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Table of Contents
9.+ C6ecutive #ummary.....................................................................................................................1
9.9 Dbjectives....................................................................................................................................1
9.* Eission...........................................................................................................................................1
1hart! Fighlights...........................................................................................................................2
9.G Heys to #uccess.........................................................................................................................2
*.+ 1ompany #ummary......................................................................................................................2
*.9 1ompany Dwnership................................................................................................................2
*.* #tart:up #ummary....................................................................................................................3
.able! #tart:up...............................................................................................................................3
.able! #tart:up )unding..............................................................................................................4
1hart! #tart:up..............................................................................................................................5
*.G 1ompany Locations and )acilities.......................................................................................5
G.+ roducts and #ervices.................................................................................................................
G.9 roduct and #ervice Bescription.........................................................................................
G.* 1ompetitive 1omparison........................................................................................................!
G.G #ales Literature..........................................................................................................................!
G.I )ulfillment....................................................................................................................................!
G.2 .echnology..................................................................................................................................."
G.> )uture roducts and #ervices...............................................................................................#
I.+ Earket Analysis #ummary.......................................................................................................1$
I.9 Earket #egmentation............................................................................................................1$
1hart! Earket Analysis $ie&...................................................................................................12
.able! Earket Analysis..............................................................................................................13
I.* .arget Earket #egment #trategy......................................................................................13
I.*.9 Earket .rends...................................................................................................................13
I.*.* Earket 5eeds....................................................................................................................13
I.*.G Earket Jrowth..................................................................................................................14
I.G #ervice 'usiness Analysis....................................................................................................14
I.G.9 1ompetition and 'uying atterns.............................................................................14
I.G.* Eain 1ompetitors............................................................................................................14
I.G.G 'usiness articipants.....................................................................................................15
2.+ #trategy and ,mplementation #ummary...........................................................................15
2.9 Kalue roposition.....................................................................................................................15
2.* 1ompetitive Cdge....................................................................................................................15
2.G Earketing #trategy.................................................................................................................1
2.G.9 Bistribution #trategy......................................................................................................1
2.G.* ositioning #tatement...................................................................................................1
2.G.G ricing #trategy...............................................................................................................1
2.G.I romotion #trategy........................................................................................................1!
2.I #ales #trategy..........................................................................................................................1!
2.I.9 #ales )orecast..................................................................................................................1!
1hart! #ales Eonthly.............................................................................................................22
1hart! #ales by Year..............................................................................................................22
.able! #ales )orecast.............................................................................................................23
Page 1
Table of Contents
2.2 #trategic Alliances...................................................................................................................24
>.+ Eanagement #ummary.............................................................................................................24
>.9 Eanagement .eam.................................................................................................................24
>.* ersonnel lan..........................................................................................................................24
.able! ersonnel..........................................................................................................................25
=.+ )inancial lan................................................................................................................................2
=.9 ,mportant Assumptions........................................................................................................2
.able! Jeneral Assumptions...................................................................................................2
=.* 'reak:even Analysis...............................................................................................................2!
=.* 'reak:even Analysis...............................................................................................................2!
1hart! 'reak:even Analysis....................................................................................................2!
.able! 'reak:even Analysis.....................................................................................................2!
=.G rojected rofit and Loss.....................................................................................................2!
1hart! Jross Eargin Yearly.....................................................................................................2!
.able! rofit and Loss................................................................................................................2"
1hart! rofit Eonthly.................................................................................................................3$
1hart! rofit Yearly.....................................................................................................................3$
1hart! Jross Eargin Eonthly.................................................................................................2"
=.I rojected 1ash )low...............................................................................................................31
1hart! 1ash...................................................................................................................................32
.able! 1ash )low.........................................................................................................................31
=.2 rojected 'alance #heet......................................................................................................33
=.2 rojected 'alance #heet......................................................................................................33
.able! 'alance #heet.................................................................................................................33
=.> 'usiness 7atios........................................................................................................................33
=.> 'usiness 7atios........................................................................................................................33
.able! 7atios.................................................................................................................................34
.able! #ales )orecast...........................................................................................................................1
.able! ersonnel....................................................................................................................................3
.able! ersonnel....................................................................................................................................3
.able! Jeneral Assumptions.............................................................................................................4
.able! Jeneral Assumptions.............................................................................................................4
.able! rofit and Loss..........................................................................................................................5
.able! rofit and Loss..........................................................................................................................5
.able! 1ash )low...................................................................................................................................!
.able! 1ash )low...................................................................................................................................!
.able! 'alance #heet..........................................................................................................................."
.able! 'alance #heet..........................................................................................................................."
Page 2
%2& Industries
9.+ C6ecutive #ummary
F*+ ,ndustries, ,nc. $F*+ ,ndustries& provides the service of ion e6change portable tanks. .his
is the process of purifying water for industrial purposes. F*+ ,ndustries will take advantage of
an unsatisfied market need for segregated resin regeneration on a portable basis. .he company
will primarily focus its marketing strategies on offering segregated regeneration services to the
untapped market of customers who re-uire high:-uality regeneration for their deioniLed $B,&
water treatment facilities. .he facility that F*+ ,ndustries will utiliLe is located in 5ewark,
1alifornia and is already in limited production. )ull production will begin at the end of
#eptember, with sales growing gradually to near capacity by the end of the first year, with very
healthy gross sales in the first year, and increasing in the second and third years.
9.9 Dbjectives
.he primary objectives are!
9. .o segment the market for portable regeneration service by stressing F*+ ,ndustriesMs
capability at providing segregated regeneration. .he goal is to reach monthly sales of 9,=9+
cu ft of segregated resin by the end of the first year.
*. .o build up a dealership network of 92 knowledgeable and efficient water service companies
who will represent F*+ ,ndustries in areas outside direct sales from the factory.
G. .o set up a bulk regeneration facility with a capacity of I+ cu ft daily, and sell its full
capacity in the large general portable e6change service market through its own sales force,
and through a dealership network.
9.* Eission
F*+ ,ndustriesMs mission is to segment the market for pure water by providing niche products
to specialiLed industry sectors who are otherwise not properly serviced by large pure water
suppliers. #egregating a customerMs F*+ ,ndustries resin and regenerating it on a portable tank
basis to hospital dialysis units is an e6cellent e6ample of such a niche product that stresses
-uality and service to users who are prepared to pay a premium price.
Page 1
%2& Industries
1hart! Fighlights
9.G Heys to #uccess
F*+ ,ndustriesMs primary keys to success are!
9. &ood '(ality control in the factory. 1ustomers for high purity water business have a
very low tolerance threshold for flaws.
*. )ast response. ,n the case of most of F*+ ,ndustriesMs customers, the cost of the water is
not a major element in their over:all costs, but a very e6pensive shut:down could result due
to poor or slow servicing.
G. *igh"profile allegiances. Hey to over:all company success is connected closely with
success in achieving the goal of developing a dealership network of service:oriented water
companies.
*.+ 1ompany #ummary
F*+ ,ndustries took over a customer base and a small -uantity of assets from a predecessor
company. 'y moving to a new location with more space, and by designing an efficient
productive capability, F*+ ,ndustries will be ready to aggressively penetrate the growing market
for portable B, e6change by Dctober 9<<<.
*.9 1ompany Dwnership
F*+ ,ndustries was established in Dctober 9<<; through the purchase of the assets of
1ommercial Waters #ystems, ,nc. $1W#,&. 1W#, was an under:capitaliLed, cash flow:starved B,
e6change tank service provider. .hree hundred si6ty of the shares of F*+ ,ndustries are owned
by Bavid 7. #mith, vice president sales and applications of 7D#Y#, a large manufacturer and
system designer of water treatment e-uipment. )ive hundred si6ty of the shares are owned by
Nohn Nones who is regional sales manager for BA)). .he remaining *++ shares are currently
held by the daughter of the seller, but are e6pected to soon be transferred to the new owners.
Page 2
%2& Industries
Additional investors have e6pressed a willingness to invest. .his would help bring in needed
administrative e6pertise, while also increasing the e-uity base.
*.* #tart:up #ummary
Assets of a former operating company were bought out and customers of the former company
continue to be serviced by the purchasing company, F*+ ,ndustries, partly from continuing
operations and partly from farming regeneration work out. Fowever, this plan is being written
as a start:up primarily because there are no reliable financial figures for prior years for
comparison purposes, and partly because of the move to new facilities and the siLable
investment in new plant and e-uipment involved. Bue to certain misrepresentations by the
seller, the agreed sales price is under protest. ,t is e6pected that the matter will be satisfactorily
resolved by payment of a much reduced amount.
.he chart and table below summariLe the start:up re-uirements for F*+ ,ndustries.
.able! #tart:up
Start-up
Requirements
Start-up Expenses
Legal $10,000
Stationery etc. $850
Brocures $!,500
"onsultants $5,000
#nsurance $0
Rent $0
Researc an$ %e&elopment $0
Expense$ Equipment $0
'ter $0
(otal Start-up Expenses $)),*50
Start-up +ssets
"as Require$ $1),,))*
Start-up #n&entory $10,000
'ter "urrent +ssets $-0,000
Long-term +ssets $))0,000
(otal +ssets $,,,,))*
Total Requirements $,!!,5.*
Page 3
%2& Industries
.able! #tart:up )unding
Start-up Funding
Start-up Expenses to /un$ $)),*50
Start-up +ssets to /un$ $,,,,))*
(otal /un$ing Require$ $,!!,5.*
+ssets
0on-cas +ssets 1rom Start-up $*)0,000
"as Requirements 1rom Start-up $1),,))*
+$$itional "as Raise$ $0
"as Balance on Starting %ate $1),,))*
(otal +ssets $,,,,))*
Lia2ilities an$ "apital
Lia2ilities
"urrent Borro3ing $)1,*5,
Long-term Lia2ilities $180,000
+ccounts 4aya2le 5'utstan$ing Bills6 $!1,,0-
'ter "urrent Lia2ilities 5interest-1ree6 $1!,810
(otal Lia2ilities $).-,5.*
"apital
4lanne$ #n&estment
7im 8unt $5!,000
9i:e 4ace: $*!,000
0e3 #n&estors $.5,000
'ter $)0,000
+$$itional #n&estment Requirement $0
(otal 4lanne$ #n&estment $18.,000
Loss at Start-up 5Start-up Expenses6 5$)),*506
(otal "apital $1!,,!50
(otal "apital an$ Lia2ilities $,,,,))*
Total Funding $,!!,5.*
Page 4
%2& Industries
1hart! #tart:up
*.G 1ompany Locations and )acilities
.he facilities are located in a rented building on an industrial estate in 5ewark, 1alifornia.
A description of the technology involved in the production can be found in section G.2
$.echnology&. .he following is a description of the production layout.
9. 1ity water is fed into the building and goes directly to a carbon filter tank to remove organic
materials and chlorine.
*. A centrifugal pump is installed, in the unlikely event that city water pressure falls below I+
pounds per s-uare inch $psi&.
G. A hot water boiler is provided to supply hot water $9++ degrees )& from part of the incoming
city water. .his water is needed for anion treatment due to the specific gravity of the caustic
material.
I. .he heated water then passes through a cation and an anion filter tank.
2. .he deioniLed hot water goes to the caustic tank where it mi6es with the caustic material
used to regenerate at the anion pad.
>. art of the unheated incoming city water is deioniLed by passage through similar cation and
anion tanks. .hese tanks, as well as the tanks deioniLing the heated in:coming water, are
regenerated automatically at night when production is shut down.
=. Water, not F*+ ,ndustries, is used at the spent tank staging area to empty the incoming
tanks into the separation cones, and more water $F*+ ,ndustries& goes to the cation
regeneration pad for use in adduction as well as flushing of the regenerate.
Page 5
%2& Industries
;. .he rinse water, as well as the acid and caustic solutions, now pass into an ;,+++:gallon
blue tank where, with the help of compressed air for mi6ing, neutraliLation takes place to
obtain the allowed h level.
<. A 2++:gallon neutraliLation tank and a *2+:gallon polishing tank are provided prior to
disposal of the waste water into the city sewer system.
G.+ roducts and #ervices
.he company is in the water purification business. F*+ ,ndustries is engaged in a specific
branch of this business called O#ervice deioniLation.O Within this branch, the company plans to
emphasiLe a further service specialiLation known as Osegregated regeneration,O as opposed to
Obulk regeneration.O .his concept is e6plained in the following sections.
G.9 roduct and #ervice Bescription
)or a simplified e6planation of how deioniLation purifies water please see #ection G.2
$.echnology&.
.he service products offered by F*+ ,ndustries are segregated as well as bulk regeneration of
portable F*+ ,ndustries e6change tanks. .he service is offered in three tank siLes of G.>, *.2,
and 9.I cubic feet $cu ft&. ,n these siLes, the company will offer!
Ei6ed bed $combination of anion and cation regenerated resin&
1ation regenerated resin
Anion regenerated resin
1arbon $used for pre:filtering&
.he application of portable deioniLed water is broad. ractically all industries using water in
processing are potential accounts. #iLe of company is rarely a determining factor. .here are
applications in electronics and high pressure boilers where flow rates of several hundred gallons
per minute are provided by portable e6change systems. .he main uni-ue benefits are!
9. .he client does not have to incur substantial capital costs to install an in:house deioniLation
plant. .his could run over P2+,+++. .he company can merely rent the portable tanks $or buy
them for appro6imately P9,*++ each& and pay for the regeneration service when the tanks
become depleted.
*. .he company also saves by not needing e6perienced technicians to maintain an in:house
plant.
G. #pace is another important factor. An in:house F*+ ,ndustries capability re-uires a great
deal of space, whereas a portable tank system using fle6ible hose connections can fit
virtually anywhere in minimal space.
I. Case of installation. F*+ ,ndustries capability can be arranged virtually in a day and can be
easily e6panded to accommodate growth.
2. .here are no chemicals, nor regenerate waste to be handled or concerned with on:site..
Page
%2& Industries
>. )le6ibility in water -uality provided. 7esin types can be easily changed in tanks if water
-uality re-uirements change.
=. Cven locations that have their own in:house F*+ ,ndustries system often use portable B, as
a back:up since a shut down can be very e6pensive.
roviding the service to a customer is simple, usually re-uiring only minimal e-uipment. F*+
,ndustries is available from a large competitor, A# )ilter and a few small competitors, such as
)luid #olutions of Lowell, EA. Fowever, none of the competition can provide segregated
regeneration $#ee 1ompetitive Analysis below&.
G.* 1ompetitive 1omparison
,n the 5orthern 1alifornia area, outside of a small company in Lowell which has to farm out its
regeneration business to a OB,O company in 5evada, #imply 1lean in Dregon, and a couple of
independent 1ulligan agents, there is only the very large, fully:integrated A# )ilter $owner of
1ulligan& to compete with. .his company, by virtue of its siLe and involvement in all fields of
water treatment, is not suited to satisfying small users of B,, nor are they able to respond to
niche needs. )or e6ample, A# )ilter cannot handle segregated resin. All resin treated by A#
)ilter is regenerated on a bulk basis, which means that various customersM depleted resin tanks
are combined. .his is not a problem for many users of B,, but the dialysis department of a
hospital might well object to their resin being co:mingled with resin used in the metal plating
industry. F*+ ,ndustries plans to specialiLe in portable segregated resin service. A# )ilter can
try to service customers with a desire for segregated B, by promising to always supply tanks
with new resin, however, there are technical problems with this.
A# )ilterMs prices for cation and anion regeneration are PG9.*2Qcu ft and mi6ed bed PIG.+2Qcu
ft. F*+ ,ndustriesMs prices for the same bulk regeneration are PG* and PIG, respectively. .he
primary market thrust of F*+ ,ndustriesMs sales will be the segregated regeneration which A#
)ilter does not offer. .his product sells at a premium $P2=Qcu ft and P>GQcu ft, respectively&.
#ome small players in the market offer regenerated resin $not segregated& in a price range of
P>G to P;+ per cu ft $mi6ed bed&.
G.G #ales Literature
#ales literature will be written and printed. A provision for this has been made in the projected
sales and marketing e6penses.
G.I )ulfillment
.he service provided by F*+ ,ndustries is the regeneration of ion e6change portable tanks. .he
tanks themselves are supplied to customers on either a monthly rental basis or offered for sale.
.hese tanks, and any other hardware, are readily available from a number of suppliers. 'y
virtue of the ownersM long involvement in the industry, they are fully knowledgeable of e6isting
sources for all hardware, including resin, as well as the supply of the two major chemicals used
in the process of regeneration. .he only other variable cost of production is the salt used in the
brine bath, this is also readily available from a number of suppliers.
Page !
%2& Industries
G.2 .echnology
,on e6change is a major means of purifying water for industrial purposes. .he degree of purity
depends on the source of the water and itMs use. 1ompanies, ranging from car washes to the
pharmaceutical and semiconductor industries all need various amounts and degrees of purified
water. ,on e6change is a chemical process by which ions, or ionic substances that are
considered OundesirableO in water, are reduced or removed from water by use of ion e6changers
or resins. Eost ground water contains unwanted dissolved substances, such as calcium and
magnesium, whose molecular structure contain charged ion particles.
.he most common impurities with ions of a positive charge are! sodium, calcium, magnesium,
potassium, iron, and manganese. .hese are called cations. .he unwanted dissolved substances
having negative ion charges, known as anions, are! bicarbonate, chloride, carbonate, sulfate,
nitrate, and bisilicate. When a substance separates into ions, each ion is now able to combine
with another ion with opposite charge, even if that ion is from a totally different type of
molecule. #ubstances only separate into ions when immersed in water molecules. )or e6ample,
a molecule of hydrochloric acid is made up of a hydrogen atom and a chloride atom.
Fydrochloric acid $F1L&, when immersed in water, will split apart into one positively charged
hydrogen cation $FR& and one negatively charged chloride anion $1L:&. ,f sodium hydro6ide
$5aDF& were added to this solution, the 5aDF would split into 5aR and DF:, which would
combine with the opposite charges of the hydrochloric acid ions to form sodium chloride, better
known as Otable saltO $5aR1L:& and leftover hydrogen and hydro6ide atoms $FRDF:&. .he field
of deioniLation, known as B, for short, utiliLes this natural phenomenon by designing a cation
e6change resin which will substitute hydrogen atoms $FR& for virtually all of the other cations,
and designing an anion e6change resin which will substitute hydro6yl ions $DF:& for virtually all
of the other anions. 'y means of this process we end up with only FR and DF: which is
e-uivalent to F*D $water&. 'y forming this demineraliLed water, we create water which is no
longer a conductor. We can measure the purity using an ohm meter. Dhms measure resistance.
.he higher the ohm count, the lower the conductivity. F*+ ,ndustries is routinely formed to 9;
mega ohms per centimeter, which is very close to Lero conductivity $9;.*G at *2 degrees
1entigrade&. Without giving lengthy chemical e6planations, what happens in the process is as
follows!
9. 1ity tap water is first passed through a carbon filter to remove chlorine, sand, and other
unwanted substances. #ometimes, reverse osmosis and ultraviolet light are used to remove
non:ioniLed substances, organic materials, etc., prior to the deioniLation stage.
*. .he water then passes into a specially:treated cation resin. .his resin takes the form of
small beads located inside a tank. .he positively charged ions from the unwanted dissolved
minerals will attach themselves to the resin. .his happens because the resin contains an
over:e-uilibrium abundance of hydrogen ions $FR& which are Obumped offO of the resin
beads and replaced by the positively:charged, unwanted, in:coming cation ions. .he
Obumped offO free hydrogen ions then pair up with anions which are left in the water to form
acids.
G. .he Ode:cationiLedO water then passes to a tank of anion resin to catch the unwanted
negatively charged ions that have dissolved in the water. Fere, the anions and the anion
portions of the acids attached to the hydrogen are attracted to, and held by, the positive
sites on the anion e6change resin beads. .hey do this by kicking off the negative hydro6yl
ions that were put on the beads $again in over:abundance&. .he leftover hydrogen portions
of the acids $FR& now join the freed hydro6yl ions $DF:& to form water $F*D&.
Page "
%2& Industries
I. ,f a very high degree of purity is called for, the water will ne6t pass into what is called a
Omi6ed bedO which normally contains resin in a ratio of one part cation resin to two to three
parts anion. #teps 9:G occur again here thus catching the last traces of unwanted ions of
the dissolved substances.
2. .he tanks of resin will continue to purify the water flowing through them until the resin balls
e6pand and their capacity to catch ions is depleted.
>. .he water flow must stop until the tanks are replaced with tanks containing regenerated
resin.
=. .o regenerate the cation resin, a solution of acid is used to bombard the resin removing all
the previously:caught positively:charged ions. .hen the tank is flushed to remove any
e6cess acid. .he anion resin tank is also given a caustic solution to bombard the previously:
caught negative ions. .he anion resin is then flushed to remove any residual caustic
solution.
;. .he tanks now contain regenerated resin and the ion e6change process can continue with
the tap water turned on.
.he regeneration process can take place at the location where the water is being purified,
however, most users of F*+ ,ndustries do not install the e6pensive e-uipment to do this but
simply arrange for a service provider, such as F*+ ,ndustries, to replace the tanks and perform
the regeneration process off:site.
As high:tech industries, such as electronics, communications, and pharmaceuticals, continue to
grow, there will almost certainly be increasing use of deioniLation technology and deioniLed
water. As instrumentation and analysis procedures improve, controlling and monitoring the
deioniLation process will be easier and more efficient, and this will, undoubtedly, help create
new uses for deioniLation that have not yet appeared, as well as make F*+ ,ndustries more
affordable to sectors now using other methods of purification. As more people in the water
treatment industry become familiar with the B, process, the industry for F*+ ,ndustries and
e-uipment will benefit.
G.> )uture roducts and #ervices
,n addition to bulk and segregated portable F*+ ,ndustries, the company plans to e6pand sales
of filters and B, cartridges. .hese sales have been disregarded in this business plan, but they
could become more significant in the future. .hese products lend themselves to mail order type
sales, as they are small and lightweight. 1artridges are disposable items. F*+ ,ndustries also
has plans to develop a reusable shipping container for its smallest $;O 6 9;O& B, e6change tank
so that this can also be shipped via A#. .his product will be marketed on a website, as well as
through conventional direct mail and yellow page advertising.
,n the future, a logical off:shoot of the B, business is reverse osmosis $7QD& used in conjunction
with B, e6change tanks. .he inclusion of 7QD in front of the B, tanks will e6tend the capacity of
an e6change tank by 9+++3. .his addition to the product line could become a substantial
element of total company sales.
7everse osmosis and electric reversing deioniLation are beginning to compete with e6change
tank B, technology. F*+ ,ndustries plans to offer service contracts to maintain this e-uipment
at the customerMs location. .his e-uipment may to either sold or leased.
Page #
%2& Industries
I.+ Earket Analysis #ummary
.he total market in 5orthern 1alifornia for F*+ ,ndustries is between >=+,+++ and <*2,+++ cu
ft of resin annually. F*+ ,ndustriesMs total productive capacity will be only G>,I++ cubic feet, or
G.<:2.I3. #ince F*+ ,ndustries will have the uni-ue capability of performing segregated
regeneration, which is of special interest to the medical industry $dialysis, labs and
pharmaceutical&, the company will emphasiLe sales efforts in this segment for high purity F*+
,ndustries. .his segment is estimated at 9>=,+++ cu ft annually. 5e6t in terms of marketing
emphasis will be the electronic $**G,+++ cu ft& and machine tool industries.
I.9 Earket #egmentation
.he market for F*+ ,ndustries encompasses many industries, and within them there is a wide
range of purity needs. At the low end, a car wash might use F*+ ,ndustries in the final rinse
only. .heir need for purity might be only .2 Eegohms $Dhms measure resistance&. Water is only
a good conductor because of the -uantity of dissolved solids in the water. As the ion e6change
process lowers the level of total dissolved solids $.B#& the resistance, measured in ohms,
increases.
A purity level of .2 Eegohms is pure enough for a car wash final rinse cycle, but not even close
to pure enough for a electronics wafer manufacturer. .hey would need 9; Eegohms, at which
point the water would be pure and incapable of acting as a conductor. Jenerally speaking, those
sectors of the market that need the highest levels of purity are the customers for F*+
,ndustriesMs main niche product of segregated B, e6change service. .his means that the resin
coming back from the customer is never mi6ed with any other companyMs resin. .his is a very
strong sales feature when dealing with dialysis units of a hospital, labs and pharmaceutical
manufacturers, and electronics makers. .hese customers are happy to pay a premium over the
price charged for bulk B, regeneration service because they do not want their resin co:mingled
with resin coming from a metal plater or a car wash.
Suantifying the market for segregated portable F*+ ,ndustries is not easy. Anlike the market
for used cars, metal furniture, or nearly every product one can think of, there are no readily:
available statistics on the market for portable B, e6change. .here is overwhelming agreement
that A# )ilter has the commanding market share of B, e6change business, opinions range from
;2 to <23 majority.
According to the publisher of AL.7AA7C WA.C74, $Eay:Nune 9<<< volume 9>, number 2& A#
)ilter had sales of P9 billion in 9<<+, and has grown to P2 billion in 9<<<. ortable B, e6change
is only a small portion of their business. #ales in 5orthern 1alifornia of only B, portable
e6change is estimated at P*2 million. .his has been confirmed from several sources. )irstly, one
of the owners of F*+ ,ndustries is a former employee of A# )ilter. ,n 9<<>, their B, e6change
business reached P9* million. .his was only >23 of the market. .hen the company ac-uired
1ulligan, adding another P; million in portable B, e6change business in 5orthern 1alifornia, and
bringing the total to P*+ million. ,t is assumed that sales have grown to P*2 million over the
past several years.
'ased on a recent -uotation received by A# )ilter for a typical portable B, e6change set:up for
a 2:gallon per minute customer, the costs come to P2<+ for a total of 9I.I cu ft of regenerated
resin. .his amounts to PI9 per cubic foot. A sales level of P*2 million would translate into
>9+,+++ cubic feet. Assuming that A# )ilter has as much as <+3 of the market, 9++3 of the
market for portable B, e6change in the 5orthern 1alifornia states would total appro6imately
>=+,+++ cu ft annually.
Page 1$
%2& Industries
.he relationship between input water and B, e6change capacity is charted. Assuming in:coming
water -uality of *++ parts per million of .B# in the far left column, a G.> cu. ft tank of
regenerated resin can handle 9+,;++ gallons. .his means that an average user with a flow rate
of 9+ gallons per minute would use up a G.> cu ft tank in *.2= days, or 9.I cu ft per day.
Assuming the salesman was accurate in his statement of *,+++ customers, this would work out
to ;I+,+++ cu ft of regenerated portable B, e6change business per year. .his figure is
somewhat greater than the figure of >9+,+++, however, the subject of this business plan, F*+
,ndustries, will have a productive capacity of only 9I+ cu ft per day, which represents between
I.23 and >.G3 of the total market in 5orthern 1alifornia.
.aking the midpoint estimate for the total 5orthern 1alifornia market of =;+,+++ cu ft annually,
these high purity users would represent a market 22;,+++ cu ft
Fospital Bialysis Anits and #tand alone 1linics!
1alifornia lists 9> stand:alone dialysis clinics, many of whom have multiple locations with
varying numbers of stations. Cvery dialysis clinic, as least in Eichigan according to 'C#1D, use
F*+ ,ndustries for polishing, after initially running the water through a reverse osmosis system.
Fospitals also have dialysis units. ,n addition, there is blood analysis work which is normally
done using OwetO analysis e-uipment that re-uires F*+ ,ndustries. Assume this sector
represents only 9+3 of the high purity market, or 22,+++ cu ft annually.
Labs and pharmaceutical Eanufacturers!
A list of labs and pharmaceutical makers in 5orthern 1alifornia contains GG+ names. A sample
calling indicated that some use no pure water, others use such small -ualities $9+ galsQmonths&
that they buy the water from suppliers like Fubbard:Fall, already made up. Dthers use so much
F*+ ,ndustries that they have their own built:in B, system. .he rest who have flow rate needs
of between one and *+ gallons per minute are in the range most economically serviced by
portable B, e6change. Assume this to represent *+3 of the 22;,+++, or 99*,+++ cu ft.
Clectronic Eanufacturers!
#emiconductor manufacturers and other makers of electronic components need pure water to
flush with. As microprocessors use wafers of ever:decreasing siLe, the re-uirements for pure
water to rinse with increase, as do various other additional micro filtering. A list of electronics
manufacturers in 5orthern 1alifornia names 9;< makers. Assume this sector represents I+3 of
22;,+++, or **G,+++ cu ft.
Eachine .ools and arts!
.his is one of the fasting growing sectors as more and more manufacturers conform to the ,#D
<+++ standard, which re-uires delivered parts to be clean $defined as rinsed thoroughly with
water of one Eegohm purity or better&. .his category includes a need for F*+ ,ndustries in
machines consuming cutting oil, any machine with cooling systems, and other uses. Assume
this sector represents G+3 of 22;,+++, or 9>=,+++ cu ft.
Page 11
%2& Industries
Dther!
.his sector of the market will represent the market for B, e6change water lower than one
Eegohm in purity. Assume that the following industries take up the remaining G+3 of the total
market. #ome industries that would be included in this OotherO category would be!
1ar washes need F*+ ,ndustries for the final rinse
)ood and beverage industry would use it for improving taste and te6ture of baked goods,
cutting and blending alcoholic beverages, dissolving food colors, etc.
1osmetics industry needs it for the production of shampoo, li-uid soaps, cold creams, hand
lotions, nail polish remover, permanent waving solutions, rubbing alcohol, and hydrogen
pero6ide.
Clectroplating industry utiliLes F*+ ,ndustries in anodiLing, electro:tinning, rinsing, rust
proofing, and actual plating with various metals such as nickel, copper, silver, and
chromium.
1eramics industry re-uires it to control pF in preparation of slips and glaLes, rinsing clay
pieces, producing enamel.
.e6tile industry uses F*+ ,ndustries insteam irons and other steaming e-uipment,
humidification systems, as well as rinsing, dying and bleaching processes.
7ailroad industry for high pressure boilers, cooling systems and storage batteries and for
many applications where steam is used&
Dthers, such as applications for grinding optical lenses, silvering solutions for mirrors,
manufacturers of blueprint paper, manufacturers of ice, humidification of gas supplies to
superchargers of high speed aeronautical engines, growing orchids, etc.
.he chart and table below summariLe the total market potential for the B, e6change services in
5orthern 1alifornia.
1hart! Earket Analysis $ie&
Page 12
%2& Industries
.able! Earket Analysis
Market Analysis
;ear 1 ;ear ) ;ear * ;ear , ;ear 5
4otential "ustomers <ro3t "+<R
%ialysis =nits )> 55,000 5!,100 5.,))) 58,*!! 5-,5** ).00>
La2s an$ 4armaceuticals 5> 11),000 11.,!00 1)*,,80 1)-,!5, 1*!,1*. 5.00>
Electronics 9anu1acturers 0> ))*,000 ))*,000 ))*,000 ))*,000 ))*,000 0.00>
9acine (ool an$ 4arts .> 1!.,000 1.8,!-0 1-1,1-8 )0,,58) )18,-0* ..00>
'ter 10> ))),000 ),,,)00 )!8,!)0 )-5,,8) *)5,0*0 10.00>
Total 5.,*> ..-,000 81-,5-0 8!*,5)0 -11,08, -!),!0* 5.,*>
I.* .arget Earket #egment #trategy
.he target markets that will receive the most attention will be the sectors which re-uire the
highest levels of pure water. .his means the =+3 of the market that wants -uality of one
Eegohm or better. Within this sector, -uantified as 22;,+++ cu ft annually, F*+ ,ndustries will
emphasiLe those users wanting the top echelon of purity $9; Eegohms&..his sector of the
market might be only one third of the 22;,+++, but even at one third $9;>,+++&, it totals more
than G++3 of F*+ ,ndustriesMs total capacity, including its bulk portion.
I.*.9 Earket .rends
Dne notable trend in industries is to out:source. 1hief financial officers analyLe the costs of
producing something in:house versus the costs of farming it out. Water purification is no
e6ception. Although many large users of F*+ ,ndustries will want to set up their own in:house
capacity, the capital costs, the maintenance costs, and the costs of dealing with regenerate
waste often make B, portable e6change a more economical solution. Bown:siLing within a
company with its own pure water manufacturing capability often will lead to a management
decision to shut down their in:house plant and switch over to portable service.
Another trend is for more and more industries to need higher degrees of purity in their
manufacturing process, which results in an ever:growing market for F*+ ,ndustries.
I.*.* Earket 5eeds
.he reasoning behind the attention to the highest purity sector of the market is that F*+
,ndustries is able to provide segregated B, e6change service. A customerMs in:coming tanks for
regeneration are tagged, and after regeneration, the same resin is returned to the customer.
.his specialiLed service is a major selling feature over A# )ilter, who must co:mingle customersM
resin in a bulk regenerating facility. Also, bulk regeneration will not achieve the same
deioniLation capacity as F*+ ,ndustriesMs segregated method which utiliLes more chemicals and
longer regeneration times. A customer dealing with blood can easily be sold on segregated resin
as he would not feel comfortable that his resin would be co:mingled with resin used in a totally
different industry.
,n addition to the feature mentioned above, F*+ ,ndustries will concentrate on those customers
who place a premium on response speed and intensity of service. Again, mainly the higher
-uality users of F*+ ,ndustries e6change, where a shut:down would be very e6pensive, will
demand the highest degree of -uality available. #egregated e6change service from a smaller
supplier is much more likely to satisfy than a huge conglomerate like A# )ilter where portable
e6change can only be done on a bulk batching basis and represents only a small part of their
overall business.
Page 13
%2& Industries
I.*.G Earket Jrowth
.he market growth percentages used in the market analysis table were obtained from various
articles appearing in AL.7AA7C WA.C74, the definitive journal of high:purity water. #pecific
articles can be located from an inde6 on their website, www.talloaks.comQ.
I.G #ervice 'usiness Analysis
.he industry for providing portable F*+ ,ndustries service is dominated by one very large
company::A# )ilter. A# )ilter controls between <+ to <23 of the F*+ ,ndustries service
business in 5orthern 1alifornia. .he company has grown from P9 billion to over P2 billion in the
past si6 years, primarily through an ac-uisition binge. .he company is now finaliLing its sale to
KivendiMs Jenerale des Cau6 water subsidiary which will result in combined sales of P9* billion,
making it the largest water business in the world. Driginally, A# )ilterMs primary focus was
industrial and high purity water. ,ts ac-uisitions in other areas include drinking water, waste
water, municipal water, and water supply.
5ow, less than *+3 of its activities relate to technologies and markets connected with high
purity water. A much smaller percentage is connected with F*+ ,ndustries, and a still:smaller
percentage concerned with B, e6change service. After their merger, the percentage will drop
even further from *+3 to eight percent. .his situation has resulted in a growing dissatisfaction
with A# )ilterMs services for F*+ ,ndustries e6change. 'oth owners of this project have been
hearing complaints from A# )ilter customers for -uite some time. .his is not just a condition
evident in 5orthern 1alifornia, other sections of the country have noticed it and competitors to
A# )ilterMs B, e6change business have started to grow.
I.G.9 1ompetition and 'uying atterns
Asers of F*+ ,ndustries have had little choice in regards to their provider. ,t is regenerated on a
bulk basis only, with no option for segregated regenerated resin $see section on Earket
#egmentation&. #ome small customers have obtained the B, e6change service through their
local 1ulligan man or similar water serviceman who in turn obtains it from A# )ilter. .he fact
that some small players in the market can capture some of this B, e6change business from A#
)ilter despite a higher price $P>G:P;+ per cu ft versus PI+ per cu ft from A# )ilter& is a good
indication of the importance that service plays in the buying decision. 7arely does the price of
F*+ ,ndustries represent a significant variable production cost in a manufacturing process.
Euch more of a factor is worry about -uality level and service response time.
I.G.* Eain 1ompetitors
,n reaction to the service complaints of customers for A# )ilterMs B, e6change, a couple of small
competitors have sprung up in 5orthern 1alifornia. )luid #olutions in Lowell is one such
company. .his company has been supplying customers with F*+ ,ndustries e6change although
they have no regeneration facilities of their own. .hey merely service the customers and send
the tanks to a regeneration facility of another B, e6change company in ennsylvania.
.he prices charged by all local companies to regenerate are between P>G and P;+ per cu ft for
mi6ed bed. .hey charge P*+ to PG+, depending on tank siLe, as a monthly rental charge.
.he market in 5orthern 1alifornia is ripe for growth in competitors to A# )ilter which does not
provide segregated regeneration and whose regenerated resin, on a bulk batch basis, will not
serve as high a flow rate as non:bulk regeneration.
Page 14
%2& Industries
I.G.G 'usiness articipants
,ndustry participants are varied, as there are several means of obtaining purified water. .here
are companies which design and engineer reverse osmosis e-uipment. .his e-uipment has a
siLable share of the water market at the end close to the municipal water inlet. 7everse osmosis
$7QD&, in conjunction with carbon filtering and ultraviolet light, is used $for e6ample in dialysis&
to bring the .B# down to a lower level. ,on e6change, either fi6ed or portable, is then used to
polish away the remaining impurities. Dther companies may supply e:cell e-uipment which
deioniLes electrically. .his technology has not advanced sufficiently to compete with traditional
F*+ ,ndustries but is still occasionally sold in conjunction with a 7QD system as the e:cell can
only handle small levels of .B#. #ome industry participants are primarily engaged in water
softening and water filtration for drinking and household purposes. .hese companies may also
utiliLe green sand to remove iron and magnesium hardness derived from aging municipal piping
systems.
,n short, there is a full range of industry participants from the local 1ulligan service
representative mainly involved in private households, to large companies involved in
engineering, design, consulting, component manufacturing, waste water treatment, etc. With
respect to the narrower market for F*+ ,ndustries, there are chemical companies who supply
$by the gallon& F*+ ,ndustries to very small users. .here are a few small companies engaged in
B, e6change service who do this only as an adjunct to their main business, such as water
softening, and who only act as a distributor of B, e6change regeneration facilities located
outside of 5orthern 1alifornia.
2.+ #trategy and ,mplementation #ummary
'esides direct sales effort to large users of F*+ ,ndustries, a major element of the companyMs
marketing efforts will be to develop a distributor network through e6isting local water service
companies. .hese companies provide local water service to small companies and homes
throughout 5orthern 1alifornia. Eost of their business takes the form of water filtering, water
softening, reverse osmosis maintenance, swimming pool service, etc. .he best of these will be
recruited to add F*+ ,ndustries service to their product line.
2.9 Kalue roposition
F*+ ,ndustries will offer segregated resin regeneration to customers wanting the highest levels
of water purity. #egregated regeneration is not offered by any other company in 5orthern
1alifornia and indications are, based on present pre:start:up sales, that users of F*+ ,ndustries
are willing to pay a substantial premium for it. ,t represents a form of peace of mind which
dialysis units, laboratories, etc. feel is important.
.he second most important value proposition is service response. When F*+ ,ndustries tanks
need changing customers insist on, and will receive, an immediate response.
2.* 1ompetitive Cdge
F*+ ,ndustriesMs ability to segregate a customerMs resin and return it to him regenerated to the
ma6imum limit, should put the company in a strong competitive position.
Appro6imately all of F*+ ,ndustriesMs business will be directed at the portable service B,
market. .his market emphasis should -uickly be noticed by users of F*+ ,ndustries, who at
Page 15
%2& Industries
present rely on A# )ilter. A# )ilterMs product range growth through ac-uisition and buy:outs has
de:emphasiLed the importance of its F*+ ,ndustries e6change service.
Fence, the two major aspects of the firmMs competitive advantage would be high -uality
segregated resin regeneration and fast service response. ,t will be important to stress these
advantages in the sales literature.
2.G Earketing #trategy
F*+ ,ndustriesMs marketing strategy will be to e6ecute and communicate its value proposition of
service and market segmentation advantage in providing segregated regeneration of customersM
resin.
2.G.9 Bistribution #trategy
Wherever F*+ ,ndustries cannot economically sell directly, due to distance or -uantities, it will
utiliLe a network of water service companies. .hese companies will be carefully chosen for their
-uality of service. An arrangement will be set up whereby the distributor will offer B, e6change
service along with its other water services. .he installations can easily be handled by them.
.hey would tag the tanks and return and pick up from the F*+ ,ndustries plant. 'eing able to
offer this service increases the image of the local water service company. ,t fosters a feeling a
one:stop shopping. A GG3 discount off the retail price should be ade-uate to satisfy the
distributors.
2.G.* ositioning #tatement
F*+ ,ndustriesMs ability to regenerate resin on a segregated basis, rather than only bulk, is a
capability that should provide -uick and easy entry into the user market where the highest
water purity is needed. .hese users, blood analysis, hemodialysis units, and medical
laboratories for e6ample, are especially sensitive to contamination risks. #imply pointing out to
these users that bulk regeneration involves the co:mingling of their resin with resin used in the
metal:finishing and car wash industries usually is -uite convincing. #egregated regeneration
results in the further advantage of achieving a higher B, capacity per cubic foot as greater
-uantities of chemicals are used during a longer regeneration period.
.he second most important position statement is F*+ ,ndustriesMs concentration on the B,
e6change business. .his concentration will force F*+ ,ndustries to provide a higher level of
service, and more -uickly, too. ,t must be remembered that the cost for F*+ ,ndustries in the
market for the highest level of water purity is not a significant cost element in the overall cost
structure. Fowever, a service shutdown, for -uality or for service reasons, would be very costly
to high technology users of F*+ ,ndustries.
2.G.G ricing #trategy
,n line with the conclusions drawn in the positioning statements, F*+ ,ndustries can charge a
higher price for its segregated regenerated resin. .here is virtually no competition for this
product in the 5orthern 1alifornia market.
1harging P>G per cubic foot $mi6ed bed&, as used in the sales projections, is more than a >23
increase over the price for A# )ilterMs bulk resin price for mi6ed bed. F*+ ,ndustries is currently
successfully charging in e6cess of P=+ for this product. ,t is essential that F*+ ,ndustries place
a premium price consistent with its superior product.
Page 1
%2& Industries
Wholesale prices have been established to encourage the -uick formation of a dealership
network. Bealers are afforded a GG3 discount.
2.G.I romotion #trategy
.he main focus of promotion will be two:pronged! promotion to F*+ ,ndustries end users, and
promotion to wholesalers.
romotion to wholesalers should receive primary stress due to the e6tended reach made
possible by the wholesaler network with its e6isting customer base. .he sales force of these
wholesale distributors needs to be educated on F*+ ,ndustriesMs positioning statement so that
they all understand the important sales advantages of segregated resin. 'eing able to offer B,
e6change service to a distributorMs customer list is a great advantage to the distributor, and this
fact needs to be clearly spelled out to them. .herefore, the F*+ ,ndustries relationship with a
dealership network is one in which both sides benefit.
F*+ ,ndustries should strive to create a small:town, friendly relationship with its customers.
1ompany brochures will show a map with all the F*+ ,ndustries locations, including each newly
ac-uired distributor. .he distributor trucks, as well as F*+ ,ndustries vehicles, would carry the
F*+ ,ndustries logo, helping all to achieve name recognition. 1ost savings would result through
sharing literature, leads $by territory andQor industry&, co:op marketing costs, and the sharing
of technical e6pertise.
Birect marketing to customers within easy reach of F*+ ,ndustries should stress service. As a
major supplier of resin stated! OA# )ilter is a huge concern that closes down at 2 .E. on
)riday.O 1ustomers for F*+ ,ndustries need to feel that they can get service after hours, and
even on a #aturday if need be. .hese customers feel much more comfortable dealing with an
e6change service that is closer in siLe to the customer, and where the e6change service is an
important portion of total sales revenue of the supplier. rompt deliveries, trouble:free
installations, good technical advise, etc. are main building blocks of the promotion strategy.
2.I #ales #trategy
.he sales strategy is to concentrate on that segment of the market most easily captured by the
following sales feature! segregated regeneration of portable resin. ,n addition, the fastest way
to reach the sales goal for the first several years is by actively working to develop a dealership
network for F*+ ,ndustries.
2.I.9 #ales )orecast
Sales Pro+ections,
#ales $Nuly 9<<<& are running at less than 923 capacity monthly, e6clusive of rental revenue.
.his appro6imates *;2 cubic ft per month. .he plant capacity will be 9++ cu ft per day, on a
one:shift basis. 'ased on the potential market outlined in the Earketing #ection of this plan,
growth in sales of regenerated segregated resin should reach IGG cu ft per month by Dctober
$e-uals *+ cu ftQday& which is this planMs starting point, and growing steadily each month until
;+ cu ft per day is reached $;+3 capacity& by the end of the first year. .otal production of
segregated resin is assumed to be split into e-ual -uantities of anion, cation, and mi6ed bed.
Dnce the ;+3 capacity utiliLation level is reached $Dctober *+++&, unit sales will grow modestly
in year two and year three. .his growth can be achieved within the capacity limits of 9++ cu ft
Page 1!
%2& Industries
daily $*>,+++ cu ft per annum& without increases in production labor. )urther increases in
segregated regeneration would re-uire overtime labor charges. Also, for the projection
purposes, direct unit costs for years two and three remain at the level of year one.
.he bulk regeneration pad will have a capacity of *+ cu ft and can handle two batches during
an eight:hour shift, totaling I+ cu ftQday. We will assume sales for bulk regeneration will grow
at the rate of 2 cu ftQday in the first month reaching capacity of I+ cu ftQday after eight
months. #ales are split between mi6ed bed $2+3&, *23 anion, and *23 cation. #ales of bulk
resin will grow 923 each of the first three years. As the bulk regeneration, unlike the
segregated regeneration, is not labor intensive, this 923 growth can be achieved without
increases in production labor.
,n projecting unit prices per ten cu ft. rices will be assumed at!
P>G+Q9+ cu ft for mi6ed bed $segregated&
P2=+Q9+ cu ft for anion or cation $segregated&
PIG+Q9+ cu ft for mi6ed bed $bulk&
PG*+Q9+ cu ft for cation or anion $bulk&
.he above prices will be reduced for dealers who will deliver and pick up at the factory to!
PI**Q9+ cu ft for mi6ed bed $segregated&
PG;*Q9+ cu ft for anion or cation $segregated&
P*;;Q9+ cu ft for mi6ed bed $bulk&
P*92Q9+ cu ft for cation or anion $bulk&
We will assume that 2+3 of all sales will go through dealers, so the unit price weighted average
of the retail and dealer prices will be!
P2*>Q9+ cu ft for mi6ed bed $segregated&
PI=>Q9+ cu ft for anion or cation $segregated&
PG2<Q9+ cu ft for mi6ed bed $bulk&
P*>=.2+Q9+ cu ft for cation or anion $bulk&
-aria.le /nit Costs,
.he costs connected with one cubic foot of segregated anion treatment involve the cost of!
9. 1ity water.
*. 1ity sewer disposal.
G. 1ost of carbon filtering and converting city water to F*+ ,ndustries.
I. 1ost of heating water.
2. 1ost of #odium Fydro6ide.
>. 1ost of replacing small amounts of lost resin.
Page 1"
%2& Industries
=. 1ity water is supplied by 5ewark, at P*.=+ per 9++ cu ft, which works out to $=.I; gallons in
one cubic foot& P+.++G> per gallon. ,t re-uires one gallon per minute for I2 minutes to
regenerate one cubic foot of anion, which comes to I2 gallons. .he slow rinse needs one
gallonQminute for *+ minutes, and the fast rinse needs five gallonsQmin for I+ minutes. .his
comes to **+ gallons. )inally, testing takes another 9*.2 gallons. .otal water consumption
per cubic foot of anion resin is *==.2 gallons, or P9.++.
;. All water used eventually passes to the sewer which is metered at P*.I2 per 9++ cubic feet
or P+.++G* per gallon. 1ost per cubic foot of anion serviced is P+.<9.
<. 1ost of carbon filtering and converting city surface:sourced water to F*+ ,ndustries is
arrived at by assuming that one cu ft of regenerated resin has the capability of producing
sufficient F*+ ,ndustries to regenerate five cu ft of spent resin. .he costs of regenerating
one cu ft of anion resin without F*+ ,ndustries costs are appro6imately P;.<>. Bividing this
amount by five comes to appro6imately P9.;+ for the F*+ ,ndustries per gallon of anion
resin serviced.
9+. Jas to heat incoming city water $average temp I+ degrees& up to 9++ degrees goes by a
formula $;.GI T number of gallons T temp rise& or 2++.I '.AMs per gallon. *==.2 gallons
would need 9G;,>9+ '.AMs which, when divided by 9+I,+++ '.AMs per thermal unit, comes
to 9.GG2* therms. Dne therm $assume JI9 rate class& is billed at P.;9 by Csse6gas, so
9.GG2* therms will cost P9.+;.
99. #odium hydro6ide is a caustic chemical supplied in a 22:gallon drum containing 2+3
solution. .he regeneration process re-uires one drum to regenerate 9* anion tanks of
each two cu ft. .herefore, one cubic foot of anion re-uires *.*<9= gallons, or .+I9>=, of a
drum. Dne 22:gallon drum costs P;+.2+ $Fubbard:Fall ,nc.&. 1ost per cubic foot of anion
servicing is PG.G2.
C6perience indicates that with each regeneration it is necessary to replace appro6imately two
percent of the resin. Anion resin costs P9G+ per cu ft. 1ost is P*.>+ per cu ft of anion serviced.
S(mmary of Anion ser%icing costs,
1ity Water! P9.++
1ity #ewer! P+.<9
1arbon filtering and B,! P9.;+.
Jas to heat water! P9.+;
#odium Fydro6ide! PG.G2
7esin replacement! P*.>+
.otal for anion servicing! P9+.=I
Page 1#
%2& Industries
.he costs connected with servicing one cubic foot of segregated cation treatment involve the
cost of!
9. 1ity water.
*. 1ity sewer disposal.
G. 1ost of carbon filtering and converting city water to F*+ ,ndustries.
I. 1ost of heating water $not needed for cation treatment&.
2. 1ost of Fydrochloric acid.
1ost of replacing small amounts of lost resin.
9. 1ity water is supplied by 5ewark at P*.=+ per 9++ cubic feet which works out to $=.I;
gallons in one cubic foot& P+.++G> per gallon. ,t re-uires one gallon per minute for *+
minutes to regenerate one cubic foot of cation, which comes to *+ gallons. .he slow rinse
needs one gallonQminute for *+ minutes, and the fast rinse needs five gallonsQminute for G+
minutes. .his comes to 9=+ gallons. )inally, testing takes another 9*.2 gallons. .otal water
consumption per cubic foot of cation resin is *+*.2 gallons, or P+.=G.
*. All water used eventually passes to the sewer, which is metered at P*.I2 per 9++ cubic feet,
or P+.++G* per gallon. 1ost per cubic foot of anion serviced is P+.>>.
G. 1ost of carbon filtering and converting city water to F*+ ,ndustries is estimated at P9.I>
per cu ft of cation serviced based on e6perience that one cu ft of regenerated cation resin
has the ability to produce enough F*+ ,ndustries to regenerate five cu ft of cation resin.
$P=.G* divided by five e-uals P9.I>&
I. 5o cost to heat water.
2. Fydrochloric acid is supplied in 22:gallon drums containing G+3 solution. .he regeneration
process re-uires two drums to regenerate 9* tanks of each two cubic feet, using an eight to
ten percent solution. .herefore, one cubic foot of cation re-uires I.> gallons or .+;G>G of a
drum. Dne 22 gallon drum costs P>G.=+ $Fubbard:Fall ,nc.&. 1ost per cubic foot of anion
servicing is P2.GG.
C6perience indicates that in the process of regeneration about *3 of the resin needs to be
replaced. 1ation resin costs PG+ per cu ft. 1ost is P.>+ per cu ft of cation serviced.
S(mmary of Cation ser%icing costs,
1ity Water! P+.=G.
1ity #ewer! P+.>>.
1arbon filtering and B,! P9.I>.
Jas to heat water! P+.++.
Fydrochloric acid! P2.GG.
7esin replacement! P+.>+.
.otal! P;.=; for cation servicing.
Page 2$
%2& Industries
1osts of servicing one cubic foot of mi6ed bed!
A mi6ed bed tank is more time:consuming as it re-uires a separation stage prior to
regeneration. 1ity water $not B,& is mi6ed with salt. .his solution is used to bathe the anion and
cation resin in a cone until the two resins separate, at which point the cation and anion are
treated in the regeneration stage in the same manner as the single bed anion and cation. Dne
mi6ed bed contains twice as much anion as cation. .his aspect results in a weighted cost of
P9+.+< per cu ft #alt consumption! every cubic foot of mi6ed bed needs 9.2 cu ft of brine
solution. .here are =.I; gallons per cu ft .his comes to 99 gallons of brine needs. A **3 salt
solution in this -uantity of water would amount to amount two pounds. #alt is supplied by
Fubbard:Fall ,nc. at P.+<2 per pound. Adding the cost of the two pounds of salt to the
weighted average cost of P9+.+< comes to P9+.*;.
.otal cost of mi6ed bed serving! P9+.*; per cu ft.
9. 'ulk 7egeneration Kariable costs!
o Water. According to the spec sheet, *,I2< gallons are needed for *+ cu ft of mi6ed
bed. At P+.++G> per gallon, this comes to P;.;=, or P+.III per cu ft of resin
serviced.
o #ewer. Assuming all the water goes down the sewer with a minimal need for
balancing chemicals, at P+.++G* per gallon, this comes to P+.I+*= per cu ft of resin
serviced.
o er cu ft of mi6ed bed. P9.G< of acid and P9.9+ of caustic soda.
o #alt. P+.+= per cu ft.
o F*+ ,ndustries and filteringQsoftening assume the same costs as in the production of
segregated resin $i.e. P9.;+ for anion and P9.I> for cation&.
o Loss of resin. Assume two percent. At P9G+ for anion and PG+ per cu ft of cation
$ratio *!G cation to anion&, a blended cost of P<+ at two percent comes to P9.;+ per
cu ft.
o Feat for water. G.* therm at P.+;9 divided by *+ cu ft comes to P+.9G per cu ft.
*. .otal bulk anion! P=.*2, or P=*.2+ for 9+ cu ft.
G. .otal bulk cation P>.9I, or P>9.I+ for 9+ cu ft.
I. .otal bulk mi6ed bed! P>.<2, or P><.2+ for 9+ cu ft.
Tank 0ental Income,
'ecause of the high costs of purchasing tanks, many new customers opt for renting tanks on a
monthly basis. )or purposes of these projections we will assume that!
9. Bealership:generated sales resulting in tank rentals will be handled by them $i.e. ignored in
these projections&.
*. Falf of all directly:generated sales will involve rental tanks $i.e. total unit sales for Dctober
amount to 2GI cu ft of which half will be dealer:generated. .otal direct sales in Dctober U
*>= cu ft of which half $9GG cu ft& will need rental tanks.
G. Assume, for simplification of projections, all rentals will be in 9* inch tanks holding G.> cu ft
with rental price of PI+ per tank. Dctober will see rental income of P9,I;+ $9GG cu ft divided
by G.> cu ftQtank times PI+ rental per tank&.
Page 21
%2& Industries
Tank Sales,
,t is assumed that those customers who do not opt to rent their tanks will already have their
own tanks or will purchase tanks from F*+ ,ndustries. #ales of tanks is assumed at only five
percent of the number of monthly rental tanks. #ales price is P9,*++. 1ost e-uals PI2+.
1hart! #ales Eonthly
1hart! #ales by Year
Page 22
%2& Industries
.able! #ales )orecast
Sales Forecast
;ear 1 ;ear ) ;ear *
=nit Sales
Segregate$ +nion Ser&ice 10 cu 1t ,,5 .)8 .!,
Segregate$ "ation Ser&ice 10 cu 1t ,,5 .)8 .!,
Segregate$ 9ixe$ Be$ 10 cu 1t ,,5 .)8 .!,
Bul: Regen 10 cu 1t 59B6 *!. 5-8 !8.
Bul: Regen 10 cu 1t 5"at6 18* )-- *,,
Bul: Regen 10 cu 1t 5+n6 18* )-- *,,
(an: Rentals 5eac *.! cu 1t6? 1,,*! ),*,. ),5,!
(an: Sales? !. 11. 1).
'ter 0 0 0
(otal =nit Sales *,5.) 5,8,, !,*,0
=nit 4rices ;ear 1 ;ear ) ;ear *
Segregate$ +nion Ser&ice 10 cu 1t $,.!.00 $,.!.00 $,.!.00
Segregate$ "ation Ser&ice 10 cu 1t $,.!.00 $,.!.00 $,.!.00
Segregate$ 9ixe$ Be$ 10 cu 1t $5)!.00 $5)!.00 $5)!.00
Bul: Regen 10 cu 1t 59B6 $*5-.00 $*5-.00 $*5-.00
Bul: Regen 10 cu 1t 5"at6 $)!..50 $)!..50 $)!..50
Bul: Regen 10 cu 1t 5+n6 $)!..50 $)!..50 $)!..50
(an: Rentals 5eac *.! cu 1t6? $,0.00 $,0.00 $,0.00
(an: Sales? $1,)00.00 $1,)00.00 $1,)00.00
'ter $0.00 $0.00 $0.00
Sales
Segregate$ +nion Ser&ice 10 cu 1t $)11,8)0 $*,!,5)8 $*!*,!!,
Segregate$ "ation Ser&ice 10 cu 1t $)11,8)0 $*,!,5)8 $*!*,!!,
Segregate$ 9ixe$ Be$ 10 cu 1t $)*,,0.0 $*8),-)8 $,01,8!,
Bul: Regen 10 cu 1t 59B6 $1*1,.5* $)1,,!8) $),!,!**
Bul: Regen 10 cu 1t 5"at6 $,-,080 $.-,-8* $-),0)0
Bul: Regen 10 cu 1t 5+n6 $,-,080 $.-,-8* $-),0)0
(an: Rentals 5eac *.! cu 1t6? $5.,,,0 $-*,880 $101,8,0
(an: Sales? $80,,00 $1,0,,00 $15),,00
'ter $0 $0 $0
(otal Sales $1,0)5,,!) $1,!8,,-11 $1,81,,105
%irect =nit "osts ;ear 1 ;ear ) ;ear *
Segregate$ +nion Ser&ice 10 cu 1t $10..,0 $10..,0 $10..,0
Segregate$ "ation Ser&ice 10 cu 1t $8..80 $8..80 $8..80
Segregate$ 9ixe$ Be$ 10 cu 1t $10).80 $10).80 $10).80
Bul: Regen 10 cu 1t 59B6 $!1.,0 $!1.,0 $!1.,0
Bul: Regen 10 cu 1t 5"at6 $!-.50 $!-.50 $!-.50
Bul: Regen 10 cu 1t 5+n6 $.).50 $.).50 $.).50
(an: Rentals 5eac *.! cu 1t6? $0.00 $0.00 $0.00
(an: Sales? $,50.00 $,50.00 $,50.00
'ter $0.00 $0.00 $0.00
%irect "ost o1 Sales
Segregate$ +nion Ser&ice 10 cu 1t $,.,.-* $.8,18. $8),05,
Segregate$ "ation Ser&ice 10 cu 1t $*-,0.1 $!*,-18 $!.,0.-
Segregate$ 9ixe$ Be$ 10 cu 1t $,5,.,! $.,,8*8 $.8,5*-
Bul: Regen 10 cu 1t 59B6 $)),5*, $*!,.1. $,),18)
Bul: Regen 10 cu 1t 5"at6 $1),.5) $)0,.81 $)*,-08
Bul: Regen 10 cu 1t 5+n6 $1*,*0) $)1,!.8 $),,-,0
(an: Rentals 5eac *.! cu 1t6? $0 $0 $0
(an: Sales? $*0,150 $5),!50 $5.,150
'ter $0 $0 $0
Subtotal Direct Cost of Sales $)11,*,. $*,8,.!- $*.5,85)
Page 23
%2& Industries
5.5 'trategic (lliances
.he relationship between dealerships and F*+ ,ndustries could be called a strategic alliance.
.hese water service companies have an e6tensive customer base. Eost of the customers have
needs such as water softening, filtration, reverse osmosis maintenance, swimming pool
maintenance, etc., however, many dealership customers have F*+ ,ndustries needs as well. At
present, these water service companies must direct their customers to A# )ilter or supply the
customer through A# )ilter. )orming a relationship between F*+ ,ndustries and these
dealerships would -uickly result in substantial sales increases for F*+ ,ndustries and would
result in increased prestige and profits for the dealerships.
>.+ Eanagement #ummary
.he management of F*+ ,ndustries is made up of individual shareholders with e6tensive
e6pertise in the water treatment industry, as well as commercial and financial background.
>.9 Eanagement .eam
.he management team is uni-uely -ualified to implement this business plan. .he founders,
Nohn Nones and Bave #mith, have been active in the water treatment industry for years. NohnMs
e6perience working with dealers in application engineering and sales has prepared him well to
present the F*+ ,ndustries dealership to water service companies that he already knows. Fis
years of calling on dealerships in all aspects of the water industry have allowed him a birds:eye
view of the prevailing marketing and business practices.
Bave has been involved in the manufacturing sector of the water industry and is well respected
and connected there. Fis training and certification as a rofessional Cngineer give him an
advantage when consulting with customers and prospective customers.
.he person planned for the position of general manager has wide:ranging e6perience in finance
and manufacturing. Fe is a former vice president of 1hase Eanhattan 'ank, team leader of a
development bank $#audi ,ndustrial Bevelopment )und&, and founderQgeneral manager of a
factory which, after 9+ years of profitable operations, was bought out in 9<;<.
.he production manager is a chemical engineer by education and professional e6perience, and
has demonstrated his know:how by successfully managing the production activity in the factory
despite the challenges presented by the present incomplete production line.
>.* ersonnel lan
0egeneration Personnel!
A production manager must be a skilled chemical engineer with e6perience in water treatment
applications. .his person must be a hands:on individual supervising two assistants. .he
production manager will label the tanks as they are received to assure customer segregation
and supervise the proper regeneration cycle, from separation through backwash, draw, flush,
mi6, and testing. .he assistants will primarily be kept busy moving tanks from one stage in the
regeneration cycle to the ne6t, connecting the hosing, performing the chemical mi6 and draw
according to the instructions of the production manager, adding salt to the brine tank, etc. .he
production manager is in place. Dne assistant is now in place. A second is needed.
An engineerQfitter is also needed to maintain the e-uipment and to make installations. .his
person is in place.
Page 24
%2& Industries
Sales and 1arketing Personnel!
,t is planned that both owners will continue to maintain their present positions. .hese sales
positions re-uire them to move about the territory which provides an e6cellent source of
knowledge of customers for F*+ ,ndustries. .his information will be communicated to the sales
and marketing manager who will spend his time calling and visiting potential F*+ ,ndustries
users. Fe will be paid a base salary plus commissions. .he commission will be higher for
landing a new customer, and lower for repeat sales. .he commission schedule will be
constructed in such a way as to permit an annual total compensation that will encourage
e6cellent sales results.
&eneral and Administrati%e!
An office manager is needed. Answering phones, primary contact with customers, incoming and
outgoing mail, etc. Fe will be the main connection between the owners and the operations of
the facility. Within si6 months, a part:time assistant will need to be added to keep pace with
bookkeeping and management.
2eli%ery Personnel!
Dne driver, who has additional responsibilities, is now in place. A second will need to be added
after appro6imately four months.
.able! ersonnel
Personnel Plan
;ear 1 ;ear ) ;ear *
4ro$uction 4ersonnel
4ro$uction 9anager $,1,!0, $,1,!00 $,1,!00
+ssistant $)0,.-! $)0,800 $)0,800
+ssistant $)0,.-! $)0,800 $)0,800
Engineer@1itter $*1,)00 $*1,)00 $*1,)00
%ri&ers $5,,1-8 $58,,00 $58,,00
'ter $0 $0 $0
Su2total $1!8,5-, $1.),800 $1.),800
Sales an$ 9ar:eting 4ersonnel
Sales 9anager 52ase6 $),,000 $),,000 $),,000
Sales 9anager 5commissions6 $*8,!!0 $51,000 $!0,000
0ame or title $0 $0 $0
'ter $0 $0 $0
Su2total $!),!!0 $.5,000 $8,,000
<eneral an$ +$ministrati&e 4ersonnel
'11ice 9anager $*-,--! $,0,000 $,0,000
Boo::eeper 5part-time6 $-,100 $15,!00 $15,!00
0ame or title $0 $0 $0
'ter $0 $0 $0
Su2total $,-,0-! $55,!00 $55,!00
'ter 4ersonnel
0ame or (itle $0 $0 $0
0ame or title $0 $0 $0
0ame or title $0 $0 $0
'ter $0 $0 $0
Su2total $0 $0 $0
(otal 4eople - - -
Total Payroll $)80,*50 $*0*,,00 $*1),,00
Page 25
%2& Industries
=.+ )inancial lan
As of August 9<<<, stockholder e-uity stood at P99*,+++. Additional infusion of e-uity from
new shareholders will boost the e-uity capital.
.o complete the necessary planned additions to plant and e-uipment, a 2:year term loan will be
re-uired from a financial institution. .he projected cash:flow is sufficient to repay this loan in
-uarterly installments. .his term loan should be sufficient to cover the increases in accounts
receivable, as well as to support growth in inventory of rental tanks.
=.9 ,mportant Assumptions
.a6 7ate!
.a6 rate reflects the present sliding scale!
P+ to P2+,+++ 8 923 )ederal, plus <.23 #tate ta6
P2+ to P=2,+++ 8 *23
P=2 to P9++,+++ 8 GI3
P9++ to PGG2,+++ 8 G<3
PGG2,+++ and up 8 GI3
,nventory .urnover!
#ince this is a service business, the only inventory is that of chemicals and some resin, both of
which do not need to be stored more than two weeks. Average is one week $inventory turnover
rate of I;&.
.able! Jeneral Assumptions
General Assumptions
;ear 1 ;ear ) ;ear *
4lan 9ont 1 ) *
"urrent #nterest Rate 10.00> 10.00> 10.00>
Long-term #nterest Rate 10.00> 10.00> 10.00>
(ax Rate ).50> 0.00> ).50>
Other 0 0 0
Page 2
%2& Industries
=.* 'reak:even Analysis
.he following table and chart show the Eonthly Anits and Eonthly 7evenue 'reak:even
calculations based on the Average er:Anit 7evenue, Average er:Anit Kariable 1osts and the
Cstimated Eonthly )i6ed 1osts, as drawn from the other financial tables in this plan.
1hart! 'reak:even Analysis
.able! 'reak:even Analysis
Break-even Analysis
9ontly =nits Brea:-e&en 11-
9ontly Re&enue Brea:-e&en $*,,)*5
+ssumptions?
+&erage 4er-=nit Re&enue $)8..08
+&erage 4er-=nit Aaria2le "ost $5-.1.
Estimated Monthly Fixed Cost $).,1.-
=.G rojected rofit and Loss
.he following table and charts give the yearly projected profit and loss statement for F*+
,ndustries. )or a monthly analysis, please see attached appendi6.
1hart! Jross Eargin Yearly
Page 2!
%2& Industries
1hart! Jross Eargin Eonthly
Page 2"
%2& Industries
.able! rofit and Loss
Pro Forma Profit and Loss
;ear 1 ;ear ) ;ear *
Sales $1,0)5,,!) $1,!8,,-11 $1,81,,105
%irect "ost o1 Sales $)11,*,. $*,8,.!- $*.5,85)
4ro$uction 4ayroll $1!8,5-, $1.),800 $1.),800
'ter $0 $0 $0
(otal "ost o1 Sales $*.-,-,1 $5)1,5!- $5,8,!5)
<ross 9argin $!,5,5)1 $1,1!*,*,) $1,)!5,,5*
<ross 9argin > !).-5> !-.0,> !-..!>
'perating Expenses
Sales an$ 9ar:eting Expenses
Sales an$ 9ar:eting 4ayroll $!),!!0 $.5,000 $8,,000
+$&ertising@4romotion $1!,500 $1),000 $1),000
(ra&el $*,!00 $!,000 $!,000
/uel@oil 1or Aeicles? $11,5)0 $1),000 $1),500
Aeicle Repair? $)0,00, $)0,000 $)0,000
=ni1orms $1,)00 $1,)00 $1,)00
9iscellaneous $10,800 $10,800 $10,800
(otal Sales an$ 9ar:eting Expenses $1)!,)8, $1*.,000 $1,!,500
Sales an$ 9ar:eting > 1).*1> 8.1*> 8.08>
<eneral an$ +$ministrati&e Expenses
<eneral an$ +$ministrati&e 4ayroll $,-,0-! $55,!00 $55,!00
Sales an$ 9ar:eting an$ 'ter Expenses $0 $0 $0
%epreciation $*!,000 $*!,000 $*!,000
Lease$ Equipment $15,)5) $15,)5) $15,)5)
=tilities $),)50 $),)50 $),)50
#nsurance $11,.-! $11,800 $11,800
Business Lia2. #nsurance? $1),000 $1),000 $1),000
4rinting an$ 4ostage? $*,!00 $*,!00 $*,!00
(elepone Expenses? $8,00, $8,000 $8,000
+u$iting? $),,00 $),,00 $),,00
Rent $),,000 $),,000 $),,000
4ayroll (axes $*5,,!, $*8,*80 $*-,51-
'ter <eneral an$ +$ministrati&e Expenses $0 $0 $0
(otal <eneral an$ +$ministrati&e Expenses $1--,8!) $)0-,)8) $)10,,)1
<eneral an$ +$ministrati&e > 1-.,-> 1).,)> 11.!0>
'ter Expenses?
'ter 4ayroll $0 $0 $0
"onsultants $0 $0 $0
"ontract@"onsultants $0 $0 $0
(otal 'ter Expenses $0 $0 $0
'ter > 0.00> 0.00> 0.00>
(otal 'perating Expenses $*)!,1,! $*,!,)8) $*5!,-)1
4ro1it Be1ore #nterest an$ (axes $*1-,*.5 $81.,0!0 $-08,5**
EB#(%+ $*55,*.5 $85*,0!0 $-,,,5**
#nterest Expense $1-,.55 $1),*)* $-,-,8
(axes #ncurre$ 5$,,!,*6 $0 $)),,!5
0et 4ro1it $*0,,)!* $80,,.*. $8.!,1)0
et Profit!Sales )-.!.> ,...!> ,8.)->
Page 2#
%2& Industries
1hart! rofit Yearly
1hart! rofit Eonthly
Page 3$
%2& Industries
=.I rojected 1ash )low
1ash )low is an intrinsic projection for F*+ ,ndustries. We must maintain a suitable cash
balance in the bank in order to be successful. .he chart and table below outline our basic cash
flow assumptions.
.able! 1ash )low
Pro Forma Cash Flo
;ear 1 ;ear ) ;ear *
"as Recei&e$
"as 1rom 'perations
"as Sales $0 $0 $0
"as 1rom Recei&a2les $..,,8*1 $1,5)*,.*! $1,.8),5)-
Su2total "as 1rom 'perations $..,,8*1 $1,5)*,.*! $1,.8),5)-
+$$itional "as Recei&e$
Sales (ax, A+(, 8S(@<S( Recei&e$ $0 $0 $0
0e3 "urrent Borro3ing $50,000 $!,)50 $!,)50
0e3 'ter Lia2ilities 5interest-1ree6 $0 $0 $0
0e3 Long-term Lia2ilities $0 $0 $0
Sales o1 'ter "urrent +ssets $50,000 $0 $0
Sales o1 Long-term +ssets $0 $0 $0
0e3 #n&estment Recei&e$ $0 $0 $0
Su2total "as Recei&e$ $8.,,8*1 $1,5)-,-8! $1,.88,..-
Expen$itures ;ear 1 ;ear ) ;ear *
Expen$itures 1rom 'perations
"as Spen$ing $)80,*50 $*0*,,00 $*1),,00
Bill 4ayments $,*-,!8, $5!*,!-8 $5.*,1-0
Su2total Spent on 'perations $.)0,0*, $8!.,0-8 $885,5-0
+$$itional "as Spent
Sales (ax, A+(, 8S(@<S( 4ai$ 'ut $0 $0 $0
4rincipal Repayment o1 "urrent Borro3ing $5!,)5) $0 $0
'ter Lia2ilities 4rincipal Repayment $1!,810 $0 $0
Long-term Lia2ilities 4rincipal Repayment $!0,000 $*0,000 $*0,000
4urcase 'ter "urrent +ssets $!*,,50 $10,*50 $-,,50
4urcase Long-term +ssets $0 $0 $0
%i&i$en$s $0 $0 $0
Su2total "as Spent $-1!,5,! $-0.,,,8 $-)5,0,0
0et "as /lo3 5$,1,.156 $!)),5*8 $8!*,.*-
Cash "alance $8),508 $.05,0,! $1,5!8,.85
Page 31
%2& Industries
1hart! 1ash
Page 32
%2& Industries
=.2 rojected 'alance #heet
.he projected balance sheet for F*+ ,ndustries is presented below.
.able! 'alance #heet
Pro Forma Balance Sheet
;ear 1 ;ear ) ;ear *
+ssets
"urrent +ssets
"as $8),508 $.05,0,! $1,5!8,.85
+ccounts Recei&a2le $)50,!*1 $,11,80! $,,*,*8)
#n&entory $)8,88! $5),.58 $*.,1)8
'ter "urrent +ssets $10*,,50 $11*,800 $1)*,)50
(otal "urrent +ssets $,!5,,.! $1,)8*,,11 $),1.),5,!
Long-term +ssets
Long-term +ssets $))0,000 $))0,000 $))0,000
+ccumulate$ %epreciation $*!,000 $.),000 $108,000
(otal Long-term +ssets $18,,000 $1,8,000 $11),000
(otal +ssets $!,-,,.! $1,,*1,,11 $),)8,,5,!
Lia2ilities an$ "apital ;ear 1 ;ear ) ;ear *
"urrent Lia2ilities
+ccounts 4aya2le $,5,,!1 $,!,,0- $,.,1.,
"urrent Borro3ing $15,10) $)1,*5) $).,!0)
'ter "urrent Lia2ilities $0 $0 $0
Su2total "urrent Lia2ilities $!0,5!* $!.,.!1 $.,,..!
Long-term Lia2ilities $1)0,000 $-0,000 $!0,000
(otal Lia2ilities $180,5!* $15.,.!1 $1*,,..!
4ai$-in "apital $18.,000 $18.,000 $18.,000
Retaine$ Earnings 5$)),*506 $)81,-1* $1,08!,!50
Earnings $*0,,)!* $80,,.*. $8.!,1)0
(otal "apital $,!8,-1* $1,).*,!50 $),1,-,..0
(otal Lia2ilities an$ "apital $!,-,,.! $1,,*1,,11 $),)8,,5,!
et #orth $,!8,-1* $1,).*,!50 $),1,-,..0
=.> 'usiness 7atios
.he following table gives standard business ratios for the water treatment e-uipment
manufacturer industry, as determined by the #tandard ,ndustry 1lassification $#,1& ,nde6 code
G2;<. .he last column, ,ndustry rofile, presents specific information and important ratios for
this industry.
Page 33
%2& Industries
.able! 7atios
!atio Analysis
;ear 1 ;ear ) ;ear * #n$ustry 4ro1ile
Sales <ro3t n.a. !,.*1> ..!.> 8.10>
4ercent o1 (otal +ssets
+ccounts Recei&a2le *8.5-> )8...> 1-.,1> )5.10>
#n&entory ,.,5> *.!-> 1.!*> )1.!0>
'ter "urrent +ssets 15.-*> ..-5> 5.*-> )5.80>
(otal "urrent +ssets .1.!.> 8-.!!> -5.10> .).50>
Long-term +ssets )8.**> 10.*,> ,.-0> )..50>
(otal +ssets 100.00> 100.00> 100.00> 100.00>
"urrent Lia2ilities -.*)> ,..*> *.).> *5.50>
Long-term Lia2ilities 18.,8> !.)-> ).!*> )1.*0>
(otal Lia2ilities )..80> 11.0)> 5.-0> 5!.80>
0et Bort .).)0> 88.-8> -,.10> ,*.)0>
4ercent o1 Sales
Sales 100.00> 100.00> 100.00> 100.00>
<ross 9argin !).-5> !-.0,> !-..!> *).10>
Selling, <eneral C +$ministrati&e Expenses **.)8> )1.)8> )0.))> 1..80>
+$&ertising Expenses 1.!1> 0..1> 0.!!> 0.-0>
4ro1it Be1ore #nterest an$ (axes *1.1,> ,8.,-> 50.08> *.,0>
9ain Ratios
"urrent ..!- 18.-, )-.05 ).1)
Duic: ..)1 18.1! )8.5! 1.)0
(otal %e2t to (otal +ssets )..80> 11.0)> 5.-0> 5!.80>
4re-tax Return on 0et Bort !*.-0> !*.18> ,1.80> ,.50>
4re-tax Return on +ssets ,!.1*> 5!.))> *-.**> 10.,0>
+$$itional Ratios ;ear 1 ;ear ) ;ear *
0et 4ro1it 9argin )-.!.> ,...!> ,8.)-> n.a
Return on Equity !,.8-> !*.18> ,0..5> n.a
+cti&ity Ratios
+ccounts Recei&a2le (urno&er ,.0- ,.0- ,.0- n.a
"ollection %ays 5! .) 8! n.a
#n&entory (urno&er 10.-1 8.5, 8.*! n.a
+ccounts 4aya2le (urno&er -.*) 1).1. 1).1. n.a
4ayment %ays *1 *0 *0 n.a
(otal +sset (urno&er 1.58 1.18 0..- n.a
%e2t Ratios
%e2t to 0et Bort 0.*- 0.1) 0.0! n.a
"urrent Lia2. to Lia2. 0.*, 0.,* 0.55 n.a
Liqui$ity Ratios
0et Bor:ing "apital $,0,,-1* $1,)15,!50 $),0-.,..0 n.a
#nterest "o&erage 1!.1. !!.*1 -1.** n.a
+$$itional Ratios
+ssets to Sales 0.!* 0.85 1.)! n.a
"urrent %e2t@(otal +ssets -> 5> *> n.a
+ci$ (est *.0. 1).08 )).!* n.a
Sales@0et Bort ).1- 1.*) 0.8, n.a
Di$idend Payout 0.00 0.00 0.00 n.a
Page 34
(ppendi)
.able! #ales )orecast
Sales Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Sales
Segregated Anion Service 10 cu ft 0 14 19 23 27 31 35 40 44 48 52 56 57
Segregated !ation Service 10 cu ft 0 14 19 23 27 31 35 40 44 48 52 56 57
Segregated Mi"ed #ed 10 cu ft 0 14 19 23 27 31 35 40 44 48 52 56 57
#ul$ %egen 10 cu ft &M#' 0 5 11 16 22 26 33 38 43 43 43 43 43
#ul$ %egen 10 cu ft &!at' 0 3 5 8 11 13 16 19 22 22 22 22 22
#ul$ %egen 10 cu ft &An' 0 3 5 8 11 13 16 19 22 22 22 22 22
(an$ %entals &each 3)6 cu ft'* 0 37 54 70 86 101 118 135 151 160 168 178 178
(an$ Sales* 0 2 2 3 4 5 5 7 7 8 8 8 8
+ther 0 0 0 0 0 0 0 0 0 0 0 0 0
(otal Unit Sales 92 133 174 214 251 294 336 376 398 419 442 443
Unit ,rices Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Segregated Anion Service 10 cu ft -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00
Segregated !ation Service 10 cu ft -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00 -476)00
Segregated Mi"ed #ed 10 cu ft -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00 -526)00
#ul$ %egen 10 cu ft &M#' -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00 -359)00
#ul$ %egen 10 cu ft &!at' -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50
#ul$ %egen 10 cu ft &An' -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50 -267)50
(an$ %entals &each 3)6 cu ft'* -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00 -40)00
(an$ Sales* -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00 -1.200)00
+ther -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00
Sales
Segregated Anion Service 10 cu ft -6.807 -8.806 -10.805 -12.804 -14.804 -16.803 -18.802 -20.801 -22.800 -24.800 -26.799 -26.989
Segregated !ation Service 10 cu ft -6.807 -8.806 -10.805 -12.804 -14.804 -16.803 -18.802 -20.801 -22.800 -24.800 -26.799 -26.989
Segregated Mi"ed #ed 10 cu ft -7.364 -9.731 -11.940 -14.149 -16.359 -18.568 -20.777 -22.986 -25.195 -27.405 -29.614 -29.982
#ul$ %egen 10 cu ft &M#' -1.939 -3.877 -5.834 -7.772 -9.334 -11.668 -13.606 -15.545 -15.545 -15.545 -15.545 -15.545
#ul$ %egen 10 cu ft &!at' -722 -1.445 -2.173 -2.889 -3.478 -4.347 -5.069 -5.791 -5.791 -5.791 -5.791 -5.791
#ul$ %egen 10 cu ft &An' -722 -1.445 -2.173 -2.889 -3.478 -4.347 -5.069 -5.791 -5.791 -5.791 -5.791 -5.791
(an$ %entals &each 3)6 cu ft'* -1.480 -2.160 -2.800 -3.440 -4.040 -4.720 -5.400 -6.040 -6.400 -6.720 -7.120 -7.120
(an$ Sales* -2.400 -2.400 -3.600 -4.800 -6.000 -6.000 -8.400 -8.400 -9.600 -9.600 -9.600 -9.600
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(otal Sales -28.241 -38.669 -50.131 -61.549 -72.295 -83.255 -95.925 -106.156 -113.924 -120.451 -127.059 -127.808
/irect Unit !osts Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Segregated Anion Service 10 cu ft 0)00 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40 -107)40
Segregated !ation Service 10 cu ft 0)00 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80 -87)80
Segregated Mi"ed #ed 10 cu ft 0)00 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80 -102)80
#ul$ %egen 10 cu ft &M#' 0)00 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40 -61)40
Page 1
(ppendi)
#ul$ %egen 10 cu ft &!at' 0)00 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50 -69)50
#ul$ %egen 10 cu ft &An' 0)00 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50 -72)50
(an$ %entals &each 3)6 cu ft'* 0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00
(an$ Sales* 0)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00 -450)00
+ther 0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00 -0)00
/irect !ost of Sales
Segregated Anion Service 10 cu ft -1.536 -1.987 -2.438 -2.889 -3.340 -3.791 -4.242 -4.693 -5.144 -5.596 -6.047 -6.090
Segregated !ation Service 10 cu ft -1.256 -1.624 -1.993 -2.362 -2.731 -3.099 -3.468 -3.837 -4.206 -4.574 -4.943 -4.978
Segregated Mi"ed #ed 10 cu ft -1.439 -1.902 -2.334 -2.765 -3.197 -3.629 -4.061 -4.492 -4.924 -5.356 -5.788 -5.860
#ul$ %egen 10 cu ft &M#' -332 -663 -998 -1.329 -1.596 -1.996 -2.327 -2.659 -2.659 -2.659 -2.659 -2.659
#ul$ %egen 10 cu ft &!at' -188 -375 -565 -751 -904 -1.129 -1.317 -1.505 -1.505 -1.505 -1.505 -1.505
#ul$ %egen 10 cu ft &An' -196 -392 -589 -783 -943 -1.178 -1.374 -1.570 -1.570 -1.570 -1.570 -1.570
(an$ %entals &each 3)6 cu ft'* -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(an$ Sales* -900 -900 -1.350 -1.800 -2.250 -2.250 -3.150 -3.150 -3.600 -3.600 -3.600 -3.600
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Subtotal Direct Cost of Sales -5.846 -7.843 -10.266 -12.679 -14.960 -17.072 -19.939 -21.906 -23.607 -24.859 -26.110 -26.260
Page 2
(ppendi)
.able! ersonnel
Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
,roduction ,ersonnel
,roduction Manager -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467 -3.467
Assistant -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733
Assistant -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733 -1.733
0ngineer1fitter -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600 -2.600
/rivers -3.467 -3.466 -3.467 -4.866 -4.867 -4.866 -4.867 -4.866 -4.867 -4.866 -4.867 -4.866
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total -13.000 -12.999 -13.000 -14.399 -14.400 -14.399 -14.400 -14.399 -14.400 -14.399 -14.400 -14.399
Sales and Mar$eting ,ersonnel
Sales Manager &2ase' -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000
Sales Manager &co33issions' -960 -1.500 -2.000 -2.500 -3.000 -3.700 -3.850 -3.950 -4.100 -4.250 -4.350 -4.500
4a3e or title -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total -2.960 -3.500 -4.000 -4.500 -5.000 -5.700 -5.850 -5.950 -6.100 -6.250 -6.350 -6.500
5eneral and Ad3inistrative ,ersonnel
+ffice Manager -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333 -3.333
#oo$$ee6er &6art7ti3e' -0 -0 -0 -0 -0 -1.300 -1.300 -1.300 -1.300 -1.300 -1.300 -1.300
4a3e or title -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total -3.333 -3.333 -3.333 -3.333 -3.333 -4.633 -4.633 -4.633 -4.633 -4.633 -4.633 -4.633
+ther ,ersonnel
4a3e or (itle -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4a3e or title -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4a3e or title -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(otal ,eo6le 7 7 7 7 8 9 9 9 9 9 9 9
Total Payroll -19.293 -19.832 -20.333 -22.232 -22.733 -24.732 -24.883 -24.982 -25.133 -25.282 -25.383 -25.532
Page 3
(ppendi)
Page 4
(ppendi)
.able! Jeneral Assumptions
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
,lan Month 1 2 3 4 5 6 7 8 9 10 11 12
!urrent 8nterest %ate 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00
9ong7ter3 8nterest %ate 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00 10)00
(a" %ate 30)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00
Other 0 0 0 0 0 0 0 0 0 0 0 0
Page 5
(ppendi)
.able! rofit and Loss
Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales -28.241 -38.669 -50.131 -61.549 -72.295 -83.255 -95.925 -106.156 -113.924 -120.451 -127.059 -127.808
/irect !ost of Sales -5.846 -7.843 -10.266 -12.679 -14.960 -17.072 -19.939 -21.906 -23.607 -24.859 -26.110 -26.260
,roduction ,a:roll -13.000 -12.999 -13.000 -14.399 -14.400 -14.399 -14.400 -14.399 -14.400 -14.399 -14.400 -14.399
+ther -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(otal !ost of Sales -18.846 -20.842 -23.266 -27.078 -29.360 -31.471 -34.339 -36.305 -38.007 -39.258 -40.510 -40.659
5ross Margin -9.395 -17.827 -26.865 -34.470 -42.935 -51.783 -61.586 -69.852 -75.917 -81.194 -86.549 -87.148
5ross Margin 33)27 46)10 53)59 56)01 59)39 62)20 64)20 65)80 66)64 67)41 68)12 68)19
+6erating 0"6enses
Sales and Mar$eting 0"6enses
Sales and Mar$eting ,a:roll -2.960 -3.500 -4.000 -4.500 -5.000 -5.700 -5.850 -5.950 -6.100 -6.250 -6.350 -6.500
Advertising1,ro3otion -1.900 -1.900 -1.900 -1.900 -1.900 -1.000 -1.000 -1.000 -1.000 -1.000 -1.000 -1.000
(ravel -300 -300 -300 -300 -300 -300 -300 -300 -300 -300 -300 -300
;uel1oil for <ehicles* -960 -960 -960 -960 -960 -960 -960 -960 -960 -960 -960 -960
<ehicle %e6air* -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667 -1.667
Unifor3s -100 -100 -100 -100 -100 -100 -100 -100 -100 -100 -100 -100
Miscellaneous -900 -900 -900 -900 -900 -900 -900 -900 -900 -900 -900 -900
(otal Sales and Mar$eting
0"6enses
-8.787 -9.327 -9.827 -10.327 -10.827 -10.627 -10.777 -10.877 -11.027 -11.177 -11.277 -11.427
Sales and Mar$eting 31)11 24)12 19)60 16)78 14)98 12)76 11)23 10)25 9)68 9)28 8)88 8)94
5eneral and Ad3inistrative
0"6enses
5eneral and Ad3inistrative ,a:roll -3.333 -3.333 -3.333 -3.333 -3.333 -4.633 -4.633 -4.633 -4.633 -4.633 -4.633 -4.633
Sales and Mar$eting and +ther
0"6enses
-0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
/e6reciation -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000 -3.000
9eased 0=ui63ent -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271 -1.271
Utilities -250 -250 -250 -250 -250 -250 -250 -100 -100 -100 -100 -100
8nsurance -983 -983 -983 -983 -983 -983 -983 -983 -983 -983 -983 -983
#usiness 9ia2) 8nsurance* -0 -0 -0 -0 -0 -6.000 -0 -0 -0 -0 -0 -6.000
,rinting and ,ostage* -300 -300 -300 -300 -300 -300 -300 -300 -300 -300 -300 -300
(ele6hone 0"6enses* -667 -667 -667 -667 -667 -667 -667 -667 -667 -667 -667 -667
Auditing* -0 -0 -0 -2.400 -0 -0 -0 -0 -0 -0 -0 -0
%ent -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000 -2.000
,a:roll (a"es 13 -2.441 -2.509 -2.572 -2.812 -2.876 -3.129 -3.148 -3.160 -3.179 -3.198 -3.211 -3.230
Page
(ppendi)
+ther 5eneral and Ad3inistrative
0"6enses
-0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(otal 5eneral and Ad3inistrative
0"6enses
-14.245 -14.313 -14.376 -17.016 -14.680 -22.233 -16.252 -16.114 -16.133 -16.152 -16.165 -22.184
5eneral and Ad3inistrative 50)44 37)01 28)68 27)65 20)31 26)70 16)94 15)18 14)16 13)41 12)72 17)36
+ther 0"6enses*
+ther ,a:roll -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
!onsultants -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
!ontract1!onsultants -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
(otal +ther 0"6enses -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
+ther 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00 0)00
(otal +6erating 0"6enses -23.032 -23.640 -24.203 -27.343 -25.507 -32.860 -27.029 -26.991 -27.160 -27.329 -27.442 -33.611
,rofit #efore 8nterest and (a"es &-13.636' &-5.812' -2.662 -7.127 -17.428 -18.924 -34.558 -42.860 -48.756 -53.864 -59.107 -53.538
0#8(/A &-10.636' &-2.812' -5.662 -10.127 -20.428 -21.924 -37.558 -45.860 -51.756 -56.864 -62.107 -56.538
8nterest 0"6ense -1.840 -1.773 -1.769 -1.765 -1.698 -1.694 -1.689 -1.622 -1.618 -1.614 -1.547 -1.126
(a"es 8ncurred &-4.643' -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4et ,rofit &-10.834' &-7.586' -893 -5.362 -15.730 -17.230 -32.868 -41.238 -47.138 -52.251 -57.560 -52.412
Net Profit/Sales 738)36 719)62 1)78 8)71 21)76 20)70 34)26 38)85 41)38 43)38 45)30 41)01
Page !
(ppendi)
.able! 1ash )low
Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
!ash %eceived
!ash fro3 +6erations
!ash Sales -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
!ash fro3 %eceiva2les -0 -941 -28.588 -39.051 -50.512 -61.907 -72.660 -83.677 -96.266 -106.415 -114.141 -120.672
Su2total !ash fro3 +6erations -0 -941 -28.588 -39.051 -50.512 -61.907 -72.660 -83.677 -96.266 -106.415 -114.141 -120.672
Additional !ash %eceived
Sales (a". <A(. >S(15S( %eceived 0)00 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4e? !urrent #orro?ing -50.000 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4e? +ther 9ia2ilities &interest7free' -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4e? 9ong7ter3 9ia2ilities -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Sales of +ther !urrent Assets -50.000 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Sales of 9ong7ter3 Assets -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
4e? 8nvest3ent %eceived -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total !ash %eceived -100.000 -941 -28.588 -39.051 -50.512 -61.907 -72.660 -83.677 -96.266 -106.415 -114.141 -120.672
0"6enditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
0"6enditures fro3 +6erations
!ash S6ending -19.293 -19.832 -20.333 -22.232 -22.733 -24.732 -24.883 -24.982 -25.133 -25.282 -25.383 -25.532
#ill ,a:3ents -61.849 -13.625 -25.719 -28.739 -33.600 -33.584 -40.540 -38.353 -39.147 -40.550 -41.335 -42.644
Su2total S6ent on +6erations -81.142 -33.457 -46.052 -50.971 -56.333 -58.316 -65.423 -63.335 -64.280 -65.832 -66.718 -68.176
Additional !ash S6ent
Sales (a". <A(. >S(15S( ,aid +ut -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
,rinci6al %e6a:3ent of !urrent #orro?ing -521 -521 -521 -521 -521 -521 -521 -521 -521 -521 -521 -50.521
+ther 9ia2ilities ,rinci6al %e6a:3ent -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -16.810
9ong7ter3 9ia2ilities ,rinci6al %e6a:3ent -30.000 -7.500 -0 -0 -7.500 -0 -0 -7.500 -0 -0 -7.500 -0
,urchase +ther !urrent Assets -0 -0 -0 -5.400 -8.550 -9.900 -9.900 -9.450 -5.400 -4.500 -10.350 -0
,urchase 9ong7ter3 Assets -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
/ividends -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0
Su2total !ash S6ent -111.663 -41.478 -46.573 -56.892 -72.904 -68.737 -75.844 -80.806 -70.201 -70.853 -85.089 -135.507
4et !ash ;lo? &-11.663' &-40.537' &-17.984' &-17.840' &-22.392' &-6.830' &-3.184' -2.871 -26.066 -35.562 -29.052 &-14.836'
Cash Balance -112.560 -72.023 -54.039 -36.198 -13.806 -6.977 -3.793 -6.664 -32.730 -68.292 -97.344 -82.508
Page "
(ppendi)
.able! 'alance #heet
Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets Starting #alances
!urrent Assets
!ash -124.223 -112.560 -72.023 -54.039 -36.198 -13.806 -6.977 -3.793 -6.664 -32.730 -68.292 -97.344 -82.508
Accounts %eceiva2le -0 -28.241 -65.969 -87.511 -110.009 -131.792 -153.140 -176.405 -198.884 -216.541 -230.577 -243.495 -250.631
8nventor: -10.000 -6.430 -8.627 -11.293 -13.947 -16.456 -18.780 -21.933 -24.096 -25.968 -27.345 -28.721 -28.886
+ther !urrent Assets -90.000 -40.000 -40.000 -40.000 -45.400 -53.950 -63.850 -73.750 -83.200 -88.600 -93.100 -103.450 -103.450
(otal !urrent Assets -224.223 -187.230 -186.619 -192.843 -205.554 -216.004 -242.746 -275.881 -312.844 -363.839 -419.314 -473.010 -465.476
9ong7ter3 Assets
9ong7ter3 Assets -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000 -220.000
Accu3ulated /e6reciation -0 -3.000 -6.000 -9.000 -12.000 -15.000 -18.000 -21.000 -24.000 -27.000 -30.000 -33.000 -36.000
(otal 9ong7ter3 Assets -220.000 -217.000 -214.000 -211.000 -208.000 -205.000 -202.000 -199.000 -196.000 -193.000 -190.000 -187.000 -184.000
(otal Assets -444.223 -404.230 -400.619 -403.843 -413.554 -421.004 -444.746 -474.881 -508.844 -556.839 -609.314 -660.010 -649.476
9ia2ilities and !a6ital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
!urrent 9ia2ilities
Accounts ,a:a2le -61.409 -12.771 -24.766 -27.618 -32.488 -32.230 -39.262 -37.050 -37.796 -39.173 -39.919 -41.076 -45.461
!urrent #orro?ing -21.354 -70.833 -70.312 -69.791 -69.270 -68.749 -68.228 -67.707 -67.186 -66.665 -66.144 -65.623 -15.102
+ther !urrent 9ia2ilities -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -16.810 -0
Su2total !urrent 9ia2ilities -99.573 -100.414 -111.888 -114.219 -118.568 -117.789 -124.300 -121.567 -121.792 -122.648 -122.873 -123.509 -60.563
9ong7ter3 9ia2ilities -180.000 -150.000 -142.500 -142.500 -142.500 -135.000 -135.000 -135.000 -127.500 -127.500 -127.500 -120.000 -120.000
(otal 9ia2ilities -279.573 -250.414 -254.388 -256.719 -261.068 -252.789 -259.300 -256.567 -249.292 -250.148 -250.373 -243.509 -180.563
,aid7in !a6ital -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000 -187.000
%etained 0arnings &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350' &-22.350'
0arnings -0 &-10.834' &-18.420' &-17.527' &-12.164' -3.566 -20.796 -53.664 -94.902 -142.040 -194.291 -251.851 -304.263
(otal !a6ital -164.650 -153.816 -146.230 -147.123 -152.486 -168.216 -185.446 -218.314 -259.552 -306.690 -358.941 -416.501 -468.913
(otal 9ia2ilities and !a6ital -444.223 -404.230 -400.619 -403.843 -413.554 -421.004 -444.746 -474.881 -508.844 -556.839 -609.314 -660.010 -649.476
Net Worth -164.650 -153.816 -146.230 -147.123 -152.486 -168.216 -185.446 -218.314 -259.552 -306.690 -358.941 -416.501 -468.913
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