Financial_Planning_Practice

Financial Planning Practice Strategic Business and Marketing Plan The information in this document is confidential and is to be only read by authorized parties. Please refer to the confidentiality agreement for further details. This business plan is not an offering for securities. Confidentiality Agreement Table of Contents 1.0 Executive Summary 4 1.1 The Services 4 1.2 Financing 4 1.3 Mission Statement 4 1.4 Management Team 4 1.5 Sales Forecasts 5 1.6 Expansion Plan 5 2.0 Company and Financing Summary 6 2.1 Registered Name and Corporate Structure 6 2.2 Required Funds 6 2.3 Investor Equity 6 2.4 Management Equity 7 2.5 Exit Strategy 7 3.0 Products and Services 8 3.1 Financial Services 8 3.2 Sales of Insurance Products and Annuities 8 4.0 Strategic and Market Analysis 9 4.1 Economic Outlook 9 4.2 Industry Analysis 9 4.3 Customer Profile 9 4.4 Competition 10 5.0 Marketing Plan 11 5.1 Marketing Objectives 11 5.2 Marketing Strategies 11 5.3 Pricing 11 6.0 Organizational Plan and Personnel Summary 12 6.1 Corporate Organization 12 6.2 Organizational Budget 12 6.3 Management Biographies 13 7.0 Financial Plan 14 7.1 Underlying Assumptions 14 7.2 Sensitivity Analysis 14 7.3 Source of Funds 14 7.4 General Assumptions 14 7.5 Profit and Loss Statements 15 7.6 Cash Flow Analysis 16 7.8 Breakeven Analysis 18 Three Year Profit and Loss Statement 19 Three Year Cash Flow Analysis 23 1.0 Executive Summary The purpose of this business plan is to raise $100,000 for the development of a financial planning practice while showcasing the expected financials and operations over the next three years. The Financial Planning Practice, Inc. (“the Company”) is a New York based corporation that will provide financial advice, asset management, and sales of insurance/annuities to customers in its targeted market. The Company was founded in 2009 by John Doe. 1.1 The Services The primary revenue stream for the Company will come from the assets that are managed by Mr. Doe as his staff. Each calendar year, the Company will charge a 1% fee equal to the aggregate assets managed in a client’s account. The business will also generate per hour financial/estate planning fees related to advice provided for clients. The Financial Planning Practice will also generate revenues from the sale of insurance products (especially life insurance) as well as annuities. The third section of the business plan will further describe the services offered by the Financial Planning Practice. 1.2 Financing Mr. Doe is seeking to raise $100,000 from as a bank loan. The interest rate and loan agreement are to be further discussed during negotiation. This business plan assumes that the business will receive a 10 year loan with a 9% fixed interest rate. The financing will be used for the following: • Development of the Company’s Financial Planning Practice’s location. • Financing for the first six months of operation. • Capital to purchase a company vehicle. Mr. Doe will contribute $10,000 to the venture. 1.3 Mission Statement The Financial Planning Practice’s mission is to become the recognized local leader in its targeted market for financial advisory and asset management services. 1.4 Management Team The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the asset management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations. 1.5 Sales Forecasts Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years. Proforma Profit and Loss (Yearly) Year 2009 2010 2011 Sales $327,978 $393,574 $460,481 Operating Costs $262,503 $272,474 $282,815 EBITDA $45,008 $96,538 $148,929 Taxes, Interest, and Depreciation $29,948 $45,833 $65,331 Net Profit $15,060 $50,705 $83,599 1.6 Expansion Plan The Founder expects that the business will aggressively expand during the first three years of operation. Mr. Doe intends to implement marketing campaigns that will effectively target individuals within the target market. 2.0 Company and Financing Summary 2.1 Registered Name and Corporate Structure Financial Planning Practice, Inc. The Company is registered as a corporation in the State of New York. 2.2 Required Funds At this time, the Financial Planning Practice requires $100,000 of debt funds. Below is a breakdown of how these funds will be used: Projected Startup Costs Business Startup Year 2009 Initial Lease Payments and Deposits $10,000 Working Capital $35,000 FF&E $23,000 Leasehold Improvements $5,000 Security Deposits $5,000 Insurance $2,500 Company Vehicle $17,000 Marketing Budget $7,500 Miscellaneous and Unforeseen Costs $5,000 Total Startup Costs $110,000 2.3 Investor Equity Mr. Doe is not seeking an investment from a third party at this time. 2.4 Management Equity John Doe owns 100% of the Financial Planning Practice, Inc. 2.5 Exit Strategy If the business is very successful, Mr. Doe may seek to sell the business to a third party for a significant earnings multiple. Most likely, the Company will hire a qualified business broker to sell the business on behalf of the Financial Planning Practice. Based on historical numbers, the business could fetch a sales premium of up to 4 times earnings. 3.0 Products and Services Below is a description of the financial planning and advisory services offered by the Financial Planning Practice. 3.1 Financial Services The Company will offer a wide variety of financial products that will help clients plan for their future retirement, college savings, and other financial needs. The agency will offer to its clients: • Retirement Plans • General Financial Planning • Annuities and Mutual Funds • Traditional and Roth IRA Accounts The sales of these products will generate significant streams of commission based and recurring income. Each year, the business would receive fees of approximately 1% of the dollar amount of assets under management. These fees will comprise of approximately 70% of the revenue generated by the Company during the next five years of operation. 3.2 Sales of Insurance Products and Annuities Prior to the onset of operations, the business will develop underwriting relationships with life insurance and annuity companies so that the Company can generate commission revenue from the sale of these financial products to the Financial Planning Practice’s clients. Whole life insurance and annuities are a very important part of a client’s financial/estate planning, and the Company will generate a significant income stream from the sale of these products. In this section of the business plan, you should further describe the products and services that you intend to offer to your customers. If you need to add more product categories, please consult the instructions that were included in the BizPlanDB.com zip file. 4.0 Strategic and Market Analysis 4.1 Economic Outlook This section of the analysis will detail the economic climate, the financial planning industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is moderate. The meltdown of the sub prime mortgage market coupled with increasing gas prices has led many people to believe that the US is on the cusp of an economic recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows. 4.2 Industry Analysis The financial services sector has become one of the fastest growing business segments in the U.S. economy. Computerized technologies allow financial firms to operate advisory and brokerage services anywhere in the country. In previous decades, most financial firms needed to be within a close proximity to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can access almost every facet of the financial markets through Internet connections and specialized trading and investment management software. With these advances, several new firms have been created to address the needs of people in rural and suburban areas. The Bureau of Labor Statistics estimates that there are approximately 94,000 investment advisors currently employed throughout the United States. The average annual income for an investment advisor is $62,700. Salaries are expected to increase at a rate of 2.1% a year as inflation increases. In the last study conducted by the U.S. Economic Census, it was found that the revenues of the investment advisory industry increased from $14.8 billion dollars in 1992 to over $52.9 billion dollars by 2005. This represents a five year growth rate of 257%. The number of investment advisory establishments increased 61.5% over the same period. This trend is expected to continue as the ‘baby boomer’ generation begins to move into retirement age. 4.3 Customer Profile The Financial Planning Practice’s average client will be a middle to upper middle class man or woman living in the Company’s target market. Common traits among clients will include: • Annual household income exceeding $50,000 • Lives or works no more than 15 miles from the Company’s location. • Has a net worth exceeding $500,000. • Owns their own home. In this section of the analysis, you should describe the type of customer you are seeking to acquire. These traits include income size, type of business/occupation; how far away from your business is to your customer, and what the customer is looking for. In this section, you can also put demographic information about your target market including population size, income demographics, level of education, etc. 4.4 Competition This is one of the sections of the business plan that you must write completely on your own. The key to writing a strong competitive analysis is that you do your research on the local competition. Find out who your competitors are by searching online directories and searching in your local Yellow Pages. If there are a number of competitors in the same industry (meaning that it is not feasible to describe each one) then showcase the number of businesses that compete with you, and why your business will provide customers with service/products that are of better quality or less expensive than your competition. 5.0 Marketing Plan The Financial Planning Practice intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Financial Planning Practice. 5.1 Marketing Objectives • Develop an online presence by developing a website and placing the Company’s name and contact information with online directories. • Implement a local campaign with the Company’s targeted market via the use of flyers, local newspaper advertisements, and word of mouth advertising. • Establish relationships with accountants and attorneys within the targeted market. 5.2 Marketing Strategies Mr. Doe intends on using a number of marketing strategies that will allow Financial Planning Practice to easily target men and women within the target market. These strategies include traditional print advertisements and ads placed on search engines on the Internet. Below is a description of how the business intends to market its services to the general public. The Financial Planning Practice will also use an internet based strategy. This is very important as many people seeking local services, such as financial planners, now the Internet to conduct their preliminary searches. Mr. Doe will register the Financial Planning Practice with online portals so that potential customers can easily reach the business. The Company will also develop its own online website showcasing Mr. Doe’s experience as an asset manager, the Company’s location, and relevant contact information. The Company will maintain a sizable amount of print and traditional advertising methods within local markets to promote the financial planning and advisory services that the Company is selling. In this section, you should expand on how you intend to implement your marketing. List publications, local newspapers, radio, and other outlets that you will use to promote your business. Discuss how much money you intend to spending on marketing. 5.3 Pricing In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page. 6.0 Organizational Plan and Personnel Summary 6.1 Corporate Organization 6.2 Organizational Budget Personnel Plan - Yearly Year 2009 2010 2011 Owner $40,000 $41,200 $42,436 Practice Manager $35,000 $36,050 $37,132 On Staff Financial Specialist $65,000 $66,950 $68,959 Bookkeeper (P/T) $12,500 $12,875 $13,261 Receptionist $22,000 $22,660 $23,340 Total $174,500 $179,735 $185,127 Numbers of Personnel Year 2009 2010 2011 Owner 1 1 1 Practice Manager 1 1 1 On Staff Financial Specialist 2 2 2 Bookkeeper (P/T) 1 1 1 Receptionist 1 1 1 Totals 6 6 6 6.2 Organizational Budget (Cont.) 6.3 Management Biographies In this section of the business plan, you should write a two to four paragraph biography about your work experience, your education, and your skill set. For each owner or key employee, you should provide a brief biography in this section. 7.0 Financial Plan 7.1 Underlying Assumptions The Company has based its proforma financial statements on the following: • The Financial Planning Practice will have an annual revenue growth rate of 16% per year. • The Owner will acquire $100,000 of debt funds to develop the business. • The loan will have a 10 year term with a 9% interest rate. 7.2 Sensitivity Analysis In the event of an economic downturn, the business may have a decline in its revenues. The Company’s revenues are directly linked to the value of the clients’ accounts, and a decline in the publicly traded asset markets may cause a decline in top line income. However, these fees are generated on a recurring basis, and the business will be able to remain profitable even during an economic recession. 7.3 Source of Funds Financing Equity Contributions Management Investment $10,000.00 Total Equity Financing $10,000.00 Banks and Lenders Banks and Lenders $100,000.00 Total Debt Financing $100,000.00 Total Financing $110,000.00 7.4 General Assumptions General Assumptions Year 2009 2010 2011 Short Term Interest Rate 9.5% 9.5% 9.5% Long Term Interest Rate 10.0% 10.0% 10.0% Federal Tax Rate 33.0% 33.0% 33.0% State Tax Rate 5.0% 5.0% 5.0% Personnel Taxes 15.0% 15.0% 15.0% 7.5 Profit and Loss Statements Proforma Profit and Loss (Yearly) Year 2009 2010 2011 Sales $327,978 $393,574 $460,481 Cost of Goods Sold $20,468 $24,561 $28,737 Gross Margin 93.76% 93.76% 93.76% Operating Income $307,510 $369,012 $431,744 Expenses Payroll $174,500 $179,735 $185,127 General and Administrative $25,200 $26,208 $27,256 Marketing Expenses $1,640 $1,968 $2,302 Professional Fees and Licensure $5,219 $5,376 $5,537 Insurance Costs $3,987 $4,186 $4,396 Travel and Vehicle Costs $7,596 $8,356 $9,191 Rent and Utilities $14,250 $14,963 $15,711 Miscellaneous Costs $3,936 $4,723 $5,526 Payroll Taxes $26,175 $26,960 $27,769 Total Operating Costs $262,503 $272,474 $282,815 EBITDA $45,008 $96,538 $148,929 Federal Income Tax $14,852 $29,174 $46,682 State Income Tax $2,250 $4,420 $7,073 Interest Expense $8,738 $8,131 $7,468 Depreciation Expenses $4,107 $4,107 $4,107 Net Profit $15,060 $50,705 $83,599 Profit Margin 4.59% 12.88% 18.15% 7.6 Cash Flow Analysis Proforma Cash Flow Analysis - Yearly Year 2009 2010 2011 Cash From Operations $19,167 $54,812 $87,706 Cash From Receivables $0 $0 $0 Operating Cash Inflow $19,167 $54,812 $87,706 Other Cash Inflows Equity Investment $10,000 $0 $0 Increased Borrowings $100,000 $0 $0 Sales of Business Assets $0 $0 $0 A/P Increases $37,902 $43,587 $50,125 Total Other Cash Inflows $147,902 $43,587 $50,125 Total Cash Inflow $167,069 $98,400 $137,831 Cash Outflows Repayment of Principal $6,463 $7,070 $7,733 A/P Decreases $24,897 $29,876 $35,852 A/R Increases $0 $0 $0 Asset Purchases $57,500 $13,703 $21,926 Dividends $13,417 $38,369 $61,394 Total Cash Outflows $102,277 $89,018 $126,905 Net Cash Flow $64,792 $9,382 $10,926 Cash Balance $64,792 $74,174 $85,100 7.7 Balance Sheet Proforma Balance Sheet - Yearly Year 2009 2010 2011 Assets Cash $64,792 $74,174 $85,100 Amortized Development/Expansion Costs $17,500 $27,777 $44,222 Company Vehicle $17,000 $18,370 $20,563 FF&E $23,000 $25,055 $28,344 Accumulated Depreciation ($4,107) ($8,214) ($12,321) Total Assets $118,185 $137,162 $165,908 Liabilities and Equity Accounts Payable $13,005 $26,716 $40,990 Long Term Liabilities $93,537 $86,467 $79,397 Other Liabilities $0 $0 $0 Total Liabilities $106,542 $113,183 $120,387 Net Worth $11,643 $23,979 $45,521 Total Liabilities and Equity $118,185 $137,162 $165,908 7.8 Breakeven Analysis Monthly Break Even Analysis Year 2009 2010 2011 Monthly Revenue $23,331 $24,217 $25,137 Yearly Revenue $279,975 $290,610 $301,639 7.9 Business Ratios Business Ratios - Yearly Year 2009 2010 2011 Sales Sales Growth 0.0% 20.0% 17.0% Gross Margin 93.8% 93.8% 93.8% Financials Profit Margin 4.59% 12.88% 18.15% Assets to Liabilities 1.11 1.21 1.38 Equity to Liabilities 0.11 0.21 0.38 Assets to Equity 10.15 5.72 3.64 Liquidity Acid Test 0.61 0.66 0.71 Cash to Assets 0.55 0.54 0.51 Three Year Profit and Loss Statement Profit and Loss Statement (First Year) Months 1 2 3 4 5 6 7 Sales $26,600 $26,733 $26,866 $26,999 $27,132 $27,265 $27,398 Cost of Goods Sold $1,660 $1,668 $1,677 $1,685 $1,693 $1,702 $1,710 Gross Margin 93.8% 93.8% 93.8% 93.8% 93.8% 93.8% 93.8% Operating Income $24,940 $25,065 $25,189 $25,314 $25,439 $25,564 $25,688 Expenses Payroll $14,542 $14,542 $14,542 $14,542 $14,542 $14,542 $14,542 General and Administrative $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 Marketing Expenses $137 $137 $137 $137 $137 $137 $137 Professional Fees and Licensure $435 $435 $435 $435 $435 $435 $435 Insurance Costs $332 $332 $332 $332 $332 $332 $332 Travel and Vehicle Costs $633 $633 $633 $633 $633 $633 $633 Rent and Utilities $1,188 $1,188 $1,188 $1,188 $1,188 $1,188 $1,188 Miscellaneous Costs $328 $328 $328 $328 $328 $328 $328 Payroll Taxes $2,181 $2,181 $2,181 $2,181 $2,181 $2,181 $2,181 Total Operating Costs $21,875 $21,875 $21,875 $21,875 $21,875 $21,875 $21,875 EBITDA $3,065 $3,189 $3,314 $3,439 $3,564 $3,688 $3,813 Federal Income Tax $1,205 $1,211 $1,217 $1,223 $1,229 $1,235 $1,241 State Income Tax $183 $183 $184 $185 $186 $187 $188 Interest Expense $750 $746 $742 $738 $734 $730 $726 Depreciation Expense $342 $342 $342 $342 $342 $342 $342 Net Profit $585 $707 $829 $950 $1,072 $1,194 $1,316 Profit and Loss Statement (First Year Cont.) Month 8 9 10 11 12 2009 Sales $27,531 $27,664 $27,797 $27,930 $28,063 $327,978 Cost of Goods Sold $1,718 $1,726 $1,735 $1,743 $1,751 $20,468 Gross Margin 93.8% 93.8% 93.8% 93.8% 93.8% 93.8% Operating Income $25,813 $25,938 $26,062 $26,187 $26,312 $307,510 Expenses Payroll $14,542 $14,542 $14,542 $14,542 $14,542 $174,500 General and Administrative $2,100 $2,100 $2,100 $2,100 $2,100 $25,200 Marketing Expenses $137 $137 $137 $137 $137 $1,640 Professional Fees and Licensure $435 $435 $435 $435 $435 $5,219 Insurance Costs $332 $332 $332 $332 $332 $3,987 Travel and Vehicle Costs $633 $633 $633 $633 $633 $7,596 Rent and Utilities $1,188 $1,188 $1,188 $1,188 $1,188 $14,250 Miscellaneous Costs $328 $328 $328 $328 $328 $3,936 Payroll Taxes $2,181 $2,181 $2,181 $2,181 $2,181 $26,175 Total Operating Costs $21,875 $21,875 $21,875 $21,875 $21,875 $262,503 EBITDA $3,938 $4,062 $4,187 $4,312 $4,436 $45,008 Federal Income Tax $1,247 $1,253 $1,259 $1,265 $1,271 $14,852 State Income Tax $189 $190 $191 $192 $193 $2,250 Interest Expense $722 $718 $714 $710 $706 $8,738 Depreciation Expense $342 $342 $342 $342 $342 $4,107 Net Profit $1,438 $1,559 $1,681 $1,803 $1,925 $15,060 Profit and Loss Statement (Second Year) 2010 Quarter Q1 Q2 Q3 Q4 2010 Sales $78,715 $98,393 $106,265 $110,201 $393,574 Cost of Goods Sold $4,912 $6,140 $6,632 $6,877 $24,561 Gross Margin 93.8% 93.8% 93.8% 93.8% 93.8% Operating Income $73,802 $92,253 $99,633 $103,323 $369,012 Expenses Payroll $35,947 $44,934 $48,528 $50,326 $179,735 General and Administrative $5,242 $6,552 $7,076 $7,338 $26,208 Marketing Expenses $394 $492 $531 $551 $1,968 Professional Fees and Licensure $1,075 $1,344 $1,451 $1,505 $5,376 Insurance Costs $837 $1,047 $1,130 $1,172 $4,186 Travel and Vehicle Costs $1,671 $2,089 $2,256 $2,340 $8,356 Rent and Utilities $2,993 $3,741 $4,040 $4,190 $14,963 Miscellaneous Costs $945 $1,181 $1,275 $1,322 $4,723 Payroll Taxes $5,392 $6,740 $7,279 $7,549 $26,960 Total Operating Costs $54,495 $68,119 $73,568 $76,293 $272,474 EBITDA $19,308 $24,135 $26,065 $27,031 $96,538 Federal Income Tax $5,835 $7,294 $7,877 $8,169 $29,174 State Income Tax $884 $1,105 $1,193 $1,238 $4,420 Interest Expense $2,092 $2,053 $2,013 $1,973 $8,131 Depreciation Expense $1,027 $1,027 $1,027 $1,027 $4,107 Net Profit $9,470 $12,656 $13,955 $14,624 $50,705 Profit and Loss Statement (Third Year) 2011 Quarter Q1 Q2 Q3 Q4 2011 Sales $92,096 $115,120 $124,330 $128,935 $460,481 Cost of Goods Sold $5,747 $7,184 $7,759 $8,046 $28,737 Gross Margin 93.8% 93.8% 93.8% 93.8% 93.8% Operating Income $86,349 $107,936 $116,571 $120,888 $431,744 Expenses Payroll $37,025 $46,282 $49,984 $51,836 $185,127 General and Administrative $5,451 $6,814 $7,359 $7,632 $27,256 Marketing Expenses $460 $576 $622 $645 $2,302 Professional Fees and Licensure $1,107 $1,384 $1,495 $1,550 $5,537 Insurance Costs $879 $1,099 $1,187 $1,231 $4,396 Travel and Vehicle Costs $1,838 $2,298 $2,482 $2,574 $9,191 Rent and Utilities $3,142 $3,928 $4,242 $4,399 $15,711 Miscellaneous Costs $1,105 $1,381 $1,492 $1,547 $5,526 Payroll Taxes $5,554 $6,942 $7,498 $7,775 $27,769 Total Operating Costs $56,563 $70,704 $76,360 $79,188 $282,815 EBITDA $29,786 $37,232 $40,211 $41,700 $148,929 Federal Income Tax $9,336 $11,671 $12,604 $13,071 $46,682 State Income Tax $1,415 $1,768 $1,910 $1,980 $7,073 Interest Expense $1,932 $1,889 $1,846 $1,802 $7,468 Depreciation Expense $1,027 $1,027 $1,027 $1,027 $4,107 Net Profit $16,076 $20,878 $22,824 $23,820 $83,599 Three Year Cash Flow Analysis Cash Flow Analysis (First Year) Month 1 2 3 4 5 6 7 8 Cash From Operations $928 $1,049 $1,171 $1,293 $1,414 $1,536 $1,658 $1,780 Cash From Receivables $0 $0 $0 $0 $0 $0 $0 $0 Operating Cash Inflow $928 $1,049 $1,171 $1,293 $1,414 $1,536 $1,658 $1,780 Other Cash Inflows Equity Investment $10,000 $0 $0 $0 $0 $0 $0 $0 Increased Borrowings $100,000 $0 $0 $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 $0 $0 $0 A/P Increases $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 Total Other Cash Inflows $113,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 $3,159 Total Cash Inflow $114,086 $4,208 $4,329 $4,451 $4,573 $4,695 $4,816 $4,938 Cash Outflows Repayment of Principal $517 $521 $525 $528 $532 $536 $540 $545 A/P Decreases $2,075 $2,075 $2,075 $2,075 $2,075 $2,075 $2,075 $2,075 A/R Increases $0 $0 $0 $0 $0 $0 $0 $0 Asset Purchases $57,500 $0 $0 $0 $0 $0 $0 $0 Dividends $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Outflows $60,092 $2,595 $2,599 $2,603 $2,607 $2,611 $2,615 $2,619 Net Cash Flow $53,995 $1,612 $1,730 $1,848 $1,966 $2,084 $2,201 $2,319 Cash Balance $53,995 $55,607 $57,337 $59,185 $61,151 $63,235 $65,436 $67,755 Cash Flow Analysis (First Year Cont.) Month 9 10 11 12 2009 Cash From Operations $1,902 $2,024 $2,145 $2,267 $19,167 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $1,902 $2,024 $2,145 $2,267 $19,167 Other Cash Inflows Equity Investment $0 $0 $0 $0 $10,000 Increased Borrowings $0 $0 $0 $0 $100,000 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $3,159 $3,159 $3,159 $3,159 $37,902 Total Other Cash Inflows $3,159 $3,159 $3,159 $3,159 $147,902 Total Cash Inflow $5,060 $5,182 $5,304 $5,426 $167,069 Cash Outflows Repayment of Principal $549 $553 $557 $561 $6,463 A/P Decreases $2,075 $2,075 $2,075 $2,075 $24,897 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $0 $0 $0 $0 $57,500 Dividends $0 $0 $0 $13,417 $13,417 Total Cash Outflows $2,623 $2,627 $2,632 $16,053 $102,277 Net Cash Flow $2,437 $2,555 $2,672 -$10,627 $64,792 Cash Balance $70,192 $72,746 $75,419 $64,792 $64,792 Cash Flow Analysis (Second Year) 2010 Quarter Q1 Q2 Q3 Q4 2010 Cash From Operations $10,962 $13,703 $14,799 $15,347 $54,812 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $10,962 $13,703 $14,799 $15,347 $54,812 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $8,717 $10,897 $11,769 $12,204 $43,587 Total Other Cash Inflows $8,717 $10,897 $11,769 $12,204 $43,587 Total Cash Inflow $19,680 $24,600 $26,568 $27,552 $98,400 Cash Outflows Repayment of Principal $1,708 $1,747 $1,787 $1,827 $7,070 A/P Decreases $5,975 $7,469 $8,067 $8,365 $29,876 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $2,741 $3,426 $3,700 $3,837 $13,703 Dividends $7,674 $9,592 $10,360 $10,743 $38,369 Total Cash Outflows $18,098 $22,234 $23,913 $24,773 $89,018 Net Cash Flow $1,582 $2,366 $2,655 $2,779 $9,382 Cash Balance $66,374 $68,739 $71,394 $74,174 $74,174 Cash Flow Analysis (Third Year) 2011 Quarter Q1 Q2 Q3 Q4 2011 Cash From Operations $17,541 $21,926 $23,681 $24,558 $87,706 Cash From Receivables $0 $0 $0 $0 $0 Operating Cash Inflow $17,541 $21,926 $23,681 $24,558 $87,706 Other Cash Inflows Equity Investment $0 $0 $0 $0 $0 Increased Borrowings $0 $0 $0 $0 $0 Sales of Business Assets $0 $0 $0 $0 $0 A/P Increases $10,025 $12,531 $13,534 $14,035 $50,125 Total Other Cash Inflows $10,025 $12,531 $13,534 $14,035 $50,125 Total Cash Inflow $27,566 $34,458 $37,214 $38,593 $137,831 Cash Outflows Repayment of Principal $1,869 $1,911 $1,954 $1,999 $7,733 A/P Decreases $7,170 $8,963 $9,680 $10,038 $35,852 A/R Increases $0 $0 $0 $0 $0 Asset Purchases $4,385 $5,482 $5,920 $6,139 $21,926 Dividends $12,279 $15,349 $16,576 $17,190 $61,394 Total Cash Outflows $25,703 $31,704 $34,131 $35,367 $126,905 Net Cash Flow $1,863 $2,754 $3,084 $3,226 $10,926 Cash Balance $76,037 $78,790 $81,874 $85,100 $85,100