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Executive Summary
Executive Summary
Introduction It is the mission of Visigoth Imports to provide complete import/export brokerage services including purchase contracts, shipping, warehousing, and delivery scheduling. The company will concentrate on special and cultural imports from mumbai and navi mumbai to the unique Bavarian town of Leavenworth, WA. Visigoth also plans to provide trade consultation services to newly started farms created under the Puget Consumers Co-op's Farmland Fund initiative. The Company Visigoth Imports will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Frank Curtiss, a former master distributor with Fisher-Mills. Mr. Curtiss has brought together a highly respected group of individuals who are well versed in foreign trade processes. The company has a limited number of private investors and does not plan to go public. The company has its main offices in Wenatchee, Washington. The facilities include conference rooms and office spaces. The company expects to begin offering its services in June. The Services Visigoth offers complete import/export brokerage services plus inventory consulting services. As mentioned previously, this includes the following:
It must be noted that Visigoth does not posess any warehousing facilities and intends to outsource this particular service. We expect to earn revenues by charging a commission based on the value of goods moved per order. The Market Visigoth will be concentrating on servicing just two types of clients, the gift shops of Leavenworth, Washington, and the farmers of the Puget Consumers Co-op (PCC). For both market segments, we have secured exclusive contracts or endorsements putting us in a unique position to service these niche firms and their needs. Profitability in these two markets is expected to be excellent, especially in the import section as Leavenworth draws in over a million tourists each year. We expect profitability in the co-op end to be much slower in the first five years of operation, but it too will increase steadily. Financial Considerations Start-up assets required include expenses and cash needed to support operations until revenues reach an acceptable level. Most of the company's liabilities will come from outside private
investors and management investment, however, we have obtained current borrowing from Bank of America Commercial Investments, the principal to be paid off in two years. A long-term loan through Charter Bank of Nieurich will be paid off in ten years. The company expects to reach profitability in year 2 and does not anticipate any serious cash flow problems. We expect that about 3,500 units per month will guarantee a break-even point.
1.1 Mission
It is the mission of Visigoth Imports to provide complete import/export consultation and brokerage services including purchase contracts, shipping, warehousing, and delivery. The company will concentrate on special and cultural imports from Germany and Scandinavia to the unique Bavarian town of Leavenworth, WA. Visigoth also plans to export apples and other produce by newly started farms created under the Puget Consumers Co-op's Farmland Fund initiative. It is our long-term goal to become the preferred import company for the unique tourist town of Leavenworth. Visigoth understands that the import shops and restaurants in Leavenworth have special needs of most unique gifts for the million tourists that visit the town annually. Visigoth Imports also understands that the newly launched farms of the PCC farmland fund initiative also have higher costs than most competitors and will need to export their produce at a cost that provides sufficient profit. Visigoth Imports has a combined 35 years of experience working in the import/export business. Our philosophy is in creating a long-term relationship with clients so that the delivery of their products becomes a seamless experience that promotes loyalty.
Differentiate our services to our niche clients so that they realize that we are better able to serve their needs than a more generic competitor. Keeping close contact with clients and establishing a well functioning long-term relationship with them to generate repeat business and create a top notch reputation. Establish a comprehensive service experience for our clients that includes consultation, product/client search, purchasing contracts, warehousing, shipping, delivery, and follow up service analysis.
1.3 Objectives
The three year goals for Visigoth Imports are the following:
Achieve break-even by year 2. Retain our long-term contracts with local import shops in Leavenworth, WA, through excellent customer service. Become the premier importer of German and Scandinavian specialty products in Leavenworth, and become the prime exporter of apples and other produce for the farmers of the PCC Farmland Fund initiative.
Company Summary
Visigoth Imports will be a limited liability partnership registered in the state of Delaware for tax purposes. Its founder is Mr. Frank Curtiss, a former master distributor with Fisher-Mills. Mr. Curtiss has brought together a highly respected group of individuals who are well versed in the various aspects of foreign trade processes. The company has a limited number of private investors and does not plan to go public. The company has its main offices in Wenatchee, Washington. The facilities include conference rooms and office spaces. The company expects to begin offering its services in June. The company's main clients will be small import shops in the Leavenworth area and start-up farms throughout the state. By focusing on small niche market entrepreneurs, we believe we will be able to provide superior and more efficient service than other import/export firms.
Start-up Requirements Start-up Expenses Legal $2,000 Insurance $1,000 Utilities $200 Rent $2,000 Accounting and bookkeeping fees $2,000 Expensed equipment $2,000 Advertising $4,000 Other $8,000 Total Start-up Expenses $21,200 Start-up Assets Cash Required $38,550 Other Current Assets $15,000
Start-up Funding Start-up Expenses to Fund $21,200 Start-up Assets to Fund $63,550 Total Funding Required $84,750 Assets Non-cash Assets from Start-up $25,000 Cash Requirements from Start-up $38,550 Additional Cash Raised $0 Cash Balance on Starting Date $38,550 Total Assets $63,550 Liabilities and Capital Liabilities Current Borrowing $9,000 Long-term Liabilities $12,000 Accounts Payable (Outstanding Bills) $2,000 Other Current Liabilities (interest-free) $8,000 Total Liabilities $31,000 Capital Planned Investment Mr. Frank Curtiss $15,000 Ms. Hannah Mills $13,000 Mr. Steve Iltheus $13,000 Mr. Pierce Bolm $5,000 Others $7,750 Additional Investment Requirement $0 Total Planned Investment $53,750 Loss at Start-up (Start-up Expenses) ($21,200) Total Capital $32,550 Total Capital and Liabilities $63,550 Total Funding $84,750
Services
Visigoth offers complete import/export brokerage services plus inventory consulting services. As mentioned previously, this includes the following:
Supplier/buyer identification Purchasing process contracting and consulting Shipping setup Warehousing arrangements Delivery
It must be noted that Visigoth does not posess any warehousing facilities and intends to outsource this particular service.This means that we will have virtually no variable costs associated with unit sales. Visigoth will be importing such things as steins, figurines, Christmas gifts, germanic foodstuffs, cuckoo clocks, and nutcrackers from Germany, where Mr. Curtiss has had extensive experience. In addition Visigoth will be importing Scandinavian wool products such as sweaters and other gift items. The company will be exporting produce, primarily apples, to Europe. Our revenue model is based on a commission rate charged to our clients scaled on the dollar value of goods moved per order.
Market Analysis Year 1 Potential Customers Growth Leavenworth 1% 34 businesses Pugent Consumer Co5% 72 op farms Total 3.58% 106 34 76 110 Year 2 34 80 114 Year 3 34 84 118 Year 4 34 88 122 Year 5 CAGR 0.00% 5.14% 3.58%
has become a pillar of the tourism industry in the Pacific Northwest. Today, more than a million tourists come to Leavenworth yearly, each visitor finding their own love affair with the community. The town brings in an average 24 million dollars in revenue each year, and since much of the town's profits are based on the sale of alpine and Scandinavian gifts, the opportunity for a company such as Visigoth is almost unmatched. In 2002 a town meeting of the principal shop owners in Leavenworth was held concerning the present contracts with the community's main importer, Deutsche Gifts. The previously good relations between the community and the import firm had soured due to rising costs and unreliable service. The result of the meeting was to look for another importer better able to meet the local needs once the current contract expired. Mr. Frank Curtiss successfully bid for the contract, and the idea of Visigoth was born. Exports Visigoth has made arrangements to export produce from member farms established by the Puget Consumers Co-op Farmland Fund. The Fund works to secure and preserve threatened farmland in Washington State and move it into organic production. The Fund's primary focus is on large, functional landscapes of local, regional and statewide importance so protection can be extended to biodiversity and wildlife habitat as well as to farmers and farming communities. The Fund is an independent, community-supported non-profit land trust founded in 1999. The Fund has already rescued a half dozen farms within the state and plans to increase these projects so that by 2007 there will be at least 36 farms that come under the fund's protection. In addition, approximately 60 farms belonging to the Co-op have expressed interest in contracting with Visigoth.
warehouses in Wenatchee and Leavenworth. Most of these items are handmade so handling is a special issue. In addition, the small companies and shops in Leavenworth depend a great deal on their import agents to alert them to new and unique product introductions overseas. On the other end, the farms belonging to the PCC need to keep export costs as low as possible since many of them are start-up ventures with initially high overhead. Quite a few trade firms do not accept these types of contracts and leave it to the co-ops to create their own exporting ventures. This can lead to higher costs as most co-ops do not have the core competencies in import/export issues.
Sales Forecast Year 1 Sales Leavenworth imports PCC farm exports Total Sales Direct Cost of Sales Leavenworth imports PCC farm exports Year 2 Year 3
$127,000 $145,000 $189,000 $33,000 $56,000 $77,000 $160,000 $201,000 $266,000 Year 1 Year 2 Year 3 $0 $0 $0 $0 $0 $0
$0
$0
Management Summary
Company officers include our President, Mr. Frank Curtiss, our head of exports Ms. Hannah Mills, and our head of imports, Mr. Steve Iltheus.
6.1 Personnel
Visigoth's management brings to the company strong capabilities in all aspects of trade relations, logistics, contracting and selling. Mr. Frank Curtiss is a former master distributor with Fisher-Mills, one of the nation's largest import/export firms. During his 10 years with Fisher-Mills he worked exclusively on trade contracts with Germany. In 1996 Mr. Curtiss accepted a position with Eagle Distributors as a department head. By introducing American wines into eastern Europe and the former Soviet republics he demonstrated his flair for opening new markets. Mr. Curtiss has an MBA in finance and an BS in International Relations. Ms. Hannah Mills graduated with honors from the University of Oregon, having earned a bachelors degree in marketing in 1988. From 1988-1994 Ms. Mills worked for Stanford Distributors working with canning companies in the midwest region. In 1995 she went to work for Anderson Consulting in their International Trade division. Four years later, Ms. Mills became vice president of A.V. Imports.
Personnel Plan Mr. Frank Curtiss - President Mrs. Hannah Mills Year 1 Year 2 Year 3 $36,00 $36,000 $45,000 0 $36,00 $36,000 $45,000 0
$24,00 0 $0 3 $96,00 0
Financial Plan
Our financial plan anticipates one year of negative profits as we gain sales volume. We have enough investment to cover these losses, and have an additional credit line available if sales do not match predictions.
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
working with smaller companies projects. We expect that about 3,500 units per month will guarantee break even.
Break-even Analysis Monthly Revenue Break-even $14,067 Assumptions: Average Percent Variable Cost 0% Estimated Monthly Fixed Cost $14,067
Pro Forma Profit and Loss Sales Direct Cost of Sales Other Costs of Sales Total Cost of Sales Gross Margin Gross Margin % Expenses Payroll Year 1 Year 2 Year 3 $160,000 $201,000 $266,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $160,000 $201,000 $266,000 100.00% 100.00% 100.00% $96,000 $108,000 $126,000
Sales and Marketing and Other Expenses Depreciation Rent Utilities Insurance Payroll Taxes Travel Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales
$8,400 $0 $12,000 $3,600 $3,000 $14,400 $24,200 $7,200 $168,800 ($8,800) ($8,800) $2,035 $0 ($10,835) -6.77%
$8,000 $0 $12,000 $3,600 $3,000 $16,200 $12,000 $8,000 $170,800 $30,200 $30,200 $1,820 $8,514 $19,866 9.88%
$8,000 $0 $13,000 $4,000 $3,000 $18,900 $10,000 $10,000 $192,900 $73,100 $73,100 $1,600 $21,450 $50,050 18.82%
Pro Forma Cash Flow Year 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interestfree) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance Year 2 Year 3
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $142,767 $196,584 $258,999 Year 1 Year 2 Year 3 $96,000 $70,247 $166,247 $0 $0 $0 $1,200 $0 $0 $4,000 $171,447 ($28,680) $9,869 $108,000 $73,711 $181,711 $0 $2,000 $1,000 $1,200 $0 $0 $10,000 $195,911 $673 $10,543 $126,000 $88,568 $214,568 $0 $0 $1,000 $1,200 $0 $0 $42,000 $258,768 $231 $10,774
Pro Forma Balance Sheet Year 1 Assets Current Assets Cash Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth Year 2 Year 3
$10,000 $10,000 $10,000 $0 $0 $0 $10,000 $10,000 $10,000 $52,103 $57,192 $64,424 Year 1 Year 2 Year 3 $6,588 $9,000 $8,000 $23,588 $10,800 $34,388 $53,750 ($25,200) ($10,835) $17,715 $52,103 $17,715 $6,011 $7,000 $7,000 $20,011 $9,600 $29,611 $53,750 ($46,035) $19,866 $27,581 $57,192 $27,581 $7,393 $7,000 $6,000 $20,393 $8,400 $28,793 $53,750 ($68,169) $50,050 $35,631 $64,424 $35,631
Ratio Analysis Year 1 Sales Growth Percent of Total Assets Accounts Receivable Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days 0.00% 33.08% 28.79% 80.81% 19.19% 100.00% 45.27% 20.73% 66.00% 34.00% Industry Profile 25.63% 32.34% 6.98% Year 2 Year 3 37.85% 26.23% 82.52% 17.48% 100.00% 34.99% 16.79% 51.77% 48.23% 44.47% 23.28% 84.48% 15.52% 100.00% 31.65% 13.04% 44.69% 55.31% 26.80% 43.95% 75.76% 24.24% 100.00% 31.78% 17.26% 49.04% 50.96%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 106.77% 90.12% 81.18% 85.31% 0.00% -5.50% 0.00% 0.00% 1.02%
1.78 2.36 2.67 1.88 1.78 2.36 2.67 1.48 66.00% 51.77% 44.69% 3.41% -61.16% 102.90% 200.67% 55.78% -20.80% 49.62% 110.98% 7.72% Year 1 Year 2 Year 3 -6.77% 9.88% 18.82% n.a -61.16% 72.03% 140.47% n.a 4.64 56 4.64 71 4.64 69 n.a n.a
Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout
n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a
$18,515 $27,181 $34,031 -4.32 16.59 45.69 0.33 45% 1.05 9.03 0.00 0.28 35% 1.28 7.29 0.50 0.24 32% 1.26 7.47 0.84