Executive Summary
Services
Market Segmentation
Strategy and Implementation Summary
7.2 Projected Profit and Loss
7.3 Projected Cash Flow
cash
7.4 Projected Balance Sheet
7.5 Business Ratios
Todd,
West, and Associates specialize in modifications to inventory management
systems of all types. The company's connectivity and network engineering
expertise assures a complete wireless solution to warehouse management issues.
Todd, West, and Associates has over fifteen years of
experience within the ADC (Automated Data Collection) marketplace.
Prior to
starting this new company, the staff of Todd, West, and Associates worked
within the industry's major companies performing special wireless modification
for customers. Their unique perspective has already led to two of the
industry leaders, Symbol and CDS, outsourcing special modification orders
to Todd, West, and Associates.
1.1 Objectives
The objectives of Todd, West, and Associates are as
follows:
- Establish the company as a leader in warehouse wireless connectivity.
- Increase client base by 20% each year.
- Develop packaged solutions for warehouse management systems.
1.2 Mission
The mission of Todd, West, and Associates is to work
directly with customers to improve their warehouse management systems. The
development, modification, and/or improvement of warehouse data infrastructure
will assure that the business will function efficiently and successfully.
Company Summary
Todd, West, and Associates is
a new start-up engineering contracting firm. Co-owners, Mary Todd and John West
have over fifteen years of experience in connectivity and network engineering.
The country's economic growth over the last several years has resulted in
increased opportunity for the installation of high-end warehouse management
systems. Todd, West, and Associates is positioned to
capitalize on the growing need of companies to better manage their inventory.
From 1996 to 2001, Mary Todd was senior
engineer for the Special Modification Services unit of CDS, one of the
country's leading producers of Automatic Data Collection (ADC) products.
Her primary responsibility was to travel to the customer's warehouse site and
perform custom wireless network modifications using CDS products.
John West has been a senior engineer for
Symbol's system installation services unit for the past five years. John's
responsibilities included custom wireless installation of Symbol networking
equipment and ADC products at the customer's warehouse site.
Todd, West, and Associates has
signed outsourcing agreements with both CDS and Symbol to provide custom
network installation services to their customers. Currently, these agreements
represent $100,000 in scheduled assignments.
2.1 Company Ownership
Mary Todd and John West are co-owners of Todd, West,
and Associates.
2.2 Start-up Summary
Mary Todd and John West will each
equally invest in Todd, West, and Associates. In addition, they will
secure a long-term loan. The following table and chart show projected
initial start-up costs for Todd, West, and Associates.
Start-up
Funding
|
|
Start-up
Expenses to Fund
|
$9,000
|
Start-up
Assets to Fund
|
$61,000
|
Total
Funding Required
|
$70,000
|
Assets
|
|
Non-cash
Assets from Start-up
|
$0
|
Cash Requirements
from Start-up
|
$61,000
|
Additional
Cash Raised
|
$0
|
Cash
Balance on Starting Date
|
$61,000
|
Total
Assets
|
$61,000
|
Liabilities
and Capital
|
|
Liabilities
|
|
Current
Borrowing
|
$0
|
Long-term
Liabilities
|
$50,000
|
Accounts
Payable (Outstanding Bills)
|
$0
|
Other
Current Liabilities (interest-free)
|
$0
|
Total
Liabilities
|
$50,000
|
Capital
|
|
Planned
Investment
|
|
Mary
Todd
|
$10,000
|
John
West
|
$10,000
|
Additional
Investment Requirement
|
$0
|
Total
Planned Investment
|
$20,000
|
Loss at
Start-up (Start-up Expenses)
|
($9,000)
|
Total
Capital
|
$11,000
|
Total
Capital and Liabilities
|
$61,000
|
Total
Funding
|
$70,000
|
Start-up
|
|
Requirements
|
|
Start-up
Expenses
|
|
Legal
|
$1,000
|
Stationery
etc.
|
$1,000
|
Rent
|
$1,000
|
Expensed
Equipment
|
$6,000
|
Total Start-up
Expenses
|
$9,000
|
Start-up
Assets
|
|
Cash
Required
|
$61,000
|
Other
Current Assets
|
$0
|
Long-term
Assets
|
$0
|
Total
Assets
|
$61,000
|
Total
Requirements
|
$70,000
|
Services
Todd,
West, and Associates' services include the following:
- Automated
data collection installation
- Database
engineering/conversions (MS Access/SQL/Oracle)
- Data
imports/exports
- Database
links to accounting system (MAS-90/Solomon/Peachtree)
- Wireless
networking
- Portable
data terminal programming
- LAN/WAN
infrastructure
- System
consulting
The prices
for services are as follows:
- On-site
System Requirements Study:
$1,000 a day plus travel and expenses.
- On-site
Database/Network Engineering/Training: $1,000 a day plus travel and expenses.
- Phone Training/Assistance: $120 an hour.
- Database
Modifications:
Quoted based on job specifics.
- General
Data Imports/Exports:
$120 an hour.
Market Segmentation
Automated
Data Collection (ADC) products and services is a $3 billion industry. The
products are used in numerous companies with significant inventory and
warehouse space. Approximately, 30% of the market is in wireless products and
services but the demand is growing. It is estimated that wireless ADC
products will dominate the market by 2005. Two of the industry leaders, Symbol
and CDS, exceeded $600 million in sales for FY 2000. Wireless products
represented 28% of their total sales.
Typically,
with the installation of wireless products, there are associated costs for
networking and connectivity issues. Most companies in the industry offer these
additional services to their customers or outsource the service to engineering
firms with expertise in their product line.
Todd,
West, and Associates has extensive experience with
both Symbol and CDS products. The company's focus is to first meet the demands
of the Symbol and CDS referred customers. Todd, West, and
Associates will establish relationships with these companies and will
work to receive referral business from them over time. The company estimates
that 80% of revenues will come from outsourced clientele and 20% from new
business. Over the next three years, Todd, West, and Associates estimates
that new business will constitute 40% of revenue.
Market
Analysis
|
|||||||
Year
1
|
Year
2
|
Year
3
|
Year
4
|
Year
5
|
|||
Potential Customers
|
Growth
|
CAGR
|
|||||
Outsourced Customers
|
10%
|
2,000
|
2,200
|
2,420
|
2,662
|
2,928
|
10.00%
|
New Customers
|
5%
|
10,000
|
10,500
|
11,025
|
11,576
|
12,155
|
5.00%
|
Total
|
5.88%
|
12,000
|
12,700
|
13,445
|
14,238
|
15,083
|
5.88%
|
Strategy and Implementation Summary
Todd, West, and Associates will focus on companies
utilizing Symbol and CDS wireless ADC products to manage their inventories. The
targeted customer will have ten or more warehouse staff members using ADC
wireless systems.
Initially, the company will receive 80% of its
clients through Symbol and CDS outsource referrals. The remaining 20% will come
from direct marketing.
Over the past five years, both Mary and John have
built an extensive network of contacts with companies utilizing wireless ADC products. Todd,
West, and Associates will market its services directly to these companies.
After its first three months of operation, the
company expects to begin to receive installation contracts from new customers.
5.1 Competitive Edge
Todd, West, and Associates will sustain
its competitive advantages to steadily gain market share. The first
advantage is based on extensive knowledge of Symbol and CDS wireless ADC
products. The second advantage is an established network of contacts among
numerous companies that utilize wireless ADC products.
Todd, West, and Associates' competitive edge is
the five years Mary and John have spent installing Symbol
and CDS wireless ADC systems. Both have excellent reputations with
customers for quality work and effective communication skills. These
established relationships create a trust bond that is significant when it comes
to generating new referrals.
5.2 Sales Strategy
Todd, West, and Associates estimates that about 80%
of revenues will come from outsourced clientele and 20% from new
business. Over the next three years, Todd, West, and Associates estimates
that new business will grow to eventually constitute 40% of revenue.
5.2.1 Sales Forecast
The following is the sales forecast for the
next three years.
Sales
Forecast
|
|||
Year 1
|
Year 2
|
Year 3
|
|
Sales
|
|||
Symbol and CDS Customers
|
$283,377
|
$310,000
|
$330,000
|
New Customers
|
$57,200
|
$78,000
|
$100,000
|
Total Sales
|
$340,577
|
$388,000
|
$430,000
|
Direct Cost of Sales
|
Year 1
|
Year 2
|
Year 3
|
Symbol and CDS Customers
|
$0
|
$0
|
$0
|
New Customers
|
$0
|
$0
|
$0
|
Subtotal Direct Cost of Sales
|
$0
|
$0
|
$0
|
Management Summary
Todd, West, and Associates will be managed jointly
by Mary Todd and John West. Initially, the company will have only three
additional employees.
6.1 Personnel Plan
The personal plan for Todd, West, and Associates is
as follows:
- Mary Todd
- John West
- Installation consultants (wireless installations)
- Office manager
Personnel
Plan
|
|||
Year 1
|
Year 2
|
Year 3
|
|
Mary Todd
|
$60,000
|
$63,000
|
$66,000
|
John West
|
$60,000
|
$63,000
|
$66,000
|
Installation Consultants
|
$96,000
|
$100,000
|
$104,000
|
Office Manager
|
$36,000
|
$38,000
|
$40,000
|
Total People
|
4
|
4
|
4
|
Total Payroll
|
$252,000
|
$264,000
|
$276,000
|
Financial Plan
The following is the financial plan for Todd, West,
and Associates.
7.1 Break-even Analysis
The monthly break-even point is shown in the table
and chart below.
Break-even
Analysis
|
|
Monthly Revenue Break-even
|
$25,450
|
Assumptions:
|
|
Average Percent Variable Cost
|
0%
|
Estimated Monthly Fixed Cost
|
$25,450
|
7.2 Projected Profit and Loss
The following table and charts highlight the
projected profit and loss for the next three years.
Pro
Forma Profit and Loss
|
|||
Year
1
|
Year
2
|
Year
3
|
|
Sales
|
$340,577
|
$388,000
|
$430,000
|
Direct Cost of Sales
|
$0
|
$0
|
$0
|
Other Production Expenses
|
$0
|
$0
|
$0
|
Total Cost of Sales
|
$0
|
$0
|
$0
|
Gross Margin
|
$340,577
|
$388,000
|
$430,000
|
Gross Margin %
|
100.00%
|
100.00%
|
100.00%
|
Expenses
|
|||
Payroll
|
$252,000
|
$264,000
|
$276,000
|
Sales and Marketing and Other
Expenses
|
$0
|
$0
|
$0
|
Depreciation
|
$0
|
$0
|
$0
|
Leased Equipment
|
$0
|
$0
|
$0
|
Utilities
|
$3,600
|
$3,600
|
$3,600
|
Insurance
|
$0
|
$0
|
$0
|
Rent
|
$12,000
|
$12,000
|
$12,000
|
Payroll Taxes
|
$37,800
|
$39,600
|
$41,400
|
Other
|
$0
|
$0
|
$0
|
Total Operating Expenses
|
$305,400
|
$319,200
|
$333,000
|
Profit Before Interest and Taxes
|
$35,177
|
$68,800
|
$97,000
|
EBITDA
|
$35,177
|
$68,800
|
$97,000
|
Interest Expense
|
$2,883
|
$2,676
|
$2,460
|
Taxes Incurred
|
$9,688
|
$19,837
|
$28,362
|
Net Profit
|
$22,606
|
$46,287
|
$66,178
|
Net Profit/Sales
|
6.64%
|
11.93%
|
15.39%
|
7.3 Projected Cash Flow
The following table and chart highlight the
projected cash flow for the next three years.
cash
Pro
Forma Cash Flow
|
|||
Year
1
|
Year
2
|
Year
3
|
|
Cash Received
|
|||
Cash from Operations
|
|||
Cash Sales
|
$85,144
|
$97,000
|
$107,500
|
Cash from Receivables
|
$209,420
|
$284,593
|
$316,826
|
Subtotal Cash from Operations
|
$294,565
|
$381,593
|
$424,326
|
Additional Cash Received
|
|||
Sales Tax, VAT, HST/GST Received
|
$0
|
$0
|
$0
|
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
|
$294,565
|
$381,593
|
$424,326
|
Expenditures
|
Year 1
|
Year 2
|
Year 3
|
Expenditures from Operations
|
|||
Cash Spending
|
$252,000
|
$264,000
|
$276,000
|
Bill Payments
|
$60,773
|
$76,524
|
$86,991
|
Subtotal Spent on Operations
|
$312,773
|
$340,524
|
$362,991
|
Additional Cash Spent
|
|||
Sales Tax, VAT, HST/GST Paid Out
|
$0
|
$0
|
$0
|
Principal Repayment of Current
Borrowing
|
$0
|
$0
|
$0
|
Other Liabilities Principal
Repayment
|
$0
|
$0
|
$0
|
Long-term Liabilities Principal
Repayment
|
$3,600
|
$3,600
|
$3,600
|
Purchase Other Current Assets
|
$0
|
$0
|
$0
|
Purchase Long-term Assets
|
$0
|
$0
|
$0
|
Dividends
|
$0
|
$0
|
$0
|
Subtotal Cash Spent
|
$316,373
|
$344,124
|
$366,591
|
Net Cash Flow
|
($21,809)
|
$37,469
|
$57,735
|
Cash Balance
|
$39,191
|
$76,661
|
$134,395
|
7.4 Projected Balance Sheet
The following table highlights the projected balance
sheet for the next three years.
Pro
Forma Balance Sheet
|
|||
Year
1
|
Year
2
|
Year
3
|
|
Assets
|
|||
Current Assets
|
|||
Cash
|
$39,191
|
$76,661
|
$134,395
|
Accounts Receivable
|
$46,013
|
$52,419
|
$58,094
|
Other Current Assets
|
$0
|
$0
|
$0
|
Total Current Assets
|
$85,204
|
$129,080
|
$192,489
|
Long-term Assets
|
|||
Long-term Assets
|
$0
|
$0
|
$0
|
Accumulated Depreciation
|
$0
|
$0
|
$0
|
Total Long-term Assets
|
$0
|
$0
|
$0
|
Total Assets
|
$85,204
|
$129,080
|
$192,489
|
Liabilities and Capital
|
Year
1
|
Year
2
|
Year
3
|
Current Liabilities
|
|||
Accounts Payable
|
$5,198
|
$6,387
|
$7,218
|
Current Borrowing
|
$0
|
$0
|
$0
|
Other Current Liabilities
|
$0
|
$0
|
$0
|
Subtotal Current Liabilities
|
$5,198
|
$6,387
|
$7,218
|
Long-term Liabilities
|
$46,400
|
$42,800
|
$39,200
|
Total Liabilities
|
$51,598
|
$49,187
|
$46,418
|
Paid-in Capital
|
$20,000
|
$20,000
|
$20,000
|
Retained Earnings
|
($9,000)
|
$13,606
|
$59,893
|
Earnings
|
$22,606
|
$46,287
|
$66,178
|
Total Capital
|
$33,606
|
$79,893
|
$146,071
|
Total Liabilities and Capital
|
$85,204
|
$129,080
|
$192,489
|
Net Worth
|
$33,606
|
$79,893
|
$146,071
|
7.5 Business Ratios
Business ratios for the years of this plan are shown
below. Industry profile ratios based on the NAISC code 541614, Process,
Physical Distribution, and Logistics Consulting, are shown for comparison.
Ratio
Analysis
|
||||
Year
1
|
Year
2
|
Year
3
|
Industry
Profile
|
|
Sales Growth
|
0.00%
|
13.92%
|
10.82%
|
7.23%
|
Percent of Total Assets
|
||||
Accounts Receivable
|
54.00%
|
40.61%
|
30.18%
|
19.37%
|
Other Current Assets
|
0.00%
|
0.00%
|
0.00%
|
50.13%
|
Total Current Assets
|
100.00%
|
100.00%
|
100.00%
|
70.99%
|
Long-term Assets
|
0.00%
|
0.00%
|
0.00%
|
29.01%
|
Total Assets
|
100.00%
|
100.00%
|
100.00%
|
100.00%
|
Current Liabilities
|
6.10%
|
4.95%
|
3.75%
|
34.21%
|
Long-term Liabilities
|
54.46%
|
33.16%
|
20.36%
|
15.24%
|
Total Liabilities
|
60.56%
|
38.11%
|
24.11%
|
49.45%
|
Net Worth
|
39.44%
|
61.89%
|
75.89%
|
50.55%
|
Percent of Sales
|
||||
Sales
|
100.00%
|
100.00%
|
100.00%
|
100.00%
|
Gross Margin
|
100.00%
|
100.00%
|
100.00%
|
23.92%
|
Selling, General &
Administrative Expenses
|
93.80%
|
88.49%
|
85.02%
|
11.77%
|
Advertising Expenses
|
0.00%
|
0.00%
|
0.00%
|
0.57%
|
Profit Before Interest and Taxes
|
10.33%
|
17.73%
|
22.56%
|
0.85%
|
Main Ratios
|
||||
Current
|
16.39
|
20.21
|
26.67
|
1.60
|
Quick
|
16.39
|
20.21
|
26.67
|
1.31
|
Total Debt to Total Assets
|
60.56%
|
38.11%
|
24.11%
|
56.90%
|
Pre-tax Return on Net Worth
|
96.10%
|
82.77%
|
64.72%
|
2.82%
|
Pre-tax Return on Assets
|
37.90%
|
51.23%
|
49.11%
|
6.54%
|
Additional Ratios
|
Year
1
|
Year
2
|
Year
3
|
|
Net Profit Margin
|
6.64%
|
11.93%
|
15.39%
|
n.a
|
Return on Equity
|
67.27%
|
57.94%
|
45.31%
|
n.a
|
Activity Ratios
|
||||
Accounts Receivable Turnover
|
5.55
|
5.55
|
5.55
|
n.a
|
Collection Days
|
57
|
62
|
63
|
n.a
|
Accounts Payable Turnover
|
12.69
|
12.17
|
12.17
|
n.a
|
Payment Days
|
27
|
27
|
28
|
n.a
|
Total Asset Turnover
|
4.00
|
3.01
|
2.23
|
n.a
|
Debt Ratios
|
||||
Debt to Net Worth
|
1.54
|
0.62
|
0.32
|
n.a
|
Current Liab.
to Liab.
|
0.10
|
0.13
|
0.16
|
n.a
|
Liquidity Ratios
|
||||
Net Working Capital
|
$80,006
|
$122,693
|
$185,271
|
n.a
|
Interest Coverage
|
12.20
|
25.71
|
39.43
|
n.a
|
Additional Ratios
|
||||
Assets to Sales
|
0.25
|
0.33
|
0.45
|
n.a
|
Current Debt/Total Assets
|
6%
|
5%
|
4%
|
n.a
|
Acid Test
|
7.54
|
12.00
|
18.62
|
n.a
|
Sales/Net Worth
|
10.13
|
4.86
|
2.94
|
n.a
|
Dividend Payout
|
0.00
|
0.00
|
0.00
|
n.a
|
