GV First Class Greetings Sample Business Plan 2017... · Class Greetings, LLC, and will continue to take an active role in the leadership of the organization as additional management

Business PlanBusiness Plan Prepared By

Chris Straka, President

45 Industry Road

Seaside, StateA 50011

(090) 555-2400

(090) 555-2492 Mobile

[email protected]

Date PreparedJanuary, 200B

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© 2017 Ewing Marion Kauffman Foundation. All Rights Reserved.

First Class Greetings LLC Business Plan

Table of ContentsExecutive Summary ..........................................................................................................................5

Management and Organization Plan ...........................................................................................7Management team ...................................................................................................................................7Compensation and ownership .................................................................................................................8Board of directors/advisory board ...........................................................................................................8Infrastructure ...........................................................................................................................................9Contracts and franchise agreements ........................................................................................................9Recruitment and selection of employees .................................................................................................9Employee reward and incentive plan .....................................................................................................10Communication and change .................................................................................................................10Organization .........................................................................................................................................10

Product/Service Plan ......................................................................................................................11Purpose of the product/service ..............................................................................................................11Features and benefits .............................................................................................................................11Stage of development ............................................................................................................................11Intellectual property ..............................................................................................................................12Governmental approvals ........................................................................................................................12Product/service limitations ....................................................................................................................12Product/service liability .........................................................................................................................13Related products/services and spin-offs ................................................................................................13Production .............................................................................................................................................13Facilities.................................................................................................................................................13Suppliers ................................................................................................................................................13

Marketing Plan .................................................................................................................................14Industry profile ......................................................................................................................................14

Current size .....................................................................................................................................14Growth potential .............................................................................................................................14Industry trends ................................................................................................................................14Other characteristics .......................................................................................................................15Distribution channels ......................................................................................................................16

Competitive analysis ..............................................................................................................................16Market analysis ......................................................................................................................................18

Target market profile .......................................................................................................................18Customer profile .............................................................................................................................18Future markets ................................................................................................................................18

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Pricing ..................................................................................................................................................... 19Pricing structure ................................................................................................................................ 19Price list ............................................................................................................................................ 19Pricing policies .................................................................................................................................. 19

Market penetration ................................................................................................................................. 19Distribution channels ........................................................................................................................ 19Location ............................................................................................................................................ 19Sales representatives .......................................................................................................................... 20Licensing or distributors ................................................................................................................... 20Brand identity ................................................................................................................................... 20Customer service ............................................................................................................................... 20Advertising and promotion ............................................................................................................... 20Publicity ............................................................................................................................................ 21Internet ............................................................................................................................................. 21Trade shows ...................................................................................................................................... 21Market activities schedule ................................................................................................................. 21Market penetration effectiveness ...................................................................................................... 21

Operations Plan ...............................................................................................................................22Operational systems ................................................................................................................................ 22Operations system workflow ................................................................................................................... 25Operational improvements ...................................................................................................................... 26

Financial Plan ....................................................................................................................................27Sales projections ...................................................................................................................................... 27Income projections .................................................................................................................................. 27Cash requirements ................................................................................................................................... 27Sources of financing ................................................................................................................................ 27Exit strategy ............................................................................................................................................ 27Projected Financial Statements

Monthly Cash Flow Report (for three years)Year-End Income StatementYear-End Balance SheetRatio Analysis



Supporting Documents .................................................................................................APPENDIX Historical Balance Sheet Sales Projections Inventory Projections Operating Expenses Projections Depreciation Schedules Capital Budget Projection Equity & Debt Worksheet Amortization Table



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Executive Summary

HistoryFirst Class Greetings, LLC, continues to impact the national stationery market with patent pending, innovative, stamped and ready-to-mail greeting cards. The First Class Greetings’ card line includes the major greeting card categories of birthday, thank-you, seasonal holidays and general humor. First Class Greetings offers a full selection of original artwork, photographs and seasonal images by numerous artists with national and international recognition. First Class Greetings competes within the mid-market price range at $2.75 with a first class postage stamp affixed, creating an added sense of value.

DescriptionThe uniqueness of the First Class Greetings concept is simple. Each greeting card is stamped and ready to mail. An envelope, with its corner removed, reveals the stamp affixed to the greeting card. The obvious benefit to the consumer is convenience. The consumer is spared the hassle of searching for a stamp to send the greeting card. This added value makes it an attractive product for targeted locations such as airports, hotels, card shops and cafés.

OrganizationThe management of the company will be the responsibility of Chris Straka. Chris Straka has over seven years of business development and analysis experience. Chris served as the business analyst for the national Hoofin’ Joe’s Restaurant chain and was a founding partner in Enviro-Juice, a $1,500,000 four-unit company in the Seaside area.

MarketFirst Class Greetings’ product line is positioned in the 7 billion dollar a year U.S. greeting card industry. Greeting cards can be found in over 100,000 retail outlets in the United States. Over 90% of American households participated in the greeting card industry in 200A, with the average household purchasing 35 individual cards per year. This successful national market business model can be applied to international markets for continued growth.

For marketing and distribution, First Class Greetings is enlisting sales representatives nationwide. First Class Greetings selected 20 representatives to cover the Western regions of the United States, and it will soon add over 80 additional sales reps to cover the remainder of the nation.



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OperationsFirst Class Greetings is seeking a $300,000 loan in order to implement the second phase of its business plan. The funding will help to secure an office/shipping location, increase the current line from 100 images to over 300, provide working capital, attract an experienced marketing director from within the greeting card industry, and market at national tradeshows and in industry trade magazines. Current test locations support the business plan assumptions and project gross income by year three at nearly $4,000,000.

FinancingThe marketing advantage created from the patent pending greeting card system will position First Class Greetings as an attractive candidate for acquisition within the competitive greeting card industry. The long-term strategy is to concentrate on building value in the company through increasing cash flow and to harvest this value by merging with a larger competitor or by taking the company public. Consistent with these end goals, considerable attention will be placed on business fundamentals as outlined in the plan. Investor distributions are planned in year three, assuming projections are realized and market saturation and reinvestment needs begin to level off. Following year three, new limited partners will replace limited partners wishing to withdraw capital from the company, or, if prudent, their equity will be purchased by the company.




Management and Organization Plan

Management team

The following three individuals of the management team comprise the original members of First Class Greetings, LLC, and will continue to take an active role in the leadership of the organization as additional management staff persons are added.

Chris Straka — All initial First Class Greetings operations, including marketing distribution, advance planning and business analysis will be under Chris Straka’s direction. Chris Straka is the founder of First Class Greetings with over six years of business development and analysis experience. Chris Straka recently served as the business analyst for Hoofin’ Joe’s Restaurants—voted America’s number one eatery in the 1990s—a $300 million restaurant chain with 101 restaurants nationwide. Chris Straka also brings to the table a successful entrepreneurial background as a founding partner in Enviro-Juice, a $1.5 million four-unit restaurant chain in the Seaside area. Under Chris Straka’s direction, Enviro-Juice received national recognition including a write-up in Blue Planet Magazine and was voted best Seaside area juice chain in 1999. The first Enviro-Juice was profitable after only three months of operation, while the Suntown, StateA, location was profitable from day one. The restaurants were sold to a larger corporation at a multiplier of nearly three times net.

Jody Arbek — Jody Arbek serves as a part-time art director. Jody is owner and founder of Startling Visions art gallery, located in Conch Ville, StateA. Since founding Startling Visions art gallery in 1980, Jody has been responsible for the production of over 60 original art shows showcasing as many artists. Jody has also received awards and recognition for contribution to the arts. All First Class Greetings’ original art procurement will be under Jody Arbek’s direction.

Shaun Patrick — Shaun Patrick serves as a part-time marketing consultant to First Class Greetings. Shaun brings over six years of marketing and tradeshow experience. Shaun was instrumental in the start-up months of First Class Greetings, seeing the company through its initial product rollout as well as the first two tradeshows.

Marketing Director — The marketing director position is currently open. The director will be fully responsible for all marketing aspects of the business including full implementation and revisions of the marketing plan, tradeshow organization, sales rep negotiations, brand promotion and market expansion. During the early stages of the business, the current management group will manage these functions. As funding permits, a qualified candidate from within the greeting card industry will be sought to fill the position.

During 200B, the primary management of the company will be Chris Straka’s responsibility. Chris will build a management team focused on issues of marketing, finance and distribution beginning in 200C. Up to 12 additional production positions will be hired for shipping and order fulfillment. All other jobs, such as printing, bookkeeping and accounting will be subcontracted out. As the business matures beyond its entrepreneurial beginnings, long-term objectives include seeking experienced and seasoned personnel from within the greeting card industry.



Compensation and ownership

Compensation at the management level will be achieved through salary, while shipping and order fulfillment personnel will be paid on an hourly basis. Cash bonuses tied to profitability will be awarded throughout the company.

Majority ownership will remain with member, Chris Straka. Minority ownership positions will be made available to investors and employees.

Board of directors/advisory board

The following advisors will form an informal advisory council to the management of First Class Greetings. Throughout the year, the management team will call on the advisors asking for their viewpoint and expertise on strategic matters. At least once each year, all advisors will be invited to an advisory council meeting where a more formal discussion of the following year’s goals and strategies will take place.

Stefanie Samuelsen — Stefanie Samuelsen is a Clinical Professor of Finance and Management at Western-Thomas Graduate School of Management, Western University. She has also been an Entrepreneur-in-Residence at the Foundation for Advancement in America since 1994. In 1998, Commerce Weekly named her one of the top 12 entrepreneurship professors at graduate business schools in the U.S. In 200A, Wallace and Timberton Accounting Firm selected her as Entrepreneur of the Year. Her guidance and feedback in the areas of financial strategies and entrepreneurship will be immeasurable.

James Task, Ph.D. — James Task is vice president of the Center for Entrepreneurs at the Foundation for Advancement in America in Center City. James Task was selected as one of the Entrepreneurs of the Year in 1998 for his work in support of entrepreneurship. James has great insights and experiences to share concerning strategic assessment, planning and entrepreneurship.

Rashaun Gamberden — Rashaun Gamberden is currently the president and CEO of Hoofin’ Joe’s Restaurant chain. Rashaun has already offered his support and business experience to First Class Greetings throughout the start-up. In addition, Rashaun’s personal ties to Mary Ann Sparkington, CFO of Mugga Coffee, have proven to be advantageous for acquiring industry trend information concerning the retail coffee industry. This connection is important for the marketing of the Coffee Notes line of cards.



Sandra Wu — CPA MS-Tax — Sandra Wu, owner of Accounting Specialists, Inc., is handling the accounting and capital growth needs of the company. Sandra Wu will use many business resources, contacts and knowledge to help secure capital and bank financing for First Class Greetings.

Daniel Renkin – Daniel Renkin is the senior director of business finance and analysis for Hoofin’ Joe’s Restaurant. With over 15 years of business analysis experience, Daniel Renkin’s knowledge of corporate business strategy and financial models will help guide anticipated growth.

Infrastructure

Many outside advisors will be relied upon for their contracted services, among them:

Cara Cuthbert — Insurance advice and coverage, paid for through policies obtained.

Lea Liu, Attorney at Law — Legal services as needed, paid hourly or by project.

Michelle Norris — Mailbox/display rack designs and all marketing and tradeshow displays and materials, paid by the project.

W. J. Peete, ITS — Computer and information technology services as needed, paid hourly.

Sandra Wu, CPA MS-Tax — Accounting and tax services provided quarterly and yearly paid by the project.

Contracts and franchise agreements

First Class Greetings has employed Lea Liu, Attorney at Law, to provide legal counsel concerning contracts and other legal matters. Ms. Liu has developed several contractual agreements to aid in the operations between vendors, suppliers, artists, manufacturer’s representatives and employees. These contracts are designed to protect the assets of First Class Greetings and its members. At this time, there are no plans for franchising or licensing.

Recruitment and selection of employees

Three individuals from the original team of members in the LLC comprise the current management team. This team will add a marketing director by May 200B. This management position will be fully responsible for all marketing aspects of the business. The expanded management team will include a director of operations, distribution and art procurement and a director of finance. These two positions will be added in 200C.

The management team relies heavily on the infrastructure and advisory council for certain contracted services and advice on the strategic direction of the company.



Employee reward and incentive plan

Members and employees of the LLC will receive yearly cash bonuses tied to profitability. In 200D, and every year after, investors will receive profit distributions. Various incentive programs encourage outside (non-employee) involvement in the company. Sales representatives are offered a commission based on gross sales (15%) and artists are offered a commission for their artwork based on gross sales associated with their artwork (6%).

Communication and change

Every company associate receives our manual containing the mission and goals of the company as well as the operating procedures. The management team meets weekly. Web-based conferences are held with sales reps monthly. Updates are done through e-mails with acknowledgment required.

Organization

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Product/Service Plan

Purpose of the product/service

The company’s objective is to develop, market and distribute postage pre-paid greeting cards to selected upscale card shops, airports, hotels and coffeehouse locations. The First Class Greetings’ product line is positioned in the high-quality, mid-price range of the market. The company’s product line differentiates itself by offering consumers a greeting card that is stamped and ready to mail. First Class Greetings will also further differentiate its product through unique, high-quality artwork.

Features and benefits

Card designs and images

The First Class Greetings’ card line includes the major greeting card categories of birthday, thank-you, seasonal, holidays and general humor. The line consists of original artwork from a number of different artists. Different styles include watercolors, oils, photography and other mediums to help diversify and keep the line fresh, original and appealing to varied demographics and tastes. The initial Coffee Notes line consisted of 15 coffee-related images. The second run produced 15 additional images including seasonal and general designs. An additional 88 images debuted at the Stationery Show of America, May 200A, in New York. These 118 images will help solidify First Class Greetings as a viable stationery company.

Envelope design

The envelope is a patent pending original design that incorporates functional and aesthetic features. The original feature of the envelope design is that the top right hand corner is cut off to reveal a postage stamp adhered directly to the note card rather than the envelope.

Display racks

First Class Greetings can be displayed from a variety of customized counter-top, floor-spinners and wall display racks. The original rack design is a patent pending counter-top model, designed with a mailbox built into the display. Floor-spinners and wall racks have recently been added to the display line to offer space saving alternatives as well as the ability to hold a larger number of the upgraded cards.

Stage of development

First Class Greetings is a new business operating as a limited liability company. After considerable product/market research and product design, First Class Greetings began Phase One–Start-Up operations the first quarter 200A. During Phase One, efforts were concentrated on proving marketability and profitability of the concept. Since the feasibility of the concept was established, First Class Greetings is moving into Phase Two–Operations. The initial Coffee Notes line of cards now contains 30 coffee-related images. Another 88 images debuted at the Stationery Show of America, May 200A, in New York.



Intellectual property

First Class Greetings has trademarked its logo, which appears on the backs of all cards and envelopes. This trademark will become recognized by consumers as a sign of quality and convenience and will help to establish First Class Greetings as a superior greeting card company.

The envelope is a patent pending original design that incorporates utility functions as well as aesthetic features. The patent approval process should be completed in 200B.

All artwork created under contract for First Class Greetings is held as copyrighted material by First Class Greetings, not the artist. The artist is compensated through commissions based on gross sales associated with the specific artwork.

Governmental approvals

Since First Class Greetings is an already established limited liability company, all governmental approvals have been satisfied for its start-up—including local, state, and federal registrations. In addition to these regular necessary approvals, the U.S. Postmaster of San Morton, StateA, has tested First Class Greetings, finalizing its compatibility with the U.S. postal system and its machinery. To date, all envelopes sold have successfully passed through the postal system.

Product/service limitations

One product limitation could be additional pilfering and shoplifting of the product because of the added value of having a stamp affixed to the card. The patent pending design will limit stealing of the envelopes, since the stamp is affixed to the card itself. A stamped note card is less likely to be stolen due to its perceived higher value ($2.75 value) than a stamped envelope. In addition, the cut envelope corner renders the envelope useless since no stamp can be adhered to it in the appropriate place.

Product/service liability

Product liability risk was discussed at length with people from the greeting card industry, the advisory council members, legal counsel, and the insurance broker. The product does not in and of itself create extreme risk above and beyond what is deemed reasonable. Therefore, the insurance and legal status of the company should be sufficient to cover the unlikely risk associated with the product.

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Related products/services and spin-offsFirst Class Greetings can easily grow from the current marketing strategy and spin-off product lines to include stationery, wrapping paper, boxed note cards and postcards. Of these related products, postcards would be the most likely choice since they are consistent with the current marketing strategy—a postage-ready product that provides convenience to the customer.

Another option for future growth is to enter the e-market on the Internet. Several card companies have experienced phenomenal growth, in terms of visitors, in the last year. In most cases, e-cards are made available for free to visitors. Advertising spots shown while visitors are selecting cards are meant to bring in the profits. As of yet, profitability is often sought after but not attained on the Internet. Opportunities will be evaluated for profitability to make cards available in this medium.

ProductionThe two main components for production are the greeting cards and the envelopes. In the Seaside area alone 12 major printing companies are capable of producing the quality and quantity needs projected. The two vendors currently being used were selected in consideration of quality and price. Beachcombers Printing and Lithograph out of Seaside publishes the greeting cards, while Mid-Continent Envelope out of Midtown manufactures the patent pending envelope. Since there are many companies that can provide this service, First Class Greetings has developed relationships with back-up production companies as well.

FacilitiesCurrently, First Class Greetings operates out of a 1,300-square-foot facility in Seaside that provides adequate space for current operations. Members and employees work both virtually from their remote location and from the Seaside facility. Each Wednesday, all members work at the Seaside facility. As sales top $4 million (anticipated in 200E), the business will move all offices, storage and shipping facilities to one central location in San Morton, StateA. San Morton has been chosen for its proximity to current printing, employee and financial resources.

SuppliersSince production is handled by subcontractors, the most pressing concern is to have enough artists to supply artwork to grow the product line from 100 images to 300—the average number of images an established, mid-sized greeting card company carries. It will be necessary to attract artists with different styles including watercolors, oils, photography and other mediums to help diversify and keep the line appealing to the intended customers. Jody Arbek, Art Director beginning in 200A, will use her background, network and expertise to establish a group of artists that will meet these needs. Many incentive programs, including commissions on sold cards, will be employed to keep the artists interested in the potential of working with First Class Greetings.



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Marketing Plan

Industry profile

Current size

First Class Greetings’ product line is positioned in the $7 billion a year U.S. greeting card industry. Large companies command nearly 85 % of the market share (Market Group Research, Inc.). Given that these companies have greater financial resources, market penetration, and brand recognition, First Class Greetings will target the remaining $1+ billion market currently divided between as many as 1,700 small- to medium-sized independent card companies.

Growth potential

Annual growth in the greeting card industry is expected to remain at 1% to 3% throughout the year 200G. This growth comes from two sources. The first is based on the number of consumers in the marketplace. Greeting cards are primarily purchased by women between the ages of 35 and 65—baby boomers. The number of this customer segment is expected to remain the same until the year 200G. The second source is greeting card prices, which are expected to increase at a rate slightly higher than the rate of inflation (Cards and Gifts Magazine, January 200B). First Class Greetings’ growth projections are based on these findings and new market sales.

Industry trends

Many of the marketing and card design decisions will be guided by the following greeting card industry trends:

■ Of total greeting cards purchased annually, roughly half is from seasonal sales and the remaining half is from everyday card sales. Sales of non-occasion cards are on the increase (USA Research Plus, July 200A).

■ Major card selling holidays are, in order, Christmas, Valentines Day, Easter, Mother’s Day, Father’s Day, and Graduation (USA Research Plus, July 200A).

■ Women between ages 35 and 65 purchase over 80 % of all greeting cards (Cards and Gifts Magazine, January 200B).

■ The average person receives 30 cards per year, eight of which are birthday cards. In fact, nine in 10 Americans aged 16 to 69 received at least one card on their last birthday (Global Marketing, Spring 200A).

■ The number of substitutable products for greeting cards is dramatically increasing with technology, including e-mail, e-cards, telephone, mobile phones and digital technology.



First Class Greetings will respond to these trends in the following ways: Due to the special offering of First Class Greetings—a convenient card with postage affixed—everyday cards, including birthday cards, will be produced. Limited selections of holiday cards may be made available in holiday point-of-purchase displays for established retail customers. Cards will be designed to appeal primarily to women between the ages of 35 to 65. In addition, a larger demographic group including men and women concerned with time and convenience will be targeted. In the future, cards appealing to young men and women will also be developed to begin to harvest this future market of potential customers.

Other characteristics

Greeting card sales are highly relational to population figures. Therefore, the highest populated geographic areas will generate the highest sales. Due to First Class Greetings’ unique offering, geographic locations with high tourism and travel will be targeted. These areas will have the highest concentration of potential customers that will respond to a more convenient greeting card—one with the postage already affixed.

Of the total greeting cards purchased annually, roughly half are seasonal while the remaining half are everyday card-sending situations. The most popular everyday card-sending situation is still birthday, which accounts for nearly 60 % of everyday cards sold. First Class Greetings would like to concentrate on everyday cards in an effort to stabilize revenues and output. A limited selection of holiday cards may be made available for established retail customers.

Net profit margins in the greeting card industry (NAISC 8999 and SIC 2771) have shown some consistency in the last four years. (Figures listed from most recent to least recent.) The lowest profit percentage year, 1.4% net profit, reveals the impact on greeting card sales during a dramatic shift in distribution towards card sales in large discount retailers.

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(Statistics taken from the RMA Annual Reports for the cited years)



Distribution channels

Distribution channels within the greeting card industry are experiencing many changes. Over the past ten years, the typical card shop distribution channel has shrunk from about 40% of industry sales to less than 30% today. The main cause is increased distribution of cards in mass-merchandisers such as grocery stores and discount stores. This trend is expected to continue into 200E when this distribution is expected to maintain 15-20% of sales. The number of cards distributed through specialty shops and trendy gift shops has increased slightly.

A newer distribution channel, the Internet, will also create many changes. This channel is highly speculative at this point. Some companies are willing to spend the money to attract the next wave of consumers—the 20-somethings. These Internet efforts are expected to bring losses of some magnitude for the next three to 10 years (Gift Shop Manager Magazine, August 200A).

Competitive analysis

Since the large greeting card companies command nearly 85 % of the market share, First Class Greetings will compete for the market share of smaller alternative card companies such as Special Arts, E-notes, Century and Sunset Publications and Green Living Products, Inc. The greeting card industry is extremely competitive; therefore, it is critical to long-term success to establish First Class Greetings in as many locations and in as short a time as possible. The National Association for Greeting Card Producers (NAGCP) estimates as many as 2,000 greeting card publishers in America, ranging from major corporations to small family organizations.

Similar to the competitors, First Class Greetings addresses the largest segment of consumers by providing images that appeal to the largest group of consumers—women. First Class Greetings will set itself apart from the competition by appealing to an even larger demographic group including men and women concerned with time and convenience. First Class Greetings can better service this sector over larger competitors by tailoring the product, offerings, prices, distribution, promotional efforts and services towards that particular market segment.

One competitor worth close examination is Green Living Products (GLP). GLP is a publicly traded company that specializes in wildlife and nature related greeting cards and grosses over $3 million annually. The company is similar in size and revenue to First Class Greetings’ budget figures. GLP utilizes 130 independent sales reps to support and service 5,200 national retail locations (Source: GLP SEC filing). A complete list of direct competitors is included in the Appendix.

One of First Class Greetings’ greatest marketing advantages is the originality of a greeting card that is stamped and ready to mail. At this time, no other greeting card company has attempted this combination. This allows First Class Greetings a brief window of opportunity to rapidly gain market share and saturation.



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Differentiators that Build

Competitive Advantage

First Class Greetings

Green Living

ProductsSpecial Arts E-notes Century

Core competencies Innovation, point-of-sale displays, distribution system

Specialized artwork, sales rep network

Edgy, comtemporary artwork, boutique distribution

Web-based Special occasion cards, family friendly

Products or services perceived by the customer as superior to others in the market or industry

Pre-stamped, availability

Framable photography

Humor line Tech delivery Special occastion poetry

Target market or niche the company serves better than anyone else

Time-pressed, convenience loving market, travelers

Nature lovers Professional women

Younger tech-savy customer

Traditional market/women

Unique distribution channel or delivery method

Traveler locations, pre-stampled

no High-end gift boutique shops

Web-based no

Organizational efficiency

Systems are improving daily

Sales rep network highly effective

High priced based on very talented artists

Best smaller company e-mail card system. Web site is easy to use with variety of choices

no

Technology or innovative products or services unique in the market

Yes—pre-stamped

Photo reproduction techniques are state of the art

“Suzette & Friends” character line

Yes—one of the first to develop e-mail cart delivery

no

Weaknesses

Weaknesses in the product or service, marketing, or organization and other weaknesses

New, wide distribution not yet established

Staff turnover New artwork slow to hit shelves

Quality control Competes directly with major players



Market analysis

Target market profile

Greeting cards can be found in over 100,000 retail outlets in the United States. Over 90% of American households participated in the greeting card industry in 200A, with the average household purchasing 35 individual cards per year. First Class Greetings seeks entrance into this retail market through

■ Airport concession/retail companies.

■ Hotel gift shops.

■ Unique card and gift shops.

■ Cafés.

A complete list of potential target markets appears in the Appendix.

Customer profile

Although people of all ages and types exchange greeting cards, women, aged 35 to 65 still purchase over 80 % of all greeting cards. This demographic will define the primary target customer for most product lines. In addition, First Class Greetings will focus on an even larger demographic group including men and women concerned with time and convenience. Potential customers will be found in hotel gift shops, airports, tourist locations, cafés and card shops.

Future markets

First Class Greetings will focus on national sales while keeping an eye on international potential. Greeting cards have international acceptance, meaning the concept could have similar potential overseas. One of the major markets, the U.S. coffeehouse itself, is a carryover from Europe. A recent study released in the United Kingdom indicates that 5% of the British population is passionate about greeting cards. Consumer research findings show that more avid enthusiasts are sending cards for a wide range of occasions (National Association for Greeting Card Producers—NAGCP).

Continual research concerning trends in the greeting card industry and artwork preferences will have a large impact on the salability of future card lines. Jody Arbek, Art Director beginning in 200A, will continue to serve as an art consultant to First Class Greetings. Jody will offer guidance based on her considerable experience procuring artwork for her gallery, Startling Visions. In addition, experienced and seasoned personnel from within the greeting card industry will be sought as the business matures.



Pricing

Pricing structure

The gross margin for the industry ranges from 52 to 57 %.

First Class Greetings’ gross margin will have little fluctuation since the costs are based on raw paper goods and postage stamps. Goods are subcontracted out at a set price and quantity, which can be controlled through competitive bidding. First Class Greetings’ gross margin is 46.4 % in 200B. The gross margin will rise slightly by year 200D to 52.3 %. This increase is attributed to established ordering patterns and batch quantity increases.

Price list

First Class Greetings will compete near the mid-price range within the market. While greeting cards range in price from $0.38 to $10.00, the average counter card retails for around $2.65. Most of the First Class Greetings’ cards retail at $2.75 with a first class postage stamp already affixed, creating an added sense of value.

Pricing policies

Retail pricing is set and will not be altered by distributors or retail outlets. Volume pricing will be addressed as we add larger distributors such as major hotel chains.

Market penetration

Distribution channels

There are two main channels for product sales and distribution. The first plan is to integrate First Class Greetings into as many locations as quickly as possible through national independent sales representatives. The second channel targets specialized stationery, hotel and coffee tradeshows.

Location

The company will continue to be located in San Morton, State A. Company image and sales are not affected by our physical location.



Sales representatives

Independent sales representatives provide the best mode for distribution in order to maintain pricing controls and higher margins. Independent sales reps are not full-time employees of First Class Greetings, thus benefits are not necessary. Independent sales reps receive a flat commission based on gross sales. First Class Greetings’ sales reps are set at a commission rate of 15% of gross sales. The average sales rep can service up to 40 accounts with the average location generating around $1,000 per year.

Twenty independent sales reps covering 13 states sell the company’s product. The company anticipates adding over 80 additional sales reps to cover the remainder of the United States. In addition to field calls, sales reps will represent the product line at all regional tradeshows, with the marketing director attending all national tradeshows.

Licensing or distributors

Licensing is not under consideration at this time.

Brand identity

Two important packaging and labeling issues face First Class Greetings. First, the card and envelope must be manufactured and arranged in an attractive, appealing way. Since each card is stamped and ready to mail, an envelope with its corner removed will be packaged with each card to be sold together.

The second packaging issue is the way in which First Class Greetings cards are displayed. The cards can be displayed from a variety of customized counter-top, floor-spinners and wall display racks. The original point-of-purchase rack design is an award-winning patent pending counter-top model, designed with a mailbox built into the display.

Customer service

First Class Greetings retail accounts have the option of exchanging slow-selling images for new images. This pledge will encourage first-time orders. This exchange is handled via UPS’s three-day service in order to help keep customers’ inventory on the racks.

Advertising and promotion

The company will use various methods to promote its product at the retail level as well as to the end consumer—for example, tradeshows, point-of-sale materials and the Web site (www.firstclasscards.com). In addition, sales materials will be produced at the beginning of each season featuring new products and merchandising programs. One of the company’s most effective forms of retail advertising is the visual point-of-purchase display in retail stores.

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Publicity

Conversations have been initiated with travel writers who place articles in both airline and hotel publications. Once adequate distribution has been established, efforts will be made to have articles regarding the new “traveler’s solution” in those publications.

Internet

The Web site is already in place. Consumers can view the variety of cards available and search for the retail outlet closest to them.

Trade shows

Trade shows are an essential strategy to the future success of First Class Greetings and are the most efficient means of acquiring new accounts as well as new sales reps. A tradeshow presence also helps to secure brand awareness within the industry. Tradeshows offer a targeted market of owners and buyers looking for new items for their businesses. With proper marketing and booth location, new accounts will be obtained. The first 60 Coffee Notes accounts were located through two regional coffee-related tradeshows.

Market activities schedule

For marketing and distribution, First Class Greetings is enlisting the service of sales representatives nationwide. First Class Greetings selected 20 representatives that cover the Western regions of the United States and will soon add over 80 additional sales reps to cover the remainder of the nation. Efforts will be made to recruit and evaluate enough sales reps to secure the services of 10 representatives each month until 100-120 sales representatives are selling the products.

Market penetration effectiveness

There are two main channels for product sales and distribution. The first plan is to integrate First Class Greetings into as many locations as quickly as possible through national independent sales representatives. This plan is well on its way with 20 sales representatives currently selling the products and more than 80 to be added within the next year. The second plan for distribution is through specialized stationery, hotel and coffee tradeshows. These tradeshows will be held in May, July and September of each year.

�1 21Attribution-NonCommercial-NoDerivatives4.0 International (CC BY-NC-ND 4.0)


��


Operations Plan

Operational systems

Receiving orders

After receiving faxed orders from sales reps, the orders are shipped via UPS Ground to their final destination. The main exceptions are orders from Hawaii and Alaska, which are shipped through the U.S. postal system. Current orders are shipped directly from the home office in Seaside, StateA. All First Class Greetings retail accounts also have the option of exchanging slow-selling images for new images. This exchange is also handled via UPS but on the faster three-day service in order to help keep customer’s inventory on the racks.

Billing the customers

A packing slip is included with all shipments. This packing slip can be used by the customer to compare what is received with the original order and the invoice when it arrives. The invoice is mailed after the shipment is sent. New account collections are COD and 30-day net for established accounts. If the invoice is not paid within 30 days, a reminder statement is sent and a late fee charged.

Paying the suppliers

All suppliers will be paid upon their payment terms. Most vendors allow 30 days to pay. Any advance payment discounts will be evaluated and utilized when appropriate. In order to process payment, the original invoice must be attached to the internal approval form with an account number (for categorizing expenses) and approval signature on it.

Collecting the accounts receivable

The first attempt to collect a late receivable is to send a statement that lists the late invoice and adds a late fee to the total. One of the keys to keeping accounts receivable current is to provide payment terms only to those customers who fill out a credit application. The credit application requests basic financial information including the name of their bank and credit references. All applications will go through an approval process that includes calling the references to establish the customer’s payment patterns. Collection agencies will be used for accounts over 90 days past due.

Reporting to management

Because of the current virtual operations of the company, excellent communication systems are being put into place. These systems, including e-mail, project manager software and a budding intranet, will provide the foundation for clear communication as the company grows.



Staff development

Certain training and development of staff will be beneficial to the overall efficiency of business operations. Computer training, equipment training and personal development will all be sought and encouraged by management.

Inventory control

Inventory will be ordered as needed so that stock is held for a very short time before it is sent on to the customer. Therefore, our inventory turn will be shorter than six weeks. One inventory challenge is the inevitable postal increases. Given the frequency of postal increases in recent years, it is necessary to stay ahead of the rate increases so that inventory with non-compliant postage is not left on the market. The best way to handle this issue is through advance planning. The post office usually gives unofficial notice of a rate increase at least a year in advance. The best-case scenario is to begin placing the proper postage in advance of the change. The next rate increase will occur mid-200B by one cent. Because the new stamp is not yet available, First Class Greetings has already begun to apply the stamp that is currently available—two cents above the current rate of first class postage. Although the extra cent will raise the cost of goods for the product, this one-cent increase is preferable to the costs associated with directly exchanging merchandise already distributed to current accounts. In a direct exchange, First Class Greetings loses the cost of the exchanged card which ranges from $.16-$.20. The cost of the invalidated stamp can be recovered from the post office, but the card is destroyed. Direct exchange is the least desirable option.

Handling warranties and returns

First Class Greetings’ retail accounts have the option of exchanging slow-selling images for new images. This exchange is handled via UPS on the three-day service in order to help keep customers’ inventory on the racks. Returns are accepted for damaged or incorrectly shipped merchandise.

Monitoring the company budgets

Budgets will be prepared yearly to determine benchmarks for:

■ Revenue

■ Inventory

■ Sales and Marketing Expenses

■ Administrative Expenses

■ General Expenses

■ Capital Expenditures

The budgets will be used to establish benchmarks and then to review actual performance against the benchmarks.

�� 23Attribution-NonCommercial-NoDerivatives4.0 International (CC BY-NC-ND 4.0)


Security systems

A sophisticated security system is established for the inventory and equipment areas within the office space. This system includes 24-hour surveillance.

Documents and paper flow

At this time all documents are scanned into the computer system and stored digitally. This system supports the virtual operations of the company and aids in security and storage.

Product development

The product line will be developed from 100 images to 300—the average number of images an established, mid-sized greeting card company carries. It will be necessary to attract artists with different styles including watercolors, oils, photography and other mediums to help diversify and keep the line appealing to the intended customers. Jody Arbek, Art Director beginning in 200A, will use her background, network and expertise to establish a group of artists that will meet these needs. Many incentive programs, including commissions on sold cards, will be employed to keep the artists interested in the potential of working with First Class Greetings.

Manufacturing

Few factors limit the physical manufacturing of the product. The two main products for production are the greeting cards and the envelopes. In the Seaside area alone, 12 major printing companies are capable of producing the quality and quantity needs projected. Beachcombers Printing and Lithograph out of Seaside publishes the greeting cards, while Mid-Continent Envelope out of Midtown manufactures the patent pending envelope.



��

Operations system workflow

Order-fulfillment processes are in place and readily expandable. Keeping new artwork/cards in the pipeline is the more challenging operation. The system will be as follows:

Artwork submissions evaluated weekly by art director

Selected artwork goes to editing team for language development

Cards are resubmitted in three days

Art director chooses submissions for weekly management team meeting

Cards to produce are chosen

Rework of artwork/language while production bids are taken

Production bid awarded



Operational improvements

New Offerings – First Class Greetings can easily grow from the current marketing strategy and spin-off product lines to include stationery, wrapping paper, boxed note cards, postcards, etc. Of these related products, postcards would be the most likely choice since they are consistent with the current marketing strategy—postage-ready products that provide convenience to the customer. It is anticipated that the market for postcards would bring a 50% increase in sales volume.

New Markets – Greeting cards have international acceptance, meaning the concept could have similar potential overseas. One of the major markets, the U.S. coffeehouse itself, is a carryover from Europe. The viability of these markets will be assessed.

Providing new offerings to market will be similar to building our initial inventory of greeting cards. Therefore, many of the same costs apply. The costs associated with entering international markets have yet to be assessed.

Additional personnel requirements include support functions such as order entry, order fulfillment, etc. The management team included in this plan is sufficient to incorporate additional growth without added management personnel.



Sales projectionsSales for the next three years are projected to be $744,106, $2,450,000 and $3,877,594. In year 200A, First Class Greetings increased their independent sales force from 10 representatives to 20. The plan is to add approximately 80-100 additional sales reps to cover the United States in year 200B (the first year for the plan). It is estimated that each representative can service 40 locations with an average sales volume of $1,000. By Year 3 of the plan, each of those sales reps will be selling $40,000.

Income projectionsNet income projections for the next three years are $(68,715), $381,606 and $849,789. The company is not currently profitable, but expects to be profitable in Year 2 of the plan. The large, national sales force is expected to integrate First Class Greetings into as many retail locations as possible, allowing for relatively quick market penetration and growth.

Cash requirementsFirst Class Greetings has received $278,000 in start-up funds to date. The original owner has contributed $150,000 and investors have supplied the remaining $128,000 of capital. An additional $330,000 will be required to fund working capital requirements, additional personnel, additional artwork images and marketing/trade show.

The growth plan could include spin-off product lines to include stationery, wrapping paper, boxed note cards, post cards and expansion into the international market. Many of the same types of costs would apply and an additional $200,000 in financing would be required to improve working capital, acquire additional images, and promote the new offerings.

Sources of financingFirst Class Greetings expects to obtain an additional $30,000 in equity financing and is seeking a 3-year business loan in the amount of $300,000. It is estimated that the interest rate on the loan will be 8%.

Exit strategyThe marketing advantage created from the patent pending greeting card system will position First Class Greetings as an attractive acquisition candidate within the competitive greeting card industry. The long-term strategy is to concentrate on building value in the company through increasing cash flow and to harvest this value by merging with a larger competitor or by taking the company public. Consistent with these end goals, considerable attention will be placed on the business fundamentals as outlined in the plan. Partner distributions are planned in year three, assuming projections are realized and market saturation and reinvestment needs begin to level off. Following year three, new limited partners will replace limited partners wishing to withdraw capital from the company, or, if prudent, their equity will be purchased by the company.

��


Financial Plan



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92



200B 200C 200DNet Sales (less returns & allowances) 744,106 100.0% 2,450,000 100.0% 3,877,594 100.0%

Cost of Goods Sold 398,841 53.6% 1,261,750 51.5% 1,849,612 47.7%

Gross Margin $ 345,265 46.4% $ 1,188,250 48.5% $ 2,027,982 52.3%

Operating Expenses Advertising - 0.0% - 0.0% - 0.0%

Bad Debt Expense 7,441 1.0% 24,500 1.0% 38,776 1.0%

Bank Charges - 0.0% - 0.0% - 0.0%

Depreciation & Amortization 23,849 3.2% 24,717 1.0% 24,717 0.6%

Dues & Subscriptions - 0.0% - 0.0% - 0.0%

Insurance 456 0.1% 456 0.0% 456 0.0%

Licenses & Fees - 0.0% - 0.0% - 0.0%

Marketing & Promotion 25,100 3.4% 25,100 1.0% 25,100 0.6%

Meals & Entertainment - 0.0% - 0.0% - 0.0%

Miscellaneous - 0.0% - 0.0% - 0.0%

Office Expense - 0.0% - 0.0% - 0.0%

Office Supplies 7,600 1.0% 9,000 0.4% 9,000 0.2%

Outside Services - 0.0% - 0.0% - 0.0%

Payroll Expenses 0.0% 0.0% 0.0%

Salaries & Wages 259,262 34.8% 631,500 25.8% 984,623 25.4%

Payroll Taxes 25,750 3.5% 29,250 1.2% 42,572 1.1%

Benefits - 0.0% - 0.0% - 0.0%

Professional Fees 6,500 0.9% 6,500 0.3% 6,500 0.2%

Property Taxes - 0.0% - 0.0% - 0.0%

Rent 15,600 2.1% 15,600 0.6% 15,600 0.4%

Repairs & Maintenance - 0.0% - 0.0% - 0.0%

Shipping & Delivery - 0.0% - 0.0% - 0.0%

Telephone 14,130 1.9% 14,130 0.6% 14,130 0.4%

Training & Development - 0.0% - 0.0% - 0.0%

Travel 1,850 0.2% 1,850 0.1% 1,850 0.0%

Utilities 3,900 0.5% 3,900 0.2% 3,900 0.1%

Vehicle - 0.0% - 0.0% - 0.0%

Contingency 4,800 0.6% 4,800 0.2% 4,800 0.1%

Other - 0.0% - 0.0% - 0.0%

Other - 0.0% - 0.0% - 0.0%

Total Operating Expenses $ 396,239 53.3% $ 791,303 32.3% $ 1,172,023 30.2%

Operating Income $ (50,974) -6.9% $ 396,947 16.2% $ 855,958 22.1%

Interest Expense 17,741 2.4% 15,341 0.6% 6,169 0.2%

Other Income (for example, interest) - 0.0% - 0.0% - 0.0%

Income Before Taxes $ (68,715) -9.2% $ 381,606 15.6% $ 849,789 21.9%

Income Taxes (if C Corp) - 0.0% - 0.0% - 0.0%

Net Income $ (68,715) -9.2% $ 381,606 15.6% $ 849,789 21.9%

First Class Greetings LLCYear-End

Income Statement (Projected)



200B 200C 200D

AssetsCurrent Assets

Cash & Equivalents 182,567 74,539 29,392 Accounts Receivable 101,887 335,467 530,941 Inventory 141,986 317,814 743,444 Security Deposits - - - Other Current Assets - - -

Total Current Assets $ 426,440 $ 727,820 $ 1,303,776

Fixed AssetsProperty, Plant & Equipment 107,763 107,763 107,763 Less: Accumulated Depreciation (35,263) (59,980) (84,697)

Net Fixed Assets 72,500 47,783 23,066 Other Non-Current Assets - - - Total Non-Current Assets $ 72,500 $ 47,783 $ 23,066

Total Assets $ 498,939 $ 775,603 $ 1,326,843

LiabilitiesCurrent Liabilities Accounts Payable 122,240 248,330 353,850

Line of Credit - - - Other Current Liabilities - - -

Total Current Liabilities $ 122,240 $ 248,330 $ 353,850

Long-term LiabilitiesLoans 223,731 126,260 19,617 Mortgages - - - Other Non-Current Liabilities - - -

Total Non-Current Liabilities $ 223,731 $ 126,260 $ 19,617

Total Liabilities $ 345,971 $ 374,590 $ 373,467

EquityEquity Investments 278,000 278,000 278,000 Retained Earnings (125,032) 256,575 972,802 Less: Owner's & Investor's Draws - (133,562) (297,426) Total Equity $ 152,968 $ 401,013 $ 953,376

Total Liabilities and Equity $ 498,939 $ 775,603 $ 1,326,843

First Class Greetings LLC

Balance Sheet (Projected)Year-End



200B 200C 200D

Profitability Ratios

Net Margin -9.23% 15.58% 21.92%

Gross Margin 46.40% 48.50% 52.30%

Expense Analysis 53.25% 32.30% 30.23%

Return on Assets (ROA) -13.77% 49.20% 64.05%

Return on Equity (ROE) -44.92% 95.16% 89.13%

Efficiency Ratios

Inventory Turnover 2.81 3.97 2.49

Accounts Receivable Turnover 7.30 7.30 7.30

Liquidity Ratios

Current Ratio 3.49 2.93 3.68

Quick Ratio 2.33 1.65 1.58

Risk Ratios

Debt Ratio 0.69 0.48 0.28

Debt to Equity 2.26 0.93 0.39

Cash Cycle

Days Receivable 50 50 50

Days Inventory 130 92 147

Days Payable 112 72 70

Days Payroll Accrual 16 16 16

Cash Cycle 68 70 127

Total LiabilitiesTotal Equity

Total AssetsTotal Liabilities

Current Liabilities

Yearly Credit Sales

Inventory

Accounts Receivable

Total Current Liabilities

Current Assets - Inventory

Total Current Assets

Total AssetsNet Income

Total EquityNet Income

Cost of Goods Sold

First Class Greetings LLCFinancial Ratios

Net SalesOperating Expenses

Net IncomeNet Sales

Gross MarginNet Sales

Between Pay Periods

Accounts Receivable x 365Sales per year

Inventory x 365COGS per year

Days Receivable + DaysInventory - Days Payable- Days Payroll Accrual

Accounts Payable x 365COGS per year

Numer of Days



��


Supporting Documents

Appendix



HISTORICAL BALANCE SHEETFirst Class Greetings LLC

12/31/200A

Assets Current Assets Cash & Equivalents 44,412 Accounts Receivable 108,450 Inventory 104,212 Security Deposits - Other Current Assets - Total Current Assets $ 257,074

Fixed Assets Property, Plant, & Equipment Computer Equipment 34,215 Equipment & Machinery -

Furniture & Fixtures 9,048 Vehicles -

Leasehold Improvements -

Building -

Land -

Less: Accumulated Depreciation (Do not enter a negative number) 11,414 Other Non-Current Assets -

Total Non-Current Assets $ 31,849

Total Assets $ 288,923

Liabilities Current Liabilities Accounts Payable 67,240 Line of Credit - Other Current Liabilities - Total Current Liabilities $ 67,240

Long-term Liabilities Loans - Real Estate Loans - Other Non-current Liabilities - Total Long-Term Liabilities $ -

Total Liabilities $ 67,240

Equity Owner's Equity 278,000 Retained Earnings (Enter a negative number for a loss) (56,317) Less: Owner's & Investor's Draws (Not for use by C Corporations) -

Total Equity $ 221,683

Total Liabilities and Equity $ 288,923

Appendix



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Equity InvestmentFirst Class Greetings LLC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Year 1 - - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Year 3 - - - - - - - - - - - - -

Real Estate LoansFirst Class Greetings LLC

Existing Balance - New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - -

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - - - - - - - - - - - - Year 1 - interest - - - - - - - - - - - - - Year 2 - principal - - - - - - - - - - - - - Year 2 - interest - - - - - - - - - - - - - Year 3 - principal - - - - - - - - - - - - - Year 3 - interest - - - - - - - - - - - - -

Traditional Business Loan and/or Other Long-Term LoansFirst Class Greetings LLC

Loan 1 (existing loan or first new loan)Existing Balance - New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - 300,000 - - - - - - - - - - 300,000 Outstanding balance - 300,000 292,599 285,149 277,649 270,099 262,499 254,848 247,146 239,393 231,588 223,731 Year 2 - - - - - - - - - - - - - Outstanding balance 215,822 207,860 199,845 191,776 183,654 175,477 168,246 159,960 151,619 143,222 134,769 126,260 Year 3 - - - - - - - - - - - - - Outstanding balance 117,694 109,071 100,391 91,653 82,856 74,001 65,087 56,113 47,080 37,986 28,832 19,617

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - 7,401 7,450 7,500 7,550 7,600 7,651 7,702 7,753 7,805 7,857 76,269 Year 1 - interest - - 2,000 1,951 1,901 1,851 1,801 1,750 1,699 1,648 1,596 1,544 17,741 Year 2 - principal 7,909 7,962 8,015 8,069 8,122 8,177 7,231 8,286 8,341 8,397 8,453 8,509 97,471 Year 2 - interest 1,492 1,439 1,386 1,332 1,279 1,224 2,170 1,115 1,060 1,004 948 892 15,341 Year 3 - principal 8,566 8,623 8,680 8,738 8,797 8,855 8,914 8,974 9,033 9,094 9,154 9,215 106,643 Year 3 - interest 835 778 721 663 604 546 487 427 368 307 247 186 6,169

Loan 2 Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - -


Line of CreditFirst Class Greetings LLC

Existing Balance -

Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - -


Year 1 - total principal paid 76,269 Year 1 - total interest paid 17,741 Year 2 - total principal paid 97,471 Year 2 - total interest paid 15,341 Year 3 - total principal paid 106,643 Year 3 - total interest paid 6,169

Appendix



