Executive Summary

Dancing is a historical tradition. Ballroom dancing has been alive at social

functions for centuries, and Swing and Latin are the Waltz and Foxtrot of days
gone by. In recent years, social dance has proved it's long lasting presence in
our lives. It is in our media, our music and day to day social functions. It
isn't usually taught parent-to-child so people are seeking schools where they can
learn. With Dancesport being considered as a medal sport in the next Olympics,
more people will be exposed to Social and Ballroom dance.

U&ME Dance is dedicated to bringing quality and affordable dance instruction to

Bellingham. There is a very active and dedicated ballroom dance community
already located in Bellingham. However, there has never been an actual dance
studio, where these people can expand their knowledge of dance and enjoy
being with other people of like interests. It is our plan to incorporate the existing
dance community into our studio to begin with a strong base of supporters. From
there we will be able to spread the word that dancing is a fun and exciting way to
spend time. There are many benefits to dancing that will attract people from
many backgrounds and interests.

Toni Simler and Mary Evans, a mother/daughter team, are the founders and
owners of U&ME Dance. They have both been very involved in ballroom and
social dancing since 1995. Mary has worked in dance studios in the Seattle area,
where she was a dance instructor and supervisor. In the last three years, she
taught private dance instruction as an independent contractor. Toni recently
retired from Lucent Technologies, where she worked for thirty years as a
manager in customer service, business management and contract management.
She and her husband have been students of dance, taking lessons for many
years. They continue to dance socially. Together, Toni and Mary will provide a
strong team to make U&ME Dance a successful venture.
1.1 Objectives
The following are goals and objectives of U&ME Dance for Year 1 through Year
3:

• Create a dance studio with a warm, supportive atmosphere, which is

based on satisfying customers.
• Provide a social and entertainment forum for people with diverse interests,
backgrounds and ages.
• Provide dance training for students at all levels of dance, from beginner to
advanced.
• Provide continual training, benefits and incentives for staff to encourage a
long-term commitment of employees.
• Increase sales to reach $300K by end of Year 1 and maintain an annual
growth of 15% per year.
1.2 Mission
U&ME Dance offers a place where people can learn to dance, meet new people,
have fun and feel comfortable. We offer a varied dance program with price
options for all levels of interest, with greater emphasis on group classes and
small package sessions to reach dance skill objectives. Our instructors have
access to continual training with some of the area's top professional coaches.
This provides our students with up-to-date steps and technique and access to the
latest dance trends. U&ME Dance welcomes a diversity of people and maintains
a non-smoking and alcohol free environment.
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Company Summary
U&ME Dance, soon to be located in Bellingham, Washington, will provide the
community with a comfortable, friendly environment in which to learn the art of
partnership dancing. U&ME Dance will offer private dance instruction, group
classes, social dance parties and rental facilities for local events.

Ballroom dance, as a sport, as well as an art, has become increasingly popular

worldwide. As a result, the studio can expect to attract a wide cross section of
customers from Bellingham and Whatcom County. U&Me Dance will appeal to
people of all ages, abilities and backgrounds, looking for creative self expression,
exercise and/or social opportunities through dance.

2.1 Start-up Summary

U&ME Dance's start-up costs are based on an assumption that it will lease space
at the Majestic. This space is ready for occupancy but will need a few minor
renovations. The renovations include building out an office on the main floor and
a caterer kitchen.

The other category includes items such as memberships to the Chamber of

Commerce, Visitor and Convention Bureau, and anything else that we may have
forgotten or underestimated.

The current assets include the deposit of $12,000. Long-term assets include
items which will need to be purchased for the business. See the attached table
for more details.

We are not currently requesting a loan, but may need to for operating costs if
the sales forecast is less that anticipated. The owners are investing $50,000
initially.
Start-up

Requirements

Start-up Expenses

Legal $1,000

Accountant $300

Office Supplies, Stationary $500

Brochures $250

Grand Opening $5,000

Signage $500

Other $2,000

Total Start-up Expenses $9,550

Start-up Assets

Cash Required $10,750

Other Current Assets $12,000

Long-term Assets $17,700

Total Assets $40,450

Total Requirements $50,000

Start-up Funding

Start-up Expenses to Fund $9,550

Start-up Assets to Fund $40,450

Total Funding Required $50,000

Assets

Non-cash Assets from Start-up $29,700

Cash Requirements from Start-up $10,750

Additional Cash Raised $0

Cash Balance on Starting Date $10,750

Total Assets $40,450

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabilities (interest-free) $0

Total Liabilities $0

Capital

Planned Investment
Owner Loan/Investment $50,000

Other $0

Additional Investment Requirement $0

Total Planned Investment $50,000

Loss at Start-up (Start-up Expenses) ($9,550)

Total Capital $40,450

Total Capital and Liabilities $40,450

Total Funding $50,000

2.2 Company Ownership

U&ME Dance is a Limited Liability Company owned and operated by Mary Evans
and Toni Simler.

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Services
U&ME Dance is dedicated to bringing the fun and challenge of dancing to
Bellingham and Whatcom County at an affordable cost. We will offer private and
group dance instruction for social through competitive level dancers. U&ME
Dance will also provide a place for dancers to use the skills they have learned, by
having weekly dance parties and seasonal/holiday dances.

U&ME Dance will offer its students a variety of instructional choices. By

offering them several options, we can best serve their individual needs and
financial limitations.

Private Lessons offer students the best value for their investment. With a private
lesson, the students will work one-on-one with an instructor, receiving
personalized instruction and immediate correction. Through experiencing the
physical sensation of connected movement, the student is able to confidently
replicate that movement in order to provide a pleasant and comfortable
experience to other partners. In learning the best methods, one-on-one, both
beginning and advanced students will find they progress faster and more easily,
as they enjoy the sensation of partner dancing.
Group Classes are both an introduction to the experience of dancing with
different partners, and a chance for the students to become familiar with a variety
of step patterns. Rotation of partners, throughout the class allows dancers to
practice steps with different partners. This format promotes comfort in dancing
with several partners, as well as the comraderie that goes along with sharing a
learned experience. Group lessons will be available every week in the traditional
styles and latest club trends. Classes will be offered at every level, from basic
beginner through advanced competitive styling. In addition, specialty classes will
be offered for children and teens.
Practice Dances will be held once a week to allow students an opportunity to
practice the dances learned, in an environment with other students learning the
same thing. Instructors will circulate on the dance floor, assisting with questions
or demonstration of steps, as well as to dance with students.
Facility Rental will be another service offering. The Majestic is currently a very
popular place in Bellingham for weddings, receptions, musical events, etc. We
hope to expand the use of the building by including additional options of use
(church services on Sunday, exercise/yoga classes in the morning).

In addition to these main staples, U&ME Dance will go out into the community to
offer specialty dancing to schools, nursing homes and anyone wanting a
specialized program. U&ME Dance is very closely linked to the dance studios in
the Seattle area and as such, can offer exchange programs, which will give our
students additional opportunities.

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Market Analysis Summary

Ballroom Dancing is a multi-billion dollar industry that will only continue to grow,
especially now that the International Olympic Committee (IOC) has awarded
provisional recognition to Ballroom Dancing and Dancesport. According to a
recent press release by WGBH-Television, more than one million people enroll in
ballroom dance classes each year. Since 1985, the number of amateur ballroom
dancers has increased by 25% each year.
The timeless popularity of social dancing, combined with the growing interest in
the trendy dances, has proven to be a winning combination around the world. We
are confident it will produce the same results in Bellingham.

4.1 Market Segmentation

According to the information published by the Bellingham/Whatcom Chamber of
Commerce, Whatcom County had a total population of 166,814 for the year 2000
and is estimated to grow approximately 5% per year to 212,000 by the year
2010. The city of Bellingham had a total population of 68,890 in the year 2001.
This figure has grown 30%, since 1990. Bellingham is surrounded by the smaller
towns of Ferndale, Blaine, Lynden, Sumas, Everson, and Nooksak.

U&ME Dance feels that the population of Bellingham, as well as these smaller
towns, are all potential customers. We have divided these potential customers
into the following groups:

• Children/Teens (19 yrs. and under): There are 36,965 children and
teens in Whatcom County, according to the 2000 census information. Our
plan is to have special classes designed specifically for the younger people.
• College Students/Young Adults (20-24 yrs): There are 16,776 people who
fall in this category, according to the Whatcom County 2000 census
information.
• Single and Married Adults (25-55 yrs): This will include single and
married couples. The Whatcom County 2000 census information showed
there were 69,865 people in this age group.
• Seniors/Retired (56+ yrs): The people in this group will be a combination
of retired and working people. The Whatcom County 2000 census
information showed 32,998 people in this age group.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Children/Teens (5-19) 5% 36,965 38,813 40,754 42,792 44,932 5.00%

College
Students/Young Adults 5% 16,776 17,615 18,496 19,421 20,392 5.00%
(20-24)

Single and Married

5% 69,865 73,358 77,026 80,877 84,921 5.00%
Adults (25-55)

Seniors and Retired

5% 32,998 34,648 36,380 38,199 40,109 5.00%
(56+)

Total 5.00% 156,604 164,434 172,656 181,289 190,354 5.00%

4.2 Target Market Segment Strategy

As indicated in the previous table and illustration, our market is limitless.
Everyone who has the ability to walk can learn to dance. It is our job to
present dance to these people and introduce and develop interest in the
community for ballroom and social dance.

For children and teens it is important to show the fun in dance. We can
introduce Ballroom Dance through Junior and Senior High School dance and drill
teams. The United States Amateur Ballroom Dance Association (USABDA) has
made generous efforts across the country to develop dance in younger
generations. There is a USABDA chapter in Bellingham, which will assist in
getting dance introduced to this age group. We will also look to affiliate our
studio with the local Jazz and Ballet studios for mutual advertising benefits.
Colleges across the country have been adding Ballroom dance classes to their
curriculum and have been closely involved in Dancesport competitions whose
sell-out crowds rival those of football and basketball games. Western
Washington University does not currently have a Ballroom Dance curriculum,
however, there is a swing club, Western Washington University Swing Kids. We
would like to start by including the swing kids in our studio events and assisting
their efforts to spread the popularity of swing. We hope to work with the
University to offer classes to their students for credit.

Single and married adults between the ages of 25 and 55 have traditionally been
the biggest supporters of the ballroom dance studio community. This group is
generally looking for new things to try and do. For singles we offer another way
to meet people, and date. We will also have special wedding packages, which
offer the new couple options for learning their first dance. For married
couples dance is something new to learn together and provides a great social
outlet. By working with the local clubs, we can be sure there are places for
people to use the dance they are learning and in turn spread dance further into
the community.

Retired people and seniors (ages 55 and up) represent a small section of our
market. However these people usually turn into long-term dancers. Dance is a
wonderful hobby, and low impact exercise that benefits the mind, the body, and
social aspects of life. For this age group learning to dance is done for reasons
such as something they have always wanted to do, something they used to
do and would like to do again, for use on vacations, or an exercise to keep their
bodies healthy. We plan to offer our services to local nursing homes, as well as
to those who come in to the studio for lessons.

4.3 Service Business Analysis

The ballroom dance industry has experienced substantial growth at the rate of
25% each year since 1985. There are two key factors for the rise in demand for
dance instruction and places to partnership dance:

• In order to gain recognition by the IOC as a sport, the International

DanceSport Federation (IDSF) signed an 11 year agreement with a major
sports promoter, International Management Group (IMG/TWI), which began
in 1998. IMG/TWI are IDSF's commercial representatives, handling all
television, sponsorship, and implementing its medium and long-term
marketing strategies worldwide. The industry, as a whole, has benefited
directly through the increase in public interest this campaign has achieved.
 • Thepopularity of trendy dances like Lindy Hop, Argentine Tango, and
Salsa have also made an impact on the number of people wanting to learn
how to dance.

The popularity of partnership dancing has grown immensely in the last decade.
Those who are familiar with dance are well aware of how fun and addicting an
evening of dancing can be. Those who have not yet experienced the thrill of
moving gracefully around the dance floor with a partner, need a convenient,
relaxed atmosphere, where they can feel comfortable learning and utilizing
current popular dances. U&ME Dance seeks to provide its customers with
affordable quality instruction in a fun and supportive environment.

4.3.1 Competition and Buying Patterns

There are currently no other ballroom or social dance studios in Bellingham or
Whatcom County. However, there are a few independent dance teachers, who
teach classes at Whatcom Community College, at local bars, or rent floor space.
There is also a local group, Dance Connection, that holds dances on Friday
nights at the local Eagles Hall. This group does not have a studio and its main
purpose is to find places for people to dance and enjoy themselves. The founder
and administrator of Dance Connection has recently moved out of town
and asked U&ME Dance to take over the newsletter, and Friday night dances
effective in July 2002.

This leaves the independent teachers as our only competition. U&ME Dance
plans to work in concert with these instructors and will offer a place for teachers
to rent space to continue teaching on their own, and a place to go out dancing.
Our affordable pricing, elegant facility and quality instruction will be a much
needed bonus to Bellingham.

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Strategy and Implementation Summary

U&ME Dance marketing strategy will target people who wish to get more for their
investment in dancing. A large variety of dance lesson packages and programs
will be offered in an effort to make dancing affordable to any budget. Teachers
will be highly skilled and professional, keeping with the image of the studio. The
ballroom will be an elegant place to come, where customer service is number
one. Marketing venues will include placement advertisement, direct mail, Internet
Web page and include partnerships with community businesses.

U&ME Dance sales strategy will be based on a consultative style where the
customers and teachers work together to identify and plan a course of action to
satisfy the customer. Teachers will participate in continuous consultative sales
training and receive regular sales coaching where the identification of customer
buying criteria will be paramount. Sales closes will be based on demonstration of
satisfying the customer criteria.

5.1 Competitive Edge

As previously mentioned, there is currently no other ballroom or social dance
studio in Bellingham or Whatcom County. This automatically gives U&ME Dance
a competitive edge on the market. However, we do not plan to sit back and think
that people will come to us if we wait. Because Bellingham is not used to having
a dance studio, this gives us the challenge of introducing the benefits of having a
dance studio. One advantage to us, is that there is a strong dance community,
including a local chapter of United States Amateur Ballroom Dance Association
(USABDA) in the area.

We plan to keep our prices in line with the lower cost of living expenses of the
Bellingham area. We will offer a wide variety of very competitive packages. Our
teachers will be trained in the latest trends and with up-to-date styling of today's
dances. We plan to partner with many of the studios in the Seattle area so that
we can keep up with the trends of the big city and offer more variety to our
students.

5.2 Marketing Strategy

Our marketing plan will be very simple. Satisfy our customers and provide them
with the desire to continue dancing. A happy customer will not only keep coming
back, but they will tell other people about U&ME Dance. We will offer discount
awards as an incentive to people who provide us with referrals.

We will market fun! What better product could we possibly have than that?! Our
biggest challenge will be getting people who have never been in a dance studio
before to come and try us out. Many people have never considered taking dance
lessons before. Our marketing message will emphasize the opportunity to meet
people, to enhance the quality of leisure time, to gain health benefits and gain
life-long skills that will give them respect from their peers.
We will advertise in the yellow pages, local newspapers, flyers, coupons,
discount books, radio, and signs around town.

5.3 Sales Strategy

One of our marketing strategies is to advertise discount specials or introductory
offers. These are designed to introduce people to the different dances our studio
offers, and the dances our customers want to learn. Our instructors will work
with the customer on these specials to discover what it is they are looking for in
dance, and to outline a course that suits the customer's wants and needs. When
a course outline is agreed upon by customer and instructor they will meet with a
manager for a brief consultation to make sure the customer is satisfied with the
lesson outline and that the course will meet the expectations of the customer.
The customer will then sign up for the lessons by contract and commit to a series
of appointments; the studio also commits to these appointments.

We will offer a variety of courses, all mixed with combinations of private lessons,
group lessons, and practice parties. Our course outlines will follow industry
standards of recognized progression in dance, referred to as program dancing.
The different levels of dance are recognized as Social Foundation, Bronze,
Silver, and Gold, which is consistent with the dance industry. Although our
instructors will be designing course outlines according to the specific needs of
our customers, there are basic packages that we can offer in these different
levels. Also, because of the size and amount of time required for those levels
after Social Foundation, we have divided them into Bronze I, and Bronze II, Silver
I, and Silver II, and Gold or our Showcase Level.

U&ME Dance also offers the ability for customers to take group class packages.
These may be more affordable, and although take longer for advancement, might
be more preferable to some of our customers.

In addition U&ME Dance offers something unique from other dance studios,
which is a membership card.

There are three different memberships offered:

1. The Basic, which allows unlimited admission to dance parties as

well as discounts to special events.
2. The Gold, which allows limited access to group classes, unlimited
admission to dance parties, five party guest passes, and discounts on
special events.
 3. The Platinum, which allows unlimited access to group classes,
unlimited admission to parties, ten party guest passes, and discounts to
special events. These memberships will last one year.

U&ME Dance will offer discounts for larger dance packages. All payments for
dance lessons will be collected at time of purchase. Customers may be given 30
days to pay with a down payment of 50%. We will accept payment in the form of
cash, check, or credit card.

5.3.1 Sales Forecast

This sales forecast is an estimation on the number of customers we acquire while
open, and an average cost of lesson outlines. The Social Basics Introductory
special is averaged at $50, but this may vary depending on the special running
that month. The special is not an accurate count for the cost of lessons, and is
used primarily to bring people who may be interested to our studio so that they
may continue with more lessons. We are forecasting that we will sell 20
Introductory packages in our first month, and 30 each month there after, as this is
what we can handle with the hours we have available.

The Social Foundation average package price is $720. It is an average price

based on the assumption that students would buy a package containing 12
private lessons and 12 group lessons. We offer a 20% for paying in cash, and
have therefore shown $600 for our package price to show the discount. We are
forecasting to sell a social foundation dance package to 25% of the people who
come to take the introductory special.

Bronze I is priced at $1,200, and is based on the assumption that students would
buy this package with 19 privates and 25 groups. We offer a 20% discount to
people who pay cash for their lesson, and show this in our forecast by making
this package show at $1,000. We are forecasting to sell a bronze dance
package to 50% of the people who bought the social foundation package.
Bronze II is priced at $1,440, and based on the assumption that students would
buy a package containing 24 privates and 24 groups. We offer a 20% discount
for paying in cash, and show this in our forecast by showing this package price at
$1,200. We do not expect to sell any Bronze II packages the first couple of
months. Starting on the third month we are forecasting to sell 50% of those that
were in Bronze I.
Silver I and Silver II $1,620. These are both based on the assumption that the
student buys a package of 27 privates and 27 groups. We offer a 20% discount
for students who pay in cash, and have shown this in our forecast with our
package being $1,350. Starting in the fifth month we are forecasting to sell at
least two Silver I dance package per month. We have estimated that we will not
sell any Silver II packages until the end of the first year of business.

We have kept our estimates low, knowing that we are not only a new business
but a new type of business in this community, trying to break through with our
marketing. Therefore, we are showing a 25% closing ratio for new students. That
is saying that 25% of the customers who come in for the introductory special will
buy the next level of dance, Social Foundation package. We then show a 50%
closing ratio for existing student, 50% of Social Foundation customers will move
on to Bronze I, etc. Mary's previous sales results were 70% (out of every ten
potential customers she sold a dance package to seven).

Memberships were forecasted to show that people would buy the Gold at $600
each. We forecast to sell an average of five memberships per month, with that
average increasing to 10 during the peak months of November-February.
Miscellaneous sales include series group classes and kids group classes
averaged at 10 people per class.
Weekly dances will be held each Friday night. We will charge $5.00 per person
plus $3.00 if they come for the pre-dance lesson.

The Majestic is currently reported as bringing in about $30 to $40K per year in
space rentals. We will continue to rent out this space and increase the
advertising.

Other category includes one time privates lessons, special services (i.e. DJ
service, lesson packages for special events, wedding packages, etc.).
Sales Forecast
Year 1 Year 2 Year 3

Sales

Introductory Specials-Social Basics $18,000 $20,700 $23,805

Social Foundation Syllabus $57,600 $66,240 $76,176

Bronze 1 Syllabus $48,000 $55,200 $63,480

Bronze 2 Syllabus $48,000 $55,200 $63,480

Silver 1 Syllabus $21,600 $24,840 $28,566

Silver 2 Syllabus $2,700 $3,105 $3,571

Memberships $48,000 $55,200 $63,480

Miscellaneous Packages $9,330 $10,730 $12,339

Weekly Dances $12,000 $13,800 $15,870

Space Rental $33,860 $38,939 $44,780

Other $2,900 $3,335 $3,835

Total Sales $301,990 $347,289 $399,382

Direct Cost of Sales Year 1 Year 2 Year 3

Introductory Specials-Social Basics $0 $0 $0

Social Foundation Syllabus $9,792 $11,261 $12,950

Bronze 1 Syllabus $8,160 $9,384 $10,792

Bronze 2 Syllabus $8,160 $9,384 $10,792

Silver 1 Syllabus $3,672 $4,223 $4,856

Silver 2 Syllabus $460 $528 $607

Memberships $0 $0 $0

Miscellaneous Packages $0 $0 $0

Weekly Dances $0 $0 $0

Space Rental $0 $0 $0

Other $0 $0 $0

Subtotal Direct Cost of Sales $30,244 $34,780 $39,997

5.4 Milestones
The following milestones reflect an approximate timeframe and cost for
beginning and completing actions that will be needed to get U&ME Dance up and
running. Our goal is to open our doors to customers and begin teaching dance
by September 1st, 2002. We realize this date is subject to the timeframe for
renovation completion, permits, etc. and may need to be adjusted.

Milestones

Milestone Start Date End Date Budget Manager Department

Meet with SBDC 4/16/2002 9/1/2002 $0 Both Marketing

Legal 6/1/2002 9/1/2002 $750 Both Marketing

Develop Web Site 4/1/2002 4/5/2002 $90 Mary Evans Marketing

Train New Teachers 4/15/2002 9/1/2002 $0 Mary Evans Marketing

File for State Business

6/1/2002 7/1/2002 $0 Toni Simler Marketing
License

File for City Permits 6/1/2002 7/1/2002 $0 Toni Simler Marketing

Negotiate Lease 6/1/2002 9/1/2002 $0 Both Marketing

Order Tables and Chairs 7/1/2002 8/1/2002 $3,750 Both Web

Purchase Sound System 8/1/2002 9/1/2002 $2,000 Both Web

Renovate Space 7/1/2002 9/1/2002 $0 Both Department

Acquire Insurance 6/1/2002 8/1/2002 $2,000 Toni Simler Department

Create Calendar of Events 7/1/2002 9/1/2002 $100 Mary Evans Department

Open Doors for Business 9/1/2002 9/1/2002 $0 Both Department

Begin Advertising 7/1/2002 9/1/2002 $2,000 Toni Simler Department

Grand Opening 11/2/2002 11/2/2002 $3,000 Both Department

Totals $13,690

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Web Plan Summary

U&ME Dance has a Web page, www.uandmedance.com, that is designed to
provide a convenient way for people to discover our studio. For marketing
purposes the Web page will be linked to other dance Web sites and, since it has
dance in the title, it will show up on different search engines. Our students will be
able to use the Web site to look up group class schedules, upcoming events,
studio news, and lesson prices. Students and prospective students will also be
able to contact teachers via e-mail. Teachers will have the Web site on their
business cards, and it will appear on our ads to offer people a chance to look at
the space, meet the teachers and check prices, and ask questions before they
enter the studio.
6.1 Website Marketing Strategy
We plan to link our Web site with some prominent Seattle area dance Web sites
as well as the city Web sites, and local recreational sites. We will also link with
some national Web sites in order to increase the possibility of people reaching us
on the Web. By having the word dance in our title we should show up easily on
different search engines, which will increase our potential to be seen by our own
market.

Our Web site has been designed to offer looks into our prices, lesson outlines
and definitions, our staff and pictures of the studio. We will provide pages that
explore upcoming events at the studio as well as community dance events. We
will keep people posted on the national news of dance as well as local. We will
always have a current calendar of events for the convenience of our students.
We will also have a showboard to show off different pictures of events from our
studio.

U&ME Dance will also have a link page for other studios in Washington and
national, places to dance, and national dance organizations.

6.2 Development Requirements

We have created and maintained our Web page ourselves. We will continue to
do so in the future.

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Management Summary
U&ME Dance will be a very small company with the two owners, Mary Evans and
Toni Simler, responsible for managing and directing all activities.

Mary Evans, owner and dance director, will primarily be responsible for the
following:

• Teaching advanced students.

• Hiring, training and supervision of new instructors.
• Scheduling and planning the dance group lessons and special events.
• Creating dance lesson programs and packages.
• Studio events.
Mary Evans brings with her seven years of experience as a dance instructor, as
well as certification as a dance instructor from the National Dance Teachers
Council of America (NDTCA). She has knowledge of the operation of dance
studios from her training with previous studio managers, and experience of
management herself. She also brings with her, knowledge of the dance industry,
the champions, the styles, and experience with previous students. Her six years
of teaching have brought her many connections that can benefit U&ME Dance.

Toni Simler, Owner and Business Director, will primarily be responsible for the
following:

• Teach social foundation/bronze students

• Managing the accounting/financial aspect of the company
• Bookkeeping/payroll
• Design and develop advertising and marketing strategies
• Contract negotiation/vendor relations

Toni brings thirty years of working in corporate business, where she was most
recently a business manager, contract manager and call center manager for
Lucent Technologies and AT&T. Most of her career in telecommunications
centered around customer service. She will be able to put this knowledge and
experience to good use at U&ME Dance. In addition, Toni with her husband have
been dance students since 1995. She knows firsthand how it feels to be a
student and brings with her the knowledge she learned while taking dance
lessons for five years.

7.1 Personnel Plan

A teacher training class began in April to train two teachers. These teachers will
be given the training for free with an understanding that they are neither hired nor
paid during this time. In exchange for this training, they will be offered a job, once
U&ME Dance gets enough customers. Our goal is to have five part time/full time
instructors by the end of 2002, which includes the two owners.

At some point in the future, we will see about hiring a receptionist.

Personnel Plan
Year 1 Year 2 Year 3

Owners Salary/Distribution $65,000 $72,000 $84,000

Instructors Compensation $33,150 $40,000 $40,000

Other $0 $0 $0

Total People 5 5 5

Total Payroll $98,150 $112,000 $124,000

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m

Financial Plan
• We plan to use our own start-up cash to finance the business. The
Majestic is a turn key building for this type of business, requiring very
limited contract work for us to bring in. A kitchen space and office window
are to be negotiated with the building owner. Our start-up requirements are
business assets, teaching supplies, and advertising.
• We want to finance growth mainly through cash flow.
8.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown
in the following table as annual assumptions. The monthly assumptions are
included in the appendix. From the beginning, we recognize that collection of
payments for dance lesson packages is critical, however, not a factor we can
influence easily. Interest rates, tax rates, and personnel burden are based on
conservative assumptions.

Three of the more important underlying assumptions are:

1. We assume that people in Whatcom County and more importantly,

Bellingham, will be interested in learning to dance and will give us a try.
2. We assume that the area will continue to grow, as in the past, and
at the projected rate of 5% per year.
3. We assume that the Majestic will continue to be rented for events
as in the past.

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

8.2 Break-even Analysis

We will need an average of thirty new students each month taking the
introductory classes. Of these thirty students, we are anticipating that 25% will
stay to take additional classes (i.e. Social Foundation, Bronze, etc.). We realize
that we may have a slow start, until the word gets out about our business, and
therefore, will take a few months to "ramp up" to thirty new students.

Break-even Analysis

Monthly Revenue Break-even $22,393

Assumptions:

Average Percent Variable Cost 10%

Estimated Monthly Fixed Cost $20,150

8.3 Projected Profit and Loss
Our projected profit and loss is shown on the following table, with sales
increasing at a rate of 15% year over year. If we are able to meet our sales
forecast, we will begin making a profit almost immediately. Traditionally in the
dance business the slower months are in the mid-summer. However, the facility
rental is higher in the Summer and should, therefore, supplement the slower
teaching months.

The detailed monthly projections are included in the appendix.

Pro Forma Profit and Loss
Year 1 Year 2 Year 3

Sales $301,990 $347,289 $399,382

Direct Cost of Sales $30,244 $34,780 $39,997

Other Production Expenses $0 $0 $0

Total Cost of Sales $30,244 $34,780 $39,997

Gross Margin $271,746 $312,509 $359,385

Gross Margin % 89.99% 89.99% 89.99%

Expenses

Payroll $98,150 $112,000 $124,000

Sales and Marketing and Other Expenses $45,100 $45,800 $52,500

Depreciation $3,540 $3,540 $3,540

Utilities $9,000 $10,000 $11,000

Telephone $2,400 $2,400 $2,400

Insurance $1,800 $1,800 $1,800

Rent $72,000 $72,000 $74,712

Payroll Taxes $9,815 $11,200 $12,400

Other $0 $0 $0

Total Operating Expenses $241,805 $258,740 $282,352

Profit Before Interest and Taxes $29,941 $53,769 $77,033

EBITDA $33,481 $57,309 $80,573

Interest Expense ($550) ($1,700) ($2,900)

Taxes Incurred $9,147 $16,641 $23,980

Net Profit $21,344 $38,828 $55,953

Net Profit/Sales 7.07% 11.18% 14.01%

8.4 Projected Cash Flow

Cash flow projections are critical to our success. The annual cash flow figures
are included here and the more important detailed monthly numbers are included
in the appendix. The business will generate more than enough cash flow to
cover all of its expenses. The monthly cash flow is shown in the following chart,
with one bar representing the cash flow per month, and the other the monthly
cash balance.

Pro Forma Cash Flow

 Year 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales $301,990 $347,289 $399,382

Subtotal Cash from Operations $301,990 $347,289 $399,382

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $0 $0 $0

Subtotal Cash Received $301,990 $347,289 $399,382

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $98,150 $112,000 $124,000

Bill Payments $163,661 $192,360 $214,001

Subtotal Spent on Operations $261,811 $304,360 $338,001

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $11,000 $12,000 $12,000

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $272,811 $316,360 $350,001

Net Cash Flow $29,179 $30,929 $49,381

Cash Balance $39,929 $70,858 $120,239

8.5 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of
net worth, and a sufficiently healthy financial position. The monthly estimates are
included in the appendix.

Pro Forma Balance Sheet

Year 1 Year 2 Year 3

Assets

Current Assets

Cash $39,929 $70,858 $120,239

Other Current Assets $12,000 $12,000 $12,000

Total Current Assets $51,929 $82,858 $132,239

Long-term Assets

Long-term Assets $17,700 $17,700 $17,700

Accumulated Depreciation $3,540 $7,080 $10,620

Total Long-term Assets $14,160 $10,620 $7,080

Total Assets $66,089 $93,478 $139,319

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $15,296 $15,856 $17,744

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $15,296 $15,856 $17,744

Long-term Liabilities ($11,000) ($23,000) ($35,000)

Total Liabilities $4,296 ($7,144) ($17,256)

Paid-in Capital $50,000 $50,000 $50,000

Retained Earnings ($9,550) $11,794 $50,622

Earnings $21,344 $38,828 $55,953

Total Capital $61,794 $100,622 $156,575

Total Liabilities and Capital $66,089 $93,478 $139,319

Net Worth $61,794 $100,622 $156,575

8.6 Business Ratios

The following table outlines some of the more important ratios from the Fine Art
Schools industry. The final column, Industry Profile, details specific ratios based
on the industry as it is classified by the Standard Industry Classification (SIC)
code, 7911.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile

Sales Growth 0.00% 15.00% 15.00% 16.60%

Percent of Total Assets

Other Current Assets 18.16% 12.84% 8.61% 33.90%

Total Current Assets 78.57% 88.64% 94.92% 43.80%

Long-term Assets 21.43% 11.36% 5.08% 56.20%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 23.14% 16.96% 12.74% 36.40%

Long-term Liabilities -16.64% -24.60% -25.12% 22.60%

Total Liabilities 6.50% -7.64% -12.39% 59.00%

Net Worth 93.50% 107.64% 112.39% 41.00%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 89.99% 89.99% 89.99% 0.00%

Selling, General & Administrative

82.92% 78.80% 75.98% 70.60%
Expenses

Advertising Expenses 7.95% 6.91% 7.51% 3.60%

Profit Before Interest and Taxes 9.91% 15.48% 19.29% 3.90%

Main Ratios

Current 3.40 5.23 7.45 1.40

Quick 3.40 5.23 7.45 1.01

Total Debt to Total Assets 6.50% -7.64% -12.39% 59.00%

Pre-tax Return on Net Worth 49.34% 55.13% 51.05% 3.70%

Pre-tax Return on Assets 46.14% 59.34% 57.37% 8.90%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 7.07% 11.18% 14.01% n.a

Return on Equity 34.54% 38.59% 35.74% n.a

Activity Ratios

Accounts Payable Turnover 11.70 12.17 12.17 n.a

Payment Days 27 29 28 n.a

Total Asset Turnover 4.57 3.72 2.87 n.a

Debt Ratios

Debt to Net Worth 0.07 -0.07 -0.11 n.a

Current Liab. to Liab. 3.56 0.00 0.00 n.a

Liquidity Ratios

Net Working Capital $36,634 $67,002 $114,495 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.22 0.27 0.35 n.a

Current Debt/Total Assets 23% 17% 13% n.a

Acid Test 3.40 5.23 7.45 n.a

Sales/Net Worth 4.89 3.45 2.55 n.a

Dividend Payout 0.00 0.00 0.00 n.a

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