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Rudy’s Bookshelf Financial Plan Balance Sheet Assumptions Assets Starting cash
will be determined using a cash flow statement Accounts Receivable:
all sales will be cash Inventory:
Beginning inventory will be enough to generate $1000 in sales. Distributors sell to bookstores for 40% off
the cover price, so COGS for those items will be 60%. I will undoubtedly have to prepay for this
first shipment as I have not yet established a payment history with the distributor. Prepaid expenses:
First and last month’s rent is required. Deposits:
A $500 damage deposit on the rented office space is required. Startup expenses: $250 in legal fees to form an LLC $150 materials fee to create a booth for school festival
events that is easy to set up and break down and creates an attractive
display Business stationery and business cards will be created
using desktop publishing and will be printed as needed. Web design services will be employed in a limited way
for help setting up the online catalog.
Estimated 5 hours at $45/hour (going rate, according to web design
students at school), total $225. Equipment:
My existing computer, a Dell desktop, will be dedicated to the
business, estimated value (including software) $800. Office Furniture:
A desk, a chair, a file cabinet, five bookshelves to hold inventory
and a table for the shipping area will all the furniture required. Priced at used office supply store. Telephone system:
A phone capable of accommodating 3 lines for future growth, and an
office intercom. Priced at Office
Depot for $250. Liabilities As I have yet to establish credit with any suppliers, I
will have no trade payables. I do not
foresee any long-term debt as I anticipate having sufficient cash for all
start-up expenses and working capital until the business is profitable. Equity An initial owner’s equity investment of $5,900 will
provide the needed capital. Income Statement Assumptions Sales will be mainly through an online
storefront. Additional sales will be
achieved by having a booth at Waldorf school seasonal events in the COGS: According to bizstats.com, COGS for book publishers is
31%. Included in this number is royalties and reprint rights for books that Rudy’s
Bookshelf will produce. Books produced
by other publishers that I resell will carry a 60% COGS, a standard discount
in the bookselling industry. Expenses Payroll:
I will have no employees at first, or will employ only casual labor at
festival events. Rent: The first year I will work out of my
home. As the business grows, I will
need approx. 500 square feet. An ad in
the Seattle Times for a commercial space in Montlake
Terrace (“448sf from $15/ft/yr.”) would put my rent at 448*15=$6720 per year or $560
per month. Advertising: 1. Low-cost web marketing 2. Promotional fundraising events
aimed at Waldorf schools around the country.
I will provide catalogs and offer to refund back to the school 20% of
all books purchased during the sales.
Cost: 20% of sales 3. Booth at local school
festivals: 20% of sales to schools,
plus cost of booth (est. $250) 4. A two-color catalog will be
printed once a year in the summer, preparing for back-to-school and holiday
sales. First printing. 1,000 copies at
2.25 per copy. Graphic design services
estimated at $500 per year. These
figures are based on previous experience. Depreciation: Assume 5 year useful life on computer, office furniture
and equipment, using straight-line depreciation. Insurance: General business liability will be sufficient, estimated
at $600 per year based on bizstats.com percentages Legal & Professional
Services: Est. $250 for legal fees to create an LLC,
plus $500 per year for professional tax preparation Office Expense:
Basic office supplies, copier paper, printer cartridges, postage, est $50/month. Taxes:
State excise tax Sales
tax collected on in-state sales I
will skip SUI & FUTA for myself, but will pay L&I Telephone: Telephone system
will include 1-line business account for now with voicemail and an 800 number. Priced online at $50 per month Travel:
Travel by car to six festivals per year, est. $50 per festival. Utilities:
About 5% of my home will be dedicated to my business, so about 5% of
my utilities bill will be deducted as a business expense, about $15/month. Web hosting and
e-commerce: I will use the Yahoo stores starter package
at first for a $50 set-up fee, $39.95/month hosting fee and a 1.5%
transaction fee. |