that with our Internet operation, customer support will be available nonstop. The personnel
plan will be developed and refined as customer support increases.
Assumptions regarding personnel have been made for year 1 through year 3 as follows:
n Year 1 ending March 2013—Owner, Mr. John Doe, will draw a salary of $40,000.
n Year 2 ending March 2014—Salaries will be boosted by 10 to 15 percent. Additional staff
will be hired if significant increases in sales warrant.
n The same applies to Year 3 ending March 2015.
Personal Balance Sheet
It is assumed that the owner's private resources will be sufficient to finance any monthly
cash-flow shortage. However, it would be advisable to establish a bank relationship as soon
as possible. Sales could very well increase at a much sharper rate than assumed in initial
conservative projections. Sharper sales will result in a greater need for funds in support of
inventory and receivables. An overdraft line of credit with the bank will be an excellent
cushion to fall back on.
A shorter learning curve will be brought to the business by the owner due to his extensive
background and in-depth market knowledge. He has a clear understanding of the need to
manage costs and forecast future needs so that the business is not “broadsided” by the un-
One other component on which the financial plan is based is wise purchases. Finding the
right product at the right price will enable the business to meet planned margins and main-
tain inventory at an attractive level with a high turn rate.
Mr. John Doe will invest $10,000 in NEWCO, LLC to cover start-up costs. He will also
invest an additional $5,000 when operation takes off in March 2013. The cash-flow projec-
tion available shortly will show the necessity and use of the funds.
As a general rule the company will not sell on credit. However, for very special cases we
might offer short-term credit against valid assurances. We shall accept cash and checks,
Visa, MasterCard, Discover, and American Express, and PayPal on the Internet. All sales
paid via credit cards will be deposited in our business checking account within forty-eight