Box Werkz Business Plan

BoxWerkz, Inc.
Business Plan

By: Stephen Shepherd

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

Table of Contents

Table: Ratios...........................................................................................................................................19

Page 2

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


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


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


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


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


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


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


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



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


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


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


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


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


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


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


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


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


Gross Margin Monthly
$100,000

$90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

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


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


7.6 Projected Balance Sheet

Page 18


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


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

Appendix

Table: Sales Forecast

Sales Forecast
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

Appendix

Table: Personnel

Personnel Plan
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

Appendix

Table: Profit and Loss

Pro Forma Profit and Loss
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

Appendix

Table: Cash Flow

Pro Forma Cash Flow
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

Appendix

Table: Balance Sheet

Pro Forma Balance Sheet
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

Box Werkz Business Plan

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