A SAMPLE BUSINESS PLAN OF A

CONVENIENCE STORE

Submitted by:

Rhoda Mae R. Valdez

BS Civil Engineering-5

Submitted to:

Engr. Paulina Marzan

SY 2017-2018
 Table of Contents

1.0 Executive Summary........................................................................................................1

Chart: Highlights...........................................................................................................................2
1.1 Objectives....................................................................................................................................3
1.2 Mission...........................................................................................................................................3
1.3 Keys to Success.........................................................................................................................3
2.0 Company Summary......................................................................................................................3
2.1 Company Ownership................................................................................................................3
2.2 Start-up Summary....................................................................................................................4
Table: Start-up..............................................................................................................................4
Table: Start-up Funding.............................................................................................................5
Chart: Start-up..............................................................................................................................6
3.0 Products............................................................................................................................................6
4.0 Market Analysis Summary.........................................................................................................6
4.1 Market Segmentation..............................................................................................................7
Table: Market Analysis................................................................................................................7
Chart: Market Analysis (Pie).....................................................................................................8
4.2 Industry Analysis.......................................................................................................................8
4.2.1 Competition and Buying Patterns...............................................................................8
5.0 Strategy and Implementation Summary.............................................................................8
5.1 Competitive Edge......................................................................................................................9
5.2 Marketing Strategy...................................................................................................................9
5.3 Sales Strategy............................................................................................................................9
5.3.1 Sales Forecast..................................................................................................................10
Table: Sales Forecast............................................................................................................10
Chart: Sales Monthly.............................................................................................................10
Chart: Sales by Year..............................................................................................................11
6.0 Management Summary.............................................................................................................11
6.1 Personnel Plan..........................................................................................................................12
Table: Personnel..........................................................................................................................12
7.0 Financial Plan................................................................................................................................12
7.1 Important Assumptions........................................................................................................12
Table: General Assumptions...................................................................................................12
7.2 Break-even Analysis...............................................................................................................13
7.2 Break-even Analysis...............................................................................................................13
Table: Break-even Analysis....................................................................................................13
Chart: Break-even Analysis....................................................................................................13
7.3 Projected Profit and Loss.....................................................................................................14
Table: Profit and Loss................................................................................................................14
Chart: Profit Monthly.................................................................................................................15
Chart: Profit Yearly.....................................................................................................................15
Chart: Gross Margin Monthly.................................................................................................16
Chart: Gross Margin Yearly.....................................................................................................16
7.4 Projected Cash Flow...............................................................................................................17
Table: Cash Flow.........................................................................................................................17
Chart: Cash...................................................................................................................................18
Page 1
 Table of Contents

7.5 Projected Balance Sheet......................................................................................................19

Table: Balance Sheet.................................................................................................................19
7.6 Business Ratios........................................................................................................................20
7.6 Business Ratios........................................................................................................................20
Table: Ratios.................................................................................................................................21
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................2
Table: Personnel....................................................................................................................................2
Table: General Assumptions.............................................................................................................3
Table: General Assumptions.............................................................................................................3
Table: Profit and Loss..........................................................................................................................4
Table: Profit and Loss..........................................................................................................................4
Table: Cash Flow...................................................................................................................................5
Table: Cash Flow...................................................................................................................................5
Table: Balance Sheet...........................................................................................................................6
Table: Balance Sheet...........................................................................................................................6

Page 2
 MillenniumMart Inc.

1.0 Executive Summary

Introduction
MillenniumMart is the convenience store of the 21st Century future, fulfilling a need that will continue
to exist into the future - the need for speed. MillenniumMart will be the first fully automated, 24 hour
convenience store that is more like an enormous dispensing machine than the traditional store.

The company expects to capture market share by becoming the low cost leader in the convenience
store industry by significantly reducing one of the primary expenses, which is labor. Through our
completely automated shopping experience, customers will have the chance to shop for everyday
items at reduced prices, thus undercutting competition such as 7-11, AmPm, Circle K, and other local
convenience store chains. The possibilities for expansion are excellent not only in the local area, but in
neighboring communities as well.

The Company
The company is a joint venture start-up company between the principals, Mr. Bean and his associates,
and the management of Martin-Bower, one of the country's largest and most successful food
distributors. The company will be incorporated as a class C corporation in the state of Delaware with all
shares held by private investors.

Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a
further 11% shares based on growth and profitability after the first five years. MillenniumMart is
expected to open its first store in downtown Manhattan in March of Year 1.

The company will be set up with a board of directors. Mr. James Bean, a former senior manager of
Martin-Bower is slated for the position of CEO. Mrs. Linda Tuck has accepted the position of CFO.

The Products/Services
MillenniumMart will sell the same products as other convenience stores in the same packaging sizes,
quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices,
sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups,
microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies,
pet supplies, paper products, toothpaste, etc.

All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant,
Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash,
stamps, Lotto and phone cards and other coupons and will have the ability to create personal accounts
that can display preferred items, retain shopping lists and other services. An automated, interactive
"customer service rep" will be able to answer questions and pass on comments to the company's
management.

In addition, the company is looking into ways to sell restricted items such as beer, wine and cigarettes
and to set up a separate Internet area for remote access to the Web and email for its customers.

The Market
Our market is booming. Convenience store industry sales rose 8.6% last year. Overall U.S. retail sales
grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the
convenience store industry has become a powerful force in U.S. retailing.

Convenience stores serve the entire purchasing population of its geographical area but focuses on
customers who need to purchase items outside of normal working hours such as swing shift employees
and quick shoppers looking for snacks and related items. Therefore we have segmented our market

Page 1
 MillenniumMart Inc.

into night shoppers, quick shoppers, and others. Growth rates for these three segments match the
population growth for the surrounding area.

Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors
include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.

Financial Considerations
Our start-up requirements come to $453,000, which are largely single time fees associated with
opening the store. These costs are financed by both private investors and the investment of Martin-
Bower. It should be noted that we expect to be operating at a loss for the first six months before
advertising begins to take effect and draw in customers.

MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during
the first two years as it strives toward sustainable profitability. Almost all of this funding has been
arranged through lending institutions and private investors already. We do not anticipate any cash flow
problems during the next three years.

Chart: Highlights

1.1 Objectives

These are the goals for the next three years for MillenniumMart:

Achieve profitability by July Year 1;

Earn approximately $200,000 in sales by Year 3;
Start paying dividends by Year 3;
Start up second store by Year 4.

Page 2
 MillenniumMart Inc.

1.2 Mission

MillenniumMart's primary objective is to create a new and revolutionary distribution outlet that will
significantly reduce prices for its customers and provide greater services with an equal level of quality.
The company seeks to be first to market with this daring new idea so as to capture market share and
create greater than average profits.

1.3 Keys to Success

In order to survive and expand, MillenniumMart must keep the following issues in mind:

We must attain a high level of visibility through the media, billboards, and other advertising.
We must establish rigid procedures for cost control and incentives for maintaining tight control.
We must expend a significant amount on R&D in order to constantly be able to offer better and
greater products and services.

2.0 Company Summary

Automated stores such as MillenniumMart are not new, they have existed in Asia, especially in Japan
for a number of years now and have been quite successful there. Mr. James Bean, MillenniumMart's
founder and the driving force behind the joint venture, has been intrigued with the idea of bringing this
new type of store to the U.S. since it can significantly reduce costs and the ability of an automated
store to provide products and services is only limited to the imagination of management.

The company is a joint venture start-up company between the principals, Mr. Bean and his associates,
and the management of Martin-Bower, one of the country's largest and most successful food
distributors. The company will be incorporated in the state of Delaware with all shares held by private
investors.

2.1 Company Ownership

We will be structured as a C-Corporation which operates as a standard corporation. This form was
chosen by the Board of Directors because of various tax advantages. Retained earnings will not be
distributed as dividends for at least five years, thus enabling the early retirement of the debt.
Additionally, the corporate structure offers limited personal liability.

The company is a joint venture start-up between the principals, Mr. Bean and his associates, and the
management of Martin-Bower, one of the country's largest and most successful food distributors. The
company will be incorporated in the state of Delaware with all shares held by private investors.

Martin-Bower will own 29% of MillenniumMart's initial private shares with an option to acquire a
further 11% shares based on growth and profitability after the first five years. MillenniumMart is
expected to open its first store in downtown Manhattan in March of 2003. The company will be set up
with a board of directors. Mr. James Bean, a former senior manager of Martin-Bower is slated for the
position of CEO. Mrs. Linda Tuck has accepted the position of CFO.

2.2 Start-up Summary

Our start-up expenses come to $453,000, which are largely single time fees associated with opening
the store. These costs are financed by both private investors and the investment of Martin-Bower.

Page 3
 MillenniumMart Inc.

Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal $2,400
Pre-sale advertising/marketing $8,000
Land location and finders fee $8,000
Consultants $4,000
Insurance $1,780
Rent $12,000
Research and Development $10,000
Expensed Equipment $50,000
Initial store facilities $150,000
Other $3,000
Total Start-up Expenses $249,180

Start-up Assets
Cash Required $113,820
Start-up Inventory $10,000
Other Current Assets $8,000
Long-term Assets $72,000
Total Assets $203,820

Total Requirements $453,000

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund $249,180
Start-up Assets to Fund $203,820
Total Funding Required $453,000

Assets
Non-cash Assets from Start-up $90,000
Cash Requirements from Start-up $113,820
Additional Cash Raised $0
Cash Balance on Starting Date $113,820
Total Assets $203,820

Liabilities and Capital

Liabilities
Current Borrowing $15,000
Long-term Liabilities $100,000
Accounts Payable (Outstanding Bills) $8,000
Other Current Liabilities (interest-free) $10,000
Total Liabilities $133,000

Capital

Planned Investment
Private Investors $150,000
Martin-Bower management $110,000
Other $60,000
Additional Investment Requirement $0
Total Planned Investment $320,000

Loss at Start-up (Start-up Expenses) ($249,180)

Page 4
 MillenniumMart Inc.
Total Capital $70,820

Total Capital and Liabilities $203,820

Total Funding $453,000

Chart: Start-up

3.0 Products

As the most progressive company in the industry, MillenniumMart plans to offer a greater number of
products and services in the future so as to create another dimension of competitive advantage. So
that our customers will feel secure, we will subscribe to the security services offered by the shopping
center of which we are a part. This will cut down on graffiti and loitering and insure the safety of both
employees and customers.

MillenniumMart will sell the same products as other convenience stores in the same packaging sizes,
quality, and quantity as other stores. This includes newspapers, magazines, soft drinks, fruit juices,
sport drinks, hot and cold snacks, a limited number of grocery items such as canned soups,
microwaveable meals, condiments, bread, auto products such as fuel additives and cleaning supplies,
pet supplies, paper products, toothpaste, etc.

All products will be locally or nationally branded such as Frito-Lay, Coca-Cola, Jolly Green Giant,
Charmin, Stouffer's, etc. In addition each computerized transaction machine can dispense cash,
stamps, Lotto and phone cards and other coupons and will have the ability to create personal accounts
that can display preferred items, retain shopping lists and other services. An automated, interactive
"customer service rep" will be able to answer questions and pass on comments to the company's
management.

Page 5
 MillenniumMart Inc.

4.0 Market Analysis Summary

Our market is booming. Convenience store industry sales rose 8.6% for 2002. Overall U.S. retail sales
grew by only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the
convenience store industry has become a powerful force in U.S. retailing.

Convenience stores serve the entire purchasing population of its geographical area but focuses on
customers who need to purchase items outside of normal working hours such as swing shift employees
and quick shoppers looking for snacks and related items. Therefore we have segmented our market
into night shoppers, quick shoppers, and others. Growth rates for these three segments match the
population growth for the surrounding area.

Our main competitor is 7-11 which holds approximately 30% of the industry. Other competitors
include Circle K, Fastrip, and any of the 85 grocery establishments on the east coast.

4.1 Market Segmentation

Our target market for our test store encompasses a five mile radius in which the approximate
population is 150,000 (based on census information).

The majority of the residents in this area are Caucasian (58.8%) Black (23.6%) and Hispanic (19%)
with occupations classified as professional/technical, homemaker, or retired. The majority of household
incomes range from $20,000 - $30,000 (50.3%), yet there are also affluent household incomes
ranging from $50,000 - $100,000 (15.4%).

The median income in this area is $48,096, compared to the whole New York area which is $34,248.
The typical "head of household" age is 25 - 34 (22.4%) or age 34 - 44 (23.1%) with a median age of
44.4 years old and an average age of 32 years old.

Target market segments

Convenience stores serve the entire purchasing population of its geographical area but focuses on
customers who need to purchase items outside of normal working hours such as swing shift employees
and quick shoppers looking for snacks and related items.

Table: Market Analysis

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Late night shoppers 3% 78,000 80,340 82,750 85,233 87,790 3.00%
Quick shoppers 2% 42,000 42,840 43,697 44,571 45,462 2.00%
Other 3% 30,000 30,840 31,704 32,592 33,505 2.80%
Total 2.68% 150,000 154,020 158,151 162,396 166,757 2.68%

Chart: Market Analysis (Pie)

Page 6
 MillenniumMart Inc.

4.2 Industry Analysis

Convenience store industry sales rose 8.6% to $86.3 billion for 2002. Overall U.S. retail sales grew by
only 6.3%, and grocery sales followed with 2.4% growth, proving once again that the convenience
store industry has become a powerful force in U.S. retailing.

Pre-tax profit margin in the convenience store industry was the highest since 1988 (1.8%). The 2002
results confirm that a new, upward trend is emerging. This upward trend is based on several factors,
and occurred along with a slow rebound in the general economy.

Merchandise sales per customer increased 7.4% in 2000 suggesting that convenience stores are
placing higher priority in filling the customers' needs. Companies that align themselves properly to fill
those needs will be successful in the future.

4.2.1 Competition and Buying Patterns

7-11 holds approximately 30% of the industry market, and in 1999 their net income was $160 million.
Other competitors include Circle K, Fastrip, and any of the 85 chain grocery establishments on the east
coast.

5.0 Strategy and Implementation Summary

MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel
purchasing experience that will draw shoppers.

The most critical element of MillenniumMart's success will be its marketing and advertising. In order to
capture attention and sales MillenniumMart will use prominent signs at the store locations, billboards,
media bites on local news, and radio advertisements to capture customers.

Many of the initial customers will be drawn to the unique nature of the store and will then have the
opportunity to realize the cost savings of MillenniumMart. We expect an average 27% increase in sales
from year to year. This may seem very high, but considering the level of initial sales and the growth
possibilities, management actually considers this to be conservative.

Page 7
 MillenniumMart Inc.

5.1 Competitive Edge

MillenniumMart's competitive edge will be the lower prices we will charge our customers and the novel
purchasing experience that will draw shoppers. In the convenience store industry, low cost and
availability are the two success criteria. We plan to create these advantages in a new, high-tech
environment that will retain customers.

5.2 Marketing Strategy

The most critical element of MillenniumMart's success will be its marketing and advertising.
Convenience stores serve the entire purchasing population of its geographical area but focuses on
customers who need to purchase items outside of normal working hours such as swing shift employees
and quick shoppers looking for snacks and related items. In order to capture attention and sales
MillenniumMart will use prominent signs at the store locations, billboards, media bites on local news,
and radio advertisements to capture customers. Many of the initial customers will be drawn to the
unique nature of the store and will then have the opportunity to realize the cost savings of
MillenniumMart. Since automated shopping is still in its infancy, the firm expects to invest a great deal
of its available cash and revenues in marketing efforts.

5.3 Sales Strategy

Since our store will be a stand-alone, remote facility, there is little in the way being able to directly
influence how we close the sales other than to have an attractive storefront with our low prices and
easy-to-use system. We believe that this in itself is its own seller. One critical procedure to ensure top
customer service and reliability will be establishing a method for keeping enough inventory of all our
products. We will be using industry data on inventory for other convenience store chains to assist us.

5.3.1 Sales Forecast

Based on a 20% mark-up, our forecasted sales for years one, two, and three respectively are:
$2,480,106; $3,149,735; $4,000,163. This gives us an average 27% increase from year to year. This
may seem very high, but considering the level of initial sales and the growth possibilities, management
actually considers this to be conservative.

These sales figures are based on a conglomerate of commuter and walk-by traffic with an average
$3.00 purchase amount conforming to industry averages. The target profit margin was defined as an
average net profit of all merchandise.

Table: Sales Forecast

Sales Forecast
Year 1 Year 2 Year 3
Sales
Drinks $978,070 $1,242,149 $1,577,529
Snacks $873,277 $1,109,061 $1,408,508
Magazines/newspapers $209,586 $266,175 $338,042
General grocery items $279,449 $354,900 $450,723
Other $139,724 $177,450 $225,361
Total Sales $2,480,106 $3,149,735 $4,000,163

Direct Cost of Sales Year 1 Year 2 Year 3

Drinks $753,114 $956,455 $1,214,697
Snacks $672,423 $853,977 $1,084,551
Magazines/newspapers $161,382 $204,955 $260,292
General grocery items $215,175 $273,273 $347,056
Other $107,588 $136,636 $173,528

Page 8
 MillenniumMart Inc.

Subtotal Direct Cost of Sales $1,909,682 $2,425,296 $3,080,125

Chart: Sales Monthly

Chart: Sales by Year

Page 9
 MillenniumMart Inc.

6.0 Management Summary

As stated earlier, MillenniumMart will be a joint venture between Mr. Wallace Bean and his associates
and the management of Martin-Bower, a large food distribution company. The company officers will
include Mr. Bean as CEO, Mrs. Linda Tuck as CFO, plus Mr. Minoru Takeda, who will be operations
manager. Since the firm is a start-up, there will be little in the way of formal structure at first. The
company also plans to hire three technicians who will service the automated store and a office
manager. Additional personnel will be added once more stores are set up.

Mr. Wallace Bean is a graduate of the University of Texas, Austin's school of business. He has worked
for more than twelve years in the food distribution and grocery store industry, including positions as
vice president of marketing for Fry's Food and Drug, director of special projects for Giant Foods and
more recently, senior vice president for Martin-Bower.

Mrs. Linda Tuck has a graduate degree in finance from Kansas State University and has eight years
experience working for various companies. Her last job was as a financial analyst for Circle K
corporation.

Mr Minoru Takeda is an MBA graduate from the University of Osaka. He has been operational manager
for Kiyama Inc. for the past six years which operates approximately six hundred automated
convenience stores throughout Japan. Mr. Takeda has moved to the United States for the express
purpose of bringing this new type of store to this country.

6.1 Personnel Plan

Initially the company will only have a small staff including upper management, an operations
technician and office manager. All other services, such as bookkeeping, will be outsourced.

Table: Personnel

Personnel Plan
Year 1 Year 2 Year 3
Mr. Bean $42,000 $48,000 $52,000
Mrs. Tuck $42,000 $48,000 $52,000
Mr. Takeda $30,000 $40,000 $48,000
Office manager $20,400 $22,000 $28,000
Technicians $33,000 $56,000 $58,000
Total People 7 7 7

Total Payroll $167,400 $214,000 $238,000

7.0 Financial Plan

The following tables illustrate our financial projections over the next three years. Please note that we
expect to be operating at a loss for the first six months before advertising begins to take effect and
draw in customers.

As retained earnings increase, a debt retirement fund will be established to encourage early
repayment, thus relieving interest expense. Also, a 30-day payment period for purchases will be used
to avoid incurring liabilities.

Page 10
 MillenniumMart Inc.

7.1 Important Assumptions

MillenniumMart is basing its assumptions on a stable growth market using average interest rates over
the past ten years.

Table: General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

7.2 Break-even Analysis

The following table and chart show our Break-even Analysis. Although our break-even point seems
quite high, we are expecting to have higher than average fixed costs during the period of this plan due
to customer "creation costs," R&D costs, higher rent in a premier spot, higher percentage of payroll
costs to overall fixed costs with a small company, and the need to import and pay for the store
facilities. We expect to have a more reasonable positive retained earnings point around year 5.

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even $165,326

Assumptions:
Average Percent Variable Cost 77%
Estimated Monthly Fixed Cost $38,025

Page 11
 MillenniumMart Inc.

Chart: Break-even Analysis

Page 12
 MillenniumMart Inc.

7.3 Projected Profit and Loss

The following table explains our itemized costs and determines gross and net margin. Please note that
these predictions are weighted toward having higher costs in comparison to revenues in case
unexpected hidden costs arise. The charts give a visual representation of the data.

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1 Year 2 Year 3
Sales $2,480,106 $3,149,735 $4,000,163
Direct Cost of Sales $1,909,682 $2,425,296 $3,080,125
Other Costs of Goods $0 $0 $0
Total Cost of Sales $1,909,682 $2,425,296 $3,080,125

Gross Margin $570,424 $724,439 $920,037

Gross Margin % 23.00% 23.00% 23.00%

Expenses
Payroll $167,400 $214,000 $238,000
Sales and Marketing and Other Expenses $60,000 $130,000 $130,000
Depreciation $7,200 $7,200 $7,200
Leased equipment $50,000 $60,000 $60,000
Rent $84,000 $84,000 $84,000
Utilities $28,800 $30,000 $30,000
Accounting/bookeeping $6,500 $9,000 $9,000
Insurance $14,400 $14,400 $14,400
Payroll Taxes $0 $0 $0
Other $38,000 $45,000 $45,000

Total Operating Expenses $456,300 $593,600 $617,600

Profit Before Interest and Taxes $114,124 $130,839 $302,437

EBITDA $121,324 $138,039 $309,637
Interest Expense $16,250 $16,400 $14,650
Taxes Incurred $29,362 $34,332 $86,336

Net Profit $68,512 $80,107 $201,451

Net Profit/Sales 2.76% 2.54% 5.04%

Page 13
 MillenniumMart Inc.

Chart: Profit Monthly

Chart: Profit Yearly

Page 14
 MillenniumMart Inc.

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 15
 MillenniumMart Inc.

7.4 Projected Cash Flow

MillenniumMart will be receiving periodic influxes of cash in order to cover operating expenses during
the first two years as it strives toward sustainable profitability. Almost all of this funding has been
arranged through lending institutions and private investors already. We do not anticipate any cash flow
problems during the next three years.

Table: Cash Flow

Pro Forma Cash Flow

Year 1 Year 2 Year 3
Cash Received

Cash from Operations

Cash Sales $2,480,106 $3,149,735 $4,000,163
Subtotal Cash from Operations $2,480,106 $3,149,735 $4,000,163

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $5,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $50,000 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $54,000 $78,000 $0
Subtotal Cash Received $2,589,106 $3,227,735 $4,000,163

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $167,400 $214,000 $238,000
Bill Payments $2,177,877 $2,961,091 $3,558,207
Subtotal Spent on Operations $2,345,277 $3,175,091 $3,796,207

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $7,000 $13,000
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $5,000 $10,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $30,000
Dividends $0 $0 $50,000
Subtotal Cash Spent $2,345,277 $3,187,091 $3,899,207

Net Cash Flow $243,829 $40,643 $100,956

Cash Balance $357,649 $398,292 $499,248

Page 16
 MillenniumMart Inc.

Chart: Cash

7.5 Projected Balance Sheet

The following table shows the Projected Balance Sheet for MillenniumMart.

Table: Balance Sheet

Pro Forma Balance Sheet

Year 1 Year 2 Year 3
Assets

Current Assets
Cash $357,649 $398,292 $499,248
Inventory $371,402 $282,345 $358,578
Other Current Assets $8,000 $8,000 $8,000
Total Current Assets $737,050 $688,637 $865,826

Long-term Assets
Long-term Assets $72,000 $72,000 $102,000
Accumulated Depreciation $7,200 $14,400 $21,600
Total Long-term Assets $64,800 $57,600 $80,400
Total Assets $801,850 $746,237 $946,226

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities
Accounts Payable $428,518 $226,798 $298,335
Current Borrowing $20,000 $13,000 $0
Other Current Liabilities $10,000 $10,000 $10,000
Subtotal Current Liabilities $458,518 $249,798 $308,335

Long-term Liabilities $150,000 $145,000 $135,000

Total Liabilities $608,518 $394,798 $443,335

Paid-in Capital $374,000 $452,000 $452,000

Retained Earnings ($249,180) ($180,668) ($150,561)
Earnings $68,512 $80,107 $201,451

Page 17
 MillenniumMart Inc.
Total Capital $193,332 $351,439 $502,891
Total Liabilities and Capital $801,850 $746,237 $946,226

Net Worth $193,332 $351,439 $502,891

7.6 Business Ratios

We are using the industry standard business ratios for independent convenience store chains as a
comparison to our own. There are some significant differences between the two since we have a
completely different storefront than our competitors. First of all our accounts receivable are very
different as we expect to have higher sales using credit cards than other stores, due to the
convenience of using credit cards and cash cards at our facility. There is generally a three day waiting
period to receive funds from the credit card company. This is a short period of time compared to a
normal collection day period of 30 days, but it is still something we need to factor for.

In addition, we expect higher percentages in inventory as we will be operating only one store initially
and even many independent convenience store owners often have two or more facilities. Our long-
term assets are low since we are only renting our facilities.

Table: Ratios

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 27.00% 27.00% 2.27%

Percent of Total Assets

Inventory 46.32% 37.84% 37.90% 22.18%
Other Current Assets 1.00% 1.07% 0.85% 26.81%
Total Current Assets 91.92% 92.28% 91.50% 56.12%
Long-term Assets 8.08% 7.72% 8.50% 43.88%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 57.18% 33.47% 32.59% 26.39%

Long-term Liabilities 18.71% 19.43% 14.27% 24.87%
Total Liabilities 75.89% 52.91% 46.85% 51.26%
Net Worth 24.11% 47.09% 53.15% 48.74%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 23.00% 23.00% 23.00% 23.55%
Selling, General & Administrative Expenses 20.26% 20.10% 17.78% 16.21%
Advertising Expenses 0.00% 0.00% 0.00% 0.85%
Profit Before Interest and Taxes 4.60% 4.15% 7.56% 1.02%

Main Ratios
Current 1.61 2.76 2.81 1.68
Quick 0.80 1.63 1.65 0.71
Total Debt to Total Assets 75.89% 52.91% 46.85% 4.63%
Pre-tax Return on Net Worth 50.63% 32.56% 57.23% 57.28%
Pre-tax Return on Assets 12.21% 15.34% 30.41% 10.83%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 2.76% 2.54% 5.04% n.a
Return on Equity 35.44% 22.79% 40.06% n.a

Activity Ratios
Inventory Turnover 10.91 7.42 9.61 n.a
Accounts Payable Turnover 6.06 12.17 12.17 n.a
Payment Days 27 43 26 n.a
Total Asset Turnover 3.09 4.22 4.23 n.a

Page 18
 MillenniumMart Inc.
Debt Ratios
Debt to Net Worth 3.15 1.12 0.88 n.a
Current Liab. to Liab. 0.75 0.63 0.70 n.a

Liquidity Ratios
Net Working Capital $278,532 $438,839 $557,491 n.a
Interest Coverage 7.02 7.98 20.64 n.a

Additional Ratios
Assets to Sales 0.32 0.24 0.24 n.a
Current Debt/Total Assets 57% 33% 33% n.a
Acid Test 0.80 1.63 1.65 n.a
Sales/Net Worth 12.83 8.96 7.95 n.a
Dividend Payout 0.00 0.00 0.25 n.a

Page 19
 Appendix

Table: Sales Forecast

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
Sales
Drinks 0% $28,000 $33,040 $38,987 $46,005 $54,286 $64,057 $75,588 $89,193 $105,248 $124,193 $146,547 $172,926
Snacks 0% $25,000 $29,500 $34,810 $41,076 $48,469 $57,194 $67,489 $79,637 $93,971 $110,886 $130,846 $154,398
Magazines/newspapers 0% $6,000 $7,080 $8,354 $9,858 $11,633 $13,727 $16,197 $19,113 $22,553 $26,613 $31,403 $37,056
General grocery items 0% $8,000 $9,440 $11,139 $13,144 $15,510 $18,302 $21,596 $25,484 $30,071 $35,484 $41,871 $49,407
Other 0% $4,000 $4,720 $5,570 $6,572 $7,755 $9,151 $10,798 $12,742 $15,035 $17,742 $20,935 $24,704
Total Sales $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491

Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Drinks $21,560 $25,441 $30,020 $35,424 $41,800 $49,324 $58,202 $68,679 $81,041 $95,628 $112,841 $133,153
Snacks $19,250 $22,715 $26,804 $31,628 $37,321 $44,039 $51,966 $61,320 $72,358 $85,382 $100,751 $118,887
Magazines/newspapers $4,620 $5,452 $6,433 $7,591 $8,957 $10,569 $12,472 $14,717 $17,366 $20,492 $24,180 $28,533
General grocery items $6,160 $7,269 $8,577 $10,121 $11,943 $14,093 $16,629 $19,623 $23,155 $27,322 $32,240 $38,044
Other $3,080 $3,634 $4,289 $5,061 $5,971 $7,046 $8,315 $9,811 $11,577 $13,661 $16,120 $19,022
Subtotal Direct Cost of Sales $54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638

Table: Personnel

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
Mr. Bean 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Mrs. Tuck 0% $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500
Mr. Takeda 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Office manager 0% $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700
Technicians 0% $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $3,000 $3,000 $4,500 $4,500 $4,500 $4,500
Total People 5 5 5 5 5 5 6 6 7 7 7 7

Total Payroll $12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700

Table: General 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

Page 1
 Appendix
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Table: Profit 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 $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491
Direct Cost of Sales $54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638
Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $54,670 $64,511 $76,123 $89,825 $105,993 $125,072 $147,585 $174,150 $205,497 $242,486 $286,134 $337,638

Gross Margin $16,330 $19,269 $22,738 $26,831 $31,660 $37,359 $44,084 $52,019 $61,382 $72,431 $85,469 $100,853
Gross Margin % 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00% 23.00%

Expenses
Payroll $12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700
Sales and Marketing and Other $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000
Expenses
Depreciation $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Leased equipment $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $6,000
Rent $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Utilities $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Accounting/bookeeping $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $750 $750
Insurance $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Payroll Taxes 15% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $3,000 $4,000 $5,000 $10,000

Total Operating Expenses $35,400 $35,400 $35,400 $35,400 $35,400 $35,400 $36,900 $36,900 $39,400 $40,400 $41,650 $48,650

Profit Before Interest and Taxes ($19,070) ($16,131) ($12,662) ($8,569) ($3,740) $1,959 $7,184 $15,119 $21,982 $32,031 $43,819 $52,203
EBITDA ($18,470) ($15,531) ($12,062) ($7,969) ($3,140) $2,559 $7,784 $15,719 $22,582 $32,631 $44,419 $52,803
Interest Expense $958 $1,375 $1,375 $1,375 $1,375 $1,375 $1,375 $1,375 $1,417 $1,417 $1,417 $1,417
Taxes Incurred ($6,008) ($5,252) ($4,211) ($2,983) ($1,534) $175 $1,743 $4,123 $6,170 $9,184 $12,721 $15,236

Page 2
 Appendix
Net Profit ($14,020) ($12,254) ($9,826) ($6,961) ($3,580) $409 $4,066 $9,621 $14,396 $21,430 $29,681 $35,550
Net Profit/Sales -19.75% -14.63% -9.94% -5.97% -2.60% 0.25% 2.12% 4.25% 5.39% 6.80% 7.99% 8.11%

Table: Cash Flow

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
Cash Received

Cash from Operations

Cash Sales $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491
Subtotal Cash from Operations $71,000 $83,780 $98,860 $116,655 $137,653 $162,431 $191,668 $226,169 $266,879 $314,917 $371,602 $438,491

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $5,000 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $50,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $50,000 $0 $0 $0 $0 $0 $0 $4,000
Subtotal Cash Received $71,000 $133,780 $98,860 $116,655 $187,653 $162,431 $191,668 $226,169 $271,879 $314,917 $371,602 $442,491

Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending $12,700 $12,700 $12,700 $12,700 $12,700 $12,700 $14,200 $14,200 $15,700 $15,700 $15,700 $15,700
Bill Payments $12,062 $120,914 $94,045 $108,734 $126,066 $146,518 $170,637 $198,680 $232,293 $272,239 $319,734 $375,955
Subtotal Spent on Operations $24,762 $133,614 $106,745 $121,434 $138,766 $159,218 $184,837 $212,880 $247,993 $287,939 $335,434 $391,655

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $24,762 $133,614 $106,745 $121,434 $138,766 $159,218 $184,837 $212,880 $247,993 $287,939 $335,434 $391,655

Page 3
 Appendix

Net Cash Flow $46,238 $166 ($7,885) ($4,779) $48,887 $3,212 $6,831 $13,289 $23,886 $26,979 $36,168 $50,835
Cash Balance $160,058 $160,225 $152,340 $147,561 $196,448 $199,661 $206,492 $219,780 $243,667 $270,645 $306,813 $357,649

Table: Balance Sheet

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 Balances

Current Assets
Cash $113,820 $160,058 $160,225 $152,340 $147,561 $196,448 $199,661 $206,492 $219,780 $243,667 $270,645 $306,813 $357,649
Inventory $10,000 $60,137 $70,962 $83,735 $98,807 $116,592 $137,579 $162,343 $191,565 $226,047 $266,735 $314,747 $371,402
Other Current Assets $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Total Current Assets $131,820 $228,195 $239,186 $244,074 $254,368 $321,040 $345,239 $376,835 $419,345 $477,713 $545,380 $629,561 $737,050

Long-term Assets
Long-term Assets $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000 $72,000
Accumulated Depreciation $0 $600 $1,200 $1,800 $2,400 $3,000 $3,600 $4,200 $4,800 $5,400 $6,000 $6,600 $7,200
Total Long-term Assets $72,000 $71,400 $70,800 $70,200 $69,600 $69,000 $68,400 $67,800 $67,200 $66,600 $66,000 $65,400 $64,800
Total Assets $203,820 $299,595 $309,986 $314,274 $323,968 $390,040 $413,639 $444,635 $486,545 $544,313 $611,380 $694,961 $801,850

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities
Accounts Payable $8,000 $117,795 $90,440 $104,554 $121,209 $140,862 $164,052 $190,981 $223,271 $261,643 $307,280 $361,179 $428,518
Current Borrowing $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $20,000 $20,000 $20,000 $20,000
Other Current Liabilities $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal Current Liabilities $33,000 $142,795 $115,440 $129,554 $146,209 $165,862 $189,052 $215,981 $248,271 $291,643 $337,280 $391,179 $458,518

Long-term Liabilities $100,000 $100,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000
Total Liabilities $133,000 $242,795 $265,440 $279,554 $296,209 $315,862 $339,052 $365,981 $398,271 $441,643 $487,280 $541,179 $608,518

Paid-in Capital $320,000 $320,000 $320,000 $320,000 $320,000 $370,000 $370,000 $370,000 $370,000 $370,000 $370,000 $370,000 $374,000
Retained Earnings ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180) ($249,180)
Earnings $0 ($14,020) ($26,274) ($36,100) ($43,061) ($46,641) ($46,232) ($42,166) ($32,545) ($18,150) $3,280 $32,962 $68,512
Total Capital $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 $102,670 $124,100 $153,782 $193,332
Total Liabilities and Capital $203,820 $299,595 $309,986 $314,274 $323,968 $390,040 $413,639 $444,635 $486,545 $544,313 $611,380 $694,961 $801,850

Net Worth $70,820 $56,800 $44,546 $34,720 $27,759 $74,179 $74,588 $78,654 $88,275 $102,670 $124,100 $153,782 $193,332

Page 4