for the first few months to help the company get off the ground. As we develop our business and start to sell the license agreements, some or all of Keith's income could come from the sale to the agreements. We will supplement our employees with part timers as need. We will not offer benefits in the beginning. As we grow with other Boxwerkz installations around the country, we will have the size to offer a medical plan, etc. for our employees. Table: Personnel Personnel Plan FY 2009 FY 2010 FY 2011 Stephen Shepherd $72,000 $72,000 $72,000 Keith Steele $0 $46,000 $56,000 James Nix $0 $0 $0 Brad Nix $0 $0 $0 Machine operator $26,880 $32,000 $36,000 Administrator $23,040 $26,000 $29,000 Total People 0 0 0 Total Payroll $121,920 $176,000 $193,000 Page 12
  16. 16. BoxWerkz Business Plan 7.0 Financial Plan 7.1 Start-up Funding We plan on paying back all or part of the $61,000 as soon as possible to Keith Steele. Table: Start-up Funding Start-up Funding Start-up Expenses to Fund $10,026 Start-up Assets to Fund $120,000 Total Funding Required $130,026 Assets Non-cash Assets from Start-up $77,500 Cash Requirements from Start-up $42,500 Additional Cash Raised $55,974 Cash Balance on Starting Date $98,474 Total Assets $175,974 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $125,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $61,000 Total Liabilities $186,000 Capital Planned Investment Owner $0 Investor $0 Additional Investment Requirement $0 Total Planned Investment $0 Loss at Start-up (Start-up Expenses) ($10,026) Total Capital ($10,026) Total Capital and Liabilities $175,974 Total Funding $186,000 7.2 Important Assumptions We are basing the 7% on the interest rate we were told we could get from Point Bank. 7.3 Break-even Analysis Our break even is just 360 boxes a day. FibreCorr in Phoenix is averaging over 2,000 a day. That is with no advertizing or sales prospecting. Page 13
  17. 17. BoxWerkz Business Plan Table: Break-even Analysis Break-even Analysis Monthly Units Break-even 7,926 Monthly Revenue Break-even $24,342 Assumptions: Average Per-Unit Revenue $3.07 Average Per-Unit Variable Cost $1.21 Estimated Monthly Fixed Cost $14,781 Break-even Analysis $6,000 $4,000 $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) ($10,000) ($12,000) ($14,000) 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 7.4 Projected Profit and Loss We are basing our sales and sales projections on a working business in the Phoenix, AZ area. We have a business relationship with the owner, David Basto. He has allowed Keith Steele and Stephen Shepherd to fly out and observe his operations and gave recommendations on all aspects of the business. BoxWerkz will be almost identical to David's business. His company is called FibreCorr Container. He is a wealth of knowledge and has pledged to help us any way he can. He has had his Auto Box for 2 years now and is doing about 1.2 million in sales. He makes no sales calls and his advertising is a one liner in the Yellow Pages under boxes. He has given us all his formulas, his vendor lists and costs. He showed us how to operate the machines. We base our sales and cost of sales on his business. Phoenix has similar cost to our market but we are much richer in prospective customers. Our payroll and marketing/promotions are like his. Our equipment is used so most of the big depreciation has already happened. We are basing depreciation on 7 year flat line on what we think the equipment will be worth at that time. Page 14
  18. 18. BoxWerkz Business Plan Our rent is locked for 2 years (see attached lease). Our equipment is much like FibreCorr's so my numbers for utilities are what he pays per month. Our insurance is for 1 million in liability and contents and workman' s comp for the two employees we are hiring. Table: Profit and Loss Pro Forma Profit and Loss FY 2009 FY 2010 FY 2011 Sales $411,580 $756,663 $1,422,211 Direct Cost of Sales $161,650 $297,568 $560,674 Other Costs of Sales $8,445 $9,289 $10,218 Total Cost of Sales $170,095 $306,857 $570,892 Gross Margin $241,484 $449,806 $851,319 Gross Margin % 58.67% 59.45% 59.86% Expenses Payroll $121,920 $176,000 $193,000 Marketing/Promotion $1,413 $3,000 $6,000 Depreciation $6,384 $6,384 $6,384 Rent $21,600 $21,600 $25,000 Utilities $4,374 $6,000 $8,000 Payroll Taxes $18,288 $20,117 $22,128 Insurance $3,396 $3,736 $4,109 Total Operating Expenses $177,375 $236,836 $264,621 Profit Before Interest and Taxes $64,109 $212,970 $586,697 EBITDA $70,493 $219,354 $593,081 Interest Expense $8,001 $6,676 $5,293 Taxes Incurred $16,833 $61,888 $174,421 Net Profit $39,276 $144,406 $406,983 Net Profit/Sales 9.54% 19.08% 28.62% Page 15
  19. 19. BoxWerkz Business Plan Profit Monthly $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 ($10,000) Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Profit Yearly $400,000 $360,000 $320,000 $280,000 $240,000 $200,000 $160,000 $120,000 $80,000 $40,000 $0 FY 2009 FY 2010 FY 2011 Page 16
  20. 20. BoxWerkz Business Plan Gross Margin Monthly $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Gross Margin Yearly $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 FY 2009 FY 2010 FY 2011 7.5 Projected Cash Flow Table: Cash Flow Pro Forma Cash Flow FY 2009 FY 2010 FY 2011 Cash Received Page 17
  21. 21. BoxWerkz Business Plan Cash from Operations Cash Sales $308,685 $567,497 $1,066,658 Cash from Receivables $64,312 $156,817 $293,162 Subtotal Cash from Operations $372,997 $724,314 $1,359,821 Additional Cash Received Sales Tax, VAT, HST/GST Received $33,955 $62,425 $117,332 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $406,952 $786,739 $1,477,153 Expenditures FY 2009 FY 2010 FY 2011 Expenditures from Operations Cash Spending $121,920 $176,000 $193,000 Bill Payments $158,823 $502,810 $808,902 Subtotal Spent on Operations $280,743 $678,810 $1,001,902 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $14,121 $31,212 $58,666 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $40,656 $20,344 $0 Long-term Liabilities Principal Repayment $19,752 $19,752 $19,752 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $355,271 $750,118 $1,080,320 Net Cash Flow $51,681 $36,621 $396,833 Cash Balance $150,155 $186,776 $583,609 Cash $160,000 $140,000 $120,000 $100,000 Net Cash Flow $80,000 Cash Balance $60,000 $40,000 $20,000 $0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 7.6 Projected Balance Sheet Page 18
  22. 22. BoxWerkz Business Plan Table: Balance Sheet Pro Forma Balance Sheet FY 2009 FY 2010 FY 2011 Assets Current Assets Cash $150,155 $186,776 $583,609 Accounts Receivable $38,583 $70,932 $133,322 Inventory $15,856 $29,187 $54,994 Other Current Assets $3,000 $3,000 $3,000 Total Current Assets $207,594 $289,895 $774,925 Long-term Assets Long-term Assets $69,500 $69,500 $69,500 Accumulated Depreciation $6,384 $12,768 $19,152 Total Long-term Assets $63,116 $56,732 $50,348 Total Assets $270,710 $346,627 $825,273 Liabilities and Capital FY 2009 FY 2010 FY 2011 Current Liabilities Accounts Payable $96,033 $36,428 $69,177 Current Borrowing $0 $0 $0 Other Current Liabilities $40,178 $51,047 $109,713 Subtotal Current Liabilities $136,211 $87,475 $178,890 Long-term Liabilities $105,248 $85,496 $65,744 Total Liabilities $241,459 $172,971 $244,635 Paid-in Capital $0 $0 $0 Retained Earnings ($10,026) $29,250 $173,656 Earnings $39,276 $144,406 $406,983 Total Capital $29,250 $173,656 $580,639 Total Liabilities and Capital $270,710 $346,627 $825,273 Net Worth $29,250 $173,656 $580,639 7.7 Business Ratios Table: Ratios Ratio Analysis FY 2009 FY 2010 FY 2011 Industry Profile Sales Growth 0.00% 83.84% 87.96% 6.22% Percent of Total Assets Accounts Receivable 14.25% 20.46% 16.15% 14.35% Inventory 5.86% 8.42% 6.66% 12.38% Other Current Assets 1.11% 0.87% 0.36% 26.46% Total Current Assets 76.68% 83.63% 93.90% 53.19% Long-term Assets 23.32% 16.37% 6.10% 46.81% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 50.32% 25.24% 21.68% 20.06% Long-term Liabilities 38.88% 24.67% 7.97% 28.36% Total Liabilities 89.19% 49.90% 29.64% 48.42% Net Worth 10.81% 50.10% 70.36% 51.58% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Page 19
  23. 23. BoxWerkz Business Plan Gross Margin 58.67% 59.45% 59.86% 17.83% Selling, General & Administrative Expenses 49.13% 40.36% 31.24% 6.78% Advertising Expenses 0.34% 0.40% 0.42% 0.13% Profit Before Interest and Taxes 15.58% 28.15% 41.25% 0.74% Main Ratios Current 1.52 3.31 4.33 1.73 Quick 1.41 2.98 4.02 0.94 Total Debt to Total Assets 89.19% 49.90% 29.64% 61.04% Pre-tax Return on Net Worth 191.82% 118.79% 100.13% 3.96% Pre-tax Return on Assets 20.73% 59.51% 70.45% 1.54% Additional Ratios FY 2009 FY 2010 FY 2011 Net Profit Margin 9.54% 19.08% 28.62% n.a Return on Equity 134.28% 83.16% 70.09% n.a Activity Ratios Accounts Receivable Turnover 2.67 2.67 2.67 n.a Collection Days 29 106 105 n.a Inventory Turnover 35.55 13.21 13.32 n.a Accounts Payable Turnover 2.65 12.17 12.17 n.a Payment Days 27 55 23 n.a Total Asset Turnover 1.52 2.18 1.72 n.a Debt Ratios Debt to Net Worth 8.25 1.00 0.42 n.a Current Liab. to Liab. 0.56 0.51 0.73 n.a Liquidity Ratios Net Working Capital $71,383 $202,420 $596,035 n.a Interest Coverage 8.01 31.90 110.84 n.a Additional Ratios Assets to Sales 0.66 0.46 0.58 n.a Current Debt/Total Assets 50% 25% 22% n.a Acid Test 1.12 2.17 3.28 n.a Sales/Net Worth 14.07 4.36 2.45 n.a Dividend Payout 0.00 0.00 0.00 n.a Page 20
  24. 24. Appendix Table: Sales Forecast Sales Forecast Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Unit Sales Corrugated Boxes 200 318 506 805 1,280 2,035 3,236 5,145 8,181 13,008 20,683 32,886 Dye Cut Boxes 50 84 140 234 391 653 1,091 1,822 3,043 5,082 8,487 14,173 Standard Boxes 50 70 98 137 192 269 377 528 739 1,035 1,449 2,029 Supplies (Tape, peanuts, bubble wrap, etc.) 25 35 49 69 97 136 190 266 372 521 729 1,021 Total Unit Sales 325 507 793 1,245 1,960 3,093 4,894 7,761 12,335 19,646 31,348 50,109 Unit Prices Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Corrugated Boxes $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 $1.19 Dye Cut Boxes $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 Standard Boxes $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 Supplies (Tape, peanuts, bubble wrap, etc.) $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 Sales Corrugated Boxes $238 $378 $602 $958 $1,523 $2,422 $3,851 $6,123 $9,735 $15,480 $24,613 $39,134 Dye Cut Boxes $400 $672 $1,120 $1,872 $3,128 $5,224 $8,728 $14,576 $24,344 $40,656 $67,896 $113,384 Standard Boxes $50 $70 $98 $137 $192 $269 $377 $528 $739 $1,035 $1,449 $2,029 Supplies (Tape, peanuts, bubble wrap, etc.) $125 $175 $245 $345 $485 $680 $950 $1,330 $1,860 $2,605 $3,645 $5,105 Total Sales $813 $1,295 $2,065 $3,312 $5,328 $8,595 $13,906 $22,557 $36,678 $59,776 $97,603 $159,652 Direct Unit Costs Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Corrugated Boxes 45.00% $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 Dye Cut Boxes 40.00% $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 Standard Boxes 10.00% $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 Supplies (Tape, peanuts, bubble wrap, etc.) 5.00% $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 Direct Cost of Sales Corrugated Boxes $107 $170 $271 $431 $685 $1,090 $1,733 $2,755 $4,381 $6,966 $11,076 $17,610 Dye Cut Boxes $160 $269 $448 $749 $1,251 $2,090 $3,491 $5,830 $9,738 $16,262 $27,158 $45,354 Standard Boxes $5 $7 $10 $14 $19 $27 $38 $53 $74 $104 $145 $203 Supplies (Tape, peanuts, bubble wrap, etc.) $6 $9 $12 $17 $24 $34 $48 $67 $93 $130 $182 $255 Subtotal Direct Cost of Sales $278 $455 $741 $1,211 $1,980 $3,240 $5,309 $8,705 $14,285 $23,462 $38,561 $63,422 Page 1
  25. 25. Appendix Table: Personnel Personnel Plan Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Stephen Shepherd $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 Keith Steele $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 James Nix $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Brad Nix $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Machine operator $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 $2,240 Administrator $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 $1,920 Total People 0 0 0 0 0 0 0 0 0 0 0 0 Total Payroll $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 Page 2
  26. 26. Appendix Table: Profit and Loss Pro Forma Profit and Loss Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Sales $813 $1,295 $2,065 $3,312 $5,328 $8,595 $13,906 $22,557 $36,678 $59,776 $97,603 $159,652 Direct Cost of Sales $278 $455 $741 $1,211 $1,980 $3,240 $5,309 $8,705 $14,285 $23,462 $38,561 $63,422 Other Costs of Sales $500 $530 $562 $596 $632 $670 $710 $753 $798 $846 $897 $951 Total Cost of Sales $778 $985 $1,303 $1,807 $2,612 $3,910 $6,019 $9,458 $15,083 $24,308 $39,458 $64,373 Gross Margin $35 $311 $762 $1,505 $2,716 $4,684 $7,887 $13,099 $21,595 $35,468 $58,144 $95,279 Gross Margin % 4.26% 23.98% 36.90% 45.45% 50.98% 54.50% 56.71% 58.07% 58.88% 59.33% 59.57% 59.68% Expenses Payroll $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 Marketing/Promotion $100 $103 $106 $109 $112 $115 $118 $122 $126 $130 $134 $138 Depreciation $532 $532 $532 $532 $532 $532 $532 $532 $532 $532 $532 $532 Rent $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 Utilities $275 $289 $303 $318 $334 $351 $369 $387 $406 $426 $447 $469 Payroll Taxes 15% $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 $1,524 Insurance $283 $283 $283 $283 $283 $283 $283 $283 $283 $283 $283 $283 Total Operating Expenses $14,674 $14,691 $14,708 $14,726 $14,745 $14,765 $14,786 $14,808 $14,831 $14,855 $14,880 $14,906 Profit Before Interest and Taxes ($14,639) ($14,380) ($13,946) ($13,221) ($12,029) ($10,081) ($6,899) ($1,709) $6,764 $20,613 $43,264 $80,373 EBITDA ($14,107) ($13,848) ($13,414) ($12,689) ($11,497) ($9,549) ($6,367) ($1,177) $7,296 $21,145 $43,796 $80,905 Interest Expense $720 $710 $700 $691 $681 $672 $662 $652 $643 $633 $624 $614 Taxes Incurred ($4,608) ($4,527) ($4,394) ($4,173) ($3,813) ($3,226) ($2,268) ($708) $1,836 $5,994 $12,792 $23,928 Net Profit ($10,751) ($10,563) ($10,252) ($9,738) ($8,897) ($7,527) ($5,293) ($1,653) $4,285 $13,986 $29,849 $55,831 Net Profit/Sales -1322.41% -815.43% -496.45% -294.03% -166.98% -87.57% -38.06% -7.33% 11.68% 23.40% 30.58% 34.97% Page 3
  27. 27. Appendix Table: Cash Flow Pro Forma Cash Flow Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Cash Received Cash from Operations Cash Sales $610 $972 $1,549 $2,484 $3,996 $6,446 $10,429 $16,917 $27,509 $44,832 $73,202 $119,739 Cash from Receivables $7 $207 $330 $527 $845 $1,359 $2,193 $3,549 $5,757 $9,362 $15,259 $24,918 Subtotal Cash from Operations $617 $1,179 $1,879 $3,011 $4,841 $7,805 $12,622 $20,466 $33,266 $54,194 $88,461 $144,657 Additional Cash Received Sales Tax, VAT, HST/GST Received 8.25% $67 $107 $170 $273 $440 $709 $1,147 $1,861 $3,026 $4,931 $8,052 $13,171 New Current Borrowing $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 New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales of Other Current Assets $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 New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Received $684 $1,286 $2,049 $3,284 $5,281 $8,514 $13,770 $22,327 $36,292 $59,125 $96,513 $157,828 Expenditures Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Expenditures from Operations Cash Spending $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 $10,160 Bill Payments $20 $598 $718 $893 $1,166 $1,848 $5,854 $9,202 $14,658 $23,573 $38,174 $62,121 Subtotal Spent on Operations $10,180 $10,758 $10,878 $11,053 $11,326 $12,008 $16,014 $19,362 $24,818 $33,733 $48,334 $72,281 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $414 $563 $766 $1,042 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417 $1,417 Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Liabilities Principal Repayment $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 $3,388 Long-term Liabilities Principal Repayment $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 $1,646 Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subtotal Cash Spent $15,627 $16,355 $16,678 $17,129 $17,777 $18,459 $22,465 $25,813 $31,269 $40,184 $54,785 $78,732 Net Cash Flow ($14,944) ($15,069) ($14,628) ($13,845) ($12,497) ($9,944) ($8,695) ($3,486) $5,023 $18,941 $41,729 $79,097 Cash Balance $83,531 $68,461 $53,833 $39,988 $27,491 $17,547 $8,852 $5,366 $10,389 $29,330 $71,059 $150,155 Page 4
  28. 28. Appendix Page 5
  29. 29. Appendix Table: Balance Sheet Pro Forma Balance Sheet Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Assets Starting Balances Current Assets Cash $98,474 $83,531 $68,461 $53,833 $39,988 $27,491 $17,547 $8,852 $5,366 $10,389 $29,330 $71,059 $150,155 Accounts Receivable $0 $196 $313 $499 $800 $1,288 $2,077 $3,361 $5,451 $8,864 $14,446 $23,587 $38,583 Inventory $5,000 $4,722 $4,267 $3,526 $2,315 $495 $810 $1,327 $2,176 $3,571 $5,865 $9,640 $15,856 Other Current Assets $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Total Current Assets $106,474 $91,449 $76,041 $60,858 $46,103 $32,274 $23,434 $16,540 $15,993 $25,824 $52,641 $107,286 $207,594 Long-term Assets Long-term Assets $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 $69,500 Accumulated Depreciation $0 $532 $1,064 $1,596 $2,128 $2,660 $3,192 $3,724 $4,256 $4,788 $5,320 $5,852 $6,384 Total Long-term Assets $69,500 $68,968 $68,436 $67,904 $67,372 $66,840 $66,308 $65,776 $65,244 $64,712 $64,180 $63,648 $63,116 Total Assets $175,974 $160,417 $144,477 $128,762 $113,475 $99,114 $89,742 $82,316 $81,237 $90,536 $116,821 $170,934 $270,710 Liabilities and Capital Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Current Liabilities Accounts Payable $0 $574 $688 $855 $1,109 $1,656 $5,553 $8,723 $13,888 $22,327 $36,146 $58,809 $96,033 Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $61,000 $57,265 $53,421 $49,437 $45,281 $40,915 $36,819 $33,161 $30,217 $28,438 $28,565 $31,812 $40,178 Subtotal Current Liabilities $61,000 $57,839 $54,109 $50,292 $46,390 $42,571 $42,372 $41,885 $44,105 $50,765 $64,710 $90,621 $136,211 Long-term Liabilities $125,000 $123,354 $121,708 $120,062 $118,416 $116,770 $115,124 $113,478 $111,832 $110,186 $108,540 $106,894 $105,248 Total Liabilities $186,000 $181,194 $175,817 $170,355 $164,806 $159,342 $157,496 $155,363 $155,937 $160,952 $173,251 $197,515 $241,459 Paid-in Capital $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Retained Earnings ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) ($10,026) Earnings $0 ($10,751) ($21,314) ($31,567) ($41,305) ($50,202) ($57,729) ($63,022) ($64,675) ($60,390) ($46,404) ($16,556) $39,276 Total Capital ($10,026) ($20,777) ($31,340) ($41,593) ($51,331) ($60,228) ($67,754) ($73,047) ($74,700) ($70,415) ($56,430) ($26,581) $29,250 Total Liabilities and Capital $175,974 $160,417 $144,477 $128,762 $113,475 $99,114 $89,742 $82,316 $81,237 $90,536 $116,821 $170,934 $270,710 Net Worth ($10,026) ($20,777) ($31,340) ($41,593) ($51,331) ($60,228) ($67,754) ($73,047) ($74,700) ($70,415) ($56,430) ($26,581) $29,250 Page 6

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