Assignment

On
Chapter Six

Entrepreneurship and Starting a Small Business

Prepared For:
Mahfuza Khatun
Course Teacher
FNB 101
Introduction to Business

Prepared By:
Saima Binte Ikram
ID: 1640, Batch: 10th
Department of Finance and Banking
Faculty of Business Studies
Jahangirnagar University

Date of Submission:
14 July, 2019
 Cover Letter

The General Manager saimabinteikram19@gmail.com

Standard Chartered +8801768100400
Dhaka 67 Gulshan Avenue, C-2, 12/12, Parbat Nagar, Baigertek,
Gulshan, Dhaka-1212 Cantonment, Dhaka-1206
Date: 26.6.19

Subject: Investment Proposal.

Dear Mr. Atikur Rahman,

I am writing this letter on behalf of “Pizzaliano” to invite you to become an investor for our new
business venture. I am submitting my business plan to you in hope of receiving a start-up loan for
60,000TK.

Our investment proposal will give you an outline on how you can invest in this new venture and also
how will you be benefitted from this venture by becoming gold or platinum investor with our group.
We have planned to start off with the execution of the project from July 2019 and hopefully the shop
will open for guests by September 2019.

Kindly review the investment proposal attached with the letter and let us know if it suits you or not.
Consider investing in our business group as we have sent the net profit margin that we hope to
achieve in next five years. In case, you have any doubts about the proposal, you can always contact
us through the details mentioned.

Kindly confirm your reply by the earliest possible so that we can fix a meeting and discuss further
issues.

Kind Regards,

Saima Binte Ikram

Pizzaliano
 Confidential

Pizzaliano

Business plan
Prepared on 12 July 2019

Contact Information
Saima Binte Ikram
saimabinteikram19@gmail.com
+8801768100400
 Table of Contents

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

1.1 Objectives.......................................................................................................................... 1
1.2 Mission and Vision ............................................................................................................. 1
1.3 Keys to Success ................................................................................................................ 2
1.4 Start-up costs and funding ................................................................................................. 3
1.5 Strategy ............................................................................................................................. 3
1.6 Management...................................................................................................................... 3
1.7 Financials .......................................................................................................................... 3

2.0 Company Background ........................................................................................................................... 4

2.1 Start-up Summary.............................................................................................................. 4
2.2 Start-up Funding ................................................................................................................ 5
2.3 Company Ownership ......................................................................................................... 6

3.0 Products and Services .......................................................................................................................... 7

3.1 Business Model ................................................................................................................. 7
3.2 Competitive Landscape...................................................................................................... 7

4.0 Market Analysis Summary ..................................................................................................................... 8

4.1 Market Segmentation ......................................................................................................... 8
4.2 Target Market Segment Strategy ....................................................................................... 9

5.0 Strategy and Implementation Summary ................................................................................................. 9

5.1 SWOT Analysis.................................................................................................................. 9
5.2 Competitive Edge ............................................................................................................ 11
5.3 Sales Strategy ................................................................................................................. 11
5.3.1 Sales Forecast ................................................................................................. 11
5.4 Milestones ....................................................................................................................... 13
5.5 Marketing Strategy........................................................................................................... 14
5.6 Pricing Strategy ............................................................................................................... 14
5.7 Location and Facilities ..................................................................................................... 15

6.0 Management Summary ....................................................................................................................... 15

7.0 Financial Plan ..................................................................................................................................... 16

7.1 Break-even Analysis ........................................................................................................ 17
7.2 Projected Profit and Loss ................................................................................................. 17
7.3 Projected Cash Flow ........................................................................................................ 18
7.4 Projected Balance Sheet.................................................................................................. 20
7.5 Long-term Plan ................................................................................................................ 20
7.6 Risks ............................................................................................................................... 20
7.7 Exit Strategy………………………………………………………………………….………….....22
Appendix……………………………………………………………...…………………………………….……….....24
 Start-up Sample Business Plan

1.0 Executive Summary

This business plan will show how a total investment of only 100,000TK could
yield cumulative net profits in excess of 600,000TK over a five-year period, and
average monthly sales of 72,000TK while maintaining adequate levels of
liquidity.

The purpose of this plan is to secure additional funding from a bank (60,000TK five-
year term business loan), to cover the start-up costs.

Pizzaliano is a family-run start-up business dedicated to providing excellent quality

New York-style pizza to the residents of Local area, in a manner that generates fair and
equitable returns for present and future owners, and superior value to our customers.
We specialize in creating and offering a variety of deliciously different pizza.

Currently, the closest pizza restaurant is one mile away from our intended location in
the Local area. Pizzaliano will offer a better product, at a reasonable price, and will
deliver it on time to the customer's door.

1.1 Objectives

• To attract a minimum of 100 regular customers per day for pizza take-out and
delivery, in the first year of operations;
• To offer our customers excellent pizza services, at a reasonable price, and
provide outstanding customer experience, measured by minimum 5 percent yearly
sales growth, and customer complaints less than 1 percent.
• To generate positive cash flow from operations, and at least 10 percent net profits
to sales.

1.2 Mission and Vision

Pizzaliano's mission is to offer residents of the Local area the best pizza service in the
area. We are committed to providing the service quality and value that our customers
expect.

Pizzaliano will use its strategy, staff, and systems to provide each customer with a
seamless three-part customer experience -- service product (New York-style pizza),
service environment, and service delivery -- each part of which will meet or exceed
our customers' expectations.

Our vision is to become the first choice of pizza in Local Bay area, and a respected
company -- as measured by our customers, our employees, our shareholders, and the
community we live in.

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Our values are critical to our success. They are the strong foundation of Pizzaliano
define who we are, and set us apart from our competitors. They underlie our vision of
the future. These values include:

• Performance excellence. We act like responsible owners, always seeking to meet

or exceed expectations.
• Teamwork. We act as a team, committed to each other, and bound by trust and
loyalty.
• Integrity. We treat one another, and all our stakeholders with dignity and respect.
Honesty, ethical behavior, and integrity are fundamental characteristics of our business
conduct.

1.3 Keys to Success

Our keys to success are:

• Excellent product and service that will build and maintain customer loyalty.
• A business location that will assure high company visibility and a high flow of
customers.
• Proven management ability to successfully run a similar business.
• Our commitment to continuous improvement and total quality services.

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1.4 Start-up costs and funding

After spending several months searching for a convenient location, the owners decided
to lease a commercial space in a densely populated local area. The start-up capital will
be used for legal expenses, kitchen inventory and equipment, packing and other
materials, insurance, rent, promotion, business sign, and inventory on hand at start-up,
as detailed in the company summary section of this plan.

We have estimated total start-up costs of 130,000TK. The numbers in the start-up
and the start-up funding tables are meant to reflect these estimates. The company
capital will be 70,000TK.

Saima and Jinia, as co-owners, will provide the bulk of start-up financing in the amount
of 70,000TK (35,000TK and 50.00 percent ownership each). Approximately
60,000TK additional funding is needed. The purpose of this business plan is to
secure financing for that amount. For the remaining 60,000TK additional financing
needed to cover the start-up costs, the company plans to receive a five-year term
commercial loan facility which will meet the cash flow requirements. The loan
could be repaid in equal monthly installments over a five-year period.

1.5 Strategy

Our strategy is based on delivering a strong customer value proposition in a niche

market. We are looking to offer the Local city and its surrounding areas a new
choice in pizza options. We focus on satisfying the needs of low-to- middle class
residents and companies located inside or outside the Local Industrial Park.

1.6 Management

Our management is expected to use resources wisely, operate profitably, pay debts,
and abide by laws and regulations. People who work at Pizzaliano would want to be
part of our team because we operate in an environment that encourages creativity,
diversity, growth, and performance.

Saima Binte Ikram will be the manager of Pizzaliano assisted by her friend, Jinia.
Both of them have successfully owned and operated a similar business in Savar,
Dhaka, they have more than two years relevant experience in the industry, and hold
various degrees and certificates in management and hospitality.

1.7 Financials

According to our conservative estimates, Pizzaliano is expected to maintain a healthy

financial position over the next five years. We expect to be profitable in the first year of
operations, with profits increasing over the next four years, as we establish and
increase our customer base.

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Our main concern will be to have sufficient cash on hand to meet our payment
obligations and be prepared for unexpected needs of cash. The ratio analysis
clearly shows that financial position of Pizzaliano is expected to remain strong,
as measured by its liquidity, long-term solvency, and cash flow adequacy ratios.

2.0 Company Background

Pizzaliano is a new pizza take-out and delivery service started in the city's Local area. It
is a family-run business. Saima, owner of Pizzaliano has two years experience in the
hospitality industry. Her friend and company co-owner, Jinia has one years experience
as a cook. Both of them successfully conducted a pizza delivery business in Uttara,
Dhaka, which they sold for a handsome profit when they decided, for family reasons, to
move to the Local area.

Pizzaliano's prices will not beat the competition. We are aware that we cannot
compete on price only. That is why we prefer to focus on assessing customer
expectations, and our core competencies, decide which expectations we can
reasonably meet. Thus, we will be able to maintain and increase the level of customer
satisfaction, as a strong foundation for future growth.

2.1 Start-up Summary

After spending several months searching for a convenient location, the owners decided
to lease a commercial space in a densely populated area of Local. The start-up capital
will be used for legal expenses, kitchen inventory and equipment, packing and other
materials, insurance, rent, promotion and business sign, and inventory on hand at start-
up.

Fifty thousand Taka worth of equipment (long-term assets) will be expensed over the
next five years, using the straight-line depreciation method. A complete list of the
equipment to be purchased, including prices and acquisition terms, will be made
available for both the investor and the bank's consideration.

There are several U.S.-based manufacturers and suppliers of pizzeria equipment. The
specific vendors will be chosen soon, based on competitive bidding process. All the
selected manufacturers produce and supply high-quality, energy-efficient kitchen and
restaurant equipment, and they compete primarily on price.

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Table: Start-up

Start-up

Requirements

Start-up Expenses
Legal 1,200TK
Kitchen Inventory 6,000TK
Packing Materials 1,000TK
Kitchen Equipment 20,000TK
Insurance 1,500TK
Rent 2,000TK
Prom otion 1,800TK
Other Expensed Equipm ent 5,000TK
Business Sign 2,000TK
Permits 1,500TK
Office Supplies 1,000TK
Other 3,000TK
Total Start-up Expenses 46,000TK

Start-up Assets
Cash Required 10,000TK
Start-up Inventory 15,000TK
Other Current Assets 9,000TK
Long-term Assets 50,000TK
Total Assets 84,000TK

Total Requirements 130,000TK

2.2 Start-up Funding

We have estimated total start-up costs of 130,000TK. The numbers in the start-up
and the start-up funding tables are meant to reflect these estimates. The company
capital will be 70,000TK.

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Saima and Jinia, as co-owners, will provide the bulk of start-up financing in the amount
of 70,000tk (35,000 and 50.00 percent ownership each). Approximately
60,000TK additional funding is needed. The purpose of this business plan is to
secure financing for that amount.

For the remaining 60,000TK additional financing needed to cover the start-up costs, the
company plans to receive a five-year term commercial loan facility which will meet the
cash flow requirements. The borrowed funds will be used exclusively to buy equipment,
based on the list that will be made available to the lending institution. The loan could be
repaid in equal monthly installments over a five-year period. For conservative purposes,
the annual interest rate has been estimated at 12 percent. The actual interest rate and
the borrowing terms will be negotiated with the participating bank. Strong collateral could
be provided by an SBA guarantee, and by the owners' personal assets (for example,
cash collateral in the form of certificates of deposit, to cover the remaining collateral
requirements in addition to the guarantee).

Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund 46,000TK
Start-up Assets to Fund 84,000TK
Total Funding Required 130,000TK

Assets
Non-cash Assets from Start-up 74,000TK
Additional Cash Raised 0TK
Cash Balance on Starting Date 10,000TK
Total Assets 84,000TK

Liabilities and Capital

Liabilities
Current Borrowing 0TK
Long-term Liabilities 60,000TK
Accounts Payable (Outstanding Bills) 0TK
Other Current Liabilities (interest-free) 0TK
Total Liabilities 60,000TK

Capital

Planned Investment
Owner 1 35,000TK
Owner 2 35,000TK
Other 0TK
Additional Investment Requirement 0TK
Total Planned Investment 70,000TK

Loss at Start-up (Start-up Expenses) (46,000TK)

Total Capital 24,000TK

Total Capital and Liabilities 84,000TK

Total Funding 130,000TK

2.3 Company Ownership

Pizzaliano will be a privately held C-corporation owned in majority by Saima and her
friend Jinia.

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At the time of formation, Pizzaliano plans to issue 10,000 shares of 100TK par value
common stock. The issued and outstanding common stock would be 100,000TK. John
and Lisa Walker, husband and wife, would receive 3,500 shares of 100TK par value,
or 50.00 percent ownership each. Their total contributed capital would be
70,000TK.

3.0 Products and Services

Pizzaliano will offer a wide variety of New York-style pizza, as well as sauces, sodas,
fruit juices, and desserts.

The pizza is sold by the slice or as whole pies. The slices, taken from a large pizza,
which is about 18 inches in diameter, are cut into 8 slices. When sold by the slice, we
can offer both “regular” and "plain" pizza, and with different toppings. In addition to
pizza, we offer other menu items, such as cookie dough, soft drinks, bread sticks, and
dessert items.

Pizza is served at the counter, for take-out, or delivered to the location indicated in our
customer orders. We take orders online, by phone, or at our location.

3.1 Business Model

Pizzaliano is a typical take-out restaurant where customers order food and drinks at
the counter, as opposed to sit-down restaurants that provide table service. Wait-staff
is therefore not included in our work team.

To prepare pizza, we use high quality ingredients and traditional recipes. State-of-the-art
energy-efficient food preparation equipment and technology will be available to our
kitchen staff, as we plan to invest our capital in valuable long-term assets.

Pizza can be delivered hot or refrigerated. Special package offers protection and quality
conservation during transportation. Re-heating instructions are also included in the
package, along with other items ordered by the customer, such as soft drinks, cookies,
or other dessert items.

3.2 Competitive Landscape

Currently, the closest specialized pizza restaurant is one mile away from our intended
location in the Local area. Pizzaliano will offer a better product, at a reasonable price,
and will deliver it hot or refrigerated, always on time, to the customer's door.

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4.0 Market Analysis Summary

The Local area is a growing low-to-middle-class area, counting more than one million
residents. There are about five hundred businesses close to our location. Most of
these residents are families of three or more. The average income for the area is
45,000TK.With continued growth in the area, opportunities to serve the Local residents
will increase. The Company will sell to individuals, but it will also accept some occasional
catering jobs to individuals and companies in the area.

We estimate that over 90 percent of our sales will go to individuals (retail customers)
and the remaining balance to existing and future businesses (corporate customers).
However, it is important to note that, typically, corporate customers make larger orders
for their employees' needs or special business events.

4.1 Market Segmentation

The main market segments are: a) individuals (retail customers) accounting for more
than 90 percent of our sales, and b) local businesses (corporate customers) which,
in terms of purchase orders, typically make larger orders for their employees and
business needs.

Next illustration shows the market segmentation, taking into account, for conservative
purposes, only the potential number of individuals that would order pizza (about 100
thousand residents, or 10 percent of the population in the Local Bay area, plus 500
businesses), and less than 5 percent average growth rate.

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4.2 Target Market Segment Strategy

Pizzaliano will focus on its target market, low-to-middle class residents in the Local
area, along with local businesses that are located inside or outside the Local Industrial
Park.

Typically, according to our own market survey, the target individual customers prefer to
order pizza more than once a month, as an occasional alternative to an expensive and
time-consuming lunch or dinner. Businesses prefer to order pizza for their employees,
or on different occasions or less exclusive business events.

Target Market Share. The estimated total total market in Local Bay area is 105,000
pizza pies per month, and our target market share would be 4 percent (4,224 pies /
105,000 pies = .04). We believe this target market share to be reasonable and
achievable. See more details in the sales forecast section of this plan.

5.0 Strategy and Implementation Summary

Our strategy is based on delivering a strong customer value proposition in a niche

market. We are looking to offer the Local Bay city and its surrounding areas a new
choice in pizza options.

We are building our marketing infrastructure so that we can eventually reach more
customers with the same pizza offering. We intend to use various forms of marketing
communication as an efficient way to reach our target market and raise their
awareness of Pizzaliano and their pizza service offerings.

In addition, Pizzaliano will use effective advertising tools to promote the business.
The Local flyer is a common way to advertise in the area. We will also hire people to
hold signs near Local Industrial Park.

Adequate funding has been accounted for when projecting the promotion expenses.
We intend to spend the marketing amount in the most cost-effective way. Therefore,
many other advertising options will be evaluated during the project implementation, to
make sure that we achieve best results.

5.1 SWOT Analysis

The SWOT analysis provides us with an excellent opportunity to examine and evaluate
the internal strengths and weaknesses of Pizzaliano. It also allows us to focus on the
external opportunities presented by the business environment as well as potential
threats. Next sections explain major strengths, weaknesses, opportunities, and threats
that Pizzaliano should be aware of.

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Strengths

a) location

b) excellent quality of New York-style pizza that is currently not available in the Local
Bay area

c) management's proven experience in successfully running a similar business in San

Francisco, CA

d) state-of-the-art, energy-efficient pizza preparation equipment and technology

e) clear vision of the market needs: we know the customers' needs, we are familiar with
the latest technology, and we can offer the pizza services that would bring the two
together.
Weaknesses

a) cost factor associated with keeping state-of-the-art equipment and technology

b) we are new in town

c) start-up challenges

d) limited operating capacity during peak sales periods

Opportunities

a) fast growing population in Local Bay area

b) no other specialized pizza take-out and delivery restaurant within a five-mile radius
from our chosen location

c) a large segment of low-to-middle class population, and more than five hundred
businesses in the area

d) no competitors offer New York-style pizza in the surrounding area

e) consumer behavior changes due to the economic downturn, respectively an
increased preference to buy affordable pizza instead of expensive meals
Threats

a) slow recovery process of the economy from the current crisis

b) changes in the business environment that might reduce our sales

c) higher taxes in the future

d) the commercial property is leased, not owned by our company

e) tight credit times, higher interest rate, and higher inflation rate than predicted.

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5.2 Competitive Edge

Pizza Delivery's competitive edge is:

• Location: Pizzaliano is located in the heart of the Local area, near the Local
Industrial Center. This is the busiest area in town. The closest pizza
restaurant is a thirty minute drive. There are more than five hundred
businesses in the neighborhood.
• Lower operating cost and reasonable prices: Since Pizzaliano's policy is to
purchase latest equipment and technology, and will be operating with a team of
five multi-skilled employees, it will be able to offer reasonable prices for a high
quality New York-style pizza, but it will be impossible to compete on price only.
• Excellent products and services, timely delivery, and convenience.

5.3 Sales Strategy

Because Pizzaliano is a new entity, we recognize that we will need to prove our
company's worth to Local customers, in order to earn respect and business.

Most important, we need to sell our company, not necessarily our products and
services, and create positive word-of-mouth. We will have to push our service and
delivery capacities.

Our sales strategy is based on the belief that there will be a regular flow of first-time
customers, due to our convenient location. The real sales effort will be to focus on the
conversion of each first-time customer into a long-term customer relationship, where
these customers come regularly to our pizzeria, and also bring or recommend new
friends to share the experience of a great pizza.

5.3.1 Sales Forecast

The following table and charts illustrate the sales forecast for five years. The first few
months will be be slower, a consequence of being a start-up business, struggling to
become more visible within the community, going from nothing to achieving a regular
clientele.The increasing sales forecast suggest an important potential growth. Our
projected sales are actually net sales, which consist of the gross proceeds from sales
of merchandise -- gross sales -- less returns and allowances.

The projected average monthly sales are approximately 72,000TK. Considering an

average price of 17TK per pie, Pizzaliano would need to sell on average 176 pies
each day (72,000TK average monthly sales / 17TK per pie / 24 business days per
month).

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The question remains, will we be able to attract and maintain at least the minimum
number of customers required to order 176 pies per day? If each customer would order
one pie it would mean a total of 4,224 customers per month. This figure is disputable
because the companies typically order a larger number of pizzas, and the individuals
usually buy by slices, or order full pies for home delivery. However, it is a good starting
point for our analysis.

According to a recent study, pizza sales account for 18 percent of all food service sales
and, despite the economic crisis, continues to outpace overall restaurant growth. Our
own market survey shows that one in five persons interviewed use to order pizza at
least once a month.

Table: Sales Forecast

Sales Forecast
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Unit Sales
NYS Pizza for All 19,230 21,153 23,268 25,130 25,884
NYS Pizza Healthy Style 8,936 9,830 10,813 11,678 12,028
NYS Pizza Vegetarian 4,504 4,954 5,450 5,886 6,062
NYS Pizza Special 3,050 3,355 3,691 3,986 4,105
Other 1,480 1,628 1,791 1,934 1,992
Total Unit Sales 37,200 40,920 45,012 48,613 50,071

Unit Prices FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

NYS Pizza for All 16.00TK 16.80TK 17.64TK 18.52TK 19.45TK
NYS Pizza Healthy Style 18.00TK 18.90TK 19.85TK 20.84TK 21.88TK
NYS Pizza Vegetarian 19.00TK 19.95TK 20.95TK 21.99TK 23.09TK
NYS Pizza Special 21.00TK 22.05TK 23.15TK 24.31TK 25.53TK
Other 25.00TK 26.25TK 27.56TK 28.94TK 30.39TK

Sales
NYS Pizza for All 307,680TK 355,370TK 410,453TK 465,453TK 503,388TK
NYS Pizza Healthy Style 160,848TK 185,779TK 214,575TK 243,328TK 263,160TK
NYS Pizza Vegetarian 85,576TK 98,840TK 114,161TK 129,458TK 140,009TK
NYS Pizza Special 64,050TK 73,978TK 85,444TK 96,894TK 104,791TK
Other 37,000TK 42,735TK 49,359TK 55,973TK 60,535TK
Total Sales 655,154TK 756,703TK 873,992TK 991,107TK 1,071,882TK

Direct Unit Costs FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

NYS Pizza for All 8.32TK 8.57TK 8.82TK 9.08TK 9.34TK
NYS Pizza Healthy Style 9.36TK 9.64TK 10.12TK 10.42TK 10.72TK
NYS Pizza Vegetarian 9.88TK 10.17TK 10.68TK 11.00TK 11.32TK
NYS Pizza Special 10.92TK 11.25TK 11.81TK 12.16TK 12.51TK
Other 13.00TK 13.39TK 14.06TK 14.47TK 14.89TK

Direct Cost of Sales

NYS Pizza for All 159,994TK 181,239TK 205,226TK 228,072TK 241,626TK
NYS Pizza Healthy Style 83,641TK 94,748TK 109,433TK 121,664TK 128,948TK
NYS Pizza Vegetarian 44,500TK 50,409TK 58,222TK 64,729TK 68,604TK
NYS Pizza Special 33,306TK 37,729TK 43,577TK 48,447TK 51,347TK
Other 19,240TK 21,795TK 25,173TK 27,987TK 29,662TK
Subtotal Direct Cost of Sales 340,680TK 385,918TK 441,631TK 490,899TK 520,188TK

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5.4 Milestones

The following table lists important start-up program milestones, with dates, managers
in charge, and budgets for each. The schedule indicates Pizzaliano's emphasis on
planning for implementation.

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5.5 Marketing Strategy

The marketing strategy of Pizzaliano centers on creating and developing a

corporate identity that clearly defines our market niche in terms that benefit our
retail and corporate customers.

Market needs and trends. Since our target market includes two major segments --
low- to-middle class residents in the Local area, and local businesses that are located
inside or outside the Local Bay Industrial Park -- their most important needs are
service, price, and delivery, in that order.

One of the key points of Pizzaliano strategy is to focus on these target segments
that know and understand these needs, and are willing to pay a reasonable price to
have them fulfilled.

Our previous experience in running a similar business shows that advertising

costs can easily overwhelm a start-up company, so keeping marketing simple,
creative and cost-efficient will be challenging. Cost-effective use of marketing Taka
is one of our keys to success.

To reach our potential customers, a combination of marketing techniques will

be utilized:

• Local media (radio is most effective in the Local Bay area, followed by print
media). Radio and newspaper advertising will include our core positioning
message, and the New York-style pizza that we offer, in order to differentiate
our service from the competition.
• Sales literature. To drive sales initially, Pizzaliano will utilize a four- color
catalog with a different cover including the company logo and contact
address. We have developed a price sheet to be enclosed with each catalog
5.6 Pricing Strategy

Our retail and corporate customers are especially sensitive to service value.
Pizzaliano must ensure that price and service are perceived to be a good value to our
customers. High-quality New York-style pizza will be offered at a reasonable price, but
the price will certainly not be the lowest in the area. In the limited-service restaurants
industry, one message rings true: other competitor can always beat you on price.

Therefore, our pricing strategy will be competitive within the various product ranges,
but will not rely on the selling price to overshadow other advantages of doing business
with our company.

In addition, we recognize that price flexibility is critical to our success. We are

prepared to offer discounts and allowances, sales promotion prices, and to reduce the
price over limited periods of time during the slow-sales hours, in order to increase our
operating capacity usage, and reduce or eliminate idle capacity and subsequent
losses.

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5.7 Location and Facilities

The company's location is very favorable, providing high visibility, high traffic, and
a high flow of customers (travelers) wishing to stop at our restaurant. Accordingly,
the rent that was accounted for in this plan is higher than in other areas of the city.

The restaurant will be located just minutes from downtown, which provides shopping,
dining, and entertainment. The restaurant is also conveniently located, just three blocks
from Local shopping mall. Other advantages of the chosen location include:

• Plenty of parking, garages, and additional storage area available

• Excellent central location with easy access to major destinations, freeways
and other transportation means
• Short commute to major employers in Local Bay
• High flow of pedestrians
• A recent new commercial complex opening, just across the street, that will
attract many potential customers to our immediate vicinity
• Strategically located on one of the busiest streets in downtown
• High profile area with easy access from all parts of town
• Proximity to the business community and the Local Industrial Park; there are
more than five hundred businesses in the area
• Proximity to trendy, upscale restaurants and recreational facilities
• All utilities required for operating a restaurant are available

As the company gains community recognition, and our Local market is developed,
further expansion to one or both of the neighboring shopping malls will be considered
as a possible second stage capital investment option.

6.0 Management Summary

Our management is expected to use resources wisely, operate profitably, pay

debts, and abide by laws and regulations. Our management philosophy is based
on team work, responsibility, and mutual respect.

Saima will be the manager of Pizzaliano assisted byher friend, Jinia. Both of them
have successfully owned and operated a similar business in Uttara Dhaka, and
have more than two years relevant experience in the industry.

Both Saima and Jinia have attended several business management courses
organized by the local Small Business Development Center, steadily adding business
skills and business training at their technical background. They constantly focus on
continuous improvement of their business by applying modern management
techniques, such as total quality, activity-based management, theory of constraints,
and just-in-time operating environment.

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7.0 Financial Plan

According to our conservative estimates, Pizzaliano is expected to maintain a healthy

financial position over the next five years. The following plan outlines the financial
development of our company. The business will be initially financed by a
60,000TK five-year term loan and a total capital investment of 70,000TK (Saima and
Jinia 35,000TK each).

The source to repay the loan will be the cash flow generated from operations. The
company will also finance growth through cash flow. After an initial period of five years,
the company will be able to make a further expansion. At that time, it is envisioned that
an bank loan or equity funding will be sought to finance the new development, in
addition to retained earnings.

The projected financial statements have been prepared in accordance with the general
accounting principles, and necessarily include some amounts that are based on
reasonable estimates and judgments. For accounting purposes, the long-term assets
are expensed using the straight-line depreciation method, and inventory is accounted
for based on the First-In, First-Out (FIFO) method.

The following sections outline important financial information.

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7.1 Break-even Analysis

For our break-even analysis, we assume running costs of approximately 16,874TK per
month, which include payroll, utilities, insurance, rent and other fixed costs. We need to
sell about 1,996 pies for minimum 35,155TK per month to break even, based on our
assumptions.

Since our normal operating capacity is 300 pies per day (4,224 pies for 122,400TK per
month, as explained in the sales forecast section), and the average projected sales of
72,000TK per month, or 176 pies per day (at only 58 percent of normal operating
capacity) are expected to be much greater than the computed break-even point, we
believe that our company is likely to easily reach and maintain profitability.

Pizzliano is expected to break even in the third month of operations.

7.2 Projected Profit and Loss

We expect to be profitable in the first year of operations, with profits increasing over the
next four years, as we establish and increase our customer base.

The following table and charts show the projected profit and loss for five years.

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Table: Profit and Loss

Pro Form a Profit and Loss

FY 2019 FY 2011 FY 2012 FY 2013 FY 2014
Sales
655,154TK 756,703TK 873,992TK 991,107T 1 0 7 1 8 2

Direct Costs of Goods 340,680TK 385,918TK 441,631TK 490,899TK 520,188TK

Other Production Expenses 17,034TK 19,296TK 22,082TK 24,545TK 26,009TK
------------ ------------ ------------ ------------ ------------
Cost of Goods Sold 357,714TK 405,214TK 463,713TK 515,444TK 546,198TK

Gross Margin 297,440TK 351,488TK 410,279TK 475,663TK 525,684TK

Gross Margin % 45.40% 46.45% 46.94% 47.99% 49.04%

Expenses
Payroll 108,600TK 114,030TK 119,732TK 125,718TK 132,004TK
Sales and Marketing and Other
8,000TK 8,500TK 8,700TK 8,900TK 9,000TK
Expenses
Depreciation 9,996TK 9,996TK 9,996TK 9,996TK 10,016TK
Office Supplies 1,200TK 1,250TK 1,300TK 1,350TK 1,400TK
Utilities 6,600TK 6,900TK 7,226TK 7,640TK 8,022TK
Insurance 9,000TK 9,450TK 9,922TK 10,418TK 10,939TK
Rent 24,000TK 24,720TK 25,461TK 26,225TK 27,012TK
Payroll Taxes and Benefits 31,494TK 33,069TK 34,722TK 36,458TK 38,281TK
Other 3,600TK 4,000TK 4,500TK 4,800TK 5,200TK
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 202,490TK 211,915TK 221,559TK 231,505TK 241,874TK

Profit Before Interest and Taxes 94,950TK 139,574TK 188,720TK 244,158TK 283,810TK
EBITDA 104,946TK 149,570TK 198,716TK 254,154TK 293,826TK
Interest Expense 6,810TK 6,120TK 5,400TK 4,680TK 3,960TK
Taxes Incurred 26,442TK 40,036TK 54,996TK 71,843TK 83,955TK

Net Profit 61,698TK TK93,418TK 128,324TK 167,634TK 195,895TK

Net Profit/Sales 9.42% 12.35% 14.68% 16.91% 18.28%

7.3 Projected Cash Flow

Many profitable companies go bankrupt because of cash flow deficiencies. That is why
our main concern will be to have sufficient cash on hand to meet our payment
obligations, and be prepared for unexpected needs of cash. Our conservative
projections indicate that our business is able to generate positive cash flows and
sufficient cash reserves.

In addition to normal cash inflows and outflows, we will focus on establishing sufficient
cash reserves for contingencies. That includes a possible line of credit with our bank
that could be used in slow sales periods as well. This is a good way to control the cash
flow risk.

The following table and chart show the projected cash flow for five years.

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 Start-up Sample Business Plan

Table: Cash Flow

Pro Form a Cash Flow

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Cash Received

Cash from Operations

Cash Sales 556,881TK 643,197TK 742,893TK 842,441TK 911,100TK
Cash from Receivables 88,540TK 111,997TK 129,356TK 146,926TK 159,582TK
Subtotal Cash from Operations 1,070,682TK
645,421TK 755,194TK 872,249TK 989,367TK

Additional Cash Received

Sales Tax, VAT, HST/GST Received 55,688TK 64,320TK 74,289TK 84,244TK 91,110TK
New Current Borrowing 0TK 0TK 0TK 0TK 0TK
New Other Liabilities (interest-free) 0TK 0TK 0TK 0TK 0TK
New Long-term Liabilities 30,000TK 0TK 0TK 0TK 0TK
Sales of Other Current Assets 0TK 0TK 0TK 0TK 0TK
Sales of Long-term Assets 0TK 0TK 0TK 0TK 0TK
New Investment Received 0TK 0TK 0TK 0TK 0TK
Subtotal Cash Received 1,161,79TK
731,109TK 819,514TK 946,539TK 1,073,611TK
2

Expenditures FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Expenditures from Operations

Cash Spending 108,600TK 114,030TK 119,732TK 125,718TK 132,004TK
Bill Paym ents 461,968TK 510,618TK 612,191TK 684,597TK 732,139TK
Subtotal Spent on Operations 570,568TK 624,648TK 731,922TK 810,315TK 864,143TK

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out 55,688TK 64,320TK 74,289TK 84,244TK 91,110TK
Principal Repayment of Current Borrowing 0TK 0TK 0TK 0TK 0TK
Other Liabilities Principal Repaym ent 0TK 0TK 0TK 0TK 0TK
Long-term Liabilities Principal Repaym ent 6,000TK 6,000TK 6,000TK 6,000TK 6,000TK
Purchase Other Current Assets 0TK 0TK 0TK 0TK 0TK
Purchase Long-term Assets 30,000TK 0TK 0TK 0TK 0TK
Dividends 17,892TK 27,091TK 37,213TK 48,613TK TK56,809TK
Subtotal Cash Spent 1,018,06TK
680,148TK 722,059TK 849,425TK 949,172TK
2

Net Cash Flow 50,961TK 97,455TK 97,114TK 124,439TK 143,730T

Cash Balance 60,961TK 158,416TK 255,530TK 379,969TK 523,699T

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 Start-up Sample Business Plan

7.4 Projected Balance Sheet

We expect a healthy growth in net worth and a healthy financial position. We do not
project any real trouble meeting our debt obligations, as long as we achieve our specific
objectives.

The following table is the projected balance sheet for five years.

Table: Balance Sheet

Pro Form a Balance Sheet

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023
Assets

Current Assets
Cash 60,961TK 158,416TK 255,530TK 379,969TK 523,699TK
Accounts Receivable 9,733TK 11,241TK 12,984TK 14,724TK 15,924TK
Inventory 15,857TK 17,963TK 20,556TK 23,311TK 25,211TK
Other Current Assets 9,000TK TK,000TK 9,000TK 9,000TK 9,000TK
Total Current Assets 95,551TK 196,620TK 298,070TK 427,004TK 573,833TK

Long-term Assets
Long-term Assets 80,000TK 80,000TK 80,000TK 80,000TK 80,000TK
Accumulated Depreciation 9,996TK 19,992TK 29,988TK 39,984TK 50,000TK
Total Long-term Assets TK,004TK 60,008TK 50,012TK 40,016TK 30,000TK
Total Assets 165,555TK 256,628TK 348,082TK 467,020TK 603,833TK

Liabilities and Capital FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Current Liabilities
Accounts Payable 13,749TK 44,496TK 50,838TK 56,754TK 60,482TK
Current Borrowing 0TK 0TK 0TK 0TK 0TK
Other Current Liabilities 0TK 0TK 0TK 0TK 0TK
Subtotal Current Liabilities 13,749TK 44,496TK 50,838TK 56,754TK 60,482TK

Long-term Liabilities 54,000TK 48,000TK 42,000TK 36,000TK 30,000TK

Total Liabilities 67,749TK 92,496TK 92,838TK 92,754TK 90,482TK

Paid-in Capital 101,500TK 101,500TK 101,500TK 101,500TK 101,500TK

Retained Earnings (65,392TK) (30,785TK) 25,420TK 105,131TK 215,956TK
Earnings 61,698TK 93,418TK 128,324TK 167,634TK 195,895TK
Total Capital 97,806TK 164,133TK 255,244TK 374,265TK 513,351TK
Total Liabilities and Capital 165,555TK 256,628TK TK348,082TK 467,020TK 603,833TK

Net W orth 97,806TK 164,133TK 255,244TK 374,265TK 513,351TK

7.5 Long-term Plan

This is a five-year plan. Projections for further periods are not considered relevant at
this time.

7.6 Risks

Company management is responsible for constantly evaluating risks and taking

corrective actions to provide adequate prevention, control and risk reserves. We have
identified several risks that are associated with our business project.

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There are many possible classifications of risks, but for the purposes of this plan, we
have chosen to group them as follows:

a) External Risks (These risks come from outside the company and are more difficult
to prevent and control.)

Economic depression Current trends indicate that the economic downturn is reaching
the bottom and chances are that the recovery process will begin soon. However, it is
likely to be a slow process, and it will probably take several years until complete
recovery and full growth are achieved. We assess the risk of a major depression to be
low.
• Competition and buying patterns changes. There is a high risk that new
competitors will arrive in the relevant marketplace. Our continuous improvement
management strategy and cost control techniques will help us to stay on top of
customer preference. The pizza customer buying patterns are not likely to
significantly change over the next five years. In addition, the population growth
predicted in the area will increase the chances to maintain and boost sales.
• Suppliers. Our company's purchases do not depend on a single or a limited
group of suppliers. There is a large supply of materials and ingredients for pizza
preparation, and other specific products in the Local area. The risk to face
supply constrictions is low.
• Technology. New and more efficient food preparation equipment is expected to
become available. However, by deciding to purchase only state-of-the-art,
energy-efficient equipment, we believe to have reduced this risk over the next
five years.
• Location. The chosen location will be leased for minimum five years, with the
possibility to extend the lease over another similar period. There are no other
construction developments foreseen in this highly dense population area of Local
that might affect our business location in the near future.
b) Inflation. According to expert estimates, the inflation rate is likely to remain
under control over the next five years. We have accounted for a 5 percent
annual inflation rate. Internal Risks (These risks come from inside the company
and can be better prevented or controlled.)
• Personnel. There are many skilled food-service employees in the Local Bay
area. We will be able to select the best new staff members from a large number
of valuable applicants. Our personnel strategy includes modern management
techniques that will be applied to select, hire, motivate, and reward the
employees.

This strategy is expected to build and maintain employee loyalty, and increase
productivity. However, before hiring new employees, their background check will
be reviewed, to avoid possible employee theft, which is a frequent risk in the
restaurant industry.

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• Cash flow deficiency. Our main concern will be to have sufficient cash on hand
to meet our payment obligations, and be prepared for unexpected needs of
cash. Our conservative projections indicate that our business is able to generate
positive cash flows and sufficient cash reserves to reduce the risk of cash flow
deficiency.

• Business continuity over the next five years. In the event something happens
to one of the company's managers and co-owners (husband and wife), the other
will have the skills and experience required to take over and continue operations.
In addition, the company's incorporation legal documents include special
provisions for protection in such cases.

• Management. John and Lisa Walker have proven experience in successfully

running a similar business in San Francisco, CA. They also have relevant skills
and a solid background in the food industry.

7.7 Exit Strategy

We recognize that any investor in a start-up company, no matter how well on paper,
ultimately needs an exit vehicle. Our purpose is to provide the best alternatives to
protect investor's interest, while maintaining the potential growth of our company, the
liquidity, and the profitability of future operations.

Typically, the fear of investors is that they will become locked into a company that might
show no sign of either going public or going bankrupt. To overcome this potential threat,
we are open to discuss with the investor several exit alternatives, and include the best
provisions in the agreements that are expected be reached by the time of the
incorporation.

There are several options that could be discussed while considering alternative
methods for the investor to turn illiquid securities into readily tradable securities or cash.
These options include, but are not limited to:

• IPO (Initial Public Offering)

• Acquisition terms
• Liquidation terms, certain rights and liquidation preferences over common stock
• Selling to a friendly buyer
• Preferred stock, redeemable at option of the holder
• Convertible preferred stock
• Investor's right of first refusal in the next round of financing
• Anti-dilution measures
• Buy-back after the initial five years

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 Start-up Sample Business Plan

In addition, we believe that following negotiating terms are expected to increase

investor confidence, and improve management-investor communication:

• A board position and possible a consulting role of the investor

• Good communication between company's management and the investor (For
example: quarterly reports, monthly updates, etc.)
• Setting clear return objectives for the management (projected IRR, potential
returns, sales projections, etc.)
• Not taking certain actions without investor's approval, such as: selling all or
substantially all of the company's assets, setting stock options programs, issuing
additional stock to existing management, selling stock below prices paid by the
investor, or creating classes of stock with liquidation preferences or other rights
senior to the investor's class of security.
• Stock price protection, an anti-dilution provision that will result in the investor
receiving more stock, should the company issue stock at a lower price that paid
by the investor
• Corporate governance provisions.

We don't plan on going public before the end of the first five years of operations.
However, Pizzaliano believes that the level of financial resources might become an
important competitive factor, and it may later chose to raise additional capital
through debt or equity financing, to strengthen its financial position, stimulate
growth, and provide flexibility to take advantage of business opportunities that may
arise.

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 Appendix

Table: Sales Forecast

Sales Forecast
Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Unit Sales
NYS Pizza for All 0% 780 960 1,300 1,540 1,670 1,720 1,800 1,850 2,010 2,150 2,300 1,150
NYS Pizza Healthy Style 0% 340 410 556 700 730 730 820 850 1,060 1,090 1,100 550
NYS Pizza Vegetarian 0% 180 216 288 360 375 375 420 430 435 555 570 300
NYS Pizza Special 0% 120 140 160 200 220 250 270 330 350 380 420 210
Other 0% 80 90 90 100 110 120 140 150 160 170 180 90
Total Unit Sales 1,500 1,816 2,394 2,900 3,105 3,195 3,450 3,610 4,015 4,345 4,570 2,300

Unit Prices Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
NYS Pizza for All TK16.00 TK16.00 TK16.00 TK16.00 TK16.00 TK16.0 TK16.00 TK16.0 TK16.00 TK16.0 TK16.00 TK16.00
0 0 0
NYS Pizza Healthy Style TK18.00 TK18.00 TK18.00 TK18.00 TK18.00 TK18.0 TK18.00 TK18.0 TK18.00 TK18.0 TK18.00 TK18.00
0 0 0
NYS Pizza Vegetarian TK19.00 TK19.00 TK19.00 TK19.00 TK19.00 TK19.0 TK19.00 TK19.0 TK19.00 TK19.0 TK19.00 TK19.00
0 0 0
NYS Pizza Special TK21.00 TK21.00 TK21.00 TK21.00 TK21.00 TK21.0 TK21.00 TK21.0 TK21.00 TK21.0 TK21.00 TK21.00
0 0 0
Other TK25.00 TK25.00 TK25.00 TK25.00 TK25.00 TK25.0 TK25.00 TK25.0 TK25.00 TK25.0 TK25.00 TK25.00
0 0 0

Sales
NYS Pizza for All TK12,480 TK15,360 TK20,800 TK24,640 TK26,720 TK27,5 TK28,800 TK29,6 TK32,160 TK34,4 TK36,800 TK18,400
20 00 00
NYS Pizza Healthy Style TK6,120 TK7,380 TK10,008 TK12,600 TK13,140 TK13,1 TK14,760 TK15,3 TK19,080 TK19,6 TK19,800 TK9,900
40 00 20
NYS Pizza Vegetarian TK3,420 TK4,104 TK5,472 TK6,840 TK7,125 TK7,12 TK7,980 TK8,17 TK8,265 TK10,5 TK10,830 TK5,700
5 0 45
NYS Pizza Special TK2,520 TK2,940 TK3,360 TK4,200 TK4,620 TK5,25 TK5,670 TK6,93 TK7,350 TK7,98 TK8,820 TK4,410
0 0 0
Other TK2,000 TK2,250 TK2,250 TK2,500 TK2,750 TK3,00 TK3,500 TK3,75 TK4,000 TK4,25 TK4,500 TK2,250
0 0 0
Total Sales TK26,540 TK32,034 TK41,890 TK50,780 TK54,355 TK56,0 TK60,710 TK63,7 TK70,855 TK76,7 TK80,750 TK40,660
35 50 95
Direct Unit Costs Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
NYS Pizza for All 0.00% TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32 TK8.32
NYS Pizza Healthy Style 0.00% TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36 TK9.36
NYS Pizza Vegetarian 0.00% TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88 TK9.88
NYS Pizza Special 0.00% TK10.92 TK10.92 TK10.92 TK10.92 TK10.92 TK10.9 TK10.92 TK10.9 TK10.92 TK10.9 TK10.92 TK10.92
2 2 2
Other 0.00% TK13.00 TK13.00 TK13.00 TK13.00 TK13.00 TK13.0 TK13.00 TK13.0 TK13.00 TK13.0 TK13.00 TK13.00
0 0 0

Direct Cost of Sales

NYS Pizza for All TK6,490 TK7,987 TK10,816 TK12,813 TK13,894 TK14,3 TK14,976 TK15,3 TK16,723 TK17,8 TK19,136 TK9,568
10 92 88
NYS Pizza Healthy Style TK3,182 TK3,838 TK5,204 TK6,552 TK6,833 TK6,83 TK7,675 TK7,95 TK9,922 TK10,2 TK10,296 TK5,148
3 6 02
NYS Pizza Vegetarian TK1,778 TK2,134 TK2,845 TK3,557 TK3,705 TK3,70 TK4,150 TK4,24 TK4,298 TK5,48 TK5,632 TK2,964
5 8 3
NYS Pizza Special TK1,310 TK1,529 TK1,747 TK2,184 TK2,402 TK2,73 TK2,948 TK3,60 TK3,822 TK4,15 TK4,586 TK2,293
0 4 0
Other TK1,040 TK1,170 TK1,170 TK1,300 TK1,430 TK1,56 TK1,820 TK1,95 TK2,080 TK2,21 TK2,340 TK1,170
0 0 0
Subtotal Direct Cost of Sales TK13,801 TK16,658 TK21,783 TK26,406 TK28,265 TK29,1 TK31,569 TK33,1 TK36,845 TK39,9 TK41,990 TK21,143
38 50 33

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 Appendix

Table: Personnel

Personnel Plan
Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Manager 0% TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900 TK1,900
Cook 0% TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700 TK1,700
Kitchen Staff Member 0% TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600 TK1,600
Servers (2) 0% TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200 TK3,200
Bonuses and Incentives 0% TK650 TK650 TK650 TK650 TK650 TK650 TK650 TK650 TK650 TK650 TK650 TK650
Other 0% TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Total People 5 5 5 5 5 5 5 5 5 5 5 5

Total Payroll TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050

Table: General Assumptions

General Assumptions
Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00%
Long-term Interest Rate 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
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%
Payment Delays 30 30 30 30 30 30 30 30 30 30 30 30
Sales on Credtit 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00%
Collection Period (days) 40 40 40 40 40 40 40 40 40 40 40 40
Inventory on Hand (days) 21 21 21 21 21 21 21 21 21 21 21 21
Inflation Rate 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41% 0.41%
Max Op. Capacity 400 400 400 400 400 400 400 400 400 400 400
400
(pizzas/day)
Other 0 0 0 0 0 0 0 0 0 0 0 0

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 Appendix

Table: Profit and Loss

Pro Forma Profit and Loss

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Sales TK26,540 TK32,034 TK41,890 TK50,780 TK54,35 TK56,03 TK60,710 TK63,750 TK70,85 TK76,79 TK80,750 TK40,660
5 5 5 5
Direct Costs of Goods TK13,801 TK16,658 TK21,783 TK26,406 TK28,26 TK29,13 TK31,569 TK33,150 TK36,84 TK39,93 TK41,990 TK21,143
5 8 5 3
Other Production Expenses TK690 TK833 TK1,089 TK1,320 TK1,413 TK1,457 TK1,578 TK1,658 TK1,842 TK1,997 TK2,100 TK1,057
------------ ------------ ------------ ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------ ------------
- - - -
Cost of Goods Sold TK14,491 TK17,491 TK22,872 TK27,726 TK29,67 TK30,59 TK33,148 TK34,808 TK38,68 TK41,93 TK44,090 TK22,200
8 5 7 0
Gross Margin TK12,049 TK14,543 TK19,018 TK23,054 TK24,67 TK25,44 TK27,562 TK28,943 TK32,16 TK34,86 TK36,661 TK18,460
7 0 8 5
Gross Margin % 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40% 45.40%

Expenses
Payroll TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050
Sales and Marketing and Other TK1,500 TK1,200 TK1,200 TK500 TK500 TK500 TK500 TK500 TK400 TK400 TK400 TK400
Expenses
Depreciation TK833 TK833 TK833 TK833 TK833 TK833 TK833 TK833 TK833 TK833 TK833 TK833
Office Supplies TK100 TK100 TK100 TK100 TK100 TK100 TK100 TK100 TK100 TK100 TK100 TK100
Utilities TK550 TK550 TK550 TK550 TK550 TK550 TK550 TK550 TK550 TK550 TK550 TK550
Insurance TK750 TK750 TK750 TK750 TK750 TK750 TK750 TK750 TK750 TK750 TK750 TK750
Rent TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000 TK2,000
Payroll Taxes and Benefits 29% TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625 TK2,625
Other TK300 TK300 TK300 TK300 TK300 TK300 TK300 TK300 TK300 TK300 TK300 TK300
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Operating Expenses TK17,708 TK17,408 TK17,408 TK16,708 TK16,708 TK16,708 TK16,708 TK16,708 TK16,608 TK16,608 TK16,608 TK16,608

Profit Before Interest and Taxes (TK5,658) (TK2,864) TK1,611 TK6,347 TK7,970 TK8,732 TK10,855 TK12,235 TK15,561 TK18,257 TK20,053 TK1,852
EBITDA (TK4,825) (TK2,031) TK2,444 TK7,180 TK8,803 TK9,565 TK11,688 TK13,068 TK16,394 TK19,090 TK20,886 TK2,685
Interest Expense TK595 TK590 TK585 TK580 TK575 TK570 TK565 TK560 TK555 TK550 TK545 TK540
Taxes Incurred (TK1,876) (TK1,036) TK308 TK1,730 TK2,218 TK2,449 TK3,087 TK3,503 TK4,502 TK5,312 TK5,852 TK394

Net Profit (TK4,377) (TK2,418) TK718 TK4,037 TK5,176 TK5,714 TK7,203 TK8,173 TK10,504 TK12,395 TK13,656 TK918
Net Profit/Sales -16.49% -7.55% 1.71% 7.95% 9.52% 10.20% 11.86% 12.82% 14.82% 16.14% 16.91% 2.26%

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 Appendix
Table: Cash Flow

Pro Forma Cash Flow

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Cash Received

Cash from Operations

Cash Sales TK22,559 TK27,229 TK35,607 TK43,163 TK46,202 TK47,630 TK51,604 TK54,188 TK60,227 TK65,276 TK68,638 TK34,561
Cash from Receivables TK0 TK2,787 TK4,558 TK5,840 TK7,217 TK7,992 TK8,330 TK8,896 TK9,426 TK10,309 TK11,252 TK11,935
Subtotal Cash from Operations TK22,559 TK30,016 TK40,164 TK49,003 TK53,419 TK55,622 TK59,933 TK63,084 TK69,652 TK75,584 TK79,889 TK46,496

Additional Cash Received

Sales Tax, VAT, HST/GST Received 8.50% TK2,256 TK2,723 TK3,561 TK4,316 TK4,620 TK4,763 TK5,160 TK5,419 TK6,023 TK6,528 TK6,864 TK3,456
New Current Borrowing TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
New Other Liabilities (interest-free) TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
New Long-term Liabilities TK30,000 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Sales of Other Current Assets TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Sales of Long-term Assets TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
New Investment Received TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Subtotal Cash Received TK54,815 TK32,738 TK43,725 TK53,319 TK58,039 TK60,385 TK65,094 TK68,502 TK75,675 TK82,112 TK86,753 TK49,952

Expenditures Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Expenditures from Operations

Cash Spending TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050 TK9,050
Bill Payments TK546 TK16,729 TK26,992 TK35,306 TK40,340 TK40,703 TK41,239 TK45,495 TK47,092 TK53,359 TK56,897 TK57,270
Subtotal Spent on Operations TK9,596 TK25,779 TK36,042 TK44,356 TK49,390 TK49,753 TK50,289 TK54,545 TK56,142 TK62,409 TK65,947 TK66,320

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out TK2,256 TK2,723 TK3,561 TK4,316 TK4,620 TK4,763 TK5,160 TK5,419 TK6,023 TK6,528 TK6,864 TK3,456
Principal Repayment of Current TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Borrowing
Other Liabilities Principal Repayment TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Long-term Liabilities Principal TK500 TK500 TK500 TK500 TK500 TK500 TK500 TK500 TK500 TK500 TK500 TK500
Repayment
Purchase Other Current Assets TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Purchase Long-term Assets TK30,000 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Dividends TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK17,892
Subtotal Cash Spent TK42,352 TK29,002 TK40,103 TK49,172 TK54,510 TK55,016 TK55,949 TK60,464 TK62,665 TK69,436 TK73,311 TK88,168

Net Cash Flow TK12,463 TK3,736 TK3,622 TK4,147 TK3,529 TK5,369 TK9,144 TK8,039 TK13,010 TK12,675 TK13,442 (TK38,216)
Cash Balance TK22,463 TK26,199 TK29,821 TK33,968 TK37,497 TK42,866 TK52,011 TK60,049 TK73,060 TK85,735 TK99,177 TK60,961

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 Appendix

Table: Balance Sheet

Pro Forma Balance Sheet

Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Assets Starting
Balances

Current Assets
Cash TK10,000 TK22,463 TK26,199 TK29,821 TK33,968 TK37,497 TK42,866 TK52,011 TK60,049 TK73,060 TK85,735 TK99,177 TK60,961
Accounts Receivable TK0 TK3,981 TK5,999 TK7,725 TK9,502 TK10,438 TK10,851 TK11,628 TK12,294 TK13,497 TK14,708 TK15,568 TK9,733
Inventory TK15,000 TK10,351 TK12,493 TK16,337 TK19,804 TK21,198 TK21,854 TK23,677 TK24,863 TK27,633 TK29,950 TK31,493 TK15,857
Other Current Assets TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000 TK9,000
Total Current Assets TK34,000 TK45,794 TK53,692 TK62,884 TK72,275 TK78,134 TK84,571 TK96,316 TK106,206 TK123,190 TK139,393 TK155,238 TK95,551

Long-term Assets
Long-term Assets TK50,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000 TK80,000
Accumulated Depreciation TK0 TK833 TK1,666 TK2,499 TK3,332 TK4,165 TK4,998 TK5,831 TK6,664 TK7,497 TK8,330 TK9,163 TK9,996
Total Long-term Assets TK50,000 TK79,167 TK78,334 TK77,501 TK76,668 TK75,835 TK75,002 TK74,169 TK73,336 TK72,503 TK71,670 TK70,837 TK70,004
Total Assets TK84,000 TK124,961 TK132,026 TK140,385 TK148,943 TK153,969 TK159,573 TK170,485 TK179,542 TK195,693 TK211,063 TK226,075 TK165,555

Liabilities and Capital Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Current Liabilities
Accounts Payable TK0 TK15,839 TK25,821 TK33,962 TK38,983 TK39,334 TK39,724 TK43,932 TK45,317 TK51,464 TK54,939 TK56,795 TK13,749
Current Borrowing TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Other Current Liabilities TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0 TK0
Subtotal Current Liabilities TK0 TK15,839 TK25,821 TK33,962 TK38,983 TK39,334 TK39,724 TK43,932 TK45,317 TK51,464 TK54,939 TK56,795 TK13,749

Long-term Liabilities TK30,000 TK59,500 TK59,000 TK58,500 TK58,000 TK57,500 TK57,000 TK56,500 TK56,000 TK55,500 TK55,000 TK54,500 TK54,000
Total Liabilities TK30,000 TK75,339 TK84,821 TK92,462 TK96,983 TK96,834 TK96,724 TK100,432 TK101,317 TK106,964 TK109,939 TK111,295 TK67,749

Paid-in Capital TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500 TK101,500
Retained Earnings (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK47,500) (TK65,392)
Earnings TK0 (TK4,377) (TK6,795) (TK6,077) (TK2,041) TK3,136 TK8,849 TK16,052 TK24,225 TK34,729 TK47,124 TK60,779 TK61,698
Total Capital TK54,000 TK49,623 TK47,205 TK47,923 TK51,959 TK57,136 TK62,849 TK70,052 TK78,225 TK88,729 TK101,124 TK114,779 TK97,806
Total Liabilities and Capital TK84,000 TK124,961 TK132,026 TK140,385 TK148,943 TK153,969 TK159,573 TK170,485 TK179,542 TK195,693 TK211,063 TK226,075 TK165,555

Net Worth TK54,000 TK49,623 TK47,205 TK47,923 TK51,959 TK57,136 TK62,849 TK70,052 TK78,225 TK88,729 TK101,124 TK114,779 TK97,806

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